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Exhibit Promissory Note $9,500.00 Date of Issuance May 11, 2009 FOR VALUE RECEIVED, So Act Network, Inc., a Delaware corporation (the "Maker"), with an address at 5715 Will Clayton, Parkway, #6572Humble, TX 77338, for value received, hereby promises to pay to the order of Greg Halpern (the “Payee”), with an address of 5715 Will Clayton, Parkway, #6572Humble, TX 77338 or his designees, the principal sum of $9,500.00 (the “Principal Amount”), together with interest at the prime rate as of the Date of Issuance until all principal under this Note is paid in full.The principal balance of this Note may be prepaid in whole or in part, at any time and from time to time, without premium or penalty, together with all accrued interest on the principal balance so prepaid. All prepayments and the other payments under this Note shall be applied first to accrued but unpaid interest, and then to the unpaid principal balance, until all principal and accrued interest under this Note have been paid in full. No change, amendment, modification, termination, waiver, or discharge, in whole or in part, of any provision of this Note shall be effective unless in writing and signed by the Maker and Payee, and with respect to a waiver or discharge so given by the Payee, shall be effective only in the specific instance in which given.The Maker acknowledges that this Note and the Maker’s obligations under this Note are, and shall at all times continue to be, absolute and unconditional in all respects, and shall at all times be valid and enforceable.The Payee, at his discretion, may unilaterally offset any of his obligations to Maker by reducing any installments at any time payable under this Note. In the event any one or more of the provisions contained in this Note should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby. This Note binds the Maker and its successors and assigns, and Maker shall have the right to assign, transfer or delegate its rights or obligations under this Note with the Payee’s consent, and this Note shall inure to the benefit of Payee and its successors and assigns.This Note shall be construed in accordance with and governed by the laws of the State of Delaware without giving effect to conflict of law principles. [Signature Page Follows] -1- [Signature Page to the Note] IN WITNESS WHEREOF, this Note has been executed and delivered on the date specified above by the duly authorized representative of the Company. So Act Network, Inc. By: /s/ Greg Halpern Name:Greg Halpern Title: President Greg Halpern /s/ Greg Halpern -2-
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Exhibit 10.1
EXECUTION VERSION
CREDIT AGREEMENT
among
POLYPORE INTERNATIONAL, INC.,
as Borrower,
The Several Lenders from Time to Time Parties Hereto,
BBVA COMPASS BANK, PNC BANK, NATIONAL ASSOCIATION, HSBC BANK USA, NATIONAL
ASSOCIATION and FIFTH THIRD BANK,
as Co-Documentation Agents,
BANK OF AMERICA, N.A. and WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Syndication Agents,
and
as Administrative Agent
Dated as of May 13, 2004,
as Amended and Restated as of June 29, 2012
J.P. MORGAN SECURITIES LLC,
and
WELLS FARGO SECURITIES, LLC,
as Joint Lead Arrangers and Joint Bookrunners
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS
1
SECTION 1.1. Defined Terms
1
SECTION 1.2. Terms Generally
33
SECTION 1.3. Pro Forma Calculations
33
SECTION 1.4. Classification of Loans and Borrowings
34
SECTION 1.5. Currency Equivalents Generally
34
ARTICLE II THE CREDITS
34
SECTION 2.1. Commitments
34
SECTION 2.2. Loans
34
SECTION 2.3. Borrowing Procedure
36
SECTION 2.4. Evidence of Debt; Repayment of Loans
36
SECTION 2.5. Fees
37
SECTION 2.6. Interest on Loans
38
SECTION 2.7. Default Interest
38
SECTION 2.8. Alternate Rate of Interest
38
SECTION 2.9. Termination and Reduction of Commitments
38
SECTION 2.10. Conversion and Continuation of Borrowings
39
SECTION 2.11. Repayment of Term Loan Borrowings
40
SECTION 2.12. Optional Prepayments
41
SECTION 2.13. Mandatory Prepayments
41
SECTION 2.14. Reserve Requirements; Change in Circumstances
42
SECTION 2.15. Indemnity
43
SECTION 2.16. Pro Rata Treatment
44
SECTION 2.17. Sharing of Setoffs
44
SECTION 2.18. Payments
44
SECTION 2.19. Taxes
45
SECTION 2.20. Assignment of Commitments Under Certain Circumstances; Duty to
Mitigate
47
SECTION 2.21. Swingline Loans
49
SECTION 2.22. Letters of Credit
50
SECTION 2.23. Increase in Commitments
53
SECTION 2.24. Defaulting Lenders
54
SECTION 2.25. Voluntary Prepayments
56
ARTICLE III REPRESENTATIONS AND WARRANTIES
57
SECTION 3.1. Organization; Powers
57
SECTION 3.2. Authorization
57
SECTION 3.3. Enforceability
58
SECTION 3.4. Governmental Approvals
58
SECTION 3.5. Financial Statements
58
SECTION 3.6. No Material Adverse Change
58
i
SECTION 3.7. Title to Properties; Possession Under Leases
58
SECTION 3.8. Subsidiaries
59
SECTION 3.9. Litigation; Compliance with Laws
59
SECTION 3.10. Agreements
59
SECTION 3.11. Federal Reserve Regulations
59
SECTION 3.12. Investment Company Act
59
SECTION 3.13. Use of Proceeds
60
SECTION 3.14. Tax Returns
60
SECTION 3.15. No Material Misstatements
60
SECTION 3.16. Employee Benefit Plans
60
SECTION 3.17. Environmental Matters
60
SECTION 3.18. Insurance
60
SECTION 3.19. Security Documents
61
SECTION 3.20. Location of Real Property and Leased Premises
61
SECTION 3.21. Labor Matters
61
SECTION 3.22. Solvency
62
SECTION 3.23. Certain Treasury Regulation Matters
62
SECTION 3.24. Foreign Assets Control Regulations, Etc.
62
ARTICLE IV CONDITIONS OF LENDING
62
SECTION 4.1. All Credit Events
62
SECTION 4.2. First Credit Event
63
ARTICLE V AFFIRMATIVE COVENANTS
65
SECTION 5.1. Existence; Businesses and Properties
65
SECTION 5.2. Insurance
65
SECTION 5.3. Taxes
66
SECTION 5.4. Financial Statements, Reports, etc.
66
SECTION 5.5. Litigation and Other Notices
68
SECTION 5.6. Information Regarding Collateral
68
SECTION 5.7. Maintaining Records; Access to Properties and Inspections
69
SECTION 5.8. Use of Proceeds
69
SECTION 5.9. Further Assurances
69
SECTION 5.10. Certain Treasury Regulation Matters
70
SECTION 5.11. Environmental Laws
70
ARTICLE VI NEGATIVE COVENANTS
71
SECTION 6.1. Indebtedness
71
SECTION 6.2. Liens
71
SECTION 6.3. Sale and Lease-Back Transactions
74
SECTION 6.4. Investments, Loans and Advances
74
SECTION 6.5. Mergers, Consolidations and Sales of Assets
76
SECTION 6.6. Restricted Payments
78
SECTION 6.7. Transactions with Affiliates
79
SECTION 6.8. Business of Polypore and Subsidiaries
80
ii
SECTION 6.9. Amendments to Senior Note Indenture; Certain Payments of
Subordinated Debt
80
SECTION 6.10. Financial Condition Covenants
81
SECTION 6.11. Fiscal Year
81
SECTION 6.12. Negative Pledge Clauses
81
SECTION 6.13. Clauses Restricting Subsidiary Distributions
81
ARTICLE VII EVENTS OF DEFAULT
81
ARTICLE VIII THE AGENTS
83
SECTION 8.1. Appointment
83
SECTION 8.2. Delegation of Duties
84
SECTION 8.3. Exculpatory Provisions
84
SECTION 8.4. Reliance by Administrative Agent
84
SECTION 8.5. Notice of Default
84
SECTION 8.6. Non-Reliance on Agents and Other Lenders
85
SECTION 8.7. Indemnification
85
SECTION 8.8. Agent in Its Individual Capacity
85
SECTION 8.9. Successor Administrative Agent
86
SECTION 8.10. Co-Documentation Agents and Syndication Agents
86
ARTICLE IX MISCELLANEOUS
86
SECTION 9.1. Notices
86
SECTION 9.2. Survival of Agreement
87
SECTION 9.3. Binding Effect
87
SECTION 9.4. Successors and Assigns
87
SECTION 9.5. Expenses; Indemnity
90
SECTION 9.6. Right of Setoff
91
SECTION 9.7. Applicable Law
91
SECTION 9.8. Waivers; Amendment
91
SECTION 9.9. Interest Rate Limitation
93
SECTION 9.10. Entire Agreement
93
SECTION 9.11. WAIVER OF JURY TRIAL
93
SECTION 9.12. Severability
93
SECTION 9.13. Counterparts
94
SECTION 9.14. Headings
94
SECTION 9.15. Jurisdiction; Consent to Service of Process
94
SECTION 9.16. Confidentiality
94
SECTION 9.17. USA Patriot Act
95
SECTION 9.18. Releases of Guarantees and Liens
95
SECTION 9.19. Acknowledgements
96
iii
Schedules
Schedule 1.1(a)
Guarantors
Schedule 1.1(b)
Mortgaged Properties
Schedule 2.1
Lenders and Commitments
Schedule 3.2
Authorizations
Schedule 3.8
Subsidiaries
Schedule 3.17
Environmental Matters
Schedule 3.18
Insurance
Schedule 3.19(a)
Filing Offices
Schedule 3.19(d)
Mortgage Filing Offices
Schedule 3.20(a)
Owned Property
Schedule 3.20(b)
Leased Property
Schedule 6.1
Outstanding Indebtedness on Restatement Effective Date
Schedule 6.2
Liens Existing on Restatement Effective Date
Schedule 6.4
Existing Investments
Schedule 6.7
Transactions with Affiliates
Exhibits
EXHIBIT A
EXHIBIT B
Form of Borrowing Request
EXHIBIT C
Guarantee and Collateral Agreement
EXHIBIT D
Form of Perfection Certificate
EXHIBIT E
Form of Opinion of Willkie Farr & Gallagher LLP
EXHIBIT F
Form of Mortgage
EXHIBIT G
Form of U.S. Tax Compliance Certificate
iv
CREDIT AGREEMENT (this “Agreement”), dated as of May 13, 2004, as amended and
restated as of June 29, 2012, among POLYPORE INTERNATIONAL, INC., a Delaware
corporation (“Polypore”), the several banks and other financial institutions or
entities from time to time parties to this Agreement (the “Lenders”), BBVA
ASSOCIATION and FIFTH THIRD BANK, as co-documentation agents (in such capacity,
the “Co-Documentation Agents”), BANK OF AMERICA, N.A. and WELLS FARGO BANK,
NATIONAL ASSOCIATION, as syndication agents (in such capacity, the “Syndication
Agents”), and JPMORGAN CHASE BANK, N.A., as administrative agent.
WHEREAS, Polypore entered into the Credit Agreement, dated as of May 13, 2004,
as amended and restated as of July 3, 2007 (the “Existing Credit Agreement”),
among PP Holding Corporation, Daramic Holding SAS, Polypore, the several banks
and other financial institutions or entities party thereto and the agents named
therein; and
WHEREAS, the parties hereto have agreed to amend and restate the Existing Credit
Agreement as provided in this Agreement, which Agreement shall become effective
upon the satisfaction of the conditions precedent set forth in Section 4.2
hereof; and
WHEREAS, it is the intent of the parties hereto that this Agreement not
constitute a novation of the obligations and liabilities existing under the
Existing Credit Agreement or evidence repayment of any of such obligations and
liabilities and that this Agreement amend and restate in its entirety the
Existing Credit Agreement and re-evidence the obligations of Polypore
outstanding thereunder;
NOW, THEREFORE, in consideration of the above premises, the parties hereto
hereby agree that, on the Restatement Effective Date (as defined below), the
Existing Credit Agreement shall be amended and restated in its entirety as
follows:
ARTICLE I
Definitions
SECTION 1.1. Defined Terms. As used in this Agreement, the following terms
shall have the meanings specified below:
“Acceptable Payment Percentage” shall have the meaning assigned to such term in
Section 2.25.
“Acquired Indebtedness” shall mean Indebtedness (a) of a Person or any of its
Subsidiaries existing at the time such Person becomes a Subsidiary of Polypore
or at the time it merges or consolidates with or into Polypore or any of its
Subsidiaries or (b) that is assumed in connection with the acquisition of assets
from such Person and in each case not incurred by such Person in connection
with, or in anticipation or contemplation of, such Person becoming a Subsidiary
of Polypore or such acquisition, merger or consolidation. Acquired Indebtedness
shall be deemed to have been incurred, with respect to clause (a) of the
preceding sentence, on the date such Person becomes a Subsidiary and, with
respect to clause (b) of the preceding sentence, on the date of consummation of
such acquisition of assets.
1
“Administrative Agent” shall mean JPMorgan Chase Bank, N.A., together with its
affiliates, as the arranger of the Commitments and as the administrative agent
for the Lenders under this Agreement and the other Loan Documents, together with
any of its successors.
“Administrative Agent Fees” shall have the meaning assigned to such term in
Section 2.5(b).
“Affiliate” shall mean, when used with respect to a specified Person, another
Person that directly, or indirectly through one or more intermediaries, Controls
or is Controlled by or is under common Control with the Person specified.
“Affiliate Transaction” shall have the meaning assigned to such term in
Section 6.7.
“Agents” shall mean the collective reference to the Syndication Agents, the
Co-Documentation Agents and the Administrative Agent.
“Aggregate Revolving Credit Exposure” shall mean the aggregate amount of the
Lenders’ Revolving Credit Exposures.
“Alternate Base Rate” shall mean, for any day, a rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the greatest of (a) the
Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect
on such day plus ½ of 1% and (c) the Eurodollar Rate that would be calculated as
of such day (or, if such day is not a Business Day, as of the next preceding
Business Day) in respect of a proposed Eurodollar Loan with a one-month Interest
Period plus 1.0%. Any change in the ABR due to a change in the Prime Rate, the
Federal Funds Effective Rate or such Eurodollar Rate shall be effective as of
the opening of business on the day of such change in the Prime Rate, the Federal
Funds Effective Rate or such Eurodollar Rate, respectively.
“Applicable Payment Percentage” shall have the meaning assigned to such term in
Section 2.25.
“Applicable Percentage” shall mean the rate determined pursuant to the Pricing
Grid.
“Approved Fund” shall have the meaning assigned to such term in Section 9.4.
“Arrangers” shall mean J.P. Morgan Securities LLC, Merrill Lynch, Pierce,
Fenner & Smith Incorporated and Wells Fargo Securities, LLC.
“Asset Sale” shall mean the sale, transfer or other disposition (by way of
merger, casualty, condemnation or otherwise but excluding investments permitted
by Section 6.4) by any Group Member to any Person other than Polypore or any
Guarantor of (a) any Capital Stock of any of the Subsidiaries or Unrestricted
Subsidiaries (other than directors’ qualifying shares or the sale by any Person
of Capital Stock of such Person) or (b) any other assets of any Group Member
(other than (i) inventory, materials and equipment, damaged, obsolete or worn
out assets, scrap and Permitted Investments, in each case disposed of in the
ordinary course of business, (ii) licenses of intellectual property in the
ordinary course of business, (iii) dispositions between or among Polypore and
Domestic Subsidiaries, (iv) dispositions between or among Foreign Subsidiaries,
(v) dispositions of assets from Polypore or a Domestic Subsidiary to a Foreign
Subsidiary if the disposition were treated as an investment in the Foreign
Subsidiary and would be permitted by Section 6.4 and (vi) the Microporous
Disposition (provided that such exception shall only apply if, after giving
effect thereto and the application of the Net Cash Proceeds thereof, the pro
forma Senior Leverage Ratio (determined without giving effect to clause (ii) of
the definition thereof) is lower than 1.50 to 1.00)), provided, that any
Specified Disposition shall be deemed not to be an “Asset Sale” for purposes of
this Agreement.
2
“Assignee” shall have the meaning assigned to such term in Section 9.4(b).
“Assignment and Assumption” shall mean an Assignment and Assumption,
substantially in the form of Exhibit A or such other form as may be approved by
the Administrative Agent.
“Available Amount” shall mean an amount (which may be a negative number) equal
to (a) the sum of (i) $30,000,000 and (ii) the Restricted Available Amount minus
(b) any Specified Payment made prior to the relevant transaction, provided,
that, in connection with a particular transaction, the Restricted Available
Amount shall not be available if, at the time of such transaction or immediately
after giving effect thereto, (x) a Default or an Event of Default shall have
occurred and be continuing (or would result therefrom) or (y) Polypore is not
able to incur at least $1.00 of additional Indebtedness (other than Permitted
Indebtedness) in compliance with the incurrence test set forth in Section 6.1.
“Bankruptcy Event” shall mean with respect to any Person, such Person becomes
the subject of a bankruptcy or insolvency proceeding, or has had a receiver,
conservator, trustee, administrator, custodian, assignee for the benefit of
creditors or similar Person charged with the reorganization or liquidation of
its business appointed for it, or, in the good faith determination of the
Administrative Agent, has taken any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any such proceeding or appointment,
provided that a Bankruptcy Event shall not result solely by virtue of any
ownership interest, or the acquisition of any ownership interest, in such Person
by a Governmental Authority or instrumentality thereof, provided, further, that
such ownership interest does not result in or provide such Person with immunity
from the jurisdiction of courts within the United States or from the enforcement
of judgments or writs of attachment on its assets or permit such Person (or such
Governmental Authority or instrumentality) to reject, repudiate, disavow or
disaffirm any contracts or agreements made by such Person.
“Board” shall mean the Board of Governors of the Federal Reserve System of the
“Borrowing” shall mean (a) Loans of the same Class and Type made, converted or
single Interest Period is in effect, or (b) a Swingline Loan.
“Borrowing Request” shall mean a request by Polypore in accordance with the
terms of Section 2.3 and substantially in the form of Exhibit B, or such other
form as shall be approved by the Administrative Agent.
“Breakage Event” shall have the meaning assigned to such term in Section 2.15.
“Business Day” shall mean any day other than a Saturday, Sunday or day on which
banks in New York City are authorized or required by law to close; provided,
however, that when used in connection with a Eurodollar Loan, the term “Business
Day” shall also exclude any day on which banks are not open for dealings in
dollar deposits or euro deposits, as the case may be, in the London interbank
market.
“Capital Expenditures” shall mean, for any period, (a) the additions to
property, plant and equipment and other capital expenditures of Polypore and its
consolidated Subsidiaries that are (or should be) set forth in a consolidated
statement of cash flows of Polypore for such period prepared in accordance with
GAAP and (b) Capital Lease Obligations or Synthetic Lease Obligations incurred
by Polypore and its consolidated Subsidiaries during such period, but excluding
in each case (i) any such expenditure made to restore, replace or rebuild
property to the condition of such property immediately prior to any damage,
loss, destruction or condemnation of such property, to the extent such
expenditure is made with insurance
3
proceeds, condemnation awards or damage recovery proceeds relating to any such
damage, loss, destruction or condemnation, (ii) any such expenditure made as the
purchase price of any Permitted Acquisition, (iii) capital expenditures relating
to the construction or acquisition of any property that has been transferred to
a Person (other than any Group Member) pursuant to a sale-leaseback transaction
permitted under Section 6.3, (iv) interest capitalized during such period,
(v) the purchase price of equipment that is purchased during such period to the
extent the consideration therefor consists of any combination of (x) used or
surplus equipment traded in at the time of such purchase and (y) the proceeds of
a concurrent sale of used or surplus equipment, in each case, in the ordinary
course of business, (vi) the purchase price of equipment that is purchased
substantially contemporaneously with the trade-in of existing equipment to the
extent that the gross amount of the such price is reduced by the credit granted
by the seller of such equipment for the equipment being traded at such time or
(vii) any capital expenditures made with Net Cash Proceeds received from an
Asset Sale.
“Capital Lease Obligations” of any Person shall mean the obligations of such
leases on a balance sheet of such Person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance
with GAAP. For the avoidance of doubt, “Capital Lease Obligations” shall not
include obligations or liabilities of any Person to pay rent or other amounts
under any lease of (or other arrangement conveying the right to use) real or
personal property, or a combination thereof, which obligations would be required
to be accounted for as an operating lease under GAAP as existing on the
Restatement Effective Date; provided, that financial reporting obligations shall
not be affected by this sentence.
“Capital Stock” shall mean shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity interests in any Person.
“Cash Management Agreement” shall mean any agreement entered into by any Group
Member in respect of treasury, depository and cash management services,
purchasing card services, T&E card services, automated clearing house transfers
of funds or similar arrangements.
“Change in Control” shall mean any of the following events:
(a) any “person” or “group” (within the meaning of the Securities
Exchange Act of 1934 and the rules of the SEC thereunder as in effect on the
Restatement Effective Date) becomes, directly or indirectly, the beneficial
owner of Capital Stock in Polypore representing more than 40% of the aggregate
ordinary voting power represented by the issued and outstanding Capital Stock of
Polypore;
(b) at any time, occupation of a majority of the seats (other than
vacant seats) on the board of directors of Polypore by persons who were neither
(i) nominated by the board of directors of Polypore nor (ii) appointed by
directors so nominated; or
(c) the occurrence of any change in control or similar event (however
denominated) with respect to Polypore under and as defined in any indenture or
agreement in respect of Material Indebtedness to which any Group Member is a
party.
“Change in Law” shall mean (a) the adoption of any law, rule or regulation after
the Restatement Effective Date, (b) any change in any law, rule or regulation or
in the interpretation or application thereof by any Governmental Authority after
the Restatement Effective Date or (c) compliance by any Lender or the Issuing
Bank (or, for purposes of Section 2.14, by any lending office of such Lender or
by such Lender’s or Issuing Bank’s holding company, if any) with any request,
guideline or directive (whether or
4
not having the force of law) of any Governmental Authority made or issued after
the Restatement Effective Date.
“Charges” shall have the meaning assigned to such term in Section 9.9.
“Class”, when used in reference to any Loan or Borrowing, refers to whether such
Loan, or the Loans comprising such Borrowing, are Revolving Loans, Term Loans,
Other Term Loans or Swingline Loans and, when used in reference to any
Commitment, refers to whether such Commitment is a Revolving Credit Commitment,
a Term Loan Commitment, an Incremental Term Loan Commitment or a Swingline
Commitment.
“Code” shall mean the Internal Revenue Code of 1986, as amended from time to
time.
“Co-Documentation Agents” shall have the meaning assigned to such term in the
preamble hereto.
“Collateral” shall mean all the “Collateral” as defined in any Security
Document, and shall include the Mortgaged Properties.
“Commitment” shall mean, with respect to any Lender, such Lender’s Revolving
Credit Commitment and/or Term Loan Commitment.
“Commitment Fee” shall have the meaning assigned to such term in Section 2.5(a).
“Confidential Information Memorandum” shall mean the Confidential Information
Memorandum of Polypore dated June 4, 2012.
“Consolidated EBITDA” shall mean, for any period, Consolidated Net Income for
such period plus (a) without duplication and to the extent deducted in
determining such Consolidated Net Income, the sum of (i) Consolidated Interest
Expense for such period, (ii) all income tax expense (including, without
limitation, income tax expense of consolidated Foreign Subsidiaries) and foreign
withholding tax expense for such period, (iii) all amounts attributable to
depreciation and amortization for such period, (iv) any non-recurring fees, cash
charges and other cash expenses made or incurred in connection with (A) the
Transactions (to the extent paid or otherwise accounted for within 180 days of
the consummation of the Transactions), (B) current and future permitted
financing transactions and (C) retirements, purchases and redemptions of the
Senior Notes (including, without limitation, premiums paid and costs incurred in
connection therewith), (v) (A) facilities relocation or closing costs,
(B) non-recurring restructuring costs and (C) integration costs and fees,
including cash severance costs, in connection with Permitted Acquisitions, in
each case incurred during such period and payable in cash, in an aggregate
amount under this clause (v) not to exceed $10,000,000 for such period and
(vi) any other non-cash charges (other than the write-down of current assets),
impairments and expenses for such period (including amortization of loan
acquisition costs and unrealized gains and losses on Hedging Agreements and
gains and losses on foreign exchange (including in respect of intercompany
notes)) minus (b) without duplication (i) all cash payments made during such
period on account of non-cash charges added to Consolidated Net Income pursuant
to clause (a)(vi) above in such period or in a previous period and (ii) to the
extent included in determining such Consolidated Net Income, any non-cash items
of income (other than normal accruals in the ordinary course of business) for
such period, all determined on a consolidated basis in accordance with GAAP.
“Consolidated Interest Coverage Ratio” shall mean, for any period, the ratio of
(a) Consolidated EBITDA for such period to (b) Consolidated Interest Expense for
such period.
5
“Consolidated Interest Expense” shall mean, for any period, the sum of (a) the
interest expense (including (i) imputed interest expense in respect of Capital
Lease Obligations and Synthetic Lease Obligations, (ii) interest or other fees
in the nature of interest or discount accrued and paid or payable in connection
with a Qualified Securitization Transaction and (iii) dividends paid in respect
of Preferred Stock), net of cash interest income of Polypore and its
Subsidiaries for such period, determined on a consolidated basis in accordance
with GAAP, plus (b) any interest accrued during such period in respect of
Indebtedness of Polypore or any Subsidiary that is required to be capitalized
rather than included in consolidated interest expense for such period in
accordance with GAAP. For purposes of the foregoing, interest expense shall be
determined (a) by excluding non-cash interest expense and amortization of
deferred financing costs and original issue discount and (b) after giving effect
to any net payments made or received by Polypore or any Subsidiary with respect
to interest rate Hedging Agreements.
“Consolidated Net Income” shall mean, for any period, the aggregate net income
(or loss) of Polypore and its Subsidiaries for such period on a consolidated
basis, in accordance with GAAP and without any deduction in respect of preferred
stock dividends; provided that there shall be excluded therefrom to the extent
otherwise included, without duplication: (a) gains and losses from Asset Sales
(without regard to the $2,500,000 limitation set forth in the definition
thereof) and the Microporous Disposition and the related tax effects according
to GAAP; (b) gains and losses due solely to fluctuations in currency values and
the related tax effects according to GAAP; (c) all extraordinary, unusual or
non-recurring charges, gains and losses (including, without limitation, all
restructuring costs, acquisition integration costs and fees, including cash
severance payments made in connection with acquisitions, and any expense or
charge related to the repurchase of Capital Stock or warrants or options to
purchase Capital Stock), and the related tax effects according to GAAP; (d) the
net income (but not loss) of any Subsidiary to the extent that the declaration
of dividends or similar distributions by that Subsidiary of that income is
prohibited by contract, operation of law or otherwise provided, however, that a
Foreign Subsidiary may agree to restrict its ability to declare dividends or
similar distributions without excluding the net income of such Foreign
Subsidiary from Consolidated Net Income if (i) the agreement that restricts such
ability relates to Indebtedness of such Foreign Subsidiary described in clause
(xiii) of the definition of “Permitted Indebtedness,” (ii) the proceeds thereof
are used, directly or indirectly through intercompany transfers, to permanently
repay the Loans, and (iii) the net income of such Foreign Subsidiary, together
with the net income of each other Foreign Subsidiary subject to a similar
restriction, does not exceed 10% of Consolidated Net Income; (e) the net loss of
any Person, other than a Subsidiary; (f) the net income of any Person, other
than a Guarantor or a Wholly Owned Subsidiary, except to the extent of cash
dividends or distributions paid to Polypore, a Guarantor or a Wholly Owned
Subsidiary; (g) in the case of a successor to the referent Person by
consolidation or merger or as a transferee of the referent Person’s assets, any
earnings of the successor corporation prior to such consolidation, merger or
transfer of assets; (h) any non-cash compensation charges and deferred
compensation charges, including any arising from existing stock options
resulting from any merger or recapitalization transaction; provided, however,
that Consolidated Net Income for any period shall be reduced by any cash
payments made during such period by such Person in connection with any such
deferred compensation, whether or not such reduction is in accordance with GAAP;
(i) inventory purchase accounting adjustments and amortization and impairment
charges resulting from other purchase accounting adjustments with respect to
acquisition transactions; and (j) unrealized gains and losses due solely to
fluctuations in currency values and related tax effects according to GAAP.
“Consolidated Total Indebtedness” shall mean, on any date, the total
Indebtedness of Polypore and the Subsidiaries on a consolidated basis on such
date.
“Control” shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ownership of voting securities,
6
by contract or otherwise, and the terms “Controlling” and “Controlled” shall
have meanings correlative thereto.
“Credit Event” shall have the meaning assigned to such term in Section 4.1.
“Credit Party” shall mean the Administrative Agent, the Issuing Lender, the
Swingline Lender or any other Lender, and for the purposes of Section 9.19 shall
include the Arrangers and the Syndication Agents.
“Current Assets” shall mean, at any time, the consolidated current assets (other
than cash and Permitted Investments) of Polypore and the Subsidiaries.
“Current Liabilities” shall mean, at any time, the consolidated current
liabilities of Polypore and the Subsidiaries at such time, but excluding,
without duplication, (a) the current portion of any long-term Indebtedness and
(b) outstanding Revolving Loans and Swingline Loans.
“Default” shall mean any event or condition which upon notice, lapse of time or
both would constitute an Event of Default.
“Defaulting Lender” shall mean any Lender that (a) has failed, within two
Business Days of the date required to be funded or paid, to (i) fund any portion
of its Loans, (ii) fund any portion of its participations in Letters of Credit
or Swingline Loans or (iii) pay over to any Loan Party any other amount required
to be paid by it hereunder, unless, in the case of clause (i) above, such Lender
notifies the Administrative Agent in writing that such failure is the result of
such Lender’s good faith determination that a condition precedent to funding
(specifically identified and including the particular default, if any) has not
been satisfied, (b) has notified Polypore or any Loan Party in writing, or has
made a public statement to the effect, that it does not intend or expect to
comply with any of its funding obligations under this Agreement (unless such
writing or public statement indicates that such position is based on such
Lender’s good faith determination that a condition precedent (specifically
identified and including the particular default, if any) to funding a loan under
this Agreement cannot be satisfied) or generally under other agreements in which
it commits to extend credit, (c) has failed, within three Business Days after
request by a Loan Party, acting in good faith, to provide a certification in
writing from an authorized officer of such Lender that it will comply with its
obligations (and is financially able to meet such obligations) to fund
prospective Loans and participations in then outstanding Letters of Credit and
Swingline Loans under this Agreement, provided that such Lender shall cease to
be a Defaulting Lender pursuant to this clause (c) upon such Loan Party’s
receipt of such certification in form and substance satisfactory to it and the
Administrative Agent, or (d) has become the subject of a Bankruptcy Event.
“Designated Preferred Stock” shall mean preferred stock that is so designated as
Designated Preferred Stock, pursuant to an Officers’ Certificate executed by the
principal executive officer and the principal financial officer of Polypore, on
the issuance date thereof, the cash proceeds of which are excluded from the
Available Amount.
“Disqualified Capital Stock” shall mean, with respect to any Person, any Capital
Stock which by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable at the option of the holder) or upon
the happening of any event: (i) matures or is mandatorily redeemable (other than
redeemable only for Capital Stock of such Person which is not itself
Disqualified Capital Stock) pursuant to a sinking fund obligation or otherwise;
(ii) is convertible or exchangeable at the option of the holder for Indebtedness
or Disqualified Capital Stock (excluding Capital Stock which is convertible or
exchangeable solely at the option of Polypore or a Subsidiary); or (iii) is
mandatorily redeemable or must
7
be purchased upon the occurrence of certain events or otherwise, in whole or in
part; in each case (x) in the case of Polypore, on or prior to (a) the final
maturity date of the Term Loans or (b) the date on which there are no Loans or
Commitments outstanding or (y) in the case of a Subsidiary, at any time;
provided, however, that any Capital Stock that would not constitute Disqualified
Capital Stock but for provisions thereof giving holders thereof the right to
require such Person to purchase or redeem such Capital Stock upon the occurrence
of an “asset sale” or “change of control” occurring prior to the final maturity
date of the Term Loans shall not constitute Disqualified Capital Stock if:
(A) the “asset sale” or “change of control” provisions applicable to such
Capital Stock are not more favorable to the holders of such Capital Stock than
the terms described in Sections 4.10 and 4.15, respectively, of the Senior Note
Indenture as in effect on the Restatement Effective Date; and (B) any such
requirement only becomes operative after (1) compliance with such terms
applicable to the Senior Notes, including the purchase of any Senior Notes
tendered pursuant thereto and (2) payment in full of all amounts owing under
this Agreement and the termination of the Commitments. The amount of any
Disqualified Capital Stock that does not have a fixed redemption, repayment or
repurchase price will be calculated in accordance with the terms of such
Disqualified Capital Stock as if such Disqualified Capital Stock were redeemed,
repaid or repurchased on any date on which the amount of such Disqualified Stock
is to be determined pursuant to this Agreement; provided, however, that if such
Disqualified Capital Stock could not be required to be redeemed, repaid or
repurchased at the time of such determination, the redemption, repayment or
repurchase price will be the book value of such Disqualified Capital Stock as
reflected in the most recent internal financial statements of such Person.
“Dollars” and “$” shall mean dollars in lawful currency of the United States.
“Domestic Subsidiaries” shall mean all Subsidiaries incorporated or organized
under the laws of the United States of America, any State thereof or the
District of Columbia. If a Foreign Subsidiary becomes a Guarantor and complies
with the provisions of Section 5.9 as to collateral, Polypore may elect by
written notice to the Administrative Agent to treat such Subsidiary as a
Domestic Subsidiary for purposes of the Loan Documents; provided, that the
Administrative Agent concludes, in its reasonable discretion, that the Lenders
would have substantially the same rights against such Subsidiary pursuant to the
Security Documents under the law of the relevant foreign jurisdiction as the
Lenders would have if such Subsidiary were organized in the United States of
America.
“Environmental Laws” shall mean all former, current and future Federal, state,
local and foreign laws (including common law), treaties, regulations, rules,
ordinances, codes, decrees, judgments, directives having the force of law and
orders (including consent orders), in each case, relating to protection of the
environment, natural resources, human health and safety or the presence, Release
of, or exposure to, Hazardous Materials, or the generation, manufacture,
processing, distribution, use, treatment, storage, transport, recycling or
handling of, or the arrangement for such activities with respect to, Hazardous
Materials.
“Environmental Liability” shall mean all liabilities, obligations, damages,
losses, claims, actions, suits, judgments, orders, fines, penalties, fees,
expenses and costs (including administrative oversight costs, natural resource
damages and remediation costs), whether contingent or otherwise, arising out of
or relating to (a) compliance or non-compliance with any Environmental Law,
(d) the Release of any Hazardous Materials or (e) any contract, agreement or
“Environmental Permits” shall mean any and all permits, licenses, approvals,
registrations, notifications, exemptions and any other authorization pursuant to
any Environmental Law.
8
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as the
same may be amended from time to time.
“ERISA Affiliate” shall mean any trade or business (whether or not incorporated)
that is under common control with Polypore within the meaning of Section 4001 of
ERISA or that, together with Polypore, is treated as a single employer under
“ERISA Event” shall mean (a) any “reportable event”, as defined in Section 4043
of ERISA or the regulations issued thereunder, with respect to a Plan (other
than an event for which the 30-day notice period is waived as of the date on
which the representations contained herein are made or deemed made); (b) the
failure of Polypore or any ERISA Affiliate to make by its due date a required
installment under Section 430(j) of the Code with respect to any Plan or any
failure by any Plan to satisfy the minimum funding standards (within the meaning
of Section 412 of the Code or Section 302 of ERISA) applicable to such Plan,
whether or not waived; (c) the filing pursuant to Section 412 of the Code or
Section 302 of ERISA of an application for a waiver of the minimum funding
standard with respect to any Plan; (d) the incurrence by Polypore or any of its
ERISA Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan or the withdrawal or partial withdrawal of Polypore or
any of its ERISA Affiliates from any Plan or Multiemployer Plan; (e) the receipt
by Polypore or any of its ERISA Affiliates from the PBGC or a plan administrator
of any notice relating to the intention to terminate any Plan or Plans or to
appoint a trustee to administer any Plan; (f) a determination by the Plan’s
actuaries that any Plan is, or is reasonably expected in the next twelve (12)
months to be, in “at risk” status (within the meaning of Section 430 of the Code
or Section 303 of ERISA; (g) the receipt by Polypore or any of its ERISA
Affiliates of a written notice, or the receipt by any Multiemployer Plan from
Polypore or any of its ERISA Affiliates of a written notice, concerning the
actual imposition of Withdrawal Liability or a formal conclusive determination
that a Multiemployer Plan is, or is expected in the next twelve (12) months to
be, Insolvent, in Reorganization, in “endangered” or “critical” status (within
the meaning of Section 432 of the Code or Section 305 of ERISA), or terminated
(within the meaning of Section 4041A of ERISA); (h) the occurrence of a
“prohibited transaction” with respect to which any Group Member is a
“disqualified person” (within the meaning of Section 4975 of the Code) or with
respect to which any Group Member could otherwise be liable that could
reasonably result in a liability of Polypore or any Group Member; or (i) any
other event or condition with respect to a Plan or Multiemployer Plan that could
reasonably result in liability of any Group Members.
“Eurodollar Base Rate” shall mean with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, the rate per annum determined on the
basis of the rate for deposits in Dollars for a period equal to such Interest
Period commencing on the first day of such Interest Period appearing on the
Reuters Screen LIBOR01 Page as of 11:00 A.M., London time, two Business Days
prior to the beginning of such Interest Period. In the event that such rate
does not appear on such page (or otherwise on such screen), the “Eurodollar Base
Rate” shall be determined by reference to such other comparable publicly
available service for displaying Eurodollar rates as may be selected by the
Administrative Agent or, in the absence of such availability, by reference to
the rate at which Dollar deposits of $5,000,000 and for a maturity comparable to
such Interest Period are offered by the principal London office of the
market at approximately 11:00 A.M., London time, two Business Days prior to the
“Eurodollar Rate” shall mean, with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, a rate per annum determined for such day
in accordance with the following formula (rounded upward to the nearest 1/100th
of 1%):
9
Eurodollar Base Rate
1.00 - Eurodollar Reserve Requirements
“Eurodollar Reserve Requirements” shall mean, for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the maximum rates
(expressed as a decimal fraction) of reserve requirements in effect on such day
(including basic, supplemental, marginal and emergency reserves) under any
regulations of the Board or other Governmental Authority having jurisdiction
with respect thereto dealing with reserve requirements prescribed for Eurodollar
funding (currently referred to as “Eurodollar Liabilities” in Regulation D of
the Board) maintained by a member bank of the Federal Reserve System.
rate determined by reference to the Eurodollar Rate.
“Eurodollar Tranche” shall mean the collective reference to Eurodollar Loans
under a particular Facility the then current Interest Periods with respect to
all of which begin on the same date and end on the same later date (whether or
not such Loans shall originally have been made on the same day).
“Event of Default” shall have the meaning assigned to such term in Article VII.
“Excess Cash Flow” shall mean, for any fiscal year of Polypore, the excess of
(a) the sum, without duplication, of (i) Consolidated EBITDA for such fiscal
year and (ii) reductions to noncash working capital of Polypore and the
Subsidiaries for such fiscal year (i.e., the decrease, if any, in Current Assets
minus Current Liabilities from the beginning to the end of such fiscal year)
over (b) the sum, without duplication, of (i) all income tax expense (including,
without limitation, income tax expense of consolidated Foreign Subsidiaries) and
foreign withholding tax expense for such fiscal year to the extent paid in cash,
(ii) Consolidated Interest Expense for such fiscal year payable in cash,
(iii) Capital Expenditures made in cash and cash expenditures in connection with
Permitted Acquisitions during such fiscal year, in each case except to the
extent financed with the proceeds of Indebtedness, equity issuances or other
proceeds that would not be included in Consolidated EBITDA for such fiscal year,
(iv) permanent repayments of Indebtedness (other than mandatory prepayments of
Loans under Section 2.13), including the principal component of Capitalized
Lease Obligations and Synthetic Lease Obligations, made by Polypore and the
Subsidiaries during such fiscal year, but only to the extent that such
prepayments by their terms cannot be reborrowed or redrawn and do not occur in
connection with a refinancing of all or any portion of such Indebtedness,
(v) additions to noncash working capital for such fiscal year (i.e., the
increase, if any, in Current Assets minus Current Liabilities from the beginning
to the end of such fiscal year), (vi) to the extent added to Consolidated Net
Income in determining Consolidated EBITDA, proceeds received by the Loan Parties
during such fiscal year from insurance claims with respect to casualty events,
business interruption or product recalls which reimburse prior business
expenses, (vii) to the extent added to Consolidated Net Income in determining
Consolidated EBITDA, cash indemnity payments received during such fiscal year
pursuant to indemnification provisions in any agreement in connection with any
Permitted Acquisition or any other investment permitted hereunder,
(viii) Restricted Payments made in such fiscal year to the extent such
Restricted Payments are permitted under Section 6.6(b), (ix) to the extent not
deducted from Consolidated Net Income in determining Consolidated EBITDA, letter
of credit fees paid in such fiscal year, (x) all extraordinary cash charges for
such fiscal year, (xi) to the extent included in determining Consolidated EBITDA
or added to Consolidated Net Income in determining Consolidated EBITDA,
non-recurring cash charges for such fiscal year, (xii) to the extent added to
Consolidated Net Income in determining Consolidated EBITDA, losses from
discontinued operations for such fiscal year, (xiii) cash expenditures made in
respect of Hedging Agreements during such fiscal year to the extent not
reflected in the computation of Consolidated EBITDA, (xiv) to the extent not
deducted from Consolidated Net Income in determining Consolidated EBITDA, cash
payments for employment benefits made during such fiscal year; and (xv) to the
extent not deducted from Consolidated Net Income in determining Consolidated
EBITDA, cash
10
payments for reserves deemed appropriate by Polypore for environmental
liabilities during such fiscal year (unless such cash payments relate to
reserves previously excluded from Consolidated EBITDA pursuant to clause (B) of
the next sentence). For purposes of computation of Excess Cash Flow,
Consolidated EBITDA shall be computed by excluding (A) items (iv) and (v) of
clause (a) of the definition of Consolidated EBITDA to the extent such items are
paid in cash during such fiscal year, (B) without duplication of clause
(b)(xv) above and to the extent added to Consolidated Net Income in determining
Consolidated EBITDA, reserves deemed appropriate by Polypore for environmental
liabilities for such fiscal year, (C) without duplication of clause
(b)(xiv) above and to the extent added to Consolidated Net Income in determining
Consolidated EBITDA, employment benefits for such fiscal year, (D) to the extent
added to Consolidated Net Income in determining Consolidated EBITDA, working
capital changes resulting from purchase accounting for such fiscal year and
(E) to the extent added to Consolidated Net Income in determining Consolidated
EBITDA and constituting noncash amounts, items (c), (e), (g), (h) and (i) of the
definition of Consolidated Net Income.
“Excluded Contributions” shall mean net cash proceeds, or property other than
cash that would constitute Permitted Investments or a Permitted Business, in
each case received by Polypore from:
(i) contributions to its common equity capital; and
(ii) the sale (other than to a Subsidiary or to any management equity
plan or stock option plan or any other management or employee benefit plan or
agreement of Polypore or any Subsidiary) of Capital Stock (other than
Disqualified Capital Stock) of Polypore,
in each case designated as Excluded Contributions pursuant to an Officers’
Certificate on the date such capital contributions are made or the date such
Capital Stock are sold, as the case may be, which are excluded from the
calculation of the Restricted Available Amount.
“Excluded Taxes” shall mean, with respect to the Administrative Agent, any
Lender, the Issuing Bank or any other recipient of any payment to be made by or
on account of any obligation of Polypore hereunder, (a) income or franchise
taxes imposed on (or measured by) its net income by the United States of
America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction described in clause (a) above, (c) in the case of a
Foreign Lender (other than an assignee pursuant to a request by Polypore under
Section 2.20(a)), any United States federal withholding tax that is imposed on
amounts payable to such Foreign Lender at the time such Foreign Lender becomes a
party to this Agreement (or designates a new lending office), except to the
time of designation of a new lending office (or assignment), to receive
additional amounts from Polypore with respect to such withholding tax pursuant
to Section 2.19(a), (d) any taxes attributable to a Lender’s failure to comply
with Section 2.19(e) and (e) any United States federal withholding taxes imposed
pursuant to FATCA.
“Executive Order” shall mean have the meaning assigned to such term in
Section 3.24.
“Existing Credit Agreement” shall have the meaning set forth in the recitals
hereto.
“Facility” shall mean each of (a) the Term Loan Commitments and the Term Loans
made thereunder (the “Term Facility”), (b) the Incremental Term Loan Commitments
and the Incremental Term Loans made thereunder (the “Incremental Term Facility”)
and (c) the Revolving Credit Commitments and the extensions of credit made
thereunder (the “Revolving Facility”).
11
“FATCA” shall mean Sections 1471 through 1474 of the Code, as of the date of
this Agreement (or any amended or successor version that is substantively
comparable and not materially more onerous to comply with) and any current or
future regulations or official interpretations thereof.
“Federal Funds Effective Rate” shall mean, for any day, the weighted average of
the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average of the
quotations for the day of such transactions received by JPMorgan Chase Bank,
N.A. from three federal funds brokers of recognized standing selected by it.
“Fee Letter” shall mean the Administrative Agent Fee Letter dated May 31, 2012,
between Polypore and the Administrative Agent.
“Fee Payment Date” shall mean (a) the third Business Day following the last day
of each March, June, September and December and (b) the Revolving Credit
Maturity Date.
“Fees” shall mean the Commitment Fees, the Administrative Agent Fees, the L/C
Participation Fees, the Issuing Bank Fees and any other fees payable by a Loan
Party pursuant to a fee agreement entered into with the Administrative Agent or
any other Lender.
“Financial Officer” of any Person shall mean the chief financial officer,
principal accounting officer, Treasurer or Controller of such Person.
“Foreign Assets Control Regulations” shall mean have the meaning assigned to
such term in Section 3.24.
“Foreign Lender” shall mean, under the relevant Facility, any Lender that is
organized under the laws of, or if different, of which the lending office is
located in, a jurisdiction other than that in which Polypore is located. For
purposes of this definition, the United States of America, each State thereof
and the District of Columbia shall be deemed to constitute a single
jurisdiction.
“Foreign Subsidiary” shall mean any Subsidiary that is not a Domestic
Subsidiary.
“Funding Office” shall mean the relevant office of the Administrative Agent
specified in Section 9.1 or such other office as may be specified from time to
time by the Administrative Agent as its funding office by written notice to
Polypore and the Lenders.
“GAAP” shall mean United States of America generally accepted accounting
principles.
“Governmental Authority” shall mean any Federal, state, local or foreign court
or governmental agency, authority, instrumentality or regulatory body, including
any central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government (including any supra-national bodies such as the European Union or
the European Central Bank).
“Group Members” shall mean the collective reference to Polypore and the
Subsidiaries.
“Guarantee” of or by any Person shall mean any obligation, contingent or
guaranteeing any Indebtedness or other obligation of any other Person (the
“primary obligor”) in any manner, whether directly or indirectly, and including
12
any obligation of such Person, direct or indirect, (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or
other obligation or to purchase (or to advance or supply funds for the purchase
of) any security for the payment of such Indebtedness or other obligation,
(b) to purchase or lease property, securities or services for the purpose of
assuring the owner of such Indebtedness or other obligation of the payment of
such Indebtedness or other obligation or (c) to maintain working capital, equity
capital or any other financial statement condition or liquidity of the primary
obligor so as to enable the primary obligor to pay such Indebtedness or other
obligation; provided, however, that the term “Guarantee” shall not include
endorsements for collection or deposit in the ordinary course of business.
“Guarantee and Collateral Agreement” shall mean the Guarantee and Collateral
Agreement executed and delivered by Polypore and each Guarantor, in the form of
Exhibit C.
“Guarantors” shall mean each Subsidiary listed on Schedule 1.1(a), and each
other Subsidiary that is or becomes a party to the Guarantee and Collateral
Agreement.
“Hazardous Materials” shall mean (a) any petroleum products or byproducts and
all other hydrocarbons, coal ash, radon gas, asbestos, urea formaldehyde foam
insulation, polychlorinated biphenyls, chlorofluorocarbons and all other
ozone-depleting substances and (b) any chemical, material, substance or waste
that is prohibited, limited or regulated by or pursuant to any Environmental
Law.
“Hedging Agreement” shall mean any interest rate protection agreement, foreign
currency exchange agreement, commodity price protection agreement or other
interest or currency exchange rate or commodity price hedging arrangement.
“Inactive Subsidiary” shall mean any Subsidiary of Polypore that (a) does not
conduct any business operations, (b) has assets with a total book value not in
excess of $10,000 and (c) does not have any Indebtedness outstanding.
“Increased Facility Closing Date” shall mean any Business Day designated as such
in an Incremental Assumption Agreement.
“Incremental Amount” shall mean, at any time, the excess, if any, of
(a) $150,000,000 over (b) the aggregate amount of all Incremental Term Loan
Commitments plus the aggregate amount of all increases in the Revolving Credit
Commitments effected prior to such time pursuant to Section 2.23.
“Incremental Assumption Agreement” shall mean an Incremental Assumption
Agreement in form and substance reasonably satisfactory to the Administrative
Agent, among Polypore, the Administrative Agent and one or more Incremental
Lenders.
“Incremental Lender” shall mean a Lender with an Incremental Term Loan
Commitment or an outstanding Incremental Term Loan or that increases its
Revolving Credit Commitment pursuant to Section 2.23.
“Incremental Term Loan Borrowing” shall mean a Borrowing comprised of
Incremental Term Loans.
“Incremental Term Loan Commitment” shall mean the commitment of any Lender,
established pursuant to Section 2.23, to make Incremental Term Loans to
Polypore.
13
“Incremental Term Loan Maturity Date” shall mean the final maturity date of any
Incremental Term Loan, as set forth in the applicable Incremental Assumption
Agreement.
“Incremental Term Loan Repayment Dates” shall mean the dates scheduled for the
repayment of principal of any Incremental Term Loan, as set forth in the
applicable Incremental Assumption Agreement.
“Incremental Term Loans” shall mean Term Loans made by one or more Lenders to
Polypore pursuant to Section 2.1(b). Incremental Term Loans may be made in the
form of additional Term Loans or, to the extent permitted by Section 2.23 and
provided for in the relevant Incremental Assumption Agreement, Other Term Loans.
“Indebtedness” of any Person shall mean, without duplication, (a) all
obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments, (c) all
obligations of such Person under conditional sale or other title retention
agreements relating to property or assets purchased by such Person, (d) all
obligations of such Person issued or assumed as the deferred purchase price of
property or services (excluding trade accounts payable and accrued obligations
incurred in the ordinary course of business), (e) all Indebtedness of others
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien on property owned or
acquired by such Person, whether or not the obligations secured thereby have
been assumed (it being understood that, unless such Person shall have assumed
such obligations, the amount of such Indebtedness shall be the lesser of (x) the
fair market value of the property securing such Indebtedness and (y) the stated
principal amount of such Indebtedness), (f) all Guarantees by such Person of
Indebtedness of others, (g) all Capital Lease Obligations and Synthetic Lease
Obligations of such Person, (h) all outstanding reimbursement obligations of
such Person as an account party in respect of letters of credit, (i) all
obligations of such Person in respect of bankers’ acceptances, (j) all
obligations of such Person under or in respect of Hedging Agreements, (k) all
obligations of such Person under a Qualified Securitization Transaction or any
transaction of the type described in the definition thereof that does not meet
the criteria of a Qualified Securitization Transaction, in each case that would
be characterized as principal if such transaction were structured as a secured
lending transaction rather than as a purchase and (l) for the purposes of
Section 6.1 and the definition of “Total Leverage Ratio” only, all Disqualified
Capital Stock issued by such Person with the amount of Indebtedness represented
by such Disqualified Capital Stock being equal to the greater of its voluntary
or involuntary liquidation preference and its maximum fixed repurchase price or,
with respect to any Subsidiary, any Preferred Stock (but excluding, in each
case, accrued dividends, if any). For purposes of determining the amount of
Indebtedness of any Person under clause (j) of the preceding sentence, (i) in
the case of Section 6.1 and in determining the Total Leverage Ratio pursuant to
clause (i) of the definition of “Restricted Available Amount”, the amount of the
obligations of such Person in respect of any Hedging Agreement shall be equal at
any time to the termination value, as determined in good faith by Polypore’s
Board of Directors, which determination will be conclusive, of such agreement or
arrangement giving rise to such obligation that would be payable by such Person
at such time and (ii) in all other cases, the amount of the obligations of such
Person in respect of any Hedging Agreement at any time shall be zero prior to
the time any counterparty to such Hedging Agreement shall be entitled to
terminate such Hedging Agreement and, thereafter, shall be the maximum aggregate
amount (giving effect to any netting agreements) that such Person would be
required to pay if such Hedging Agreement were terminated at such time. The
Indebtedness of any Person shall include the Indebtedness of any partnership in
which such Person is a general partner only to the extent such Person is liable
therefor by contract, as a matter of law or otherwise, and shall not include any
Indebtedness of such partnership that is expressly non-recourse to such Person.
For clarification purposes, the liability of Polypore or any Guarantor to make
any periodic payments to licensors in consideration for the license of patents
and technical information under license agreements in existence on the
Restatement Effective Date and any amount payable in
14
respect of a settlement of disputes with respect to such payments thereunder,
shall not constitute Indebtedness. Notwithstanding any other provision of this
Agreement to the contrary, (i) the term “Indebtedness” shall not be deemed to
include (x) any earn-out obligation until such obligation becomes a liability on
the balance sheet of the applicable Person, (y) any deferred compensation
arrangements or (z) any non compete or consulting obligations incurred in
connection with Permitted Acquisitions and (ii) the amount of Indebtedness for
which recourse is limited either to a specified amount or to an identified asset
of such Person shall be deemed to be equal to such specified amount or the fair
market value of such identified asset, as the case may be.
Notwithstanding the foregoing, in connection with the purchase by Polypore or
any Subsidiary of any business, the term “Indebtedness” will exclude
post-closing payment adjustments to which the seller may become entitled to the
extent such payment is determined by a final closing balance sheet or such
payment depends on the performance of such business after the closing; provided,
however, that, at the time of closing, the amount of any such payment is not
determinable and, to the extent such payment thereafter becomes fixed and
determined, the amount is paid within 60 days thereafter.
For purposes hereof, the “maximum fixed repurchase price” of any Disqualified
Capital Stock which does not have a fixed repurchase price shall be calculated
in accordance with the terms of such Disqualified Capital Stock as if such
Disqualified Capital Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to this Agreement, and if such price
is based upon, or measured by, the fair market value of such Disqualified
Capital Stock, such fair market value shall be determined reasonably and in good
faith by the Board of Directors of the issuer of such Disqualified Capital
Stock. For the purposes of calculating the amount of Indebtedness of a
Securitization Entity outstanding as of any date, the face or notional amount of
any interest in receivables or equipment that is outstanding as of such date
shall be deemed to be Indebtedness but any such interests held by Affiliates of
such Securitization Entity shall be excluded for purposes of such calculation.
“Indemnified Taxes” shall mean Taxes other than Excluded Taxes.
“Indemnitee” shall have the meaning assigned to such term in Section 9.5.
“Insolvent” shall mean, with respect to any Multiemployer Plan, the condition
that such plan is insolvent within the meaning of Section 4245 of ERISA.
“Interest Payment Date” shall mean (a) as to any ABR Loan (other than any
Swingline Loan), the last day of each March, June, September and December to
occur while such Loan is outstanding and the final maturity date of such Loan,
(b) as to any Eurodollar Loan having an Interest Period of three months or less,
the last day of such Interest Period, (c) as to any Eurodollar Loan having an
Interest Period longer than three months, each day that is three months, or a
whole multiple thereof, after the first day of such Interest Period and the last
day of such Interest Period, (d) as to any Loan (other than any Revolving Loan
that is an ABR Loan and any Swingline Loan), the date of any repayment or
prepayment made in respect thereof and (e) as to any Swingline Loan, the day
that such Loan is required to be repaid.
“Interest Period” shall mean, as to any Eurodollar Loan, (a) initially, the
period commencing on the borrowing or conversion date, as the case may be, with
respect to such Eurodollar Loan and ending one, two, three or six or (if agreed
to by all Lenders under the relevant Facility) nine or twelve months thereafter,
as selected by Polypore in its notice of borrowing or notice of conversion, as
the case may be, given with respect thereto; and (b) thereafter, each period
such Eurodollar Loan and ending one, two, three or six or (if agreed to by all
Lenders under the relevant Facility) nine or twelve months thereafter, as
selected by Polypore by irrevocable notice to the Administrative Agent not later
than 11:00 A.M., New York City
15
time, on the date that is three Business Days prior to the last day of the then
current Interest Period with respect thereto; provided that, all of the
foregoing provisions relating to Interest Periods are subject to the following:
(i) if any Interest Period would otherwise end on a day that is not a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless the result of such extension would be to carry such Interest
Period into another calendar month in which event such Interest Period shall end
on the immediately preceding Business Day;
(ii) Polypore may not select an Interest Period under a particular
Facility that would extend beyond the Revolving Credit Maturity Date or beyond
the date final payment is due on the relevant Term Loans, as the case may be;
and
(iii) any Interest Period that begins on the last Business Day of a
in the calendar month at the end of such Interest Period) shall end on the last
Business Day of a calendar month.
“Investment” or “investment” shall have the meaning assigned to such term in
Section 6.4.
“Issuing Bank” shall mean, as the context may require, (a) JPMorgan Chase Bank,
N.A., in its capacity as the issuer of Letters of Credit hereunder, and (b) any
other Lender that may become an Issuing Bank pursuant to Section 2.22(i) or
2.22(k), with respect to Letters of Credit issued by such Lender. The Issuing
Bank may, in its discretion, arrange for one or more Letters of Credit to be
issued by Affiliates of the Issuing Bank, in which case the term “Issuing Bank”
shall include any such Affiliate with respect to Letters of Credit issued by
such Affiliate.
“Issuing Bank Fees” shall have the meaning assigned to such term in
Section 2.5(c).
“L/C Commitment” shall mean the commitment of the Issuing Bank to issue Letters
of Credit pursuant to Section 2.22.
“L/C Disbursement” shall mean a payment or disbursement made by the Issuing Bank
pursuant to a Letter of Credit.
“L/C Exposure” shall mean at any time the sum of (a) the aggregate undrawn
amount of all outstanding Letters of Credit at such time and (b) the aggregate
principal amount of all L/C Disbursements that have not yet been reimbursed at
such time. The L/C Exposure of any Revolving Credit Lender at any time shall
equal its Pro Rata Percentage of the aggregate L/C Exposure at such time.
“L/C Participation Fee” shall have the meaning assigned to such term in
“Lenders” shall mean (a) the Persons listed on Schedule 2.1 (other than any such
Person that has ceased to be a party hereto pursuant to an Assignment and
Assumption) and (b) any Person that has become a party hereto pursuant to an
Assignment and Assumption. Unless the context clearly indicates otherwise, the
term “Lenders” shall include the Swingline Lender.
“Lender Parent” shall mean, with respect to any Lender, any Person as to which
such Lender is, directly or indirectly, a Subsidiary.
“Letter of Credit” shall mean any letter of credit issued pursuant to
Section 2.22.
16
“Lien” shall mean, with respect to any asset, (a) any mortgage, deed of trust,
lien, pledge, encumbrance, charge or security interest in or on such asset,
(b) the interest of a vendor or a lessor under any conditional sale agreement,
capital lease or title retention agreement (or any financing lease having
substantially the same economic effect as any of the foregoing) relating to such
asset and (c) in the case of securities, any purchase option, call or similar
right of a third party with respect to such securities.
“Loan Documents” shall mean this Agreement, the Letters of Credit, the Security
Documents, any fee letters entered into between any Loan Party and the
Administrative Agent or any Lender and each Incremental Assumption Agreement.
“Loan Parties” shall mean Polypore and the Guarantors.
“Loans” shall mean the Revolving Loans, the Term Loans and the Swingline Loans.
“Margin Stock” shall have the meaning assigned to such term in Regulation U.
“Material Adverse Effect” shall mean (a) a materially adverse effect on the
business, operations, assets, liabilities, financial condition or results of
operations of the Group Members, taken as a whole, (b) a material impairment of
the ability of Polypore or any other Loan Party to perform any of its
obligations under any Loan Document to which it is or will be a party or (c) a
material impairment of the rights of or benefits available to the Lenders under
any Loan Document.
“Material Indebtedness” shall mean Indebtedness (other than the Loans and
Letters of Credit) of any one or more Group Members in an aggregate principal
amount exceeding $20,000,000.
“Material Subsidiary” shall mean, at any time, any Subsidiary which at such time
shall be a “significant subsidiary” of Polypore within the meaning of Regulation
S-X of the SEC as in effect on the Restatement Effective Date; provided, that
Polypore and its Material Subsidiaries shall at all times have assets during the
term of this Agreement constituting at least 90% of Polypore’s consolidated
total assets; provided, further, that each Subsidiary which owns any
Intellectual Property (other than Intellectual Property with an aggregate fair
market value of less than $1,500,000) shall be deemed to be a Material
Subsidiary hereunder.
“Materials of Environmental Concern” shall mean any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products, asbestos,
polychlorinated biphenyls and urea-formaldehyde insulation, molds, pollutants,
contaminants, radioactivity, radiofrequency radiation or any other radiation
associated with or allegedly associated with the telecommunications business,
and any other substance of any kind that is regulated pursuant to or gives rise
to liability under any applicable Environmental Law.
“Maximum Rate” shall have the meaning assigned to such term in Section 9.9.
“Microporous Disposition” shall mean the sale of the business and/or assets (or
interests in Persons to the extent containing such assets or business) of
Microporous Products acquired by Polypore and its Subsidiaries in 2008, together
with associated assets resulting from post-acquisition expenditures and
activities, in each case to the extent one or more Loan Parties are ordered to
consummate such disposition by one or more Governmental Authorities.
“Mortgaged Properties” shall mean, initially, the real properties owned or
leased by the Loan Parties specified on Schedule 1.1(b), and shall include each
parcel of real property and improvements thereto with respect to which a
Mortgage is granted pursuant to Section 5.9.
17
“Mortgages” shall mean the mortgages, deeds of trust, leasehold mortgages,
assignments of leases and rents, modifications and other security documents
delivered by any Loan Party in connection with the Existing Credit Agreement or
pursuant to Section 5.9, each substantially in the form of Exhibit F.
“Multiemployer Plan” shall mean a multiemployer plan as defined in
“Net Cash Proceeds” shall mean (a) with respect to any Asset Sale or Recovery
Event, the cash proceeds (including cash proceeds subsequently received (as and
when received) in respect of noncash consideration initially received), net of
(i) selling expenses (including reasonable broker’s and investment banking fees
or commissions, legal, environmental assessment, appraisal and consultant’s
fees, transfer and similar taxes and Polypore’s good faith estimate of income
taxes paid or payable in connection with such sale), (ii) amounts provided as a
reserve, in accordance with GAAP, against (A) any liabilities under any
indemnification obligations or purchase price adjustment associated with such
Asset Sale and (B) any liabilities associated with such asset or assets and
retained by Polypore or any of its Subsidiaries after such sale or other
disposition thereof, including, without limitation, pension and other
post-employment benefit liabilities and liabilities related to environmental
matters or against any indemnification obligations associated with such
transaction (provided, that, to the extent and at the time any such amounts are
released from such reserve, such amounts shall constitute Net Cash Proceeds) and
(iii) the principal amount, premium or penalty, if any, interest and other
amounts on any Indebtedness for borrowed money which is secured by the asset
sold in such Asset Sale or the asset relating to such Recovery Event, as
applicable, and which is required to be repaid with such proceeds (other than
any such Indebtedness assumed by the purchaser of such asset); provided,
however, that, if (x) Polypore shall deliver a certificate of a Financial
Officer to the Administrative Agent at the time of receipt thereof setting forth
Polypore’s intent to reinvest such proceeds in productive assets of a kind used
or useful in the business of Polypore and its Subsidiaries within 365 days of
receipt of such proceeds and (y) no Default or Event of Default shall have
occurred and shall be continuing at the time of such certificate or at the
proposed time of the application of such proceeds, such proceeds shall not
constitute Net Cash Proceeds except to the extent not so used or contractually
committed to be used at the end of such 365-day period, at which time such
proceeds shall be deemed to be Net Cash Proceeds (provided, that any such
proceeds that are excluded from Net Cash Proceeds because they have been
contractually committed to be used, but not actually used, by the end of such
365-day period shall be deemed to be Net Cash Proceeds on the date that is 120
days after the end of such 365-day period, unless they have been actually used
prior thereto); and (b) with respect to any issuance or disposition of
Indebtedness, the cash proceeds thereof, net of all taxes and fees (including
investment banking fees, underwriting discounts, commissions, costs and other
out-of-pocket expenses and other customary expenses) incurred in connection
therewith.
“Non-U.S. Lender” shall have the meaning assigned to such term in
Section 2.19(e)(ii)(B).
“Obligations” shall mean the unpaid principal of and interest on (including
interest accruing after the maturity of the Loans (including the Incremental
Term Loans) and Reimbursement Obligations and interest accruing after the filing
of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to Polypore, whether or not a claim
for post-filing or post-petition interest is allowed in such proceeding) the
Loans and all other obligations and liabilities of Polypore to the
Administrative Agent or to any Lender (or, in the case of Specified Hedging
Agreements or Specified Cash Management Agreements, any affiliate of any
Lender), whether direct or indirect, absolute or contingent, due or to become
due, or now existing or hereafter incurred, which may arise under, out of, or in
connection with, this Agreement, any other Loan Document, the Letters of Credit,
any Specified Hedging Agreement, any Specified Cash Management Agreement or any
other document made, delivered or given in connection herewith or therewith,
whether on account of principal, interest,
18
reimbursement obligations, fees, indemnities, costs, expenses (including all
fees, charges and disbursements of counsel to the Administrative Agent or to any
Lender that are required to be paid by Polypore pursuant hereto) or otherwise.
“Officers’ Certificate” shall mean a certificate signed on behalf of Polypore by
two officers of Polypore, one of whom must be the principal executive officer,
the principal financial officer, the treasurer or the principal accounting
officer of Polypore.
“Other Taxes” shall mean any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made under any Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, any Loan Document.
“Other Term Loans” shall have the meaning assigned to such term in
Section 2.23(a).
“Participant” shall have the meaning assigned to such term in Section 9.4(c).
“Participant Register” shall have the meaning assigned to such term in
Section 9.4(c).
“Patriot Act shall have the meaning assigned to such term in Section 9.17.
“Payment Percentage” shall have the meaning assigned to such term in
Section 2.25.
“PBGC” shall mean the Pension Benefit Guaranty Corporation referred to and
defined in ERISA.
“Perfection Certificate” shall mean the Perfection Certificate substantially in
the form of Exhibit D, prepared by Polypore.
“Permitted Acquisition” shall mean any acquisition not prohibited by this
Agreement.
“Permitted Business” shall mean any business (including stock or assets) that
derives a majority of its revenues from the business engaged in by Polypore and
its Subsidiaries on the Restatement Effective Date and/or activities that are
reasonably similar, ancillary or related to, or a reasonable extension,
development or expansion of, the businesses in which Polypore and its
Subsidiaries are engaged on the Restatement Effective Date.
“Permitted Indebtedness” shall mean, without duplication, each of the following:
(i) Indebtedness under the Senior Notes outstanding on the
Restatement Effective Date and the Guarantees thereof outstanding on the
Restatement Effective Date;
(ii) Indebtedness of the Loan Parties under the Loan Documents;
(iii) other Indebtedness of Polypore and its Subsidiaries outstanding
on the Restatement Effective Date described on Schedule 6.1;
(iv) Hedging Agreements of Polypore or any of its Subsidiaries covering
Indebtedness of Polypore or any of its Subsidiaries; provided, however, that, if
applicable, any Indebtedness to which any such Hedging Agreements correspond is
otherwise permitted to be incurred under this Agreement; and provided, further,
that such Hedging Agreements are not entered into, in the judgment of Polypore,
for speculative purposes;
19
(v) unsecured intercompany Indebtedness between or among Polypore and
any such Subsidiaries (other than a Securitization Entity); provided, however,
that: (a) if any Loan Party is the obligor on such Indebtedness and the payee is
a Subsidiary that is not a Guarantor, such Indebtedness is expressly
subordinated to the prior payment in full in cash of all obligations of such
Loan Party under the Loan Documents to which it is a party; and (b)(1) any
subsequent issuance or transfer of Capital Stock or any other event which
results in any such Indebtedness being beneficially held by a Person other than
Polypore or a Subsidiary (other than a Securitization Entity) thereof; and
(2) any sale or other transfer of any such Indebtedness to a Person that is not
either Polypore or a Subsidiary (other than a Securitization Entity) thereof
(other than by way of granting a Lien permitted under this Agreement or in
connection with the exercise of remedies by a secured creditor) shall be deemed,
in each case, to constitute an incurrence of such Indebtedness by Polypore or
such Subsidiary, as the case may be, that was not permitted by this clause (v);
(vi) Indebtedness (including Capital Lease Obligations) incurred to
finance the purchase, lease or improvement of property (real or personal) or
equipment (whether through the direct purchase of assets or the Capital Stock of
any Person owning such assets and no other material assets) in an aggregate
principal amount outstanding not to exceed the greater of (a) $20,000,000 and
(b) 1.5% of Total Assets, provided, that such Indebtedness is incurred prior to
or within 180 days after such purchase, lease or improvement;
(vii) Refinancing Indebtedness;
(viii) guarantees by Polypore and its Subsidiaries of each other’s
Indebtedness; provided, however, that such Indebtedness is permitted to be
incurred under this Agreement; provided, further, that in the event such
Indebtedness (other than Acquired Indebtedness) is incurred pursuant to the
incurrence test set forth in Section 6.1, such guarantees are by Polypore or a
Guarantor only; and provided, further, that the Indebtedness of any Subsidiary
that is not a Guarantor may only be so guaranteed by another Subsidiary that is
not a Guarantor;
(ix) Indebtedness arising from agreements of Polypore or a Subsidiary
of Polypore providing for indemnification, adjustment of purchase price,
earn-out or other similar obligations, in each case, incurred or assumed in
connection with the disposition of any business, assets or Capital Stock of a
Subsidiary of Polypore, other than guarantees of Indebtedness incurred by any
Person acquiring all or any portion of such business, assets or Subsidiary for
the purpose of financing such acquisition; provided, however, that the maximum
assumable liability in respect of all such Indebtedness shall at no time exceed
the gross proceeds actually received by Polypore and its Subsidiaries in
connection with such disposition;
(x) obligations in respect of performance and surety bonds and
completion guarantees provided by Polypore or any Subsidiary of Polypore in the
(xi) Indebtedness of a Securitization Entity incurred in a Qualified
Securitization Transaction that is non-recourse to Polypore or any Subsidiary of
Polypore (except for Standard Securitization Undertakings); provided, however,
after giving pro forma effect to the incurrence of such Indebtedness, Polypore
is in compliance with Section 6.10 and no Default or Event of Default shall
have occurred and be continuing;
(xii) additional Indebtedness of Polypore and the Domestic Subsidiaries
in an aggregate principal amount which does not exceed $50,000,000 at any one
time outstanding
20
which amount may, but need not, be incurred in whole or in part under a credit
facility (it being understood that any Indebtedness or Preferred Stock incurred
pursuant to this clause (xii) shall cease to be deemed incurred or outstanding
for purposes of this clause (xii) but shall be deemed incurred under Section 6.1
hereof from and after the first date on which Polypore or such Domestic
Subsidiary could have incurred such Indebtedness or Preferred Stock thereunder
without reliance on this clause (xii));
(xiii) additional Indebtedness of the Foreign Subsidiaries in an
aggregate outstanding principal amount which does not exceed an amount equal to
the greater of (a) $50,000,000 and (b) 3.6% of the portion of Total Assets
comprising assets of the Foreign Subsidiaries (which amount may, but need not,
be incurred in whole or in part under a credit facility); provided, that, after
giving pro forma effect to the incurrence of such additional Indebtedness, the
Total Leverage Ratio shall be less than 4.00 to 1.00;
(xiv) Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument inadvertently (except in the
case of daylight overdrafts) drawn against insufficient funds in the ordinary
course of business; provided, however, that such Indebtedness is extinguished
within five Business Days of incurrence;
(xv) Indebtedness of Polypore or any of its Subsidiaries represented by
letters of credit for the account of Polypore or such Subsidiary, as the case
may be, issued in the ordinary course of business of Polypore or such
Subsidiary, including, without limitation, in order to provide security for
workers’ compensation claims or payment obligations in connection with
self-insurance or similar requirements in the ordinary course of business and
other Indebtedness with respect to workers’ compensation claims, self-insurance
obligations, performance, surety and similar bonds and completion guarantees
provided by Polypore or any Subsidiary of Polypore in the ordinary course of
business; and
(xvi) Indebtedness consisting of promissory notes issued by Polypore or
any Guarantor to current or former officers, directors and employees, their
respective estates, spouses or former spouses to finance the purchase or
redemption of Capital Stock of Polypore permitted by Section 6.6.
No Foreign Subsidiary may incur any Indebtedness (other than pursuant to clause
(v) of the definition of Permitted Indebtedness) if the proceeds are used to
refinance Indebtedness of Polypore; provided, however, that proceeds of
Indebtedness incurred pursuant to clause (xiii) of the definition of “Permitted
Indebtedness” may be used to prepay the Term Loans or, if there is a
corresponding permanent reduction in the Revolving Credit Commitments, the
Revolving Loans.
For purposes of determining compliance with Section 6.1, in the event that an
item of Indebtedness meets the criteria of more than one of the categories of
Permitted Indebtedness described in clauses (i) through (xvi) above or is
entitled to be incurred pursuant to the incurrence test set forth in
Section 6.1, Polypore shall, in its sole discretion, divide and classify (or
later redivide and reclassify) such item of Indebtedness in any manner that
complies with Section 6.1 hereof. Accrual of interest, accretion or
amortization of original issue discount, the payment of interest on any
Indebtedness in the form of additional Indebtedness with the same terms, and the
payment of dividends on Disqualified Capital Stock in the form of additional
shares of the same class of Disqualified Capital Stock will not be deemed to be
an incurrence of Indebtedness or an issuance of Disqualified Capital Stock for
purposes of Section 6.1.
21
“Permitted Investments” shall mean:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are backed by
the full faith and credit of the United States of America) or, in the case of a
Foreign Subsidiary, marketable direct obligations issued by or unconditionally
guaranteed by the government of the country of such Foreign Subsidiary or backed
by the full faith and credit of the government of the country of such Foreign
Subsidiary, in each case maturing within one year from the date of acquisition
thereof;
(b) investments in commercial paper maturing within one year from the
date of acquisition thereof and having, at such date of acquisition, one of the
two highest credit ratings obtainable from Standard & Poor’s Ratings Service
(“S&P”) or from Moody’s Investors Service, Inc. (“Moody’s”) or carrying an
equivalent rating by a nationally recognized rating agency, if both of the two
named rating agencies cease publishing ratings of investments;
(c) investments in certificates of deposit, Eurodollar deposits,
overnight bank deposits or banker’s acceptances, demand deposits and time
deposits maturing within one year from the date of acquisition thereof issued or
guaranteed by or placed with, and money market deposit accounts issued or
offered by, the Administrative Agent or any domestic office of any Lender or any
other commercial bank organized under the laws of the United States of America
or any State thereof that has a combined capital and surplus and undivided
profits of not less than $500,000,000 or issued by or offered by a bank
organized under the laws of any foreign country recognized by the United States
the long-term debt of which is rated at least “A” or the equivalent by S&P or
“A” or the equivalent thereof by Moody’s having at the date of acquisition
thereof combined capital and surplus of not less than $500,000,000 or the
foreign currency equivalent thereof;
(d) fully collateralized repurchase agreements with a term of not more
than 30 days for securities described in clause (a) above and entered into with
a financial institution satisfying the criteria of clause (c) above;
(e) investments in marketable direct obligations issued by any state
of the United States of America or any political subdivision of any such state
or any public instrumentality thereof maturing within one year from the date of
acquisition thereof and having, at such date of acquisition, one of the two
highest credit ratings obtainable from Standard & Poor’s Ratings Service or from
Moody’s Investors Service, Inc.;
(f) investments in “money market funds” within the meaning of
Rule 2a-7 of the Investment Company Act of 1940, as amended, substantially all
of whose assets are invested in investments of the type described in clauses
(a) through (e) above;
(g) other short-term investments utilized by Foreign Subsidiaries in
accordance with normal investment practices for cash management in investments
of a type analogous to the foregoing; and
(h) solely with respect to any Foreign Subsidiary, non-Dollar
denominated (i) certificates of deposit of, bankers acceptances of, or time
deposits with, any commercial bank which is organized and existing under the
laws of the country in which such Foreign Subsidiary maintains its chief
executive office and principal place of business provided such country is a
member of the Organization for Economic Cooperation and Development, and whose
short-term
22
commercial paper rating from S&P is at least A-1 or the equivalent thereof or
from Moody’s is at least P-1 or the equivalent thereof (any such bank being an
“Approved Foreign Bank”) and maturing within twelve (12) months of the date of
acquisition and (ii) equivalents of demand deposit accounts which are maintained
with an Approved Foreign Bank.
“Person” shall mean any natural person, corporation, business trust, joint
venture, association, company, limited liability company, partnership,
Governmental Authority or other entity.
“Plan” shall mean any employee pension benefit plan (other than a Multiemployer
Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code
or Section 302 of ERISA, and in respect of which Polypore or any ERISA Affiliate
is (or, if such plan were terminated, would under Section 4069 of ERISA be
“Polypore” shall have the meaning assigned to such term in the preamble hereto.
“Preferred Stock” of any Person shall mean any Capital Stock of such Person that
has preferential rights to any other Capital Stock of such Person with respect
to dividends or redemptions or upon liquidation or dissolution of such Person,
over shares of Capital Stock of any other class of such Person.
“Prepayment Agent” shall mean JPMorgan Chase Bank, N.A., in its capacity as
prepayment agent in connection with any Voluntary Prepayment and its permitted
successors in such capacity.
“Prepayment Amount” shall have the meaning assigned to such term in
Section 2.25.
“Prepayment Notice” shall have the meaning assigned to such term in
Section 2.25.
“Pricing Grid” shall mean the table set forth below.
Total Leverage Ratio
Eurodollar
Spread
ABR Spread
Commitment Fee
Rate
Category 1
Greater than or equal to 3.00 to 1.00
2.75
%
1.75
%
0.50
%
Category 2
Greater than or equal to 2.25 to 1.00, but less than 3.00 to 1.00
2.50
%
1.50
%
0.45
%
Category 3
Greater than or equal to 1.50 to 1.00, but less than 2.25 to 1.00
2.25
%
1.25
%
0.40
%
Category 4
Less than 1.50 to 1.00
2.00
%
1.00
%
0.35
%
Each change in the rates described above resulting from a change in the Total
Leverage Ratio shall be effective on and after the date (the “Adjustment Date”)
of delivery to the Administrative Agent of the financial statements and
certificates required by Section 5.4(a) or (b) and Section 5.4(c), respectively,
indicating such change, and until the date immediately preceding the next date
of delivery of such
23
financial statements and certificates indicating another such change.
Notwithstanding the foregoing, until Polypore shall have delivered the financial
statements and certificates required by Section 5.4(b) and Section 5.4(c),
respectively, for the fiscal period ended on June 30, 2012, the Total Leverage
Ratio shall be deemed to be in Category 2 for purposes of determining the rates
described above.
“Prime Rate” shall mean the rate of interest per annum publicly announced from
time to time by JPMorgan Chase Bank, N.A. as its prime rate in effect at its
principal office in New York City (the Prime Rate not being intended to be the
lowest rate of interest charged by JPMorgan Chase Bank, N.A. in connection with
extensions of credit to debtors).
“Pro Forma Basis”, “pro forma” or similar terms shall mean, with respect to
compliance with any test or covenant hereunder (excluding any calculation of the
Restricted Available Amount), compliance with such test or covenant after giving
effect to any proposed Permitted Acquisition, Investment or Asset Sale
(including pro forma adjustments arising out of events which are directly
attributable to the proposed Permitted Acquisition, Investment or Asset Sale,
are factually supportable and are expected to have a continuing impact, in each
case as reasonably determined by Polypore and as certified by a Financial
Officer of Polypore and approved by the Administrative Agent) using, for
purposes of determining such compliance, the historical financial statements of
all entities or assets so acquired or sold or to be acquired or sold and the
consolidated financial statements of Polypore and its Subsidiaries which shall
be reformulated as if such Permitted Acquisition, Investment or Asset Sale, and
all other Permitted Acquisitions, Investments or Asset Sales that have been
consummated during the period, and any Indebtedness or other liabilities
incurred or repaid in connection with any such Permitted Acquisition, Investment
or Asset Sale had been consummated and incurred or repaid at the beginning of
such period (and if such Indebtedness has a floating or formula rate, shall have
an implied rate of interest for the applicable period for purposes of this
definition determined by utilizing the rate which is or would be in effect with
respect to such Indebtedness as at the relevant date of determination). For
purposes of this definition, whenever pro forma effect is to be given to an
acquisition of assets and the amount of income or earnings relating thereto, the
pro forma calculations shall be determined in good faith by a responsible
financial or accounting officer of Polypore (including pro forma expense and
cost reductions). In addition, any such pro forma calculation, to reflect
operating expense reductions reasonably expected to result from any acquisition
or merger, may include adjustments as appropriate, in the reasonable
determination of Polypore as set forth in an certificate of its chief financial
officer, that either (a) would be permitted pursuant to Rule 11-02 of Regulation
S-X of the Securities Act of 1933, as amended, or (b) have been realized or for
which substantially all the steps necessary for realization have been taken or
at the time of determination are reasonably expected to be taken within 12
months following any such acquisition, including, but not limited to, the
execution or termination of any contracts, the termination of any personnel or
the closing of any facility, as applicable (but determined without duplication
of any amounts included in clause (a)(v)(C) of the definition of “Consolidated
EBITDA”), provided that such adjustments shall be calculated on an annualized
basis and will be set forth in a certificate signed by Polypore’s chief
financial officer and another officer which states in detail (i) the amount of
such adjustment or adjustments, and (ii) that such adjustment or adjustments are
based on the reasonable good faith beliefs of the officers executing such
certificate at the time of such execution.
“Pro Rata Percentage” shall mean, of any Revolving Credit Lender at any time the
percentage of the Total Revolving Credit Commitment represented by such Lender’s
Revolving Credit Commitment. In the event the Revolving Credit Commitments
shall have expired or been terminated, the Pro Rata Percentages shall be
determined on the basis of the Revolving Credit Commitments most recently in
effect. Notwithstanding the foregoing, in the case of Section 2.24 when a
Defaulting Lender shall exist, Pro Rata Percentages shall be determined without
regard to any Defaulting Lender’s Revolving Credit Commitment.
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“Public Equity Offering” shall mean an underwritten primary public offering of
common stock of, and by, Polypore pursuant to a registration statement filed
with the SEC in accordance with the Securities Act of 1933, as amended.
“Purchase Money Note” shall mean a promissory note of a Securitization Entity
evidencing the deferred purchase price of receivables (and related assets)
and/or a line of credit, which may be irrevocable, from Polypore or any
Subsidiary in connection with a Qualified Securitization Transaction to a
Securitization Entity, which note shall be repaid from cash available to the
Securitization Entity other than amounts required to be established as reserves
pursuant to agreements, amounts paid to investors in respect of interest and
principal and amounts paid in connection with the purchase of newly generated
receivables or newly acquired equipment.
“Qualified Capital Stock” shall mean any Capital Stock that is not Disqualified
Capital Stock.
“Qualified Securitization Transaction” shall mean any transaction or series of
transactions that may be entered into by Polypore or any of its Subsidiaries
pursuant to which Polypore or any of its Subsidiaries may sell, convey or
otherwise transfer to: (i) a Securitization Entity (in the case of a transfer by
Polypore or any of its Subsidiaries); and (ii) any other Person (in the case of
a transfer by a Securitization Entity), or may grant a security interest in any
accounts receivable or equipment (whether now existing or arising or acquired in
the future) of Polypore or any of its Subsidiaries, and any assets related
thereto including, without limitation, all collateral securing such accounts
receivable and all contracts and contract rights and all guarantees or other
obligations in respect of such accounts receivable, proceeds of such accounts
receivable and other assets (including contract rights) which are customarily
transferred or in respect of which security interests are customarily granted in
connection with assets securitization transactions involving accounts
receivable.
“Qualifying Loans” shall have the meaning assigned to such term in Section 2.25.
“Range” shall have the meaning assigned to such term in Section 2.25.
“Recovery Event” shall mean any settlement of or payment in respect of any
property or casualty insurance claim or any condemnation proceeding relating to
any asset of any Loan Party.
“Refinance” shall mean, in respect of any security or Indebtedness, to
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness in whole or in part. “Refinanced” and “Refinancing”
shall have correlative meanings.
“Refinancing Indebtedness” shall mean any Refinancing, modification,
replacement, restatement, refunding, deferral, extension, substitution,
supplement, reissuance or resale of existing or future Indebtedness (other than
intercompany Indebtedness), including any additional Indebtedness incurred to
pay interest or premiums required by the instruments governing such existing or
future Indebtedness as in effect at the time of issuance thereof (“Required
Premiums”) and fees in connection therewith; provided that any such event shall
not: (i) directly or indirectly result in an increase in the aggregate principal
amount of Permitted Indebtedness, except to the extent such increase is a result
of a simultaneous incurrence of additional Indebtedness: (A) to pay Required
Premiums and related fees; or (B) otherwise permitted to be incurred under this
Agreement; and (ii) create Indebtedness with a Weighted Average Life to Maturity
at the time such Indebtedness is incurred that is less than the Weighted Average
Life to Maturity at such time of the Indebtedness being refinanced, modified,
replaced, renewed, restated, refunded, deferred, extended, substituted,
supplemented, reissued or resold; and (iii) if the Indebtedness being refinanced
is subordinated in right of payment to the Obligations or the Guarantees
thereof, such
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Refinancing Indebtedness is subordinated in right of payment to the Obligations
or the Guarantees thereof on terms at least as favorable to the Lenders as those
contained in the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded.
“Register” shall have the meaning assigned to such term in Section 9.4(b).
“Regulation T” shall mean Regulation T of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
“Regulation U” shall mean Regulation U of the Board as from time to time in
“Regulation X” shall mean Regulation X of the Board as from time to time in
“Reimbursement Obligation” shall mean the obligation of Polypore to reimburse
the Issuing Bank pursuant to Section 2.22(e) for amounts drawn under Letters of
Credit.
“Related Parties” shall mean, with respect to any specified Person, such
Person’s Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person’s Affiliates.
“Release” shall mean any release, spill, emission, leaking, dumping, injection,
pouring, deposit, disposal, discharge, dispersal, leaching or migration into or
through the environment or within or upon any building, structure, facility or
fixture.
“Reorganization” shall mean, with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section 4241
of ERISA.
“Repayment Date” shall have the meaning assigned to such term in Section 2.11.
“Required Lenders” shall mean, at any time, the holders of more than 50% of
(a) until the Restatement Effective Date, the Commitments then in effect and
(b) thereafter, the sum of (i) the aggregate unpaid principal amount of the Term
Loans then outstanding and (ii) the Total Revolving Credit Commitments then in
effect or, if the Revolving Credit Commitments have been terminated, the total
Revolving Credit Exposure of all Lenders at such time; provided, that the unused
Term Loan Commitment, unused Revolving Credit Commitment of, and the portion of
the Term Loans and Revolving Credit Exposure held or deemed held by, any
Defaulting Lender shall be excluded for purposes of making a determination of
Required Lenders.
“Required Revolving Lenders” shall mean, at any time, the holders of more than
50% of the Total Revolving Credit Commitments then in effect or, if the
Revolving Credit Commitments have been terminated, the total Revolving Credit
Exposure of all Lenders at such time; provided, that the unused Revolving Credit
Commitment of, and the portion of the Revolving Credit Exposure held or deemed
held by, any Defaulting Lender shall be excluded for purposes of making a
determination of Required Revolving Lenders.
“Responsible Officer” of any Person shall mean any executive officer or
Financial Officer of such Person and any other officer or similar official
thereof responsible for the administration of the obligations of such Person in
respect of this Agreement.
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“Restatement Effective Date” shall mean the date on which the conditions
precedent set forth in Section 4.2 hereof shall have been satisfied.
“Restricted Available Amount” shall mean the sum of, without duplication:
(i) 50% of the cumulative Consolidated Net Income (or if cumulative
Consolidated Net Income shall be a loss, minus 100% of such loss) of Polypore
earned subsequent to April 1, 2012 and on or prior to the date the relevant
Specified Payment occurs (the “Reference Date”) (treating such period as a
single accounting period); provided, however, that if, at the time of a proposed
Specified Payment, the Senior Leverage Ratio is less than 1.00 to 1.00, for
purposes of calculating the availability of amounts hereunder for such Specified
Payment only, the reference to 50% in this clause (i) shall be deemed to be 75%;
plus
(ii) 100% of the aggregate net cash proceeds (including the fair
market value of property other than cash that would constitute Permitted
Investments or a Permitted Business) received by Polypore from any Person (other
than (1) a Subsidiary of Polypore and (2) Excluded Contributions) from the
issuance and sale subsequent to the Restatement Effective Date and on or prior
to the Reference Date of Qualified Capital Stock of Polypore; plus
(iii) without duplication of any amounts included in clause (ii) above,
100% of the aggregate net cash proceeds of any equity contribution received
subsequent to the Restatement Effective Date by Polypore from a holder of
Polypore’s Capital Stock (other than Excluded Contributions); plus
(iv) the amount by which Indebtedness of Polypore is reduced on
Polypore’s balance sheet upon the conversion or exchange subsequent to the
Restatement Effective Date of any Indebtedness of Polypore for Qualified Capital
Stock of Polypore (less the amount of any cash, or the fair value of any other
property, distributed by Polypore upon such conversion or exchange); provided,
however, that the foregoing amount shall not exceed the net cash proceeds
received by Polypore or any Subsidiary from the sale of such Indebtedness
(excluding net cash proceeds from sales to a Subsidiary of Polypore or to an
employee stock ownership plan or a trust established by Polypore or any of its
Subsidiaries for the benefit of their employees); plus
(v) an amount equal to the sum of (I) 100% of the aggregate net
proceeds (including the fair market value of property other than cash that would
constitute Permitted Investments or a Permitted Business) received by Polypore
or any Subsidiary (A) from any sale or other disposition of any Investment in
any Person (including an Unrestricted Subsidiary) made by Polypore and its
Subsidiaries pursuant to Section 6.4(k) and (B) representing the return of
capital or principal (excluding dividends and distributions otherwise included
in Consolidated Net Income) with respect to such Investment, and (II) the
portion (proportionate to Polypore’s Capital Stock in an Unrestricted
Subsidiary) of the fair market value of the net assets of an Unrestricted
Subsidiary at the time such Unrestricted Subsidiary is designated a Subsidiary,
in each case to the extent such event occurs after the Restatement Effective
Date; provided, however, that, in the case of item (II), the foregoing sum shall
not exceed, in the case of any Unrestricted Subsidiary, the amount of
Investments previously made (and treated as a Specified Payment) by Polypore or
any Subsidiary in such Unrestricted Subsidiary pursuant to Section 6.4(k) and;
provided further, that no amount will be included under this clause (v) to the
extent it is already included in Consolidated Net Income; plus
(vi) $25,000,000.
“Restricted Indebtedness” shall mean Indebtedness of any Group Member, the
payment, prepayment, repurchase or defeasance of which is restricted under
Section 6.9(b).
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“Restricted Payment” shall mean any dividend or other distribution (whether in
cash, securities or other property) with respect to any Capital Stock in any
Group Member, or any payment (whether in cash, securities or other property),
including any sinking fund or similar deposit, on account of the purchase,
redemption, retirement, acquisition, cancellation or termination of any Capital
Stock in any Group Member or any option, warrant or other right to acquire any
such Capital Stock in any Group Member.
“Restricted Subsidiary” shall mean any subsidiary of Polypore that is not an
Unrestricted Subsidiary.
“Revolving Credit Borrowing” shall mean a Borrowing comprised of Revolving
Loans.
“Revolving Credit Commitment” shall mean, as to any Lender, the obligation of
such Lender, if any, to make Revolving Loans and participate in Swingline Loans
and Letters of Credit in an aggregate principal and/or face amount not to exceed
the amount set forth under the heading “Revolving Credit Commitment” opposite
such Lender’s name on Schedule 2.1 or in the Assignment and Assumption pursuant
to which such Lender became a party hereto, as the same may be changed from time
to time pursuant to the terms hereof.
“Revolving Credit Exposure” shall mean, with respect to any Lender at any time,
the aggregate principal amount at such time of all outstanding Revolving Loans
of such Lender, plus the aggregate amount at such time of such Lender’s L/C
Exposure, plus the aggregate amount at such time of such Lender’s Swingline
Exposure.
“Revolving Credit Lender” shall mean a Lender with a Revolving Credit Commitment
or an outstanding Revolving Loan.
“Revolving Credit Maturity Date” shall mean June 29, 2017.
“Revolving Loans” shall mean the revolving loans made by the Lenders to Polypore
pursuant to clause (ii) of Section 2.1(a).
“SEC” shall mean the Securities and Exchange Commission, any successor thereto
and any analogous Governmental Authority.
“Secured Parties” shall have the meaning assigned to such term in the Guarantee
and Collateral Agreement.
“Securitization Entity” shall mean a wholly-owned Subsidiary of Polypore (or
another Person in which Polypore or any Subsidiary of Polypore makes an
Investment and to which Polypore or any Subsidiary of Polypore transfers
accounts receivable or equipment and related assets) which engages in no
activities other than in connection with the financing of accounts receivable or
equipment and which is designated by the Board of Directors of Polypore (as
provided below) as a Securitization Entity: (i) no portion of the Indebtedness
or any other obligations (contingent or otherwise) of which: (A) is guaranteed
by Polypore or any Subsidiary of Polypore (excluding guarantees of obligations
(other than the principal of, and interest on, Indebtedness) pursuant to
Standard Securitization Undertakings); (B) is recourse to or obligates Polypore
or any Subsidiary of Polypore in any way other than pursuant to Standard
Securitization Undertakings; or (C) subjects any property or asset of Polypore
or any Subsidiary of Polypore, directly or indirectly, contingently or
otherwise, to the satisfaction thereof, other than pursuant to Standard
Securitization Undertakings; (ii) with which neither Polypore nor any Subsidiary
of Polypore has any material contract, agreement, arrangement or understanding
(except in connection with a Purchase Money Note or Qualified Securitization
Transaction) other than on terms no less favorable to
28
Polypore or such Subsidiary than those that might be obtained at the time from
Persons that are not Affiliates of Polypore, other than fees payable in the
ordinary course of business in connection with servicing receivables of such
entity; and (iii) to which neither Polypore nor any Subsidiary of Polypore has
any obligations to maintain or preserve such entity’s financial condition or
cause such entity to achieve certain levels of operating results.
Any such designation by the Board of Directors of Polypore shall be evidenced to
the Administrative Agent by filing with the Administrative Agent a certified
copy of the resolution of the Board of Directors of Polypore giving effect to
such designation and an Officers’ Certificate certifying that such designation
complied with the foregoing conditions.
“Security Documents” shall mean the Mortgages, the Guarantee and Collateral
Agreement and each of the security agreements, mortgages and other instruments
and documents executed and delivered pursuant to any of the foregoing or
pursuant to Section 5.9.
“Senior Leverage Ratio” shall mean, on any date, the ratio of (a) the excess of
(i) Consolidated Total Indebtedness that is secured by a Lien (including, in any
event, Indebtedness of the type described in clause (k) of the definition
thereof) on such date (other than Indebtedness secured exclusively by Collateral
on a second or lower priority basis) over (ii) an amount equal to the lesser of
(x) the amount of cash and Permitted Investments held by Polypore and its
Subsidiaries on such date that are free and clear of any Lien (other than
non-consensual Liens permitted by Section 6.2 and Liens permitted by
Section 6.2(b)) and (y) $50,000,000 to (b) Consolidated EBITDA for the period of
four consecutive fiscal quarters most recently ended on or prior to such date
“Senior Note Indenture” shall mean the Indenture entered into by Polypore and
certain of the Guarantors in connection with the issuance of the Senior Notes,
together with all instruments and other agreements entered into by Polypore or
such Guarantor in connection therewith.
“Senior Notes” shall mean (a) the 7.5% senior notes of Polypore issued on
November 26, 2010 pursuant to the Senior Note Indenture, together with any
exchange notes or any replacement notes issued under the Senior Note Indenture
and (b) additional notes of Polypore issued after the Restatement Effective Date
pursuant to the Senior Note Indenture to the extent permitted under Section 6.1.
“Specified Cash Management Agreement” shall mean any Cash Management Agreement
entered into by any Group Member with any Lender or affiliate thereof which
either (a) is in effect on the Restatement Effective Date or (b) has been
designated by such Lender and Polypore, by notice to the Administrative Agent
not later than 90 days after execution and delivery thereof, as a “Specified
Cash Management Agreement”.
“Specified Disposition” shall mean any asset sale or series of related asset
sales described in clause (b) of the definition of “Asset Sale” having a value
not in excess of $2,500,000.
“Specified Hedging Agreement” shall mean any Hedging Agreement in respect of
interest rates entered into by Polypore and any Lender or affiliate thereof or,
in the case of any agreement in effect on the Restatement Effective Date, any
former Lender that was a Lender on the Restatement Effective Date, or any of
their respective affiliates, which either (a) is in effect on the Restatement
Effective Date or (b) has been designated by such Lender and Polypore, by notice
to the Administrative Agent not later than 90 days after execution and delivery
thereof, as a “Specified Hedging Agreement”.
“Specified Payment” shall mean any payment or expenditure made pursuant to
Section 6.4(k), 6.6(i), 6.6(h) or 6.9(b)(iii).
29
“Standard Securitization Undertakings” shall mean representations, warranties,
covenants and indemnities entered into by Polypore or any Subsidiary of Polypore
which are reasonably customary, as determined in good faith by the Board of
Directors of Polypore, in an accounts receivable or equipment transaction.
“subsidiary” shall mean, with respect to any Person (herein referred to as the
“parent”), any corporation, partnership, association or other business entity of
which securities or other ownership interests representing more than 50% of the
equity or more than 50% of the ordinary voting power or more than 50% of the
general partnership interests are, at the time any determination is being made,
owned, controlled or held by the parent or one or more subsidiaries of the
parent or a combination thereof.
“Subsidiary” shall mean any subsidiary of Polypore; provided that Unrestricted
Subsidiaries shall be deemed not to constitute “Subsidiaries” for the purposes
of this Agreement (other than the definition of “Unrestricted Subsidiary”).
“Surviving Entity” shall have the meaning assigned to such term in Section 6.5.
“Swingline Commitment” shall mean the commitment of the Swingline Lender to make
loans pursuant to Section 2.21, as the same may be reduced from time to time
pursuant to Section 2.9 or Section 2.21.
“Swingline Exposure” shall mean at any time the aggregate principal amount at
such time of all outstanding Swingline Loans. The Swingline Exposure of any
Revolving Credit Lender at any time shall equal its Pro Rata Percentage of the
aggregate Swingline Exposure at such time.
“Swingline Lender” shall mean JPMorgan Chase Bank, N.A., in its capacity as
lender of Swingline Loans hereunder.
“Swingline Loan” shall mean any loan made by the Swingline Lender pursuant to
Section 2.21.
“Syndication Agents” shall have the meaning assigned to such term in the
preamble hereto.
“Synthetic Lease” shall mean, as to any Person, any lease (including leases that
may be terminated by the lessee at any time) of any property (whether real,
personal or mixed) (a) that is accounted for as an operating lease under GAAP
and (b) in respect of which the lessee retains or obtains ownership of the
property so leased for U.S. federal income tax purposes, other than any such
lease under which such Person is the lessor.
“Synthetic Lease Obligations” shall mean, as to any Person, an amount equal to
the sum of (a) the obligations of such Person to pay rent or other amounts under
any Synthetic Lease which are attributable to principal and, without
duplication, (b) the amount of any purchase price payment under any Synthetic
Lease assuming the lessee exercises the option to purchase the leased property
at the end of the lease term.
“Synthetic Purchase Agreement” shall mean any swap, derivative or other
agreement or combination of agreements pursuant to which any Group Member is or
may become obligated to make (a) any payment in connection with a purchase by
any third party from a Person other than any Group Member of any Capital Stock
or Restricted Indebtedness of any Group Member or (b) any payment (other than on
account of a permitted purchase by it of any Capital Stock or Restricted
Indebtedness) the amount of which is determined by reference to the price or
value at any time of any Capital Stock or Restricted Indebtedness of any Group
Member; provided, that no phantom stock or similar plan providing for
30
payments only to current or former directors, officers or employees of any Group
Member (or to their heirs or estates) shall be deemed to be a Synthetic Purchase
Agreement.
“Taxes” shall mean any and all present or future taxes, levies, imposts, duties,
deductions, charges, liabilities or withholdings imposed by any Governmental
thereto.
“Term Loan” shall have the meaning assigned to such term in Section 2.1. Unless
the context shall otherwise require, the term “Term Loans” shall include
Incremental Term Loans.
“Term Loan Borrowing” shall mean a Borrowing comprised of Term Loans.
“Term Loan Commitment” shall mean, with respect to each Lender, the commitment
of such Lender to make Term Loans hereunder as set forth on Schedule 2.1. The
aggregate amount of the Term Loan Commitments as of the Restatement Effective
Date is $300,000,000. Unless the context shall otherwise require, the term
“Term Loan Commitment” shall include Incremental Term Loan Commitments.
“Term Loan Maturity Date” shall mean June 29, 2017.
“Term Percentage” shall mean as to any Lender at any time, the percentage which
such Lender’s Term Loan Commitment then constitutes of the aggregate Term Loan
Commitments (or, at any time after the Restatement Effective Date, the
percentage which the principal amount of such Lender’s Term Loan then
outstanding constitutes of the aggregate principal amount of the Term Loans then
outstanding).
“Total Assets” shall mean, as of any date, the total consolidated assets of
Polypore and the Subsidiaries, as set forth on Polypore’s most recently
delivered quarterly balance sheet.
“Total Leverage Ratio” shall mean, on any date, the ratio of (a) the excess of
(i) Consolidated Total Indebtedness on such date over (ii) an amount equal to
the lesser of (x) the amount of cash and Permitted Investments held by Polypore
and its Subsidiaries on such date that are free and clear of any Lien (other
than non-consensual Liens permitted by Section 6.2) and (y) $50,000,000 to (b)
Consolidated EBITDA for the period of four consecutive fiscal quarters most
recently ended on or prior to such date.
“Total Revolving Credit Commitment” shall mean, at any time, the aggregate
amount of the Revolving Credit Commitments, as in effect at such time. The Total
Revolving Credit Commitment as of the Restatement Effective Date is
$150,000,000.
“Trading With the Enemy Act” shall have the meaning assigned to such term in
Section 3.24.
“Transactions” shall mean, collectively, (a) the execution, delivery and
performance by the Loan Parties of the Loan Documents to which they are a party
and, in the case of Polypore, the making of the initial Borrowings hereunder,
(b) the repayment of all amounts outstanding or due under the Existing Credit
Agreement and (c) the payment of related fees and expenses.
“Type”, when used in respect of any Loan or Borrowing, shall refer to the Rate
by reference to which interest on such Loan or on the Loans comprising such
Borrowing is determined. For purposes hereof, the term “Rate” shall include the
Eurodollar Rate and the Alternate Base Rate.
“Uniform Customs” shall have the meaning assigned to such term in Section 9.7.
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“Unrestricted Subsidiary” of any Person means: (i) any Subsidiary of such Person
that at the time of determination shall be or continue to be designated an
Unrestricted Subsidiary by the Board of Directors of such Person in the manner
provided below; and (ii) any Subsidiary of an Unrestricted Subsidiary.
The Board of Directors of Polypore may designate any Subsidiary (including any
newly acquired or newly formed Subsidiary or a Person becoming a Subsidiary
through merger or consolidation or Investment therein) to be an Unrestricted
Subsidiary unless such Subsidiary owns any Capital Stock of or Indebtedness of
or has any Investment in, or owns or holds any Lien on any property of, Polypore
or any other Subsidiary of Polypore that is not a Subsidiary of the Subsidiary
to be so designated or another Unrestricted Subsidiary; provided that:
(i) Polypore certifies to the Administrative Agent that such designation is
being made as an Investment using the Available Amount pursuant to
Section 6.4(k) or the basket referred to in Section 6.4(q) (with the amount of
such Investment being deemed to be the fair market value of the net assets of
such Subsidiary at the time such Subsidiary is designated an Unrestricted
Subsidiary); and (ii) each Subsidiary to be so designated and each of its
Subsidiaries: (A) has not at the time of designation, any Indebtedness pursuant
to which the lender has recourse to any of the assets of Polypore or any of its
Restricted Subsidiaries, unless such recourse is Indebtedness or a Lien that is
permitted under this Agreement after giving effect to such designation; and
(B) either alone or in the aggregate with all other Unrestricted Subsidiaries
does not operate, directly or indirectly, all or substantially all of the
business of Polypore and its Subsidiaries.
The Board of Directors of Polypore may designate any Unrestricted Subsidiary to
be a Restricted Subsidiary only if (x) immediately after giving effect to such
designation, Polypore is able to incur at least $1.00 of additional Indebtedness
(other than Permitted Indebtedness) in compliance with the incurrence test set
forth in Section 6.1 and (y) immediately before and immediately after giving
effect to such designation, no Default or Event of Default shall have occurred
and be continuing or would occur as a consequence thereof. Any such designation
by the Board of Directors of Polypore shall be evidenced to the Administrative
Agent by promptly filing with the Administrative Agent a copy of the Board
Resolution giving effect to such designation and an Officers’ Certificate
certifying that such designation complied with the foregoing provisions. Any
Unrestricted Subsidiary designated as a Restricted Subsidiary may not
subsequently be re-designated as an Unrestricted Subsidiary.
If, at any time, any Unrestricted Subsidiary would fail to meet the foregoing
requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an
Unrestricted Subsidiary for purposes of this Agreement and any Indebtedness of
such Subsidiary shall be deemed to be incurred as of such date.
Actions taken by an Unrestricted Subsidiary shall not be deemed to have been
taken, directly or indirectly, by Polypore or any Restricted Subsidiary.
“U.S. Person” shall mean a “United States person” within the meaning of
“U.S. Tax Compliance Certificate” shall have the meaning assigned to such term
in Section 2.19(e)(ii)(B)(3).
“Voluntary Prepayment” shall have the meaning assigned to such term in
Section 2.25.
“Weighted Average Life to Maturity” shall mean, when applied to any Indebtedness
at any date, the number of years obtained by dividing: (a) the then outstanding
aggregate principal amount of such Indebtedness into (b) the sum of the total of
the products obtained by multiplying: (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including
32
payment at final maturity, in respect thereof; by (ii) the number of years
(calculated to the nearest one-twelfth) which will elapse between such date and
the making of such payment.
“Wholly Owned Subsidiary” of any Person shall mean a subsidiary of such Person
of which securities (except for directors’ qualifying shares and other de
minimis ownership interests required to be owned under foreign law by local
residents) or other ownership interests representing 100% of the Capital Stock
are, at the time any determination is being made, owned, controlled or held by
such Person or one or more Wholly Owned Subsidiaries of such Person or by such
Person and one or more Wholly Owned Subsidiaries of such Person.
“Withdrawal Liability” shall mean liability to a Multiemployer Plan as a result
of a complete or partial withdrawal from such Multiemployer Plan, as such terms
are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.2. Terms Generally. The definitions in Section 1.1 shall apply
equally to both the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
shall be deemed to be followed by the phrase “without limitation”. The word
“will” shall be construed to have the same meaning and effect as the word
“shall”; and the words “asset” and “property” shall be construed as having the
same meaning and effect and to refer to any and all tangible and intangible
assets and properties, including cash, securities, accounts and contract
rights. All references herein to Articles, Sections, Exhibits and Schedules
shall be deemed references to Articles and Sections of, and Exhibits and
Schedules to, this Agreement unless the context shall otherwise require. Except
as otherwise expressly provided herein, (a) any reference in this Agreement to
any Loan Document shall mean such document as amended, restated, supplemented or
otherwise modified from time to time and (b) all terms of an accounting or
financial nature shall be construed in accordance with GAAP, as in effect from
time to time (provided that all terms of an accounting or financial nature used
herein shall be construed, and all computations of amounts and ratios referred
to herein shall be made without giving effect to (i) any election under
Accounting Standards Codification 825-10-25 (previously referred to as Statement
of Financial Accounting Standards 159) (or any other Accounting Standards
to value any Indebtedness or other liabilities of Polypore or any Subsidiary at
“fair value”, as defined therein and (ii) any treatment of Indebtedness in
respect of convertible debt instruments under Accounting Standards Codification
470-20 (or any other Accounting Standards Codification or Financial Accounting
Standard having a similar result or effect) to value any such Indebtedness in a
reduced or bifurcated manner as described therein, and such Indebtedness shall
at all times be valued at the full stated principal amount thereof); provided,
however, that if, before or after any change in GAAP occurs, Polypore notifies
the Administrative Agent that Polypore wishes to amend any covenant in
Article VI or any related definition to eliminate the effect of any such change
in GAAP occurring after the Restatement Effective Date on the operation of such
covenant (or if the Administrative Agent notifies Polypore that the Required
Lenders wish to amend Article VI or any related definition for such purpose),
then Polypore’s compliance with such covenant (and the computations made for
purposes of determining the Applicable Percentage) shall be determined on the
basis of GAAP in effect immediately before the relevant change in GAAP became
effective, until either such notice is withdrawn or such covenant is amended in
a manner satisfactory to Polypore and the Required Lenders.
SECTION 1.3. Pro Forma Calculations. With respect to any period during which
any Permitted Acquisition or Asset Sale occurs as permitted pursuant to the
terms hereof, the Total Leverage Ratio and the Senior Leverage Ratio shall be
calculated with respect to such period and such Permitted Acquisition or Asset
Sale on a Pro Forma Basis. For purposes of determining whether a Default or
Event of Default
33
is in existence after giving effect to a particular transaction, pro forma
compliance with Section 6.10 shall be required unless otherwise agreed by the
Required Lenders.
SECTION 1.4. Classification of Loans and Borrowings. For purposes of this
Agreement, Loans may be classified and referred to by Class (e.g., a “Revolving
Loan”) or by Type (e.g., a “Eurodollar Loan”) or by Class and Type (e.g., a
“Eurodollar Revolving Loan”). Borrowings also may be classified and referred to
by Class (e.g., a “Revolving Borrowing”) or by Type (e.g., a “Eurodollar
Borrowing”) or by Class and Type (e.g., a “Eurodollar Revolving Borrowing”).
SECTION 1.5. Currency Equivalents Generally. Any amount specified in this
Agreement or any of the other Loan Documents to be in Dollars shall also include
the equivalent of such amount in any currency other than Dollars, such
equivalent amount to be determined at the rate of exchange quoted by JPMorgan
Chase Bank, N.A. in New York, New York at the close of business on the Business
Day immediately preceding any date of determination thereof, to prime banks in
New York, New York for the spot purchase in the New York foreign exchange market
of such amount in Dollars with such other currency. The maximum amount of
Indebtedness, investments and other threshold amounts that any Group Member may
incur under Article VI shall not be deemed to be exceeded, with respect to any
outstanding Indebtedness, investments and other threshold amounts solely as a
result of fluctuations in the exchange rate of currencies. When calculating
capacity for the incurrence of additional Indebtedness, investments and other
threshold amounts by any Group Member, the exchange rate of currencies shall be
measured as of the date of such calculation.
ARTICLE II
The Credits
SECTION 2.1. Commitments. (a) Subject to the terms and conditions and relying
upon the representations and warranties herein set forth, each Lender agrees,
severally and not jointly, (i) to make a term loan to Polypore in Dollars (a
“Term Loan”) on the Restatement Effective Date in a principal amount not to
exceed its Term Loan Commitment, and (ii) to make Revolving Loans to Polypore in
Dollars, at any time and from time to time on or after the Restatement Effective
Date, and until the earlier of the Revolving Credit Maturity Date and the
termination of the Revolving Credit Commitment of such Lender in accordance with
the terms hereof, in an aggregate principal amount at any time outstanding that
will not result in such Lender’s Revolving Credit Exposure exceeding such
Lender’s Revolving Credit Commitment. Within the limits set forth in clause
(ii) of the preceding sentence and subject to the terms, conditions and
limitations set forth herein, Polypore may borrow, pay or prepay and reborrow
Revolving Loans. Amounts paid or prepaid in respect of Term Loans may not be
reborrowed.
(b) Incremental Term Loans. Each Lender having
an Incremental Term Loan Commitment hereby agrees, severally and not jointly, on
the terms and subject to the conditions set forth herein and in the applicable
Incremental Assumption Agreement and in reliance on the representations and
warranties set forth herein and in the other Loan documents, to make Incremental
Term Loans to Polypore, in an aggregate principal amount not to exceed its
Incremental Term Loan Commitment. Amounts paid or prepaid in respect of
Incremental Term Loans may not be reborrowed.
SECTION 2.2. Loans. (a) Each Loan (other than Swingline Loans) shall be made
as part of a Borrowing consisting of Loans made by the Lenders ratably in
accordance with their applicable Commitments; provided, however, that the
failure of any Lender to make any Loan shall not in itself relieve any other
Lender of its obligation to lend hereunder (it being understood, however, that
no Lender shall be responsible for the failure of any other Lender to make any
Loan required to be made by such other Lender). Except for Swingline Loans and
Loans deemed made pursuant to Section 2.2(f), the Loans
34
comprising any Borrowing shall be in an aggregate principal amount that is
(i) (A) in the case of a Revolving Borrowing, an integral multiple of $1,000,000
and not less than $1,000,000 and (B) in the case of a Term Loan Borrowing or an
Incremental Term Loan Borrowing, an integral multiple of $1,000,000 and not less
than $5,000,000 (except with respect to any Incremental Term Loan Borrowing, to
the extent otherwise provided in the related Incremental Assumption Agreement)
or (ii) in the case of any Borrowing, equal to the remaining available balance
of the applicable Commitments.
(b) Subject to Section 2.8, each Borrowing shall
be comprised entirely of Eurodollar Loans or ABR Loans, as Polypore may request
pursuant to Section 2.3. Each Lender may at its option make any Eurodollar Loan
such Loan; provided, that any exercise of such option shall not affect the
obligation of Polypore to repay such Loan in accordance with the terms of this
Agreement. Borrowings of more than one Type may be outstanding at the same
time; provided, however, that Polypore shall not be entitled to request any
Borrowing that, if made, would result in more than ten (10) Eurodollar
Borrowings outstanding hereunder at any time. For purposes of the foregoing,
Borrowings having different Interest Periods, regardless of whether they
commence on the same date, shall be considered separate Borrowings.
(c) Except with respect to Swingline Loans and
Loans made pursuant to Section 2.2(f), each Lender shall make each Loan to be
made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds to the Funding Office not later than 12:00 (noon),
New York City time, and the Administrative Agent shall promptly transfer the
amounts so received to the account designated by Polypore in the applicable
Borrowing Request or, if a Borrowing shall not occur on such date because any
condition precedent herein specified shall not have been met, return the amounts
so received to the respective Lenders.
(d) Unless the Administrative Agent shall have
received notice from a Lender prior to the date of any Borrowing that such
Lender will not make available to the Administrative Agent such Lender’s portion
of such Borrowing, the Administrative Agent may assume that such Lender has made
such portion available to the Administrative Agent on the date of such Borrowing
in accordance with paragraph (c) above and the Administrative Agent may, in
reliance upon such assumption, make available to Polypore on such date a
corresponding amount. If the Administrative Agent shall have so made funds
available then, to the extent that such Lender shall not have made such portion
available to the Administrative Agent, such Lender and Polypore severally agree
to repay to the Administrative Agent forthwith on demand such corresponding
amount together with interest thereon, for each day from the date such amount is
made available to Polypore until the date such amount is repaid to the
Administrative Agent at (i) in the case of Polypore, the interest rate
applicable at the time to the Loans comprising such Borrowing and (ii) in the
case of such Lender, a rate determined by the Administrative Agent to represent
its cost of overnight or short-term funds (which determination shall be
conclusive absent manifest error). If such Lender shall repay to the
Administrative Agent such corresponding amount, such amount shall constitute
such Lender’s Loan as part of such Borrowing for purposes of this Agreement.
(e) Notwithstanding any other provision of this
Agreement, Polypore shall not be entitled to request any Revolving Credit
the Revolving Credit Maturity Date.
(f) If the Issuing Bank shall not have
received from Polypore the payment required to be made by Section 2.22(e) within
the time specified in such Section, the Issuing Bank will promptly notify the
Administrative Agent of the L/C Disbursement and the Administrative Agent will
promptly notify each Revolving Credit Lender of such L/C Disbursement and its
Pro Rata Percentage thereof. Each Revolving Credit Lender shall pay by wire
transfer of immediately available funds to the Administrative Agent not later
than 2:00 p.m., New York City time, on such date (or, if such Revolving Credit
Lender
35
shall have received such notice later than 12:00 (noon), New York City time, on
any day, not later than 10:00 a.m., New York City time, on the immediately
following Business Day), an amount equal to such Lender’s Pro Rata Percentage of
such L/C Disbursement (it being understood that such amount shall be deemed to
constitute an ABR Revolving Loan of such Lender and such payment shall be deemed
to have reduced the L/C Exposure), and the Administrative Agent will promptly
pay to the Issuing Bank amounts so received by it from the Revolving Credit
Lenders. The Administrative Agent will promptly pay to the Issuing Bank any
amounts received by it from Polypore pursuant to Section 2.22(e) prior to the
time that any Revolving Credit Lender makes any payment pursuant to this
paragraph (f); any such amounts received by the Administrative Agent thereafter
will be promptly remitted by the Administrative Agent to the Revolving Credit
Lenders that shall have made such payments and to the Issuing Bank, as their
interests may appear. If any Revolving Credit Lender shall not have made its
Pro Rata Percentage of such L/C Disbursement available to the Administrative
Agent as provided above, such Lender and Polypore severally agree to pay
interest on such amount, for each day from and including the date such amount is
required to be paid in accordance with this paragraph to but excluding the date
such amount is paid, to the Administrative Agent for the account of the Issuing
Bank at (i) in the case of Polypore, a rate per annum equal to the interest rate
applicable to Revolving Loans pursuant to Section 2.6(a), and (ii) in the case
of such Lender, for the first such day, the Federal Funds Effective Rate, and
for each day thereafter, the Alternate Base Rate.
SECTION 2.3. Borrowing Procedure. In order to request a Borrowing (other than
a Swingline Loan or a deemed Borrowing pursuant to Section 2.2(f), as to which
this Section 2.3 shall not apply), Polypore shall hand deliver or fax to the
Administrative Agent (or give telephonic notice promptly confirmed by written
notice) a duly completed Borrowing Request (a) in the case of a Eurodollar
Borrowing, not later than 12:00 (noon), New York City time, three Business Days
before a proposed Borrowing, and (b) in the case of an ABR Borrowing, not later
than 12:00 (noon), New York City time, one Business Day before a proposed
Borrowing. Each Borrowing Request shall be irrevocable, shall be signed by or
on behalf of Polypore and shall specify the following information: (i) whether
the Borrowing then being requested is to be a Term Loan Borrowing, an
Incremental Term Loan Borrowing or a Revolving Credit Borrowing and whether such
Borrowing is to be a Eurodollar Borrowing or an ABR Borrowing; (ii) the date of
such Borrowing (which shall be a Business Day); (iii) the number and location of
the account to which funds are to be disbursed; (iv) the amount of such
Borrowing; and (v) if such Borrowing is to be a Eurodollar Borrowing, the
Interest Period with respect thereto; provided, however, that, notwithstanding
any contrary specification in any Borrowing Request, each requested Borrowing
shall comply with the requirements set forth in Section 2.2. If no election as
to the Type of Borrowing is specified in any such notice, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period with respect to any
Eurodollar Borrowing is specified in any such notice, then Polypore shall be
deemed to have selected an Interest Period of one month’s duration. The
Administrative Agent shall promptly advise the applicable Lenders of any notice
given pursuant to this Section 2.3 (and the contents thereof), and of each
Lender’s portion of the requested Borrowing.
SECTION 2.4. Evidence of Debt; Repayment of Loans. (a) Polypore hereby
unconditionally promises to pay to each Lender, through the Administrative
Agent, (i) the principal amount of each Term Loan of such Lender as provided in
Section 2.11 and (ii) the then unpaid principal amount of each Revolving Loan of
such Lender on the Revolving Credit Maturity Date. Polypore hereby promises to
pay to the Swingline Lender the then unpaid principal amount of each Swingline
Loan on the Revolving Credit Maturity Date.
(b) Each Lender shall maintain in accordance
with its usual practice an account or accounts evidencing the indebtedness of
Polypore to such Lender resulting from each Loan made by such Lender from time
to time, including the amounts of principal and interest payable and paid to
such Lender from time to time under this Agreement.
36
(c) The Administrative Agent shall maintain
accounts in which it will record (i) the amount of each Loan made hereunder, the
Type thereof and, if applicable, the Interest Period applicable thereto,
(ii) the amount of any principal or interest due and payable or to become due
and payable from Polypore to each Lender hereunder and (iii) the amount of any
sum received by the Administrative Agent hereunder from Polypore or any
Guarantor and each Lender’s share thereof.
(d) The entries made in the accounts maintained
pursuant to paragraphs (b) and (c) above shall be prima facie evidence of the
existence and amounts of the obligations therein recorded; provided, however,
that the failure of any Lender or the Administrative Agent to maintain such
accounts or any error therein shall not in any manner affect the obligations of
Polypore to repay the Loans in accordance with their terms.
(e) Any Lender may request that Loans made by
it hereunder be evidenced by a promissory note. In such event, Polypore shall
execute and deliver to such Lender a promissory note payable to such Lender and
its registered assigns and in a form and substance reasonably acceptable to the
Administrative Agent and Polypore. Notwithstanding any other provision of this
Agreement, in the event any Lender shall request and receive such a promissory
note, the interests represented by such note shall at all times (including after
any assignment of all or part of such interests pursuant to Section 9.4) be
represented by one or more promissory notes payable to the payee named therein
or its registered assigns.
SECTION 2.5. Fees. (a) Polypore agrees to pay to each Lender, through the
Administrative Agent, on the last Business Day of March, June, September and
December in each year and on each date on which any Commitment of such Lender
shall expire or be terminated as provided herein, a commitment fee (a
“Commitment Fee”) at the rate determined pursuant to the Pricing Grid on the
daily unused amount of the Commitments of such Lender (other than the Swingline
Commitment) during the preceding quarter (or other period commencing with the
Restatement Effective Date or ending with the Revolving Credit Maturity Date or
the date on which the Commitments of such Lender shall expire or be
terminated). All Commitment Fees shall be computed on the basis of the actual
number of days elapsed in a year of 360 days. The Commitment Fee due to each
Lender shall commence to accrue on the Restatement Effective Date and shall
cease to accrue on the date on which the Commitment of such Lender shall expire
or be terminated as provided herein. For purposes of calculating Commitment
Fees only, no portion of the Revolving Credit Commitments shall be deemed
utilized as a result of outstanding Swingline Loans.
(b) Polypore agrees to pay to the Administrative
Agent, for its own account, the administration fees set forth in the Fee Letter
at the times and in the amounts specified therein (the “Administrative Agent
Fees”).
(c) Polypore agrees to pay (i) to each
Revolving Credit Lender, through the Administrative Agent, on each Fee Payment
Date a fee (an “L/C Participation Fee”) calculated on such Lender’s Pro Rata
Percentage of the daily aggregate L/C Exposure (excluding the portion thereof
attributable to unreimbursed L/C Disbursements) during the preceding quarter (or
shorter period commencing with the Restatement Effective Date or ending with the
Revolving Credit Maturity Date or the date on which all Letters of Credit have
been canceled or have expired and the Revolving Credit Commitments of all
Lenders shall have been terminated) at a rate per annum equal to the Applicable
Percentage from time to time used to determine the interest rate on Revolving
Credit Borrowings comprised of Eurodollar Loans pursuant to Section 2.6, and
(ii) to the Issuing Bank, for its own account, a fronting fee of 0.25% per annum
on the undrawn and unexpired amount of each Letter of Credit, payable quarterly
in arrears on each Fee Payment Date after the issuance date (the “Issuing Bank
Fees”). All L/C Participation Fees and Issuing Bank Fees shall be computed on
the basis of the actual number of days elapsed in a year of 360 days.
37
(d) All Fees shall be paid in Dollars on the
dates due, in immediately available funds, to the Administrative Agent for
distribution, if and as appropriate, among the Lenders, except that the Issuing
Bank Fees shall be paid directly to the Issuing Bank. Once paid, none of the
Fees shall be refundable under any circumstances.
SECTION 2.6. Interest on Loans. (a) Subject to the provisions of Section 2.7,
the Loans comprising each ABR Borrowing, including each Swingline Loan, shall
bear interest (computed on the basis of the actual number of days elapsed over a
year of 365 or 366 days, as the case may be, when the Alternate Base Rate is
determined by reference to the Prime Rate and over a year of 360 days at all
other times and calculated from and including the date of such Borrowing to but
excluding the date of repayment thereof) at a rate per annum equal to the
Alternate Base Rate plus the Applicable Percentage in effect from time to time.
(b) Subject to the provisions of Section 2.7,
the Loans comprising each Eurodollar Borrowing shall bear interest (computed on
the basis of the actual number of days elapsed over a year of 360 days) at a
rate per annum equal to the Eurodollar Rate for the Interest Period in effect
for such Borrowing plus the Applicable Percentage in effect from time to time.
(c) Interest on each Loan shall be payable to
the applicable Lenders, through the Administrative Agent, on the Interest
Payment Dates applicable to such Loan except as otherwise provided in this
Agreement. The applicable Alternate Base Rate or Eurodollar Rate for each
Interest Period or day within an Interest Period, as the case may be, shall be
determined by the Administrative Agent, and such determination shall be
SECTION 2.7. Default Interest. Any amount (whether of principal, interest,
Fees or otherwise) not paid when due hereunder or under any other Loan Document
shall bear interest, to the extent permitted by law (after as well as before
judgment), payable on demand, (a) in the case of principal, at the rate
otherwise applicable thereto pursuant to Section 2.6 plus 2.00% per annum and
(b) in all other cases, at a rate per annum (computed on the basis of the actual
number of days elapsed over a year of 365 or 366 days, as the case may be, when
other times) equal to the rate that would be applicable to an ABR Term Loan plus
2.00% per annum.
SECTION 2.8. Alternate Rate of Interest. In the event, and on each occasion,
that on the day two Business Days prior to the commencement of any Interest
Period for a Eurodollar Borrowing the Administrative Agent shall have determined
that dollar deposits in the principal amounts of the Loans comprising such
Borrowing are not generally available in the London interbank market, or that
the rates at which such dollar deposits are being offered will not adequately
and fairly reflect the cost to a majority in interest of the Lenders
participating or to participate in such Loan of making or maintaining its
Eurodollar Loan during such Interest Period, or that reasonable means do not
exist for ascertaining the Eurodollar Rate, the Administrative Agent shall, as
soon as practicable thereafter, give written or fax notice of such determination
to Polypore and the Lenders. In the event of any such determination, until the
Administrative Agent shall have advised Polypore and the Lenders that the
circumstances giving rise to such notice no longer exist, any request by
Polypore for a Eurodollar Borrowing pursuant to Section 2.3 or 2.10 shall be
deemed to be a request for an ABR Borrowing. Each determination by the
Administrative Agent under this Section 2.8 shall be conclusive absent manifest
error.
SECTION 2.9. Termination and Reduction of Commitments. (a) The Term Loan
Commitments shall automatically terminate at 5:00 p.m., New York City time, on
the Restatement Effective Date. The Revolving Credit Commitments, the Swingline
Commitment and the L/C Commitment shall automatically terminate on the Revolving
Credit Maturity Date.
38
(b) Upon at least three Business Days’ prior
irrevocable written or fax notice (or telephonic notice promptly confirmed by
written notice) to the Administrative Agent, Polypore may at any time in whole
permanently terminate, or from time to time in part permanently reduce, the Term
Loan Commitments or the Revolving Credit Commitments; provided, however, that
(i) each partial reduction of the Term Loan Commitments or the Revolving Credit
Commitments shall be in an integral multiple of $1,000,000 and in a minimum
amount of $1,000,000 and (ii) the Total Revolving Credit Commitment shall not be
reduced to an amount that is less than the Aggregate Revolving Credit Exposure
at the time.
(c) Each reduction in the Term Loan Commitments
or the Revolving Credit Commitments hereunder shall be made ratably among the
Lenders in accordance with their respective applicable Commitments. Polypore
shall pay to the Administrative Agent for the account of the applicable Lenders,
on the date of termination of the Commitments of any Class, all accrued and
unpaid Commitment Fees relating to such Class to but excluding the date of such
termination.
SECTION 2.10. Conversion and Continuation of Borrowings. Polypore shall have
the right at any time upon prior irrevocable notice to the Administrative Agent
(a) not later than 12:00 (noon), New York City time, one Business Day prior to
conversion, to convert any Eurodollar Borrowing into an ABR Borrowing, (b) not
later than 12:00 (noon), New York City time, three Business Days prior to
conversion or continuation, to convert any ABR Borrowing into a Eurodollar
Borrowing or to continue any Eurodollar Borrowing as a Eurodollar Borrowing for
an additional Interest Period, and (c) not later than 12:00 (noon), New York
City time, three Business Days prior to conversion, to convert the Interest
Period with respect to any Eurodollar Borrowing to another permissible Interest
Period, subject in each case to the following:
(i) each conversion or continuation shall be
made pro rata among the Lenders in accordance with the respective principal
amounts of the Loans comprising the converted or continued Borrowing;
(ii) if less than all the outstanding principal
amount of any Borrowing shall be converted or continued, then each resulting
Borrowing shall satisfy the limitations specified in Sections 2.2(a) and
2.2(b) regarding the principal amount and maximum number of Borrowings of the
relevant Type;
(iii) each conversion shall be effected by each
Lender and the Administrative Agent by recording for the account of such Lender
the new Loan of such Lender resulting from such conversion and reducing the Loan
(or portion thereof) of such Lender being converted by an equivalent principal
amount; accrued interest on any Eurodollar Loan (or portion thereof) being
converted shall be paid by Polypore at the time of conversion;
(iv) if any Eurodollar Borrowing is converted at a
time other than the end of the Interest Period applicable thereto, Polypore
shall pay, upon demand, any amounts due to the Lenders pursuant to Section 2.15;
and
(v) after the occurrence and during the
continuance of a Default specified in clause (b), (c), (g) or (h) of Article VII
(without regard to any applicable grace period in such clause (c)), no
outstanding Loan may be converted into, or continued as, a Eurodollar Loan.
Each notice pursuant to this Section 2.10 shall be irrevocable and shall refer
to this Agreement and specify (i) the identity, currency denomination and amount
of the Borrowing that Polypore requests be converted or continued, (ii) whether
such Borrowing is to be converted to or continued as a Eurodollar Borrowing or
an ABR Borrowing, (iii) if such notice requests a conversion, the date of such
conversion
39
(which shall be a Business Day) and (iv) if such Borrowing is to be converted to
or continued as a Eurodollar Borrowing, the Interest Period with respect
thereto. If no Interest Period is specified in any such notice with respect to
any conversion to or continuation as a Eurodollar Borrowing, Polypore shall be
Administrative Agent shall advise the Lenders of any notice given pursuant to
this Section 2.10 and of each Lender’s portion of any converted or continued
Borrowing. If Polypore shall not have given notice in accordance with this
Section 2.10 to continue any Eurodollar Borrowing into a subsequent Interest
Period (and shall not otherwise have given notice in accordance with this
Section 2.10 to convert such Borrowing), such Borrowing shall, at the end of the
Interest Period applicable thereto (unless repaid pursuant to the terms hereof),
automatically be converted into an ABR Borrowing.
SECTION 2.11. Repayment of Term Loan Borrowings. (a) Polypore shall pay to
the applicable Lenders, through the Administrative Agent, on the dates set forth
below, or if any such date is not a Business Day, on the next preceding Business
Day (each such date being called a “Repayment Date”), a principal amount of the
Term Loans (as adjusted from time to time pursuant to Sections 2.11(c), 2.12,
2.13(e) and 2.23(d)) equal to such Lender’s Term Percentage multiplied by a
percentage of the original aggregate principal amount of the Term Loans as set
forth below (together in each case with accrued and unpaid interest on the
principal amount to be paid to but excluding the date of such payment):
Repayment Date
Amount
September 29, 2012
1.250
%
December 29, 2012
1.250
%
March 30, 2013
1.250
%
June 29, 2013
1.250
%
September 28, 2013
1.250
%
December 29, 2013
1.250
%
March 29, 2014
1.250
%
June 28, 2014
1.250
%
September 27, 2014
1.875
%
January 3, 2015
1.875
%
March 28, 2015
1.875
%
June 27, 2015
1.875
%
October 3, 2015
2.500
%
January 2, 2016
2.500
%
April 2, 2016
2.500
%
July 2, 2016
2.500
%
October 1, 2016
3.750
%
December 31, 2016
3.750
%
April 1, 2017
3.750
%
Term Loan Maturity Date
57.500
%
(b) Polypore shall pay to the Administrative
Agent, for the account of the Lenders, on each Incremental Term Loan Repayment
Date, a principal amount of the Other Term Loans (as adjusted from time to time
pursuant to Sections 2.11(c), 2.12 and 2.13(e)) equal to the amount set forth
for such date in the applicable Incremental Assumption Agreement, together in
each case with accrued and unpaid interest on the principal amount to be paid to
but excluding the date of such payment.
(c) In the event and on each occasion that any
Term Loan Commitment (other than any Incremental Term Loan Commitment) shall be
reduced or shall expire or terminate other than as a result
40
of the making of a Term Loan, the installments payable on each Repayment Date
shall be reduced pro rata by an aggregate amount equal to the amount of such
(d) To the extent not previously paid, all Term
Loans shall be due and payable on the Term Loan Maturity Date and all
Incremental Term Loans shall be due and payable on the applicable Incremental
Term Loan Maturity Date, together in each case with accrued and unpaid interest
on the principal amount to be paid to but excluding the date of payment.
(e) All repayments pursuant to this
Section 2.11 shall be subject to Section 2.15, but shall otherwise be without
premium or penalty.
SECTION 2.12. Optional Prepayments. (a) Polypore shall have the right at any
time and from time to time to prepay any Borrowing, in whole or in part, upon at
least three Business Days’ prior written or fax notice (or telephonic notice
promptly confirmed by written notice) in the case of Eurodollar Loans, or
written or fax notice (or telephonic notice promptly confirmed by written
notice) at least one Business Day prior to the date of prepayment in the case of
ABR Loans, to the Administrative Agent before 12:00 (noon), New York City time;
provided, however, that each partial prepayment of Loans shall be in an amount
that is an integral multiple of $100,000 and not less than $500,000.
(b) Optional prepayments of outstanding Term
Loans under this Agreement shall be applied to the installments thereof as
directed by Polypore.
(c) Each notice of prepayment shall specify the
prepayment date and the principal amount and currency denomination of each
Borrowing (or portion thereof) to be prepaid, shall be irrevocable, unless
conditioned upon the effectiveness of any extension, renewal, refinancing or
replacement, in whole or in part, of the Obligations, and shall commit Polypore
to prepay such Borrowing by the amount stated therein on the date stated
therein. All prepayments under this Section 2.12 shall be subject to
Section 2.15 but otherwise without premium or penalty. All prepayments under
this Section 2.12 shall be accompanied by accrued and unpaid interest on the
principal amount to be prepaid to but excluding the date of payment; provided,
however, that in the case of a prepayment of an ABR Revolving Loan or a
Swingline Loan that is not made in connection with a termination of the
Revolving Credit Commitments, the accrued and unpaid interest on the principal
amount prepaid shall be payable on the next scheduled Interest Payment Date with
respect to such ABR Revolving Loan or Swingline Loan.
SECTION 2.13. Mandatory Prepayments. (a) In the event of any termination of
all the Revolving Credit Commitments, Polypore shall, on the date of such
termination, repay or prepay all its outstanding Revolving Credit Borrowings and
all outstanding Swingline Loans and replace all outstanding Letters of Credit.
If as a result of any partial reduction of the Revolving Credit Commitments the
Aggregate Revolving Credit Exposure would exceed the Total Revolving Credit
Commitment after giving effect thereto, then Polypore shall, on the date of such
reduction, repay or prepay Revolving Credit Borrowings or Swingline Loans (or a
combination thereof) and/or replace outstanding Letters of Credit in an amount
sufficient to eliminate such excess.
(b) Not later than the third Business Day
following the completion of any Asset Sale or Recovery Event, Polypore shall
apply 100% of the Net Cash Proceeds received with respect thereto to prepay
outstanding Term Loans in accordance with Section 2.13(e), provided, that if the
Microporous Disposition constitutes an Asset Sale, the Net Cash Proceeds thereof
shall only be required to be so applied to the extent necessary to reduce the
Senior Leverage Ratio (determined without giving effect to clause (ii) of the
definition thereof) to 1.50 to 1.00.
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(c) No later than the earlier of (i) 90 days
after the end of each fiscal year of Polypore, commencing with the fiscal year
ending on December 29, 2013, and (ii) the date on which the financial statements
with respect to such period are delivered pursuant to Section 5.4(a), Polypore
shall prepay outstanding Term Loans in accordance with Section 2.13(e) in an
aggregate principal amount equal to 50% of Excess Cash Flow for the fiscal year
then ended; provided, however, that in the event the Total Leverage Ratio at the
end of such fiscal year was equal to or less than 3.50 to 1.00 and greater than
or equal to 3.00 to 1.00, then such amount shall be reduced to 25% of such
Excess Cash Flow and in the event the Total Leverage Ratio at the end of such
fiscal year was less than 3.00 to 1.00, no such prepayment shall be required.
(d) In the event that any Loan Party or any
subsidiary of a Loan Party shall receive Net Cash Proceeds from the issuance or
other disposition of Indebtedness for money borrowed (or similar transaction
evidenced by bonds, debentures, notes or similar instruments) of any Loan Party
or any subsidiary of a Loan Party (other than Indebtedness for money borrowed
(or similar transaction evidenced by bonds, debentures, notes or similar
instruments) permitted pursuant to Section 6.1, except for Indebtedness incurred
under clause (xi) of the definition of “Permitted Indebtedness”, for which a
mandatory prepayment shall be required), Polypore shall, substantially
simultaneously with (and in any event not later than the third Business Day next
following) the receipt of such Net Cash Proceeds by such Loan Party or such
subsidiary, apply an amount equal to 100% of such Net Cash Proceeds to prepay
outstanding Term Loans in accordance with Section 2.13(e).
(e) Mandatory prepayments of outstanding Term
Loans under this Agreement shall be applied, first, to the next four scheduled
installments thereof in direct order of maturity and, thereafter, ratably to the
installments thereof.
(f) Polypore shall deliver to the
Administrative Agent, at the time of each prepayment required under this
Section 2.13, (i) a certificate signed by a Financial Officer of Polypore
setting forth in reasonable detail the calculation of the amount of such
prepayment and (ii) to the extent practicable, at least three days prior written
notice of such prepayment. Each notice of prepayment shall specify the
prepayment date, the Type of each Loan being prepaid and the principal amount of
each Loan (or portion thereof) to be prepaid. All prepayments of Borrowings
under this Section 2.13 shall be subject to Section 2.15, but shall otherwise be
without premium or penalty.
SECTION 2.14. Reserve Requirements; Change in Circumstances. (a)
Notwithstanding any other provision of this Agreement, if any Change in Law
shall (i) impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account of or
credit extended by any Lender or the Issuing Bank (except any such reserve
requirement which is reflected in the Eurodollar Rate), (ii) subject any Lender
to any Taxes (other than (A) Indemnified Taxes covered by Section 2.19,
(B) Other Taxes and (C) Excluded Taxes) on its loans, loan principal, letters of
liabilities or capital attributable thereto, or (iii) shall impose on such
Lender or the Issuing Bank or the London interbank market any other condition
affecting this Agreement or Eurodollar Loans made by such Lender or any Letter
of Credit or participation therein, and the result of any of the foregoing shall
be to increase the cost to such Lender or the Issuing Bank of making or
maintaining any Eurodollar Loan (or in the case of (ii) any Loans) or increase
the cost to any Lender of issuing or maintaining any Letter of Credit or
purchasing or maintaining a participation therein or to reduce the amount of any
sum received or receivable by such Lender or the Issuing Bank hereunder (whether
of principal, interest or otherwise), in each case, by an amount deemed by such
Lender or the Issuing Bank to be material, then Polypore will pay to such Lender
or the Issuing Bank, as the case may be, upon demand such additional amount or
amounts as will compensate such Lender or the Issuing Bank, as the case may be,
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(b) If any Lender or the Issuing Bank shall have
determined that any Change in Law regarding capital or liquidity requirements
the Issuing Bank’s capital or on the capital of such Lender’s or the Issuing
Bank’s holding company, if any, as a consequence of this Agreement or the Loans
made or participations in Letters of Credit purchased by such Lender pursuant
hereto or the Letters of Credit issued by the Issuing Bank pursuant hereto to a
level below that which such Lender or the Issuing Bank or such Lender’s or the
(taking into consideration such Lender’s or the Issuing Bank’s policies and the
policies of such Lender’s or the Issuing Bank’s holding company with respect to
capital adequacy or liquidity) by an amount deemed by such Lender or the Issuing
Bank to be material, then from time to time Polypore shall pay to such Lender or
the Issuing Bank, as the case may be, such additional amount or amounts as will
compensate such Lender or the Issuing Bank or such Lender’s or the Issuing
Bank’s holding company for any such reduction suffered.
(c) Notwithstanding anything herein to the
contrary, (i) all requests, rules, guidelines, requirements and directives
promulgated by the Bank for International Settlements, the Basel Committee on
Banking Supervision (or any successor or similar authority) or by United States
or foreign regulatory authorities, in each case pursuant to Basel III, and
(ii) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all
requests, rules, guidelines, requirements and directives thereunder or issued in
connection therewith or in implementation thereof, shall in each case be deemed
to be a Change in Law, regardless of the date enacted, adopted, issued or
implemented.
(d) A certificate of a Lender or the Issuing
Bank setting forth the amount or amounts necessary to compensate such Lender or
the Issuing Bank or its holding company, as applicable, as specified in
paragraph (a) or (b) above shall be delivered to Polypore and shall be
conclusive absent manifest error. Polypore shall pay such Lender or the Issuing
Bank the amount shown as due on any such certificate delivered by it within 10
days after its receipt of the same.
(e) Failure or delay on the part of any Lender
or the Issuing Bank to demand compensation for any increased costs or reduction
in amounts received or receivable or reduction in return on capital shall not
constitute a waiver of such Lender’s or the Issuing Bank’s right to demand such
compensation; provided, that Polypore shall not be under any obligation to
compensate any Lender or the Issuing Bank under paragraph (a) or (b) above with
respect to increased costs or reductions with respect to any period prior to the
date that is 180 days prior to such request if such Lender or the Issuing Bank
knew or could reasonably have been expected to know of the circumstances giving
rise to such increased costs or reductions and of the fact that such
circumstances would result in a claim for increased compensation by reason of
such increased costs or reductions; provided, further, that the foregoing
limitation shall not apply to any increased costs or reductions arising out of
the retroactive application of any Change in Law within such 180-day period.
The protection of this Section shall be available to each Lender and the Issuing
Bank regardless of any possible contention of the invalidity or inapplicability
of the Change in Law that shall have occurred or been imposed.
SECTION 2.15. Indemnity. Polypore shall indemnify each Lender against any loss
or expense that such Lender may sustain or incur as a consequence of (a) any
event, other than a default by such Lender in the performance of its obligations
hereunder, which results in (i) such Lender receiving or being deemed to receive
any amount on account of the principal of any Eurodollar Loan prior to the end
of the Interest Period in effect therefor, (ii) the conversion of any Eurodollar
Loan to an ABR Loan, or the conversion of the Interest Period with respect to
any Eurodollar Loan, in each case other than on the last day of the Interest
Period in effect therefor, or (iii) any Eurodollar Loan to be made by such
Lender (including any Eurodollar Loan to be made pursuant to a conversion or
continuation under Section 2.10) not being made after notice of such Loan shall
have been given by Polypore hereunder (any of the events
43
referred to in this clause (a) being called a “Breakage Event”) or (b) any
default in the making of any payment or prepayment required to be made
hereunder. In the case of any Breakage Event, such loss shall include an amount
equal to the excess, as reasonably determined by such Lender, of (i) its cost of
obtaining funds for the Eurodollar Loan that is the subject of such Breakage
Event for the period from the date of such Breakage Event to the last day of the
Interest Period in effect (or that would have been in effect) for such Loan over
(ii) the amount of interest likely to be realized by such Lender in redeploying
the funds released or not utilized by reason of such Breakage Event for such
period, but such loss shall not, in any event, include any lost profit or loss
of applicable margin. A certificate of any Lender setting forth any amount or
amounts which such Lender is entitled to receive pursuant to this Section 2.15
shall be delivered to Polypore and shall be conclusive absent manifest error.
SECTION 2.16. Pro Rata Treatment. Except as otherwise provided herein, each
Borrowing, each payment or prepayment of principal of any Borrowing, each
payment of interest on the Loans, each payment of the Commitment Fees or the L/C
Participation Fees, each reduction of the Term Loan Commitments or the Revolving
Credit Commitments and each conversion of any Borrowing to or continuation of
any Borrowing as a Borrowing of any Type shall be allocated pro rata among the
Lenders in accordance with their respective applicable Commitments (or, if such
Commitments shall have expired or been terminated, in accordance with the
respective principal amounts of their outstanding Loans or participations in L/C
Disbursements, as applicable). Each Lender agrees that in computing such
Lender’s portion of any Borrowing to be made hereunder, the Administrative Agent
may, in its discretion, round each Lender’s percentage of such Borrowing to the
next higher or lower whole dollar amount.
SECTION 2.17. Sharing of Setoffs. Each Lender agrees that if it shall, through
the exercise of a right of banker’s lien, setoff or counterclaim against
Polypore or any other Loan Party, or pursuant to a secured claim under
Section 506 of Title 11 of the United States Code or other security or interest
arising from, or in lieu of, such secured claim, received by such Lender under
any applicable bankruptcy, insolvency or other similar law or otherwise, or by
any other means, obtain payment (voluntary or involuntary) in respect of any
Loan or L/C Disbursement as a result of which the unpaid portion of its Loans
and participations in L/C Disbursements shall be proportionately less than the
unpaid portion of the Loans and participations in L/C Disbursements of any other
Lender, it shall be deemed simultaneously to have purchased from such other
Lender at face value, and shall promptly pay to such other Lender the purchase
price for, a participation in the Loans and L/C Exposure of such other Lender,
so that the aggregate unpaid amount of the Loans and L/C Exposure and
participations in Loans and L/C Exposure held by each Lender shall be in the
same proportion to the aggregate unpaid amount of all Loans and L/C Exposure
then outstanding as the amount of its Loans and L/C Exposure prior to such
exercise of banker’s lien, setoff or counterclaim or other event was to the
amount of all Loans and L/C Exposure outstanding prior to such exercise of
banker’s lien, setoff or counterclaim or other event; provided, however, that if
any such purchase or purchases or adjustments shall be made pursuant to this
Section 2.17 and the payment giving rise thereto shall thereafter be recovered,
such purchase or purchases or adjustments shall be rescinded to the extent of
such recovery and the purchase price or prices or adjustment restored without
interest. Polypore expressly consents to the foregoing arrangements and agree
that any Lender holding a participation in a Loan or L/C Disbursement deemed to
have been so purchased may exercise any and all rights of banker’s lien, setoff
or counterclaim with respect to any and all moneys owing by Polypore to such
Lender by reason thereof as fully as if such Lender had made a Loan directly to
Polypore in the amount of such participation.
SECTION 2.18. Payments. (a) Polypore shall make each payment (including
principal of or interest on any Borrowing or any L/C Disbursement or any Fees or
other amounts) hereunder and under any other Loan Document not later than 12:00
(noon), New York City time, on the date when due in Dollars and in immediately
available funds, without setoff, defense or counterclaim. Each such payment
(other than (i) Issuing Bank Fees, which shall be paid directly to the Issuing
Bank, and (ii) principal of
44
and interest on Swingline Loans, which shall be paid directly to the Swingline
Lender except as otherwise provided in Section 2.20(e)) shall be made to the
Administrative Agent at the Funding Office, or at such other location as the
Administrative Agent shall notify Polypore from time to time in accordance with
Section 9.1. The Administrative Agent shall distribute any such payments
received by it for the account of any other Person to the appropriate recipient
promptly following receipt thereof.
(b) Except as otherwise expressly provided
herein, whenever any payment (including principal of or interest on any
Borrowing or any Fees or other amounts) hereunder or under any other Loan
Document shall become due, or otherwise would occur, on a day that is not a
Business Day, such payment may be made on the next succeeding Business Day, and
such extension of time shall in such case be included in the computation of
interest or Fees, if applicable.
SECTION 2.19. Taxes. (a) Any and all payments by or on account of any
obligation of Polypore or any Loan Party hereunder or under any other Loan
Document shall be made free and clear of and without deduction for any
Indemnified Taxes or Other Taxes; provided, that if the applicable withholding
agent shall be required to deduct any Indemnified Taxes or Other Taxes from such
payments as determined in good faith, then (i) the sum payable by Polypore or
applicable Loan Party shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section) the Administrative Agent or such Lender (as the case may be)
deductions been made, (ii) the applicable withholding agent shall make such
deductions and (iii) the applicable withholding agent shall pay the full amount
deducted to the relevant Governmental Authority in accordance with applicable
law.
(b) In addition, Polypore shall pay any Other
Taxes to the relevant Governmental Authority in accordance with applicable law.
(c) Polypore shall indemnify the Administrative
Agent and each Lender, within 10 days after written demand therefor, for the
full amount of any Indemnified Taxes or Other Taxes paid by the Administrative
Agent or such Lender, as the case may be, on or with respect to any payment by
or on account of any obligation of Polypore or any Loan Party hereunder or under
any other Loan Document (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to amounts payable under this Section) and any
penalties, interest and reasonable expenses arising therefrom or with respect
thereto (other than penalties or interest attributable to (i) a failure or delay
by the Administrative Agent or such Lender, as applicable, in making such
written demand to Polypore or (ii) the gross negligence or willful misconduct of
the Administrative Agent or such Lender, as applicable), whether or not such
Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted
by the relevant Governmental Authority. A certificate as to the amount of such
payment or liability delivered to Polypore by a Lender, or by the Administrative
Agent on its behalf or on behalf of a Lender, shall be conclusive absent
manifest error.
(d) As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by Polypore or any other Loan Party to a
Governmental Authority, Polypore shall deliver to the Administrative Agent the
original or a certified copy of a receipt issued by such Governmental Authority
evidencing such payment, a copy of the return reporting such payment or other
evidence of such payment reasonably satisfactory to the Administrative Agent.
(e) (i) Any Lender that is entitled to an
exemption from or reduction of withholding Tax with respect to payments made
under any Loan Document shall deliver to Polypore and the Administrative Agent,
at the time or times reasonably requested by Polypore or the Administrative
Agent, such properly completed and executed documentation reasonably requested
by Polypore or the Administrative Agent as will permit such payments to be made
without withholding or at a reduced rate of withholding. In
45
addition, any Lender, if reasonably requested by Polypore or the Administrative
Agent, shall deliver such other documentation prescribed by applicable law or
reasonably requested by Polypore or the Administrative Agent as will enable
Polypore or the Administrative Agent to determine whether or not such Lender is
subject to backup withholding or information reporting requirements.
documentation set forth in Section 2.19(e)(ii)(A), (ii)(B) and (ii)(D) below)
shall not be required if in the Lender’s reasonable judgment such completion,
of such Lender.
(ii) Without limiting the generality of the
foregoing:
to Polypore and the Administrative Agent on or prior to the date on which such
upon the reasonable request of Polypore or the Administrative Agent), executed
originals of IRS Form W-9 certifying that such Lender is exempt from U.S.
Federal backup withholding tax;
(B) any Lender that is not a U.S. Person (a
“Non-U.S. Lender”) shall, to the extent it is legally entitled to do so, deliver
to Polypore and the Administrative Agent (in such number of copies as shall be
requested by the recipient) on or prior to the date on which such Lender becomes
a Lender under this Agreement (and from time to time thereafter upon the
reasonable request of Polypore or the Administrative Agent), whichever of the
following is applicable:
(1) in the case of a Non-U.S. Lender claiming
the benefits of an income tax treaty to which the United States is a party
(x) with respect to payments of interest under any Loan Document, executed
originals of IRS Form W-8BEN establishing an exemption from, or reduction of,
U.S. Federal withholding Tax pursuant to the “interest” article of such tax
Document, IRS Form W-8BEN establishing an exemption from, or reduction of, U.S.
Federal withholding Tax pursuant to the “business profits” or “other income”
article of such tax treaty;
(3) in the case of a Non-U.S. Lender claiming
the benefits of the exemption for portfolio interest under Section 881(c) of the
Code, (x) a certificate substantially in the form of Exhibit G-1 to the effect
that such Non-U.S. Lender is not a “bank” within the meaning of
Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of Polypore within
Compliance Certificate”) and (y) executed originals of IRS Form W-8BEN; or
(4) to the extent a Non-U.S. Lender is not the
beneficial owner, executed originals of IRS Form W-8IMY, accompanied by IRS
Form W-8ECI, IRS Form W-8BEN, a U.S. Tax Compliance Certificate substantially in
the form of Exhibit G-2 or Exhibit G-3, IRS Form W-9, and/or other certification
documents from each beneficial owner, as applicable; provided that if the Non-
46
U.S. Lender is a partnership and one or more direct or indirect partners of such
Non-U.S. Lender are claiming the portfolio interest exemption, such Non-U.S.
of Exhibit G-4 on behalf of each such direct and indirect partner;
(C) any Non-U.S. Lender shall, to the extent it is
legally entitled to do so, deliver to Polypore and the Administrative Agent (in
such number of copies as shall be requested by the recipient) on or prior to the
date on which such Non-U.S. Lender becomes a Lender under this Agreement (and
from time to time thereafter upon the reasonable request of Polypore or the
Administrative Agent), executed originals of any other form prescribed by
applicable law as a basis for claiming exemption from or a reduction in U.S.
Federal withholding Tax, duly completed, together with such supplementary
documentation as may be prescribed by applicable law to permit Polypore or the
Administrative Agent to determine the withholding or deduction required to be
made; and
Document would be subject to U.S. Federal withholding Tax imposed by FATCA if
such Lender were to fail to comply with the applicable reporting requirements of
applicable), such Lender shall deliver to Polypore and the Administrative Agent
at the time or times prescribed by law and at such time or times reasonably
requested by Polypore or the Administrative Agent such documentation prescribed
by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the
Code) and such additional documentation reasonably requested by Polypore or the
Administrative Agent as may be necessary for Polypore and the Administrative
Agent to comply with their obligations under FATCA and to determine that such
Lender has complied with such Lender’s obligations under FATCA or to determine
the amount to deduct and withhold from such payment. Solely for purposes of
this clause (D), “FATCA” shall include any amendments made to FATCA after the
date of this Agreement.
form or certification or promptly notify Polypore and the Administrative Agent
in writing of its legal inability to do so.
(f) Each Lender shall severally indemnify the
Administrative Agent, within 10 days after demand therefor, for (i) any Taxes
attributable to such Lender (but only to the extent that any Loan Party has not
already indemnified the Administrative Agent for such Taxes and without limiting
the obligation of the Loan Parties to do so) and (ii) any Taxes attributable to
such Lender’s failure to comply with the provisions of Section 9.4(c) relating
to the maintenance of a Participant Register, in either case, that are payable
or paid by the Administrative Agent in connection with any Loan Document, and
any reasonable expenses arising therefrom or with respect thereto, whether or
not such Taxes were correctly or legally imposed or asserted by the relevant
liability delivered to any Lender by the Administrative Agent shall be
conclusive absent manifest error. Each Lender hereby authorizes the
Administrative Agent to set off and apply any and all amounts at any time owing
to such Lender under any Loan Document or otherwise payable by the
Administrative Agent to the Lender from any other source against any amount due
to the Administrative Agent under this paragraph (f).
Mitigate. (a) In the event (i) any Lender or the Issuing Bank delivers a
certificate requesting compensation
47
pursuant to Section 2.14, (ii) Polypore is required to pay any additional amount
to any Lender or the Issuing Bank or any Governmental Authority on account of
any Lender or the Issuing Bank pursuant to Section 2.19, (iii) any Lender
becomes a Defaulting Lender or (iv) any Lender refuses to consent to any
amendment, waiver or other modification of any Loan Document requested by
Polypore that requires the consent of a greater percentage of the Lenders than
the Required Lenders and such amendment, waiver or other modification is
consented to by the Required Lenders, Polypore may, at its sole expense and
effort (including with respect to the processing and recordation fee referred to
in Section 9.4(b)), upon notice to such Lender or the Issuing Bank and the
Administrative Agent, require such Lender or the Issuing Bank to transfer and
assign, without recourse, representation or warranty, except as to warranty as
to its ownership of the assigned obligations (in accordance with and subject to
the restrictions contained in Section 9.4), all of its interests, rights and
obligations under this Agreement to an assignee that shall assume such assigned
obligations and, with respect to clause (iv) above, shall consent to such
requested amendment, waiver or other modification of any Loan Document (which
assignee may be another Lender, if a Lender accepts such assignment); provided
that (x) such assignment shall not conflict with any law, rule or regulation or
order of any court or other Governmental Authority having jurisdiction,
(y) Polypore shall have received the prior written consent of the Administrative
Agent (and, if a Revolving Credit Commitment is being assigned, of the Issuing
Bank and the Swingline Lender), which consent shall not unreasonably be
withheld, and (z) Polypore or such assignee shall have paid to the affected
Lender or the Issuing Bank in immediately available funds an amount equal to the
sum of the principal of and interest accrued to the date of such payment on the
outstanding Loans or L/C Disbursements of such Lender or the Issuing Bank plus
all Fees and other amounts accrued for the account of such Lender or the Issuing
Bank hereunder (including any amounts under Section 2.14 and Section 2.15);
provided, further, that, if prior to any such transfer and assignment the
circumstances or event that resulted in such Lender’s or the Issuing Bank’s
claim for compensation under Section 2.14 or the amounts paid pursuant to
Section 2.19, as the case may be, cease to cause such Lender or the Issuing Bank
to suffer increased costs or reductions in amounts received or receivable or
reduction in return on capital or cease to result in amounts being payable under
Section 2.19, as the case may be (including as a result of any action taken by
such Lender or the Issuing Bank pursuant to paragraph (b) below), or if such
Lender or the Issuing Bank shall waive its right to claim further compensation
under Section 2.14 in respect of such circumstances or event or shall waive its
right to further payments under Section 2.19 in respect of such circumstances or
event or shall consent to the proposed amendment, waiver, consent or other
modification, as the case may be, then such Lender or the Issuing Bank shall not
thereafter be required to make any such transfer and assignment hereunder. Each
party hereto agrees that an assignment required pursuant to this paragraph may
be effected pursuant to an Assignment and Assumption executed by Polypore, the
Administrative Agent and the assignee, and that the Lender required to make such
assignment need not be a party thereto in order for such assignment to be
effective.
(b) If (i) any Lender or the Issuing Bank shall
request compensation under Section 2.14 or (ii) Polypore is required to pay any
additional amount to any Lender or the Issuing Bank or any Governmental
Authority on account of any Lender or the Issuing Bank, pursuant to
Section 2.19, then such Lender or the Issuing Bank shall use reasonable efforts
(which shall not require such Lender or the Issuing Bank to incur an
unreimbursed loss or unreimbursed cost or expense or otherwise take any action
inconsistent with its internal policies or legal or regulatory restrictions or
suffer any disadvantage or burden deemed by it to be significant) (x) to file
any certificate or document reasonably requested in writing by Polypore or
(y) to assign its rights and delegate and transfer its obligations hereunder to
another of its offices, branches or Affiliates, if such filing or assignment
would reduce its claims for compensation under Section 2.14 or would reduce
amounts payable pursuant to Section 2.19, as the case may be, in the future.
Polypore hereby agrees to pay all reasonable costs and expenses incurred by any
Lender or the Issuing Bank in connection with any such filing or assignment,
delegation and transfer.
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SECTION 2.21. Swingline Loans. (a) Swingline Commitment. Subject to the
terms and conditions and relying upon the representations and warranties herein
set forth, the Swingline Lender agrees to make loans to Polypore at any time and
from time to time on and after the Restatement Effective Date and until the
earlier of the Revolving Credit Maturity Date and the termination of the
Revolving Credit Commitments in accordance with the terms hereof, in an
aggregate principal amount at any time outstanding that will not result in
(i) the aggregate principal amount of all Swingline Loans exceeding $15,000,000
in the aggregate or (ii) the Aggregate Revolving Credit Exposure, after giving
effect to any Swingline Loan, exceeding the Total Revolving Credit Commitment.
Each Swingline Loan shall be in a principal amount that is an integral multiple
of $100,000 and not less than $100,000. The Swingline Commitment may be
terminated or reduced from time to time as provided herein. Within the
foregoing limits, Polypore may borrow, pay or prepay and reborrow Swingline
Loans hereunder, subject to the terms, conditions and limitations set forth
herein.
(b) Swingline Loan Borrowing Procedure. Polypore
shall notify the Swingline Lender by fax, or by telephone (confirmed by fax),
not later than 12:00 (noon), New York City time, on the day of a proposed
Swingline Loan. Such notice shall be delivered on a Business Day, shall be
irrevocable and shall refer to this Agreement and shall specify the requested
date (which shall be a Business Day) and amount of such Swingline Loan and the
wire transfer instructions for the account of Polypore to which the proceeds of
such Swingline Loan should be transferred. The Swingline Lender shall promptly
make each Swingline Loan by wire transfer to the account specified by Polypore
in such request.
(c) Prepayment. Polypore shall have the right
at any time and from time to time to prepay any Swingline Loan, in whole or in
part, upon giving written or fax notice (or telephonic notice promptly confirmed
by written notice) to the Swingline Lender and to the Administrative Agent
before 12:00 (noon), New York City time on the date of prepayment at the
Swingline Lender’s address for notices specified in Section 9.1.
(d) Interest. Each Swingline Loan shall be an
ABR Loan and, subject to the provisions of Section 2.7, shall bear interest at
the rate provided for the ABR Revolving Loans as provided in Section 2.6(a).
(e) Participations. The Swingline Lender may
by written notice given to the Administrative Agent not later than 11:00 a.m.,
New York City time, on any Business Day require the Revolving Credit Lenders to
acquire participations on such Business Day in all or a portion of the Swingline
Loans outstanding. Such notice shall specify the aggregate amount of Swingline
Loans in which the Revolving Credit Lenders will participate. The
Administrative Agent will, promptly upon receipt of such notice, give notice to
each Revolving Credit Lender, specifying in such notice such Lender’s Pro Rata
Percentage of such Swingline Loan or Loans. In furtherance of the foregoing,
each Revolving Credit Lender hereby absolutely and unconditionally agrees, upon
receipt of notice as provided above, to pay to the Administrative Agent, for the
account of the Swingline Lender, such Revolving Credit Lender’s Pro Rata
Percentage of such Swingline Loan or Loans. Each Revolving Credit Lender
acknowledges and agrees that its obligation to acquire participations in
Swingline Loans pursuant to this paragraph is absolute and unconditional and
shall not be affected by any circumstance whatsoever, including the occurrence
and continuance of a Default or an Event of Default, and that each such payment
shall be made without any offset, abatement, withholding or reduction
whatsoever. Each Revolving Credit Lender shall comply with its obligation under
this paragraph by wire transfer of immediately available funds, in the same
manner as provided in Section 2.2(c) with respect to Loans made by such Lender
(and Section 2.2(c) shall apply, mutatis mutandis, to the payment obligations of
the Lenders) and the Administrative Agent shall promptly pay to the Swingline
Lender the amounts so received by it from the Lenders. The Administrative Agent
shall notify Polypore of any participations in any Swingline Loan acquired
pursuant to this paragraph and thereafter payments in respect of such Swingline
Loan shall be made to the Administrative Agent and not
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to the Swingline Lender. Any amounts received by the Swingline Lender from
Polypore (or other party on behalf of Polypore) in respect of a Swingline Loan
after receipt by the Swingline Lender of the proceeds of a sale of
participations therein shall be promptly remitted to the Administrative Agent;
any such amounts received by the Administrative Agent shall be promptly remitted
by the Administrative Agent to the Lenders that shall have made their payments
pursuant to this paragraph and to the Swingline Lender, as their interests may
appear. The purchase of participations in a Swingline Loan pursuant to this
paragraph shall not relieve Polypore (or other party liable for obligations of
Polypore) of any default in the payment thereof.
SECTION 2.22. Letters of Credit. (a) General. Polypore may request the
issuance of a Letter of Credit denominated in Dollars for its own account or for
the account of any Subsidiary, in a form reasonably acceptable to the
Administrative Agent and the Issuing Bank, at any time and from time to time
while the Revolving Credit Commitments remain in effect. This Section shall not
be construed to impose an obligation upon the Issuing Bank to issue any Letter
of Credit that is inconsistent with the terms and conditions of this Agreement.
(b) Notice of Issuance, Amendment, Renewal,
Extension; Certain Conditions. In order to request the issuance of a Letter of
Credit (or to amend, renew or extend an existing Letter of Credit), Polypore
shall hand deliver or fax to the Issuing Bank and the Administrative Agent
(reasonably in advance of the requested date of issuance, amendment, renewal or
extension) a notice requesting the issuance of a Letter of Credit, or
identifying the Letter of Credit to be amended, renewed or extended, the date of
issuance, amendment, renewal or extension, the date on which such Letter of
Credit is to expire (which shall comply with paragraph (c) below), whether such
Letter of Credit shall be issued in Dollars, the amount of such Letter of
Credit, the name and address of the beneficiary thereof and such other
information as shall be necessary to prepare such Letter of Credit. The Issuing
Bank shall promptly (i) notify the Administrative Agent in writing of the amount
and expiry date of each Letter of Credit issued by it and (ii) provide a copy of
each such Letter of Credit (and any amendments, renewals or extensions thereof)
to the Administrative Agent. A Letter of Credit shall be issued, amended,
renewed or extended only if, and upon issuance, amendment, renewal or extension
of each Letter of Credit Polypore shall be deemed to represent and warrant that,
after giving effect to such issuance, amendment, renewal or extension (i) the
L/C Exposure shall not exceed $50,000,000 and (ii) the Aggregate Revolving
Credit Exposure shall not exceed the Total Revolving Credit Commitment.
(c) Expiration Date. Each Letter of Credit
shall expire at the close of business on the earlier of the date one year after
the date of the issuance of such Letter of Credit and the date that is five
Business Days prior to the Revolving Credit Maturity Date, unless such Letter of
Credit expires by its terms on an earlier date; provided, that a Letter of
Credit may, upon the request of Polypore, include a provision whereby such
Letter of Credit shall be renewed automatically for additional consecutive
periods of 12 months or less (but not beyond the date that is five Business Days
prior to the Revolving Credit Maturity Date) unless the Issuing Bank notifies
the beneficiary thereof at least 30 days prior to the then-applicable expiration
date that such Letter of Credit will not be renewed.
(d) Participations. By the issuance of a Letter
of Credit and without any further action on the part of the Issuing Bank or the
Lenders, the Issuing Bank hereby grants to each Revolving Credit Lender, and
each such Revolving Credit Lender hereby acquires from the Issuing Bank, a
participation in such Letter of Credit equal to such Revolving Credit Lender’s
Pro Rata Percentage of the aggregate amount available to be drawn under such
Letter of Credit, effective upon the issuance of such Letter of Credit. In
consideration and in furtherance of the foregoing, each Revolving Credit Lender
for the account of the Issuing Bank, such Revolving Credit Lender’s Pro Rata
Percentage of each L/C Disbursement made by the Issuing Bank and not reimbursed
by Polypore (or, if applicable, another party pursuant to its obligations under
any other
50
Loan Document) forthwith on the date due as provided in Section 2.2(f) (or in
the event that any reimbursement received by the Issuing Lender shall be
required to be returned by it at any time). Each Revolving Credit Lender
to this paragraph in respect of Letters of Credit is absolute and unconditional
and shall not be affected by any circumstance whatsoever, including the
occurrence and continuance of a Default or an Event of Default, and that each
such payment shall be made without any offset, abatement, withholding or
reduction whatsoever.
(e) Reimbursement. If the Issuing Bank shall
make any L/C Disbursement in respect of a Letter of Credit, Polypore shall pay
to the Administrative Agent (or directly to the Issuing Bank, with concurrent
notice to the Administrative Agent) an amount (in the currency in which the
Letter of Credit was denominated) equal to such L/C Disbursement not later than
two hours after Polypore shall have received notice from the Issuing Bank that
payment of such draft will be made, or, if Polypore shall have received such
notice later than 10:00 a.m., New York City time, on any Business Day, not later
than 10:00 a.m., New York City time, on the immediately following Business Day.
(f) Obligations Absolute. Polypore’s
obligations to reimburse L/C Disbursements as provided in paragraph (e) above
shall be absolute, unconditional and irrevocable, and shall be performed
strictly in accordance with the terms of this Agreement, under any and all
circumstances whatsoever, and irrespective of:
(i) any lack of validity or enforceability
of any Letter of Credit or any Loan Document, or any term or provision therein;
(ii) any amendment or waiver of or any consent
to departure from all or any of the provisions of any Letter of Credit or any
Loan Document;
(iii) the existence of any claim, setoff, defense
or other right that Polypore, any other party guaranteeing, or otherwise
obligated with, Polypore, any Subsidiary or other Affiliate thereof or any other
Person may at any time have against the beneficiary under any Letter of Credit,
the Issuing Bank, the Administrative Agent or any Lender or any other Person,
whether in connection with this Agreement, any other Loan Document or any other
related or unrelated agreement or transaction;
(iv) any draft or other document presented under a
(v) payment by the Issuing Bank under a Letter
of Credit against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit; and
(vi) any other act or omission to act or delay of
any kind of the Issuing Bank, the Lenders, the Administrative Agent or any other
Person or any other event or circumstance whatsoever, whether or not similar to
any of the foregoing, that might, but for the provisions of this Section,
constitute a legal or equitable discharge of Polypore’s obligations hereunder.
Without limiting the generality of the foregoing, it is expressly understood and
agreed that the absolute and unconditional obligation of Polypore hereunder to
reimburse L/C Disbursements will not be excused by the gross negligence or
willful misconduct of the Issuing Bank. However, the foregoing shall not be
construed to excuse the Issuing Bank from liability to Polypore to the extent of
any direct damages (as opposed to consequential damages, claims in respect of
which are hereby waived by Polypore to the
51
extent permitted by applicable law) suffered by Polypore that are caused by the
Issuing Bank’s gross negligence or willful misconduct in determining whether
drafts and other documents presented under a Letter of Credit comply with the
terms thereof; it is understood that the Issuing Bank may accept documents that
appear on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary and, in
making any payment under any Letter of Credit (i) the Issuing Bank’s exclusive
reliance on the documents presented to it under such Letter of Credit as to any
and all matters set forth therein, including reliance on the amount of any draft
presented under such Letter of Credit, whether or not the amount due to the
beneficiary thereunder equals the amount of such draft and whether or not any
document presented pursuant to such Letter of Credit proves to be insufficient
in any respect, if such document on its face appears to be in order, and whether
or not any other statement or any other document presented pursuant to such
Letter of Credit proves to be forged or invalid or any statement therein proves
to be inaccurate or untrue in any respect whatsoever and (ii) any noncompliance
in any immaterial respect of the documents presented under such Letter of Credit
with the terms thereof shall, in each case, be deemed not to constitute willful
misconduct or gross negligence of the Issuing Bank.
(g) Disbursement Procedures. The Issuing Bank
shall, promptly following its receipt thereof, examine all documents purporting
to represent a demand for payment under a Letter of Credit. The Issuing Bank
shall as promptly as possible give telephonic notification, confirmed by fax, to
the Administrative Agent and Polypore of such demand for payment and whether the
Issuing Bank has made or will make an L/C Disbursement thereunder; provided,
that any failure to give or delay in giving such notice shall not relieve
Polypore of its obligation to reimburse the Issuing Bank and the Revolving
Credit Lenders with respect to any such L/C Disbursement. The Administrative
Agent shall promptly give each Revolving Credit Lender notice thereof.
(h) Interim Interest. If the Issuing Bank shall
make any L/C Disbursement in respect of a Letter of Credit, then, unless
Polypore shall reimburse such L/C Disbursement in full on such date, the unpaid
amount thereof shall bear interest for the account of the Issuing Bank, for each
day from and including the date of such L/C Disbursement, to but excluding the
earlier of the date of payment by Polypore or the date on which interest shall
commence to accrue thereon as provided in Section 2.2(f), at the rate per annum
that would apply to such amount if such amount were an ABR Revolving Loan.
(i) Resignation or Removal of the Issuing
Bank. The Issuing Bank may resign at any time by giving 30 days’ prior written
notice to the Administrative Agent, the Lenders and Polypore, and may be removed
at any time by Polypore by notice to the Issuing Bank, the Administrative Agent
and the Lenders. Subject to the next succeeding paragraph, upon the acceptance
of any appointment as the Issuing Bank hereunder by a Lender that shall agree to
serve as successor Issuing Bank, such successor shall succeed to and become
vested with all the interests, rights and obligations of the retiring Issuing
Bank and the retiring Issuing Bank shall be discharged from its obligations to
issue additional Letters of Credit hereunder. At the time such removal or
resignation shall become effective, Polypore shall pay all accrued and unpaid
fees pursuant to Section 2.5(c)(ii). The acceptance of any appointment as the
Issuing Bank hereunder by a successor Lender shall be evidenced by an agreement
entered into by such successor, in a form satisfactory to Polypore and the
Administrative Agent, and, from and after the effective date of such agreement,
(i) such successor Lender shall have all the rights and obligations of the
previous Issuing Bank under this Agreement and the other Loan Documents and (ii)
references herein and in the other Loan Documents to the term “Issuing Bank”
shall be deemed to refer to such successor or to any previous Issuing Bank, or
to such successor and all previous Issuing Banks, as the context shall require.
After the resignation or removal of the Issuing Bank hereunder, the retiring
Issuing Bank shall remain a party hereto and shall continue to have all the
rights and obligations of an Issuing Bank under this Agreement and the other
Loan Documents with respect to Letters of Credit issued by it prior to such
resignation or removal, but shall not be required to issue additional Letters of
Credit.
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(j) Cash Collateralization. If any Event of
Default shall occur and be continuing, Polypore shall, on the Business Day it
receives notice from the Administrative Agent or the Required Lenders (or, if
the maturity of the Loans has been accelerated, Revolving Credit Lenders holding
participations in outstanding Letters of Credit representing greater than 50% of
the aggregate undrawn amount of all outstanding Letters of Credit) thereof and
of the amount to be deposited, deposit in an account with the Administrative
Agent, for the benefit of the Revolving Credit Lenders, an amount in cash equal
to the L/C Exposure as of such date; provided, however, that the obligation to
deposit such cash shall become effective immediately, and such deposit shall
become immediately due and payable, without demand or other notice of any kind,
upon the occurrence of any Event of Default with respect to Polypore described
in clause (g) or (h) of Article VII. Such deposit shall be held by the
Administrative Agent as collateral for the payment and performance of the
Obligations. The Administrative Agent shall have exclusive dominion and
control, including the exclusive right of withdrawal, over such account. Other
than any interest earned on the investment of such deposits in Permitted
Investments, which investments shall be made at the option and sole discretion
of the Administrative Agent, such deposits shall not bear interest. Interest or
profits, if any, on such investments shall accumulate in such account. Moneys
in such account shall (i) automatically be applied by the Administrative Agent
to reimburse the Issuing Bank for L/C Disbursements for which it has not been
reimbursed, (ii) be held for the satisfaction of the reimbursement obligations
of Polypore for the L/C Exposure at such time and (iii) if the maturity of the
Loans has been accelerated (but subject to the consent of Revolving Credit
Lenders holding participations in outstanding Letters of Credit representing
greater than 50% of the aggregate undrawn amount of all outstanding Letters of
Credit), be applied to satisfy the Obligations. If Polypore is required to
provide an amount of cash collateral hereunder as a result of the occurrence of
an Event of Default, such amount (to the extent not applied as aforesaid) shall
be returned to Polypore within three Business Days after all Events of Default
have been cured or waived.
(k) Additional Issuing Banks. Polypore may, at
any time and from time to time with the consent of the Administrative Agent
(which consent shall not be unreasonably withheld) and such Lender, designate
one or more additional Lenders to act as an Issuing Bank under the terms of the
Agreement. Any Lender designated as an Issuing Bank pursuant to this paragraph
(k) shall be deemed to be an “Issuing Bank” (in addition to being a Lender) in
respect of Letters of Credit issued or to be issued by such Lender, and, with
respect to such Letters of Credit, such term shall thereafter apply to the other
Issuing Bank and such Lender.
SECTION 2.23. Increase in Commitments. (a) Polypore may, by written notice to
the Administrative Agent from time to time, request Incremental Term Loan
Commitments or an increase in the Revolving Credit Commitments in an amount not
to exceed the Incremental Amount from one or more Incremental Lenders (which may
include any existing Lender willing to provide such Incremental Term Loan
Commitment or increase in the Revolving Credit Commitments or new Lender)
willing to provide such Incremental Term Loans or to increase its Revolving
Credit Commitments in their own discretion; provided, that each Incremental
Lender, if not already a Lender hereunder, shall be subject to the approval of
the Administrative Agent (which approval shall not be unreasonably withheld).
Such notice shall set forth (i) the amount of such increase and the Facility or
Facilities involved (which shall be in minimum increments of $1,000,000 and a
minimum amount of $25,000,000 or equal to the remaining Incremental Amount),
(ii) the date on which such Incremental Term Loan Commitments or increase in
Revolving Credit Commitments are requested to become effective and (iii) in the
case of Incremental Term Loan Commitments, whether such Incremental Term Loan
Commitments are to be Term Loan Commitments or commitments to make term loans
with terms different from the Term Loans (“Other Term Loans”).
(b) Polypore and each Incremental Lender shall
execute and deliver to the Administrative Agent an Incremental Assumption
Agreement and such other documentation as the Administrative Agent
53
shall reasonably specify to evidence the Incremental Term Loan Commitment or
increase in the Revolving Credit Commitment of such Incremental Lender. Each
Incremental Assumption Agreement in respect of Incremental Term Loan Commitments
shall specify the terms of the Incremental Term Loans to be made thereunder;
provided, that, without the prior written consent of the Required Lenders,
(i) the final maturity date of any Other Term Loans shall be no earlier than the
Term Loan Maturity Date, (ii) the average life to maturity of any Other Term
Loans shall be no shorter than the average life to maturity of the Term Loans,
(iii) any Other Term Loans shall be denominated in Dollars and (iv) after giving
pro forma effect to the incurrence thereof and any substantially concurrent use
of proceeds thereof, Polypore shall be in compliance with Section 6.10. The
Administrative Agent shall promptly notify each Lender as to the effectiveness
of each Incremental Assumption Agreement. Each of the parties hereto hereby
agrees that, upon the effectiveness of any Incremental Assumption Agreement,
this Agreement shall be amended to the extent (but only to the extent) necessary
to reflect the existence and terms of the Incremental Term Loan Commitment or
the increase in the Revolving Credit Commitment evidenced thereby as provided
for in Section 9.8(b). Any such deemed amendment may be memorialized in writing
by the Administrative Agent with Polypore’s consent (not to be unreasonably
withheld) and furnished to the other parties hereto.
(c) Notwithstanding the foregoing, no
Incremental Term Loan Commitment or increase in any Revolving Credit Commitment
shall become effective under this Section 2.23 unless (i) on the date of such
effectiveness, the conditions set forth in paragraphs (b) and (c) of Section 4.1
shall be satisfied and the Administrative Agent shall have received a
certificate to that effect dated such date and executed by a Financial Officer
of Polypore and (ii) the Administrative Agent shall have received (with
sufficient copies for each of the Incremental Lenders) legal opinions, board
resolutions and other closing certificates and documentation consistent with
those delivered on the Restatement Effective Date under Section 4.2.
(d) Each of the parties hereto hereby agrees
that the Administrative Agent may take any and all action as may be reasonably
necessary to ensure that all Incremental Term Loans (other than Other Term
Loans), when originally made, are included in each Borrowing of outstanding Term
Loans on a pro rata basis, and Polypore agrees that Section 2.15 shall apply to
any conversion of Eurodollar Term Loans to ABR Term Loans reasonably required by
the Administrative Agent to effect the foregoing. In addition, to the extent
any Incremental Term Loans are not Other Term Loans, the scheduled amortization
payments under Sections 2.11(a) required to be made after the making of such
Incremental Term Loans shall be ratably increased by the aggregate principal
amount of such Incremental Term Loans.
(e) Unless otherwise agreed by the
Administrative Agent, on each Increased Facility Closing Date with respect to
the Revolving Facility, Polypore shall borrow Revolving Loans under the relevant
increased Revolving Credit Commitments from each Lender participating in the
relevant increase in an amount determined by reference to the amount of each
Type of Loan (and, in the case of Eurodollar Loans, of each Eurodollar Tranche)
which would then have been outstanding from such Lender if (i) each such Type or
Eurodollar Tranche had been borrowed or effected on such Increased Facility
Closing Date and (ii) the aggregate amount of each such Type or Eurodollar
Tranche requested to be so borrowed or effected had been proportionately
increased. The Eurodollar Base Rate applicable to any Eurodollar Loan borrowed
pursuant to the preceding sentence shall equal the Eurodollar Base Rate then
applicable to the Eurodollar Loans of the other Lenders in the same Eurodollar
Tranche or, until the expiration of the then-current Interest Period, such other
rate as shall be agreed upon between Polypore and the relevant Lender.
SECTION 2.24. Defaulting Lenders. Notwithstanding any provision of this
Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the
following provisions shall apply for so long as such Lender is a Defaulting
Lender:
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(a) fees shall cease to accrue on the unfunded
portion of the Revolving Credit Commitment of such Defaulting Lender pursuant to
Section 2.5(a);
(b) the Revolving Credit Commitment and
Revolving Credit Exposure of such Defaulting Lender shall not be included in
determining whether the Required Lenders have taken or may take any action
hereunder (including any consent to any amendment, waiver or other modification
pursuant to Section 9.8); provided, that this clause (b) shall not apply to the
vote of a Defaulting Lender in the case of an amendment, waiver or other
modification requiring the consent of such Lender or each Lender affected
thereby;
(c) if any Swingline Exposure or L/C Exposure
exists at the time such Lender becomes a Defaulting Lender then:
(i) all or any part of the Swingline
Exposure and L/C Exposure of such Defaulting Lender shall be reallocated among
the non-Defaulting Lenders in accordance with their respective Pro Rata
Percentages but only to the extent such reallocation does not cause the
aggregate Revolving Credit Exposure of any non-Defaulting Lender to exceed such
non-Defaulting Lender’s Revolving Credit Commitment;
(ii) if the reallocation described in clause
(i) above cannot, or can only partially, be effected, Polypore shall within one
Business Day following notice by the Administrative Agent (x) first, prepay such
Swingline Exposure and (y) second, cash collateralize for the benefit of the
Issuing Lender only Polypore’s obligations corresponding to such Defaulting
Lender’s L/C Exposure (after giving effect to any partial reallocation pursuant
to clause (i) above) for so long as such L/C Exposure is outstanding;
(iii) if Polypore cash collateralizes any portion
of such Defaulting Lender’s L/C Exposure pursuant to clause (ii) above, Polypore
shall not be required to pay any fees to such Defaulting Lender pursuant to
Section 2.5(c) with respect to such Defaulting Lender’s L/C Exposure during the
period such Defaulting Lender’s L/C Exposure is cash collateralized;
(iv) if the L/C Exposure of the non-Defaulting
Lenders is reallocated pursuant to clause (i) above, then the fees payable to
the Lenders pursuant to Section 2.5(a) and Section 2.5(c) shall be adjusted in
accordance with such non-Defaulting Lenders’ Revolving Percentages; and
(v) if all or any portion of such Defaulting
Lender’s L/C Exposure is neither reallocated nor cash collateralized pursuant to
clause (i) or (ii) above, then, without prejudice to any rights or remedies of
the Issuing Lender or any other Lender hereunder, all fees payable under
Section 2.5(c) with respect to such Defaulting Lender’s L/C Exposure shall be
payable to the Issuing Lender until and to the extent that such L/C Exposure is
reallocated and/or cash collateralized; and
(d) so long as such Lender is a Defaulting
Lender, the Swingline Lender shall not be required to fund any Swingline Loan
and the Issuing Lender shall not be required to issue, amend or increase any
Letter of Credit, unless it is satisfied that the related exposure and the
Defaulting Lender’s then outstanding L/C Exposure will be 100% covered by the
Revolving Credit Commitments of the non-Defaulting Lenders and/or cash
collateral will be provided by Polypore in accordance with Section 2.24(c), and
participating interests in any newly made Swingline Loan or any newly issued or
increased Letter of Credit shall be allocated among non-Defaulting Lenders in a
manner consistent with Section 2.24(c)(i) (and such Defaulting Lender shall not
participate therein).
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If (i) a Bankruptcy Event with respect to a Lender Parent of any Lender shall
occur following the date hereof and for so long as such event shall continue or
(ii) the Swingline Lender or the Issuing Lender has a good faith belief that any
Lender has defaulted in fulfilling its obligations under one or more other
agreements in which such Lender commits to extend credit, the Swingline Lender
shall not be required to fund any Swingline Loan and the Issuing Lender shall
not be required to issue, amend or increase any Letter of Credit, unless the
Swingline Lender or the Issuing Lender, as the case may be, shall have entered
into arrangements with Polypore or such Lender, satisfactory to the Swingline
Lender or the Issuing Lender, as the case may be, to defease any risk to it in
respect of such Lender hereunder.
In the event that the Administrative Agent, Polypore, the Swingline Lender and
the Issuing Lender each agrees that a Defaulting Lender has adequately remedied
all matters that caused such Lender to be a Defaulting Lender, then the
Swingline Exposure and L/C Exposure of the Lenders shall be readjusted to
reflect the inclusion of such Lender’s Revolving Credit Commitment and on such
date such Lender shall purchase at par such of the Loans of the other Lenders
(other than Swingline Loans) as the Administrative Agent shall determine may be
necessary in order for such Lender to hold such Loans in accordance with its Pro
Rata Percentage.
SECTION 2.25. Voluntary Prepayments. (a) Polypore may elect to notify the
Administrative Agent and the Lenders that it may wish to make below par
voluntary prepayments of the Term Loans (each such payment a “Voluntary
Prepayment”) pursuant to the procedures set forth in this Section 2.25. At the
time of any Voluntary Prepayment, Polypore shall certify, with reasonable
supporting detail (as determined by the Administrative Agent), (i) that no Event
of Default pursuant to Section 6.10 could reasonably be expected to occur during
the succeeding four calendar quarters if such Voluntary Prepayment is not made
and (ii) the election to make a Voluntary Prepayment is not based on material
non-public information. In addition, immediately prior to and after giving
effect to any Voluntary Prepayment, no Default or Event of Default shall have
(b) In connection with any Voluntary Prepayment,
Polypore shall notify the Lenders (the “Prepayment Notice”) that Polypore
desires to prepay Term Loans with cash proceeds in an aggregate amount (each, a
“Prepayment Amount”) specified by Polypore (which amount shall be not less than
$10,000,000) at a price within a range (the “Range”) to be specified by Polypore
equal to a percentage of par (the “Payment Percentage”) of the principal amount
of the Term Loans to be prepaid.
(c) In connection with any Voluntary
Prepayment, Polypore shall allow each Lender to specify a Payment Percentage
(the “Acceptable Payment Percentage”) for a principal amount (subject to
rounding requirements specified by the Prepayment Agent) of Term Loans at which
such Lender is willing to permit such Voluntary Prepayment. Based on the
Acceptable Payment Percentages and principal amounts of Term Loans specified by
Lenders, the applicable Payment Percentage (the “Applicable Payment Percentage”)
for the Voluntary Prepayment shall be the lowest Acceptable Payment Percentage
at which Polypore can complete the Voluntary Prepayment for the applicable
Prepayment Amount that is within the applicable Range; provided that if the
offers received from Lenders are insufficient to allow Polypore to complete the
Voluntary Prepayment for the applicable Prepayment Amount, then the Applicable
Payment Percentage shall instead be the highest Acceptable Payment Percentage
that is within the applicable Range. Polypore shall prepay Term Loans (or the
respective portions thereof) offered by Lenders at the Acceptable Payment
Percentages specified by each such Lender that are equal to or less than the
Applicable Payment Percentage (“Qualifying Loans”) by remitting an amount to
each Lender to be prepaid equal to the product of the face amount, or par, of
the Term Loan being prepaid multiplied by the Applicable Payment Percentage;
provided that if the aggregate cash proceeds required to prepay Qualifying Loans
(disregarding any interest payable under Section 2.25(d)) would exceed the
applicable Prepayment Amount for such Voluntary Prepayment, Polypore shall
prepay such Qualifying Loans at the Applicable Payment Percentage ratably based
on the
56
respective principal amounts of such Qualifying Loans (subject to rounding
requirements specified by the Prepayment Agent).
(d) All Term Loans prepaid by Polypore pursuant
to this Section 2.25 shall be accompanied by payment of accrued and unpaid
interest on the par principal amount so prepaid to, but not including, the date
of prepayment.
(e) Each Voluntary Prepayment shall be
consummated pursuant to procedures (including as to rounding and minimum
amounts, Type and Interest Periods of accepted Term Loans, irrevocability of
Prepayment Notice and other notices by Polypore and Lenders and determination of
Applicable Payment Percentage) reasonably established by the Prepayment Agent in
consultation with Polypore and not inconsistent with the terms hereof.
(f) Each Voluntary Prepayment shall constitute
an optional prepayment of Term Loans for all purposes under this Agreement,
including for purposes of Section 2.12.
(g) Notwithstanding anything to the contrary in
this Agreement (including, without limitation, Sections 2.12, 2.16 and 2.17),
the Lenders hereby consent to the transactions described in this Section 2.25
and further acknowledge that in connection with any Voluntary Prepayment,
principal and interest payments may be made on a non-pro rata basis, as
determined by the Prepayment Agent, to the applicable Lenders.
This Section 2.25 shall not require Polypore to undertake or any Lender to
participate in any Voluntary Prepayment.
ARTICLE III
Representations and Warranties
Polypore represents and warrants to the Administrative Agent, the Issuing Bank
and each of the Lenders that:
SECTION 3.1. Organization; Powers. Each Group Member (a) is duly organized,
organization, (b) has all requisite power and authority to own its property and
assets and to carry on its business as now conducted and as proposed to be
conducted, (c) is qualified to do business in, and is in good standing in, every
jurisdiction where such qualification is required, except where the failure so
to qualify could not reasonably be expected to result in a Material Adverse
Effect, and (d) has the power and authority to execute, deliver and perform its
obligations under each of the Loan Documents and each other agreement or
instrument contemplated hereby or thereby to which it is or will be a party and,
in the case of Polypore, to borrow hereunder.
SECTION 3.2. Authorization. The Transactions (a) have been duly authorized by
all requisite corporate and, if required, stockholder action and (b) will not
(i) violate (A) any provision of law, statute, rule or regulation, or of the
certificate or articles of incorporation or other constitutive documents or
by-laws of any Group Member, (B) any order of any Governmental Authority or (C)
any provision of any indenture, material agreement or other material instrument
to which any Group Member is a party or by which any of them or any of their
property is or may be bound, (ii) except as set forth on Schedule 3.2, be in
conflict with, result in a breach of or constitute (alone or with notice or
lapse of time or both) a default under, or give rise to any right to accelerate
or to require the prepayment, repurchase or redemption of any obligation under
any such indenture, material agreement or other material instrument or (iii)
result in the
57
creation or imposition of any Lien upon or with respect to any property or
assets now owned or hereafter acquired by any Group Member (other than any Lien
created hereunder or under the Security Documents).
SECTION 3.3. Enforceability. This Agreement has been duly executed and
delivered by Polypore and constitutes, and each other Loan Document when
executed and delivered by each Loan Party party thereto will constitute, a
legal, valid and binding obligation of such Loan Party enforceable against such
Loan Party in accordance with its terms.
SECTION 3.4. Governmental Approvals. No action, consent or approval of,
registration or filing with or any other action by any Governmental Authority is
or will be required in connection with the Transactions, except for (a) the
filing of Uniform Commercial Code financing statements and filings with the
United States Patent and Trademark Office and the United States Copyright
Office, (b) recordation of any Mortgages, (c) such as have been made or obtained
and are in full force and effect or which are not material to the consummation
of the Transactions and (d) those approvals, consents, exemptions,
authorizations or other actions, notices or filings, the failure of which to
obtain or make could not reasonably be expected to have a Material Adverse
Effect.
SECTION 3.5. Financial Statements. (a) Polypore has heretofore furnished to
the Lenders (i) the consolidated balance sheets and related statements of
income, stockholders’ equity and cash flows of Polypore and its consolidated
subsidiaries as of and for the fiscal year ended December 31, 2011, audited by
and accompanied by the unqualified opinion of Ernst & Young LLP, independent
public accountants and (ii) the unaudited consolidated balance sheet and related
statements of income, stockholders’ equity and cash flows of Polypore and its
consolidated subsidiaries as of and for each fiscal quarter subsequent to
December 31, 2011 ended 45 days before the Restatement Effective Date. Such
financial statements present fairly, in all material respects, the financial
condition and results of operations and cash flows of Polypore and its
consolidated subsidiaries as of such dates and for such periods. Such balance
sheets and the notes thereto disclose all material liabilities, direct or
contingent, of Polypore and its consolidated subsidiaries as of the dates
thereof. Such financial statements were prepared in accordance with GAAP
applied on a consistent basis, except that the unaudited financial statements
are subject to normal year-end adjustments and do not contain notes thereto.
(b) Polypore has heretofore delivered to the
Lenders the unaudited pro forma consolidated balance sheet of Polypore and its
consolidated subsidiaries at March 31, 2012, prepared giving effect to the
Transactions as if they had occurred on such date. Such pro forma financial
statements have been prepared in good faith by Polypore, based on the
assumptions used to prepare the pro forma financial information contained in the
Confidential Information Memorandum (which assumptions are believed by Polypore
on the Restatement Effective Date to be reasonable), are based on the best
information available to Polypore as of the date of delivery thereof, accurately
reflect, in all material respects, all adjustments required to be made to give
effect to the Transactions and present fairly, in all material respects, on a
pro forma basis the estimated consolidated financial position of Polypore and
its consolidated subsidiaries as of such date and for such periods, assuming
that the Transactions had actually occurred at such date or at the beginning of
such period, as the case may be.
SECTION 3.6. No Material Adverse Change. No event, change or condition has
occurred that has had, or could reasonably be expected to have, a material
adverse effect on the business, operations, assets, liabilities, financial
condition or results of operations of the Group Members, taken as a whole, since
SECTION 3.7. Title to Properties; Possession Under Leases. (a) Each Group
Member has good and marketable title to, or valid leasehold interests in, all
its material properties and material assets,
58
except for minor defects in title that do not materially interfere with its
ability to conduct its business or to utilize such assets for their intended
purposes and Liens permitted by Section 6.2 and except where the failure to have
such title could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect. All such material properties and assets
are free and clear of Liens, other than Liens expressly permitted by
Section 6.2.
(b) Each Group Member has complied with all
material obligations due and payable or required to be performed under all
material leases to which it is a party and all such material leases are in full
force and effect. Each Group Member enjoys peaceful and undisturbed possession
under all such leases, except where the failure to so enjoy could not reasonably
SECTION 3.8. Subsidiaries. Schedule 3.8 sets forth as of the Restatement
Effective Date a list of all Subsidiaries and the percentage ownership interest
of Polypore therein. The shares of Capital Stock so indicated on Schedule 3.8
are owned by Polypore, directly or indirectly, free and clear of all Liens
(other than Liens created under the Security Documents).
SECTION 3.9. Litigation; Compliance with Laws. (a) There are not any actions,
suits or proceedings at law or in equity or by or before any Governmental
Authority now pending or, to the knowledge of Polypore, threatened against or
affecting any Group Member or any business, property or rights of any such
Person (i) that involve any Loan Document or the Transactions or (ii) as to
which there is a reasonable possibility of an adverse determination and that, if
aggregate, to result in a Material Adverse Effect.
(b) No Group Member nor any of their respective
material properties or material assets is in violation of, nor will the
continued operation of their material properties and material assets as
currently conducted violate, any law, rule or regulation (including any zoning,
building, Environmental Law, ordinance, code or approval or any building
permits), or is in default with respect to any judgment, writ, injunction,
decree or order of any Governmental Authority, where such violation or default
SECTION 3.10. Agreements. (a) No Group Member is a party to any agreement or
instrument or subject to any corporate restriction that has resulted or could
(b) No Group Member is in default in any manner
under any provision of any indenture or other agreement or instrument evidencing
Indebtedness, or any other agreement or instrument to which it is a party or by
which it or any of its properties or assets are or may be bound, where such
default could reasonably be expected to result in a Material Adverse Effect.
SECTION 3.11. Federal Reserve Regulations. (a) No Group Member is engaged
credit for the purpose of buying or carrying Margin Stock.
(b) No part of the proceeds of any Loan or any
Letter of Credit will be used, whether directly or indirectly, and whether
immediately, incidentally or ultimately, for any purpose that entails a
violation of, or that is inconsistent with, the provisions of the Regulations of
the Board, including Regulation T, U or X.
SECTION 3.12. Investment Company Act. No Group Member is an “investment
company” as defined in, or subject to regulation under, the Investment Company
Act of 1940.
59
SECTION 3.13. Use of Proceeds. Polypore will use the proceeds of the Loans
(other than any Incremental Term Loans) and will request the issuance of Letters
of Credit only for the purposes specified in Section 5.8. Polypore will use the
proceeds of any Incremental Term Loans solely as set forth in the applicable
Incremental Assumption Agreement.
SECTION 3.14. Tax Returns. Each Group Member has filed or caused to be filed
all Federal and all material state, local and foreign tax returns or materials
required to have been filed by it and has paid or caused to be paid all material
taxes due and payable by it and all assessments received by it, except taxes
that are being contested in good faith by appropriate proceedings and for which
the relevant Group Member shall have set aside on its books adequate reserves
and except for taxes the nonpayment of which could not reasonably be expected to
SECTION 3.15. No Material Misstatements. None of (a) the Confidential
Information Memorandum or (b) any other information, report, financial
statement, exhibit or schedule furnished by or on behalf of Polypore to the
Administrative Agent or any Lender in connection with the negotiation of any
Loan Document or included therein or delivered pursuant thereto contained,
which, in the case of clauses (a) and (b), when taken as a whole and together
with the representations and warranties contained in this Agreement, contains or
will contain any material misstatement of fact or omitted, omits or will omit to
of the circumstances under which they were, are or will be made, not misleading;
provided that to the extent any such information, report, financial statement,
exhibit or schedule was based upon or constitutes a forecast or projection,
Polypore represents only that it acted in good faith and utilized reasonable
assumptions and due care in the preparation of such information, report,
financial statement, exhibit or schedule and it is understood that actual
results may differ from forecasts and projections.
SECTION 3.16. Employee Benefit Plans. Except as could not, individually or in
the aggregate, reasonably be expected to result in a Material Adverse Effect,
each of Polypore and each of its ERISA Affiliates is in compliance in all
respects with the applicable provisions of ERISA and the Code and the
regulations and published interpretations thereunder. No ERISA Event has
occurred or is reasonably expected to occur that, when taken together with all
other such ERISA Events, could reasonably be expected to result in a Material
Adverse Effect. The present value of all benefit liabilities under any
underfunded Plan did not, as of the last annual valuation dates applicable
thereto, exceed the fair market value of the assets of such underfunded Plans
(determined in both cases using the assumptions applicable under Section 430 of
the Code) by an amount that could reasonably be expected to result in a Material
Adverse Effect.
SECTION 3.17. Environmental Matters. (a) Except as set forth in Schedule 3.17
and except with respect to any other matters that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect, no Group Member (i) has failed to comply with any Environmental Law or
to obtain, maintain or comply with any permit, license or other approval
required under any Environmental Law, (ii) has become subject to any
Environmental Liability, (iii) has received notice of any claim with respect to
any Environmental Liability or (iv) knows of any basis for any Environmental
Liability.
(b) Since the Restatement Effective Date, there
has been no change in the status of the matters disclosed on Schedule 3.17 that,
individually or in the aggregate, has resulted in, or could reasonably be
SECTION 3.18. Insurance. Schedule 3.18 sets forth a true, complete and correct
description of all insurance maintained by Polypore or by Polypore for its
Subsidiaries as of the Restatement Effective Date. As of each such date, such
insurance is in full force and effect and all premiums have been duly
60
paid if due. Polypore and its Subsidiaries have insurance in such amounts and
covering such risks and liabilities as are, when considered in its entirety, in
the good faith judgment of Polypore prudent in the ordinary course of business
of Polypore and its Subsidiaries.
SECTION 3.19. Security Documents. (a) The Guarantee and Collateral Agreement
is effective to create in favor of the Administrative Agent, for the ratable
benefit of the Secured Parties, a legal, valid and enforceable security interest
in the Collateral (as defined in the Guarantee and Collateral Agreement) and the
proceeds thereof and (i) if the Pledged Collateral (as defined in the Guarantee
and Collateral Agreement) has been delivered to the Administrative Agent, the
Guarantee and Collateral Agreement shall constitute a fully perfected first
priority Lien on, and security interest in, all right, title and interest of the
Loan Parties in such Pledged Collateral, in each case prior and superior in
right to any other Person, and (ii) if financing statements in appropriate form
have been filed in the offices specified on Schedule 3.19(a), the Lien created
under the Guarantee and Collateral Agreement will constitute a fully perfected
Lien on, and security interest in, all right, title and interest of the Loan
Parties in all such Collateral as to which a security interest may be perfected
by such a filing (other than Intellectual Property, as defined in the Guarantee
and Collateral Agreement), in each case prior and superior in right to any other
Person, other than with respect to Liens expressly permitted by Section 6.2.
(b) If the Guarantee and Collateral Agreement
has been recorded with the United States Patent and Trademark Office and the
United States Copyright Office, and financing statements in appropriate form
have been filed in the offices specified on Schedule 3.19(a), the Guarantee and
Collateral Agreement shall constitute a fully perfected Lien on, and security
interest in, all right, title and interest of the Loan Parties in the
Intellectual Property (as defined in the Guarantee and Collateral Agreement) in
which a security interest may be perfected by filing in the United States and
its territories and possessions, in each case prior and superior in right to any
other Person (it being understood that subsequent recordings in the United
States Patent and Trademark Office and the United States Copyright Office may be
necessary to perfect a Lien on registered trademarks, trademark applications and
copyrights acquired by the Loan Parties after the Restatement Effective Date).
(c) The Mortgages are effective to create in
favor of the Administrative Agent, for the ratable benefit of the Secured
Parties, a legal, valid and enforceable Lien on all of the Loan Parties’ right,
title and interest in and to the Mortgaged Property thereunder and the proceeds
thereof, and if the Mortgages have been filed in the offices specified on
Schedule 3.19(d), the Mortgages shall constitute a fully perfected Lien on, and
security interest in, all right, title and interest of the Loan Parties in such
Mortgaged Property and the proceeds thereof, in each case prior and superior in
right to any other Person, other than with respect to the rights of Persons
pursuant to Liens expressly permitted by Section 6.2.
SECTION 3.20. Location of Real Property and Leased Premises.
Schedule 3.20(a) lists completely and correctly as of the Restatement Effective
Date all domestic real property owned by Polypore and the Subsidiaries and the
addresses thereof. Polypore and the Subsidiaries, as the case may be, as of the
Restatement Effective Date, own in fee all the real property set forth on
Schedule 3.20(a). Schedule 3.20(b) lists completely and correctly as of the
Restatement Effective Date all material domestic real property leased by
Polypore and the Subsidiaries and the addresses thereof. Polypore and the
Subsidiaries, as the case may be, as of the Restatement Effective Date, have
valid leasehold interests in all the real property set forth on
Schedule 3.20(b).
SECTION 3.21. Labor Matters. As of the Restatement Effective Date, there are
no strikes, lockouts or slowdowns against any Group Member pending or, to the
knowledge of Polypore, threatened. The consummation of the Transactions will
not give rise to any right of termination or right of renegotiation on the part
of any union under any collective bargaining agreement to which any Group Member
is bound. Except to the extent any of the following, individually or in the
aggregate, could not
61
reasonably be expected to have a Material Adverse Effect, (a) the hours worked
by and payments made to employees of each Group Member have not been in
violation in any material respect of the Fair Labor Standards Act or any other
applicable Federal, state, local or foreign law dealing with such matters and
(b) all payments due from any Group Member, or for which any claim may be made
against any Group Member, on account of wages and employee health and welfare
insurance and other benefits, have been paid or accrued as a liability on the
books of such Group Member.
SECTION 3.22. Solvency. Immediately after the consummation of the Transactions
to occur on the Restatement Effective Date and immediately following the making
of each Loan and after giving effect to the application of the proceeds of each
Loan, (a) the fair value of the assets of the Loan Parties taken as a whole, at
a fair valuation, will exceed their debts and liabilities, subordinated,
contingent or otherwise; (b) the present fair saleable value of the property of
the Loan Parties taken as a whole will be greater than the amount that will be
required to pay the probable liability of their debts and other liabilities,
subordinated, contingent or otherwise, as such debts and other liabilities
become absolute and matured; (c) the Loan Parties taken as a whole will be able
to pay their debts and liabilities, subordinated, contingent or otherwise, as
such debts and liabilities become absolute and matured; and (d) the Loan Parties
taken as a whole will not have unreasonably small capital with which to conduct
the business in which they are engaged as such business is now conducted and is
proposed to be conducted following the Restatement Effective Date.
SECTION 3.23. Certain Treasury Regulation Matters. Polypore does not intend to
treat the Loans and related transactions as being a “reportable” transaction
(within the meaning of Treasury Regulation 1.6011-4). Polypore acknowledges
that the Administrative Agent and one or more of the Lenders may treat its Loans
as part of a transaction that is subject to Treasury Regulation
Section 301.6112-1 to the extent that Polypore’s application of the proceeds of
the Loans requires the same and the Administrative Agent and such Lender or
Lenders, as applicable, may, in connection therewith, maintain such lists and
other records as they may determine is required by such Treasury Regulation.
SECTION 3.24. Foreign Assets Control Regulations, Etc. None of the requesting
or borrowing of the Loans, the requesting or issuance, extension or renewal of
any Letters of Credit or the use of the proceeds of any thereof will violate the
Trading With the Enemy Act (50 U.S.C. § 1 et seq., as amended) (the “Trading
With the Enemy Act”) or any of the foreign assets control regulations of the
United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended)
(the “Foreign Assets Control Regulations”) or any enabling legislation or
executive order relating thereto (which for the avoidance of doubt shall
include, but shall not be limited to (a) Executive Order 13224 of September 21,
2001 Blocking Property and Prohibiting Transactions With Persons Who Commit,
Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)) (the
“Executive Order”) and (b) the Patriot Act). To the knowledge of Polypore,
neither Polypore nor any of its Subsidiaries (a) is a “blocked person” as
described in the Executive Order, the Trading With the Enemy Act or the Foreign
Assets Control Regulations or (b) engages transactions with any such “blocked
person” blocked by such order, law or regulation.
ARTICLE IV
Conditions of Lending
The obligations of the Lenders to make Loans and of the Issuing Bank to issue
Letters of Credit hereunder are subject to the satisfaction of the following
conditions:
SECTION 4.1. All Credit Events. On the date of each Borrowing, including each
Borrowing of a Swingline Loan and on the date of each issuance, amendment,
extension or renewal of a Letter of Credit (each such event being called a
“Credit Event”):
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(a) The Administrative Agent shall have received
a notice of such Borrowing as required by Section 2.3 (or such notice shall have
been deemed given in accordance with Section 2.3) or, in the case of the
issuance, amendment, extension or renewal of a Letter of Credit, the Issuing
Bank and the Administrative Agent shall have received a notice requesting the
issuance, amendment, extension or renewal of such Letter of Credit as required
by Section 2.22(b) or, in the case of the Borrowing of a Swingline Loan, the
Swingline Lender and the Administrative Agent shall have received a notice
requesting such Swingline Loan as required by Section 2.21(b).
(b) The representations and warranties set forth
in Article III hereof and in each other Loan Document shall be true and correct
in all material respects on and as of the date of such Credit Event with the
same effect as though made on and as of such date, except to the extent such
representations and warranties expressly relate to an earlier date, in which
case they shall be true and correct in all material respects on and as of such
earlier date.
(c) At the time of and immediately after such
Credit Event, no Event of Default or Default shall have occurred and be
continuing.
Each Credit Event shall be deemed to constitute a representation and warranty by
Polypore on the date of such Credit Event as to the matters specified in
paragraphs (b) and (c) of this Section 4.1.
SECTION 4.2. First Credit Event. On the Restatement Effective Date:
(a) The Administrative Agent shall have
received, on behalf of itself, the Lenders and the Issuing Bank, a favorable
written opinion of Willkie Farr & Gallagher LLP, counsel for Polypore,
substantially to the effect set forth in Exhibit E (A) dated the Restatement
Effective Date, (B) addressed to the Issuing Bank, the Administrative Agent and
the Lenders and (C) covering such other matters relating to the Loan Documents
and the Transactions as the Administrative Agent shall reasonably request, and
Polypore hereby request such counsel to deliver such opinion.
(b) The Administrative Agent shall have received
(i) a copy of the certificate or articles of incorporation, including all
amendments thereto, of each Loan Party, certified as of a recent date by the
Secretary of State of the state of its organization, and a certificate as to the
good standing of each Loan Party as of a recent date, from such Secretary of
State; (ii) a certificate of the Secretary or Assistant Secretary of each Loan
Party dated the Restatement Effective Date and certifying (A) that attached
thereto is a true and complete copy of the by-laws of such Loan Party as in
effect on the Restatement Effective Date and at all times since a date prior to
the date of the resolutions described in clause (B) below, (B) that attached
thereto is a true and complete copy of resolutions duly adopted by the Board of
Directors of such Loan Party authorizing the execution, delivery and performance
of the Loan Documents to which such Person is a party and, in the case of
Polypore, the borrowings hereunder, and that such resolutions have not been
modified, rescinded or amended and are in full force and effect, (C) that the
certificate or articles of incorporation of such Loan Party have not been
amended since the date of the last amendment thereto shown on the certificate of
good standing furnished pursuant to clause (i) above and (D) as to the
incumbency and specimen signature of each officer executing any Loan Document or
any other document delivered in connection herewith on behalf of such Loan
Party; (iii) a certificate of another officer as to the incumbency and specimen
signature of the Secretary or Assistant Secretary executing the certificate
pursuant to clause (ii) above; and (iv) such other documents as the Lenders, the
Issuing Bank or the Administrative Agent may reasonably request.
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(c) The Administrative Agent shall have
received a certificate, dated the Restatement Effective Date and signed by a
Financial Officer of Polypore, confirming compliance with the conditions
precedent set forth in Sections 4.1(b) and (c).
(d) The Administrative Agent and the Syndication
Agents shall have received all Fees and other amounts due and payable on or
prior to the Restatement Effective Date, including, to the extent invoiced,
or paid by Polypore hereunder or under any other Loan Document.
(e) The Guarantee and Collateral Agreement
shall have been duly executed by each Loan Party. The Administrative Agent on
behalf of the Secured Parties shall have a security interest in the Collateral
of the type and priority described in each Security Document, except to the
extent otherwise provided herein or in such Security Documents.
(f) The Administrative Agent shall have
received a Perfection Certificate with respect to the Loan Parties dated the
Restatement Effective Date and duly executed by a Responsible Officer of
Polypore, and shall have received the results of a search of the Uniform
Commercial Code filings (or equivalent filings) made with respect to the Loan
Parties in the states (or other jurisdictions) of formation of such Persons, in
which the chief executive office of each such Person is located and in the other
jurisdictions in which such Persons maintain property, in each case as indicated
on such Perfection Certificate, together with copies of the financing statements
(or similar documents) disclosed by such search, and accompanied by evidence
satisfactory to the Administrative Agent that the Liens indicated in any such
financing statement (or similar document) would be permitted under Section 6.2
or have been or will be contemporaneously released or terminated.
(g) The Administrative Agent shall have
received a copy of, or a certificate as to coverage under, the insurance
policies required by Section 5.2 and the applicable provisions of the Security
Documents, each of which shall be endorsed or otherwise amended to include a
customary lender’s loss payable endorsement and to name the Administrative Agent
on behalf of the Secured Parties as additional insured, in form and substance
satisfactory to the Administrative Agent.
(h) All amounts owing under the Existing Credit
Agreement shall have been paid in full.
(i) The Lenders shall have received the
financial statements and opinion referred to in Section 3.5.
(j) All requisite Governmental Authorities
shall have approved or consented to the Transactions and the other transactions
contemplated hereby to the extent required, all applicable appeal periods shall
have expired and there shall not be any pending or threatened litigation,
governmental, administrative or judicial action that could reasonably be
expected to prevent or impose materially burdensome conditions on the
Transactions or the other transactions contemplated hereby. All requisite third
party consents necessary for the consummation of the Transactions shall have
been obtained except for those third party consents where the failure to so
obtain such consents would not have a Material Adverse Effect.
(k) The Administrative Agent shall have received
a solvency certificate from the chief financial officer of Polypore documenting
the solvency of Polypore and its Subsidiaries
64
after giving effect to the Transactions, in form and substance reasonably
(l) The Lenders shall have received all
documentation and other information required by Governmental Authorities under
applicable “know your customer” and anti-money laundering rules and regulations,
including the Patriot Act, at least five Business Days prior to the Restatement
Effective Date.
ARTICLE V
Affirmative Covenants
Polypore covenants and agrees with each Lender that so long as this Agreement
shall remain in effect and until the Commitments have been terminated and the
principal of and interest on each Loan, all Fees and all other expenses or
amounts payable under any Loan Document shall have been paid in full and all
Letters of Credit have been canceled or have expired and all amounts drawn
thereunder have been reimbursed in full, unless the Required Lenders shall
otherwise consent in writing, Polypore will, and will cause each of the Material
Subsidiaries to:
SECTION 5.1. Existence; Businesses and Properties. (a) Do or cause to be done
legal existence, except as otherwise expressly permitted under Section 6.5.
(b) Do or cause to be done all things necessary
to obtain, preserve, renew, extend and keep in full force and effect all rights,
licenses, permits, franchises, authorizations, patents, copyrights, trademarks
and trade names used in or relating to the conduct of its business, except where
the failure to do so could not reasonably be expected to have a Material Adverse
Effect; maintain and operate such business in substantially the manner in which
it is presently conducted and operated, including any reasonable extension,
development or expansion thereof; comply with all applicable laws, rules,
regulations and decrees and orders of any Governmental Authority, whether now in
effect or hereafter enacted, except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect; and at all times
maintain and preserve all property material to the conduct of such business and
keep such property in good repair, working order and condition and from time to
time make, or cause to be made, all needful and proper repairs, renewals,
additions, improvements and replacements thereto necessary in order that the
business carried on in connection therewith may be properly conducted at all
times, except where the failure to do so could not reasonably be expected to
SECTION 5.2. Insurance. (a) Keep its insurable properties adequately insured
at all times by financially sound and reputable insurers; maintain such other
insurance, to such extent and against such risks, including fire and other risks
insured against by extended coverage, as is customary with companies in the same
or similar businesses operating in the same or similar locations, including
public liability insurance against claims for personal injury or death or
property damage occurring upon, in, about or in connection with the use of any
properties owned, occupied or controlled by it; and maintain such other
insurance as may be required by law.
(b) Cause all such policies covering any
Collateral to be endorsed or otherwise amended to include a customary lender’s
loss payable endorsement, in form and substance satisfactory to the
Administrative Agent, which endorsement shall provide that, from and after the
Restatement Effective Date, if the insurance carrier shall have received written
notice from the Administrative Agent of the occurrence of an Event of Default,
the insurance carrier shall pay all proceeds otherwise payable to
65
Polypore or the Loan Parties under such policies directly to the Administrative
Agent; cause all such policies to provide that neither Polypore, the
Administrative Agent nor any other party shall be a coinsurer thereunder and to
contain a “Replacement Cost Endorsement”, without any deduction for
depreciation, and such other provisions as the Administrative Agent may
reasonably require from time to time to protect their interests; deliver
evidence of all such policies to the Administrative Agent; upon the occurrence
of an Event of Default, deliver original or certified copies of all such
policies to the Administrative Agent upon its request; cause each such policy to
provide that it shall not be canceled, modified or not renewed (i) by reason of
nonpayment of premium upon not less than 10 days’ prior written notice thereof
by the insurer to the Administrative Agent (giving the Administrative Agent the
right to cure defaults in the payment of premiums) or (ii) for any other reason
upon not less than 30 days’ prior written notice thereof by the insurer to the
Administrative Agent; deliver to the Administrative Agent, prior to the
cancellation, modification or nonrenewal of any such policy of insurance,
evidence of a renewal or replacement policy (or other evidence of renewal of a
policy previously delivered to the Administrative Agent) together with evidence
satisfactory to the Administrative Agent of payment of the premium therefor.
(c) If at any time the area in which the
Premises (as defined in the Mortgages) are located is designated (i) a “flood
hazard area” in any Flood Insurance Rate Map published by the Federal Emergency
Management Agency (or any successor agency), obtain flood insurance in such
total amount as the Administrative Agent or the Required Lenders may from time
to time require, and otherwise comply with the National Flood Insurance Program
as set forth in the Flood Disaster Protection Act of 1973, as it may be amended
from time to time, or (ii) a “Zone 1” area, obtain earthquake insurance in such
to time require.
(d) With respect to any Mortgaged Property,
carry and maintain comprehensive general liability insurance including a “broad
form” commercial general liability endorsement and coverage on an occurrence
basis against claims made for personal injury (including bodily injury, death
and property damage) and umbrella liability insurance against any and all
claims, in no event for a combined single limit of less than $15,000,000, naming
the Administrative Agent as an additional insured, on forms satisfactory to the
Administrative Agent.
(e) Notify the Administrative Agent immediately
whenever any separate insurance concurrent in form or contributing in the event
of loss with that required to be maintained under this Section 5.2 is taken out
by Polypore; and promptly deliver to the Administrative Agent a duplicate
original copy of such policy or policies.
SECTION 5.3. Taxes. Pay all taxes, assessments and governmental charges or
levies imposed upon it or upon its income or profits or in respect of its
property, before the same shall become delinquent or in default; provided,
however, that such payment and discharge shall not be required with respect to
any such tax, assessment, charge or levy so long as (a) the validity or amount
thereof shall be contested in good faith by appropriate proceedings and Polypore
accordance with GAAP and such contest operates to suspend collection of the
contested obligation, tax, assessment or charge and enforcement of a Lien and,
in the case of a Mortgaged Property, there is no risk of forfeiture of such
property or (b) the nonpayment thereof could not reasonably be expected to
SECTION 5.4. Financial Statements, Reports, etc. In the case of Polypore,
furnish to the Administrative Agent (either physically or through electronic
delivery reasonably acceptable to the Administrative Agent), which shall furnish
to each Lender:
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(a) within 90 days after the end of each fiscal
year, its consolidated balance sheet and related statements of income,
stockholders’ equity and cash flows showing the financial condition of Polypore
and its consolidated Subsidiaries as of the close of such fiscal year and the
results of its operations and the operations of such Subsidiaries during such
year, together with comparative figures for the immediately preceding fiscal
year, all audited by Ernst & Young LLP or other independent public accountants
of recognized national standing and accompanied by an opinion of such
accountants (which shall not be qualified in any material respect) to the effect
that such consolidated financial statements fairly present the financial
condition and results of operations of Polypore and its consolidated
Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied;
(b) within 45 days after the end of each of the
first three fiscal quarters of each fiscal year, its consolidated balance sheet
and related statements of income, stockholders’ equity and cash flows showing
the financial condition of Polypore and its consolidated Subsidiaries as of the
close of such fiscal quarter and the results of its operations and the
operations of such Subsidiaries during such fiscal quarter and the then elapsed
portion of the fiscal year, and comparative figures for the same periods in the
immediately preceding fiscal year, all certified by one of its Financial
Officers as fairly presenting the financial condition and results of operations
of Polypore and its consolidated Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied, subject to normal year-end audit
adjustments;
(c) concurrently with any delivery of financial
statements under paragraph (a), or (b) above, a certificate of the accounting
firm (in the case of paragraph (a)) or Financial Officer (in the case of
paragraph (b)) opining on or certifying such statements (which certificate, when
furnished by an accounting firm, may be limited to accounting matters and
disclaim responsibility for legal interpretations and which may be provided by a
Financial Officer if accounting firms generally are not providing such
certificates) (i) certifying that no Event of Default or Default has occurred
or, if such an Event of Default or Default has occurred, specifying the nature
and extent thereof and any corrective action taken or proposed to be taken with
respect thereto; provided that for certificates delivered by the accounting firm
such certification shall be limited to an Event of Default or Default pursuant
to Section 6.10, (ii) setting forth computations in reasonable detail
satisfactory to the Administrative Agent of the Total Leverage Ratio, the Senior
Leverage Ratio and the Consolidated Interest Coverage Ratio as of the last day
of the relevant fiscal period and (iii) setting forth computations in reasonable
detail satisfactory to the Administrative Agent of any Specified Payment made
during the relevant fiscal period (including calculations of the Available
Amount and, if applicable, the Total Leverage Ratio as of each relevant date)
and, (iv) in the case of a certificate delivered with the financial statements
required by paragraph (a) above, setting forth Polypore’s calculation of Excess
Cash Flow;
(d) within 45 days after the commencement of
each fiscal year of Polypore, a detailed consolidated budget for such fiscal
year (including a projected consolidated balance sheet and related statements of
projected operations and cash flows as of the end of and for such fiscal year);
(e) promptly after the same become publicly
available, copies of all periodic and other reports, proxy statements and other
materials filed by any Group Member with the SEC, or any Governmental Authority
succeeding to any or all of the functions of said Commission, or with any
national securities exchange distributed to its shareholders;
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(f) promptly after the receipt thereof by any
Group Member, a copy of any “management letter” received by any such Person from
its certified public accountants and the management’s response thereto; and
(g) promptly, from time to time, such other
information regarding the operations, business affairs and financial condition
of any Group Member, or compliance with the terms of any Loan Document, as the
Administrative Agent or any Lender may reasonably request.
Documents required to be delivered pursuant to Section 5.4(a), (b) or (e) (to
the extent any such documents are included in materials otherwise filed with the
SEC) may be delivered electronically and if so delivered, shall be deemed to
have been delivered on the date (i) on which Polypore posts such documents, or
provides a link thereto on Polypore’s website on the Internet at Polypore’s
website address; or (ii) on which such documents are posted on Polypore’s behalf
on IntraLinks/IntraAgency or another relevant website, if any, to which each
Lender and the Administrative Agent have access (whether a commercial,
third-party website or whether sponsored by the Administrative Agent).
SECTION 5.5. Litigation and Other Notices. Furnish to the Administrative
Agent, the Issuing Bank and each Lender prompt written notice of the following:
(a) any Event of Default or Default, specifying
the nature and extent thereof and the corrective action (if any) taken or
proposed to be taken with respect thereto;
(b) the filing or commencement of, or any threat
or notice of intention of any Person to file or commence, any action, suit or
proceeding, whether at law or in equity or by or before any Governmental
Authority, against Polypore or any Affiliate thereof that could reasonably be
(c) the occurrence of any ERISA Event that,
(d) any development that has resulted in, or
SECTION 5.6. Information Regarding Collateral. (a) Furnish to the
Administrative Agent prompt written notice of any change in (i) any Loan Party’s
legal name, (ii) the jurisdiction of organization or formation of any Loan
Party, (iii) any Loan Party’s identity or corporate structure or (iv) any Loan
Party’s Federal Taxpayer Identification Number. Polypore agrees not to effect
or permit any change referred to in the preceding sentence unless all filings
have been made under the Uniform Commercial Code or otherwise that are required
in order for the Administrative Agent to continue at all times following such
change to have a valid, legal and perfected security interest in all the
Collateral. Polypore also agrees promptly to notify the Administrative Agent if
any material portion of the Collateral is damaged or destroyed.
(b) In the case of Polypore, each year, at the
time of delivery of the annual financial statements with respect to the
preceding fiscal year pursuant to Section 5.4(a), deliver to the Administrative
Agent a certificate of a Financial Officer setting forth the information
required pursuant to Section 2 of the Perfection Certificate or confirming that
there has been no change in such information since the date of the Perfection
Certificate delivered on the Restatement Effective Date or the date of the most
recent certificate delivered pursuant to this Section 5.6.
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SECTION 5.7. Maintaining Records; Access to Properties and Inspections. Keep
proper books of record and account in which full, true and correct entries in
conformity with GAAP and all requirements of law are made of all dealings and
transactions in relation to its business and activities. Each Loan Party will,
and will cause each of its subsidiaries to, permit any representatives
designated by the Administrative Agent or any Lender to visit and inspect the
financial records and the properties of Polypore or any Material Subsidiary at
reasonable times and as often as reasonably requested (but not, except during
the continuance of an Event of Default, more than two times per fiscal year) and
to make extracts from and copies of such financial records, and permit any
representatives designated by the Administrative Agent or any Lender to discuss
the affairs, finances and condition of Polypore or any Material Subsidiary with
the officers thereof and independent accountants therefor. Except following the
occurrence and during the continuance of any Default, Polypore shall be entitled
to have a representative present at all such discussions and to obtain a copy of
all written requests for information relating to any Loan Party made by the
Administrative Agent or any Lender to any third party.
SECTION 5.8. Use of Proceeds. Use the proceeds of (a) the Term Loans (other
than the Incremental Term Loans) to pay (i) a portion of the amounts owing under
the Existing Credit Agreement and other existing Indebtedness of Polypore and
(ii) transaction costs incurred in connection with the Transactions, (b) the
Revolving Loans and Swingline Loans for working capital and general corporate
purposes (including to pay (i) a portion of the amounts owing under the Existing
Credit Agreement and other existing Indebtedness of Polypore and
(ii) transaction costs incurred in connection with the Transactions), (c) the
Letters of Credit for general corporate purposes and (d) Incremental Term Loans
for general corporate purposes (including Permitted Acquisitions).
SECTION 5.9. Further Assurances. Execute any and all further documents,
financing statements, agreements and instruments, and take all further action
(including filing Uniform Commercial Code and other financing statements,
mortgages and deeds of trust) that may be required under applicable law, or that
the Required Lenders or the Administrative Agent may reasonably request, in
order to effectuate the transactions contemplated by the Loan Documents and in
order to grant, preserve, protect and perfect the validity and first priority of
the security interests created or intended to be created by the Security
Documents. Polypore will cause any subsequently acquired or organized Domestic
Subsidiary (other than any Inactive Subsidiary) or any Domestic Subsidiary that
ceases to be an Inactive Subsidiary to become a Loan Party by executing the
Guarantee and Collateral Agreement and each other applicable Security Document
in favor of the Administrative Agent. Polypore will cause any subsequently
acquired or organized Foreign Subsidiary to promptly (i) execute and deliver to
the Administrative Agent such amendments to the Guarantee and Collateral
Agreement as the Administrative Agent deems necessary or advisable to grant to
the Administrative Agent, for the benefit of the Lenders, a perfected first
priority security interest in the Capital Stock of such new Subsidiary that is
owned by any such Group Member (provided that in no event shall more than 66% of
the total outstanding voting Capital Stock of any such new Subsidiary be
required to be so pledged), (ii) deliver to the Administrative Agent the
certificates representing such Capital Stock, together with undated stock
powers, in blank, executed and delivered by a duly authorized officer of the
relevant Group Member, and take such other action as may be necessary or, in the
opinion of the Administrative Agent, desirable to perfect the Administrative
Agent’s security interest therein, (iii) if requested by the Administrative
Agent, deliver to the Administrative Agent legal opinions relating to the
matters described above, which opinions shall be in form and substance, and from
counsel, reasonably satisfactory to the Administrative Agent and (iv) deliver to
the Administrative Agent pledge agreements governed by local law and legal
opinions of local counsel with respect thereto if reasonably requested. In
addition, subject to the last sentence of this Section 5.9, from time to time,
Polypore will, at its cost and expense, promptly secure the Obligations by
pledging or creating, or causing to be pledged or created, perfected security
interests with respect to such of its assets and properties as the
Administrative Agent or the Required Lenders shall designate (it being
understood that it is the intent of the parties that the Obligations shall be
secured by substantially all the assets of Polypore and its
69
Subsidiaries (including real and other properties acquired prior or subsequent
to the Restatement Effective Date, but excluding real property with a value of
less than $5,000,000, leasehold real property, other immaterial leasehold
property, and other Excluded Property (as defined in the Guarantee and
Collateral Agreement))). Such security interests and Liens will be created
under the Security Documents and other security agreements, mortgages, deeds of
trust and other instruments and documents in form and substance satisfactory to
the Administrative Agent, and Polypore shall deliver or cause to be delivered to
the Lenders all such instruments and documents (including legal opinions, title
insurance policies and lien searches) as the Administrative Agent shall
reasonably request to evidence compliance with this Section 5.9. Polypore
agrees to provide such evidence as the Administrative Agent shall reasonably
request as to the perfection and priority status of each such security interest
and Lien. In furtherance of the foregoing, Polypore will give prompt notice to
the Administrative Agent of the acquisition by it or any of the Domestic
Subsidiaries of any real property (or any interest in real property) having a
value in excess of $5,000,000. The actions required under this Section 5.9
shall be taken with 60 days (or such later time as may be acceptable to the
Administrative Agent) after the event giving rise to the requirement to take
such action. Notwithstanding the foregoing, (x) the Administrative Agent shall
not take a security interest in those assets as to which the Administrative
Agent shall determine, in its reasonable discretion, that the cost of obtaining
such Lien (including any mortgage, stamp, intangibles or other tax) are
excessive in relation to the benefit to the Lenders of the security afforded
thereby and (y) Liens required to be granted pursuant to this Section 5.9 shall
be subject to exceptions and limitations consistent with those set forth in the
Security Documents as in effect on the Restatement Effective Date (to the extent
appropriate in the applicable jurisdiction).
SECTION 5.10. Certain Treasury Regulation Matters. In the event Polypore
determines to take any action inconsistent with its intention as set forth in
the first sentence of Section 3.23, it will promptly notify the Administrative
Agent thereof.
SECTION 5.11. Environmental Laws. Except, in each case, as would not,
individually or in the aggregate, have a Material Adverse Effect:
(a) Comply in all material respects with, and
use reasonable efforts to ensure compliance in all material respects by all
tenants and subtenants, if any, with, all applicable Environmental Laws, and
obtain and comply in all material respects with and maintain, and use reasonable
efforts to ensure that all tenants and subtenants obtain and comply in all
material respects with and maintain, any and all Environmental Permits required
of them by any applicable Environmental Laws. For purposes of this
Section 5.11(a), noncompliance with the foregoing shall be deemed not to
constitute a breach of this covenant, provided, that upon learning of any actual
or suspected noncompliance, Polypore shall promptly undertake reasonable efforts
to achieve compliance.
(b) Conduct and complete in all material
respects all investigations, studies, sampling and testing, and all remedial,
removal and other actions required to be undertaken by any Group Member under
Environmental Laws and promptly comply with all orders and directives applicable
to any Group Member of all Governmental Authorities regarding Environmental
Laws; provided, however, that this covenant shall be deemed not violated if the
relevant Group Member promptly challenges in good faith any such order or
directive in a manner consistent with all applicable Environmental Laws and
other Requirements of Law and pursues such challenge or challenges diligently.
(c) Generate, use, treat, store, release,
dispose of, and otherwise manage Materials of Environmental Concern in a manner
that would not reasonably be expected to result in a material liability to any
Group Member or to materially affect any real property owned or leased by any of
them; and take reasonable efforts to prevent any other Person from generating,
using, treating, storing, releasing, disposing of, or otherwise managing
Materials of Environmental Concern in a manner that could
70
reasonably be expected to result in a material liability to, or materially
affect any real property owned or operated by, any Group Member. For purposes
of this Section 5.11(c), noncompliance with the foregoing shall be deemed not to
constitute a breach of this covenant, provided, that, upon learning of any
actual or suspected noncompliance, Polypore shall promptly undertake reasonable
efforts to remove such Materials of Environmental Concern or otherwise remediate
them in a manner consistent with applicable Environmental Law.
(d) Maintain, update as appropriate, and
implement in all material respects an ongoing program reasonably designed to
ensure that all the properties and operations of the Group Members are regularly
and reasonably reviewed by competent professionals to identify and promote
compliance with and to reasonably and prudently manage any liabilities or
potential liabilities under any Environmental Law that may affect any Group
Member, including, without limitation, compliance and liabilities relating to:
discharges to air and water; acquisition, transportation, storage and use of
hazardous materials; waste disposal; repair, maintenance and improvement of
properties; employee health and safety; species protection; and recordkeeping.
ARTICLE VI
Negative Covenants
Polypore covenants and agrees with each Lender that, so long as this Agreement
amounts payable under any Loan Document have been paid in full and all Letters
of Credit have been cancelled or have expired and all amounts drawn thereunder
have been reimbursed in full, unless the Required Lenders shall otherwise
consent in writing, Polypore will not, nor will it cause or permit any of the
Material Subsidiaries (or, in the case of Section 6.1, any of the Subsidiaries)
to:
SECTION 6.1. Indebtedness. Directly or indirectly, create, incur, issue,
assume, guarantee, acquire, become liable, contingently or otherwise, with
“incur”) any Indebtedness (other than Permitted Indebtedness); provided,
however, that if no Default or Event of Default shall have occurred and be
continuing at the time of or as a consequence of the incurrence of any such
Indebtedness, Polypore and the Guarantors may incur unsecured Indebtedness
(including unsecured Acquired Indebtedness), and Subsidiaries of Polypore that
are not Guarantors may incur unsecured Acquired Indebtedness in an aggregate
amount not to exceed $20,000,000 at any time outstanding, in each case if on the
date of the incurrence of such Indebtedness, after giving effect to the
incurrence thereof, the Total Leverage Ratio would be less than 4.00 to 1.00.
The maximum amount of Indebtedness that Polypore and its Subsidiaries may incur
pursuant to this covenant shall not be deemed to be exceeded, with respect to
any outstanding Indebtedness, solely as a result of fluctuations in the exchange
rate of currencies. When calculating capacity for the incurrence of additional
Indebtedness by Polypore and its Subsidiaries pursuant to this covenant the
exchange rate of currencies shall be measured as of the date of such
calculation.
SECTION 6.2. Liens. Create, incur, assume or suffer to exist any Lien on any
property or assets (including Capital Stock or other securities of any Person,
including any Subsidiary) now owned or hereafter acquired by it or on any income
or revenues or rights in respect of any thereof, except:
(a) Liens on property or assets of Polypore and
its Subsidiaries existing on the Restatement Effective Date and set forth in
Schedule 6.2; provided, that such Liens shall secure only those obligations
which they secure on the Restatement Effective Date and any extensions, renewals
and replacements thereof permitted hereunder;
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(b) any Lien created under the Loan Documents;
(c) any Lien existing on any property or asset
prior to the acquisition thereof by Polypore or any Subsidiary; provided, that
(i) such Lien is not created in contemplation of or in connection with such
acquisition, (ii) such Lien does not apply to any other property or assets of
Polypore or any Subsidiary, (iii) such Lien does not materially interfere with
the use, occupancy and operation of any Mortgaged Property and (iv) the
aggregate principal amount of Indebtedness secured by all Liens incurred
pursuant to this paragraph (c) does not exceed the greater of (A) $35,000,000
and (B) 2.5% of Total Assets at any one time;
(d) Liens for taxes not yet due or which are
being contested in compliance with Section 5.3;
(e) carriers’, landlords’, warehousemen’s,
mechanics’, materialmen’s, repairmen’s or other like Liens arising in the
ordinary course of business and securing obligations that are not due and
payable or which are being contested in compliance with Section 5.3;
(f) pledges and deposits made in the ordinary
course of business in compliance with workmen’s compensation, unemployment
insurance and other social security laws or regulations;
(g) deposits to secure the performance of bids,
trade contracts (other than for Indebtedness), leases (other than Capital Lease
Obligations), statutory obligations, surety and appeal bonds, performance bonds
and other obligations of a like nature incurred in the ordinary course of
business;
(h) zoning restrictions, easements,
rights-of-way, restrictions on use of real property and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, do not materially detract from the value of the property subject
thereto or interfere with the ordinary conduct of the business of Polypore or
any of its Subsidiaries as currently operated;
(i) purchase money security interests in
real property, improvements thereto or equipment hereafter acquired (or, in the
case of improvements, constructed) by Polypore or any Subsidiary; provided, that
(i) such security interests secure Indebtedness permitted by clause (vi) of the
definition of “Permitted Indebtedness”, (ii) such security interests are
originally incurred within 180 days after such acquisition (or construction),
(iii) the Indebtedness secured thereby is created within 180 days after such
acquisition (or construction) or is Refinancing Indebtedness of such
Indebtedness, and (iv) such security interests do not apply to any other
property or assets of Polypore or any Subsidiary (it being agreed that
transactions with the same vendor or any Affiliate of such vendor may be
cross-collateralized);
(j) Liens arising out of judgments or awards
in respect of which any Group Member shall in good faith be prosecuting an
appeal or proceedings for review in respect of which there shall be secured a
subsisting stay of execution pending such appeal or proceedings; provided, that
the aggregate amount of all such judgments or awards (and any cash and the fair
market value of any property subject to such Liens) does not exceed $20,000,000
at any time outstanding;
(k) any interest or title of a licensor, lessor
or sublessor under any license or lease agreement pursuant to which rights are
granted to Polypore or any Subsidiary;
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(l) licenses, leases or subleases granted by
Polypore or any Subsidiary to third Persons in the ordinary course of business
not interfering in any material respect with the business of Polypore or any
Subsidiary;
(m) Liens in favor of customs or revenue authorities
arising as a matter of law to secure payment of customs duties in connection
with the importation of goods;
(n) restrictions imposed in the ordinary course
of business on the sale or distribution of designated inventory pursuant to
agreements with customers under which such inventory is consigned by the
customer or such inventory is designated for sale to one or more customers;
(o) (i) Liens on the assets of a Foreign
Subsidiary that is not a Guarantor securing Indebtedness permitted to be
incurred by such Foreign Subsidiary pursuant to clause (xiii) of the definition
of “Permitted Indebtedness” and (ii) other Liens on the assets of a Foreign
Subsidiary that is not a Guarantor securing Indebtedness by such Foreign
Subsidiary not, in the case of this clause (ii), in excess of $1,000,000;
(p) any interest of a lessor under Liens arising
from precautionary UCC financing statement filings regarding leases entered into
by Polypore or any of its Subsidiaries in the ordinary course of business;
(q) Liens arising out of conditional sale, title
retention, consignment or similar arrangements for the sale of goods entered
into by Polypore or any of its Subsidiaries in the ordinary course of business;
(r) Liens deemed to exist in connection with
investments in repurchase agreements permitted under this Agreement;
(s) Liens that are contractual or statutory
setoff rights arising in the ordinary course of business with financial
institutions, relating to pooled deposit accounts or sweep accounts of any Group
Member to permit satisfaction of overdraft or similar obligations incurred in
the ordinary course of business or relating to purchase orders or other
agreements entered into with customers of any Group Member in the ordinary
course of business;
(t) Liens solely on any cash earnest money
deposits by Polypore or any of its Subsidiaries in connection with any letter of
intent or purchase agreement permitted under this Agreement;
(u) Liens on accounts receivable and related
assets or equipment and related assets incurred in connection with Qualified
Securitization Transactions;
(v) other Liens securing obligations incurred in
the ordinary course of business that do not, individually or in the aggregate,
secure obligations (or encumber property with a fair market value) in excess of
the greater of (i) $50,000,000 and (ii) 3.5% of Total Assets at any one time);
provided, that, after giving pro forma effect to the incurrence of any
Indebtedness pursuant to this paragraph in reliance on clause (ii) above, the
Total Leverage Ratio shall be less than 4.00 to 1.00; and
(w) the retained interest of the U.S. Federal
government or any agency or department thereof in assets purchased in whole or
in part (including via reimbursement of amounts expended by Polypore) with
proceeds of grants from the U.S. Federal government or any agency or
73
department thereof, in accordance with Federal law or regulation (including any
rule, regulation or policy governing the subject grant program).
SECTION 6.3. Sale and Lease-Back Transactions. Enter into any arrangement,
directly or indirectly, with any Person whereby it shall sell or transfer any
property, real or personal, used or useful in its business, whether now owned or
hereafter acquired, and thereafter rent or lease such property or other property
which it intends to use for substantially the same purpose or purposes as the
property being sold or transferred unless (a) the sale of such property is
permitted by Section 6.5 and (b) any Capital Lease Obligations, Synthetic Lease
Obligations or Liens arising in connection therewith are permitted by clause
(vi) of the definition of “Permitted Indebtedness” and Section 6.2, as
applicable.
SECTION 6.4. Investments, Loans and Advances. Purchase, hold or acquire any
Capital Stock, evidences of indebtedness or other securities of, make or permit
to exist any loans or advances to, or make or permit to exist any investment or
any other interest in, any other Person, or purchase any assets constituting a
business unit of any other Person (each, an “Investment” or an “investment”),
except:
(a) Permitted Investments;
(b) Investments made by Polypore or any
Subsidiary to Polypore or any other Subsidiary (other than a Securitization
Entity or a Restricted Subsidiary of Polypore in which an Affiliate of Polypore
that is not a Restricted Subsidiary of Polypore holds a minority interest);
provided, that (i) any loans and advances made by a Loan Party shall be
evidenced by a promissory note pledged to the Administrative Agent for the
ratable benefit of the Secured Parties pursuant to the Guarantee and Collateral
Agreement, (ii) the outstanding amount of such Investments made in Subsidiaries
that are not Wholly Owned Subsidiaries shall not exceed the greater of
(A) $35,000,000 and (B) 2.5% of Total Assets and (iii) in the case of
Investments described in clause (ii) above and Investments in Foreign
Subsidiaries, Polypore will be in compliance with Section 6.10 on a Pro Forma
Basis and no Default or Event of Default shall have occurred and be continuing
after giving effect thereto;
(c) investments received in connection with the
bankruptcy or reorganization of, or settlement of delinquent accounts and
disputes with, customers and suppliers, in each case in the ordinary course of
business;
(d) Polypore and the Subsidiaries may make loans
and advances in the ordinary course of business to their respective employees so
long as the aggregate principal amount thereof at any time outstanding
(determined without regard to any write-downs or write-offs of such loans and
advances) shall not exceed $10,000,000 at any time and advances in the ordinary
course of business of payroll payments to employees;
(e) Polypore may enter into Hedging Agreements
that are not speculative in nature;
(f) Polypore and its Subsidiaries may acquire
and hold receivables owing to it, if created or acquired in the ordinary course
of business and payable or dischargeable in accordance with customary trade
terms (including the dating of receivables) of Polypore or such Subsidiary;
(g) Polypore may acquire and hold obligations
of one or more officers or other employees of Polypore or its subsidiaries in
connection with such officers’ or employees’ acquisition of Capital Stock of
Polypore;
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(h) Polypore and its Subsidiaries may acquire
and hold non-cash consideration issued by the purchaser of assets in connection
with a sale of such assets to the extent permitted by Section 6.5;
(i) investments, loans and advances existing
on the Restatement Effective Date and set forth in Schedule 6.4;
(j) investments that are made with the
proceeds of substantially concurrent Excluded Contributions;
(k) investments made using the Available Amount;
(l) the sale or transfer of all or
substantially all of the assets of Daramic LLC related to its operations in
Norderstedt, Germany, to a newly-formed private German limited liability company
(Gesellschaft mit beschränkter Haftung) that is a Wholly Owned Subsidiary of
Polypore Acquisition GmbH;
(m) additional Investments having an aggregate fair
market value, taken together with all other Investments made pursuant to this
clause (m) that are at that time outstanding, not to exceed the greater of
(A) $30,000,000 and (B) 2.0% of Total Assets (provided that any investments in
joint ventures pursuant to this clause (m) will not exceed the greater of
(A) $25,000,000 and (B) 1.75% of Total Assets);
(n) Investments in a Securitization Entity or
any Investment by a Securitization Entity in any other Person in connection with
a Qualified Securitization Transaction; provided that any Investment in a
Securitization Entity is in the form of a Purchase Money Note or an equity
interest or interests in receivables and related assets generated by Polypore or
a Subsidiary and transferred to any Person in connection with a Qualified
Securitization Transaction or any such Person owning such receivables;
(o) Investments the payment for which consists
exclusively of Qualified Capital Stock;
(p) any Investment in any Person to the extent
it consists of prepaid expenses, negotiable instruments held for collection and
lease, utility and workers’ compensation, performance and other similar deposits
made in the ordinary course of business;
(q) Investments in Unrestricted Subsidiaries not
to exceed $5,000,000 at any one time outstanding; and
(r) Investments in any other Person
(including any such Investment that flows through one or more Subsidiaries
before being conveyed to such Person) or acquisitions of business units
(including by means of any transfer of cash or other property) if as a result of
such Investment such other Person shall become a Subsidiary of Polypore or, in
the case of an acquisition of a business unit, such business unit will be owned
by a Subsidiary of Polypore (in each case other than a Securitization Entity or
a Subsidiary of Polypore in which an Affiliate of Polypore that is not a
Subsidiary of Polypore holds a minority interest) or that will merge with or
consolidate into Polypore or a Subsidiary of Polypore (other than a
Securitization Entity or a Subsidiary of Polypore in which an Affiliate of
Polypore that is not a Subsidiary of Polypore holds a minority interest),
provided that (x) each Investment pursuant to this paragraph (r) shall have been
approved by the relevant governing body of such Person or a parent thereof, (y)
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Polypore will be in compliance with Section 6.10 on a Pro Forma Basis and no
Default or Event of Default shall have occurred and be continuing after giving
effect thereto and (z) the aggregate amount of Investments made pursuant to this
paragraph (r) in, or that will be held by non-Wholly Owned Subsidiaries shall
not exceed the greater of (A) $35,000,000 and (B) 2.5% of Total Assets.
SECTION 6.5. Mergers, Consolidations and Sales of Assets. (a) In the case of
Polypore, in a single transaction or series of related transactions, consolidate
or merge with or into any Person, or sell, assign, transfer, lease, convey or
otherwise dispose of (or cause or permit any Subsidiary to sell, assign,
transfer, lease, convey or otherwise dispose of) all or substantially all of
Polypore’s assets (determined on a consolidated basis for Polypore and the
Subsidiaries) to any Person unless:
(i) either: (A) Polypore shall be the
surviving or continuing corporation; or (B) the Person (if other than Polypore)
formed by such consolidation or into which Polypore is merged or the Person
which acquires by sale, assignment, transfer, lease, conveyance or other
disposition the properties and assets of Polypore and of the Subsidiaries
substantially as an entirety (the “Surviving Entity”): (x) shall be a
corporation organized and validly existing under the laws of the United States
of America or any State thereof or the District of Columbia; and (y) shall
expressly assume pursuant to supplements to the Loan Documents or other
documents or instruments in form reasonably satisfactory to the Administrative
Agent, executed and delivered to the Administrative Agent, the Obligations;
(ii) except in the case of a merger of Polypore
with or into a Wholly Owned Subsidiary that is not a Securitization Entity or
Unrestricted Subsidiary of Polypore and except in the case of a merger entered
into solely for the purpose of reincorporating Polypore in another jurisdiction,
immediately after giving effect to such transaction and the assumption
contemplated by clause (i)(B)(y) above (including giving effect to any
Indebtedness and Acquired Indebtedness incurred in connection with or in respect
of such transaction), Polypore or such Surviving Entity, as the case may be,
shall be able to incur at least $1.00 of additional Indebtedness (other than
Permitted Indebtedness) pursuant to Section 6.1 hereof,
(iii) except in the case of a merger of Polypore
Unrestricted Subsidiary and except in the case of a merger entered into solely
for the purpose of reincorporating Polypore in another jurisdiction, immediately
after giving effect to such transaction and the assumption contemplated by
clause (i)(B)(y) above (including, without limitation, giving effect to any
Indebtedness and Acquired Indebtedness incurred and any Lien granted in
connection with or in respect of the transaction), no Default or Event of
Default shall have occurred or be continuing; and
(iv) Polypore or the Surviving Entity shall have
delivered to the Administrative Agent an Officers’ Certificate and an opinion of
counsel, each stating that such consolidation, merger, sale, assignment,
transfer, lease, conveyance or other disposition and, if supplements to the Loan
Documents are required in connection with such transaction, such supplements
comply with the applicable provisions of the Loan Documents and that all
conditions precedent in this Agreement relating to such transaction have been
satisfied.
For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise, in a single transaction or series of transactions) of all or
substantially all of the properties or assets of one or more Subsidiaries the
Capital Stock of which constitutes all or substantially all of the properties
and assets of Polypore, shall be deemed to be the transfer of all or
substantially all of the properties and assets of Polypore. However, transfer of
assets (i) between or among Polypore and the Subsidiaries, (ii) between and
among Foreign
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Subsidiaries or (iii) from Foreign Subsidiaries to Polypore or a Loan Party will
not be subject to this Section 6.5(a).
Upon any consolidation, combination or merger, or any transfer of all or
substantially all of the assets of Polypore in accordance with Section 6.5
hereof, in which Polypore is not the continuing corporation, the successor
Person formed by such consolidation or into which Polypore is merged or to which
such conveyance, lease or transfer is made shall succeed to, and be substituted
for, and may exercise every right and power of Polypore under this Agreement and
the other Loan Documents with the same effect as if such surviving entity had
been named as such and that, in the event of a conveyance or transfer (but not a
lease), the conveyor or transferor (but not a lessor) shall be released from the
provisions of this Agreement and the other Loan Documents.
(b) In the case of any Guarantor, consolidate or
merge with or into, or sell, assign, transfer, lease, convey or otherwise
dispose of, in a single transaction or series of related transactions, all or
substantially all of its assets to any Person unless:
(i) (except in the case of such Guarantor
that has been disposed of in its entirety to another Person (other than to
Polypore or an Affiliate of Polypore), whether through a merger, consolidation
or sale of Capital Stock or through the sale of all or substantially all of its
assets (such sale constituting the disposition of such Guarantor in its
entirety), if in connection therewith Polypore provides an Officers’ Certificate
to the Administrative Agent to the effect that Polypore will comply with its
obligations under Section 2.13 hereof in respect of such disposition) the
resulting, surviving or transferee Person (if not such Guarantor) shall be a
Person organized and validly existing under the laws of the jurisdiction under
which such Guarantor was organized or under the laws of the United States of
America, any State thereof or the District of Columbia, and such Person shall
expressly assume, pursuant to supplements to the Loan Documents or other
Agent, executed and delivered to the Administrative Agent, the Guarantee of such
Guarantor;
(ii) except in the case of a merger of such
Guarantor with or into Polypore or another Guarantor and except in the case of a
merger entered into solely for the purpose of reincorporating such Guarantor in
another jurisdiction, immediately after giving effect to such transaction and
(b)(i) (including, without limitation, giving effect to any Indebtedness and
Acquired Indebtedness incurred and any Lien granted in connection with or in
respect of the transaction), no Default or Event of Default shall have occurred
and be continuing; and
(iii) Polypore shall have delivered to the
Administrative Agent an Officers’ Certificate and an opinion of counsel, each
stating that such consolidation, merger, sale, assignment, transfer, lease,
conveyance or other disposition and, if supplements to the Loan Documents are
required in connection with such transaction, such supplements comply with the
applicable provisions of the Loan Documents and that all conditions precedent in
this Agreement relating to such transaction have been satisfied
In case of any such consolidation, merger, sale or conveyance and upon the
assumption by the successor Person, by supplements to the Loan Documents,
executed and delivered to the Administrative Agent and reasonably satisfactory
in form to the Administrative Agent, of the Guarantee of the relevant Guarantor,
such successor Person shall succeed to and be substituted for the Guarantor with
the same effect as if it had been named herein as a Guarantor.
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(c) Consummate any Asset Sale unless (i) such
Asset Sale is for consideration at least 75% of which is cash or Permitted
Investments (other than in the case of a like-kind exchange or trade-in of one
asset for another asset used or useful in the business of Polypore and its
Subsidiaries), (ii) such consideration is at least equal to the fair market
value of the assets being sold, transferred, leased or disposed of and
(iii) Polypore shall have delivered to the Administrative Agent a certificate in
reasonable detail demonstrating that, upon giving effect to such Asset Sale,
Event of Default or Default shall have occurred and be continuing. The
Microporous Disposition shall be deemed to be an Asset Sale for the purposes of
this paragraph whether or not it constitutes an “Asset Sale” pursuant to the
definition thereof.
SECTION 6.6. Restricted Payments. Declare or make, or agree to declare or
make, directly or indirectly, any Restricted Payment (including pursuant to any
Synthetic Purchase Agreement), or incur any obligation (contingent (unless the
contingency is the repayment of the Obligations or receipt of consent from the
requisite Lenders under this Agreement) or otherwise) to do so; provided,
however, that the following Restricted Payments shall be permitted:
(a) any Subsidiary may declare and pay dividends
or make other distributions ratably to its equity holders;
(b) so long as no Event of Default or Default
shall have occurred and be continuing or would result therefrom, payments by
Polypore in connection with the repurchase provisions of employee stock option
or stock purchase agreements or other agreements to compensate management
employees or upon the death, disability, retirement, severance or termination of
employment of management employees; provided that all such redemptions or
repurchases pursuant to this clause (b) shall not exceed in any fiscal year the
sum of (i) $5,000,000 plus (ii) any amounts not utilized in any preceding fiscal
year following the Restatement Effective Date that were otherwise available
under this clause for such purchases (which aggregate amount shall be increased
by the amount of any net cash proceeds received from the sale since the
Restatement Effective Date of Capital Stock (other than Disqualified Capital
Stock) to members of Polypore’s management team that have not otherwise been
applied through application of the Available Amount or clause (d) of this
Section 6.6 and by the cash proceeds of any “key-man” life insurance policies
which are used to make such redemptions or repurchases); provided, further, that
the cancellation of Indebtedness owing to Polypore from members of management of
Polypore or any Subsidiary in connection with any repurchase of Capital Stock of
Polypore (or warrants or options or rights to acquire such Capital Stock) will
not be deemed to constitute a Restricted Payment;
(c) the payment of any dividend or the
consummation of any irrevocable redemption within 60 days after the date of
declaration of such dividend or notice of such redemption if the dividend or
payment of the redemption price, as the case may be, would have been permitted
on the date of declaration or notice;
(d) any Restricted Payment made out of the net
cash proceeds of the substantially concurrent sale of, or made by exchange for,
Qualified Capital Stock of Polypore (other than Capital Stock issued or sold to
a Subsidiary of Polypore or an employee stock ownership plan or to a trust
established by Polypore or any Subsidiary for the benefit of their respective
employees) or a substantially concurrent cash capital contribution received by
Polypore from its shareholders; provided, however, that the net cash proceeds
from such sale or such cash capital contribution (to the extent so used for such
Restricted Payment) shall be excluded from the calculation of the Available
Amount;
(e) if no Default or Event of Default shall
have occurred and be continuing or would occur as a consequence thereof, the
declaration and payment of dividends to holders of any class or series of
Designated Preferred Stock (other than Disqualified Capital Stock), issued after
the Restatement Effective
78
Date; provided that, at the time of the declaration of such dividend, after
giving effect to the payment of such dividend on a pro forma basis, (i) the
Consolidated Interest Coverage Ratio is at least 2.0 to 1.0 and (ii) Polypore is
in compliance with Section 6.10;
(f) repurchases of Capital Stock deemed to
occur upon the exercise of stock options, warrants or other convertible
securities if such Capital Stock represents a portion of the exercise price
thereof;
(g) payments of dividends on Disqualified
Capital Stock issued in compliance with Section 6.1 hereof;
(h) so long as no Default or Event of Default
has occurred and is continuing or would be caused thereby, the payment of
dividends on Polypore’s Common Stock of up to 6% per annum of the Net Cash
Proceeds received by Polypore in any Public Equity Offering; and
(i) in addition to the foregoing Restricted
Payments, Polypore may make additional Restricted Payments using the Available
Amount.
SECTION 6.7. Transactions with Affiliates.
(a) Polypore shall not, and shall not permit any
of its Subsidiaries to, directly or indirectly, enter into or permit to occur
any transaction or series of related transactions (including, without
limitation, the purchase, sale, lease or exchange of any property or the
rendering of any service) with, or for the benefit of, any of its Affiliates
involving aggregate consideration in excess of $3,000,000 (an “Affiliate
Transaction”), other than Affiliate Transactions on terms that are not
materially less favorable than those that might reasonably have been obtained in
a comparable transaction at such time on an arm’s-length basis from a Person
that is not an Affiliate of Polypore; provided, however, that for a transaction
or series of related transactions with an aggregate value of $10,000,000 or
more, at Polypore’s option, either: (i) a majority of the disinterested members
of the Board of Directors of Polypore shall determine in good faith that such
Affiliate Transaction is on terms that are not materially less favorable than
those that might reasonably have been obtained in a comparable transaction at
such time on an arm’s-length basis from a Person that is not an Affiliate of
Polypore, or (ii) the Board of Directors of Polypore or any such Subsidiary
party to such Affiliate Transaction shall have received an opinion from a
nationally recognized investment banking, appraisal or accounting firm that such
Affiliate Transaction is either fair, from a financial standpoint, to Polypore
and its Subsidiaries or is on terms not materially less favorable than those
that might reasonably have been obtained in a comparable transaction at such
Polypore; and provided, further, that for an Affiliate Transaction with an
aggregate value of $20,000,000 or more the Board of Directors of Polypore or any
such Subsidiary party to such Affiliate Transaction shall have received a
written opinion from a nationally recognized investment banking, appraisal or
accounting firm that such Affiliate Transaction is either fair, from a financial
standpoint, to Polypore and its Subsidiaries or is on terns not materially less
favorable than those that might reasonably have been obtained in a comparable
transaction at such time on an arm’s-length basis from a Person that is not an
Affiliate of Polypore.
(b) The restrictions set forth in
Section 6.7(a) hereof shall not apply to: (i) reasonable fees and compensation
paid to, and indemnity provided on behalf of, officers, directors, employees or
consultants of Polypore or any Subsidiary of Polypore as determined in good
faith by Polypore’s Board of Directors or senior management; (ii) transactions
exclusively between or among Polypore and any of its Subsidiaries or any entity
that becomes a Subsidiary as a result of such transaction (other than a
Securitization Entity) or exclusively between or among such Subsidiaries or any
entity that becomes a Subsidiary as a result of such transaction, provided that
such transactions are not otherwise prohibited by
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this Agreement; (iii) any agreement as in effect as of the Restatement Effective
Date and described on Schedule 6.7 or any amendment thereto or any transaction
contemplated thereby (including pursuant to any amendment thereto) or by any
replacement agreement thereto so long as any such amendment or replacement
agreement is not more disadvantageous to the Lenders in any material respect
than the original agreement as in effect on the Restatement Effective Date as
determined in good faith by the Board of Directors of Polypore; (iv) Restricted
Payments or Investments (other than Investments made pursuant to Section 6.4(k))
permitted by this Agreement; (v) transactions effected as part of a Qualified
Securitization Transaction; (vi) payments or loans allowed by law to employees
or consultants that are approved by the Board of Directors of Polypore in good
faith; (vii) sales of Qualified Capital Stock; (viii) the existence of, or the
performance by Polypore or any of its Subsidiaries of its obligations under the
terms of, any stockholders’ agreement (including any registration rights
agreement or purchase agreement related thereto) to which it is a party as of
the Restatement Effective Date and any similar agreements which it may enter
into thereafter; provided, however, that the existence of, or the performance by
Polypore or any of its Subsidiaries of obligations under, any future amendment
to any such existing agreement or under any similar agreement entered into after
the Restatement Effective Date shall only be permitted by this clause (viii) to
the extent that the terms of any such amendment or new agreement are not
disadvantageous to the Lenders in any material respect; (ix) transactions
permitted by, and complying with, the provisions of Section 6.5; (x) any
issuance of securities or other payments, awards, grants in cash, securities or
otherwise pursuant to, or the funding of, employment arrangements, stock options
and stock ownership plans approved by the Board of Directors of Polypore;
(xi) transactions in which Polypore or any Subsidiary delivers to the
Administrative Agent a letter from a nationally recognized investment banking,
appraisal or accounting firm stating that such transaction is fair to Polypore
or such Subsidiary from a financial point of view; and (xii) transactions with
customers, clients, suppliers, or purchasers or sellers of goods or services, in
each case in the ordinary course of business and otherwise in compliance with
the terms of this Agreement that are fair to Polypore or the Subsidiaries, in
the reasonable determination of the members of the Board of Directors of
Polypore, which determinations shall be conclusive, or are on terms at least as
favorable as might reasonably have been obtained at such time from an
unaffiliated party.
SECTION 6.8. Business of Polypore and Subsidiaries. Engage in any businesses a
majority of whose revenues are not derived from businesses that are the same or
Subsidiaries are engaged on the Restatement Effective Date (which shall include,
without limitation, business or operations of Polypore’s suppliers and
customers).
Subordinated Debt. (a) Permit any supplement, modification or amendment of the
Senior Note Indenture if the effect of such supplement, modification or
amendment as a whole would materially increase the obligations (including,
without limitation, the pricing thereof) of the obligor or confer additional
material rights on the holders of the Indebtedness outstanding thereunder in a
manner that would be, or could reasonably be expected to be, materially
detrimental to Polypore or materially adverse to the interests of the Lenders,
as determined in good faith by Polypore.
(b) Make any distribution, whether in cash,
property, securities or a combination thereof in excess of $15,000,000 in the
aggregate during the term of this Agreement, other than regular scheduled
payments of principal and interest as and when due (to the extent not prohibited
by applicable subordination provisions), in respect of, or pay, or offer or
commit to pay, or directly or indirectly (including pursuant to any Synthetic
Purchase Agreement) redeem, repurchase, retire or otherwise acquire for
consideration, or set apart any sum for the aforesaid purposes, any subordinated
Indebtedness (provided, however, that the foregoing shall not prohibit (i) any
Refinancings of Indebtedness in
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accordance with Section 6.1, (ii) the conversion of any such Indebtedness into
equity securities or (iii) any such transaction funded with the Available
Amount).
SECTION 6.10. Financial Condition Covenants. (a) Permit the Senior Leverage
Ratio as at the last day of any fiscal quarter of Polypore to exceed 2.50 to
1.00.
(b) Permit the Consolidated Interest Coverage
Ratio as at the last day of any fiscal quarter of Polypore to be less than 3.00
to 1.00.
SECTION 6.11. Fiscal Year. With respect to Polypore, change its fiscal
year-end to a date other than the end of the 52 or 53-week period ending the
Saturday nearest to December 31.
SECTION 6.12. Negative Pledge Clauses. Enter into or suffer to exist or become
effective any agreement that prohibits or limits the ability of Polypore or any
Domestic Subsidiary to create, incur, assume or suffer to exist any Lien upon
any of its property or revenues, whether now owned or hereafter acquired, to
secure its obligations under the Loan Documents (assuming, in the case of each
Domestic Subsidiary, that it is a Guarantor, whether or not it is in fact a
Guarantor), other than (a) this Agreement and the other Loan Documents and
(b) any agreements governing any purchase money Liens, Capital Lease Obligations
or Qualified Securitization Transaction otherwise permitted hereby (in which
case, any prohibition or limitation shall only be effective against the assets
financed thereby).
SECTION 6.13. Clauses Restricting Subsidiary Distributions. Enter into or
suffer to exist or become effective any consensual encumbrance or restriction on
the ability of any Subsidiary of Polypore to (a) make Restricted Payments in
respect of any Capital Stock of such Subsidiary held by, or pay any Indebtedness
owed to, Polypore or any other Subsidiary of Polypore, (b) make loans or
advances to, or other Investments in, Polypore or any other Subsidiary of
Polypore or (c) transfer any of its assets to Polypore or any other Subsidiary
of Polypore, except for such encumbrances or restrictions existing under or by
reason of (i) any restrictions existing under the Loan Documents and (ii) any
restrictions with respect to a Subsidiary imposed pursuant to an agreement that
has been entered into in connection with the Disposition of all or substantially
all of the Capital Stock or assets of such Subsidiary.
ARTICLE VII
Events of Default
In case of the happening of any of the following events (“Events of Default”):
(a) any representation or warranty made or
deemed made in or in connection with any Loan Document or the borrowings or
issuances of Letters of Credit hereunder, or any representation, warranty,
statement or information contained in any report, certificate, financial
statement or other instrument furnished in connection with or pursuant to any
Loan Document, shall prove to have been false or misleading in any material
respect when so made, deemed made or furnished;
(b) default shall be made in the payment of any
principal of any Loan or the reimbursement with respect to any L/C Disbursement
when and as the same shall become due and payable, whether at the due date
thereof or at a date fixed for prepayment thereof or by acceleration thereof or
otherwise;
(c) default shall be made in the payment of any
interest on any Loan or L/C Disbursement or of any Fee or any other amount
(other than an amount referred to in (b) above) due under any Loan Document,
when and as the same shall become due and payable, and such default shall
continue unremedied for a period of 5 days;
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(d) default shall be made in the due observance
or performance by any Group Member of any covenant, condition or agreement
contained in Section 5.1(a), 5.5(a) or in Article VI;
(e) default shall be made in the due observance
contained in any Loan Document (other than those specified in (b), (c) or
(d) above) and such default shall continue unremedied for a period of 30 days
after notice thereof from the Administrative Agent or any Lender to Polypore;
(f) (i) Polypore or any Material Subsidiary
shall fail to pay any principal or interest, regardless of amount, due in
respect of any Material Indebtedness, when and as the same shall become due and
payable; (ii) any other event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables or
permits (with or without the giving of notice, the lapse of time or both) the
holder or holders of any Material Indebtedness or any trustee or agent on its or
their behalf to cause any Material Indebtedness to become due, or to require the
prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled
maturity; provided, that this clause (ii) shall not apply to secured
Indebtedness that becomes due as a result of the voluntary sale or transfer of
the property or assets securing such Indebtedness; or (iii) any event or
circumstance entitling the Persons purchasing, or financing the purchase of,
receivables or equipment under any Qualified Securitization Transaction to stop
so purchasing or financing, other than by reason of the occurrence of the stated
expiry date of such Qualified Securitization Transaction, a refinancing of such
Qualified Securitization Transaction through another Qualified Securitization
Transaction, a reduction in any applicable borrowing base, or the occurrence of
any other event or circumstance which is not, or is not related primarily to, an
action or statement taken or made, or omitted to be taken or made, by or on
behalf of, or a condition of or relating to, Polypore or any of its
Subsidiaries;
(g) an involuntary proceeding shall be commenced
or an involuntary petition shall be filed in a court of competent jurisdiction
seeking (i) relief in respect of Polypore or any Material Subsidiary, or of a
substantial part of the property or assets of Polypore or a Material Subsidiary,
under Title 11 of the United States Code, as now constituted or hereafter
amended, or any other Federal, state or foreign bankruptcy, insolvency,
receivership or similar law, (ii) the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for Polypore or any
Material Subsidiary or for a substantial part of the property or assets of
Polypore or a Material Subsidiary or (iii) the winding-up or liquidation of
Polypore or any Material Subsidiary; and such proceeding or petition shall
continue undismissed for 60 days or an order or decree approving or ordering any
of the foregoing shall be entered;
(h) Polypore or any Material Subsidiary shall
(i) voluntarily commence any proceeding or file any petition seeking relief
receivership or similar law, (ii) consent to the institution of, or fail to
contest in a timely and appropriate manner, any proceeding or the filing of any
petition described in (g) above, (iii) apply for or consent to the appointment
of a receiver, trustee, custodian, sequestrator, conservator or similar official
for Polypore or any Material Subsidiary or for a substantial part of the
property or assets of Polypore or any Material Subsidiary, (iv) file an answer
admitting the material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors,
(vi) become unable, admit in writing its inability or fail generally to pay its
debts as they become due or (vii) take any action for the purpose of effecting
any of the foregoing;
money in an aggregate amount in excess of $20,000,000 (net of amounts covered by
independent third party insurance as to which the insurer has been notified of
such judgment or order and does not deny coverage and of amounts covered by an
indemnity from a Person that, in the reasonable judgment of the Administrative
Agent, is creditworthy)
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from a party shall be rendered against Polypore, any Material Subsidiary or any
combination thereof and the same shall remain undischarged for a period of 30
consecutive days during which execution shall not be effectively stayed, or any
action shall be legally taken by a judgment creditor to levy upon assets or
properties of Polypore or any Material Subsidiary to enforce any such judgment;
(j) an ERISA Event shall have occurred that,
in the opinion of the Required Lenders, when taken together with all other ERISA
Events that have occurred, could reasonably be expected to have a Material
Adverse Effect;
(k) any Guarantee under the Guarantee and
Collateral Agreement for any reason shall cease to be in full force and effect
(other than in accordance with its terms), or any Guarantor shall deny in
writing that it has any further liability under the Guarantee and Collateral
Agreement (other than as a result of the discharge of such Guarantor in
accordance with the terms of the Loan Documents);
(l) any security interest in any material
item of Collateral purported to be created by any Security Document shall cease
to be, or shall be asserted by Polypore or any other Loan Party not to be, a
valid, perfected, first priority (except as otherwise expressly provided in this
Agreement or such Security Document) security interest in the securities, assets
or properties covered thereby, except to the extent that any such loss of
perfection or priority results from the failure of the Administrative Agent to
maintain possession of certificates representing securities pledged under the
Guarantee and Collateral Agreement and except to the extent that such loss is
covered by a lender’s title insurance policy and the related insurer shall not
have denied or disclaimed in writing that such loss is covered by such title
insurance policy; or
(m) there shall have occurred a Change in Control;
then, and in every such event (other than an event with respect to Polypore
described in paragraph (g) or (h) (i) - (v) above), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to Polypore, take either or
both of the following actions, at the same or different times: (i) terminate
forthwith the Commitments and (ii) declare the Loans then outstanding to be
forthwith due and payable in whole or in part, whereupon the principal of the
Loans so declared to be due and payable, together with accrued interest thereon
and any unpaid accrued Fees and all other liabilities of Polypore accrued
hereunder and under any other Loan Document, shall become forthwith due and
payable, without presentment, demand, protest or any other notice of any kind,
all of which are hereby expressly waived by Polypore, anything contained herein
or in any other Loan Document to the contrary notwithstanding; and in any event
with respect to Polypore described in paragraph (g) or (h) (i) - (v) above, the
Commitments shall automatically terminate and the principal of the Loans then
outstanding, together with accrued interest thereon and any unpaid accrued Fees
and all other liabilities of Polypore accrued hereunder and under any other Loan
Document, shall automatically become due and payable, without presentment,
demand, protest or any other notice of any kind, all of which are hereby
expressly waived by Polypore, anything contained herein or in any other Loan
Document to the contrary notwithstanding.
ARTICLE VIII
The Agents
SECTION 8.1. Appointment. Each Lender hereby irrevocably designates and
appoints the Administrative Agent as the agent of such Lender under this
Agreement and the other Loan Documents, and each such Lender irrevocably
authorizes the Administrative Agent, in such capacity, to take such action on
its behalf under the provisions of this Agreement and the other Loan Documents
and to exercise
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such powers and perform such duties as are expressly delegated to the
Documents, together with such other powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary elsewhere in this
Agreement, the Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the
Administrative Agent.
SECTION 8.2. Delegation of Duties. The Administrative Agent may execute any of
its duties under this Agreement and the other Loan Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent
shall not be responsible for the negligence or misconduct of any agents or
attorneys in-fact selected by it with reasonable care.
SECTION 8.3. Exculpatory Provisions. Neither any Agent nor any of their
respective officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except to the extent that any of the foregoing are found by
a final and nonappealable decision of a court of competent jurisdiction to have
resulted from its or such Person’s own gross negligence or willful misconduct)
or (ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by any Loan Party or any officer
thereof contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agents under or in connection with, this Agreement or any
other Loan Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document or
for any failure of any Loan Party a party thereto to perform its obligations
hereunder or thereunder. The Agents shall not be under any obligation to any
Lender to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of any Loan Party.
SECTION 8.4. Reliance by Administrative Agent. The Administrative Agent shall
be entitled to rely, and shall be fully protected in relying, upon any
instrument, writing, resolution, notice, consent, certificate, affidavit,
letter, telecopy, telex or teletype message, statement, order or other document
or conversation believed by it to be genuine and correct and to have been
signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including counsel to Polypore), independent
accountants and other experts selected by the Administrative Agent. The
thereof for all purposes unless a written notice of assignment, negotiation or
transfer thereof shall have been filed with the Administrative Agent. The
Administrative Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Required Lenders (or, if so specified
by this Agreement, all Lenders) as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders against any and all liability and
expense that may be incurred by it by reason of taking or continuing to take any
such action. The Administrative Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement and the other Loan
Documents in accordance with a request of the Required Lenders (or, if so
specified by this Agreement, all Lenders), and such request and any action taken
or failure to act pursuant thereto shall be binding upon all the Lenders and all
future holders of the Loans.
SECTION 8.5. Notice of Default. The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of Default
unless the Administrative Agent has received notice from a Lender or Polypore
referring to this Agreement, describing such Default or
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Event of Default and stating that such notice is a “notice of default”. In the
event that the Administrative Agent receives such a notice, the Administrative
Agent shall give notice thereof to the Lenders. The Administrative Agent shall
take such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Lenders (or, if so specified by this
Agreement, all Lenders); provided that unless and until the Administrative Agent
shall have received such directions, the Administrative Agent may (but shall not
be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable in the
best interests of the Lenders.
SECTION 8.6. Non-Reliance on Agents and Other Lenders. Each Lender expressly
acknowledges that neither the Agents nor any of their respective officers,
directors, employees, agents, attorneys-in-fact or affiliates have made any
representations or warranties to it and that no act by any Agent hereafter
taken, including any review of the affairs of a Loan Party or any affiliate of a
Loan Party, shall be deemed to constitute any representation or warranty by any
Agent to any Lender. Each Lender represents to the Agents that it has,
independently and without reliance upon any Agent or any other Lender, and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Loan Parties and their
affiliates and made its own decision to make its Loans hereunder and enter into
this Agreement. Each Lender also represents that it will, independently and
without reliance upon any Agent or any other Lender, and based on such documents
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Loan Parties and their affiliates. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative Agent shall not have any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of any Loan Party or any affiliate of
a Loan Party that may come into the possession of the Administrative Agent or
any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates.
SECTION 8.7. Indemnification. The Lenders severally agree to indemnify each
Agent in its capacity as such (to the extent not reimbursed by Polypore and
without limiting the obligation of Polypore to do so), ratably according to
their respective Aggregate Exposure Percentages in effect on the date on which
indemnification is sought under this Section (or, if indemnification is sought
after the date upon which the Commitments shall have terminated and the Loans
shall have been paid in full, ratably in accordance with such Aggregate Exposure
Percentages immediately prior to such date), from and against any and all
costs, expenses or disbursements of any kind whatsoever that may at any time
(whether before or after the payment of the Loans) be imposed on, incurred by or
asserted against such Agent in any way relating to or arising out of, the
Commitments, this Agreement, any of the other Loan Documents or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by such Agent
under or in connection with any of the foregoing; provided that no Lender shall
be liable for the payment of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements that are found by a final and nonappealable decision of a court of
competent jurisdiction to have resulted from such Agent’s gross negligence or
willful misconduct. The agreements in this Section shall survive the payment of
the Loans and all other amounts payable hereunder.
SECTION 8.8. Agent in Its Individual Capacity. Each Agent and its affiliates
may make loans to, accept deposits from and generally engage in any kind of
business with any Loan Party as though such Agent were not an Agent. With
respect to its Loans made or renewed by it and with respect to any Letter
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of Credit issued or participated in by it, each Agent shall have the same rights
and powers under this Agreement and the other Loan Documents as any Lender and
may exercise the same as though it were not an Agent, and the terms “Lender” and
“Lenders” shall include each Agent in its individual capacity.
SECTION 8.9. Successor Administrative Agent. The Administrative Agent may
resign as Administrative Agent upon 10 days’ notice to the Lenders and
Polypore. If the Administrative Agent shall resign as Administrative Agent
under this Agreement and the other Loan Documents, then the Required Lenders
shall appoint from among the Lenders a successor agent for the Lenders, which
successor agent shall (unless an Event of Default under Section 7(b), (c),
(g) or (h) with respect to Polypore shall have occurred and be continuing) be
subject to approval by Polypore (which approval shall not be unreasonably
withheld or delayed), whereupon such successor agent shall succeed to the
rights, powers and duties of the Administrative Agent, and the term
“Administrative Agent” shall mean such successor agent effective upon such
appointment and approval, and the former Administrative Agent’s rights, powers
and duties as Administrative Agent shall be terminated, without any other or
further act or deed on the part of such former Administrative Agent or any of
the parties to this Agreement or any holders of the Loans. If no successor
agent has accepted appointment as Administrative Agent by the date that is 10
days following a retiring Administrative Agent’s notice of resignation, the
retiring Administrative Agent’s resignation shall nevertheless thereupon become
effective, and the Lenders shall assume and perform all of the duties of the
Administrative Agent hereunder until such time, if any, as the Required Lenders
appoint a successor agent as provided for above. After any retiring
Administrative Agent’s resignation as Administrative Agent, the provisions of
this Article VIII shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Administrative Agent under this Agreement and the
other Loan Documents.
SECTION 8.10. Co-Documentation Agents and Syndication Agents. Neither the
Co-Documentation Agents nor the Syndication Agents shall have any duties or
responsibilities hereunder in its capacity as such.
ARTICLE IX
Miscellaneous
SECTION 9.1. Notices. Notices and other communications provided for herein
(a) if to Polypore, to it at 11430 N. Community
House Drive, Suite 350, Charlotte NC 28277, Fax No. (704) 587-8795;
(b) if to the Administrative Agent or the
Swingline Lender, to JPMorgan Chase Bank, Loan and Agency Services Group, 1111
Fannin, 10th Floor, Houston, TX, 77002 Attention: Bejaye Ilegbodu, Fax No. (713)
427-6307 and
(c) if to a Lender, to it at its address (or
fax number) set forth on Schedule 2.1 or in the Assignment and Assumption
pursuant to which such Lender shall have become a party hereto.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by fax
or on the date five Business Days after dispatch by certified or registered mail
if mailed, in each case delivered, sent or mailed (properly addressed) to such
party as provided in this Section 9.1 or in accordance with the latest unrevoked
direction from such party given in accordance
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with this Section 9.1. As agreed to among Polypore, the Administrative Agent,
the Swingline Lender and the applicable Lenders from time to time, notices and
other communications may also be delivered by e-mail to the e-mail address of a
representative of the applicable Person provided from time to time by such
Person.
SECTION 9.2. Survival of Agreement. All covenants, agreements, representations
and warranties made by Polypore herein and in the certificates or other
instruments prepared or delivered in connection with or pursuant to this
Agreement or any other Loan Document shall be considered to have been relied
upon by the Lenders and the Issuing Bank and shall survive the making by the
Lenders of the Loans and the issuance of Letters of Credit by the Issuing Bank,
regardless of any investigation made by the Lenders or the Issuing Bank or on
their behalf, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any Fee or any other amount
have not been terminated. The provisions of Sections 2.14, 2.15, 2.19 and 9.5
shall remain operative and in full force and effect regardless of the expiration
of the term of this Agreement, the consummation of the transactions contemplated
hereby, the repayment of any of the Loans, the expiration of the Commitments,
the expiration of any Letter of Credit, the invalidity or unenforceability of
any term or provision of this Agreement or any other Loan Document, or any
investigation made by or on behalf of the Administrative Agent, any Lender or
the Issuing Bank.
SECTION 9.3. Binding Effect. This Agreement shall become effective when it
shall have been executed by Polypore and the Administrative Agent and when the
SECTION 9.4. Successors and Assigns. (a) The provisions of this Agreement
respective successors and assigns permitted hereby (including any affiliate of
the Issuing Bank that issues any Letter of Credit), except that (i) Polypore may
not assign or otherwise transfer any of its rights or obligations hereunder
without the prior written consent of each Lender (and any attempted assignment
or transfer by Polypore without such consent shall be null and void), and
hereunder except in accordance with this Section.
paragraph (b)(ii) below, any Lender may assign to one or more assignees (each,
an “Assignee”), other than a natural person or a Defaulting Lender, all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Commitments and the Loans at the time owing to it) with the prior
written consent (such consent not to be unreasonably withheld or delayed) of:
(A) Polypore, provided that no consent of Polypore
shall be required for an assignment to a Lender, an affiliate of a Lender, an
Approved Fund (as defined below) or, if an Event of Default has occurred and is
continuing, any other Person; and provided, further, that Polypore shall be
deemed to have consented to any such assignment unless Polypore shall object
thereto by written notice to the Administrative Agent within five Business Days
after having received notice thereof;
(B) the Administrative Agent, provided that no
consent of the Administrative Agent shall be required for an assignment of all
or any portion of a Term Loan to a Lender, an Affiliate of a Lender or an
Approved Fund; and
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(C) the Issuing Bank, provided that no consent of
the Issuing Bank shall be required for an assignment of all or any portion of a
Term Loan.
following additional conditions:
(A) except in the case of an assignment to a
Lender, an affiliate of a Lender or an Approved Fund or an assignment of the
entire remaining amount of the assigning Lender’s Commitments or Loans under any
Facility, the amount of the Commitments or Loans of the assigning Lender subject
to each such assignment (determined as of the date the Assignment and Assumption
with respect to such assignment is delivered to the Administrative Agent) shall
not be less than $5,000,000 (or, in the case of Term Loans and Incremental Term
Loans, $1,000,000) unless each of Polypore and the Administrative Agent
otherwise consent, provided that (1) no such consent of Polypore shall be
required if an Event of Default has occurred and is continuing and (2) such
amounts shall be aggregated in respect of each Lender and its affiliates or
Approved Funds, if any;
(B) the parties to each assignment shall execute
and deliver to the Administrative Agent an Assignment and Assumption, together
with a processing and recordation fee of $3,500; and
(C) the Assignee, if it shall not be a Lender,
shall deliver to the Administrative Agent an administrative questionnaire in
which the Assignee designates one or more credit contacts to whom all
syndicate-level information (which may contain material non-public information
about Polypore and its Affiliates and their related parties or their respective
securities) will be made available and who may receive such information in
accordance with the assignee’s compliance procedures and applicable laws,
including Federal and state securities laws.
For the purposes of this Section 9.4, “Approved Fund” means any Person (other
than a natural person) that is engaged in making, purchasing, holding or
investing in bank loans and similar extensions of credit in the ordinary course
of its business and that is administered or managed by (a) a Lender, (b) an
(iii) Subject to acceptance and recording thereof
pursuant to paragraph (b)(iv) below, from and after the effective date specified
in each Assignment and Assumption the Assignee thereunder shall be a party
hereto and, to the extent of the interest assigned by such Assignment and
Lender shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.14, 2.15, 2.19 and 9.5). Any assignment or transfer by a
this Section 9.4 shall be treated for purposes of this Agreement as a sale by
paragraph (c) of this Section.
purpose as an agent of Polypore, shall maintain at one of its offices a copy of
each Assignment and Assumption delivered to it and a register for the
and principal amount of the Loans and L/C Obligations owing to, each Lender
pursuant to the terms hereof from time to time (the
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“Register”). The entries in the Register shall be conclusive, and Polypore, the
contrary.
Assignment and Assumption executed by an assigning Lender and an Assignee, the
Assignee’s completed administrative questionnaire (unless the Assignee shall
in paragraph (b) of this Section and any written consent to such assignment
required by paragraph (b) of this Section, the Administrative Agent shall accept
such Assignment and Assumption and record the information contained therein in
the Register. No assignment shall be effective for purposes of this Agreement
unless it has been recorded in the Register as provided in this paragraph.
(c) (i) Any Lender may, without the consent of
Polypore or the Administrative Agent, sell participations to one or more banks
or other entities or a Defaulting Lender (a “Participant”) in all or a portion
of such Lender’s rights and obligations under this Agreement (including all or a
portion of its Commitments and the Loans owing to it); provided that (A) such
Lender’s obligations under this Agreement shall remain unchanged, (B) such
performance of such obligations and (C) Polypore, the Administrative Agent, the
Issuing Bank and the other Lenders shall continue to deal solely and directly
with such Lender in connection with such Lender’s rights and obligations under
this Agreement. Any agreement pursuant to which a Lender sells such a
any provision of this Agreement; provided that such agreement may provide that
such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver that (1) requires the consent of each Lender
directly affected thereby pursuant to Section 9.8(b) and (2) directly affects
such Participant. Subject to paragraph (c)(ii) of this Section, Polypore agrees
that each Participant shall be entitled to the benefits of Sections 2.14, 2.15
and 2.19 to the same extent as if it were a Lender and had acquired its interest
by assignment pursuant to paragraph (b) of this Section. To the extent
Section 2.17 as though it were a Lender, provided such Participant shall be
subject to Section 9.6 as though it were a Lender. Each Lender that sells a
participation shall, acting solely for this purpose as a non-fiduciary agent of
Polypore, maintain a register on which it enters the name and address of each
Participant and the principal amounts (and stated interest) of each
obligation to disclose all or any portion of the Participant Register to any
Person (including the identity of any Participant or any information relating to
a Participant’s interest in any Commitments, Loans, Letters of Credit or its
other obligations under any Loan Document) except to the extent that such
disclosure is necessary to establish that such Commitment, Loan, Letter of
Credit or other obligation is in registered form under Section 5f.103-1(c) of
the United States Treasury Regulations. The entries in the Participant Register
shall be conclusive absent manifest error, and such Lender shall treat each
Person whose name is recorded in the Participant Register as the owner of such
participation for all purposes of this Agreement notwithstanding any notice to
the contrary. For the avoidance of doubt, the Administrative Agent (in its
capacity as Administrative Agent) shall have no responsibility for maintaining
the Participant Register.
receive any greater payment under Section 2.14 or 2.19 than the applicable
sold to such Participant, unless (i) the sale of the participation to such
Participant is made with Polypore’s prior written consent or (ii) such
entitlement to receive a greater payment results from an adoption of or any
Change in Law that occurs after the Participant acquired the applicable
participation. Any Participant
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that is a Non-U.S. Lender shall not be entitled to the benefits of Section 2.19
unless such Participant complies with Section 2.19(e).
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest; provided that no such pledge
or assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or Assignee for such Lender
SECTION 9.5. Expenses; Indemnity. (a) Polypore agrees to pay all reasonable
documented out-of-pocket expenses incurred by the Administrative Agent, the
Issuing Bank and the Swingline Lender in connection with the syndication of the
credit facilities provided for herein and the preparation and administration of
this Agreement and the other Loan Documents or in connection with any
amendments, modifications or waivers of the provisions hereof or thereof
(whether or not the transactions hereby or thereby contemplated shall be
consummated) or incurred by the Administrative Agent or any Lender in connection
with the enforcement or protection of its rights in connection with this
Agreement and the other Loan Documents or in connection with the Loans made or
Letters of Credit issued hereunder, including the reasonable fees, charges and
disbursements of Simpson Thacher & Bartlett LLP, counsel for the Administrative
Agent, and, in connection with any such enforcement or protection, the fees,
charges and disbursements of any other counsel for the Administrative Agent or
any Lender.
(b) Polypore agrees to indemnify the
Administrative Agent, each Lender, the Issuing Bank and each Related Party of
any of the foregoing Persons (each such Person being called an “Indemnitee”)
against, and to hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including reasonable counsel fees,
arising out of, in any way connected with, or as a result of (i) the execution
or delivery of this Agreement or any other Loan Document or any agreement or
or thereto of their respective obligations hereunder or thereunder or the
consummation of the Transactions and the other transactions contemplated hereby
or thereby, including any claim, litigation, investigation or proceeding
regardless of whether any Indemnitee is a party thereto and whether or not the
same are brought by Polypore, its equity holders, affiliates or creditors or any
other Person, (ii) the use of the proceeds of the Loans or issuance of Letters
of Credit, (iii) any claim, litigation, investigation or proceeding relating to
any of the foregoing, whether or not any Indemnitee is a party thereto, or
(iv) any actual or alleged presence or Release of Hazardous Materials on any
property currently or formerly owned or operated by Polypore or any of the
Subsidiaries, or any Environmental Liability related in any way to Polypore or
the Subsidiaries; provided, that such indemnity shall not, as to any Indemnitee,
related expenses are determined by a court of competent jurisdiction by final
and nonappealable judgment to have resulted from the gross negligence, bad faith
or willful misconduct of such Indemnitee or for a material breach of the Loan
Documents by such Indemnitee. No Indemnitee shall be liable for any damages
arising from the use by others of information or other materials obtained
through electronic, telecommunications or other information transmission
systems, except to the extent any such damages are found by a final and
nonappealable decision of a court of competent jurisdiction to have resulted
from the gross negligence or willful misconduct of such Indemnitee. No
Indemnitee shall be liable for any indirect, special, exemplary, punitive or
consequential damages in connection with this Agreement or the other Loan
Documents or the transactions contemplated hereby or thereby.
(c) To the extent that Polypore fails to pay
any amount required to be paid by them to the Administrative Agent, the Issuing
Bank or the Swingline Lender under paragraph (a) or (b) of this Section, each
Lender severally agrees to pay to the Administrative Agent, the Issuing Bank or
the
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Swingline Lender, as the case may be, such Lender’s pro rata share (determined
as of the time that the applicable unreimbursed expense or indemnity payment is
sought) of such unpaid amount; provided, that the unreimbursed expense or
indemnified loss, claim, damage, liability or related expense, as the case may
be, was incurred by or asserted against the Administrative Agent, the Issuing
Bank or the Swingline Lender in its capacity as such. For purposes hereof, a
Lender’s “pro rata share” shall be determined based upon its share of the sum of
the Aggregate Revolving Credit Exposure, outstanding Term Loans and unused
Commitments at the time.
Polypore shall not assert, and hereby waives, any claim against any Indemnitee,
on any theory of liability, for special, indirect, exemplary, consequential or
punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement or any agreement or
instrument contemplated hereby, the Transactions, any Loan or Letter of Credit
or the use of the proceeds thereof.
(e) The provisions of this Section 9.5 shall
remain operative and in full force and effect regardless of the expiration of
the term of this Agreement, the consummation of the transactions contemplated
the Issuing Bank. All amounts due under this Section 9.5 shall be payable on
written demand therefor.
SECTION 9.6. Right of Setoff. If an Event of Default shall have occurred and
be continuing, each Lender is hereby authorized at any time and from time to
time, except to the extent prohibited by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Lender to or for the
credit or the account of Polypore against any of and all the obligations of
Polypore now or hereafter existing under this Agreement and other Loan Documents
held by such Lender, irrespective of whether or not such Lender shall have made
any demand under this Agreement or such other Loan Document and although such
obligations may be unmatured. The rights of each Lender under this Section 9.6
are in addition to other rights and remedies (including other rights of setoff)
which such Lender may have.
SECTION 9.7. Applicable Law. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(OTHER THAN LETTERS OF CREDIT AND AS EXPRESSLY SET FORTH IN OTHER LOAN
DOCUMENTS) SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK. EACH LETTER OF CREDIT SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED IN ACCORDANCE WITH, THE LAWS OR RULES DESIGNATED IN SUCH LETTER OF
CREDIT, OR IF NO SUCH LAWS OR RULES ARE DESIGNATED, THE UNIFORM CUSTOMS AND
PRACTICE FOR DOCUMENTARY CREDITS MOST RECENTLY PUBLISHED AND IN EFFECT, ON THE
DATE SUCH LETTER OF CREDIT WAS ISSUED, BY THE INTERNATIONAL CHAMBER OF COMMERCE
(THE “UNIFORM CUSTOMS”) AND, AS TO MATTERS NOT GOVERNED BY THE UNIFORM CUSTOMS,
THE LAWS OF THE STATE OF NEW YORK.
SECTION 9.8. Waivers; Amendment. (a) No failure or delay of the
Administrative Agent, any Lender or the Issuing Bank in exercising any power or
right hereunder or under any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
right or power. The rights and remedies of the Administrative Agent, the
Issuing Bank and the Lenders hereunder and under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No
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waiver of any provision of this Agreement or any other Loan Document or consent
to any departure by Polypore or any other Loan Party therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) below,
and then such waiver or consent shall be effective only in the specific instance
and for the purpose for which given. No notice or demand on Polypore shall
entitle Polypore to any other or further notice or demand in similar or other
circumstances.
(b) Neither this Agreement nor any of the
Security Documents nor any provision hereof or thereof may be waived, amended or
by Polypore and the Required Lenders; provided, however, that (w) Polypore, the
Administrative Agent and the Arrangers may enter into an amendment to effect the
provisions of Section 2.23(b) upon the effectiveness of any Incremental
Assumption Agreement (and any such amendment shall in any event be deemed to
have occurred upon such effectiveness); (x) no such agreement under this
Section 9.8(b) shall (i) decrease the principal amount of, or extend the
maturity of or any scheduled principal payment date or date for the payment of
any interest on any Loan or any date for reimbursement of an L/C Disbursement,
or waive or excuse any such payment or any part thereof, or decrease the rate of
interest on any Loan or L/C Disbursement, without the prior written consent of
each Lender directly affected thereby, (ii) increase or extend the Commitment or
decrease or extend the date for payment of any Fees of or any other amount
actually due and payable hereunder to any Lender without the prior written
consent of such Lender, (iii) amend or modify the pro rata requirements of
Section 2.16, eliminate or reduce the voting rights of any Lender under this
Section 9.8, change any other provision of this Agreement or any of the other
Loan Documents requiring, by its terms, the consent or approval of all the
Lenders for such amendment, modification, waiver, discharge, termination or
consent, or release any Guarantor or all or substantially all of the Collateral,
without the prior written consent of each Lender directly affected thereby,
(iv) change the provisions of any Loan Document in a manner that by its terms
adversely affects the rights in respect of payments due to Lenders holding Loans
of one Class differently from the rights of Lenders holding Loans of any other
Class without the prior written consent of Lenders holding a majority in
interest of the outstanding Loans and unused Commitments of each adversely
affected Class, (v) amend, modify or waive compliance by Polypore with the
provisions of Section 4.1, as it relates to an Event of Default following a
breach of any provision of this Agreement without the prior written consent of
the Required Revolving Lenders, (vi) reduce the percentage contained in the
definition of the term “Required Lenders” without the prior written consent of
each Lender or reduce the percentage contained in the definition of the term
“Required Revolving Lenders” without the prior written consent of each Revolving
Credit Lender (it being understood that with the consent of the Required
Lenders, additional extensions of credit pursuant to this Agreement may be
included in the determination of the Required Lenders on substantially the same
basis as the Term Loan Commitments and Revolving Credit Commitments on the
Restatement Effective Date), (vii) without the prior written consent of each
Lender directly affected thereby, amend the definition of the term “Interest
Period” in any way which would permit Interest Periods to be in excess of six
months without regard to availability to Lenders or (viii) without the prior
written consent of each Lender, amend or modify Section 5.02 of the Guarantee
and Collateral Agreement and (y) amendments, waivers and other modifications to
the definition of “Total Leverage Ratio” shall not affect the determination of
the Applicable Percentage for the Revolving Facility or the Term Loans without
the prior written consent of the Required Revolving Lenders or the holders of
more than 50% of the aggregate unpaid principal amount of the affected Term
Loans then outstanding, respectively; provided, further, that no such agreement
shall amend, modify or otherwise affect the rights or duties of the
Administrative Agent, the Issuing Bank or the Swingline Lender hereunder or
under any other Loan Document without the prior written consent of the
Administrative Agent, the Issuing Bank or the Swingline Lender.
(c) Notwithstanding anything in this Agreement
or the other Loan Documents to the contrary, this Agreement may be amended to
extend the maturity of any Loan or Revolving Credit Commitment, with the written
consent of the Administrative Agent, Polypore, the Required Lenders and
92
each extending Lender; provided that each Lender under the Facility that is
being extended shall have the opportunity to participate in such extension on
the same terms and conditions as each other Lender under such Facility, but
shall not be required to participate.
(d) Furthermore, notwithstanding the foregoing,
the Administrative Agent, with the consent of Polypore, may amend, modify or
supplement any Loan Document without the consent of any Lender or the Required
Lenders in order to correct, amend or cure any ambiguity, inconsistency or
defect or correct any typographical error or other manifest error in any Loan
Document.
SECTION 9.9. Interest Rate Limitation. Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan or
participation in any L/C Disbursement, together with all fees, charges and other
amounts which are treated as interest on such Loan or participation in such L/C
Disbursement under applicable law (collectively the “Charges”), shall exceed the
taken, received or reserved by the Lender holding such Loan or participation in
accordance with applicable law, the rate of interest payable in respect of such
Loan or participation hereunder, together with all Charges payable in respect
interest and Charges that would have been payable in respect of such Loan or
participation but were not payable as a result of the operation of this
Section 9.9 shall be cumulated and the interest and Charges payable to such
Lender in respect of other Loans or participations or periods shall be increased
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.
SECTION 9.10. Entire Agreement. This Agreement, the Fee Letter and the other
Loan Documents constitute the entire contract between the parties relative to
the subject matter hereof. Any other previous agreement among the parties with
respect to the subject matter hereof is superseded by this Agreement and the
other Loan Documents. Nothing in this Agreement or in the other Loan Documents,
expressed or implied, is intended to confer upon any Person (other than the
parties hereto and thereto, their respective successors and assigns permitted
hereunder (including any Affiliate of the Issuing Bank that issues any Letter of
Credit) and, to the extent expressly contemplated hereby, the Related Parties of
each of the Administrative Agent, the Issuing Bank and the Lenders) any rights,
remedies, obligations or liabilities under or by reason of this Agreement or the
other Loan Documents.
SECTION 9.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. EACH
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.11.
SECTION 9.12. Severability. In the event any one or more of the provisions
contained in this Agreement or in any other Loan Document should be held
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby (it being understood that the
invalidity of a particular provision in a particular jurisdiction shall not in
and of itself affect the validity of such provision in any other jurisdiction).
The parties shall endeavor in good-faith negotiations to replace the invalid,
illegal or
93
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 9.13. Counterparts. This Agreement may be executed in counterparts
(and by different parties hereto on different counterparts), each of which shall
constitute an original but all of which when taken together shall constitute a
single contract, and shall become effective as provided in Section 9.3.
Delivery of an executed signature page to this Agreement by email or facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Agreement.
SECTION 9.14. Headings. Article and Section headings and the Table of Contents
Agreement and are not to affect the construction of, or to be taken into
SECTION 9.15. Jurisdiction; Consent to Service of Process. (a) Polypore
hereby irrevocably and unconditionally submits, for itself and its property, to
the exclusive jurisdiction of any New York State court or Federal court of the
United States of America sitting in New York City, and any appellate court from
any thereof, in any action or proceeding arising out of or relating to this
Agreement or the other Loan Documents, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in such New York State or, to the extent permitted by law, in
such Federal court; provided, that nothing contained herein or in any other Loan
Document will prevent any Lender or the Administrative Agent from bringing any
action to enforce any award or judgment or exercise any right under the Security
Documents or against any Collateral or any other property of any Loan Party in
any other forum in which jurisdiction can be established. Each of the parties
right that the Administrative Agent, the Issuing Bank or any Lender may
otherwise have to bring any action or proceeding relating to this Agreement or
the other Loan Documents against Polypore or its respective properties in the
courts of any jurisdiction.
(b) Polypore hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
the other Loan Documents in any New York State or Federal court. Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
(c) Polypore irrevocably consents to service of
process in the manner provided for notices in Section 9.1. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 9.16. Confidentiality. Each of the Administrative Agent, the Issuing
Bank and the Lenders agrees to maintain the confidentiality of the Information
(as defined below), except that Information may be disclosed (i) to its and its
Affiliates’ officers, directors, employees and agents, including accountants,
Information and instructed to keep such Information confidential), (ii) to the
extent requested by any regulatory authority or quasi-regulatory authority (such
as the National Association of Insurance Commissioners), (iii) to the extent
required by applicable laws or regulations or by any subpoena or similar legal
process, (iv) in connection with the exercise of any remedies hereunder or under
the other Loan Documents or any suit, action or proceeding relating to the
enforcement of its rights hereunder or thereunder, (v) subject to an agreement
94
containing provisions substantially the same as those of this Section 9.16, to
(A) any actual or prospective assignee or pledgee of or participant in any of
its rights or obligations under this Agreement and the other Loan Documents or
(B) any actual or prospective counterparty (or its advisors) to any swap or
derivative transaction relating to Polypore or any Subsidiary or any of their
respective obligations, (vi) with the consent of Polypore or (vii) to the extent
such Information becomes publicly available other than as a result of a breach
of this Section 9.16. For the purposes of this Section, “Information” shall
mean all information received from Polypore and related to Polypore or its
business, other than any such information that was available to the
Administrative Agent, the Issuing Bank or any Lender on a nonconfidential basis
prior to its disclosure by Polypore; provided that, in the case of Information
received from Polypore after the Restatement Effective Date, such information is
clearly identified at the time of delivery as confidential. Any Person required
to maintain the confidentiality of Information as provided in this Section 9.16
Information as such Person would accord its own confidential information.
Each Lender acknowledges that information furnished to it pursuant to this
Agreement or the other Loan Documents may include material non-public
information concerning Polypore and its Affiliates and their related parties or
their respective securities, and confirms that it has developed compliance
procedures regarding the use of material non-public information and that it will
handle such material non-public information in accordance with those procedures
and applicable law, including Federal and state securities laws.
All information, including requests for waivers and amendments, furnished by any
Loan Party or the Administrative Agent pursuant to, or in the course of
administering, this Agreement or the other Loan Documents will be
syndicate-level information, which may contain material non-public information
securities. Accordingly, each Lender represents to Polypore and the
Administrative Agent that it has identified in its administrative questionnaire
a credit contact who may receive information that may contain material
non-public information in accordance with its compliance procedures and
applicable law, including Federal and state securities laws.
SECTION 9.17. USA Patriot Act. Each Lender hereby notifies Polypore that
(signed into law October 26, 2001)) (the “Patriot Act”), it is required to
obtain, verify and record information that identifies Polypore, which
information includes the name and address of Polypore and other information that
will allow such Lender to identify Polypore in accordance with the Act.
SECTION 9.18. Releases of Guarantees and Liens. (a) Notwithstanding anything
to the contrary contained herein or in any other Loan Document, the
Administrative Agent is hereby irrevocably authorized by each Lender (without
requirement of notice to or consent of any Lender except as expressly required
by Section 9.8) to take any action requested by Polypore having the effect of
releasing any Collateral or guarantee obligations (i) to the extent necessary to
permit consummation of any transaction not prohibited by any Loan Document or
that has been consented to in accordance with Section 9.8 or (ii) under the
circumstances described in paragraph (b) below.
(b) At such time as the Loans, the Reimbursement Obligations and the other
obligations under the Loan Documents (other than obligations under or in respect
of Hedging Agreements and Cash Management Agreements) shall have been paid in
full, the Commitments have been terminated and no Letters of Credit shall be
outstanding, the Collateral shall be released from the Liens created by the
Security Documents, and the Security Documents and all obligations (other than
those expressly stated to
95
survive such termination) of the Administrative Agent and each Loan Party under
the Security Documents shall terminate, all without delivery of any instrument
or performance of any act by any Person.
SECTION 9.19. Acknowledgements. Polypore hereby acknowledges and agrees that
(a) no fiduciary, advisory or agency relationship between the Loan Parties and
the Credit Parties is intended to be or has been created in respect of any of
the transactions contemplated by this Agreement or the other Loan Documents,
irrespective of whether the Credit Parties have advised or are advising the Loan
Parties on other matters, and the relationship between the Credit Parties, on
the one hand, and the Loan Parties, on the other hand, in connection herewith
and therewith is solely that of creditor and debtor, (b) the Credit Parties, on
the one hand, and the Loan Parties, on the other hand, have an arm’s length
business relationship that does not directly or indirectly give rise to, nor do
the Loan Parties rely on, any fiduciary duty to the Loan Parties or their
affiliates on the part of the Credit Parties, (c) the Loan Parties are capable
of evaluating and understanding, and the Loan Parties understand and accept, the
terms, risks and conditions of the transactions contemplated by this Agreement
and the other Loan Documents, (d) the Loan Parties have been advised that the
Credit Parties are engaged in a broad range of transactions that may involve
interests that differ from the Loan Parties’ interests and that the Credit
Parties have no obligation to disclose such interests and transactions to the
Loan Parties, (e) the Loan Parties have consulted their own legal, accounting,
regulatory and tax advisors to the extent the Loan Parties have deemed
appropriate in the negotiation, execution and delivery of this Agreement and the
other Loan Documents, (f) each Credit Party has been, is, and will be acting
solely as a principal and, except as otherwise expressly agreed in writing by it
and the relevant parties, has not been, is not, and will not be acting as an
advisor, agent or fiduciary for the Loan Parties, any of their affiliates or any
other Person, (g) none of the Credit Parties has any obligation to the Loan
Parties or their affiliates with respect to the transactions contemplated by
this Agreement or the other Loan Documents except those obligations expressly
set forth herein or therein or in any other express writing executed and
delivered by such Credit Party and the Loan Parties or any such affiliate and
(h) no joint venture is created hereby or by the other Loan Documents or
otherwise exists by virtue of the transactions contemplated hereby among the
Credit Parties or among the Loan Parties and the Credit Parties.
96
above written.
POLYPORE INTERNATIONAL, INC.
By:
/s/ Lynn Amos
Name:
Lynn Amos
Title:
Chief Financial Officer, Treasurer and Secretary
[Signature Page to the Credit Agreement]
JPMORGAN CHASE BANK, N.A., individually and as Administrative Agent
By:
/s/ Brian Knapp
Name:
Brian Knapp
Title:
Vice President
Name of Institution:
By:
/s/ Charles R. Dickerson
Name:
Charles R. Dickerson
Title:
Senior Vice President
Name of Institution:
TD Bank NA
By:
/s/ M. Bernadette Collins
Name:
M. Bernadette Collins
Title:
Sr. Vice President
Name of Institution:
Regions Bank
By:
/s/ Jon C. Swift
Name:
Jon C. Swift
Title:
Senior Vice President
Name of Institution:
FIFTH THIRD BANK, individually and as Co-Documentation Agent
By:
/s/ Richard C. Hardison
Name:
Richard C. Hardison
Title:
Managing Director
Name of Institution:
First Niagara Bank, N.A.
By:
/s/ Troy Jones
Name:
Troy Jones
Title:
Assistant Vice President
Name of Institution:
By:
/s/ Greg Wilcox
Name:
Greg Wilcox
Title:
Senior Vice President
Name of Institution:
RAYMOND JAMES BANK, N.A.
By:
/s/ Alexander L. Rody
Name:
Alexander L. Rody
Title:
Senior Vice President
Name of Institution:
RBS Citizens, N.A.
By:
/s/ Patrick A. Keffer
Name:
Patrick A. Keffer
Title:
Senior Vice President
Name of Institution:
HSBC Bank USA, National Association
By:
/s/ James Huffman
Name:
James Huffman
Title:
Vice President
Name of Institution:
Capital One Leverage Finance Corp.
By:
/s/ Ron Walker
Name:
Ron Walker
Title:
Senior Vice President
Name of Institution:
Sumitomo Mitsui Banking Corporation
By:
/s/ Shuji Yabe
Name:
Shuji Yabe
Title:
Managing Director
Name of Institution:
WELLS FARGO BANK, NATIONAL ASSOCIATION, individually and as Syndication Agent
By:
/s/ Sascha M. Struckmeyer
Name:
Sascha M. Struckmeyer
Title:
Senior Vice President
Name of Institution:
By:
/s/ Preston Bergen
Name:
Preston Bergen
Title:
Senior Vice President
Name of Institution:
Compass Bank
By:
/s/ Steven M. Hamil
Name:
Steven M. Hamil
Title:
Senior Vice President
|
Exhibit 10.6
Director Fee Arrangements
Effective October 1, 2018, each non-employee director of Capitol Federal
Financial, Inc. (the "Company") receives an annual retainer, paid monthly, of
$33,000 for his or her service on the board of directors of Capitol Federal
Savings Bank (the "Bank") and $33,000 for his or her service on the Company's
board of directors ($66,000 in total). Previously, each non-employee director
of the Company received an annual retainer, paid monthly, of $30,000 for his or
her service on the board of directors of the Bank and $30,000 for his or her
service on the Company’s board of directors ($60,000 in total).
John B. Dicus, Chairman of the Board, President and Chief Executive
Officer is paid $12,000 by the Bank and $12,000 by the Company ($24,000 in
total) for his service as Chairman of the Bank and Company.
|
EXHIBIT 32.2 CERTIFICATION Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsection (a) and (b) of Section 1350 of Chapter 63 of Title 18 of the United States Code) Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350 of Chapter 63 of Title 18 of the United States Code), the undersigned officer of Vornado Realty Trust (the “Company”), hereby certifies, to such officer’s knowledge, that: The Annual Report on Form 10-K for year ended December 31, 2011 (the “Report”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. February 27, 2012 /s/ Joseph Macnow Name: Joseph Macnow Title: Executive Vice President – Finance and Administration and Chief Financial Officer
|
Name: Commission Regulation (EEC) No 2604/82 of 29 September 1982 fixing the premiums to be added to the import levies on cereals, flour and malt
Type: Regulation
Date Published: nan
30 . 9 . 82 Official Journal of the European Communities No L 278/3 COMMISSION REGULATION (EEC) No 2604/82 of 29 September 1982 fixing the premiums to be added to the import levies on cereals , flour and malt for other currencies, an exchange rate based on the arithmetic mean of the spot market rates of each of these currencies in relation to the Community - currencies referred to in the previous indent ; Whereas these exchange rates being those recorded on 28 September 1982 ; Whereas on the basis of today's cif prices and cif forward delivery prices, the premiums at present in force, which are to be added to the levies, should be altered to the amounts set out in the Annex hereto, THE COMMISSION OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Economic Community, Having regard to Council Regulation (EEC) No 2727/75 of 29 October 1975 on the common organ ization of the market in cereals (l ), as last amended by Regulation (EEC) No 1451 /82 (2), and in particular Article 15 (6) thereof, Having regard to Council Regulation No 129 on the value of the unit of account and the exchange rates to be applied for the purposes of the common agricul tural policy (3), as last amended by Regulation (EEC) No 2543/73 (4), and in particular Article 3 thereof, Having regard to the opinion of the Monetary Committee, Whereas the premiums to be added to the levies on cereals and malt were fixed by Regulation (EEC) No 21 19/82 (J) and subsequent amending 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 relation to each other at any given moment within a band of 2-25 % a rate of exchange based on their central rate, HAS ADOPTED THIS REGULATION : Article 1 The premiums referred to in Article 15 of Regulation (EEC) No 2727/75 to be added to the import levies fixed in advance in respect of cereals and malt shall be as set out in the Annex hereto . Article 2 This Regulation shall enter into force on 30 September 1982. This Regulation shall be binding in its entirety and directly applicable in all Member States . Done at Brussels, 29 September 1982. For the Commission Poul DALSAGER Member of the Commission (>) OJ No L 281 , 1 . 11 . 1975, p . 1 . 0 OJ No L 164, 14. 6 . 1982, p . 1 . (3) OJ No 106, 30 . 10 . 1962, p . 2553/62. (4) OJ No L 263, 19 . 9 . 1973, p . 1 . O OJ No L 223 , 31 . 7 . 1982, p . 47 . No L 278/4 Official Journal of the European Communities 30 . 9 . 82 ANNEX to the Commission Regulation of 29 September 1982 fixing the premiums to be added to the import levies on cereals , flour and malt A. Cereals and flour (ECU/tonne) CCT heading No Description Current 9 1st period 10 2nd period 11 3rd period 12 10.01 BÃ Common wheat, and mesiin 0 0 0 0 10.01 B II Durum wheat 0 0 0 0 10.02 Rye 0 0 0 0 10.03 Barley 0 0 0 0 10.04 Oats 0 0 0 0 10.05 B Maize, other than hybrid maize for sowing 0 6-44 6-44 7-51 10.07 A Buckwheat 0 0 0 0 10.07 B Millet 0 0 0 0 10.07 C Grain sorghum 0 0 0 0 10.07 D Other cereals 0 0 0 0 11.01 A Wheat or mesiin flour 0 0 0 0 B. Malt (ECU/tonne) CCT heading No . Description Current 9 1st period 10 . 2nd period 11 3rd period 12 4th period 1 1 1.07 A I (a) Unroasted malt, obtained from wheat, in the form of flour 0 0 0 0 0 1 1.07 A I (b) Unroasted malt, obtained from wheat, other than in the form of flour 0 0 0 0 0 1 1.07 A II (a) Unroasted malt, other than that obtained from wheat, in the form of flour 0 0 0 0 0 1 1.07 A II (b) Unroasted malt, other than that obtained from wheat, other than in the form of flour 0 0 0 0 0 11.07 B Roasted malt 0 0 0 0 0 |
EXHIBIT 10.18
DIRECTORS’ RESTRICTED STOCK UNIT AGREEMENT
1. Award of Restricted Stock Units
(a)
Portland General Electric Company (the "Company") hereby grants ____ restricted
stock units (the "Restricted Stock Units") to _______________ (the "Grantee"). A
Restricted Stock Unit represents the right to receive a share of the Company's
common stock (a "Share") at a future date in accordance with the terms of this
Agreement.
(b)
The grant is effective as of ___________ (the "Grant Date").
(c)
The grant is made under the Portland General Electric Company Stock Incentive
Plan (the "Plan") and is subject to the terms and conditions of the Plan and
this agreement (the "Agreement").
(d)
Capitalized terms used but not defined in this Agreement shall have the meanings
set forth in the Plan unless the context clearly requires an alternative
meaning.
2. Vesting
Provided that the Grantee remains a director of the Company, except as provided
in Section 4, below, the Restricted Stock Units shall vest in equal quarterly
installments on _____________, _____________, _____________ and _____________.
1.
Settlement in Shares
As soon as practicable after a Restricted Stock Unit vests, the Company shall
settle the Restricted Stock Unit by issuing a Share to the Grantee, but in no
event later than the March 15th following the year in which the Restricted Stock
Unit vests. Upon such settlement, the Grantee shall have no further rights under
the Restricted Stock Unit.
2.
Termination of Service
If the Grantee's service as a director of the Company terminates (a
"Termination") due to death or disability before all the Restricted Stock Units
have vested, the Restricted Stock Units that would have vested upon the end of
the quarterly vesting in which the Termination occurs shall vest. The Grantee
will forfeit any remaining unvested Restricted Stock Units. For purposes of this
Section 4, disability shall be determined by the Committee in its sole
discretion in accordance with the disability standard under the long-term
disability program of the Company.
If the Grantee (i) experiences a Termination effective upon consummation of a
Change in Control or (ii) experiences a Termination, following a Change in
Control, for any reason other than for cause or resignation, then any Restricted
Stock Units that have not previously vested shall immediately vest in full.
If the Grantee experiences a Termination for any other reason, the Grantee will
forfeit any unvested Restricted Stock Units.
The Committee shall determine the date of any Termination.
1.
Non-Transferability of Award
No portion of this award shall be transferable during the Grantee's lifetime.
The Grantee may, from time to time, designate one or more beneficiary or
beneficiaries (including contingently or successively) to whom any award under
this Agreement shall be paid in case of the Grantee's death. Each such
designation shall revoke all prior
designations by the Grantee, shall be in a form prescribed by the Company, and
shall be effective only when filed by the Grantee in writing with the Company
during the Grantee's lifetime. In the absence of any such designation, in the
event of the Grantee's death, awards under this Agreement shall be transferable
only by will or the laws of descent and distribution. The transferability of the
Shares issued in settlement of the Restricted Stock Units may also be limited in
accordance with any legend on the certificate(s) representing such Shares that
restricts the transferability of the Shares.
2.
Shareholder Rights
The Grantee will not have any shareholder rights with respect to the Restricted
Stock Units, including the right to vote or receive dividends, until Shares are
issued to the Grantee in settlement of the Restricted Stock Units.
3.
Dividend Equivalent Rights
The Grantee shall be entitled to one Dividend Equivalent Right for each
Restricted Stock Unit granted hereunder. A Dividend Equivalent Right entitles
the Grantee to receive an amount equal to any dividends paid on a Share, which
dividends have a record date between the Grant Date and the vesting date for the
related Restricted Stock Unit. Dividend Equivalent Rights shall be distributed
in cash to the Grantee on the date that the related Restricted Stock Unit vests.
4.
Amendments
The Committee may from time to time amend the terms of this Agreement to the
extent it deems appropriate to carry out the terms and provisions of the Plan.
Notwithstanding the foregoing, any amendment materially adverse to the economic
interests of the Grantee shall be effective only if consented to by the Grantee
in writing.
5.
Withholding
In the event that the Company is responsible for tax withholding on
distributions to the Grantee, the provisions of this Section 9 shall apply. The
Company's obligation to deliver the certificate(s) representing Shares issued to
settle Restricted Stock Units or cash in respect of Dividend Equivalent Rights
shall be subject to the satisfaction of applicable tax withholding requirements,
including federal, state and local requirements. Unless, prior to the vesting
date for the related Restricted Stock Units, the Grantee notifies the Company of
the Grantee’s intention to remit sufficient funds to the Company to satisfy all
applicable withholding requirements prior to the date the Shares are to be
delivered to the Grantee, then, subject to applicable law, the Company shall
withhold Shares or cash otherwise deliverable to the Grantee with a Fair Market
Value sufficient to satisfy the applicable withholding requirements.
6.
Incorporation of Plan Terms
The terms and conditions of the Plan are incorporated into and made a part of
this Agreement. In the event of any difference between the provisions of this
Agreement and the terms of the Plan, the terms of the Plan will control.
7.
Interpretation of Agreement and Plan
The Committee shall have sole power to interpret and construe any provisions of
this Agreement or the Plan. Any such interpretation or construction made by the
Committee shall be final and conclusive.
8.
Grant Not to Affect Service
The Restricted Stock Units granted hereunder and Shares issued in settlement of
the Restricted Stock Units shall not confer upon the Grantee any right to
continue as a director of the Company.
9.
Severability
The invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement.
Unless such an invalid or unenforceable provision can be appropriately reformed
or modified, this Agreement shall be construed as if such provision were
omitted.
10.
Miscellaneous
The captions of this Agreement are not part of the provisions hereof and shall
have no force or effect.
11.
Securities Laws
The Committee may from time to time impose any conditions on the Restricted
Stock Units or Shares issued in settlement of the Restricted Stock Units as it
deems necessary or advisable to ensure that all rights granted under the Plan
satisfy the requirements of applicable securities laws.
12.
Notices
All notices or other communications given hereunder shall be in writing, and any
notices or other communications required to be given hereunder shall be sent by
registered or certified mail, return receipt requested, postage prepaid, or by
hand delivery, or expedited delivery service, delivery charges prepaid and with
acknowledged receipt of delivery. A notice or other communication shall be
deemed given on the date of acceptance or refusal of acceptance shown on such
receipt, and shall be addressed, as the case may be to the Grantee and to the
Company at the following applicable address:
(a)
If to the Grantee, to the most recent address for Grantee that the Company or
its subsidiaries have in their records.
(b)
Portland General Electric Company
Attn Anne Mersereau
121 SW Salmon St
Portland OR 97204
Any party may, by notice given in compliance with this Section, change its
address for all subsequent notices. Notice by either party shall be deemed
sufficient if signed by such party's counsel and also, in the case of the
Company, by any of the Company's officers, if otherwise given in compliance with
this Section.
13.
Entire Agreement
This Agreement (which incorporates the terms and conditions of the Plan)
constitutes the entire agreement of the parties with respect to the subject
matter hereof. This Agreement supersedes all prior discussions, negotiations,
understandings, commitments and agreements with respect to such matters.
14.
Governing Law and Jurisdiction
the State of Oregon. With respect to any suit, action or proceedings relating to
this Agreement (the "Proceedings"), each party irrevocably submits to the
exclusive jurisdiction of the courts of the State of Oregon and the United
States District Court located in Multnomah County, Oregon, and irrevocably
waives any objection that it may have at any time to the laying of venue of any
Proceedings brought in any such court, waives any claim that such Proceedings
have been brought in an inconvenient forum and further waives the right to
object, with respect to such Proceedings, that such court does not
have jurisdiction over such party. Nothing in this Agreement precludes either
party from enforcing in any jurisdiction any judgment, order or award obtained
in any such court.
15.
Grantee Acknowledgement
Grantee acknowledges that he/she had sufficient time to consider this Agreement
and to seek legal consultation, and has fully read and understands this
Agreement.
[GRANTEE]
PORTLAND GENERAL ELECTRIC COMPANY
By: __________________________________________
______________________________________________
Its: __________________________________________
Date: __________________________________________
Date: __________________________________________
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EXHIBIT Strategic Acquisition Agreement This agreement is signed by the following two parties in Xi'an, Shaanxi Transferor (Party A): Li Hua Dong, Wu Xiao Jun Transferee (Party B): Xi'an Hanxin Science and Technology Co. Ltd Whereas: 1.Party A is a natural person with complete civil action capability; 2.Party B is an effective corporation established in July 2002 according to laws of China; the registered capital is RMB50,010,000; 3.Party A has 100% ownership of Sichuan Hanxin Cork Products Company Ltd. Until the signing of this agreement, party A has paid up all registered capital, and legally posesses the full and complete ownership of the company; 4.Party A hereby transfers Sichuan Hanxin to party B by means of transfering all assets of the company. Party B agrees to accept the company to complete the acquisition procedure; 5.According to the current situation of Sichuan Hanxin and the requirements of party B's mid-long term development plan, both parties agree that the execution period of this acquisition shall be one year upon signing of this agreement; 6.Party A hereby promises not to enter into any discussions of acquisition with any third parties during one year after signing of this agreement; 7.Party B agrees to execute this agreement within one year. Price of the ownership and capital transfer 1.Both parties agree that the price of the transfer of ownership shall be based upon the audited assets of Sichuan Hanxin; 2.The transfer of ownership and assets: Party A shall complete the following within seven days of signing of this agreement: a) Transfer the management right to party B (including but not limited to changing all staff members of the board of directors, the board of supervisors and chief manager to persons agreed or designated byparty B; b) Actively cooperate with party B to amend and sign the necessary files for the transfer of ownership according to related laws and regulations, and to complete the change of registration with the industry and commercial management departments. 3.Obligations of the transferor: a) Party A shall cooperate and assist party B with the auditing and financial assessment of Sichuan Hanxin; b) Party A shall sign or provide all necessary files related to the transfer of ownership and assets in a timely manner; Party B shall supervise and urge Sichuan Hanxin to complete the change of industrial and commercial registration procedures according to this agreement. 4.Representation and warrants: The transferor hereby irrevocablly represents and warrants that: a)Party A willingly transfer all ownership and assets of Sichuan Hanxin; b)Party A has not established any form of guarantee or has any legal flaws on the transferred ownership and assets, and guarantee that after accepting the transferred ownership and assets, party B shall not encounter and form of such guarantee or claims, or to face any similar obstacles or threats to their rights. 5.The transferee hereby irrevocablly represents and warrants that: a) Party B willing accept all ownership and assets transferred by party A; b) Party B shall not breach party B's Articles of Association by entering into and executing this agreement according to the rights and obligations stated in this agreement, nor does any legal obstacles exists for this agreement. c) Party B guarantees the true will of accepting the transferred ownership and assets, and that party B is capable of executing this agreement. 6.Amendment, change and supplementation The amendment, change and supplementation of this agreement shall be done in written form after agreements between the two parties through negotiation, and shall come into effect after signing of the two parties. 7.This agreement has three duplicates, either party shall hold one duplicate, Sichuan Hanxin shall keep the other duplicate. Issues uncovered in this agreement shall be covered in other supplementary agreements signed by the two parties. Party A: Li Hua Dong, Wu Xiao Jun Party B: Xi'an Hanxin Science and Technology Co. Ltd Sep. 20th,
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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):March 26, 2014 CVD EQUIPMENT CORPORATION (Exact Name of Registrant as Specified in Its Charter) New York (State or Other Jurisdiction of Incorporation or Organization) 1-16525 11-2621692 (Commission File Number) (IRS Employer Identification No.) 355 South Technology Dr. Central Islip, New York 11722 (Address of Principal Executive Offices, Including Zip Code) (631) 981-7081 (Registrant’s Telephone Number, Including Area Code) (Former Name or Former Address, if Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): 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) o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 5.02(d)Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers On April 1, 2014, CVD Equipment Corporation (the “Registrant”) issued a press release announcing the appointment by the Board of Lawrence Firestone on March 26, 2014 as a member of its Board of Directors. By its appointment of Mr. Firestone as a Director, the Board now has six Directors. Mr. Firestone will also be a member of the Company’s Audit Committee, Compensation Committee, Nominating, Governance and Compliance Committee and Finance Committee. A copy of the press release issued by the Registrant concerning the foregoing information is furnished herewith as Exhibit 99.1 and is incorporated herein by reference. Mr. Firestone is currently the Chief Executive Officer and President of FirePower Technology, Inc. a provider of power supplies to the high performance computing market.Prior to FirePower Technology, from June 2012 to July 2013, Mr. Firestone was Chief Executive Officer and President of Qualstar Corporation a provider of power supplies for high performance computing, instrumentation and tape libraries - markets where large amounts of electronic data are stored and maintained.From February 2011 to May 2012, Mr. Firestone served as Chief Financial Officer of Xiotech Corporation, a supplier of enterprise storage systems.From August 2006 to August 2010, Mr. Firestone was Executive Vice President and Chief Financial Officer of Advanced Energy Industries, Inc., a provider of power conversion devices for the semi-conductor and solar inverter markets.From 1999 until August 2006, Mr. Firestone served as the Senior Vice President and Chief Financial Officer at Applied Films Corporation, a supplier of thin film deposition equipment.Prior to joining Applied Films, from 1996 to 1999, Mr. Firestone served as Vice President and Chief Operating Officer of Avalanche Industries, a contract manufacturer of custom cables and harnesses.Mr. Firestone has previously served as a director on the boards of Qualstar Corporation, Amtech Systems, Inc. and Hyperspace Communications, Inc. from 2004 through 2013.Mr. Firestone received a B.S. in Business Administration with a concentrationin Accounting from Slippery Rock State College in 1981. There are no other arrangements or understandings betweenMr. Firestoneand any other person pursuant to whichMr. Firestone was appointed as a director of the Registrant.Mr. Firestonehas not entered into any transactions with the Registrant that are required to be disclosed pursuant to Item404(a) of RegulationS-K. The information contained herein and in the accompanying exhibit shall not be incorporated by reference into any filing of the Registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference to such filing. The information in this report, including the exhibit hereto, shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended. Item 9.01Financial Statements and Exhibits. (c) Exhibits. 99.1Press Release dated April 1, 2014. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. CVD EQUIPMENT CORPORATION Date: April 1, 2014 /s/ Leonard A. Rosenbaum Name: Leonard A. Rosenbaum Title:Chairman, President, Chief Executive Officer and Director (Principal Executive Officer)
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Title: M y apartment complex wants me to sign a new lease even though I'm moving out.
Question:This is in Raleigh NC. I've been living in an apartment with 2 roommates for about two years now and our current lease is ending. My roommates are planning to renew the lease but I am moving across town to a townhouse. The apartment complex however included me the new lease for them to sign and are pestering me about signing it electronically through email. I've told them I'm moving and they called my roommate and told him that I need to sign the new lease and then come in to the office in person to sign an opt out form. I'm hesitant to sign a contract I have no intention to fulfill and worried if I do they can claim I'm breaking the lease and charge us fees.
Answer #1: Don't sign it.
Have you given notice of your intent to vacate at the end of the lease?Answer #2: >...I need to sign the new lease and then come in to the office in person to sign an opt out form.
Not signing the new lease *is* opting out.
They might like this sort of thing for their own records (EDIT: which is still *very* weird), but, personally, I'm not a fan of signing a contract *and then* signing a form which may (or, tragically, may not) opt me out of that contract.
My guess? Landlords like have more people on the lease because it gives them more people to attempt to collect money from (joint and several liability). By making you sign the lease, they want to keep you around to sue in case things go south.Answer #3: IANAL, but someone this happened to [AZ]
My current apartment complex did the exact same thing to me. I am moving out but my roommate wanted to renew the lease. They claimed that we either both had to say that we were leaving or we both had to say that we were staying... and then I could later sign something that said I was moving out.
I already had a lease signed at my new place and did not want to get stuck with 2 leases in case something went wrong, so I refused to sign. I also sent my apartment complex, through certified mail, a 60 day move out notice, stating this. In the end, my roommate is being forced to move out because I am also leaving. It's a crummy situation, but I understand your hesitation 100% and recommend you do not sign. Answer #4: Have you given the leasing office written notice that you are vacating?Answer #5: I was in the exact situation as you. 2 roommates, lease ending, me moving to my own apartment. DO NOT sign any lease document regardless of how close you are to your current roommates. I don't know the case in your apartment, but mine had a 100$ lease break 'form' that I had to fill out. They didn't even return my deposit stating that you only get that once all roommates move out so lost another 100 there.
If the 1 year or whatever term lease is ending and you do not sign, then you are off the lease for the next year (edit: provided you put in the notice to vacate). The apartment will be forced to use the 2 current roommates as the only payees. They might run their credit or check paystubs to see if they can afford it now that you only have 2 incomes as opposed to 3. They might deem that they can't afford it and ask them to move out. NOT YOUR PROBLEM.
I know this might sound cold, but I went through the ordeal. Another thing you need to consider is that if you sign the lease and thr 3rd person coming in backs out, then you are contractually obliged to find someone to replace you or your roommates need to pay the full rent. If any one party doesn't, all get evicted and your credit will go to the shitter not to mention renting again will become a nightmare for all of you.
Just don't sign anything. Let them send out new lease with only 2 names on it. Then when the 3rd person moves in, let them ammend the lease and add him in. Usally they charge 100 bucks here in my apartment for ammending a lease. Again, NOT YOUR PROBLEM. Let the 3 other people decide how they want to split it. |
Name: Commission Implementing Regulation (EU) No 1235/2014 of 18 November 2014 laying down rules for the management and distribution of textile quotas established for the yearà 2015 under Council Regulation (EC) No 517/94
Type: Implementing Regulation
Subject Matter: cooperation policy; trade; international trade; tariff policy; leather and textile industries
Date Published: nan
19.11.2014 EN Official Journal of the European Union L 332/18 COMMISSION IMPLEMENTING REGULATION (EU) No 1235/2014 of 18 November 2014 laying down rules for the management and distribution of textile quotas established for the year 2015 under Council Regulation (EC) No 517/94 THE EUROPEAN COMMISSION, Having regard to the Treaty on the Functioning of the European Union, Having regard to Council Regulation (EC) No 517/94 of 7 March 1994 on common rules for imports of textile products from certain third countries not covered by bilateral agreements, protocols or other arrangements, or by other specific Community import rules (1), and in particular Article 17(3) and (6) and Article 21(2) thereof, Whereas: (1) Regulation (EC) No 517/94 established quantitative restrictions on imports of certain textile products originating in certain third countries to be allocated on a first come, first served basis. (2) Under Regulation (EC) No 517/94 it is possible, in certain circumstances, to use other allocation methods, to divide quotas into tranches, or to reserve a proportion of a specific quantitative limit exclusively for applications which are supported by evidence of the results of past import performance. (3) Rules for management of the quotas established for 2015 should be adopted before the quota year begins so that the continuity of trade flows is not affected unduly. (4) The measures adopted in previous years, such as those in Commission Implementing Regulation (EU) No 1281/2013 (2), proved to be satisfactory and it is therefore appropriate to adopt similar rules for 2015. (5) In order to satisfy the greatest possible number of operators it is appropriate to make the first come, first served allocation method more flexible by placing a ceiling on the quantities which can be allocated to each operator by that method. (6) To guarantee a degree of continuity in trade and efficient quota administration, operators should be allowed to make their initial import authorisation application for 2015 equivalent to the quantity which they imported in 2014. (7) To achieve optimum use of the quantities, an operator who has used up at least one half of the amount already authorised should be permitted to apply for a further amount, provided that quantities are available in the quotas. (8) To secure a sound administration, import authorisations should be valid for nine months from the date of issue, but only until the end of the year at the latest. Member States should issue licences only after being notified by the Commission that quantities are available and only if an operator can prove the existence of a contract and can certify, in the absence of a specific provision to the contrary, that he has not already been allocated a Community import authorisation under this Regulation for the categories and countries concerned. The competent national authorities should, however, be authorised, in response to importers' applications, to extend by three months and up to 31 March 2016 licences of which at least one half has been used by the application date. (9) The measures provided for in this Regulation are in accordance with the opinion of the Textile Committee established by Article 25 of Regulation (EC) No 517/94, HAS ADOPTED THIS REGULATION: Article 1 This Regulation lays down rules on the management of quantitative quotas for imports of certain textile products set out in Annex IV to Regulation (EC) No 517/94 for the year 2015. Article 2 The quotas referred to in Article 1 shall be allocated according to the chronological order of receipt by the Commission of Member States' notifications of applications from individual operators, for amounts not exceeding the maximum quantities per operator set out in Annex I. The maximum quantities shall not, however, apply to operators able to prove to the competent national authorities, when making their first application for 2015, that, in respect of given categories and given third countries, they imported more than the maximum quantities specified for each category pursuant to import licences granted to them for 2014. In the case of such operators, the competent authorities may authorise imports not exceeding the quantities imported in 2014 from given third countries and in given categories, provided that enough quota capacity is available. Article 3 Any importer who has already used up 50 per cent or more of the amount allocated to him under this Regulation may make a further application, in respect of the same category and country of origin, for amounts not exceeding the maximum quantities laid down in Annex I. Article 4 1. The competent national authorities listed in Annex II may, from 10.00 a.m. on 8 January 2015, notify the Commission of the amounts covered by requests for import authorisations. The time fixed in the first subparagraph shall be understood as Brussels time. 2. The competent national authorities shall issue authorisations only after being notified by the Commission pursuant to Article 17(2) of Regulation (EC) No 517/94 that quantities are available for importation. They shall issue authorisations only if an operator: (a) proves the existence of a contract relating to the provision of the goods; and (b) certifies in writing that, in respect of the categories and countries concerned: (i) the operator has not already been allocated an authorisation under this Regulation; or (ii) the operator has been allocated an authorisation under this Regulation but has used up at least 50 per cent of it. 3. Import authorisations shall be valid for nine months from the date of issue, but until 31 December 2015 at the latest. The competent national authorities may, however, at the importer's request, grant a three-month extension for authorisations which are at least 50 per cent used up at the time of the request. Such extension shall in no circumstances expire later than 31 March 2016. Article 5 This Regulation shall enter into force on 1 January 2015. This Regulation shall be binding in its entirety and directly applicable in all Member States. Done at Brussels, 18 November 2014. For the Commission The President Jean-Claude JUNCKER (1) OJ L 67, 10.3.1994, p. 1. (2) Commission Implementing Regulation (EU) No 1281/2013 of 10 December 2013 laying down rules for the management and distribution of textile quotas established for the year 2014 under Council Regulation (EC) No 517/94 (OJ L 332, 11.12.2013, p. 5). ANNEX I Maximum amounts referred to in Articles 2 and 3 Country concerned Category Unit Maximum amount Belarus 1 Kilograms 20 000 2 Kilograms 80 000 3 Kilograms 5 000 4 Pieces 20 000 5 Pieces 15 000 6 Pieces 20 000 7 Pieces 20 000 8 Pieces 20 000 15 Pieces 17 000 20 Kilograms 5 000 21 Pieces 5 000 22 Kilograms 6 000 24 Pieces 5 000 26/27 Pieces 10 000 29 Pieces 5 000 67 Kilograms 3 000 73 Pieces 6 000 115 Kilograms 20 000 117 Kilograms 30 000 118 Kilograms 5 000 Country concerned Category Unit Maximum amount North Korea 1 Kilograms 10 000 2 Kilograms 10 000 3 Kilograms 10 000 4 Pieces 10 000 5 Pieces 10 000 6 Pieces 10 000 7 Pieces 10 000 8 Pieces 10 000 9 Kilograms 10 000 12 Pairs 10 000 13 Pieces 10 000 14 Pieces 10 000 15 Pieces 10 000 16 Pieces 10 000 17 Pieces 10 000 18 Kilograms 10 000 19 Pieces 10 000 20 Kilograms 10 000 21 Pieces 10 000 24 Pieces 10 000 26 Pieces 10 000 27 Pieces 10 000 28 Pieces 10 000 29 Pieces 10 000 31 Pieces 10 000 36 Kilograms 10 000 37 Kilograms 10 000 39 Kilograms 10 000 59 Kilograms 10 000 61 Kilograms 10 000 68 Kilograms 10 000 69 Pieces 10 000 70 Pairs 10 000 73 Pieces 10 000 74 Pieces 10 000 75 Pieces 10 000 76 Kilograms 10 000 77 Kilograms 5 000 78 Kilograms 5 000 83 Kilograms 10 000 87 Kilograms 8 000 109 Kilograms 10 000 117 Kilograms 10 000 118 Kilograms 10 000 142 Kilograms 10 000 151A Kilograms 10 000 151B Kilograms 10 000 161 Kilograms 10 000 ANNEX II List of Licensing offices referred to in Article 4 1. Belgium FOD Economie, Kmo, Middenstand en Energie Algemene Directie Economische Analyses en Internationale Economie Dienst Vergunningen Vooruitgangstraat 50 1210 Brussel Tel. +32 22776713 Fax +32 22775063 SPF à conomie, PME, Classes moyennes et à nergie Direction gà ©nà ©rale des analyses à ©conomiques et de l'à ©conomie internationale Service Licences Rue du Progrà ¨s 50 1210 Bruxelles Tà ©l. + 32 22776713 Fax + 32 22775063 2. Bulgaria à à ¸Ã ½Ã ¸Ã à à µÃà à à ²Ã ¾ à ½Ã ° à ¸Ã ºÃ ¾Ã ½Ã ¾Ã ¼Ã ¸Ã ºÃ °Ã à ° à ¸ à µÃ ½Ã µÃà ³Ã µÃ à ¸Ã ºÃ °Ã à ° à à ¸Ãà µÃ ºÃ à ¸Ã à à µÃ ³Ã ¸Ã à Ãà ¸Ãà °Ã ½Ã µ, à »Ã ¸Ã à µÃ ½Ã ·Ã ¸Ãà °Ã ½Ã µ à ¸ à ºÃ ¾Ã ½Ã Ãà ¾Ã » à à ». à ¡Ã »Ã °Ã ²Ã à ½Ã à ºÃ ° 8 1052 à ¡Ã ¾Ã à ¸Ã Tel.: +359 29407008/+359 29407673/+359 29407800 Fax: +359 29815041/+359 29804710/+359 29883654 Ministry of Economy and Energy 8, Slavyanska Str., Sofia 1052, Bulgaria Tel.: +359 29407008/+359 29407673/+359 29407800 Fax: +359 29815041/+359 29804710/+359 29883654 3. Czech Republic Ministerstvo prà ¯myslu a obchodu (Ministry of Industry and Trade) Licenà nà sprà ¡va Na Frantià ¡ku 32 CZ 110 15 Praha 1 Tel: (420) 224 907 111 Fax: (420) 224 212 133 4. Denmark Erhvervs- og Và ¦kstministeriet (Ministry for Business and Growth) Erhvervsstyrelsen Langelinie Allà © 17 2100 Kà ¸benhavn DANMARK Tlf. + 45 35291000 Fax + 45 35291001 5. Germany Bundesamt fà ¼r Wirtschaft und Ausfuhrkontrolle (BAFA) [Federal Office of Economics and Export Control] Frankfurter Str. 29-35 D-65760 Eschborn Tel.: +49 6196908-0 Fax +49 6196908800 6. Estonia Majandus- ja Kommunikatsiooniministeerium Harju 11 15072 Tallinn Eesti Tel: +372 6256400 Faks: +372 6313660 7. Ireland Department of Jobs, Enterprise and Innovation Licensing Unit Kildare Street Dublin 2 IRELAND Tel. +353 16312545 Fax +353 16312562 8. Greece à ¥Ãà ¿Ã à à ³Ã µÃ ¯Ã ¿ à à ½Ã ¬Ãà à à ¾Ã ·Ã à ºÃ ±Ã ¹ à à ½Ã à ±Ã ³Ã à ½Ã ¹Ã à à ¹Ã ºÃ à à ·Ã à ±Ã à à µÃ ½Ã ¹Ã ºÃ ® à à ¹Ã µÃ à ¸Ã à ½Ã à · à à ¹Ã µÃ ¸Ã ½Ã ¿Ã à à à ¹Ã ºÃ ¿Ã ½Ã ¿Ã ¼Ã ¹Ã ºÃ ®Ã à à ¿Ã »Ã ¹Ã à ¹Ã ºÃ ®Ã à à ¹Ã µÃ à ¸Ã à ½Ã à · à à ±Ã ¸Ã µÃ à à à à à ½ à à ¹Ã à ±Ã ³Ã à ³Ã à ½-à à ¾Ã ±Ã ³Ã à ³Ã à ½, à à ¼Ãà ¿Ã à ¹Ã ºÃ ®Ã à à ¼Ã à ½Ã ±Ã à à ¿Ã à ½Ã ¬Ã à ¿Ã 1 105 63 à à ¸Ã ®Ã ½Ã ± à ¤Ã ·Ã ». +30 2103286041-43, 2103286021 à ¦Ã ±Ã ¾ +30 2103286094 Ministry of Development and Competitiveness General Directorate for International Economic Policy, Directorate of Import-Export Regimes, Trade Defence Instruments 1 Kornarou Str. 10563 à à ¸Ã ®Ã ½Ã ± à ¤Ã ·Ã ». + 30 2103286041-43, 2103286021 à ¦Ã ±Ã ¾ + 30 2103286094 9. Spain Ministerio de Economà a y Competitividad Direccià ³n General de Comercio e Inversiones Paseo de la Castellana no 162 E-28046 Madrid Tel. +34 913493817, 3493874 Fax +34 913493831 Correo electrà ³nico: sgindustrial.sscc@comercio.mineco.es 10. France Ministà ¨re de l'à ©conomie, de l'industrie et du numà ©rique Direction gà ©nà ©rale des entreprises (DGE) Service de l'industrie (SI) Sous-direction de la chimie, des matà ©riaux et des à ©co-industries (SDCME) Bureau des matà ©riaux 67 rue Barbà ¨s BP 80001 94201 Ivry-sur-Seine Cedex Tà ©l. +33 179843449 Courriel: isabelle.paimblanc@finances.gouv.fr 11. Croatia Ministarstvo vanjskih i europskih poslova Samostalni sektor za trgovinsku politiku i gospodarsku multilateralu Trg N. à . Zrinskog 7-8 10000 Zagreb Tel. 00 385 1 6444626 Faks 00 385 1 6444601 Ministry of Foreign and European Affairs Directorate for Trade Policy and Economic Multilateral Affairs Trg N. à . Zrinskog 7-8 10000 Zagreb Tel. 00 385 1 6444626 Faks 00 385 1 6444601 12. Italy Ministero dello Sviluppo Economico Dipartimento per l'impresa e l'internazionalizzazione Direzione Generale per la Politica Commerciale Internazionale Divisione III Politiche settoriali Viale Boston, 25 00144 Roma Tel. +39 0659647517, 59932202, 59932406 Fax +39 0659932263, 59932636 E-mail: polcom3@mise.gov.it 13. Cyprus à à »Ã ¬Ã ´Ã ¿Ã à à ºÃ ´Ã ¿Ã à ·Ã à à ´Ã µÃ ¹Ã à ½ à à ¹Ã à ±Ã ³Ã à ³Ã ®Ã /à à ¾Ã ±Ã ³Ã à ³Ã ®Ã à ¥Ãà ·Ã à µÃ à ¯Ã ± à à ¼Ãà ¿Ã à ¯Ã ¿Ã à ¥Ãà ¿Ã à à ³Ã µÃ ¯Ã ¿ à à ½Ã à à ³Ã µÃ ¹Ã ±Ã , à à ¼Ãà ¿Ã à ¯Ã ¿Ã , à à ¹Ã ¿Ã ¼Ã ·Ã à ±Ã ½Ã ¯Ã ±Ã à ºÃ ±Ã ¹ à ¤Ã ¿Ã à à ¹Ã à ¼Ã ¿Ã à à ½Ã ´Ã à à ± à à à ±Ã ¿Ã à ¶Ã ¿Ã 6 1421 à à µÃ à ºÃ à à ¯Ã ± à ¤Ã ·Ã ». +357 22867100 à ¦Ã ±Ã ¾ +357 22375443 Imports/Exports Licensing Section Trade Service Ministry of Energy, Commerce, Industry and Tourism 6, Andrea Araouzou Str. 1421 Nicosia à à Ãà à ¿Ã à ¤Ã ·Ã ». +357 22 867 100 à ¦Ã ±Ã ¾ +357 22 375 443 14. Latvia Latvijas Republikas Ãrlietu ministrija Kr.Valdemà ra iela 3 LV-1395 Rà «ga Tà lr.: 00 371 6701 6201 Fakss: 00 371 6782 8121 15. Lithuania Lietuvos Respublikos à «kio ministerija Gedimino pr. 38/Vasario 16-osios g. 2 LT-01104 Vilnius, Lietuva Tel. +370 70664658, +370 70664808 Faks. +370 70664762 E. paà ¡tas vienaslangelis@ukmin.lt 16. Luxembourg Ministà ¨re de l'à ©conomie Office des licences 19-21, boulevard Royal 2449 Luxembourg Tà ©l. +352 226162 Fax +352 466138 office.licences@eco.etat.lu 17. Hungary Magyar Kereskedelmi Engedà ©lyezà ©si Hivatal (Hungarian Trade Licencing Office) 1124 Budapest Nà ©metvà ¶lgyi à ºt 37 39. MAGYARORSZà G Tel. +36 14585503 Fax +36 14585814 E-mail: keo@mkeh.gov.hu 18. Malta Ministry for the Economy, Investment and Small Business Commerce Department, Trade Services Directorate Lascaris Valletta VLT2000 Malta Telefon: 00 356 256 90 202 Faks: 00 356 212 37 112 19. Netherlands Belastingdienst/Douane Centrale dienst voor in- en uitvoer Kempkensberg 12 Postbus 30003 9700 RD Groningen Tel. +31 881512122 Fax +31 881513182 20. Austria Bundesministerium fà ¼r Wissenschaft, Forschung und Wirtschaft (Federal Ministry of Science, Research and Economy) Abteilung C2/9 Auà enwirtschaftskontrolle Stubenring 1 A 1010 Wien Tel: +43 171100-8353 Fax +43 171100-8366 21. Poland Ministerstwo Gospodarki pl. Trzech Krzyà ¼y 3/5 00-507 Warszawa POLSKA Tel. +48 226935553 Faks +48226934021 22. Portugal Ministà ©rio das Finanà §as Direà §Ã £o-Geral das Alfà ¢ndegas e dos Impostos Especiais sobre o Consumo Rua Terreiro do Trigo Edifà cio da Alfà ¢ndega 1149-006 Lisboa Portugal Tel. (351-1) 218 814 263 Fax: (351-1) 218 814 261 Endereà §o eletrà ³nico: dsl@dgaiec.min-financas.pt 23. Romania Ministerul Economiei, Comerà ului Ãi Mediului de Afaceri Direcà ia Politici Comerciale Calea Victoriei, nr. 152, sector 1 BucureÃti Cod poÃtal: 010096 Tel: + 40 21 3150081 Fax: + 40 21 3150454 E-mail: clc@dce.gov.ro 24. Slovenia Ministrstvo za finance (Ministry of Finance) Davà na uprava Republike Slovenije Spodnji plavà ¾ 6c SI-4270 Jesenice SLOVENIJA Tel. +386 42974470 Faks +386 42974472 E-naslov: taric.cuje@gov.si 25. Slovakia Ministerstvo hospodà ¡rstva SR (Ministry of Economy of the Slovak Republic) Odbor và ½konu obchodnà ½ch opatrenà Mierovà ¡ 19 827 15 Bratislava Tel. +421 248547019 Fax +421 243423915 E-mail: jan.krocka@mhsr.sk 26. Finland Tulli (Finnish Customs) PL 512 FI-00101 Helsinki SUOMI/FINLAND Puhelin: +358 295 5200 Faksi: +358 204922852 Sà ¤hkà ¶posti: kirmo@tulli.fi Tullen PB 512 FI-00101 Helsingfors FINLAND Fax +358 204922852 27. Sweden Kommerskollegium Box 6803 SE-113 86 Stockholm SVERIGE Tfn +46 86904800 Fax +46 8306759 E-post: registrator@kommers.se 28. United Kingdom Import Licensing Branch (ILB) Department for Business Innovation and Skills E-mail: enquiries.ilb@bis.gsi.gov.uk |
Title: [AZ] Pima County next door neighbor passed away in 2015, snow-bird winter house has been empty ever since. I'd like to buy it but it doesn't appear to be on the market? Yard starting to get overgrown, fence falling apart, mosquitos since the monsoon rains.
Question:Tucson, Arizona. The little old lady that had a snow-bird winter house passed away in 2015. The property has sat empty since. Looking at the Pima County Assessors website shows an Estate of *Little Old Lady* with a MN address in the Taxpayer Info. There is one of those lock boxes for keys that relators use hanging from the front door but I can't find the house for sale anywhere.
I know she had a couple of kids and that lived out of state. Now, this quaint little home is starting to fall into disrepair. After the monsoon rains the yard is overgrown in weeds and I am getting a bunch of mosquito's in my yard that I suspect are from standing water in this property. There is a block wall between this property and mine with a wood slat fence built up on that properties side that is falling apart, about a dozen fence posts have fallen down. I'd love to buy it and rent it out or flip it. Actually I'd really love to buy it and rent that property and mine out.
What should I do r/legaladvice ?
Is this something an attorney can help me with?
Is there a more appropriate subreddit for this advice?
Answer #1: You can contact the estate and make an offer on it. If the executor isn't responsive, or refuses to sell, you're out of luck.
If it's actually part of your HOA and the records you reviewed are wrong, then you can wait for the HOA fines to accumulate, and for the HOA to file a lien, and for the HOA to foreclose on that lien, and then try to buy the property from the HOA. That may take some time, especially if the estate is keeping the HOA dues current and paying the fines.
You can wait for the property taxes to come past due, for the county to place a tax lien on the property, for the county to foreclose on that lien, and then try to buy the property at auction.
Those are pretty much your only options that don't involve breaking the law somewhere along the line.Answer #2: Non-legal advice. You mention mosquitoes - with West Nile and Zika, these are a health risk. Contact the local public health department and ask about what you can do regarding adding "dunks" (larvacide blocks) to major bodies of standing water on the neighbouring property. |
EXHIBIT 32.1 Section1350 Certifications Quarter ended June 30, 2011 I, Warren E. Buffett, Chairman and Chief Executive Officer of Berkshire Hathaway Inc. (the “Company”), certify, pursuant to Section906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section1350, that to the best of my knowledge: the Quarterly Report on Form 10-Q of the Company for the period ended June 30, 2011 (the “Report”) fully complies with the requirements of Section13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: August 5, 2011 /S/WARREN E. BUFFETT Warren E. Buffett Chairman and Chief Executive Officer
|
Exhibit 10.20
SAKS INCORPORATED
DEFERRED COMPENSATION PLAN
TABLE OF CONTENTS
INTRODUCTION
1-1
1.01
Establishment and Name of Plan
1-1
1.02
Intent and Status of Plan
1-1
DEFINITIONS
2-1
2.01
Basic Compensation
2-1
2.02
Board
2-1
2.03
Bonus Compensation
2-1
2.04
Committee
2-1
2.05
Code
2-1
2.06
Compensation
2-1
2.07
Compensation Deferral Agreement
2-1
2.08
Compensation Deferral Date
2-1
2.09
Compensation Deferral Period
2-1
2.10
Corporation
2-1
2.11
Deferred Compensation Account
2-1
2.12
Disability
2-2
2.13
Distribution Date
2-2
2.14
Effective Date
2-2
2.15
Elective Deferal Amounts
2-2
2.16
Employee
2-2
2.17
ERISA
2-2
2.18
Investment Credits
2-2
2.19
Matching Employer Amounts
2-2
2.20
Other Employer Amounts
2-2
2.21
Participant
2-2
2.22
Participating Company
2-2
2.23
Plan
2-2
2.24
Plan Year
2-3
2.25
Stock Grant Account
2-3
2.26
Stock Option Gains
2-3
2.27
Valuation Date
2-3
ELIGIBILITY AND PARTICIPATION
3-1
3.01
Eligibility
3-1
3.02
Participation
3-1
3.03
3-1
3.04
Special Participation for Purposes of Deferring Stock Grants and Stock Option
Gains
3-1
ACCOUNTS
4-1
4.01
Accounts
4-1
4.02
Elective Deferral Amounts
4-2
4.03
Matching Employer Amounts
4-3
4.04
Other Employer Amounts
4-3
4.05
Stock Option Gains
4-4
4.06
Stock Grant Account
4-4
4.07
Investment Credits
4-4
5-1
5.01
In General
5-1
5.02
Time and Method of Distribution
5-1
5.03
Unscheduled Withdrawals
5-2
5.04
Committee Decision
5-3
5.05
Payments After Participant’s Death or Disability
5-3
5.06
Designation of Beneficiaries
5-3
5.07
Distributions from Stock Grant Account
5-3
5.08
Distributions in Event of Change in Control
5-3
5.09
Withholding
5-4
FINANCING AND UNFUNDED STATUS
6-1
6.01
Costs Borne by the Participating Companies
6-1
6.02
Source of Benefit Payments and Medium of Financing the Plan
6-1
6.03
Unfunded Status
6-1
ADMINISTRATION
7-1
7.01
General Administration
7-1
7.02
Committee Procedures
7-1
7.03
Facility of Payment
7-1
7.04
Indemnification of Committee Members
7-1
AMENDMENT AND TERMINATION OF PLAN
8-1
8.01
Amendment and Termination
8-1
GENERAL PROVISIONS
9-1
9.01
Limitation of Rights
9-1
9.02
No Assignment or Alienation of Benefits
9-1
9.03
Successors
9-1
9.04
Governing Law
9-2
ARTICLE 1
INTRODUCTION
1.01 Establishment and Name of Plan.
Proffitt’s, Inc. established, as of April 1, 1997, an unfunded, deferred
compensation plan primarily for the purpose of providing deferred compensation
for a select group of management or highly compensated employees of the
Participating Companies, entitled the “Proffitt’s, Inc. Supplemental Savings
Plan.”
The Plan has been amended from time to time, including a complete amendment and
restatement of the Plan effective as of April 12, 1999, pursuant to which the
name of the Plan was changed to the “Saks Incorporated Supplemental Savings
Plan” to reflect the new name of the sponsor of the Plan.
This document is an amendment and restatement of the Plan and shall be effective
as of May 1, 2002. Pursuant to this amendment and restatement, the name of the
Plan shall be changed to the “Saks Incorporated Deferred Compensation Plan.”
In addition to making changes to the provisions of the Plan, this document
addresses the merger of the Carson Pirie Scott Deferred Compensation Plan into
this Plan effective May 1, 2002. Account balances under the Carson Pirie Scott
Deferred Compensation Plan as of the end of business on April 30, 2002, shall
become the beginning balances under this Plan on May 1, 2002.
In addition, active participants in the Saks Fifth Avenue Supplemental Pension
Plan as of April 30, 2002, shall be given the option of converting their monthly
accrued benefit under the Saks Fifth Avenue Supplemental Pension Plan into a
beginning account balance under this Plan.
1.02 Intent and Status of Plan.
The Plan is intended to be an unfunded plan maintained by the Corporation with
the Participating Companies primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated employees
(and intended to be within the exemptions therefore in, without limitation,
sections 201(2), 301(a)(3), 401(a)(1) and 4021(b)(6) of ERISA and section
2520.104-23 of the Labor Regulations). The Plan is intended to be “unfunded” for
purposes of both ERISA and the Code. The Plan is not intended to be qualified as
a qualified plan under section 401(a) of the Code; rather, the Plan is intended
to be a “nonqualified” plan.
1 - 1
ARTICLE 2
DEFINITIONS
Each following word, term and phrase shall have the following respective
meanings whenever such word, term or phrase is capitalized and used in any
Article of this Plan unless the context clearly indicates otherwise:
2.01 “Basic Compensation” means the portion of a Participant’s Compensation
that is paid in the form of base salary.
2.02 “Board” means the Board of Directors of the Corporation.
2.03 “Bonus Compensation” means the portion of a Participant’s Compensation
that is paid in the form of a bonus as part of the Participating Company’s
annual bonus program. Bonuses paid outside the annual bonus program are not
considered to be Bonus Compensation.
2.04 “Committee” means the Committee appointed by the Board to administer the
Plan pursuant to Article 8 hereof. If no such Committee has been appointed, then
the term Committee shall mean the Corporation.
2.05 “Code” means the Internal Revenue Code of 1986, as amended from time to
time.
2.06 “Compensation” means the cash compensation which is earned and otherwise
payable in a given Compensation Deferral Period to a Participant, including any
amounts that would be payable as cash compensation except for the Participant’s
election to defer such amount under this Plan or a plan under Code section
401(k) or Code section 125.
2.07 “Compensation Deferral Agreement” means the agreement to defer
Compensation contemplated by Articles 3 and 4 hereof made by the Participant and
the Participating Company.
2.08 “Compensation Deferral Date” means the Effective Date in the initial Plan
Year, and January 1 in each calendar year thereafter.
2.09 “Compensation Deferral Period” means the twelve (12) consecutive month
period beginning on each January 1 and ending on each following December 31
thereafter (the calendar year).
2.10 “Corporation” means Saks Incorporated, a Tennessee corporation and any
business organization or corporation into which Saks Incorporated may be merged
or consolidated or by which it may be succeeded.
2.11 “Deferred Compensation Account” means the account established by the
Participating Companies pursuant to Article 4 of this Plan for each Participant
to which shall be credited (added) the Participant’s Elective Deferral Amounts,
Matching Employer Amounts, Other Employer Amounts, Stock Option Gains, and
Investment Credits and from which any distributions and in-service withdrawals
shall be subtracted. All amounts which are credited to such Deferred
Compensation Account are credited solely for computation purposes and are at all
times general assets of the Participating Companies and subject to the claims of
the general creditors of the Participating Companies.
2 - 1
2.12 “Disability” means a physical or mental condition of a Participant
resulting in:
(a) evidence that the Participant is deemed by the Social Security
Administration to be eligible to receive a Primary Social Security disability
benefit, or
(b) evidence that the Participant is eligible for disability benefits under
the long-term disability plan sponsored by a Participating Company, or
(c) evidence satisfactory to the Committee that the Participant is totally
and permanently disabled.
Whether or not a Participant meets any or all of the above conditions will be
determined solely and exclusively by the Committee.
2.13 “Distribution Date” means the date the Participant elects to commence
distributions from a bucket pursuant to Section 5.02.
2.14 “Effective Date” means April 1, 1997, the date the Plan was established.
The effective date of this amendment and restatement is May 1, 2002, except as
otherwise indicated within a specific position.
2.15 “Elective Deferral Amounts” means amounts credited by a Participating
Company to a Participant’s Deferred Compensation Account due to the
Participant’s election made pursuant to Section 4.02.
2.16 “Employee” means a person, other than an independent contractor, who is
receiving remuneration from the Employer for services rendered to, or labor
performed for, the Employer (or who would be receiving such remuneration except
for an authorized leave of absence).
2.17 “ERISA” means the Employee Retirement Income Security Act of 1974, as
2.18 “Investment Credits” means amounts credited by a Participating Company to
a Participant’s Deferred Compensation Account or Stock Grant Account pursuant to
Section 4.07.
2.19 “Matching Employer Amounts” means amounts credited by a Participating
Company to a Participant’s Deferred Compensation Account pursuant to Section
4.03.
2.20 “Other Employer Amounts” means amounts credited by a Participating
4.04.
2.21 “Participant” means an eligible Employee participating in the Plan
pursuant to the provisions of Article 3 hereof.
2.22 “Participating Company” means the Corporation and any organization which
is in the Corporation’s controlled group within the meaning of Code section
1563(a).
2.23 “Plan” means this Saks Incorporated Deferred Compensation Plan as
established and set forth herein (together with any and all supplements hereto),
and as amended from time to time.
2 - 2
2.24 “Plan Year” means the twelve (12) consecutive month period being on each
January 1 and ending on each following December 31 thereafter (the calendar
year).
2.25 “Stock Grant Account” means the account established by the Participating
Companies pursuant to Article 4 of this Plan for each Participant to which shall
be credited (added) the Participant’s stock grant deferral amounts, as described
in Section 4.06 and Investment Credits and from which any distributions and any
in-service withdrawals shall be subtracted. All amounts which are credited to
such account are credited solely for computation purposes and are at all times
general assets of the Participating Companies and subject to the claims of the
general creditors of the Participating Companies.
2.26 “Stock Option Gains” means the gains to which a person is entitled due to
the exercise of a stock option grant under a stock option program offered by any
of the Participating Companies.
2.27 “Valuation Date” means each business day that the applicable trading
markets and the Plan’s record keeper are open for business, or such other dates
as the Committee, in its discretion, may designate.
2 - 3
ARTICLE 3
ELIGIBILITY AND PARTICIPATION
3.01 Eligibility.
Eligibility to participate in the Plan shall be limited to full-time salaried
Employees of the Participating Companies who are in a select group of management
or highly compensated Employees and who are designated, from time to time, by
the Committee as eligible to participate in the Plan. As of May 1, 2002, the
Employees eligible to participate shall be those eligible Employees as described
above whose annual base salary on April 30, 2002 from one or more Participating
Companies is at least ninety-five thousand dollars ($95,000) or who had an
account in the Saks Incorporated Supplemental Savings Plan on April 30, 2002.
The Committee shall have the authority to, at any time and from time to time,
change the conditions for eligibility within the constraints imposed by the
first sentence of this Section 3.01.
An Employee shall be considered eligible to participate in the Plan on the date
he is notified that he is eligible to participate.
Notwithstanding the above, Employees who are paid on an hourly basis shall be
considered as an excluded class for purposes of the Plan and shall not be
eligible to participate in the Plan.
3.02 Participation.
An Employee eligible to participate in the Plan as provided in Section 3.01
hereof who is not a Participant as of April 30, 2002 may elect to become a
Participant in the Plan by electing to defer Compensation with respect to any
Compensation Deferral Period under Article 4 hereof.
3.03 Termination of Participation for Purposes of Making Deferrals.
Participation in the Plan for purposes of being able to make Elective Deferral
Amounts pursuant to Section 4.02 hereof under this Plan shall terminate when a
Participant’s employment with the Participating Companies as an Employee
terminates, when the Participant transfers to an excluded class of Employees, or
when such Participant is no longer designated by the Committee as an Employee
3.04 Special Participation for Purposes of Deferring Stock Grants and Stock
Option Gains
Notwithstanding any other provision of the Plan to the contrary, the Committee,
in its discretion, may allow an Employee eligible to participate in the Plan to
elect to defer special compensation that such Employee may become eligible to
receive in the form of a grant of Corporation Stock or Stock Option Gains.
Whenever used in this Plan, the term “Corporation Stock” shall mean the common
stock of the Corporation.
3 - 1
ARTICLE 4
ACCOUNTS
4.01 Accounts.
(a) Deferred Compensation Account. On behalf of Participating Companies, the
Committee shall establish and maintain for each Participant or former
Participant under the Plan a book reserve account (the Deferred Compensation
Account as defined in Section 2.11 hereof) for the purpose of determining
deferred compensation payable to the Participant attributable to Elective
Deferral Amounts under Section 4.02, Matching Employer Amounts under Section
4.03, Other Employer Amounts under Section 4.04, and Stock Option Gains under
Section 4.05. The Committee may establish procedures for accounting for each
type of contribution. In addition, a Participant may choose to have anywhere
from one to four distribution subaccounts, or “buckets”, under the Deferred
Compensation Account, as follows:
(1) Retirement Bucket—used to account for amounts to be distributed
beginning at retirement. A Participant may elect to maintain either zero or one
retirement bucket.
(2) In-service Buckets—used to account for amounts to be distributed at
times selected by the Participant, without regard to the Participant’s
retirement date. A Participant may elect to maintain zero, one, two or three
in-service buckets.
A Participant shall allocate each contribution credit among his available
buckets by designating the percentage of the contribution credit that is to
apply to each bucket. If no such designation is made by the Participant, the
entire amount shall be credited to the Participant’s retirement bucket. Once an
amount is credited to a bucket, it cannot later be transferred to a different
bucket.
The Committee shall have the authority to establish rules concerning the
creation, operation and maintenance of such buckets.
The Committee shall also establish rules for recognizing the amounts
attributable to account balances transferred to this Plan due to the merger of
the Carson Pirie Scott Deferred Compensation Plan into this Plan effective May
1, 2002. A Participant’s account balance under the Carson Pirie Scott Deferred
Compensation Plan as of the end of business on April 30, 2002, including any
additional amounts that may have been granted to the Participant in exchange for
the elimination of matching contributions, shall become the beginning account
balance under the Deferred Compensation Account of this Plan on May 1, 2002.
In addition, the Committee shall establish rules for recognizing amounts
attributable to a special election offered to participants in the Saks Fifth
Avenue Supplemental Pension Plan. Under this special election, certain active
participants in the Saks Fifth Avenue Supplemental Pension Plan as of April 30,
2002, selected by the Committee, shall be given the option of exchanging their
monthly accrued benefit under the Saks Fifth Avenue Supplemental Pension Plan
for a beginning account balance under the Deferred Compensation Account of this
Plan.
4 - 1
(b) Stock Grant Account. In addition, if applicable, the Committee shall
establish a separate book reserve account (the Stock Grant Account as defined in
Section 2.25 hereof) for the purpose of determining deferred compensation
payable to the Participant attributable to the deferral of grants of Corporate
Stock under Section 4.06. Such account shall be governed by the provisions of
this Article 4. The entire Stock Grant Account shall be maintained as a separate
in-service bucket. The Stock Grant Account in-service bucket will not count
against the limit on the number of in-service buckets allowed for the Deferred
Compensation Account.
4.02 Elective Deferral Amounts.
Elective deferral of Compensation by Participants under the Plan is governed by
the provisions of this Section. Amounts deferred by a Participant pursuant to
this Section shall constitute “Elective Deferral Amounts” for purposes of this
Plan and shall be fully vested at all times.
(a) Compensation Elective Deferrals. The following provisions apply to
elective deferral of Compensation by Participants under the Plan.
(1) Compensation Deferral Elections by Participants. With respect to a
Compensation Deferral Period, a Participant may make an election prior to the
Compensation Deferral Date on which such Compensation Deferral Period begins to
defer a specified percentage of the Basic Compensation and a separate specified
percentage of the Bonus Compensation which would otherwise be payable by the
Participating Company to the Participant during the Compensation Deferral Period
beginning on such Compensation Deferral Date. Any such election shall be made in
such manner as is determined by the Committee before such Compensation Deferral
Date and may not be revoked, changed or modified for and during the applicable
Compensation Deferral Period and the provisions of subsection 4.02(a)(3) hereof
shall apply to any such election.
(2) Compensation Deferral Elections by Certain New Participants. In the case
of an Employee who first becomes eligible to participate in the Plan during a
Compensation Deferral Period, such an Employee may make an election no later
than thirty (30) days following the date such Employee first becomes eligible to
participate in the Plan to defer a specified percentage of the Basic
Compensation and a separate specified percentage of the Bonus Compensation which
would otherwise be earned by such employee and be payable by the Participating
Employer after the later of (A) the date the Employee first becomes eligible to
participate in the Plan, or (B) the date such election is received by the
Committee and during the remainder of the Compensation Deferral Period. Any such
election shall be made in such manner as is determined by the Committee no later
than thirty (30) days following the date the Employee first becomes eligible to
participate in the Plan, and may not be revoked, changed or modified for and
during the applicable Compensation Deferral Period, and the provisions of
subsection 4.02(a)(3) shall apply to any such election. If such Employee does
not make any such election, such Employee may make an election under Section
4.02(a) with respect to the next Compensation Deferral Period (or later
Compensation Deferral Periods) pursuant to the applicable provisions.
4 - 2
(3) Continuation and Irrevocability of Election. Any election by a
Participant pursuant to subsection 4.02(a)(1) or 4.02(a)(2) (and any subsequent
election) will continue (and may not be modified, altered, or changed in any
way) until the earliest of (A) the Compensation Deferral Period commencing after
the date the Participant notifies the Committee (in such manner as is determined
by the Committee) to suspend future deferrals of Compensation under the Plan,
(B) the Compensation Deferral Period commencing after the date on which the
Participant modifies (in such manner as is determined by the Committee) his
previous election, (C) the Participant is no longer designated as eligible to
participate in the Plan, (D) the Participant terminates employment with the
Participating Companies, or (E) the Plan is amended or terminated such that the
Plan no longer permits deferrals of Compensation.
(4) Limitations on Percentage Amounts. A Participant may elect to make a
deferral of up to ninety percent (90%) of the Participant’s Basic Compensation
and up to one hundred percent (100%) of the Participant’s Bonus Compensation
otherwise payable to him.
(5) Cessation of Deferrals for In-Service Buckets. Deferrals into an
in-service bucket must be discontinued at least one full calendar year before
the first scheduled distribution from that bucket.
(6) Special Deferral Elections as of May 1, 2002. Notwithstanding the
foregoing, eligible Participants shall make deferral elections prior to May 1
2002, with respect to pay periods beginning on or after May 1, 2002. Such
elections shall be made pursuant to rules and procedures established by the
Committee.
(b) Withholding and Crediting of Elective Deferral Amounts. The
Participating Company shall withhold the specified percentage amounts deferred
by the Participant hereunder from the Compensation which is otherwise payable to
the Participant. At the time or times it deems appropriate, the Committee shall
credit amounts equal to such withheld amounts to the Participant’s Deferred
Compensation Account.
4.03 Matching Employer Amounts.
At the discretion of the Board, an amount equal to a percentage of all or a
portion of the amounts deferred by the Participant pursuant to Section 4.02
hereof with respect to such Compensation Deferral Period shall be credited to a
Participant’s Deferred Compensation Account in such amount as the Board may in
its sole discretion determine. Such matching amounts shall be credited at such
time as the Board in its sole discretion may determine, but in any event within
a reasonable time after the end of the Plan Year to which they relate. Such
amounts (if any) shall constitute “Matching Employer Amounts” for purposes of
this Plan. The details for applying the Matching Employer Amounts, such as the
allocation formula, the criteria for receiving credit of Matching Employer
Amounts (such as basing the credit on long-term incentive goals), and the
vesting schedule shall be determined at the time the decision is made to make a
matching contribution.
4.04 Other Employer Amounts.
At the discretion of the Board, other amounts (as deferred compensation), if
any, may be credited to a Participant’s Deferred Compensation Account in such
amount or amounts and at such time or times as the Board may in its sole
discretion determine. Any such amounts shall constitute “Other Employer Amounts”
for purposes of this Plan.
4 - 3
4.05 Stock Option Gains.
Deferral of gains from the exercise of stock options by Participants under the
Plan is governed by the provisions of this Section. Amounts deferred by a
Participant pursuant to this Section shall constitute Stock Option Gains for
purposes of this Plan and shall be fully vested at all times.
A Participant who is eligible to defer Stock Option Gains must make an election
to defer that gain at least 12 months prior to the date the applicable stock
option is exercised. Any such election shall be made in such manner as is
determined by the Committee and may not be revoked, changed or modified.
The Committee shall credit amounts equal to such Stock Option Gains to the
Participant’s Deferred Compensation Account.
4.06 Stock Grant Account.
shall establish and maintain a special Stock Grant Account for each Participant
or former Participant who has elected to defer receipt of future grants of
Corporation Stock. An Employee who is eligible to defer receipt of a future
grant of Corporation Stock may make an election prior to the date that such
Employee has met the requirements established by the Corporation for receipt of
such grant. Any such election shall be made on a stock grant deferral agreement
which is duly executed by the Employee and which is delivered by such Employee
to the Committee prior to the date such Employee has met the requirements for
receipt of such grant. The deferral period shall be the period ending on the
date elected by the Participant. This stock grant deferral election may not be
revoked, changed or modified during the deferral period.
4.07 Investment Credits.
(a) Deferred Compensation Account.
(1) At the time of an eligible Participant’s initial deferral election or,
in the case of a Participant not eligible to make deferral elections, at the
time the Participant first becomes a Participant, the Participant shall specify
in such form as may be prescribed by the Committee, separately for each bucket,
the investment funds in which the bucket’s balance shall be deemed to be
invested for purposes of adjusting such balance to reflect income, gains, losses
and expenses in accordance with subsection 4.07(a)(2).
(2) As of each Valuation Date, each bucket in the Participant’s Deferred
Compensation Account will be credited with income and gains and charged with
losses, expenses and distributions equal to the amount by which the bucket would
have been credited or charged since the prior Valuation Date (in the manner
described below) had the Participant’s bucket been invested in the investment
funds (as defined below) selected by the Participant in accordance with the
Participant’s investment election. The adjustments made as of each Valuation
Date to the Participant’s bucket shall be made in any manner that the Committee,
in its sole discretion, may direct. The “investment funds” shall consist of two
or more mutual funds, collective funds or other similar funds or arrangements
designated by the Committee, in its sole discretion, for Participant’s
investment elections. The Committee may, in its sole discretion, designate
additional investment funds or terminate existing investment funds. A
Participant shall make investment elections at such times and in such manner as
required or allowed by the Committee. The investment election shall designate
the portion of the Participant’s
4 - 4
bucket which is to be treated as invested in each available investment fund. A
Participant’s investment election shall remain in effect until the Participant
files a change in investment election with the Committee. A Participant may
request a change in his investment election with respect to future deferrals
and, separately, with respect to existing balances, at any time, with such
request to be implemented at such time as the Committee deems appropriate.
Investment election change requests shall be made in such manner as prescribed
by the Committee. If a Participant fails to make an investment election with
respect to a bucket, the Participant’s bucket shall be deemed invested in such
default investment fund as the Committee may designate. A Participant’s bucket
shall continue to be adjusted under this subsection 4.07(a) until completely
distributed in accordance with the terms of the Plan.
(3) Notwithstanding the foregoing, Participants with Deferred Compensation
Accounts in the Saks Incorporated Supplemental Savings Plan as of April 30,
2002, will be given a one-time irrevocable election to have their investment
credits determined under a fixed interest process in lieu of the process
described in subsections 4.07(a)(1) and 4.07(a)(2) above. This election will
apply to such Participant’s entire Deferred Compensation Account including the
existing account balance and future contribution amounts. The investment credits
for the fixed interest accounts will be determined based on an interest rate set
by the Committee each year. The Committee will use the Aa corporate bond rate as
a guide, but not as an absolute determinative factor, in setting the interest
rate. The initial interest rate, to be applicable from May 1, 2002 through
December 31, 2002, will be 7.25%.
(b) Stock Grant Account.
(1) Amounts credited to a Participant’s Stock Grant Account shall be valued
as if the credits to such account were invested in Corporate Stock. The Stock
Grant Account shall be credited with an amount equal to the current market value
of the Corporate Stock that was to have been granted to the Participant and that
was instead deferred pursuant to the terms of such Participant’s stock grant
deferral agreement. The Stock Grant Account shall be further adjusted from time
to time to reflect the change in the market value of such stock, including the
recognition of any stock splits. Any dividends that would be credited to such
Corporate Stock will be credited to such account as if invested in additional
shares (or partial shares) of Corporate Stock.
(2) A Participant with a Stock Grant Account will have a one-time
opportunity to change the investment election of his Stock Grant Account. The
election shall allow a Participant to change his investment credits from being
determined based on Corporate Stock to being determined on the same basis as if
it were a separate bucket in his Deferred Compensation Account (either
hypothetical funds or fixed interest, whichever is applicable). Once made, this
election can never be reversed. If hypothetical funds are applicable, then the
Participant must make investment elections with respect to his Stock Grant
Account pursuant to the provisions of Section 4.07(a)(2). An election by a
Participant to change the investment methodology for his Stock Grant Account
will not in any way affect the distribution parameters previously selected by
the Participant with respect to his Stock Grant Account.
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ARTICLE 5
5.01 In General.
The benefits to be paid as deferred compensation are governed by the provisions
of this Article 5. A Participant whose employment with the Participating
Companies terminates for any reason shall be entitled to distribution of
benefits pursuant to this Article, subject to the provisions of Article 7.
5.02 Time and Method of Distribution.
(a) Elections. The Corporation, on behalf of the Participating Company or
Companies, shall distribute or begin to distribute benefits on the Distribution
Date(s) based on the payment schedules elected by the Participant. Separate
Distribution Date and payment schedule elections shall be made with respect to
each bucket established pursuant to Section 4.01. Except as may be provided in
subsection (c) below, Distribution Date and payment schedule elections for a
bucket shall be made when that bucket is initially established.
(b) Payments. Benefit payments shall be made in annual installments based on
the payment schedule elected by the Participant. If the Participant elects to
receive only one installment, the entire balance in the applicable bucket shall
be paid in a single lump sum payment.
(1) For each in-service bucket described in subsections 4.01(a)(2) and
4.01(b), the Participant shall designate the number of installments, from one to
ten, and the year in which installments are to commence.
(2) For the retirement bucket described in subsection 4.01(a)(1), the
Participant shall designate the number of installments, from one to fifteen. In
addition, the Participant shall elect whether installments are to commence:
(A) as soon as possible after retirement, or
(B) after the end of the calendar year during which retirement occurs.
If a Participant fails to make an election between (A) and (B), he will be
deemed to have elected the commencement date under (A) above. Notwithstanding
the foregoing, the Committee shall have the authority to impose option (B) if
the Participant’s retirement date occurs in the last three months of the
calendar year.
Scheduled distributions, other than the initial distribution pursuant to (A)
above, shall be made as soon as possible after January 31 of the scheduled year,
based on the account value as of the last business day in that January.
5 - 1
(c) Exceptions and Special Rules. Notwithstanding the foregoing, the
following exceptions and special rules shall apply:
(1) Second Look Election. The Participant shall have, with respect to each
bucket, a one-time opportunity to change the Distribution Date and payment
schedule applicable to that bucket. Such second look election with respect to a
bucket may be made at any time, except that it must be made at least one full
calendar year before the first scheduled payment for that bucket.
(2) Forced Lump Sum for Termination Prior to Retirement. If a Participant
terminates employment with the Participating Companies for any reason prior to
qualifying for early retirement or normal retirement, the Participant’s vested
accounts shall be paid in a lump sum as soon as administratively feasible after
the termination date. This provision shall override any Distribution Date or
payment schedule elections made by the Participant. If the Participant
terminates employment, for reasons other than death or disability, after
qualifying for early retirement or normal retirement, then all payment
schedules, whether for retirement or in-service buckets, shall be honored. A
Participant qualifies for early retirement by (A) having both attained age 55
while actively employed by one or more of the Participating Companies and
completed 5 years of service with the Participating Companies, or (B) meeting
such other criteria as the Committee may set on a case-by-case basis. A
Participant qualifies for normal retirement by having attained age 65 while
actively employed by one or more of the Participating Companies.
(3) Special Lump Sum Election for 50% Reduction in Pay. At the time of
initial enrollment, or prior to May 1, 2002 for Participants as of May 1, 2002,
a Participant shall be permitted to make an irrevocable election to receive an
automatic lump sum payout of all of his vested buckets if his base salary is
reduced by 50% or more. The payment shall occur as soon as administratively
feasible after the reduction in salary occurs.
(4) Committee Rules and Procedures. Notwithstanding the above, the Committee
may establish such rules and procedures as it deems appropriate regarding
distributions from the Plan, including but not limited to the establishment of a
minimum amount for annual installment payments and forced lump sum payout of a
Participant’s remaining vested balance if an installment payment reduces the
vested balance below a stipulated level.
5.03 Unscheduled Withdrawals.
A Participant may, at his option and at any time, make one or more unscheduled
withdrawals from his vested accounts by request to the Committee in such form as
the Committee may require. Provided, however, that a Participant who makes such
an unscheduled withdrawal shall incur a penalty equal to ten percent (10%) of
the amount withdrawn, which penalty shall be forfeited from the account of the
Participant, notwithstanding the fact that the account may be vested. A
Participant who takes an unscheduled withdrawal may designate the bucket from
which the withdrawal shall be taken.
5 - 2
5.04 Committee Decision.
Any decision to be made by the Committee under this Article 5 with respect to
the distribution of benefits with respect to a Participant or former Participant
under this Plan shall be made by the Committee, but such Participant shall
exclude himself therefrom for purposes of those decisions if such Participant is
a member of the Committee.
5.05 Payments After Participant’s Death or Disability.
If the Participant dies before his benefit under the Plan has been distributed
to him, then the deferred compensation benefits otherwise payable with respect
to such Participant under the Plan shall be paid in a lump sum to the
beneficiary or beneficiaries designated by the Participant as soon as
administratively possible after the Participant’s death.
If the Participant becomes Disabled before his benefit under the Plan has been
distributed to him, then the deferred compensation benefits otherwise payable
with respect to such Participant under the Plan shall be paid in a lump sum to
the Participant as soon as administratively possible after the Committee
determines that the Participant meets the conditions stipulated in Section 2.12
hereof regarding Disability.
5.06 Designation of Beneficiaries.
The Participant may designate in such manner as is required by the Committee
primary and contingent beneficiaries to receive any deferred compensation
benefit payments which may be payable hereunder following the Participant’s
death and the proportions in which such beneficiaries are to receive such
payments. The Participant may change such designation from time to time and the
last designation delivered to the Committee prior to the Participant’s death
will control. If the Participant fails to specifically designate such a
beneficiary, or if no designated beneficiary survives the Participant, or if all
designated beneficiaries who survive the Participant die before all payments are
made, then the remaining payments shall be made to the Participant’s surviving
spouse if such spouse is then living; if such spouse is not living, then to the
executors or administrators of the estate of the Participant. The Committee may
determine the identity of such persons and shall incur no responsibility by
reason of the payment of such interest in accordance with any such determination
made in good faith.
5.07 Distributions from Stock Grant Account.
Distributions from the Participant’s Stock Grant Account shall be in the form of
cash. Notwithstanding the foregoing, the Participant may elect to have
distributions from his Stock Grant Account be made in the form of shares of
Corporation Stock, provided that an amount equal to any partial shares shall be
distributed in cash.
5.08 Distributions in Event of Change in Control.
In the event of a Change in Control Event (as defined herein), vested benefits
of Participants shall be paid as soon as administratively feasible after the
Change in Control Event, rather than as otherwise provided in this Article 5.
Notwithstanding the foregoing, any Participant who has elected as provided
herein to have his or her vested benefits paid without regard to this Change in
Control provision shall have his or her vested accounts maintained in the Plan
and paid as otherwise provided in this Article 5. Any such election must be in
writing and must be made at least sixty (60) days prior to the Change in Control
Event.
5 - 3
A Participant who has made an election pursuant to the preceding paragraph may
later rescind such election, provided such election to rescind is in writing and
is made at least sixty (60) days prior to the Change in Control Event.
For purposes of this Section, a Change in Control Event shall mean the
(a) Any person or entity, including a “group” as defined in section 13(d)(3)
of the Securities Exchange Act of 1934, as amended, other than the Corporation,
a subsidiary of the Corporation, or any employee benefit plan of the Corporation
or its subsidiaries, becomes the beneficial owner of the Corporation’s
securities having 25 percent or more of the combined voting power of the then
outstanding securities of the Corporation that may be cast for the election for
directors of the Corporation (other than as a result of an issuance of
securities initiated by the Corporation in the ordinary course of business); or
(b) As the result of, or in connection with, any cash tender or exchange
offer, merger or other business combination, sale of assets or contested
election, or any combination of the foregoing transactions, less than a majority
of the combined voting power of the then outstanding securities of the
Corporation or any successor corporation or entity entitled to vote generally in
the election of directors of the Corporation or such other corporation or entity
after such transaction, are held in the aggregate by holders of the
Corporation’s securities entitled to vote generally in the election of directors
of the corporation immediately prior to such transactions; or
(c) During any period of two consecutive years, individuals who at the
beginning of any such period constitute the Board of Directors of the
Corporation cease for any reason to constitute at least a majority thereof,
unless the election, or the nomination for election by the Corporation’s
stockholders, of each director of the Corporation first elected during such
period was approved by a vote of at least two-thirds of the directors of the
Corporation then still in office who were directors of the Corporation at the
beginning of any such period.
5.09 Withholding.
If, at the time of distribution, the Participant does not tender to the
Corporation an amount equal to the amount required to be withheld for income
taxes due as a result of the distribution, then the Participant shall be deemed
to have authorized the Corporation to withhold enough of the distribution to pay
such tax withholding amount.
5 - 4
ARTICLE 6
FINANCING AND UNFUNDED STATUS
6.01 Costs Borne by the Participating Companies.
The costs of the Plan shall be borne by the Participating Companies or, at the
election of the Committee, by the trust if one is created pursuant to Section
6.02 hereof.
6.02 Source of Benefit Payments and Medium of Financing the Plan.
Benefits payable under the Plan to any Participant shall be paid directly by the
Participating Company which employs the Participant. The Participating Company
shall not be required to fund or otherwise segregate assets to be used for
payment of benefits under the Plan. While the Participating Company may, in the
discretion of the Committee, make investments in the funds designated by the
Committee as investment funds in amounts equal or unequal to Participants’
Deferred Compensation Accounts hereunder, the Participating Company shall not be
under any obligation to make such investments and any such investment shall
remain an asset of the Participating Company subject to the claims of its
general creditors. Notwithstanding the foregoing, the Corporation, in the
discretion of the Committee, may maintain one or more grantor trusts (“trust”)
to hold assets to be used for payment of benefits under the Plan. The assets of
the trust with respect to benefits payable to the employees of each
Participating Company shall remain the assets of such Participating Company
subject to the claims of its general creditors. Any payments by a trust of
benefits provided to a Participant under the Plan shall be considered payment by
the Participating Company and shall discharge the Participating Company of any
further liability under the Plan for such payments.
6.03 Unfunded Status.
This Plan is intended to be unfunded for purposes of both ERISA and the Code.
6 - 1
ARTICLE 7
ADMINISTRATION
7.01 General Administration.
The Board or its designee shall appoint a Committee consisting of not less than
three (3) persons to administer the Plan. Any member of the Committee may at any
time be removed, with or without cause, and his successor appointed by the Chief
Executive Officer of the Corporation or his designee, and any vacancy caused by
death, resignation or other reason shall be filled by the Chief Executive
Officer of the Corporation or his designee. The Committee shall be the plan
administrator of the Plan and in general shall be responsible for the management
and administration of the Plan. The Committee shall have full power to
administer the Plan in all of its details (including establishing claims
procedures and other rules), subject to applicable requirements of law. No
member of the Committee who is an employee of the Participating Companies shall
receive compensation for his services to the Plan. The Committee shall have such
duties and powers as may be necessary to discharge its duties under this Plan.
The fiscal records of the Plan shall be maintained on the basis of the Plan
Year.
7.02 Committee Procedures.
The Committee may act at a meeting or in writing without a meeting. The
Committee may adopt such by-laws and regulations as it deems desirable for the
conduct of its affairs. All decisions shall be made by majority vote. No member
of the Committee who is at any time a Participant in this Plan shall vote in a
decision of the Committee (whether in a meeting or by written action) made
specifically and uniquely with respect to such member of the Committee or
amount, payment, timing, form or other aspect of the benefits of such Committee
member under this Plan.
7.03 Facility of Payment.
Whenever, in the Committee’s opinion, a person entitled to receive any payment
of a benefit or installment thereof hereunder is under a legal disability or is
incapacitated in any way so as to be unable to manage his financial affairs, the
Committee may direct payments to such person or to his legal representative or
to a relative or friend of such person for his benefit, or the Committee may
direct the payment for the benefit of such person in such manner as the
Committee considers advisable. Any payment of a benefit or installment thereof
in accordance with the provisions of this Section shall be a complete discharge
to the Committee and the Participating Companies of any liability for the making
of such payment under the provisions of the Plan.
7.04 Indemnification of Committee Members.
The Participating Companies shall indemnify and hold harmless each member of the
Committee against any and all liability, claims, damages and expense (including
all expenses reasonably incurred in his defense in the event that the
Participating Companies fail to provide such defense upon his written request)
which the Committee member may incur while acting in good faith in the
7 - 1
ARTICLE 8
8.01 Amendment and Termination.
The Board may amend or terminate the Plan (without the consent of any
Participant, former Participant or beneficiary) at any time, provided that such
amendment does not decrease or divest any then Participant or former Participant
of the amounts in his Deferred Compensation Account as of the date of amendment.
8 - 1
ARTICLE 9
GENERAL PROVISIONS
9.01 Limitation of Rights.
Neither the establishment of this Plan nor any amendment thereof, nor the
payment of any benefits, will be construed as giving to any Employee,
Participant, beneficiary, or other person any legal or equitable right against
the Participating Companies, except as provided herein. Neither the
establishment of this Plan nor any amendment thereof, nor the payment of
benefits, nor any action taken with respect to this Plan shall confer upon any
person the right to be continued in the employment of the Participating
Companies or Subsidiaries.
9.02 No Assignment or Alienation of Benefits.
The rights of a Participant, former Participant, beneficiary or any other person
to payment of benefits under this Plan shall not be assigned, transferred,
anticipated, conveyed, pledged or encumbered except by will or the laws of
descent or distribution; nor shall any such right be in any manner subject to
levy, attachment, execution, garnishment or any other seizure under legal,
equitable or other process for payment of any debts, judgments, alimony, or
separate maintenance, or reached or transferred by operation of law in the event
of bankruptcy, insolvency or otherwise. Provided, however, that a Participant
shall have the right to designate in accordance with the provisions of Section
5.06 hereof primary and contingent beneficiaries to receive benefit payments
subsequent to the death of the Participant.
9.03 Successors.
The provisions of this Plan shall be binding upon and inure to the benefit of
the Corporation, its successors, and assigns, and each Participant and his
heirs, executors, administrators and legal representatives. The term successors
as used herein shall include any corporate or other business entity which shall,
whether by merger, consolidation, purchase or otherwise, acquire all or
substantially all of the assets of the Corporation, and successors of any such
corporation or other business entity.
9 - 1
9.04 Governing Law.
Except to the extent Federal law is controlling, the provisions of this Plan
shall be interpreted and construed according to the laws of the State of
Tennessee to the extent not preempted by applicable law.
IN WITNESS WHEREOF, the Corporation has caused this Plan to be duly executed for
and on behalf of the Corporation by its duly authorized officers on this the
day of , 2002.
SAKS INCORPORATED
By:
Title:
ATTEST:
9 - 2 |
ING LOGO US Legal Services Nicholas Morinigo Counsel Tel: 610.425.3447 | Fax: 610.425.3520 Email: nicholas.morinigo@us.ing.com May 2, 2013 United States Securities and Exchange Commission treet NE, Room 1580 Washington, DC 20549 Re: File Nos. 333-70600, 811-05626 Prospectus Name: Retirement Solutions – ING Rollover Choice SM Variable Annuity Dear Commissioners: Please be advised that in lieu of filing a copy of the ING Rollover Choice SM Variable Annuity Prospectus and Statement of Additional Information under Rule 497(c) of the Securities Act of 1933 (the “1933 Act”) for certain deferred combination variable and fixed annuity contracts, we hereby certify the following pursuant to Rule 497(j) of the 1933 Act: (1) The form of the Statement of Additional Information supplement that would have been filed under Rule 497(c) of the 1933 Act would not have differed from that contained in the most recent registration statement or amendment; and (2) The text of the most recent registration statement or amendment has been filed electronically. Please do not hesitate to contact me should you have any questions or comments. Sincerely, /s/ Nicholas Morinigo Nicholas Morinigo Counsel ING USA Annuity and Life Insurance Company 1475 Dunwoody Drive West Chester, PA 19380-1478
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section13 OR 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): September 11, 2007 TELZUIT MEDICAL TECHNOLOGIES, INC. (Exact name of Registrant as specified in its charter) Commission file number 001-15034 Florida 01-0656115 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer identification no.) 5422 Carrier Drive, Suite 306 Orlando, Florida 32819 (Address of principal executive offices) (Zip code) (407) 354-1222 (Registrant’s telephone number, including area code) (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: ¨ 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 Principal Officers; Election of Directors; Appointment of Principal Officers On September 5, 2007, Chris D. Phillips voluntarily tendered his resignation as a member of the Company’s Board of Directors, effective immediately. 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. Telzuit Medical Technologies, Inc. (Registrant) Date: September 11, 2007 By: /s/ Warren D. Stowell Warren D. Stowell President and Chief Executive Officer
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SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. 3) Layne Christensen Company (Name of Issuer) Common Stock (Title of Class of Securities) (CUSIP Number) David Goldman GAMCO Investors, Inc. One Corporate Center Rye, New York 10580-1435 (914) 921-5000 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) June 8, 2012 (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. 1 CUSIP No. 521050104 1 Names of reporting persons I.R.S. identification nos. of above persons (entities only) Gabelli Funds, LLCI.D. No.13-4044523 2 Check the appropriate box if a member of a group (SEE INSTRUCTIONS)(a) (b) 3 Sec use only 4 Source of funds (SEE INSTRUCTIONS) 00-Funds of investment advisory clients 5 Check box if disclosure of legal proceedings is required pursuant to items 2 (d) or 2 (e) X 6 Citizenship or place of organization New York Number Of Shares Beneficially Owned By Each Reporting Person With : 7 : : : Sole voting power 511,000(Item 5) : 8 : : : Shared voting power None : 9 : : : Sole dispositive power 511,000(Item 5) :10 : : : Shared dispositive power None 11 Aggregate amount beneficially owned by each reporting person 511,000(Item 5) 12 Check box if the aggregate amount in row (11) excludes certain shares (SEE INSTRUCTIONS) 13 Percent of class represented by amount in row (11) 2.57% 14 Type of reporting person (SEE INSTRUCTIONS) IA, CO 2 CUSIP No. 521050104 1 Names of reporting persons I.R.S. identification nos. of above persons (entities only) GAMCO Asset Management, Inc.I.D. No.13-4044521 2 Check the appropriate box if a member of a group (SEE INSTRUCTIONS)(a) (b) 3 Sec use only 4 Source of funds (SEE INSTRUCTIONS) 00-Funds of investment advisory clients 5 Check box if disclosure of legal proceedings is required pursuant to items 2 (d) or 2 (e) 6 Citizenship or place of organization New York Number Of Shares Beneficially Owned By Each Reporting Person With : 7 : : : Sole voting power 966,603(Item 5) : 8 : : : Shared voting power None : 9 : : : Sole dispositive power 985,303(Item 5) :10 : : : Shared dispositive power None 11 Aggregate amount beneficially owned by each reporting person 985,303(Item 5) 12 Check box if the aggregate amount in row (11) excludes certain shares (SEE INSTRUCTIONS) 13 Percent of class represented by amount in row (11) 4.96% 14 Type of reporting person (SEE INSTRUCTIONS) IA, CO 3 CUSIP No. 521050104 1 Names of reporting persons I.R.S. identification nos. of above persons (entities only) Teton Advisors, Inc.I.D. No.13-4008049 2 Check the appropriate box if a member of a group (SEE INSTRUCTIONS)(a) (b) 3 Sec use only 4 Source of funds (SEE INSTRUCTIONS) 00 – Funds of investment advisory client. 5 Check box if disclosure of legal proceedings is required pursuant to items 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 105,008 (Item 5) : 8 : : : Shared voting power None : 9 : : : Sole dispositive power 105,008 (Item 5) :10 : : : Shared dispositive power None 11 Aggregate amount beneficially owned by each reporting person 105,008 (Item 5) 12 Check box if the aggregate amount in row (11) excludes certain shares (SEE INSTRUCTIONS) 13 Percent of class represented by amount in row (11) 0.53% 14 Type of reporting person (SEE INSTRUCTIONS) IA, CO 4 CUSIP No. 521050104 1 Names of reporting persons I.R.S. identification nos. of above persons (entities only) Gabelli Securities, Inc.I.D. No.13-3379374 2 Check the appropriate box if a member of a group (SEE INSTRUCTIONS)(a) (b) 3 Sec use only 4 Source of funds (SEE INSTRUCTIONS) 00 – Client funds 5 Check box if disclosure of legal proceedings is required pursuant to items 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 2,000(Item 5) : 8 : : : Shared voting power None : 9 : : : Sole dispositive power 2,000(Item 5) :10 : : : Shared dispositive power None 11 Aggregate amount beneficially owned by each reporting person 2,000(Item 5) 12 Check box if the aggregate amount in row (11) excludes certain shares (SEE INSTRUCTIONS) 13 Percent of class represented by amount in row (11) 0.01% 14 Type of reporting person (SEE INSTRUCTIONS) HC, CO, IA 5 CUSIP No. 521050104 1 Names of reporting persons I.R.S. identification nos. of above persons (entities only) GGCP, Inc.I.D. No.13-3056041 2 Check the appropriate box if a member of a group (SEE INSTRUCTIONS)(a) (b) 3 Sec use only 4 Source of funds (SEE INSTRUCTIONS) None 5 Check box if disclosure of legal proceedings is required pursuant to items 2 (d) or 2 (e) 6 Citizenship or place of organization Wyoming Number Of Shares Beneficially Owned By Each Reporting Person With : 7 : : : Sole voting power None (Item 5) : 8 : : : Shared voting power None : 9 : : : Sole dispositive power None (Item 5) :10 : : : Shared dispositive power None 11 Aggregate amount beneficially owned by each reporting person None (Item 5) 12 Check box if the aggregate amount in row (11) excludes certain shares (SEE INSTRUCTIONS) X 13 Percent of class represented by amount in row (11) 0.00% 14 Type of reporting person (SEE INSTRUCTIONS) HC, CO 6 CUSIP No. 521050104 1 Names of reporting persons I.R.S. identification nos. of above persons (entities only) GAMCO Investors, Inc.I.D. No.13-4007862 Check the appropriate box if a member of a group (SEE INSTRUCTIONS)(a) (b) 3 Sec use only 4 Source of funds (SEE INSTRUCTIONS) None 5 Check box if disclosure of legal proceedings is required pursuant to items 2 (d) or 2 (e) 6 Citizenship or place of organization New York Number Of Shares Beneficially Owned By Each Reporting Person With : 7 : : : Sole voting power None(Item 5) : 8 : : : Shared voting power None : 9 : : : Sole dispositive power None(Item 5) :10 : : : Shared dispositive power None 11 Aggregate amount beneficially owned by each reporting person None(Item 5) 12 Check box if the aggregate amount in row (11) excludes certain shares (SEE INSTRUCTIONS) X 13 Percent of class represented by amount in row (11) 0.00% 14 Type of reporting person (SEE INSTRUCTIONS) HC, CO 7 CUSIP No. 521050104 1 Names of reporting persons I.R.S. identification nos. of above persons (entities only) Mario J. Gabelli 2 Check the appropriate box if a member of a group (SEE INSTRUCTIONS)(a) (b) 3 Sec use only 4 Source of funds (SEE INSTRUCTIONS) None 5 Check box if disclosure of legal proceedings is required pursuant to items 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 None(Item 5) : 8 : : : Shared voting power None : 9 : : : Sole dispositive power None(Item 5) :10 : : : Shared dispositive power None 11 Aggregate amount beneficially owned by each reporting person None(Item 5) 12 Check box if the aggregate amount in row (11) excludes certain shares (SEE INSTRUCTIONS) X 13 Percent of class represented by amount in row (11) 0.00% 14 Type of reporting person (SEE INSTRUCTIONS) IN 8 Item 1.Security and Issuer This Amendment No. 3to Schedule 13D on the Common Stock of Layne Christensen Company (the “Issuer”) is being filed on behalf of the undersigned to amend the Schedule 13D, as amended( the “Schedule 13D” ), which was originally filed on October 7, 2011.Unless otherwise indicated, all capitalized terms used herein but not defined herein shall have the same meanings as set forth in the Schedule 13D. Item 2.Identity and Background Item 2 to Schedule 13D is amended, in pertinent part, as follows: This statement is being filed by Mario J. Gabelli (“Mario Gabelli”) and various entities which he directly or indirectly controls or for which he acts as chief investment officer.These entities engage in various aspects of the securities business, primarily as investment adviser to various institutional and individual clients, including registered investment companies and pension plans, and as general partner or the equivalent of various private investment partnerships or private funds.Certain of these entities may also make investments for their own accounts. The foregoing persons in the aggregate often own beneficially more than 5% of a class of equity securities of a particular issuer.Although several of the foregoing persons are treated as institutional investors for purposes of reporting their beneficial ownership on the short-form Schedule 13G, the holdings of those who do not qualify as institutional investors may exceed the 1% threshold presented for filing on Schedule 13G or implementation of their investment philosophy may from time to time require action which could be viewed as not completely passive.In order to avoid any question as to whether their beneficial ownership is being reported on the proper form and in order to provide greater investment flexibility and administrative uniformity, these persons have decided to file their beneficial ownership reports on the more detailed Schedule 13D form rather than on the short-form Schedule 13G and thereby to provide more expansive disclosure than may be necessary. (a), (b) and (c) - This statement is being filed by one or more of the following persons: GGCP, Inc.(“GGCP”), GGCP Holdings LLC (“GGCP Holdings”), GAMCO Investors, Inc. (“GBL”), Gabelli Funds, LLC (“Gabelli Funds”), GAMCO Asset Management Inc. (“GAMCO”), Teton Advisors, Inc. (“Teton Advisors”), Gabelli Securities, Inc. (“GSI”), Gabelli & Company, Inc. (“Gabelli & Company”), MJG Associates, Inc. (“MJG Associates”), Gabelli Foundation, Inc. (“Foundation”), MJG-IV Limited Partnership (“MJG-IV”), and Mario Gabelli.Those of the foregoing persons signing this Schedule 13D are hereinafter referred to as the “Reporting Persons”. GGCP makes investments for its own account and is the manager and a member of GGCP Holdings which is the controlling shareholder of GBL.GBL, a public company listed on the New York Stock Exchange, is the parent company for a variety of companies engaged in the securities business, including those named below. GAMCO, a wholly-owned subsidiary of GBL, is an investment adviser registered under the Investment Advisers Act of 1940, as amended (“Advisers Act”).GAMCO is an investment manager providing discretionary managed account services for employee benefit plans, private investors, endowments, foundations and others. GSI, a majority-owned subsidiary of GBL, is an investment adviser registered under the Advisers Act and serves as a general partner or investment manager to limited partnerships and offshore investment companies and other accounts.As a part of its business, GSI may purchase or sell securities for its own account.GSI is a general partner or investment manager of a number of funds or partnerships, including Gabelli Associates Fund, L.P., Gabelli Associates Fund II, L.P., Gabelli Associates Limited, Gabelli Associates Limited II E, ALCE Partners, L.P., Gabelli Capital Structure Arbitrage Fund LP, Gabelli Capital Structure Arbitrage Fund Limited, Gabelli Intermediate Credit Fund L.P., Gabelli Japanese Value Partners L.P., GAMA Select Energy + L.P., GAMCO Medical Opportunities L.P., GAMCO Long/Short Equity Fund, L.P., Gabelli Multimedia Partners, L.P, Gabelli International Gold Fund Limited and Gabelli Green Long/Short Fund, L.P. Gabelli & Company, a wholly-owned subsidiary of GSI, is a broker-dealer registered under the Securities Exchange Act of 1934, as amended (“1934 Act”), which as a part of its business regularly purchases and sells securities for its own account. Gabelli Funds, a wholly owned subsidiary of GBL, is a limited liability company. Gabelli Funds is an investment adviser registered under the Advisers Act which provides advisory services for The Gabelli Equity Trust Inc., The Gabelli Asset Fund, The GAMCO Growth Fund, The Gabelli Convertible and Income Securities Fund Inc., The Gabelli Value Fund Inc., The Gabelli Small Cap Growth Fund, The Gabelli Equity Income Fund, The Gabelli ABC Fund, The GAMCO Global Telecommunications Fund, The Gabelli Gold Fund, Inc., The Gabelli Multimedia Trust Inc., The GAMCO Vertumnus Fund, The Gabelli Capital Asset Fund, The GAMCO International Growth Fund, Inc., The GAMCO Global Growth Fund, The Gabelli Utility Trust, The GAMCO Global Opportunity Fund, The Gabelli Utilities Fund, The Gabelli Dividend Growth Fund, The GAMCO Mathers Fund, The Gabelli Focus Five Fund, The Comstock Capital Value Fund, The Gabelli Dividend and Income Trust, The Gabelli Global Utility & Income Trust, The GAMCO Global Gold, Natural Resources, & Income Trust by Gabelli, The GAMCO Natural Resources Gold & Income Trust by Gabelli, The GDL Fund, Gabelli Enterprise Mergers & Acquisitions Fund, The Gabelli SRI Green Fund, Inc., and The Gabelli Healthcare & Wellness Rx Trust, (collectively, the “Funds”), which are registered investment companies.Gabelli Funds is also the investment adviser to The GAMCO International SICAV (sub-funds GAMCO Stategic Value and GAMCO Merger Arbitrage), a UCITS III vehicle. Teton Advisors, an investment adviser registered under the Advisers Act, provides discretionary advisory services to The GAMCO Westwood Mighty Mitessm Fund, The GAMCO Westwood Income Fund and The GAMCO Westwood SmallCap Equity Fund. MJG Associates provides advisory services to private investment partnerships and offshore funds.Mario Gabelli is the sole shareholder, director and employee of MJG Associates.MJG Associates is the Investment Manager of Gabelli International Limited and Gabelli Fund, LDC.Mario J. Gabelli is the general partner of Gabelli Performance Partnership, LP. The Foundation is a private foundation.Mario Gabelli is the Chairman, a Trustee and the Investment Manager of the Foundation. Elisa M. Wilson is the President of the Foundation. Mario Gabelli is the controlling stockholder, Chief Executive Officer and a director of GGCP and Chairman and Chief Executive Officer of GBL.Mario Gabelli is also a member of GGCP Holdings. Mario Gabelli is the controlling shareholder of Teton. MJG-IV is a family partnership in which Mario Gabelli is the general partner.Mario Gabelli has less than a 100% interest in MJG-IV.MJG-IV makes investments for its own account.Mario Gabelli disclaims ownership of the securities held by MJG-IV beyond his pecuniary interest. The Reporting Persons do not admit that they constitute a group. GBL, GAMCO, and Gabelli & Company are New York corporations and GSI and Teton Advisors are Delaware corporations, each having its principal business office at One Corporate Center, Rye, New York 10580. GGCP is a Wyoming corporation having its principal business office at 140 Greenwich Avenue, Greenwich, CT 06830.GGCP Holdings is a Delaware limited liability corporation having its principal business office at 140 Greenwich Avenue, Greenwich, CT 06830.Gabelli Funds is a New York limited liability company having its principal business office at One Corporate Center, Rye, New York 10580.MJG Associates is a Connecticut corporation having its principal business office at 140 Greenwich Avenue, Greenwich, CT 06830.The Foundation is a Nevada corporation having its principal offices at 165 West Liberty Street, Reno, Nevada 89501. For information required by instruction C to Schedule 13D with respect to the executive officers and directors of the foregoing entities and other related persons (collectively, “Covered Persons”), reference is made to Schedule I annexed hereto and incorporated herein by reference. (d) – Not applicable. (e) – On April 24, 2008,Gabelli Funds settled an administrative proceeding with the Securities and Exchange Commission (“Commission”)regarding frequent trading in shares of a mutual fund it advises, without admitting or denying the findings or allegations of the Commission.The inquiry involved Gabelli Funds’ treatment of one investor who had engaged in frequent trading in one fund (the prospectus of which did not at that time impose limits on frequent trading), and who had subsequently made an investment in a hedge fund managed by an affiliate of Gabelli Funds.The investor was banned from the fund in August 2002, only after certain other investors were banned.The principal terms of the settlement include an administrative cease and desist order from violating Section 206(2) of the Investment Advisers Act of 1940, Section 17(d) of the Investment Company Act of 1940 (“Company Act”), and Rule 17d-1 thereunder, and Section 12(d)(1)(B)(1) of the Company Act, and the payment of $11 million in disgorgement andprejudgment interestand $5 million in a civil monetary penalty.Gabelli Funds was also required to retain an independent distribution consultant to develop a plan and oversee distribution to shareholders of the monies paid to the Commission, and to make certain other undertakings. On January 12, 2009, Gabelli Funds settled an administrative proceeding with the Commission without admitting or denying the findings or allegations of the Commission, regarding Section 19(a) of the Company Act and Rule 19a-1 thereunder by two closed-end funds. Section 19(a) and Rule 19a-1 require registered investment companies, when making a distribution in the nature of a dividend from sources other than net investment income, to contemporaneously provide written statements to shareholders that adequately disclose the source or sources of such distribution.While the two funds sent annual statements and provided other materials containing this information, the shareholders did not receive the notices required by Rule 19a-1 with any of the distributions that were made for 2002 and 2003.As part of the settlement Gabelli Funds agreed to pay a civil monetary penalty of $450,000 and to cease and desist from causing violations of Section 19(a) and Rule 19a-1.In connection with the settlement, the Commission noted the remedial actions previously undertaken by Gabelli Funds. (f) – Reference is made to Schedule I hereto. Item 3.Source and Amount of Funds or Other Consideration Item 3 to Schedule 13D is amended, in pertinent part, as follows: The Reporting Persons used an aggregate of approximately $3,841,268 to purchase the additional Securities reported as beneficially owned in Item 5 since the most recent filing on Schedule 13D. GAMCO and Gabelli Funds used approximately $3,534,767 and $213,591, respectively, of funds that were provided through the accounts of certain of their investment advisory clients (and, in the case of some of such accounts at GAMCO, may be through borrowings from client margin accounts) in order to purchase the additional Securities for such clients.Teton Advisors used approximately $92,910 of funds of investment advisory clients to purchase the additional Securities reported by it. Item 5.Interest In Securities Of The Issuer Item 5 to Schedule 13D is amended, in pertinent part, as follows: (a) The aggregate number of Securities to which this Schedule 13D relates is 1,603,311 shares, representing 8.08% of the 19,845,876 shares outstanding as reported in the Issuer’s most recently filed Form 10-Q for the fiscal year ended April 30, 2012. The Reporting Persons beneficially own those Securities as follows: Name Shares of Common Stock % of Class of Common GAMCO Gabelli Funds Teton Advisors GSI 4.96% 2.57% 0.53% 0.01% Mario Gabelli is deemed to have beneficial ownership of the Securities owned beneficially by each of the foregoing persons.GSI is deemed to have beneficial ownership of the Securities owned beneficially by Gabelli & Company.GBL and GGCP are deemed to have beneficial ownership of the Securities owned beneficially by each of the foregoing persons other than Mario Gabelli and the Foundation. (b) Each of the Reporting Persons and Covered Persons has the sole power to vote or direct the vote and sole power to dispose or to direct the disposition of the Securities reported for it, either for its own benefit or for the benefit of its investment clients or its partners, as the case may be, except that (i) GAMCO does not have authority to vote 18,700 of the reported shares, (ii) Gabelli Funds has sole dispositive and voting power with respect to the shares of the Issuer held by the Funds so long as the aggregate voting interest of all joint filers does not exceed 25% of their total voting interest in the Issuer and, in that event, the Proxy Voting Committee of each Fund shall respectively vote that Fund’s shares, (iii) at any time, the Proxy Voting Committee of each such Fund may take and exercise in its sole discretion the entire voting power with respect to the shares held by such fund under specialcircumstances such as regulatory considerations, and (iv) the power of Mario Gabelli, GBL, and GGCP is indirect with respect to Securities beneficially owned directly by other Reporting Persons. (c) Information with respect to all transactions in the Securities which were effected during the past sixty days or since the most recent filing on Schedule 13D, whichever is less, by each of the Reporting Persons and Covered Persons is set forth on Schedule II annexed hereto and incorporated herein by reference. (e) Not applicable. 9 Signature After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated:June 11, 2012 GGCP, INC. MARIO J. GABELLI By:/s/ Douglas R. Jamieson Douglas R. Jamieson Attorney-in-Fact GABELLI FUNDS, LLC By:/s/ Bruce N. Alpert Bruce N. Alpert Chief Operating Officer – Gabelli Funds, LLC TETON ADVISORS, INC. By:/s/ David Goldman David Goldman Assistant Secretary – Teton Advisors, Inc. GAMCO ASSET MANAGEMENT INC. GAMCO INVESTORS, INC. GABELLI SECURITIES, INC. By:/s/ Douglas R. Jamieson Douglas R. Jamieson President & Chief Operating Officer – GAMCO Investors, Inc. President – GAMCO Asset Management Inc. President – Gabelli Securities, Inc. 10 Schedule I Information with Respect to Executive Officers and Directors of the Undersigned Schedule I to Schedule 13D is amended, in pertinent part, as follows: The following sets forth as to each of the executive officers and directors of the undersigned: his name; his business address; his present principal occupation or employment and the name, principal business and address of any corporation or other organization in which such employment is conducted.Unless otherwise specified, the principal employer of each such individual is GAMCO Asset Management Inc., Gabelli Funds, LLC, Gabelli Securities, Inc., Gabelli & Company, Inc., Teton Advisors, Inc., or GAMCO Investors, Inc., the business address of each of which is One Corporate Center, Rye, New York 10580, and each such individual identified below is a citizen of the United States.To the knowledge of the undersigned, during the last five years, no such person has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors), and no such person was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which he 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 law or finding any violation with respect to such laws except as reported in Item 2(d) and (e) of this Schedule 13D. 11 GGCP, Inc. Directors: Mario J. Gabelli Chief Executive Officer of GGCP, Inc., and Chairman & Chief Executive Officer of GAMCO Investors, Inc.; Director/Trustee of all registered investment companies advised by Gabelli Funds, LLC. Marc J. Gabelli Chairman of The LGL Group, Inc. 2525 Shader Road Orlando, FL 32804 Matthew R. Gabelli Vice President – Trading Gabelli & Company, Inc. One Corporate Center Rye,NY 10580 Charles C. Baum Secretary & Treasurer United Holdings Co., Inc. 2545 Wilkens Avenue Baltimore, MD21223 Fredric V. Salerno Chairman; Former Vice Chairman and Chief Financial Officer Verizon Communications Officers: Mario J. Gabelli Chief Executive Officer and Chief Investment Officer Marc J. Gabelli President Michael G. Chieco Vice President, Chief Financial Officer, Secretary Silvio A. Berni Vice President, Assistant Secretary and Controller GGCP Holdings LLC Members: GGCP, Inc. Mario J. Gabelli Manager and Member Member GAMCO Investors, Inc. Directors: Edwin L. Artzt Raymond C. Avansino Richard L. Bready Former Chairman and Chief Executive Officer Procter & Gamble Company 900 Adams Crossing Cincinnati, OH 45202 Chairman & Chief Executive Officer E.L. Wiegand Foundation 165 West Liberty Street Reno, NV 89501 Former Chairman and Chief Executive Officer Nortek, Inc. 50 Kennedy Plaza Providence, RI 02903 Mario J. Gabelli Elisa M. Wilson See above Director c/o GAMCO Investors, Inc. One Corporate Center Rye, NY 10580 Eugene R. McGrath Former Chairman and Chief Executive Officer Consolidated Edison, Inc. 4 Irving Place New York, NY 10003 Robert S. Prather President & Chief Operating Officer Gray Television, Inc. 4370 Peachtree Road, NE Atlanta, GA 30319 Officers: Mario J. Gabelli Chairman and Chief Executive Officer Douglas R. Jamieson Henry G. Van der Eb Bruce N. Alpert Agnes Mullady Robert S. Zuccaro President and Chief Operating Officer Senior Vice President Senior Vice President Senior Vice President Executive Vice President and Chief Financial Officer GAMCO Asset Management Inc. Directors: Douglas R. Jamieson Regina M. Pitaro William S. Selby Officers: Mario J. Gabelli Chief Executive Officer and Chief Investment Officer – Value Portfolios Douglas R. Jamieson Robert S. Zuccaro President Chief Financial Officer Gabelli Funds, LLC Officers: Mario J. Gabelli Chief Investment Officer – Value Portfolios Bruce N. Alpert Executive Vice President and Chief Operating Officer Agnes Mullady President and Chief Operating Officer – Open End Fund Division Robert S. Zuccaro Chief Financial Officer Teton Advisors, Inc. Directors: Howard F. Ward Nicholas F. Galluccio Robert S. Zuccaro Vincent J. Amabile Chairman of the Board Chief Executive Officer and President Chief Financial Officer Officers: Howard F. Ward Nicholas F. Galluccio Robert S. Zuccaro David Goldman Tiffany Hayden See above See above See above Assistant Secretary Secretary Gabelli Securities, Inc. Directors: Robert W. Blake President of W. R. Blake & Sons, Inc. 196-20 Northern Boulevard Flushing, NY11358 Douglas G. DeVivo DeVivo Asset Management Company LLC P.O. Box 2048 Menlo Park, CA 94027 Douglas R. Jamieson President Officers: Douglas R. Jamieson Robert S. Zuccaro See above Chief Financial Officer Gabelli & Company, Inc. Directors: James G. Webster, III Chairman Irene Smolicz Senior Trader Gabelli & Company, Inc. Officers: Daniel Miller President Bruce N. Alpert Diane M. LaPointe Douglas R. Jamieson Vice President - Mutual Funds Treasurer Secretary Gabelli Foundation, Inc. Officers: Mario J. Gabelli Chairman, Trustee & Chief Investment Officer Elisa M. Wilson Marc J. Gabelli Matthew R. Gabelli Michael Gabelli President Trustee Trustee Trustee MJG-IV Limited Partnership Officers: Mario J. Gabelli General Partner 12 SCHEDULE II INFORMATION WITH RESPECT TO TRANSACTIONS EFFECTED DURING THE PAST SIXTY DAYS OR SINCE THE MOST RECENT FILING ON SCHEDULE 13D (1) SHARES PURCHASEDAVERAGE DATESOLD(-)PRICE(2) COMMON STOCK-LAYNE CHRISTENSEN COMPANY GAMCO ASSET MANAGEMENT INC. 6/08/121,00019.2499 6/08/123,50019.2379 6/08/1280019.2500 6/07/125,30019.2550 6/07/128,00019.3794 6/07/122,00019.3705 6/07/121,00019.3415 6/06/1270019.2200 6/06/123,50019.2400 6/06/123,30019.2558 6/05/1230,10019.2118 6/01/121,10318.6000 5/31/125,00018.7298 5/31/1250018.7599 5/31/125,00018.6600 5/30/1221,50019.0728 5/30/128,64319.0143 5/29/1290019.6400 5/29/1230019.2530 5/29/1260019.6600 5/29/1230019.6499 5/29/1230019.6459 5/29/1271,50019.3690 5/29/1260019.6383 5/29/126,30019.5382 5/29/121,20019.4933 5/29/1240019.4570 5/29/1230019.2750 TETON ADVISORS, INC. 5/31/125,00018.5820 GABELLI FUNDS, LLC. GAMCO STRATEGIC VALUE 6/06/123,00019.3519 GABELLI SMALL CAP GROWTH FUND 5/29/128,00019.4419 (1) UNLESS OTHERWISE INDICATED, ALL TRANSACTIONS WERE EFFECTED ON THE NASDAQ GLOBAL SECURITIES MARKET. (2) PRICE EXCLUDES COMMISSION. 13
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Exhibit 10.2
EXHIBIT “C”
Attached to and made part of that certain Development Agreement, dated effective
May 6, 2011 by and between Gulfport Energy Corporation, Windsor Ohio, LLC and
Rhino Exploration, LLC
A.A.P.L. FORM 610-1982
MODEL FORM OPERATING AGREEMENT
OPERATING AGREEMENT
DATED
May 6, 2011,
year
OPERATOR
Gulfport Energy Corporation
CONTRACT AREA
See Exhibit “A”
COUNTY OR PARISH OF
Belmont, Carroll, Columbiana, Guernsey, Harrison, Jefferson, Mahoning, Monroe,
Noble, Portage, Stark, Summit and Tuscarawas
STATE OF
Ohio
COPYRIGHT 1982 — ALL RIGHTS RESERVED AMERICAN ASSOCIATION OF PETROLEUM LANDMEN,
4100 FOSSIL CREEK BLVD., FORT WORTH, TEXAS, 76137-2791, APPROVED FORM. A.A.P.L.
NO. 610 — 1982 REVISED
TABLE OF CONTENTS
Article
Title
Page
I.
DEFINITIONS
1
II.
EXHIBITS
1
III.
INTERESTS OF PARTIES
2
A.
OIL AND GAS INTERESTS
2
B.
INTERESTS OF PARTIES IN COSTS AND PRODUCTION
2
C.
EXCESS ROYALTIES, OVERRIDING ROYALTIES AND OTHER PAYMENTS
2
D.
SUBSEQUENTLY CREATED INTERESTS
2
IV.
TITLES
2
A.
TITLE EXAMINATION
2-3
B.
LOSS OF TITLE
3
1.
Failure of Title
3
2.
Loss by Non-Payment or Erroneous Payment of Amount Due
3
3.
Other Losses
3
V.
OPERATOR
4
A.
DESIGNATION AND RESPONSIBILITIES OF OPERATOR
4
B.
RESIGNATION OR REMOVAL OF OPERATOR AND SELECTION OF SUCCESSOR
4
1.
Resignation or Removal of Operator
4
2.
Selection of Successor Operator
4
C.
EMPLOYEES
4
D.
DRILLING CONTRACTS
4
VI.
DRILLING AND DEVELOPMENT
4
A.
INITIAL WELL
4-5
B.
SUBSEQUENT OPERATIONS
5
1.
Proposed Operations
5
2.
Operations by Less than All Parties
5-6-7
3.
Stand-By Time
7
4.
Sidetracking
7
C.
TAKING PRODUCTION IN KIND
7
D.
ACCESS TO CONTRACT AREA AND INFORMATION
8
E.
ABANDONMENT OF WELLS
8
1.
Abandonment of Dry Holes
8
2.
Abandonment of Wells that have Produced
8-9
3.
Abandonment of Non-Consent Operations
10
VII.
EXPENDITURES AND LIABILITY OF PARTIES
10
A.
LIABILITY OF PARTIES
10
B.
LIENS AND PAYMENT DEFAULTS
10
C.
PAYMENTS AND ACCOUNTING
10
D.
LIMITATION OF EXPENDITURES
10-11
1.
Drill or Deepen
10-11
2.
Rework or Plug Back
11
3.
Other Operations
11
E.
RENTALS, SHUT-IN WELL PAYMENTS AND MINIMUM ROYALTIES
11
F.
TAXES
11
G.
INSURANCE
12
VIII.
ACQUISITION, MAINTENANCE OR TRANSFER OF INTEREST
12
A.
SURRENDER OF LEASES
12
B.
RENEWAL OR EXTENSION OF LEASES
12
C.
ACREAGE OR CASH CONTRIBUTIONS
12-13
D.
MAINTENANCE OF UNIFORM INTEREST
13
E.
WAIVER OF RIGHTS TO PARTITION
13
F.
PREFERENTIAL RIGHT TO PURCHASE
13
IX.
INTERNAL REVENUE CODE ELECTION
13
X.
CLAIMS AND LAWSUITS
14
XI.
FORCE MAJEURE
14
XII.
NOTICES
14
XIII.
TERM OF AGREEMENT
14
XIV.
COMPLIANCE WITH LAWS AND REGULATIONS
15
A.
LAWS, REGULATIONS AND ORDERS
15
B.
GOVERNING LAW
15
C.
REGULATORY AGENCIES
15
XV.
OTHER PROVISIONS
16
XVI.
MISCELLANEOUS
20
OPERATING AGREEMENT
THIS AGREEMENT, entered into by and between Gulfport Energy Corporation,
hereinafter designated and referred to as “Operator”, and the signatory party or
parties other than Operator, sometimes hereinafter referred to individually
herein as “Non-Operator”, and collectively as “Non-Operators”.
WITNESSETH:
WHEREAS, the parties to this agreement are owners of oil and gas leases and/or
oil and gas interests in the land identified in Exhibit “A”, and the parties
hereto have reached an agreement to explore and develop these leases and/or oil
and gas interests for the production of oil and gas to the extent and as
hereinafter provided,
NOW, THEREFORE, it is agreed as follows:
ARTICLE I.
DEFINITIONS
As used in this agreement, the following words and terms shall have the meanings
here ascribed to them:
A. The term “oil and gas” shall mean oil, gas, casinghead gas, gas condensate,
and all other liquid or gaseous hydrocarbons and other marketable substances
produced therewith, unless an intent to limit the inclusiveness of this term is
specifically stated.
B. The terms “oil and gas lease”, “lease” and “leasehold” shall mean the oil and
gas leases covering tracts of land lying within the Contract Area which are
owned by the parties to this agreement.
C. The term “oil and gas interests” shall mean unleased fee and mineral
interests in tracts of land lying within the Contract Area which are owned by
parties to this agreement.
D. The term “Contract Area” shall mean all of the lands, oil and gas leasehold
interests and oil and gas interests intended to be developed and operated for
oil and gas purposes under this agreement. Such lands, oil and gas leasehold
interests and oil and gas interests are described in Exhibit “A”.
E. The term “drilling unit” shall mean the area fixed for the drilling of one
well by order or rule of any state or federal body having authority. If a
drilling unit is not fixed by any such rule or order, a drilling unit shall be
the drilling unit as established by the pattern of drilling in the Contract Area
or as fixed by express agreement of the Drilling Parties.
F. The term “drillsite” shall mean the oil and gas lease or interest on which a
proposed well is to be located.
G. The terms “Drilling Party” and “Consenting Party” shall mean a party who
agrees to join in and pay its share of the cost of any operation conducted under
the provisions of this agreement.
H. The terms “Non-Drilling Party” and “Non-Consenting Party” shall mean a party
who elects not to participate in a proposed operation.
Unless the context otherwise clearly indicates, words used in the singular
include the plural, the plural includes the singular, and the neuter gender
includes the masculine and the feminine.
ARTICLE II.
EXHIBITS
The following exhibits, as indicated below and attached hereto, are incorporated
in and made a part hereof:
x A. Exhibit “A”, shall include the following information: Plat Only
(1) Identification of lands subject to this agreement,
(2) Restrictions, if any, as to depths, formations, or substances,
(3) Percentages or fractional interests of parties to this agreement,
(4) Oil and gas leases and/or oil and gas interests subject to this agreement,
(5) Addresses of parties for notice purposes.
x B. Exhibit “B”, Form of Lease.
x C. Exhibit “C”, Accounting Procedure.
x D. Exhibit “D”, Insurance.
x E. Exhibit “E”, Gas Balancing Agreement.
x F. Exhibit “F”, Non-Discrimination and Certification of Non-Segregated
Facilities.
o G. Exhibit “G”, Tax Partnership.
If any provision of any exhibit, except Exhibits “E” and “G”, is inconsistent
with any provision contained in the body of this agreement, the provisions in
the body of this agreement shall prevail.
1
ARTICLE III.
INTERESTS OF PARTIES
A. Oil and Gas Interests:
If any party owns an oil and gas interest in the Contract Area, that interest
shall be treated for all purposes of this agreement and during the term hereof
as if it were covered by the form of oil and gas lease attached hereto as
Exhibit “B”, and the owner thereof shall be deemed to own both the royalty
interest reserved in such lease and the interest of the lessee thereunder.
B. Interests of Parties in Costs and Production:
Unless changed by other provisions, all costs and liabilities incurred in
operations under this agreement shall be borne and paid, and all equipment and
materials acquired in operations on the Contract Area shall be owned, by the
parties as their interests are set forth in Exhibit “A”. In the same manner, the
parties shall also own all production of oil and gas from the Contract Area
subject to the payment of royalties as provided by law to the extent of the
owners interest which shall be borne as hereinafter set forth.
Regardless of which party has contributed the lease(s) and/or oil and gas
interest(s) hereto on which royalty is due and payable, each party entitled to
receive a share of production of oil and gas from the Contract Area shall bear
and shall pay or deliver, or cause to be paid or delivered, to the extent of its
interest in such production, the royalty amount stipulated hereinabove and shall
hold the other parties free from any liability therefor. No party shall ever be
responsible, however, on a price basis higher than the price received by such
party, to any other party’s lessor or royalty owner, and if any such other
party’s lessor or royalty owner should demand and receive settlement on a higher
price basis, the party contributing the affected lease shall bear the additional
royalty burden attributable to such higher price.
Nothing contained in this Article III.B. shall be deemed an assignment or
cross-assignment of interests covered hereby.
C. Excess Royalties, Overriding Royalties and Other Payments:
Unless changed by other provisions, if the interest of any party in any lease
covered hereby is subject to any royalty, overriding royalty, production payment
or other burden on production in excess of the amount stipulated in
Article III.B., such party so burdened shall assume and alone bear all such
excess obligations and shall indemnify and hold the other parties hereto
harmless from any and all claims and demands for payment asserted by owners of
such excess burden.
D. Subsequently Created Interests:
If any party should hereafter create an overriding royalty, production payment
or other burden payable out of production attributable to its working interest
hereunder, or if such a burden existed prior to this agreement and is not set
forth in Exhibit “A”, or was not disclosed in writing to all other parties prior
to the execution of this agreement by all parties, or is not a jointly
acknowledged and accepted obligation of all parties (any such interest being
hereinafter referred to as “subsequently created interest” irrespective of the
timing of its creation and the party out of whose working interest the
subsequently created interest is derived being hereinafter referred to as
“burdened party”), and:
1. If the burdened party is required under this agreement to
assign or relinquish to any other party, or parties, all or a portion of its
working interest and/or the production attributable thereto, said other party,
or parties, shall receive said assignment and/or production free and clear of
said subsequently created interest and the burdened party shall indemnify and
save said other party, or parties, harmless from any and all claims and demands
for payment asserted by owners of the subsequently created interest; and,
2. If the burdened party fails to pay, when due, its share of
expenses chargeable hereunder, all provisions of Article VII.B. shall be
enforceable against the subsequently created interest in the same manner as they
are enforceable against the working interest of the burdened party.
ARTICLE IV.
TITLES
A. Title Examination:
Title examination shall be made on the drillsite and laterals of any proposed
well prior to commencement of drilling operations or, if the Drilling Parties so
request, title examination shall be made on the leases and/or oil and gas
interests included, or planned to be included, in the drilling unit around such
well. The opinion will include the ownership of the working interest, minerals,
royalty, overriding royalty and production payments under the applicable leases.
At the time a well is proposed, each party contributing leases and/or oil and
gas interests to the drillsite, or to be included in such drilling unit, shall
furnish to Operator all abstracts (including federal lease status reports),
title opinions, title papers and curative material in its possession free of
charge. All such information not in the possession of or made available to
Operator by the parties, but necessary for the examination of the title, shall
be obtained by Operator. Operator shall cause title to be examined by attorneys
on its staff or by outside attorneys. Copies of all title opinions shall be
furnished to each party hereto. The cost incurred by Operator in this title
program shall be borne as follows:
o Option No. 1: Costs incurred by Operator in procuring abstracts and
title examination (including preliminary, supplemental, shut-in gas royalty
opinions and division order title opinions) shall be a part of the
administrative overhead as provided in Exhibit “C”, and shall not be a direct
charge, whether performed by Operator’s staff attorneys or by outside attorneys.
2
x Option No. 2: Costs incurred by Operator in procuring abstracts and fees
paid outside attorneys and lease brokers for title examination (including
preliminary, supplemental, shut-in gas royalty opinions and division order title
opinions) shall be borne by the Drilling Parties in the proportion that the
interest of each Drilling Party bears to the total interest of all Drilling
Parties as such interests appear in Exhibit “A”. Operator shall make no charge
for services rendered by its staff attorneys or other personnel in the
performance of the above functions.
Each party shall be responsible for securing curative matter and pooling
amendments or agreements required in connection with leases or oil and gas
interests contributed by such party. Operator shall be responsible for the
preparation and recording of pooling designations or declarations as well as the
conduct of hearings before governmental agencies for the securing of spacing or
pooling orders. This shall not prevent any party from appearing on its own
behalf at any such hearing.
No well shall be drilled on the Contract Area until after (1) the title to the
drillsite or drilling unit has been examined as above provided, and (2) the
title has been approved by the examining attorney or title has been accepted by
all of the parties who are to participate in the drilling of the well.
B. Loss of Title:
1. Failure of Title: Should any oil and gas interest or lease, or interest
therein, be lost through failure of title, which loss results in a reduction of
interest from that shown on Exhibit “A”, the party contributing the affected
lease or interest shall have ninety (90) days from final determination of title
failure to acquire a new lease or other instrument curing the entirety of the
title failure, which acquisition will not be subject to Article VIII.B., and
failing to do so, this agreement, nevertheless, shall continue in force as to
all remaining oil and gas leases and interests: and,
(a) The party whose oil and gas lease or interest is affected by the title
failure shall bear alone the entire loss and it shall not be entitled to recover
from Operator or the other parties any development or operating costs which it
may have theretofore paid or incurred, but there shall be no additional
liability on its part to the other parties hereto by reason of such title
failure;
(b) There shall be no retroactive adjustment of expenses incurred or revenues
received from the operation of the interest which has been lost, but the
interests of the parties shall be revised on an acreage basis, as of the time it
is determined finally that title failure has occurred, so that the interest of
the party whose lease or interest is affected by the title failure will
thereafter be reduced in the Contract Area by the amount of the interest lost;
(c) If the proportionate interest of the other parties hereto in any producing
well theretofore drilled on the Contract Area is increased by reason of the
title failure, the party whose title has failed shall receive the proceeds
attributable to the increase in such interest (less costs and burdens
attributable thereto) until it has been reimbursed for unrecovered costs paid by
it in connection with such well;
(d) Should any person not a party to this agreement, who is determined to be
the owner of any interest in the title which has failed, pay in any manner any
part of the cost of operation, development, or equipment, such amount shall be
paid to the party or parties who bore the costs which are so refunded;
(e) Any liability to account to a third party for prior production of oil and
gas which arises by reason of title failure shall be borne by the party or
parties whose title failed in the same proportions in which they shared in such
prior production; and,
(f) No charge shall be made to the joint account for legal expenses, fees or
salaries, in connection with the defense of the interest claimed by any party
hereto, it being the intention of the parties hereto that each shall defend
title to its interest and bear all expenses in connection therewith.
2. Loss by Non-Payment or Erroneous Payment of Amount Due: If, through mistake
or oversight, any rental, shut-in well payment, minimum royalty or royalty
payment, is not paid or is erroneously paid, and as a result a lease or interest
therein terminates, there shall be no monetary liability against the party who
failed to make such payment. Unless the party who failed to make the required
payment secures a new lease covering the same interest within ninety (90) days
from the discovery of the failure to make proper payment, which acquisition will
not be subject to Article VIII.B., the interests of the parties shall be revised
on an acreage basis, effective as of the date of termination of the lease
involved, and the party who failed to make proper payment will no longer be
credited with an interest in the Contract Area on account of ownership of the
lease or interest which has terminated. In the event the party who failed to
make the required payment shall not have been fully reimbursed, at the time of
the loss, from the proceeds of the sale of oil and gas attributable to the lost
interest, calculated on an acreage basis, for the development and operating
costs theretofore paid on account of such interest, it shall be reimbursed for
unrecovered actual costs theretofore paid by it (but not for its share of the
cost of any dry hole previously drilled or wells previously abandoned) from so
much of the following as is necessary to effect reimbursement:
(a) Proceeds of oil and gas, less operating expenses, theretofore accrued to
the credit of the lost interest, on an acreage basis, up to the amount of
unrecovered costs;
(b) Proceeds, less operating expenses, thereafter accrued attributable to the
lost interest on an acreage basis, of that portion of oil and gas thereafter
produced and marketed (excluding production from any wells thereafter drilled)
which, in the absence of such lease termination, would be attributable to the
lost interest on an acreage basis, up to the amount of unrecovered costs, the
proceeds of said portion of the oil and gas to be contributed by the other
parties in proportion to their respective interest; and,
(c) Any monies, up to the amount of unrecovered costs, that may be paid by any
party who is, or becomes, the owner of the interest lost, for the privilege of
participating in the Contract Area or becoming a party to this agreement.
3. Other Losses: All losses incurred, other than those set forth in Articles
IV.B.1. and IV.B.2. above, shall be joint losses and shall be borne by all
parties in proportion to their interests. There shall be no readjustment of
interests in the remaining portion of the Contract Area.
3
ARTICLE V.
OPERATOR
A. Designation and Responsibilities of Operator:
Gulfport Energy Corporation shall be the Operator of the Contract Area, and
shall conduct and direct and have full control of all operations on the Contract
Area as permitted and required by, and within the limits of this agreement. It
shall conduct all such operations in a good and workmanlike manner, but it shall
have no liability as Operator to the other parties for losses sustained or
liabilities incurred, except such as may result from gross negligence or willful
misconduct.
B. Resignation or Removal of Operator and Selection of Successor:
1. Resignation or Removal of Operator: Operator may resign at any time by
giving written notice thereof to Non-Operators. If Operator terminates its legal
existence, no longer owns an interest hereunder in the Contract Area, or is no
longer capable of serving as Operator, Operator shall be deemed to have resigned
without any action by Non-Operators, except the selection of a successor.
Operator may be removed if it fails or refuses to carry out its duties
hereunder, or becomes insolvent, bankrupt or is placed in receivership, by the
affirmative vote of two (2) or more Non-Operators owning a majority interest
based on ownership as shown on Exhibit “A” remaining after excluding the voting
interest of Operator. Such resignation or removal shall not become effective
until 7:00 o’clock A.M. on the first day of the calendar month following the
expiration of ninety (90) days after the giving of notice of resignation by
Operator or action by the Non-Operators to remove Operator, unless a successor
Operator has been selected and assumes the duties of Operator at an earlier
date. Operator, after effective date of resignation or removal, shall be bound
by the terms hereof as a Non-Operator. A change of a corporate name or structure
of Operator or transfer of Operator’s interest to any single subsidiary, parent
or successor corporation shall not be the basis for removal of Operator.
2. Selection of Successor Operator: Upon the resignation or removal of
Operator, a successor Operator shall be selected by the parties. The successor
Operator shall be selected from the parties owning an interest in the Contract
Area at the time such successor Operator is selected. The successor Operator
shall be selected by the affirmative vote of two (2) or more parties owning a
majority interest based on ownership as shown on Exhibit “A”; provided, however,
if an Operator which has been removed fails to vote or votes only to succeed
itself, the successor Operator shall be selected by the affirmative vote of two
(2) or more parties owning a majority interest based on ownership as shown on
Exhibit “A” remaining after excluding the voting interest of the Operator that
was removed.
C. Employees:
The number of employees used by Operator in conducting operations hereunder,
their selection, and the hours of labor and the compensation for services
performed shall be determined by Operator, and all such employees shall be the
employees of Operator.
D. Drilling Contracts:
All wells drilled on the Contract Area shall be drilled on a competitive
contract basis at the usual rates prevailing in the area. If it so desires,
Operator may employ its own tools and equipment in the drilling of wells, but
its charges therefor shall not exceed the prevailing rates in the area and the
rate of such charges shall be agreed upon by the parties in writing before
drilling operations are commenced, and such work shall be performed by Operator
under the same terms and conditions as are customary and usual in the area in
contracts of independent contractors who are doing work of a similar nature.
ARTICLE VI.
DRILLING AND DEVELOPMENT
A. Initial Well:
On or before the 1st day of March, (year) 2012, Operator shall commence the
drilling of a well for oil and gas at the following location:
As proposed pursuant to the terms of this Agreement.
and shall thereafter continue the drilling of the well with due diligence to
Test the Utica/Point Pleasant Formation
unless granite or other practically impenetrable substance or condition in the
hole, which renders further drilling impractical, is encountered at a lesser
depth, or unless all parties agree to complete or abandon the well at a lesser
depth.
Operator shall make reasonable tests of all formations encountered during
drilling which give indication of containing oil and gas in quantities
sufficient to test, unless this agreement shall be limited in its application to
a specific formation or formations, in which event Operator shall be required to
test only the formation or formations to which this agreement may apply.
4
If, in Operator’s judgment, the well will not produce oil or gas in paying
quantities, and it wishes to plug and abandon the well as a dry hole, the
provisions of Article VI.E.1. shall thereafter apply.
B. Subsequent Operations:
1. Proposed Operations: Should any party hereto desire to drill any well on the
Contract Area other than the well provided for in Article VI.A., or to rework,
deepen or plug back a dry hole drilled at the joint expense of all parties or a
well jointly owned by all
the parties and not then producing in paying quantities, the party desiring to
drill, rework, deepen or plug back such a well shall give the other parties
written notice of the proposed operation, specifying the work to be performed,
the location, proposed depth, objective formation and the estimated cost of the
operation. The parties receiving such a notice shall have thirty (30) days after
receipt of the notice within which to notify the party wishing to do the work
whether they elect to participate in the cost of the proposed operation. If a
drilling rig is on location, notice of a proposal to rework, plug back or drill
deeper may be given by telephone and the response period shall be limited to
twenty-four (24) forty-eight (48) hours, exclusive of Saturday, Sunday, and
legal holidays. Failure of a party receiving such notice to reply within the
period above fixed shall constitute an election by that party not to participate
in the cost of the proposed operation. Any notice or response given by telephone
shall be promptly confirmed in writing.
If all parties elect to participate in such a proposed operation, Operator
shall, within ninety (90) days after expiration of the notice period of thirty
(30) days (or as promptly as possible after the expiration of the twenty-four
(24) forty-eight (48) hour period when a drilling rig is on location, as the
case may be), actually commence the proposed operation and complete it with due
diligence at the risk and expense of all parties hereto; provided, however, said
commencement date may be extended upon written notice of same by Operator to the
other parties, for a period of up to thirty (30) additional days if, in the sole
opinion of Operator, such additional time is reasonably necessary to obtain
permits from governmental authorities, surface rights (including rights-of-way)
or appropriate drilling equipment, or to complete title examination or curative
matter required for title approval or acceptance. Notwithstanding the force
majeure provisions of Article XI, if the actual operation has not been commenced
within the time provided (including any extension thereof as specifically
permitted herein) and if any party hereto still desires to conduct said
operation, written notice proposing same must be resubmitted to the other
parties in accordance with the provisions hereof as if no prior proposal had
been made.
2. Operations by Less than All Parties: If any party receiving such notice as
provided in Article VI.B.1. or VII.D.1. (Option No. 2) elects not to participate
in the proposed operation, then, in order to be entitled to the benefits of this
Article, the party or parties giving the notice and such other parties as shall
elect to participate in the operation shall, within ninety (90) days after the
expiration of the notice period of thirty (30) days (or as promptly as possible
after the expiration of the twenty-four (24) forty-eight (48) hour period when a
drilling rig is on location, as the case may be) actually commence the proposed
operation and complete it with due diligence. Operator shall perform all work
for the account of the Consenting Parties; provided, however, if no drilling rig
or other equipment is on location, and if Operator is a Non-Consenting Party,
the Consenting Parties shall either: (a) request Operator to perform the work
required by such proposed operation for the account of the Consenting Parties,
or (b) designate one (1) of the Consenting Parties as Operator to perform such
work. Consenting Parties, when conducting operations on the Contract Area
pursuant to this Article VI.B.2., shall comply with all terms and conditions of
this agreement. Nothing contained herein shall prohibit Operator or the
participatory parties from actually commencing the proposed operation before the
expiration of the notice period, nor shall the timing of such commencement
affect in any way the validity of a party’s election or deemed election.
If less than all parties approve any proposed operation, the proposing party,
immediately after the expiration of the applicable notice period, shall advise
the Consenting Parties of the total interest of the parties approving such
operation and its recommendation as to whether the Consenting Parties should
proceed with the operation as proposed. Each Consenting Party, within
twenty-four (24) forty-eight (48) hours (exclusive of Saturday, Sunday and legal
holidays) after receipt of such notice, shall advise the proposing party of its
desire to (a) limit participation to such party’s interest as shown on
Exhibit “A” or (b) carry its proportionate part of Non-Consenting Parties’
interests, and failure to advise the proposing party shall be deemed an election
under (a). In the event a drilling rig is on location, the time permitted for
such a response shall not exceed a total of twenty-four (24) forty-eight (48)
hours (inclusive of Saturday, Sunday and legal holidays). The proposing party,
at its election, may withdraw such proposal if there is insufficient
participation and shall promptly notify all parties of such decision.
The entire cost and risk of conducting such operations shall be borne by the
Consenting Parties in the proportions they have elected to bear same under the
terms of the preceding paragraph. Consenting Parties shall keep the leasehold
estates involved in such operations free and clear of all liens and encumbrances
of every kind created by or arising from the operations of the Consenting
Parties. If such an operation results in a dry hole, the Consenting Parties
shall plug and abandon the well and restore the surface location at their sole
cost, risk and expense. If any well drilled, reworked, deepened or plugged back
under the provisions of this Article results in a producer of oil and/or gas in
paying quantities, the Consenting Parties shall complete and equip the well to
produce at their sole cost and risk,
5
and the well shall then be turned over to Operator and shall be operated by it
at the expense and for the account of the Consenting Parties. Upon commencement
of operations for the drilling, reworking, deepening or plugging back of any
such well by Consenting Parties in accordance with the provisions of this
Article, each Non-Consenting Party shall be deemed to have relinquished to
Consenting Parties, and the Consenting Parties shall own and be entitled to
receive, in proportion to their respective interests, all of such Non-Consenting
Party’s interest in the well and share of production therefrom until the
proceeds of the sale of such share, calculated at the well, or market value
thereof if such share is not sold, (after deducting production taxes, excise
taxes, royalty, overriding royalty and other interests not excepted by
Article III.D. payable out of or measured by the production from such well
accruing with respect to such interest until it reverts) shall equal the total
of the following:
(a) 100% of each such Non-Consenting Party’s share of the cost of any newly
acquired surface equipment beyond the wellhead connections (including, but not
limited to, stock tanks, separators, treaters, pumping equipment and piping),
plus 100% of each such Non-Consenting Party’s share of the cost of operation of
the well commencing with first production and continuing until each such
Non-Consenting Party’s relinquished interest shall revert to it under other
provisions of this Article, it being agreed that each Non-Consenting Party’s
share of such costs and equipment will be that interest which would have been
chargeable to such Non-Consenting Party had it participated in the well from the
beginning of the operations; and
(b) 400% of that portion of the costs and expenses of drilling, reworking,
deepening, plugging back, testing and completing, after deducting any cash
contributions received under Article VIII.C., and 400% of that portion of the
cost of newly acquired equipment in the well (to and including the wellhead
connections), which would have been chargeable to such Non-Consenting Party if
it had participated therein.
An election not to participate in the drilling or the deepening of a well shall
be deemed an election not to participate in any reworking or plugging back
operation proposed in such a well, or portion thereof, to which the initial
Non-Consent election applied that is conducted at any time prior to full
recovery by the Consenting Parties of the Non-Consenting Party’s recoupment
account. Any such reworking or plugging back operation conducted during the
recoupment period shall be deemed part of the cost of operation of said well and
there shall be added to the sums to be recouped by the Consenting Parties one
hundred percent (100%) of that portion of the costs of the reworking or plugging
back operation which would have been chargeable to such Non-Consenting Party had
it participated therein. If such a reworking or plugging back operation is
proposed during such recoupment period, the provisions of this Article VI.B.
shall be applicable as between said Consenting Parties in said well.
During the period of time Consenting Parties are entitled to receive
Non-Consenting Party’s share of production, or the proceeds therefrom,
Consenting Parties shall be responsible for the payment of all production,
severance, excise, gathering and other taxes, and all royalty, overriding
royalty and other burdens applicable to Non-Consenting Party’s share of
production not excepted by Article III.D.
In the case of any reworking, plugging back or deeper drilling operation, the
Consenting Parties shall be permitted to use, free of cost, all casing, tubing
and other equipment in the well, but the ownership of all such equipment shall
remain unchanged; and upon abandonment of a well after such reworking, plugging
back or deeper drilling, the Consenting Parties shall account for all such
equipment to the owners thereof, with each party receiving its proportionate
part in kind or in value, less cost of salvage.
Within sixty (60) days after the completion of any operation under this Article,
the party conducting the operations for the Consenting Parties shall furnish
each Non-Consenting Party with an inventory of the equipment in and connected to
the well, and an itemized statement of the cost of drilling, deepening, plugging
back, testing, completing, and equipping the well for production; or, at its
option, the operating party, in lieu of an itemized statement of such costs of
operation, may submit a detailed statement of monthly billings. Each month
thereafter, during the time the Consenting Parties are being reimbursed as
provided above, the party conducting the operations for the Consenting Parties
shall furnish the Non-Consenting Parties with an itemized statement of all costs
and liabilities incurred in the operation of the well, together with a statement
of the quantity of oil and gas produced from it and the amount of proceeds
realized from the sale of the well’s working interest production during the
preceding month. In determining the quantity of oil and gas produced during any
month, Consenting Parties shall use industry accepted methods such as, but not
limited to, metering or periodic well tests. Any amount realized from the sale
or other disposition of equipment newly acquired in connection with any such
operation which would have been owned by a Non-Consenting Party had it
participated therein shall be credited against the total unreturned costs of the
work done and of the equipment purchased in determining when the interest of
such Non-Consenting Party shall revert to it as above provided; and if there is
a credit balance, it shall be paid to such Non-Consenting Party.
6
If and when the Consenting Parties recover from a Non-Consenting Party’s
relinquished interest the amounts provided for above, the relinquished interests
of such Non-Consenting Party shall automatically revert to it, and, from and
after such reversion, such Non-Consenting Party shall own the same interest in
such well, the material and equipment in or pertaining thereto, and the
production therefrom as such Non-Consenting Party would have been entitled to
had it participated in the drilling, reworking, deepening or plugging back of
said well. Thereafter, such Non-Consenting Party shall be charged with and shall
pay its proportionate part of the further costs of the operation of said well in
accordance with the terms of this agreement and the Accounting Procedure
attached hereto.
Notwithstanding the provisions of this Article VI.B.2., it is agreed that
without the mutual consent of all parties, no wells shall be completed in or
produced from a source of supply from which a well located elsewhere on the
Contract Area is producing, unless such well conforms to the then-existing well
spacing pattern for such source of supply.
The provisions of this Article shall have no application whatsoever to the
drilling of the initial well described in Article VI.A. except (a) as to
Article VII.D.1. (Option No. 2), if selected, or (b) as to the reworking,
deepening and plugging back of such initial well after if has been drilled to
the depth specified in Article VI.A. if it shall thereafter prove to be a dry
hole or, if initially completed for production, ceases to produce in paying
quantities.
3. Stand-By Time: When a well which has been drilled or deepened has reached
its authorized depth and all tests have been completed, and the results thereof
furnished to the parties, stand-by costs incurred pending response to a party’s
notice proposing a reworking, deepening, plugging back or completing operation
in such a well shall be charged and borne as part of the drilling or deepening
operation just completed. Stand-by costs subsequent to all parties responding,
or expiration of the response time permitted, whichever first occurs, and prior
to agreement as to the participating interests of all Consenting Parties
pursuant to the terms of the second grammatical paragraph of Article VI.B.2.,
shall be charged to and borne as part of the proposed operation, but if the
proposal is subsequently withdrawn because of insufficient participation, such
stand-by costs shall be allocated between the Consenting Parties in the
proportion each Consenting Party’s interest as shown on Exhibit “A” bears to the
total interest as shown on Exhibit “A” of all Consenting Parties.
4. Sidetracking: Except as hereinafter provided, those provisions of this
agreement applicable to a “deepening” operation shall also be applicable to any
proposal to directionally control and intentionally deviate a well from vertical
so as to change the bottom hole location (herein call “sidetracking”), unless
done to straighten the hole or to drill around junk in the hole or because of
other mechanical difficulties. Any party having the right to participate in a
proposed sidetracking operation that does not own an interest in the affected
well bore at the time of the notice shall, upon electing to participate, tender
to the well bore owners its proportionate share (equal to its interest in the
sidetracking operation) of the value of that portion of the existing well bore
to be utilized as follows:
(a) If the proposal is for sidetracking an existing dry hole, reimbursement
shall be on the basis of the actual costs incurred in
the initial drilling of the well down to the depth at which the sidetracking
operation is initiated.
(b) If the proposal is for sidetracking a well which has previously produced,
reimbursement shall be on the basis of the well’s salvable materials and
equipment down to the depth at which the sidetracking operation is initiated,
determined in accordance with the provisions of Exhibit “C”, less the estimated
cost of salvaging and the estimated cost of plugging and abandoning.
In the event that notice for a sidetracking operation is given while the
drilling rig to be utilized is on location, the response period shall be limited
to twenty-four (24) forty-eight (48) hours, exclusive of Saturday, Sunday and
legal holidays; provided, however, any party may request and receive up to eight
(8) additional days after expiration of the twenty-four (24) forty-eight (48)
hours within which to respond by paying for all stand-by time incurred during
such extended response period. If more than one party elects to take such
additional time to respond to the notice, stand by costs shall be allocated
between the parties taking additional time to respond on a day-to-day basis in
the proportion each electing party’s interest as shown on Exhibit “A” bears to
the total interest as shown on Exhibit “A” of all the electing parties. In all
other instances the response period to a proposal for sidetracking shall be
limited to thirty (30) days.
C. TAKING PRODUCTION IN KIND:
Each party shall have the right to take in kind or separately dispose of its
proportionate share of all oil and gas produced from the Contract Area,
exclusive of production which may be used in development and producing
operations and in preparing and treating oil and gas for marketing purposes and
production unavoidably lost. Any extra expenditure incurred in the taking in
kind or separate disposition by any party of its proportionate share of the
production shall be borne by such party. Any party taking its share of
production in kind shall berequired to pay for only its proportionate share of
such part of Operator’s surface facilities which it uses.
7
Each party shall execute such division orders and contracts as may be necessary
for the sale of its interest in production from the Contract Area, and, except
as provided in Article VII.B., shall be entitled to receive payment directly
from the purchaser thereof for its share of all production.
In the event any party shall fail to make the arrangements necessary to take in
kind or separately dispose of its proportionate share of the oil produced from
the Contract Area, Operator shall have the right, subject to the revocation at
will by the party owning it, but not the obligation, to purchase such oil or
sell it to others at any time and from time to time, for the account of the
non-taking party at the best price obtainable in the area for such production.
Any such purchase or sale by Operator shall be subject always to the right of
the owner of the production to exercise at any time its right to take in kind,
or separately dispose of, its share of all oil not previously delivered to a
purchaser. Any purchase or sale by Operator of any other party’s share of oil
shall be only for such reasonable periods of time as are consistent with the
minimum needs of the industry under the particular circumstances, but in no
event for a period in excess of one (1) year.
In the event one or more parties’ separate disposition of its share of the gas
causes split-stream deliveries to separate pipelines and/or deliveries which on
a day-to-day basis for any reason are not exactly equal to a party’s respective
proportionate share of total gas sales to be allocated to it, the balancing or
accounting between the respective accounts of the parties shall be in accordance
with any gas balancing agreement between the parties hereto, whether such an
agreement is attached as Exhibit “E”, or is a separate agreement.
D. Access to Contract Area and Information:
Each party shall have access to the Contract Area at all reasonable times, at
its sole cost and risk to inspect or observe operations, and shall have access
at reasonable times to information pertaining to the development or operation
thereof, including Operator’s books and records relating thereto. Operator, upon
request, shall furnish each of the other parties with copies of all forms or
reports filed with governmental agencies, daily drilling reports, well logs,
tank tables, daily gauge and run tickets and reports of stock on hand at the
first of each month, and shall make available samples of any cores or cuttings
taken from any well drilled on the Contract Area. The cost of gathering and
furnishing information to Non-Operator, other than that specified above, shall
be charged to the Non-Operator that requests the Information.
E. Abandonment of Wells:
1. Abandonment of Dry Holes: Except for any well drilled or deepened pursuant
to Article VI.B.2., any well which has been drilled or deepened under the terms
of this agreement and is proposed to be completed as a dry hole shall not be
plugged and abandoned without the consent of all parties. Should Operator, after
diligent effort, be unable to contact any party, or should any party fail to
reply within twenty-four (24) forty-eight (48) hours (exclusive of Saturday,
Sunday and legal holidays) after receipt of notice of the proposal to plug and
abandon such well, such party shall be deemed to have consented to the proposed
abandonment. All such wells shall be plugged and abandoned in accordance with
applicable regulations and at the cost, risk and expense of the parties who
participated in the cost of drilling or deepening such well. Any party who
objects to plugging and abandoning such well shall have the right to take over
the well and conduct further operations in search of oil and/or gas subject to
the provisions of Article VI.B.
2. Abandonment of Wells that have Produced: Except for any well in which a
Non-Consent operation has been conducted hereunder for which the Consenting
Parties have not been fully reimbursed as herein provided, any well which has
been completed as a producer shall not be plugged and abandoned without the
consent of all parties. If all parties consent to such abandonment, the well
shall be plugged and abandoned in accordance with applicable regulations and at
the cost, risk and expense of all the parties hereto. If, within thirty (30)
days after receipt of notice of the proposed abandonment of any well, all
parties do not agree to the abandonment of such well, those wishing to continue
its operation from the interval(s) of the formation(s) then open to production
shall tender to each of the other parties its proportionate share of the value
of the well’s salvable material and equipment, determined in accordance with the
provisions of Exhibit “C”, less the estimated cost of salvaging and the
estimated cost of plugging and abandoning. Each abandoning party shall assign
the non-abandoning parties, without warranty, express or implied, as to title or
as to quantity, or fitness for use of the equipment and material, all of its
interest in the well and related equipment, together with its interest in the
leasehold estate as to, but only as to, the interval or intervals of the
formation or formations then open to production. If the interest of the
abandoning party is or includes an oil and gas interest, such party shall
execute and deliver to the non-abandoning party or parties an oil and gas lease,
limited to the interval or intervals of the formation or formations then open to
production, for a term of one (1) year and so long thereafter as oil and/or gas
is produced from the interval or intervals of the formation or formations
covered thereby, such lease to be on the form attached as Exhibit
8
required to pay for only its proportionate share of such part of Operator’s
surface facilities which it uses.
kind or separately dispose of its proportionate share of the oil and gas
produced from the Contract Area, Operator shall have the right, subject to the
revocation at will by the party owning it, but not the obligation, to purchase
such oil and gas or sell it to others at any time and from time to time, for the
account of the non-taking party at the best price obtainable in the area for
such production. Any such purchase or sale by Operator shall be subject always
to the right of the owner of the production to exercise at any time its right to
take in kind, or separately dispose of, its share of all oil and gas not
previously delivered to a purchaser. Any purchase or sale by Operator of any
other party’s share of oil and gas shall be only for such reasonable periods of
time as are consistent with the minimum needs of the industry under the
particular circumstances, but in no event for a period in excess of one
(1) year. Notwithstanding the foregoing, Operator shall not make a sale,
including one into interstate commerce, of any other party’s share of gas
production without first giving such other party thirty (30) days notice of such
intended sale.
reply within forty-eight (48) hours (exclusive of Saturday, Sunday and legal
holidays) after receipt of notice of the proposal to plug and abandon such well,
such party shall be deemed to have consented to the proposed abandonment. All
such wells shall be plugged and abandoned in accordance with applicable
regulations and at the cost, risk and expense of the parties who participated in
the cost of drilling or deepening such well. Any party who objects to plugging
and abandoning such well shall have the right to take over the well and conduct
further operations in search of oil and/or gas subject to the provisions of
Article VI.B.
9
“B”. The assignments or leases so limited shall encompass the “drilling unit”
upon which the well is located. The payments by, and the assignments or leases
to, the assignees shall be in a ratio based upon the relationship of their
respective percentage of participation in the Contract Area to the aggregate of
the percentages of participation in the Contract Area of all assignees. There
shall be no readjustment of interests in the remaining portion of the Contract
Area.
Thereafter, abandoning parties shall have no further responsibility, liability,
or interest in the operation of or production from the well in the interval or
intervals then open other than the royalties retained in any lease made under
the terms of this Article. Upon request, at its election, Operator shall
continue to operate the assigned well for the account of the non-abandoning
parties at the rates and charges contemplated by this agreement, plus any
additional cost and charges which may arise as the result of the separate
ownership of the assigned well. Upon proposed abandonment of the producing
interval(s) assigned or leased, the assignor or lessor shall then have the
option to repurchase its prior interest in the well (using the same valuation
formula) and participate in further operations therein subject to the provisions
hereof.
3. Abandonment of Non-Consent Operations: The provisions of Article VI.E.1. or
VI.E.2 above shall be applicable as between Consenting Parties in the event of
the proposed abandonment of any well excepted from said Articles; provided,
however, no well shall be permanently plugged and abandoned unless and until all
parties having the right to conduct further operations therein have been
notified of the proposed abandonment and afforded the opportunity to elect to
take over the well in accordance with the provisions of this Article VI.E.
ARTICLE VII.
A. Liability of Parties:
The liability of the parties shall be several, not joint or collective. Each
party shall be responsible only for its obligations, and shall be liable only
for its proportionate share of the costs of developing and operating the
Contract Area. Accordingly, the liens granted among the parties in
Article VII.B. are given to secure only the debts of each severally. It is not
the intention of the parties to create, nor shall this agreement be construed as
creating, a mining or other partnership or association, or to render the parties
liable as partners.
B. Liens and Payment Defaults:
Each Non-Operator grants to Operator a lien upon its oil and gas rights in the
Contract Area, and a security interest in its share of oil and/or gas when
extracted and its interest in all equipment, to secure payment of its share of
expense, together with interest thereon at the rate provided in Exhibit “C”. To
the extent that Operator has a security interest under the Uniform Commercial
Code of the state, Operator shall be entitled to exercise the rights and
remedies of a secured party under the Code. The bringing of a suit and the
obtaining of judgment by Operator for the secured indebtedness shall not be
deemed an election of remedies or otherwise affect the lien rights or security
interest as security for the payment thereof. In addition, upon default by any
Non-Operator in the payment of its share of expense, Operator shall have the
right, without prejudice to other rights or remedies, to collect from the
purchaser the proceeds from the sale of such Non-Operator’s share of oil and/or
gas until the amount owed by such Non-Operator, plus interest, has been paid.
Each purchaser shall be entitled to rely upon Operator’s written statement
concerning the amount of any default. Operator grants a like lien and security
interest to the Non-Operators to secure payment of Operator’s proportionate
share of expense.
If any party fails or is unable to pay its share of expense within sixty (60)
days after rendition of a statement therefor by Operator, the non-defaulting
parties, including Operator, shall, upon request by Operator, pay the unpaid
amount in the proportion that the interest of each such party bears to the
interest of all such parties. Each party so paying its share of the unpaid
amount shall, to obtain reimbursement thereof, be subrogated to the security
rights described in the foregoing paragraph.
C. Payments and Accounting:
Except as herein otherwise specifically provided, Operator shall promptly pay
and discharge expenses incurred in the development and operation of the Contract
Area pursuant to this agreement and shall charge each of the parties hereto with
their respective proportionate shares upon the expense basis provided in
Exhibit “C”. Operator shall keep an accurate record of the joint account
hereunder, showing expenses incurred and charges and credits made and received.
Operator, at its election, shall have the right from time to time to demand and
receive from the other parties payment in advance of their respective shares of
the estimated amount of the expense to be incurred in operations hereunder
during the next succeeding month, which right may be exercised only by
submission to each such party of an itemized statement of such estimated
expense, together with an invoice for its share thereof. Each such statement and
invoice for the payment in advance of estimated expense shall be submitted on or
before the 20th day of the next preceding month. Each party shall pay to
Operator its proportionate share of such estimate within thirty (30) fifteen
(15) days after such estimate and invoice is received. If any party fails to pay
its share of said estimate within said time, the amount due shall bear interest
as provided in Exhibit “C” until paid. Proper adjustment shall be made monthly
between advances and actual expense to the end that each party shall bear and
pay its proportionate share of actual expenses incurred, and no more.
D. Limitation of Expenditures:
1. Drill or Deepen: Without the consent of all parties, no well shall be
drilled or deepened, except any well drilled or deepened pursuant to the
provisions of Article VI.B.2. of this agreement. Consent to the drilling or
deepening shall include:
10
x Option No. 1: All necessary expenditures for the drilling or deepening,
testing, completing and equipping of the well, including
necessary tankage and/or surface facilities.
o Option No. 2: All necessary expenditures for the drilling or deepening
and testing of the well. When such well has reached its authorized depth, and
all tests have been completed, and the results thereof furnished to the parties,
Operator shall give immediate notice to the Non-Operators who have the right to
participate in the completion costs. The parties receiving such notice shall
have forty-eight (48) hours (exclusive of Saturday, Sunday and legal holidays)
in which to elect to participate in the setting of casing and the completion
attempt. Such election, when made, shall include consent to all necessary
expenditures for the completing and equipping of such well, including necessary
tankage and/or surface facilities. Failure of any party receiving such notice to
reply within the period above fixed shall constitute an election by that party
not to participate in the cost of the completion attempt. If one or more, but
less than all of the parties, elect to set pipe and to attempt a completion, the
provisions of Article VI.B.2. hereof (the phrase “reworking, deepening or
plugging back” as contained in Article VI.B.2. shall be deemed to include
“completing”) shall apply to the operations thereafter conducted by less than
all parties.
2. Rework or Plug Back: Without the consent of all parties, no well shall be
reworked or plugged back except a well reworked or plugged back pursuant to the
provisions of Article VI.B.2. of this agreement. Consent to the reworking or
plugging back of a well shall include all necessary expenditures in conducting
such operations and completing and equipping of said well, including necessary
tankage and/or surface facilities.
3. Other Operations: Without the consent of all parties, Operator shall not
undertake any single project reasonably estimated to require an expenditure in
excess of Fifty-Thousand Dollars ($50,000.00) except in connection with a well,
the drilling, reworking, deepening, completing, recompleting, or plugging back
of which has been previously authorized by or pursuant to this agreement;
provided, however, that, in case of explosion, fire, flood or other sudden
emergency, whether of the same or different nature, Operator may take such steps
and incur such expenses as in its opinion are required to deal with the
emergency to safeguard life and property but Operator, as promptly as possible,
shall report the emergency to the other parties. If Operator prepares an
authority for expenditure (AFE) for its own use, Operator shall furnish any
Non-Operator so requesting an information copy thereof for any single project
costing in excess of Fifty-Thousand Dollars ($50,000.00) but less than the
amount first set forth above in this paragraph.
E. Rentals, Shut-in Well Payments and Minimum Royalties:
Rentals, shut-in well payments and minimum royalties which may be required under
the terms of any lease shall be paid by the party or parties who subjected such
lease to this agreement at its or their expense. In the event two or more
parties own and have contributed interests in the same lease to this agreement,
such parties may designate one of such parties to make said payments for and on
behalf of all such parties. Any party may request, and shall be entitled to
receive, proper evidence of all such payments. In the event of failure to make
proper payment of any rental, shut-in well payment or minimum royalty through
mistake or oversight where such payment is required to continue the lease in
force, any loss which results from such non-payment shall be borne in accordance
with the provisions of Article IV.B.2.
Operator shall notify Non-Operator of the anticipated completion of a shut-in
gas well, or the shutting in or return to production of a producing gas well, at
least five (5) days (excluding Saturday, Sunday and legal holidays), or at the
earliest opportunity permitted by circumstances, prior to taking such action,
but assumes no liability for failure to do so. In the event of failure by
Operator to so notify Non-Operator, the loss of any lease contributed hereto by
Non-Operator for failure to make timely payments of any shut-in well payment
shall be borne jointly by the parties hereto under the provisions of
Article IV.B.3.
F. Taxes:
Beginning with the first calendar year after the effective date hereof, Operator
shall render for ad valorem taxation all property subject to this agreement
which by law should be rendered for such taxes, and it shall pay all such taxes
assessed thereon before they become delinquent. Prior to the rendition date,
each Non-Operator shall furnish Operator information as to burdens (to include,
but not be limited to, royalties, overriding royalties and production payments)
on leases and oil and gas interests contributed by such Non-Operator. If the
assessed valuation of any leasehold estate is reduced by reason of its being
subject to outstanding excess royalties, overriding royalties or production
payments, the reduction in ad valorem taxes resulting therefrom shall inure to
the benefit of the owner or owners of such leasehold estate, and Operator shall
adjust the charge to such owner or owners so as to reflect the benefit of such
reduction. If the ad valorem taxes are based in whole or in part upon separate
valuations of each party’s working interest, then notwithstanding anything to
the contrary herein, charges to the joint account shall be made and paid by the
parties hereto in accordance with the tax value generated by each party’s
working interest. Operator shall bill the other parties for their proportionate
shares of all tax payments in the manner provided in Exhibit “C”.
If Operator considers any tax assessment improper, Operator may, at its
discretion, protest within the time and manner prescribed by law, and prosecute
the protest to a final determination, unless all parties agree to abandon the
protest prior to final determination. During the pendency of administrative or
judicial proceedings, Operator may elect to pay, under protest, all such taxes
and any interest and penalty. When any such protested assessment shall have been
finally determined, Operator shall pay the tax for the joint account, together
with any interest and penalty accrued, and the total cost shall then be assessed
against the parties, and be paid by them, as provided in Exhibit “C”.
Each party shall pay or cause to be paid all production, severance, excise,
gathering and other taxes imposed upon or with respect to the production or
handling of such party’s share of oil and/or gas produced under the terms of
this agreement.
11
G. Insurance:
At all times while operations are conducted hereunder, Operator shall comply
with the workmen’s compensation law of the state where the operations are being
conducted; provided, however, that Operator may be a self-insurer for liability
under said compensation laws in which event the only charge that shall be made
to the joint account shall be as provided in Exhibit “C”. Operator shall also
carry or provide insurance for the benefit of the joint account of the parties
as outlined in Exhibit “D”, attached to and made a part hereof. Operator shall
require all contractors engaged in work on or for the Contract Area to comply
conducted and to maintain such other insurance as Operator may require.
In the event automobile public liability insurance is specified in said
Exhibit “D”, or subsequently receives the approval of the parties, no direct
charge shall be made by Operator for premiums paid for such insurance for
Operator’s automotive equipment.
ARTICLE VIII.
A. Surrender of Leases:
The leases covered by this agreement, insofar as they embrace acreage in the
Contract Area, shall not be surrendered in whole or in part unless all parties
consent thereto.
However, should any party desire to surrender its interest in any lease or in
any portion thereof, and the other parties do not agree or consent thereto, the
party desiring to surrender shall assign, without express or implied warranty of
title, all of its interest in such lease, or portion thereof, and any well,
material and equipment which may be located thereon and any rights in production
thereafter secured, to the parties not consenting to such surrender. If the
interest of the assigning party is or includes an oil and gas interest, the
assigning party shall execute and deliver to the party or parties not consenting
to such surrender an oil and gas lease covering such oil and gas interest for a
term of one (1) year and so long thereafter as oil and/or gas is produced from
the land covered thereby, such lease to be on the form attached hereto as
Exhibit “B”. Upon such assignment or lease, the assigning party shall be
relieved from all obligations thereafter accruing, but not theretofore accrued,
with respect to the interest assigned or leased and the operation of any well
attributable thereto, and the assigning party shall have no further interest in
the assigned or leased premises and its equipment and production other than the
royalties retained in any lease made under the terms of this Article. The party
assignee or lessee shall pay to the party assignor or lessor the reasonable
salvage value of the latter’s interest in any wells and equipment attributable
to the assigned or leased acreage. The value of all material shall be determined
in accordance with the provisions of Exhibit “C”, less the estimated cost of
salvaging and the estimated cost of plugging and abandoning. If the assignment
or lease is in favor of more than one party, the interest shall be shared by
such parties in the proportions that the interest of each bears to the total
interest of all such parties.
Any assignment, lease or surrender made under this provision shall not reduce or
change the assignor’s, lessor’s or surrendering party’s interest as it was
immediately before the assignment, lease or surrender in the balance of the
Contract Area; and the acreage assigned, leased or surrendered, and subsequent
operations thereon, shall not thereafter be subject to the terms and provisions
of this agreement.
B. Renewal or Extension of Leases:
If any party secures a renewal of any oil and gas lease subject to this
agreement, all other parties shall be notified promptly, and shall have the
right for a period of thirty (30) days following receipt of such notice in which
to elect to participate in the ownership of the renewal lease, insofar as such
lease affects lands within the Contract Area, by paying to the party who
acquired it their several proper proportionate shares of the acquisition cost
allocated to that part of such lease within the Contract Area, which shall be in
proportion to the interests held at that time by the parties in the Contract
Area.
If some, but less than all, of the parties elect to participate in the purchase
of a renewal lease, it shall be owned by the parties who elect to participate
therein, in a ratio based upon the relationship of their respective percentage
of participation in the Contract Area to the aggregate of the percentages of
participation in the Contract Area of all parties participating in the purchase
of such renewal lease. Any renewal lease in which less than all parties elect to
participate shall not be subject to this agreement.
Each party who participates in the purchase of a renewal lease shall be given an
assignment of its proportionate interest therein by the acquiring party.
The provisions of this Article shall apply to renewal leases whether they are
for the entire interest covered by the expiring lease or cover only a portion of
its area or an interest therein. Any renewal lease taken before the expiration
of its predecessor lease, or taken or contracted for within six (6) months after
the expiration of the existing lease shall be subject to this provision; but any
lease taken or contracted for more than six (6) months after the expiration of
an existing lease shall not be deemed a renewal lease and shall not be subject
to the provisions of this agreement.
The provisions in this Article shall also be applicable to extensions of oil and
gas leases.
C. Acreage or Cash Contributions:
While this agreement is in force, if any party contracts for a contribution of
cash towards the drilling of a well or any other operation on the Contract Area,
such contribution shall be paid to the party who conducted the drilling or other
operation and shall be applied by it against the cost of such drilling or other
operation. If the contribution be in the form of acreage, the party to whom the
contribution is made shall promptly tender an assignment of the acreage, without
warranty of title, to the Drilling Parties in the proportions
12
said Drilling Parties shared the cost of drilling the well. Such acreage shall
become a separate Contract Area and, to the extent possible, be governed by
provisions identical to this agreement. Each party shall promptly notify all
other parties of any acreage or cash contributions it may obtain in support of
any well or any other operation on the Contract Area. The above provisions shall
also be applicable to optional rights to earn acreage outside the Contract Area
which are in support of a well drilled inside the Contract Area.
If any party contracts for any consideration relating to disposition of such
party’s share of substances produced hereunder, such consideration shall not be
deemed a contribution as contemplated in this Article VIII.C.
D. Maintenance of Uniform Interests:
For the purpose of maintaining uniformity of ownership in the oil and gas
leasehold interests covered by this agreement, no party shall sell, encumber,
transfer or make other disposition of its interest in the leases embraced within
the Contract Area and in wells, equipment and production unless such disposition
covers either:
1. the entire interest of the party in all leases and equipment and
production; or
2. an equal undivided interest in all leases and equipment and production in
the Contract Area.
Every such sale, encumbrance, transfer or other disposition made by any party
shall be made expressly subject to this agreement and shall be made without
prejudice to the right of the other parties.
If, at any time the interest of any party is divided among and owned by four or
more co-owners, Operator, at its discretion, may require such co-owners to
appoint a single trustee or agent with full authority to receive notices,
approve expenditures, receive billings for and approve and pay such party’s
share of the joint expenses, and to deal generally with, and with power to bind,
the co-owners of such party’s interest within the scope of the operations
embraced in this agreement; however, all such co-owners shall have the right to
enter into and execute all contracts or agreements for the disposition of their
respective shares of the oil and gas produced from the Contract Area and they
shall have the right to receive, separately, payment of the sale proceeds
thereof.
E. Waiver of Rights to Partition:
If permitted by the laws of the state or states in which the property covered
hereby is located, each party hereto owning an undivided interest in the
Contract Area waives any and all rights it may have to partition and have set
aside to it in severalty its undivided interest therein.
F. Preferential Right to Purchase:
Should any party desire to sell all or any part of its interests under this
agreement, or its rights and interests in the Contract Area, it shall promptly
give written notice to the other parties, with full information concerning its
proposed sale, which shall include the name and address of the prospective
purchaser (who must be ready, willing and able to purchase), the purchase price,
and all other terms of the offer. The other parties shall then have an optional
prior right, for a period of ten (10) days after receipt of the notice, to
purchase on the same terms and conditions the interest which the other party
proposes to sell; and, if this optional right is exercised, the purchasing
parties shall share the purchased interest in the proportions that the interest
of each bears to the total interest of all purchasing parties. However, there
shall be no preferential right to purchase in those cases where any party wishes
to mortgage its interests, or to dispose of its interests by merger,
reorganization, consolidation, or sale of all or substantially all of its assets
to a subsidiary or parent company or to a subsidiary of a parent company, or to
any company in which any one party owns a majority of the stock.
ARTICLE IX.
INTERNAL REVENUE CODE ELECTION
This agreement is not intended to create, and shall not be construed to create,
a relationship of partnership or an association for profit between or among the
parties hereto. Notwithstanding any provision herein that the rights and
liabilities hereunder are several and not joint or collective, or that this
agreement and operations hereunder shall not constitute a partnership, if, for
federal income tax purposes, this agreement and the operations hereunder are
regarded as a partnership, each party hereby affected elects to be excluded from
the application of all of the provisions of Subchapter “K”, Chapter 1, Subtitle
“A”, of the Internal Revenue Code of 1954, as permitted and authorized by
Section 761 of the Code and the regulations promulgated thereunder. Operator is
authorized and directed to execute on behalf of each party hereby affected such
evidence of this election as may be required by the Secretary of the Treasury of
the United States or the Federal Internal Revenue Service, including
specifically, but not by way of limitation, all of the returns, statements, and
the data required by Federal Regulations 1.761. Should there be any requirement
that each party hereby affected give further evidence of this election, each
such party shall execute such documents and furnish such other evidence as may
be required by the Federal Internal Revenue Service or as may be necessary to
evidence this election. No such party shall give any notices or take any other
action inconsistent with the election made hereby. If any present or future
income tax laws of the state or states in which the Contract Area is located or
any future income tax laws of the United States contain provisions similar to
those in Subchapter “K”, Chapter 1, Subtitle “A”, of the Internal Revenue Code
of 1954, under which an election similar to that provided by Section 761 of the
Code is permitted, each party hereby affected shall make such election as may be
permitted or required by such laws. In making the foregoing election, each such
party states that the income derived by such party from operations hereunder can
be adequately determined without the computation of partnership taxable income.
13
ARTICLE X.
CLAIMS AND LAWSUITS
Operator may settle any single uninsured third party damage claim or suit
arising from operations hereunder if the expenditure does not exceed
Fifty-Thousand Dollars ($50,000.00) and if the payment is in complete settlement
of such claim or suit. If the amount required for settlement exceeds the above
amount, the parties hereto shall assume and take over the further handling of
the claim or suit, unless such authority is delegated to Operator. All costs and
expenses of handling, settling, or otherwise discharging such claim or suit
shall be at the joint expense of the parties participating in the operation from
which the claim or suit arises. If a claim is made against any party or if any
party is sued on account of any matter arising from operations hereunder over
which such individual has no control because of the rights given Operator by
this agreement, such party shall immediately notify all other parties, and the
claim or suit shall be treated as any other claim or suit involving operations
hereunder. All claims or suits involving title to any interest subject to this
agreement shall be treated as a claim or a suit against all parties hereto.
ARTICLE XI.
FORCE MAJEURE
If any party is rendered unable, wholly or in part, by force majeure to carry
out its obligations under this agreement, other than the obligation to make
money payments, that party shall give to all other parties prompt written notice
of the force majeure with reasonably full particulars concerning it; thereupon,
the obligations of the party giving the notice, so far as they are affected by
the force majeure, shall be suspending during, but no longer than, the
continuance of the force majeure. The affected party shall use all reasonable
diligence to remove the force majeure situation as quickly as practicable.
The requirement that any force majeure shall be remedied with all reasonable
dispatch shall not require the settlement of strikes, lockouts, or other labor
difficulty by the party involved, contrary to its wishes; how all such
difficulties shall be handled shall be entirely within the discretion of the
party concerned.
The term “force majeure”, as here employed, shall mean an act of God, strike,
lockout, or other industrial disturbance, act of the public enemy, war,
blockade, public riot, lightning, fire, storm, flood, explosion, governmental
action, governmental delay, restraint or inaction, unavailability of equipment,
and any other cause, whether of the kind specifically enumerated above or
otherwise, which is not reasonably within the control of the party claiming
suspension.
ARTICLE XII.
NOTICES
All notices authorized or required between the parties and required by any of
the provisions of this agreement, unless otherwise specifically provided, shall
be given in writing by mail or telegram, postage or charges prepaid, or by telex
or telecopier and addressed to the parties to whom the notice is given at the
addresses listed on Exhibit “A”. The originating notice given under any
provision hereof shall be deemed given only when received by the party to whom
such notice is directed, and the time for such party to give any notice in
response thereto shall run from the date the originating notice is received. The
second or any responsive notice shall be deemed given when deposited in the mail
or with the telegraph company, with postage or charges prepaid, or sent by telex
or telecopier. Each party shall have the right to change its address at any
time, and from time to time, by giving written notice thereof to all other
parties.
ARTICLE XIII.
TERM OF AGREEMENT
This agreement shall remain in full force and effect as to the oil and gas
leases and/or oil and gas interests subject hereto for the period of time
selected below; provided, however, no party hereto shall ever be construed as
having any right, title or interest in or to any lease or oil and gas interest
contributed by any other party beyond the term of this agreement.
x Option No. 1: So long as any of the oil and gas leases subject to this
agreement remain or are continued in force as to any part of the Contract Area,
whether by production, extension, renewal, or otherwise.
o Option No. 2: In the event the well described in Article VI.A., or any
subsequent well drilled under any provision of this agreement, results in
production of oil and/or gas in paying quantities, this agreement shall continue
in force so long as any such well or wells produce, or are capable of
production, and for an additional period of days from cessation of all
production; provided, however, if, prior to the expiration of such additional
period, one or more of the parties hereto are engaged in drilling, reworking,
deepening, plugging back, testing or attempting to complete a well or wells
hereunder, this agreement shall continue in force until such operations have
been completed and if production results therefrom, this agreement shall
continue in force as provided herein. In the event the well described in
Article VI.A., or any subsequent well drilled hereunder, results in a dry hole,
and no other well is producing, or capable of producing oil and/or gas from the
Contract Area, this agreement shall terminate unless drilling, deepening,
plugging back or reworking operations are commenced within days
from the date of abandonment of said well.
It is agreed, however, that the termination of this agreement shall not relieve
any party hereto from any liability which has accrued or attached prior to the
date of such termination.
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ARTICLE XIV.
A. Laws, Regulations and Orders:
This agreement shall be subject to the conservation laws of the state in which
the Contract Area is located, to the valid rules, regulations, and orders of any
duly constituted regulatory body of said state; and to all other applicable
federal, state, and local laws, ordinances, rules, regulations, and orders.
B. Governing Law:
This agreement and all matters pertaining hereto, including, but not limited to,
matters of performance, non-performance, breach, remedies, procedures, rights,
duties, and interpretation or construction, shall be governed and determined by
the law of the state in which the Contract Area is located. If the Contract Area
is in two or more states, the law of the state of Ohio shall govern.
C. Regulatory Agencies:
Nothing herein contained shall grant, or be construed to grant, Operator the
right or authority to waive or release any rights, privileges, or obligations
which Non-Operators may have under federal or state laws or under rules,
regulations or orders promulgated under such laws in reference to oil, gas and
mineral operations, including the location, operation, or production of wells,
on tracts offsetting or adjacent to the Contract Area.
With respect to operations hereunder, Non-Operators agree to release Operator
from any and all losses, damages, injuries, claims and causes of action arising
out of, incident to or resulting directly or indirectly from Operator’s
interpretation or application of rules, rulings, regulations or orders of the
Department of Energy or predecessor or successor agencies to the extent such
interpretation or application was made in good faith. Each Non-Operator further
agrees to reimburse Operator for any amounts applicable to such Non-Operator’s
share of production that Operator may be required to refund, rebate or pay as a
result of such an incorrect interpretation or application, together with
interest and penalties thereon owing by Operator as a result of such incorrect
interpretation or application.
Non-Operators authorize Operator to prepare and submit such documents as may be
required to be submitted to the purchaser of any crude oil sold hereunder or to
any other person or entity pursuant to the requirements of the “Crude Oil
Windfall Profit Tax Act of 1980”, as same may be amended from time to time
(“Act”), and any valid regulations or rules which may be issued by the Treasury
Department from time to time pursuant to said Act. Each party hereto agrees to
furnish any and all certifications or other information which is required to be
furnished by said Act in a timely manner and in sufficient detail to permit
compliance with said Act.
15
ARTICLE XV.
OTHER PROVISIONS
Article VII.B. are given to secure only the debts of each severally, and no
party shall have any liability to third parties hereunder to satisfy the default
of any other party in the payment of any expense or obligation hereunder. It is
not the intention of the parties to create, nor shall this agreement be
construed as creating, a mining or other partnership, joint venture, agency
relationship or association, or to render the parties liable as partners,
co-venturers, or principals. In their relations with each other under this
agreement, the parties shall not be considered fiduciaries or to have
established a confidential relationship but rather shall be free to act on an
arm’s-length basis in accordance with their own respective self-interest,
subject, however, to the obligation of the parties to act in good faith in their
dealings with each other with respect to activities hereunder.
B. Liens and Security Interests:
Each party grants to the other parties hereto a lien upon any interest it now
owns or hereafter acquires in Oil and Gas Leases and Oil and Gas Interests in
the Contract Area, and a security interest and/or purchase money security
interest in any interest it now owns or hereafter acquires in the personal
property and fixtures on or used or obtained for use in connection therewith, to
secure performance of all of its obligations under this agreement including but
not limited to payment of expense, interest and fees, the proper disbursement of
all monies paid hereunder, the assignment or relinquishment of interest in Oil
and Gas Leases as required hereunder, and the proper performance of operations
hereunder. Such lien and security interest granted by each party hereto shall
include such party’s leasehold interests, working interests, operating rights,
and royalty and overriding royalty interests in the Contract Area now owned or
hereafter acquired and in lands pooled or unitized therewith or otherwise
becoming subject to this agreement, the Oil and Gas when extracted therefrom and
equipment situated thereon or used or obtained for use in connection therewith
(including, without limitation, all wells, tools, and tubular goods), and
accounts (including, without limitation, accounts arising from gas imbalances or
from the sale of Oil and/or Gas at the wellhead), contract rights, inventory and
general intangibles relating thereto or arising therefrom, and all proceeds and
products of the foregoing.
To perfect the lien and security agreement provided herein, each party hereto
shall execute and acknowledge the Memorandum of Operating Agreement supplement
and/or any financing statement prepared and submitted by any party hereto in
conjunction herewith or at any time following execution hereof, and Operator is
authorized to file this agreement or the recording supplement executed herewith
as a lien or mortgage in the applicable real estate records and as a financing
statement with the proper officer under the Uniform Commercial Code in the state
in which the Contract Area is situated and such other states as Operator shall
deem appropriate to perfect the security interest granted hereunder. Any party
may file this agreement, the recording supplement executed herewith, or such
other documents as it deems necessary as a lien or mortgage in the applicable
real estate records and/or a financing statement with the proper officer under
the Uniform Commercial Code.
Each party represents and warrants to the other parties hereto that the lien and
security interest granted by such party to the other parties shall be a first
and prior lien, and each party hereby agrees to maintain the priority of said
lien and security interest against all persons acquiring an interest in Oil and
Gas Leases and Interests covered by this agreement by, through or under such
party. All parties acquiring an interest in Oil and Gas Leases and Oil and Gas
Interests covered by this agreement, whether by assignment, merger, mortgage,
operation of law, or otherwise, shall be deemed to have taken subject to the
lien and security interest granted by this Article VII.B. as to all obligations
attributable to such interest hereunder whether or not such obligations arise
before or after such interest is acquired.
To the extent that parties have a security interest under the Uniform Commercial
Code of the state in which the Contract Area is situated, they shall be entitled
to exercise the rights and remedies of a secured party under the Code. The
bringing of a suit and the obtaining of judgment by a party for the secured
indebtedness shall not be deemed an election of remedies or otherwise affect the
lien rights or security interest as security for the payment thereof. In
addition, upon default by any party in the payment of its share of expenses,
interests or fees, or upon the improper use of funds by the Operator, the other
parties shall have the right, without prejudice to other rights or remedies, to
collect from the purchaser the proceeds from the sale of such defaulting party’s
share of Oil and Gas until the amount owed by such party, plus interest as
provided in “Exhibit C,” has been received, and shall have the right to offset
the amount owed against the proceeds from the sale of such defaulting party’s
share of Oil and Gas. All purchasers of production may rely on a notification
of default from the non-defaulting party or parties stating the amount due as a
result of the default, and all parties waive any recourse available against
purchasers for releasing production proceeds as provided in this paragraph.
If any party fails to pay its share of cost within one hundred twenty (120) days
after rendition of a statement therefor by Operator, the non-defaulting parties,
including Operator, shall upon request by Operator, pay the unpaid amount in the
proportion that the interest of each such party bears to the interest of all
such parties. The amount paid by each party so paying its share of the unpaid
amount shall be secured by the liens and security rights described in
Article VII.B., and each paying party may independently pursue any remedy
available hereunder or otherwise.
If any party does not perform all of its obligations hereunder, and the failure
to perform subjects such party to foreclosure or execution proceedings pursuant
to the provisions of this agreement, to the extent allowed by governing law, the
defaulting party waives any available right of redemption from and after the
date of judgment, any required valuation or appraisement of the mortgaged or
secured property prior to sale, any available right to stay execution or to
require a marshaling of assets and any required bond in the event a receiver is
appointed. In addition, to the extent permitted by applicable law, each party
hereby grants to the other parties a power of sale as to any property that is
subject to the lien and security rights granted hereunder, such power to be
exercised in the manner provided by applicable law or otherwise in a
commercially reasonable manner and upon reasonable notice.
16
Each party agrees that the other parties shall be entitled to utilize the
provisions of Oil and Gas lien law or other lien law of any state in which the
Contract Area is situated to enforce the obligations of each party hereunder.
applicable law, Non-Operators agree that Operator may invoke or utilize the
mechanics’ or materialmen’s lien law of the state in which the Contract Area is
situated in order to secure the payment to Operator of any sum due hereunder for
services performed or materials supplied by Operator.
C. Defaults and Remedies:
If any party fails to discharge any financial obligation under this agreement,
including without limitation the failure to make any advance under the preceding
Article VII.C. or any other provision of this agreement, within the period
required for such payment hereunder, then in addition to the remedies provided
in Article VII.B. or elsewhere in this agreement, the remedies specified below
shall be applicable. For purposes of this Article VII.D., all notices and
elections shall be delivered only by Operator, except that Operator shall
deliver any such notice and election requested by a non-defaulting Non-Operator,
and when Operator is the party in default, the applicable notices and elections
can be delivered by any Non-Operator. Election of any one or more of the
following remedies shall not preclude the subsequent use of any other remedy
specified below or otherwise available to a non-defaulting party.
1. Suspension of Rights: Any party may deliver to the party in default a Notice
of Default, which shall specify the default, specify the action to be taken to
cure the default, and specify that failure to take such action will result in
the exercise of one or more of the remedies provided in this Article. If the
default is not cured within thirty (30) days of the delivery of such Notice of
Default, all of the rights of the defaulting party granted by this agreement may
upon notice be suspended until the default is cured, without prejudice to the
right of the non-defaulting party or parties to continue to enforce the
obligations of the defaulting party previously accrued or thereafter accruing
under this agreement. If Operator is the party in default, the Non-Operators
shall have in addition the right, by vote of Non-Operators owning a majority in
interest in the Contract Area after excluding the voting interest of Operator,
to appoint a new Operator effective immediately. The rights of a defaulting
party that may be suspended hereunder at the election of the non-defaulting
parties shall include, without limitation, the right to receive information as
to any operation conducted hereunder during the period of such default, the
right to elect to participate in an operation proposed under Article VI.B. of
this agreement, the right to participate in an operation being conducted under
this agreement even if the party has previously elected to participate in such
operation, and the right to receive proceeds of production from any well subject
to this agreement.
2. Suit for Damages: Non-defaulting parties or Operator for the benefit of
non-defaulting parties may sue (at joint account expense) to collect the amounts
in default, plus interest accruing on the amounts recovered from the date of
default until the date of collection at the rate specified in Exhibit “C”
attached hereto. Nothing herein shall prevent any party from suing any
defaulting party to collect consequential damages accruing to such party as a
result of the default.
3. Deemed Non-Consent: The non-defaulting party may deliver a written Notice of
Non-Consent Election to the defaulting party at any time after the expiration of
the thirty-day cure period following delivery of the Notice of Default, in which
event if the billing is for the drilling a new well or the Plugging Back,
Sidetracking, Reworking or Deepening of a well which is to be or has been
plugged as a dry hole, or for the Completion or Recompletion of any well, the
defaulting party will be conclusively deemed to have elected not to participate
in the operation and to be a Non-Consenting Party with respect thereto under
Article VI.B. or VI.C., as the case may be, to the extent of the costs unpaid by
such party, notwithstanding any election to participate theretofore made. If
election is made to proceed under this provision, then the non-defaulting
parties may not elect to sue for the unpaid amount pursuant to Article VII.D.2.
Until the delivery of such Notice of Non-Consent Election to the defaulting
party, such party shall have the right to cure its default by paying its unpaid
share of costs plus interest at the rate set forth in Exhibit “C,” provided,
however, such payment shall not prejudice the rights of the non-defaulting
parties to pursue remedies for damages incurred by the non-defaulting parties as
a result of the default. Any interest relinquished pursuant to this
Article VII.D.3. shall be offered to the non-defaulting parties in proportion to
their interests, and the non-defaulting parties electing to participate in the
ownership of such interest shall be required to contribute their shares of the
defaulted amount upon their election to participate therein.
4. Advance Payment: If a default is not cured within thirty (30) days of the
delivery of a Notice of Default, Operator, or
Non-Operators if Operator is the defaulting party, may thereafter require
advance payment from the defaulting party of such defaulting party’s anticipated
share of any item of expense for which Operator, or Non-Operators, as the case
may be, would be entitled to reimbursement under any provision of this
agreement, whether or not such expense was the subject of the previous default.
Such right includes, but is not limited to, the right to require advance payment
for the estimated costs of drilling a well or Completion of a well as to which
an election to participate in drilling or Completion has been made. If the
defaulting party fails to pay the required advance payment, the non-defaulting
parties may pursue any of the remedies provided in the Article VII.D. or any
other default remedy provided elsewhere in this agreement. Any excess of funds
advanced remaining when the operation is completed and all costs have been paid
shall be promptly returned to the advancing party.
D. Costs Associated with Use of Consultants:
Operator may charge the reasonable costs of consultants, including attorneys,
necessary to secure regulatory permits and approvals for drilling wells, laying
pipelines, collecting and discharging water and any other matters related to the
project.
E. Advances of Cost of Operations:
Notwithstanding the provisions of Article VII.C herein to the contrary, Operator
may require from any other party advance payment, no more than 30 days prior to
commencement of operations, within 15 days after billing, or within 48 hours
after billing in the event of a proposed completion or in the event a drilling
rig is on location, of such other party’s anticipated share of any item of
expense for which the Operator would be entitled to reimbursement under any
provision of this agreement. Such right includes, but is not limited to, the
right to require advance payment for the estimated costs of drilling a well or
completion of a well as to which an election to participate in drilling or
completion has been made. For horizontal wells, the requirement for advance
payment shall apply to a party’s share of both the drilling and the completion
costs associated with the proposed well. Any amounts advanced by a Non-Operator
hereunder in excess of that which is reasonably expected to be needed by
Operator to complete the operations for which the funds were advanced shall be
promptly refunded to such Non-Operator.
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F. Operator Affiliates:
Notwithstanding the provisions of Article V. herein to the contrary, a party to
this agreement that has been designated as the Operator under this Agreement
(“Party”) may employ a subsidiary or affiliate to serve as Operator so long as
the Party owns an interest in the Contract Area and is otherwise in compliance
with the provisions of this Agreement. However, at such time as the Party sells
its interest or no longer owns an interest in the Contract Area, the Party’s
subsidiary or affiliate that is serving as Operator shall be deemed to have
resigned just as if the Party had been serving as Operator. Furthermore, the
Operator’s failure to observe or comply with the provisions of this Agreement
may be applied and enforced against the Party just as if the Party was serving
as the Operator. Therefore, the provisions of this Agreement may be enforced
interchangeably between the Operator and the Party just as if they are one
entity.
G. Operations Necessary to Maintain a Lease(s) in Force:
Notwithstanding the provisions of this Agreement and particularly Article VI, if
any proposed operations are necessary to maintain a lease covered by this
Agreement in force, or an agreement to earn a lease(s) which would otherwise
expire unless such operations are conducted, then in addition to being penalized
under Article VI.B.2. (a) and (b), each Non-Consenting Party shall assign to
Consenting Parties all of such Non-Consenting Party’s right, title and interest
in and to the lease(s) or portion thereof or such agreement which would be lost
or not earned if such operations were not conducted. Such assignment shall be
promptly due upon commencement of said proposed operations by Consenting Parties
and if the assignment is in favor of more than one party the assigned interest
shall be shared by the Consenting Parties unless otherwise agree to in writing.
Thereafter, such acreage covered by said assignment shall not be subject to the
terms of this Agreement, but shall be deemed to be subject to an agreement
identical to this Agreement changed only in Exhibit “A” to indicate the
Consenting Parties and their percentages. For purposes of defining necessary
operations to maintain a lease or agreement to earn a lease(s) in force which
would otherwise expire, such operations will be deemed necessary if proposed
within six (6) months of the date the lease or agreement would otherwise expire.
H. Non-consent on Developed Properties:
In the event that a Party elects under Article VI.B, to non-consent any
operation for any well(s) on a lease which has had prior development, and has,
or has planned a separate tank battery or other necessary equipment, facilities
or infrastructure that is required to separately account for the interests from
the non-consent operation under Article VI.B.2(a), shall carry a penalty of
400%.
I. Conflict of Terms:
In the event of a conflict between the typewritten portion and printed portions
hereof in this Operating Agreement, the typewritten portions shall prevail.
In the event of a conflict between the provisions of this Article XV and any
other provisions of the printed portions of the Operating Agreement, the
provisions of this Article XV shall control and prevail.
J. Metering of Production:
In the event of transfer, sale, encumbrance or other disposition of interest
within the Contract Area which creates the necessity of separate measurement of
production, the party creating the necessity for such separate measurement shall
alone bear the cost of purchase, installation and operation of such facilities.
K. Arbitration:
If any claim or controversy arises out of, or relates to, this Agreement,
Operator and Non-Operators shall make a good faith attempt to resolve the matter
through their senior management representatives, and said personnel of Operator
and each Non-Operator shall meet in person and make a good faith attempt to
resolve or settle the matter. In the event that Operator and senior management
of the Non-Operators cannot settle the claim or controversy, Operator and the
Non-Operators agree to resolve or settle the matter in accordance with the
rules of the American Arbitration Association then in effect including the
sharing and payment of costs provided in said rules. If the rules do not address
the sharing and payment of costs, then said costs shall be borne proportionately
between Operator and the Non-Operators in accordance with their respective after
payout interests.
The Arbitration shall be in Oklahoma City, Oklahoma, or such other place within
the United States on which Operator and the Non-Operators agree, and shall be
held before a disinterested third party arbitrator with a minimum of ten
(10) years of experience, and qualified in the area under dispute, selected by
mutual agreement of Operator and the Non-Operators. If the Non-Operators are
unable to promptly agree upon an arbitrator, any Non-Operator may apply to the
Senior Judge of the United States District Court for the Western District of
Oklahoma who shall appoint such arbitrator.
Notwithstanding any provisions contained in the Rules of the American
Arbitration Association, Operator and the Non-Operators shall, prior to any
arbitration hearing, be entitled to discovery of all documents and information
reasonably necessary for a full understanding of any legitimate issue raised in
the arbitration. They may use all legal methods of discovery, including but not
limited to depositions, requests for admissions, interrogatories and requests
for production of documents. In addition thereto, Operator and/or any
Non-Operator may use discovery for any matter or use any method of discovery
allowed under the Federal Rules of Civil Procedure. The time period for
compliance shall be set by the arbitrator, who may also set reasonable limits on
the scope of such discovery. The decision of the arbitrator shall be in writing
and include a statement of facts and conclusion of law and shall be final and
binding upon Operator and the Non-Operators. Operator and the Non-Operators
hereto consent to and do hereby submit to the jurisdiction of the Courts
(Federal and State) of Garfield County, Oklahoma, for all purposes in connection
with the arbitration, including the enforcement of the award and/or findings of
the arbitrator.
L. Additional Definitions (Continued from Article I):
1.
The term “lateral” shall mean that portion of a wellbore that deviates from
approximate vertical orientation and all wellbore beyond such deviation to total
depth.
2.
The term “horizontal well” shall mean a well containing a single lateral in
which the wellbore deviates from approximate vertical orientation to approximate
horizontal orientation in order to drill within and test a specific geological
interval, utilizing deviation equipment, services, and technology. This shall
include similar operations conducted in the re-entry of an existing wellbore.
3.
The term “multi-lateral well” shall mean a well which contains more than one
lateral and in which the wellbores deviate from approximate vertical orientation
to approximate horizontal orientation in order to drill within and test a
specific geological interval, utilizing deviation equipment, services and
technology. This shall include similar operations conducted in the re-entry of
an existing wellbore.
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4.
The term “total depth” shall apply to all multi-lateral or horizontal wells
drilled pursuant to this Agreement and shall mean the distance from the surface
of the ground to the terminus of the wellbore. Each lateral together with the
common vertical wellbore shall be considered a single wellbore and shall have a
corresponding total depth if the production from each lateral is to be measured
separately and not commingled in the vertical wellbore. If the production from
each lateral is to be commingled in the common vertical wellbore then the
lateral(s) and vertical wellbore shall be considered collectively as a single
wellbore. When the proposed operation is the drilling of, or operations on, a
well containing a lateral component, the term “depth” whenever used in this
Agreement shall be deemed to read “total measured depth” insofar as it applies
to such well.
5.
The term “deepen” when used in conjunction with a horizontal or multi-lateral
well shall mean an operation whereby a lateral is drilled to a distance greater
than the distance set out in Article VI.A.
6.
For the purposes of this Agreement, as to a horizontal or multi-lateral well,
the term “plug back” shall mean an operation to test or complete the well at a
stratigraphically shallower geological horizon in which an operation has been or
is being completed and which is not within an existing lateral.
M. Substitute Well Provision:
In the event any well drilled hereunder is lost for any reason prior to being
drilled to the proposed total depth for such, or Operator has encountered during
drilling mechanical conditions which would, in Operator’s opinion, make further
drilling in any test well hereunder impracticable or inadvisable, Operator may
abandon said test well and thereafter may commence operations for a substitute
well for any such well (which has been lost or abandoned) within ninety (90)
days after abandonment, to the same proposed total depth, drilled in the same
quarter section (unless a different location is agreeable to both parties), and
drilled subject to the same terms and conditions as the provided for the well so
lost or abandoned. Such substitute well shall thereafter be considered as the
originally proposed test well under this Agreement.
N. Payment of Royalties:
Notwithstanding the provisions of Article III.B herein to the contrary, so long
as the Drilling Unit for the productive Zone(s) is identical with the Contract
Area, each party shall pay or deliver, or cause to be paid or delivered, all
burdens on production from the Contract Area due under the terms of the Oil and
Gas Lease(s) which such party has contributed to this agreement, and shall
indemnify, defend and hold the other parties free from any liability therefore.
O. Regulations:
Any state or Federal regulation, penalties and/or assessments which may be
lawfully applied to Operator as the result of any action by said Operator in
Operator’s conduct of the operations hereunder, shall be shared by the Operator
and the Non-Operators in proportion to their interests as set forth in
Exhibit “A” hereof provided there is no fraud, intentional misrepresentation or
other act of gross negligence or willful misconduct by the Operator.
P. Priority of Operations:
Where a well, authorized under the terms of this Agreement by all parties (or by
less than all parties under Article VI.B.2) and the parties participating in the
well cannot agree upon the sequence and timing of further operations regarding
the well, the following elections shall control in the order enumerated below:
1. Prior to reaching the objective depth or
zone:
a. Drilling the well to its objective depth.
b. In the event that impenetrable conditions or mechanical
difficulties prevent reaching the objective depth or zone, a proposal to
sidetrack in an effort to reach the objective depth or zone shall have priority
over a proposal to attempt a completion in a zone already reached.
2. After the objective depth or zone has
been reached:
a. an election to conduct additional logging, coring or testing;
b. an election to attempt to complete the well at the objective
depth or zone;
c. an election to deepen the well;
d. an election to plug back and attempt to complete the well;
e. an election to sidetrack the well;
f. an election to plug and abandon the well;
It is provided however, that if at the time said participating parties are
considering any of the above elections the hole is in such a condition that a
reasonably prudent operator would not conduct the operations contemplated by the
particular election involved for fear of placing the hole or objective formation
in jeopardy, such election shall be eliminated from the sequence set forth
above.
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ARTICLE XVI.
MISCELLANEOUS
This agreement shall be binding upon and shall inure to the benefit of the
parties hereto and to their respective heirs, devisees, legal representatives,
successors and assigns.
This instrument may be executed in any number of counterparts, each of which
shall be considered an original for all purposes.
IN WITNESS WHEREOF, this agreement shall be effective as of 6th day of May,
(year) 2011. Gulfport Energy Corporation, who has prepared and circulated this
form for execution, represents and warrants that the form was printed from and
with the exception listed below, is identical to the AAPL Form 610-1982 Model
Form Operating Agreement, as published in computerized form by Forms
On-A-Disk, Inc. No changes, alterations, or modifications, other than those in
Articles amended herein, have been made to the form.
OPERATOR
Gulfport Energy Corporation
/s/ James D. Palm
By: James D. Palm
Title: CEO
NON-OPERATORS
Windsor Ohio, LLC
Rhino Exploration, L.L.C.
/s/ Paul Jacobi
/s/ David G. Zatezalo
By: Paul Jacobi
By: David G. Zatezalo
Title: Vice President
Title: President and CEO
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EXHIBIT “A”
Attached to and made a part of that certain Joint Operating Agreement by and
between Gulfport Energy Corporation, as Operator and Windsor Ohio LLC and Rhino
Exploration L.L.C., as Non-Operators dated May 6, 2011.
1. Contract Area
[g200591ko05i001.jpg]
2. Restrictions, if any, as to depths
formations or substances are those set forth in the Oil and Gas Leases of
Assignments of Record.
3. Percentage of interest to the parties to this Agreement:
Working Interest:
Gulfport Energy Corporation
50.0000
%
Windsor Ohio LLC
45.0000
%
Rhino Exploration LLC
5.0000
%
Total
100.0000
%
4. Oil and gas leases subject to this Agreement:
To be described for each prospect area.
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5. Addresses of the parties to this agreement:
Gulfport Energy Corporation
14313 N. May Avenue, Suite 100
Oklahoma City, OK 73134
Fax: (405) 848-8816
Windsor Ohio LLC
14301 Caliber Dr., Suite 300
Fax: (405) 286-5927
Rhino Exploration LLC
424 Lewis Hargett Circle, Suite 250
Lexington, KY 40503
Fax: (859)-389-6588
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UNITED STATES OMB APPROVAL SECURITIES AND EXCHANGE COMMISSION Washington, D.C.20549 OMB Number:3235-0456 Expires:March 31, 2012 FORM 24F-2 Estimated average burden Annual Notice of Securities Sold hours per response……2 Pursuant to Rule 24f-2 Read instructions at end of Form before preparing Form. 1. Name and address of issuer: Professionally Managed Portfolios 615 E. Michigan Street, 2nd Floor Milwaukee, WI 53202 2. The name of each series or class of securities for which this Form is filed (If the Form is being filed for all series and classes of securites of the issuer, check the box but do not list series or classes):[] TCM Small Cap Growth Fund 3. Investment Company Act File Number: 811-05037 Securities Act File Number: 033-12213 4(a). Last day of fiscal year for which this Form is filed: September 30, 2009 4(b). [] Check box if this Form is being filed late (i.e., more than 90 calendar days after the end of the issuer's fiscal year).(See Instruction A.2) Note: If the Form is being filed late, interest must be paid on the registration fee due. 4(c). [] Check box if this is the last time the issuer will be filing this Form. Persons who respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number. SEC 2393 (6-02) 5. Calculation of registration fee: (i) Aggregate sale price of securities sold during the fiscal year pursuant to section 24(f): $ 111,165,526 (ii) Aggregate price of securities redeemed or repurchased during the fiscal year: $ 74,911,348 (iii) Aggregate price of securities redeemed or repurchased during any prior fiscal year ending no earlier than October 11, 1995 that were not previously used to reduce registration fees payable to the Commission: $ 0 (iv) Total available redemption credits [add Items 5(ii) and 5(iii)]: $ 74,911,348 (v) Net sales - if Item 5(i) is greater than Item 5(iv) [subtract Item 5(iv) from Item 5(i)]: $ 36,254,178 (vi) Redemption credits available for use in future years $( ) - if Item 5(i) is less than Item 5(iv) [subtract Item 5(iv) from Item 5(i)]: (vii) Multiplier for determining registration fee (See Instruction C.9): X 0.0000558 (viii) Registration fee due [multiply Item 5(v) by Item 5(vii)](enter "0" if no fee is due): $ 2,022.98 6. Prepaid Shares If the response to item 5(i) was determined by deducting an amount of securities that were registered under the Securities Act of 1933 pursuant to rule 24e-2 as in effect before October 11, 1997, then report the amount of securities (number of shares or other units) deducted here : .If there is a number of shares or other units that were registered pursuant to rule 24e-2 remaining unsold at the end of the fiscal year for which this form is filed that are available for use by the issuer in future fiscal years, then state that number here : . 7. Interest due - if this Form is being filed more than 90 days after the end of the issuer's fiscal year (see Instruction D): +$ 0 8. Total of the amount of the registration fee due plus any interest due [line 5(viii) plus line 7]: $ 2,022.98 9. Date the registration fee and any interest payment was sent to the Commission's lockbox depository: 12/14/2009 Method of Delivery: [ X ] Wire Transfer [] Mail or other means SIGNATURES This report has been signed below by the following persons on behalf of the issuer and in the capacities and on the dates indicated. By (Signature and Title)* /s/ Aaron Perkovich Aaron Perkovich, Assistant Treasurer Date December 16, 2009 * Please print the name and title of the signing officer below the signature. UNITED STATES OMB APPROVAL SECURITIES AND EXCHANGE COMMISSION Washington, D.C.20549 OMB Number:3235-0456 Expires:March 31, 2012 FORM 24F-2 Estimated average burden Annual Notice of Securities Sold hours per response……2 Pursuant to Rule 24f-2 Read instructions at end of Form before preparing Form. 1. Name and address of issuer: Professionally Managed Portfolios 615 E. Michigan Street, 2nd Floor Milwaukee, WI 53202 2. The name of each series or class of securities for which this Form is filed (If the Form is being filed for all series and classes of securites of the issuer, check the box but do not list series or classes):[] TCM Small-Mid Cap Growth Fund 3. Investment Company Act File Number: 811-05037 Securities Act File Number: 033-12213 4(a). Last day of fiscal year for which this Form is filed: September 30, 2009 4(b). [] Check box if this Form is being filed late (i.e., more than 90 calendar days after the end of the issuer's fiscal year).(See Instruction A.2) Note: If the Form is being filed late, interest must be paid on the registration fee due. 4(c). [] Check box if this is the last time the issuer will be filing this Form. Persons who respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number. SEC 2393 (6-02) 5. Calculation of registration fee: (i) Aggregate sale price of securities sold during the fiscal year pursuant to section 24(f): $ 40,118,211 (ii) Aggregate price of securities redeemed or repurchased during the fiscal year: $ 4,840,024 (iii) Aggregate price of securities redeemed or repurchased during any prior fiscal year ending no earlier than October 11, 1995 that were not previously used to reduce registration fees payable to the Commission: $ 0 (iv) Total available redemption credits [add Items 5(ii) and 5(iii)]: $ 4,840,024 (v) Net sales - if Item 5(i) is greater than Item 5(iv) [subtract Item 5(iv) from Item 5(i)]: $ 35,278,187 (vi) Redemption credits available for use in future years $( ) - if Item 5(i) is less than Item 5(iv) [subtract Item 5(iv) from Item 5(i)]: (vii) Multiplier for determining registration fee (See Instruction C.9): X 0.0000558 (viii) Registration fee due [multiply Item 5(v) by Item 5(vii)](enter "0" if no fee is due): $ 1,968.52 6. Prepaid Shares If the response to item 5(i) was determined by deducting an amount of securities that were registered under the Securities Act of 1933 pursuant to rule 24e-2 as in effect before October 11, 1997, then report the amount of securities (number of shares or other units) deducted here : .If there is a number of shares or other units that were registered pursuant to rule 24e-2 remaining unsold at the end of the fiscal year for which this form is filed that are available for use by the issuer in future fiscal years, then state that number here : . 7. Interest due - if this Form is being filed more than 90 days after the end of the issuer's fiscal year (see Instruction D): +$ 0 8. Total of the amount of the registration fee due plus any interest due [line 5(viii) plus line 7]: $ 1,968.52 9. Date the registration fee and any interest payment was sent to the Commission's lockbox depository: 12/14/2009 Method of Delivery: [ X ] Wire Transfer [] Mail or other means SIGNATURES This report has been signed below by the following persons on behalf of the issuer and in the capacities and on the dates indicated. By (Signature and Title)* /s/ Aaron Perkovich Aaron Perkovich, Assistant Treasurer Date December 16, 2009 * Please print the name and title of the signing officer below the signature.
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AMENDMENT AGREEMENT
THIS AMENDMENT AGREEMENT is dated for reference October 30, 2012.
AMONG:
NORTH AMERICAN POTASH DEVELOPMENTS INC. (formerly Ringbolt Ventures Ltd.) of
3467 Commercial Street, Vancouver, British Columbia V5N 4E8, E-mail:
simonkm88@gmail.com (“RBV”), POTASH GREEN, LLC of 97 East Mount Peale Drive,
Moab, Utah 84532, WENDY WALKER TIBBETTS of 97 East Mount Peale Drive Moab, Utah
84532 E-mail: wendy_walker@hotmail.com (“WWT”), and JOSEPH J. HANSEN of 1116
Mariwood Circle North Salt Lake, Utah 84054 E-mail: jxhansen@earthlink.net
(“JJH”)
(collectively, the “Optionor”);
AND
PASSPORT POTASH INC., of 608 -1199 West Pender Street Vancouver, British
Columbia V6E 2Rl E-mail: josh.bleak@gmail.com and/or jbleak@passportpotash.com
(“PPI”)
(the “Optionee”).
WHEREAS:
A.
On November 3, 2011, Ringbolt Ventures Ltd. changed its name to North American
Potash Developments Inc.
B.
The Optionor and the Optionee entered into an Option Agreement dated for
reference March 28, 2011 (the “Original Agreement”) whereby the Optionee was
granted an option to acquire an undivided 90% legal and beneficial interest in
and to the Property (as more particularly described in Schedule “A” attached to
the Original Agreement).
C.
The Optionee has represented that it has satisfied the following Payment and
Work requirements under the Original Agreement, and the Optionor has relied on
such representation and warranty in this Amendment:
(a)
Made the first three cash payments totalling $650,000 as set out in Section 1.2;
(b)
Issued the common shares in the amount of 2,400,000 shares as set out in Section
1.3; and
(c)
Performed work on the Property in the amount of at least $1,250,000 as set out
in Section 1.4.
D.
On May 25, 2012, the Optionor initiated a civil action against the Optionee,
styled North American Potash Developments Inc., et al. v. Passport Potash Inc.,
Third Judicial District Court, Salt Lake County, State of Utah, Case No.
12090352 (the “Action”). The Optionor asserted causes of action against the
Optionee for breach of contract related to the Original Agreement and unjust
enrichment. The Optionee asserted counterclaims for breach of contract and
breach of the implied covenant of good faith and fair dealing related to the
Original Agreement. The parties to the Action denied liability and asserted
defences regarding the claims against them. The Optionor’s and the Optionee’s
claims in the Action are hereinafter collectively referred to as the “Claims.”
E.
As part of a settlement of the disputes between the parties, the parties wish to
now amend the Original Agreement in accordance with this Amendment Agreement, as
set forth below.
NOW THEREFORE in consideration of the premises and mutual covenants herein, and
other good and valuable consideration (the receipt and sufficiency of which is
hereby acknowledged), the parties agree as follows:
1. In furtherance of this Amendment Agreement, the Original Agreement is amended
as follows:
1
a.
The reference to “an undivided 90% legal and beneficial interest in and to the
Property (the ‘Interest’)” in Article 1 is amended to state: “an undivided 100%
legal and beneficial interest in and to the Property (the ‘Interest’)”.
b.
The reference to “the expenditures by the Optionee of set out in Section 1.4
‘Expenditures to be incurred by Optionee’” in Article 1 is amended to state:
“the expenditures by the Optionee set out in Section 1.4 ‘Expenditures by
Optionee’ (collectively, the ‘Work’)”.
c.
The reference to “All of the following payments divided and paid to each of the
parties comprising the Optionor as to following percentages RBV – 70%, WWT – 20%
and JJH – 10%:” in Article 1 is amended to state: “All of the following payments
divided and paid to each of the parties comprising the Optionor as to following
percentages RBV – 70%, WWT – 20%, and JJH – 10%:(1)
(1) All payments and share issuances, including but not limited to those made
pursuant to Article 3, made to Potash Green, LLC upon or subsequent to the
execution of the Amendment shall be deemed to be made in trust for RBV, WWT, and
JJH based on their right to receive 70%, 20%, and 10% interest of same,
respectively. The payments and share issuance made to Potash Green, LLC upon or
subsequent to the execution of the Amendment shall also be deemed to constitute
good delivery in regard of any right to receive same by RBV, WWT, and JJH from
the Optionee. Nothing in this footnote shall affect PPI’s obligation to deliver
the Payment and Shares to Potash Green, LLC. Indeed, this footnote is provided
simply to explain that RBV, WWT, and JJH are intended beneficiaries of the
Payment and Shares.”.
d.
Sections 1.2, 1.3, and 1.4, including footnote 1, are deleted in their entirety
Date or Time Period
1.2 Option Cash
Payments by Optionee 1.3 Option Share
Payment by Optionee 1.4 Expenditures by
the Optionee Upon execution of this
Agreement
US$50,000
(RBV - US$35,000,
WWT - US$10,000,
JJH - US$5,000)
Upon TSX Venture
Exchange Approval of
this Agreement
("TSXV Approval") US$250,000
(RBV - US$175,000,
WWT - US$50,000,
JJH - US$25,000) 1,000,000 common shares
(RBV - 700,000 shares,
WWT - 200,000 shares,
JJH - 100,000 shares)
Year 1: Within 1 year of
TSX Venture Exchange
approval
US$500,000
On or before the 1st
Anniversary of TSXV
Approval
US$350,000
(RBV - US$245,000,
WWT - US$70,000,
JJH - US$35,000) 1,400,000 common shares
(RBV - 980,000 shares,
WWT - 280,000 shares,
JJH - 140,000 shares)
Year 2: Within 1 year of
1st Anniversary of
TSXV Approval
US$750,000
Upon execution of the
amendment to this
Agreement, which
amendment is dated for
reference October 30,
2012 (the
“Amendment”) US$150,000
to Potash Green, LLC
To be escrowed within
3 business days of the US$2,450,000
to Potash Green, LLC 750,000 common shares(2)
2
Optionee’s receipt of
written notice, by either
the TSX Venture
Exchange or the
Optionor, of TSX
Venture Exchange’s
approval of the
Amendment (“TSX 2nd
Approval”)
On or before October
31, 2014 US$1,250,000
Totals US$4,500,000 3,150,000 common
shares US$1,250,000
(2) The common shares issued by the Optionee shall be subject to the resale
restrictions of the securities laws and regulations of the United States and
Canada. The Optionee represents that these shares have not been registered under
any US federal or state securities law, and may not be transferred without an
effective registration statement pursuant to such laws. Optionee shall have
these shares, along with shares previously issued pursuant to this Section 1.3
registered as soon as permitted after its next round of financing. In any case,
pursuant to Rule 144, these shares may be sold after June 29, 2013.
e.
Section 1.11, including Exhibit B, is deleted in its entirety.
f.
Section 1.12 is deleted in its entirety.
g. Section 2.1 is deleted in its entirety and replaced with the
following:
“Upon written notice from the TSX Venture Exchange that the Amendment Agreement
has been approved, the parties shall simultaneously do the following: (i)
Optionor shall assign all of its right, title, and interest in and to the
Property and will take all necessary action with the Arizona State Land
Department to effect such assignment, the cost of such actions to be paid by
Optionee; and (ii) Optionee will place into escrow with Christopher M. Von Maack
of Magleby & Greenwood, P.C. on behalf of Potash Green, LLC the $2,450,000 cash
payment and the 750,000 common shares of Optionee issued in the name of Potash
Green, LLC. The cash payment and shares will be released to Potash Green LLC
upon receipt of confirmation of the assignment of the Property to PPI Holding
Corp. from the Arizona State Land Department.”
h.
Article 3 and Sections 3.1, 3.2, 3.3 and 3.4 comprising thereof are deleted in
their entirety and replaced with the following:
“3. BONUS PAYMENTS
3.1 If at any time after the Optionee acquires the Interest in the Property, the
Optionee, or any subsidiary or affiliate (as those terms are defined in the
Business Corporations Act, S.B.C., c.57, as amended from time to time) of the
Optionee who may then be holding the Interest in the Property (including, but
not limited to PPI Holding Corp.), sells, leases, mortgages, transfers, pledges,
disposes, or subjects the Property to any other type of transaction or string of
transactions (collectively, a “transfer transaction”) which, in effect, results
in the legal or beneficial transfer of all of Interest, a bonus payment shall be
paid to the Optionor in accordance with the following bonus payment schedule:
(a)
if the Interest is transferred to any for an aggregate consideration valued at
less than US$30,000,000, then no bonus payment shall be payable by the Optionee
to Potash Green, LLC;
(b)
if the Interest is transferred to any party by a transfer transaction for an
aggregate consideration valued equal to or greater than US$30,000,000 and less
than US$40,000,000, then the Optionee shall pay to the Potash Green, LLC a
one-time bonus cash payment within three business days of the receipt by the
Optionee of any proceeds from the said transfer transaction in the amount of 20%
of the gross consideration received in excess of US$30,000,000 to a maximum of
US$2,000,000. For greater certainty, in the event that the Optionee sold the
Interest to a party for US$31,000,000, the Optionee would then be obligated to
pay the Potash Green, LLC a bonus cash payment of US$200,000;
3
(c)
aggregate consideration valued equal to or greater than US$40,000,000 and less
than US$50,000,000, then the Optionee shall pay to the Potash Green, LLC a
Optionee of any proceeds from the said transfer transaction in the aggregate
amount of US$2,000,000 plus 10% of the gross consideration received in excess of
US$40,000,000 to a maximum of US$1,000,000. For greater certainty, in the event
that the Optionee sold all of the Interest to a party for US$41,000,000, the
Optionee would then be obligated to pay the Potash Green, LLC a bonus cash
payment of US$2,100,000; and
(d)
aggregate consideration valued equal to or greater than US$50,000,000, then the
Optionee shall pay to the Potash Green, LLC a one-time bonus cash payment within
three business days of the receipt by the Optionee of any proceeds from the said
transfer transaction in the aggregate amount of US$3,000,000 plus 20% of the
value of the gross consideration received in excess of US$50,000,000. For
greater certainty, in the event that the Optionee sold all of the Interest to a
party for US$60,000,000, the Optionee would then be obligated to pay the Potash
Green, LLC a bonus cash payment of US$5,000,000.
3.2 If at any time after the Optionee acquires the Interest in the Property, the
Optionee, or any subsidiary, associate or affiliate of the Optionee who may then
be holding the Interest in the Property, enters into a transfer transaction and
results in the legal or beneficial transfer of less than 100% of the Interest,
then the foregoing provisions under Section 3.1 will apply if the “deemed gross
consideration value” calculated by multiplying the consideration value by the
ratio of (100% / the percentage interest subject to the transfer transaction) is
above or within the consideration value thresholds set out in Section 3.1. Any
bonus payments to be calculated upon the transfer transaction of a portion of
the Interest shall be calculated using the calculation formulas set out in the
applicable subsections of Section 3.1 for the deemed gross consideration value,
and then rateably reducing this amount by multiplying the percentage interest
subject to the transfer transaction. For example, a 50% Interest is sold for
US$28,000,000. The deemed gross consideration value would be US$56,000,000. The
bonus payment on this deemed gross consideration value would be US$4,200,000
(Section 3.1(d)), however, as only a 50% Interest was sold, US$2,100,000 would
be payable to the Potash Green, LLC upon receipt of any proceeds of the sale by
the Optionee. The bonus payment provisions under Section 3.1 would continue to
apply to the remainder 50% Interest held by the Optionee.”.
i.
Section 4.1(a) is deleted in its entirety and replaced with the following:
“The Optionor holds 100% legal and beneficial interest in the Property comprised
of a 70% legal and beneficial interest in favour of RBV, a 20% legal and
beneficial interest in favour of WWT and a 10% legal and beneficial interest in
favour of JJH.”
j.
Section 4.1(b) is deleted in its entirety and replaced with the following:
“The Property and the Optionor’s interest therein are free and clear of any and
all encumbrances (including, without limitation, any order or judgment relating
to the Property or any legal proceedings in process, pending or threatened which
might result in any such order or judgment), royalties or other payments in the
nature of a rent or royalty, or other interests of whatsoever nature or kind,
recorded or unrecorded.”
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k.
Section 4.1(c) is deleted in its entirety and replaced with the following:
“That it has the right and authority to enter into this Agreement and to carry
out the terms and conditions contained herein and upon the exercise of the
Option for the Interest, to transfer the Interest to the Optionee free and clear
of all encumbrances.”
l.
Section 4.1(e) is deleted in its entirety and replaced with the following:
“That the Property has been properly located and recorded and is in good
standing in accordance with the laws of Arizona.”
m.
A new paragraph (g) is added to Section 5.1 and read as follows:
“Notwithstanding the transfer of title contemplated herein and the
representation by the Optionor under Section 4.1(b), the Optionee acknowledges
its obligation to timely meet the schedule as set out in Sections 1.2, 1.3, 1.4,
as amended.”
n.
Section 5.2, “Covenants,” is amended to read as follows: “Covenants. Prior to
the assignment of title in and to the Property pursuant to Section 2.1, the
Optionee covenants with the Optionor as follows:
2.
This Amendment Agreement is subject to the prior written acceptance by the TSX
Venture Exchange.
3.
The parties hereto acknowledge the right and privilege of the Optionor or the
Optionee to file, register, or otherwise deposit a copy of this Amendment
Agreement in the appropriate recording office for the jurisdiction in which the
Property is located, or with any other governmental agencies, to give third
parties notice of this Amendment Agreement, and hereby agree, each with the
other, to do or cause to be done all acts or things reasonably necessary to
effect such filing, registration or deposit.
4.
The parties agree that as part of the consideration for the Optionor to enter
into this Amendment Agreement, the Optionor and Optionee will enter into a
settlement agreement and mutual release in the form set out in Schedule “A”
attached hereto.
5.
Except as provided in this Amendment Agreement, all other terms and conditions
of the Original Agreement shall continue to have the same effect and force as
though the parties had not entered into this Amendment Agreement.
6.
Each of the parties hereby covenants and agrees that at any time upon the
request of the other party, do, execute, acknowledge, and deliver or cause to be
done, executed, acknowledged, and delivered all such further acts, deeds,
assignments, transfers, conveyances, powers of attorney, and assurances as may
be required for the better carrying out and performance of all the terms of this
Amendment Agreement. This Amendment Agreement will be governed by and be
construed in accordance with the laws of British Columbia. This Amendment
Agreement will be binding upon and ensure to the benefit of the parties hereto
and their respective heirs and executors and successors and assigns as the case
may be. This Amendment Agreement may not be assigned without the prior written
consent of the other party. No modification or amendment to this Amendment
Agreement may be made unless agreed to by the parties thereto in writing. In the
event any provision of this Amendment Agreement will be deemed invalid or void,
in whole or in part, by any court of competent jurisdiction, the remaining terms
and provisions will remain in full force and effect. Time is of the essence.
5
7.
This Amendment Agreement may be executed in any number of counterparts with the
same effect as if all parties to this Amendment Agreement had signed the same
document and all counterparts will be construed together and will constitute one
and the same instrument and any facsimile signature shall be taken as an
original.
IN WITNESS WHEREOF the parties have executed this Amendment Agreement effective
NORTH AMERICAN POTASH DEVELOPMENTS INC.
Per: /s/ Simon Tam
Authorized Signatory
Name: Simon Tam
Title: Director
POTASH GREEN, LLC
Per: /s/ Wendy W. Tibbetts
Authorized Signatory
Name: Wendy Walker Tibbetts
Title: Manager
/s/ Joseph J. Hansen
JOSEPH J. HANSEN
/s/ Wendy W. Tibbetts
WENDY WALKER TIBBETTS
PASSPORT POTASH INC.
Per: /s/ Joshua Bleak
Authorized Signatory
Name: Joshua Bleak
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Title: Questions regarding my exercising my legal rights with the police, [VA USA]
Question:I'm sorry if this is not the correct sub for this sort of post, but I want to know if I have understood the exercise of my legal rights when confronted by the police down to a T (or whatever that expression is).
In order to exercise my rights to the ultimate extent, when approached by a police officer, regardless of what they ask or what they say whatsoever, I respond with "Am I free to go? Am I being detained?" if they say that I am being detained, I can respond with "On what grounds am I being detained?" and after they tell me, I say "I choose to remain silent, officer." If they ask to search me, I say "I do not consent to a search."
So to make it super basic and easy for myself, the only things I should ever say to a law enforcement officer ever in my life, for as long as I live and for any reason, are, in order,
1. Am I free to go? Am I being detained?
1a. On what grounds am I being detained?
2. I do not consent to a search.
3. I choose to exercise my right to remain silent.
I also will provide my ID when appropriate, except that I don't know when it is appropriate for a cop to have my ID, so I just give it to them anyway so I'm not resisting arrest or whatever. Can I just not hand over my ID to a cop?
**Also, what are the laws in my state regarding recording the police? Is it advisable to record the police with my cell phone voice recorder in any instance in which I am stopped with the police, so long as I let them know?**
Answer #1: >"Am I free to go? Am I being detained?"
Depending on the context this might make you seem to be a bit of an ass, it'll guarantee you come down on the other side of the officer's discretion. When the officer tells you to stop, it's clear you are being detained. If he does not tell you to stop, then you are not being detained. If you are unsure whether you are being detained or not ask if you can leave; if the officer responds in the negative you can't.
>"On what grounds am I being detained?"
You can ask but he doesn't always have to answer you immediately.
>"I choose to remain silent, officer."
This only applies when you are being asked questions. No questions, no need to say anything. Note you must comply with lawfully given orders.
>"I do not consent to a[ny] search[es]."
But if the officer tries to search do not attempt to physically stop him. The place this is best fought is in court, on the street there are a lot of ways trying to stop an officer can go sideways for you and end up with a lot more hurt than you really need to have. If the search is unlawful any evidence obtained will be able to be suppressed. If the search is lawful trying to stop him is only going to land you with a couple more charges.
>Can I just not hand over my ID to a cop?
Virginia does not appear to be a stop and identify state. If you are on the street it does not appear that you are required to provide them your identification -- However if you are driving you will be required to surrender it and on the street if you do not surrender it the police are able to hold you until they have identified you sufficiently to know that you do not have any outstanding warrants. Not passing over identification might make this process last hours instead of minutes.
That depends entirely on context and no one (but a licensed VA attorney who represents you) is going to be able to give a good blanket answer.
Personally, I tend to not record officers when I am the subject under scrutiny for a couple of reasons:
1. It tends to make officers irate, keeping them as docile as possible tends to get me the best result. (YMMV)
2. If they perform an illegal search and I record it, I might get the search tossed *but the video evidence of the search* might still be admissable. If this is a drug charge getting the drugs tossed, but the video of me with the drugs admitted is also ruinous to my case.
3. In most of my police interactions there is nothing to be gained from the record; it is neither helpful nor harmful to my issue at hand; so why waste the effort?
4. If they lawfully order me to put the phone down, or turn it off, etc. I have to comply anyway. Not much value.
5. It puts my phone in an unlocked state that they may be able to search.
6. during any stop, quickly reaching into my pocket might get me shot. I prefer not to get shot.
This changes if I think the officers are about to do me serious harm that I feel like I will need this evidence to corroborate.
If the officers were harming someone else? Yes, then I would record them from a safe distance if possible.
as for:
>the only things I should ever say to a law enforcement officer ever in my life
It also changes when you need the police yourself. If someone breaks into your house call them up and let them know. It's be pretty stupid to call up the police over an incident needing an emergency response and then just shutting up on the phone.
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Exhibit Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Securities and Exchange Commission Release 34-46427 I, Robert Johnson, certify that: 1. I have reviewed this report on Form 10-Q of Innovative Acquisitions Corp.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and I have: a) designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) disclosed in this report any change in registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of the annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Dated: November 16, 2009 By: /s/Robert Johnson Robert Johnson Principal Executive Officer
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Exhibit 10.1
EMPLOYMENT AGREEMENT
This Agreement is between George L. Mikan III (“Executive”) and United
HealthCare Services, Inc. (“UnitedHealth Group”), and is effective as of
November 7, 2006 (the “Effective Date”). This Agreement’s purposes are to set
forth certain terms of Executive’s employment by UnitedHealth Group or one of
its affiliates and to protect UnitedHealth Group’s knowledge, expertise,
customer relationships, and confidential information. Unless the context
otherwise requires, “UnitedHealth Group” includes all its affiliated entities.
1. Employment and Duties.
A. Employment. UnitedHealth Group hereby employs Executive, and Executive
accepts employment, under this Agreement’s terms.
B. Title and Duties. Executive will be employed as the Executive Vice
President and Chief Financial Officer of UnitedHealth Group Incorporated, and
will report to the President and Chief Executive Officer of UnitedHealth Group
Incorporated. Executive will perform such duties, have such authority, and
exercise such supervision and control as are commonly associated with
Executive’s position, as well as perform such other duties as are reasonably
assigned to Executive. Executive will devote substantially all of Executive’s
business time and energy to Executive’s duties. Executive will maintain
operations in Executive’s area of responsibility, and make every reasonable
effort to ensure that the employees within that area of responsibility act, in
compliance with applicable law and UnitedHealth Group’s Principles of Integrity
and Compliance. Executive is subject to all of UnitedHealth Group’s employment
policies and procedures (except as specifically superseded by this Agreement).
2. Compensation and Benefits.
A. Base Salary. Executive’s initial annual base salary will be $650,000,
payable according to UnitedHealth Group’s regular payroll schedule. Periodic
adjustments to Executive’s base salary may be made.
B. Incentive Compensation. Executive will be eligible to participate in
UnitedHealth Group’s incentive compensation plans in UnitedHealth Group’s
discretion and in accordance with the plans’ terms and conditions. Executive’s
initial target bonus potential will be 90% of annual base salary, subject to
periodic adjustments.
C. Equity Awards. Executive will be eligible for stock-based awards in
UnitedHealth Group’s discretion.
D. Employee Benefits. Executive will be eligible to participate in
UnitedHealth Group’s employee welfare, retirement, and other benefit plans on
the same basis as other similarly situated executives, in accordance with the
terms of the plans. Executive will be eligible for Paid Time Off in accordance
with UnitedHealth Group’s policies. UnitedHealth Group reserves the right to
amend or discontinue any plan or policy at any time in its sole discretion. In
addition to the Company’s generally available benefits, the Company shall
provide Executive, at the Company’s expense during the term of Executive’s
employment, a $2 million face value term life insurance policy and a long term
disability policy which covers 60% of base salary in the event of a qualifying
long term disability, subject to the terms of the policy.
3. Term and Termination.
A. Term. This Agreement’s term is from the Effective Date until this
Agreement is terminated under Section 3.B.
B. Termination.
i. By Mutual Agreement. The parties may terminate Executive’s employment and
this Agreement at any time by mutual agreement.
ii. By UnitedHealth Group without Cause. UnitedHealth Group may terminate
this Agreement and Executive’s employment without Cause upon 90 days’ prior
written notice.
iii. By UnitedHealth Group with Cause. UnitedHealth Group may terminate this
Agreement and Executive’s employment at any time for Cause. “Cause” means
Executive’s (a) material failure to follow UnitedHealth Group’s reasonable
direction or to perform any duties reasonably required on material matters,
(b) material violation of, or failure to act upon or report known or suspected
violations of, UnitedHealth Group’s Principles of Integrity and Compliance,
(c) conviction of a felony, (d) commission of any criminal, fraudulent, or
dishonest act in connection with Executive’s employment, (e) material breach of
this Agreement, or (f) conduct that is materially detrimental to UnitedHealth
Group’s interests. UnitedHealth Group will, within 120 days of the discovery of
the conduct, give Executive written notice specifying the conduct constituting
Cause in reasonable detail and Executive will have 60 days to remedy such
conduct, if such conduct is reasonably capable of being remedied. In any
instance where the Company may have grounds for Cause, failure by the Company to
provide written notice of the grounds for Cause within 120 days of discovery
shall be a waiver of its right to assert the subject conduct as a basis for
termination for Cause.
iv. By Executive without Good Reason. Executive may terminate this Agreement
and Executive’s employment at any time for any reason, including due to
Executive’s retirement.
v. By Executive for Good Reason. Executive may terminate this Agreement and
Executive’s employment for Good Reason, as defined below. Executive must give
UnitedHealth Group written notice specifying in reasonable detail the
circumstances constituting Good Reason, within 120 days of becoming aware of
such circumstances, or such circumstances will not constitute Good Reason. If
the circumstances constituting Good Reason are reasonably capable of being
remedied, UnitedHealth Group will have 60 days to remedy such circumstances.
“Good Reason” will exist if, without Executive’s consent, UnitedHealth Group:
(a) reduces Executive’s base salary or long or short term target bonus
percentage other than in connection with a general reduction affecting a group
of similarly situated employees; (b) moves Executive’s primary work location
more than 50 miles; (c) makes changes that substantially diminish Executive’s
duties or responsibilities; or (d) changes the Executive’s reporting
relationship away from the President and Chief Executive Officer of UnitedHealth
Group.
vi. Due to Executive’s Death or Disability. This Agreement and Executive’s
employment will terminate automatically if Executive dies. The termination date
will be the date of Executive’s death. UnitedHealth Group may terminate this
Agreement and Executive’s employment due to Executive’s disability that renders
Executive incapable of performing the essential functions of Executive’s job,
with or without reasonable accommodation. Executive will not be entitled to
Severance Benefits under Section 4 in the event of termination due to
Executive’s death or disability.
4. Severance Benefits.
A. Circumstances under Which Severance Benefits Payable. Executive will be
entitled to Severance Benefits only if Executive’s employment is terminated by
UnitedHealth Group without Cause or if Executive terminates employment for Good
Reason. The Severance Benefits in this Agreement are in lieu of any payments or
benefits to which Executive otherwise might be entitled under any UnitedHealth
Group severance plan or program.
B. Severance Benefits. Executive will be entitled to the following Severance
Benefits in the event Executive’s employment terminates under the circumstances
described at Section 4A above:
(1) Two times Executive’s annualized base salary as of Executive’s termination
date.
(2) Two times the average of the total of any bonus or incentive compensation
paid or payable to Executive for the two most recent calendar years (excluding
equity-related awards, payments under any long-term or similar benefit plan, or
any other special or one-time bonus or incentive compensation payments);
provided, however, that if termination occurs within two years following the
Effective Date, the amount payable under this paragraph will be two times the
greater of (i) Executive’s target incentive, or (ii) the most recent year’s
annual bonus after the first year anniversary of this Agreement.
(3) $12,000 payment to offset costs of COBRA.
(4) Outplacement services consistent with those provided to similarly situated
executives.
Subject to the provisions of § 416(i) of the Internal Revenue Code, all payments
in (1)-(2) above will be less applicable deductions, including deductions for
tax withholding, and will be paid bi-weekly on the regular payroll cycle over
the two year severance period. Executive and the Company agree that this
Section 4 will not have the effect of extending the vesting period of any equity
awards granted prior to the date hereof.
C. Separation Agreement and Release Required. In order to receive any
Severance Benefits under this Agreement, Executive must sign a separation
agreement and release of claims substantially in the form attached hereto.
5. Property Rights, Confidentiality, Non-Disparagement, and Restrictive
Covenants.
A. UnitedHealth Group’s Property.
i. Assignment of Property Rights. Executive must promptly disclose in
writing to UnitedHealth Group all inventions, discoveries, processes,
procedures, methods and works of authorship, whether or not patentable or
copyrightable, that Executive alone or jointly conceives, makes, discovers,
writes or creates, during working hours or on Executive’s own time, during this
Agreement’s term (the “Works”). Executive hereby assigns to UnitedHealth Group
all Executive’s rights, including copyrights and patent rights, to all Works.
Executive must assist UnitedHealth Group as it reasonably requires to perfect,
protect, and use its rights to the Works. This provision does not apply to any
Work for which no UnitedHealth Group equipment, supplies, facility or trade
secret information was used and: (1) which does not relate directly to
UnitedHealth Group’s business or actual or demonstrably anticipated research or
development, or (2) which does not result from any work performed for
UnitedHealth Group.
ii. No Removal of Property. Executive may not remove from UnitedHealth
Group’s premises any UnitedHealth Group records, documents, data or other
property, in either original or duplicate form, except as necessary in the
ordinary course of UnitedHealth Group’s business.
iii. Return of Property. Executive must immediately deliver to UnitedHealth
Group, upon termination of employment, or at any other time at UnitedHealth
Group’s request, all UnitedHealth Group property, including records, documents,
data, and equipment, and all copies of any such property, including any records
or data Executive prepared during employment.
B. Confidential Information. Executive will be given access to and provided
with sensitive, confidential, proprietary and trade secret information
(“Confidential Information”) in the course of Executive’s employment. Examples
of Confidential Information include: inventions; new product or marketing plans;
business strategies and plans; merger and acquisition targets; financial and
pricing information; computer programs, source codes, models and databases;
analytical models; customer lists and information; and supplier and vendor lists
and information. Executive agrees not to disclose or use Confidential
Information, either during or after Executive’s employment with UnitedHealth
Group, except as necessary to perform Executive’s UnitedHealth Group duties or
as UnitedHealth Group may consent in writing. This Agreement does not restrict
use or disclosure of publicly available information or information: (i) that
Executive obtained from a source other than UnitedHealth Group before becoming
employed by UnitedHealth Group; or (ii) that Executive received from a source
outside UnitedHealth Group without an obligation of confidentiality.
C. Non-Disparagement. Executive agrees not to criticize, make any negative
comments or otherwise disparage UnitedHealth Group or those associated with it,
whether orally, in writing or otherwise, directly or by implication, to any
person or entity, including UnitedHealth Group customers and agents.
D. Restrictive Covenants. Executive agrees to the restrictive covenants in
this Section in consideration of Executive’s employment and UnitedHealth Group’s
promises in this Agreement, including providing Executive access to Confidential
Information. The restrictive covenants in this Section apply during Executive’s
employment and for 24 months following termination of employment for any reason.
Executive agrees that he will not, without UnitedHealth Group’s prior written
consent, directly or indirectly, for Executive or for any other person or
entity, as agent, employee, officer, director, consultant, owner, principal,
partner or shareholder, or in any other individual or representative capacity:
i. Customer Solicitation: Executive will not engage in, or attempt to engage
in, any business competitive with any UnitedHealth Group business with any
person or entity who: (a) was a UnitedHealth Group provider or customer within
the 12 months before Executive’s employment termination and (b) with whom
Executive had contact to further UnitedHealth Group’s business or for whom
Executive performed services, or supervised the provision of services for,
during Executive’s employment.
ii. Employee Solicitation: Executive will not hire, employ, recruit or
solicit any UnitedHealth Group employee or consultant.
iii. Interference: Executive will not induce or influence any UnitedHealth
Group employee, consultant, customer or provider to terminate his, her or its
employment or other relationship with UnitedHealth Group.
iv. Competitive Activities: Executive will not engage or participate in, or
in any way render services or assistance to, any business that competes,
directly or indirectly, with any UnitedHealth Group product or service that
Executive participated in, engaged in, or had Confidential Information
regarding, during Executive’s employment; provided, however, that this
Section 5.D.iv will not prevent Executive from being employed by, or working as
a consultant to, or serving on the board of, or being an owner or an investor
in, a private equity firm.
v. Assisting Others: Executive will not assist anyone in any of the
activities listed above.
E. Cooperation and Indemnification. Executive agrees that Executive will
cooperate (i) with UnitedHealth Group in the defense of any legal claim
involving any matter that arose during Executive’s employment with UnitedHealth
Group, and (ii) with all government authorities on matters pertaining to any
investigation, litigation or administrative proceeding concerning UnitedHealth
Group. UnitedHealth Group will reimburse Executive for any reasonable travel and
out-of-pocket expenses incurred by Executive in providing such cooperation.
UnitedHealth Group will indemnify Executive, in accordance with the Minnesota
Business Corporation Act, for all claims and other covered matters arising in
connection with Executive’s employment.
F. Injunctive Relief. Executive agrees that (a) legal remedies (money
damages) for any breach of Section 5 will be inadequate, (b) UnitedHealth Group
will suffer immediate and irreparable harm from any such breach, and
(c) UnitedHealth Group will be entitled to injunctive relief from a court in
addition to any legal remedies UnitedHealth Group may seek in arbitration. If an
arbitrator or court determines that Executive has breached any provision of
Section 5, Executive agrees to pay to UnitedHealth Group its reasonable costs
and attorney’s fees incurred in enforcing that provision.
G. Survival. This Section 5 will survive this Agreement’s termination.
6. Miscellaneous.
A. Tax Withholding. All compensation payable under this Agreement will be
subject to applicable tax withholding and other required or authorized
deductions.
B. Assignment. Executive may not assign this Agreement. UnitedHealth Group
may assign this Agreement. Any successor to UnitedHealth Group will be deemed to
be UnitedHealth Group under this Agreement.
C. Notices. All notices under this Agreement must be hand delivered or sent
to the party’s address below or to the party’s current address at the time of
notice.
UnitedHealth Group:
UnitedHealth Group
Attn: Vice President, Employee Relations
9900 Bren Road East
Minnetonka, MN 55343
Executive:
George L. Mikan, III
9900 Bren Road East
Minnetonka, MN 55343
D. Entire Agreement, Amendment. This Agreement contains the parties’ entire
agreement regarding its subject matter and may only be amended in a writing
signed by the parties. This Agreement supersedes any and all prior oral or
written employment agreements (including letters and memoranda) between
Executive and UnitedHealth Group or its predecessors. This Agreement does not
supersede any stock option, restricted stock, or stock appreciation rights plan
or award certificate.
E. Choice of Law. Minnesota law governs this Agreement.
F. Waivers. No party’s failure to exercise, or delay in exercising, any
right or remedy under this Agreement will be a waiver of such right or remedy,
nor will any single or partial exercise of any right or remedy preclude any
other or further exercise of such right or remedy.
G. Narrowed Enforcement and Severability. If a court or arbitrator decides
that any provision of this Agreement is invalid or overbroad, the parties agree
that the court or arbitrator should narrow such provision so that it is
enforceable or, if narrowing is not possible or permissible, such provision
should be considered severed and the other provisions of this Agreement should
be unaffected.
H. Dispute Resolution and Remedies. Except for injunctive relief under
Section 5.F, any dispute between the parties relating to this Agreement or to
Executive’s employment will be resolved by binding arbitration under
UnitedHealth Group’s Employment Arbitration Policy, as it may be amended from
time to time. The arbitrator(s) may not vary this Agreement’s terms and must
apply applicable law.
United HealthCare Services, Inc.
By /s/ Richard A. Anderson
Its Officer
Date January 31, 2007
George L. Mikan III
/s/ George L. Mikan III
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10 – K/A (Mark One) [ x ] ANNUAL REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Period year ended July 31, 2006 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 000-51975 Paracap Corporation (Exact name of small business issuer as specified in its charter) Nevada (State or other jurisdiction of incorporation or or organization) N/A (IRS Employer Number) c/o Catalyst Capital Unit 232, 2498 W.41st Ave Vancouver, BC. V6M 2A7 (Address of principal executive office) 949-419-6588 (Issuer's telephone number) n/a (Former name, former address and former fiscal year, if changed since last report) Suite 443, 5525 West Boulevard Vancouver, British Columbia, Canada, V6M 3W6 Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act: Yes o No x Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act: Yes o No x Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes X No o Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the 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. o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act: Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company x (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes o No X The aggregate market value of Paracap Corporation’s Common Stock owned by non-affiliates as of July 31, 2006 was nil. Number of shares of each class of Paracap Corporation's capital stock outstanding as of July 31, 2006: 13,470,000 shares of common stock Explanatory paragraph: The Form 10-K/A is amended to replace the Form 10-K filed on September 26, 2013 in order to remove the July 31, 2006 year ended audit report and to change any references on the July 31, 2006 financial statements from audited to unaudited. 1 Paracap Corporation FORM 10-K For the Fiscal Year ended July 31, 2006 Table of Contents Part I Item 1. Description of Business Item 1A. Risk Factors Item 1B. Unresolved Staff Comments Item 2. Description of Property Item 3. Legal Proceedings Item 4. Submission of Matters to a vote of Security Holders Part II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities Item 6. Selected Financial Data Item 7. Management's Discussion and Analysis of Financial Condition and the Results of Operations Item 7A. Quantitative and Qualitative Disclosures About Market Risk Item 8. Financial Statements and Supplementary Data Management's Report on Internal Control Over Financial Reporting Report of Independent Registered Public Accounting Firm Part III Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure Item 9A. Controls and Procedures Item 9B. Other Information Item 10.Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act Item 11. Executive Compensation Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Item 13. Exhibits and Financial Statements Schedules Item 14. Principal Accountants Fees and Services Signatures 2 FORWARD LOOKING STATEMENTS CERTAIN STATEMENTS IN THIS ANNUAL REPORT ON FORM 10-K, OR THE "REPORT," ARE "FORWARD-LOOKING STATEMENTS." THESE FORWARD-LOOKING STATEMENTS INCLUDE, BUT ARE NOT LIMITED TO, STATEMENTS ABOUT THE PLANS, OBJECTIVES, EXPECTATIONS AND INTENTIONS OF PARACAP CORPORATION., A NEVADA CORPORATION AND OTHER STATEMENTS CONTAINED IN THIS REPORT THAT ARE NOT HISTORICAL FACTS. FORWARD-LOOKING STATEMENTS IN THIS REPORT OR HEREAFTER INCLUDED IN OTHER PUBLICLY AVAILABLE DOCUMENTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, OR THE "COMMISSION," REPORTS TO OUR SHAREHOLDERS AND OTHER PUBLICLY AVAILABLE STATEMENTS ISSUED OR RELEASED BY US INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH COULD CAUSE OUR ACTUAL RESULTS, PERFORMANCE (FINANCIAL OR OPERATING) OR ACHIEVEMENTS TO DIFFER FROM THE FUTURE RESULTS, PERFORMANCE (FINANCIAL OR OPERATING) OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. SUCH FUTURE RESULTS ARE BASED UPON MANAGEMENT'S BEST ESTIMATES BASED UPON CURRENT CONDITIONS AND THE MOST RECENT RESULTS OF OPERATIONS. WHEN USED IN THIS REPORT, THE WORDS "EXPECT," "ANTICIPATE," "INTEND," "PLAN," "BELIEVE," "SEEK," "ESTIMATE" AND SIMILAR EXPRESSIONS ARE GENERALLY INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS, BECAUSE THESE FORWARD-LOOKING STATEMENTS INVOLVE RISKS AND UNCERTAINTIES. THERE ARE IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED OR IMPLIED BY THESE FORWARD-LOOKING STATEMENTS, INCLUDING OUR PLANS, OBJECTIVES, EXPECTATIONS AND INTENTIONS AND OTHER FACTORS. PART I Item 1. Description of Business Paracap Corporation was incorporated in the state of Nevada on on April 1, 2005. Paracap’s original business plan was to own and operate a chain of liquor stores. The Company has shelved these plans and now have reformulated to begin operations as an online website that promotes daily deals for business-to-business transactions. We anticipate that in order for us to continue development of this online operation and retail sale of our product, we will need to raise additional capital. We currently do not have any specific plans to raise these funds. Principal Products or Services and Their Markets We intend to commence operations as an online website that promotes daily deals for business-to-business transactions. Paracap technology is developed in-house and we intend to be a leading provider of advertising and marketing services. A factor that is proprietary to Paracap is our option to allow users to suggest deals and vote on deals already suggested. This key differentiator is our user-friendly website which will allow business owners to buy and sell products and services at considerable discounts between the members of our business to business online community. The initial market we plan to introduce our software to is the worldwide market. Competition The current market for daily deal websites is competitive. Our Company differentiates itself from other daily deal websites in that it allows the customers to suggest what deals they want. Insurance Currently, we have no insurance coverage. Government Regulation We are currently not subject to any government regulations. Offices The Company's headquarters and executive address is located at Unit 268 Suite akerview Rd, Bellingham WA 98226. Our telephone number is 949-419-6588 Employees We currently do not have any employees. Subsidiaries We do not have any subsidiaries Bankruptcy, Receivership, or Similar Proceedings There has been no bankruptcy, receivership, or similar proceedings Patents and Trademarks We do not have any patents or trademarks Legal Proceedings We are not a party to any material legal proceeding, nor are any of our officers, director or affiliates' a party adverse to us in any legal proceeding.
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Title: Legality of hidden camera at work place?
Question:It is located in the break room and it was placed there by my supervisors without giving anyone else notice.
Location: Texas
Topic:
Employment Law
Answer #1: IANAL, Typically a business is allowed to install cameras where they choose so long as it's not in a bathroom or designated private space(like a nursing room)Answer #2: Your employer can surreptitiously install cameras wherever employees do not have an expectation of privacy (e.g., the bathroom, changing rooms, etc.). |
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of report (Date of earliest event reported):May 27, 2009 ASHLAND INC. (Exact name of registrant as specified in its charter) Kentucky (State or other jurisdiction of incorporation) 1-32532 20-0865835 (Commission File Number) (I.R.S. Employer Identification No.) 50 E. RiverCenter Boulevard, Covington, Kentucky41011 (Address of principal executive offices)(Zip Code) P.O. Box 391, Covington, Kentucky41012-0391 (Mailing Address)(Zip Code) Registrant’s telephone number, including area code (859) 815-3333 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: []
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Exhibit 32 Statement of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Ross J. Prossner, Chief Executive Officer and President of Beacon Federal Bancorp, Inc., a Maryland corporation (the “Company”) and Lisa M. Jones, Vice President and Principal Financial and Accounting Officer of the Company, each certify in his or her capacity as an officer of the Company that he or she has reviewed the annual report on Form 10-K for the year ended December 31, 2008 (the “Report”) and that to the best of his or her knowledge: 1. the Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods covered by the Report. Date: March 31, 2009 /s/ Ross J. Prossner Ross J. Prossner Chief Executive Officer and President Date: March 31, 2009 /s/ Lisa M. Jones Lisa M. Jones Vice President and Principal Financial and Accounting Officer This statement is authorized to be attached or an exhibit o the Report so that this statement will accompany the Report at such time on the Report is filed with the Securities and Exchange Commission pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. It is not intended that this statement be deemed to be filed for purpose of the Securities Exchange Act of 1934, as amended. A signed original 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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Exhibit 10.14
Second AMENDMENT TO Severance Agreements
Dated as of November 8, 2018
This Second Amendment to Severance Agreements (this "Amendment"), dated as of
November 8, 2018 (the "Amendment Date"), is by and between Steven J. Adolph, an
individual (the "Employee"), and SPAR Group, Inc., a Delaware corporation
("SGRP", the "Company" or the "Corporation"). The Employee and Company may be
referred to individually as a "Party" and collectively as the "Parties".
The Parties are parties to that certain existing Executive Officer Severance
Agreement dated June 17, 2016, as amended (the "Existing EOSA"), and that
certain existing Amended and Restated Change in Control Severance Agreement
dated September 5, 2017, as amended (the "Existing CICSA"), which the Parties
now desire to amend upon the terms and provisions and subject to the conditions
set forth in this Agreement to clarify that a confidentiality and
non-solicitation agreement (rather than a non-compete) will be required for
severance, as approved by SGRP's Audit Committee. The Existing EOSA and Existing
CICSA may be referred to individually as an "Existing Severance Agreement" and
collectively as the "Existing Severance Agreements", and as amended by this
Amendment, may be referred individually as a "Severance Agreement" and
collectively as the "Severance Agreements"
In consideration of past, present and future employment by the Company, the
mutual covenants below and other good and valuable consideration (the receipt
and adequacy of which are hereby acknowledged by each Party), the Employee and
Company, intending to be legally bound, hereby agree as follows:
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Amendment and the Existing Agreement, and other good and valuable
consideration (the receipt and adequacy of which is hereby acknowledged by the
Parties), the Parties hereto hereby agree as follows:
1. Certain Definitions. Except as otherwise provided herein, all capitalized
terms used and not otherwise defined or amended in this Amendment shall have the
meanings respectively given to them in the Existing EOSA or Existing CICSA, as
applicable.
2. Amendment to Existing EOSA. Upon execution and delivery of this
Amendment, the Existing EOSA is hereby supplemented and amended as follows,
effective as of the Amendment Date:
(a) The defined terms: "Existing EOSA" shall mean that certain existing
Executive Officer Severance Agreement dated September 5, 2017, by and between
Steven J. Adolph, an individual (as the "Employee" thereunder), and SPAR Group,
Inc., a Delaware corporation (as ("SGRP", the "Company" or the "Corporation"
thereunder), as amended by the First Amendment. "Existing CICSA" shall mean that
dated September 5, 2017, by and between Steven J. Adolph, an individual (as the
"Employee" thereunder), and SPAR Group, Inc., a Delaware corporation (as
("SGRP", the "Company" or the "Corporation" thereunder), as amended by the First
Amendment. "First Amendment" shall mean the Corrected First Amendment to
Severance Agreements dated as of August 8, 2018, by and between Steven J.
Adolph, an individual (as the "Employee" thereunder), and SPAR Group, Inc., a
Delaware corporation (as "SGRP", the "Company" or the "Corporation" thereunder).
"Second Amendment" shall mean the Second Amendment to Severance Agreements dated
as of November 8, 2018, by and between Steven J. Adolph, an individual (as the
"SGRP", the "Company" or the "Corporation" thereunder). "EOSA" shall mean the
Existing ESOA as amended by the First Amendment and Second Amendment and as such
agreement otherwise may have been and hereafter may be supplemented, modified,
amended or restated from time to time in the manner provided therein. "CICSA"
shall mean the Existing CICSA as amended by the First Amendment and Second
Amendment and as such agreement otherwise may have been and hereafter may be
supplemented, modified, amended or restated from time to time in the manner
provided therein. The defined term "Agreement" shall mean the EOSA.
(b) In Section 3 of the Existing EOSA, subsection (b) (entitled "Release,
Non-Compete Agreement and Resignations Required for Severance Benefits") is
hereby deleted in its entirety, and the following new amended and restated
subsection is hereby inserted in its place (without the deletion or modification
of any other material):
(b) Release, Confidentiality and Non-Solicitation and Resignations Agreement
Required for Severance Benefits. As a condition precedent to the payment of any
benefits under this Agreement in the event of a Severance Termination, the
Company may in its discretion require (within the 30 day period described below)
the execution and delivery by the Employee of any one or more of a Release,
Confidentiality Agreement and Resignation (as such terms are defined below);
provided, however, that each Release, Confidentiality Agreement and Resignation
shall expressly exclude and reserve, and shall not in any way affect, the
Employee's rights under this Agreement and any other severance agreement and
rights to indemnification (including advancement and defense) under the
Company's By-Laws and insurance policies and under applicable law. No Release,
Confidentiality Agreement or Resignation shall be required unless the Company
gives (by hand or overnight delivery with a copy by email) to the Employee the
requested Release, Confidentiality Agreement and/or Resignation signed by the
Company within the thirty (30) day period following the date of such Severance
Termination. "Release" shall mean a mutual release agreement between the
Employee and the Company (on behalf of all of all SGRP Companies) dated and
effective as of the date of the Severance Termination substantially in the same
form as Exhibit A hereto. "Confidentiality Agreement" shall mean a
Confidentiality and Non-Solicitation Agreement between the Employee and the
Company (with, among other things, a five year period of confidentiality and a
three year period of non-solicitation following termination, but without any
non-compete) dated and effective as of the date of the Severance Termination
substantially in the same form as Exhibit B hereto. "Resignation" shall mean a
confirmatory resignation letter from the Employee for each applicable SGRP
Company (other than the Company) dated and effective as of the date of the
Severance Termination substantially in the same form as Exhibit C hereto.
-1-
3. Amendment to Existing CICSA. Upon execution and delivery of this
Amendment, the Existing CICSA is hereby supplemented and amended as follows,
that certain existing Amended and Restated Change in Control Severance Agreement
dated September 5, 2017 (the "Existing CICSA"), by and between Steven J. Adolph,
amended by the First Amendment. "First Amendment" shall mean the Corrected First
Amendment to Severance Agreements dated as of August 8, 2018, by and between
Inc., a Delaware corporation ( as "SGRP", the "Company" or the "Corporation"
thereunder). "Second Amendment" shall mean the Second Amendment to Severance
Agreements dated as of November 8, 2018, by and between Steven J. Adolph, an
shall mean the Existing ESOA as amended by the First Amendment and Second
provided therein. "CICSA" shall mean the Existing CICSA as amended by the First
Amendment and Second Amendment and as such agreement otherwise may have been and
hereafter may be supplemented, modified, amended or restated from time to time
in the manner provided therein. The defined term "Agreement" shall mean the
CICSA.
(b) In Section 3 of the Existing CICSA, subsection (b) (entitled "Release,
4. Continuing Severance Agreements, Binding upon Successors. The Existing
Severance Agreements, as supplemented and amended by this Amendment, shall
remain and continue in full force and effect after the Amendment Date. This
Amendment's provisions shall be binding upon the applicable Party and its heirs,
successors, assigns and legal representatives and shall inure to the benefit of
the heirs, successors, assigns and legal representatives of each other Party.
5. Counterparts, Amendments and Authority. This Amendment may be executed in
multiple counterparts and delivered electronically (including by fax or email)
or physically, each of which shall be deemed an original and all of which
together shall constitute a single agreement binding upon all of the Parties.
Any supplement, modification, amendment, restatement, waiver, extension,
discharge, release or termination of this Amendment must be in writing and
signed by all of the Parties hereto and cannot be given orally. Each individual
signing below represents and warrants to the other Party that such individual
has the authority to bind the Party on whose behalf he or she has executed this
Amendment.
6. Governance and Entire Agreement. This Amendment shall be governed by and
construed in accordance with the applicable provisions of the applicable
Severance Agreement, which provisions are hereby incorporated herein by
reference into this Amendment, and shall be interpreted as if this Amendment
were the "Agreement" referred to in those incorporated provisions. This
Amendment and the applicable Severance Agreement together contain the entire
agreement and understanding of the Parties and supersede and completely replace
all prior and other representations, warranties, promises, assurances and other
agreements, understandings and information (including, without limitation, all
letters of intent, term sheets, existing agreements, offers, requests, responses
and proposals), whether written, electronic, oral, express, implied or
otherwise, from a Party or between them with respect to the matters contained in
this Amendment and the applicable Severance Agreement.
-2-
In Witness Whereof, the Parties hereto have executed and delivered this
Amendment through their duly authorized signatories on the dates stated below
and intend to be legally bound by this Amendment effective as of the Amendment
Date.
COMPANY:
EMPLOYEE:
SPAR Group, Inc.
Steven J. Adolph
By:
[ ▲ Executive's Signature ▲]
[ ▲ Employee's Signature ▲ ]
Executive's Name: Christiaan M. Olivier
Executive's Title: Chief Executive Officer and President
Steven J. Adolph
[Employee's Name ▲ Please Type or Print]
Date Signed:
Date Signed:
Company's Current Address:
Employee's Current Address:
Steven J. Adolph
333 Westchester Avenue, South Building, Suite 204,
White Plains, New York 10604
-3- |
Title: [ON, Canada, 23] Got in an argument with my dad, he pushed me, I pushed back and my mom tried to stop us and got knocked over.
Question:So a small bit of explaining, I'm currently off work suffering from crippling social anxiety and depression, to the point where I haven't left the house in about 6 months minus a few times to see family and my one close friend. I'm seeing a therapist and waiting on a psychiatrist.
Anyways as it stands I'm in the avoiding kind of phase of depression, I don't know how to deal with my issues and I just do everything I can to avoid getting more depressed. My parents have been kind enough to support me through this but my dad never quite gets it, anyways he was trying to force me to do something that I know only makes my issues worse and I tried to explain why I was unable to do these things. It ended up getting heated, and I just want to have him understand, he finally yelled at me to stop talking and when I wouldn't he came over to me and I put my arms up to defend myself.
He then started pushing me backwards and I'm a big guy so I started resisting. I ended up backed up against a door and I decided to fight back and not let him literally push me around, I got my footing and started pushing back. In the whole heat of it my mom started crying and yelling to stop, she then ended up standing behind him and when I was pushing back she accidentally got knocked down. Obviously all the pushing stopped and my dad tried to help her up and so did I. He then just yelled at me to go away and I just said I wanted to make sure she was ok.
Her shoulder is sore and my back is quite sore. I'm mainly curious as to if this is all my fault. He is constantly criticizing me about how I don't do enough and I always try to explain substitution, even to the point where he has come to the therapist but he doesn't get it.
How badly did I mess this up? And is this in any way abuse, I feel like I'm constantly being criticized by my father but I don't know if I'm just being a sissy.
Tldr; got in an argument with dad, I would stop talking so he started pushing me, I pushed back and mom got knocked down due to that. I feel horrible and am curious as to how badly I messed up
Answer #1: >How badly did I mess this up?
Adults should never get physical with other adults. You messed up. Your dad messed up.
Abuse? A better word is dispute for this situation.
But here's the thing: there's no such thing as a free lunch. You are living with your parents, they are paying your bills, and it's rather understandable that they are frustrated and upset that they have to do this. You really have no right to demand that they support you in a particular way or let you do whatever you want. If you need a particular living environment, then you go to inpatient. Your parents are under NO obligation to treat your mental illness or alter their behavior in your own home. They are FULLY within their rights to set terms of your residency with them, and if you cannot abide by those terms for WHATEVER reason, you need to find a new place to live.
It sounds like an unhealthy situation. The BEST option is you moving out. The second best option is everyone going to family counseling where you can set boundaries that EVERYONE (including you) must abide by. |
Exhibit 10.29
EXECUTION COPY
GRAPHIC [g295452kq01i001.jpg]
$1,800,000,000
REVOLVING LOAN AND LETTER OF CREDIT FACILITY AGREEMENT
among
FLUOR CORPORATION,
as Borrower,
BNP PARIBAS,
as Administrative Agent and an Issuing Lender,
as Syndication Agent,
CITIBANK, N.A. and THE BANK OF TOKYO-MITSUBISHI UFJ, LTD.
and
THE LENDERS PARTY HERETO
November 9, 2012
BNP PARIBAS SECURITIES CORP.,
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,
CITIGROUP GLOBAL MARKETS, INC. and THE BANK OF TOKYO-MITSUBISHI UFJ, LTD.
as Joint Bookrunners and Joint Lead Arrangers
TABLE OF CONTENTS
ARTICLE I DEFINITIONS
1
SECTION 1.01.
Definitions
1
SECTION 1.02.
Other Definitional Provisions
13
ARTICLE II REVOLVING ADVANCES AND LETTERS OF CREDIT
14
SECTION 2.01.
Revolving Advances
14
SECTION 2.02.
Making the Revolving Advances
14
SECTION 2.03.
Repayment of Revolving Advances
15
SECTION 2.04.
Optional Prepayments of Revolving Advances; Voluntary Termination or Reduction
of Commitments
15
SECTION 2.05.
Interest on Revolving Advances
16
SECTION 2.06.
Conversion and Continuation of Revolving Advances
18
SECTION 2.07.
Issuance of Letters of Credit
19
SECTION 2.08.
Participations in Letters of Credit
20
SECTION 2.09.
Reimbursement in Respect of Letters of Credit
21
SECTION 2.10.
Disbursement Procedures for Letters of Credit; Reporting
22
SECTION 2.11.
Interest on LC Disbursements and Reimbursement of Other Amounts
23
SECTION 2.12.
Cash Collateralization
23
SECTION 2.13.
Obligations
25
SECTION 2.14.
General Provisions as to Payments
26
SECTION 2.15.
27
SECTION 2.16.
Taxes; Net Payments
28
SECTION 2.17.
Increased Costs
30
SECTION 2.18.
Illegality
31
SECTION 2.19.
Fees
31
SECTION 2.20.
Evidence of Debt
33
SECTION 2.21.
Use of Proceeds
33
SECTION 2.22.
Defaulting Lenders
33
SECTION 2.23.
Replacement of Lenders
35
SECTION 2.24.
Incremental Commitments
35
ARTICLE III CONDITIONS PRECEDENT
37
SECTION 3.01.
Closing Date
37
SECTION 3.02.
Conditions to All Revolving Advances and Letters of Credit
38
ARTICLE IV REPRESENTATIONS AND WARRANTIES
38
SECTION 4.01.
Corporate Existence and Power
38
SECTION 4.02.
Corporate and Governmental Authorization; Contravention
38
SECTION 4.03.
Binding Effect
39
SECTION 4.04.
Financial Information
39
SECTION 4.05.
Litigation
39
SECTION 4.06.
Compliance with ERISA
39
SECTION 4.07.
Taxes
39
SECTION 4.08.
Material Subsidiaries
40
i
SECTION 4.09.
Not an Investment Company
40
SECTION 4.10.
Business of the Borrower; Use of Proceeds
40
SECTION 4.11.
No Misleading Statements
40
SECTION 4.12.
Environmental Matters
40
SECTION 4.13.
No Default
41
ARTICLE V COVENANTS
41
SECTION 5.01.
Information
41
SECTION 5.02.
Payment of Obligations
43
SECTION 5.03.
Maintenance of Property; Insurance
43
SECTION 5.04.
Conduct of Business and Maintenance of Existence
43
SECTION 5.05.
Compliance with Laws
44
SECTION 5.06.
Keeping of Records; Inspection of Property, Books and Records
44
SECTION 5.07.
Debt
44
SECTION 5.08.
Negative Pledge
44
SECTION 5.09.
Consolidations, Mergers and Sales of Assets
45
SECTION 5.10.
Payment of Taxes, Etc.
45
SECTION 5.11.
Pari-passu Obligations
45
SECTION 5.12.
Further Assurances
46
ARTICLE VI DEFAULTS
46
SECTION 6.01.
Events of Default
46
SECTION 6.02.
Remedies
48
ARTICLE VII THE ADMINISTRATIVE AGENT
48
SECTION 7.01.
Appointment and Authorization
48
SECTION 7.02.
Rights as a Lender
49
SECTION 7.03.
Reliance by Administrative Agent
49
SECTION 7.04.
Delegation of Duties
49
SECTION 7.05.
Exculpatory Provisions
49
SECTION 7.06.
Indemnification
50
SECTION 7.07.
Non-Reliance on Administrative Agent and Other Lenders
51
SECTION 7.08.
Resignation of Administrative Agent
51
SECTION 7.09.
Agent With Respect to Cash Collateral Accounts
52
SECTION 7.10.
No Other Duties, etc.
52
ARTICLE VIII MISCELLANEOUS
52
SECTION 8.01.
Notices
52
SECTION 8.02.
No Waivers
53
SECTION 8.03.
Expenses; Taxes; Indemnification
53
SECTION 8.04.
Sharing of Set-Offs
54
SECTION 8.05.
Amendments and Waivers
55
SECTION 8.06.
Successors and Assigns
56
SECTION 8.07.
Collateral
58
SECTION 8.08.
Governing Law
58
SECTION 8.09.
Counterparts; Effectiveness
58
SECTION 8.10.
Confidentiality
58
ii
SECTION 8.11.
Captions
59
SECTION 8.12.
Severability
59
SECTION 8.13.
Integration
59
SECTION 8.14.
Consent To Jurisdiction; Waiver Of Venue
59
SECTION 8.15.
Service of Process
60
SECTION 8.16.
60
SECTION 8.17.
61
SECTION 8.18.
Interest Rate Limitation
61
SECTION 8.19.
Judgment Currency
61
SECTION 8.20.
USA Patriot Act
62
SECTION 8.21.
Termination of Commitments under Existing Facilities
62
LIST OF EXHIBITS AND SCHEDULES
EXHIBIT A
FORM OF OPINION OF COUNSEL FOR THE BORROWER
EXHIBIT B
EXHIBIT C
FORM OF CERTIFICATE OF ASSISTANT SECRETARY TO THE BORROWER
EXHIBIT D
FORM OF NOTICE OF REVOLVING BORROWING
EXHIBIT E
FORM OF NOTICE OF CONVERSION/CONTINUATION
EXHIBIT F
FORM OF REVOLVING NOTE
SCHEDULE 1.01(a)
COMMITMENTS AND APPLICABLE PERCENTAGES
SCHEDULE 1.01(b)
EXISTING LETTERS OF CREDIT
SCHEDULE 5.08
EXISTING LIENS
iii
REVOLVING LOAN AND LETTER OF CREDIT FACILITY AGREEMENT (as amended, restated,
“Agreement”) dated as of November 9, 2012 among FLUOR CORPORATION, a Delaware
corporation (the “Borrower”), the LENDERS party hereto from time to time, and
BNP PARIBAS, as Administrative Agent and an Issuing Lender.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions.
The following terms, as used herein, have the following meanings:
“Administrative Agent” means BNPP, in its capacity as administrative agent under
any of the Loan Documents, or any successor administrative agent.
“Administrative Agent’s Account” means the account of the Administrative Agent
as the Administrative Agent shall specify in writing to the Credit Parties.
indirectly, controls, is controlled by or is under common control with such
Person. The term “control” (including the terms “controlled by” or “under common
control with”) means the possession, direct or indirect, of the power to vote
50% or more of the securities having ordinary voting power for the election of
directors of such Person or to direct or cause the direction of the management
and policies of such Person, whether through ownership of voting securities or
by contract or otherwise.
“Aggregate Commitments” means the Commitments of all the Lenders, which as of
the Closing Date is $1,800,000,000, as such amount may be increased or reduced
from time to time, as the case may be, pursuant to the terms and conditions
hereof.
represented by such Lender’s Commitment at such time. If the Commitment of each
Lender to make Revolving Advances and the obligation of the Issuing Lenders to
issue Letters of Credit have been terminated pursuant to Section 6.02 or if the
Schedule 1.01(a) or in the Assignment and Assumption Agreement or Incremental
Joinder Agreement pursuant to which such Lender becomes a party hereto, as
applicable.
“Applicable Rate” means, from time to time, the following rates per annum, based
upon the Ratings as set forth below:
1
Applicable Rate for Revolving
Advances
Pricing
Level
Ratings
S&P/Moody’s
Applicable Rate
for Commitment
Fees
Eurodollar Rate
Revolving
Advances
Base Rate
Revolving
Advances
1
A/A2 or better
7.5 basis points
87.5 basis points
0 basis points
2
A-/A3
10.0 basis points
100.0 basis points
0 basis points
3
BBB+/Baa1
12.5 basis points
112.5 basis points
12.5 basis points
4
BBB/Baa2 or worse
17.5 basis points
137.5 basis points
37.5 basis points
Pricing
Level
Ratings
Applicable Rate
for Financial
Letters of Credit
Applicable Rate
for Performance
Letters of Credit
1
87.5 basis points
52.5 basis points
2
A-/A3
100.0 basis points
60.0 basis points
3
BBB+/Baa1
112.5 basis points
67.5 basis points
4
137.5 basis points
82.5 basis points
“Ratings” means the ratings of the non-credit-enhanced, senior unsecured
long-term debt of the Borrower as set forth by S&P and Moody’s; provided that
if no such rating is available, “Ratings” shall mean the Borrower’s issuer
rating from Moody’s and the Borrower’s corporate credit rating from S&P;
provided further that (a) if the respective Ratings issued by the foregoing
rating agencies differ by one level, then the Pricing Level for the higher of
such Ratings shall apply (with the Rating for Pricing Level 1 being the highest
and the Rating for Pricing Level 4 being the lowest); (b) if there is a split in
Ratings of more than one level, then the Pricing Level that is one level higher
than the Pricing Level of the lower Rating shall apply; (c) if the Borrower has
only one Rating, the Pricing Level for that Rating shall apply; and (d) if the
Borrower does not have any Rating, Pricing Level 4 shall apply.
Initially, the Applicable Rate shall be determined based upon the Ratings
specified in the certificate delivered pursuant to Section 3.01(a)(iv).
Thereafter, each change in the Applicable Rate resulting from a publicly
announced change in the Ratings shall be effective, in the case of an upgrade or
downgrade, during the period commencing on the date of the public announcement
thereof and ending on the date immediately preceding the effective date of the
next such change.
“Application” means a letter of credit application in the standard form thereof
(or such other form as may be reasonably acceptable to the applicable Issuing
Lender) required by the applicable Issuing Lender and acceptable to the Borrower
for the issuance of letters of credit generally.
2
“Assignment and Assumption Agreement” means an assignment and assumption
agreement entered into by a Lender and an assignee (with the consent of any
party whose consent is required by Section 8.06(b)), and accepted by the
Administrative Agent, substantially in the form of Exhibit B attached hereto or
any other form approved by the Administrative Agent.
Aggregate Commitments pursuant to Section 2.04(c), and (c) the date of
termination of the commitment of each Lender to make Revolving Advances and of
the obligation of the Issuing Lenders to issue Letters of Credit pursuant to
Section 6.02.
“Base Rate” means, for any day, a rate per annum equal to the highest of:
(a) the prime commercial lending rate of interest established by BNPP
in New York, New York from time to time as its prime rate;
(b) the sum of one-half of one-percent (1/2%) plus the Federal Funds
Rate for such day; or
(c) the Eurodollar Rate for an Interest Period of one month beginning
on such day (or if such day is not a Business Day, on the immediately preceding
Business Day) plus one- percent (1%) per annum.
The “prime rate” means the rate of interest per annum publicly announced from
time to time by BNPP as its prime rate in effect at its principal office in New
York City. Any change in such prime rate announced by BNPP shall take effect at
change.
“Base Rate Revolving Advance” means a Revolving Advance that bears interest as
provided in Section 2.05(a).
“BNPP” means BNP Paribas and its successors.
“Borrower” has the meaning specified in the preamble to this Agreement.
“Business Day” means any day except a Saturday, Sunday or other day on which
commercial banks in the States of California, Texas or New York are authorized
or required by law, regulation or executive order to close; provided, however,
that when used in connection with a Eurodollar Rate Revolving Advance, the term
“Business Day” does not include any day on which banks are not open for dealings
in Dollar deposits in the London interbank market.
“Closing Date” means November 9, 2012.
“Code” means the Internal Revenue Code of 1986, as amended, or any successor
statute.
“Co-Documentation Agents” means each of Citibank, N.A. and The Bank of
Tokyo-Mitsubishi UFJ, Ltd., as Co-Documentation Agents, in their capacities as
co-documentation agents, and their respective successors in such capacities.
“Commitment” means, at any time, for any Lender, the amounts set forth opposite
such Lender’s name on Schedule 1.01(a) hereto under the heading “Aggregate
Commitment” and “Amount of Aggregate Commitment Attributable to Revolving
Facility Sublimit” or in the Assignment and
3
Assumption Agreement or Incremental Joinder Agreement pursuant to which such
Lender becomes a party hereto, as such amount may be adjusted from time to time
pursuant to the terms and conditions hereof.
“Commitment Fee” has the meaning specified in Section 2.19(a).
“Computation Date” has the meaning specified in Section 2.12(b).
“Consolidated Debt” means, at any date, the total Debt of the Borrower and its
Consolidated Subsidiaries, determined on a consolidated basis as of such date;
provided, that Consolidated Debt of the Borrower and its Consolidated
Subsidiaries shall exclude Debt of variable interest entities which is
identified (as required by and referenced in FASB Interpretation No. 46,
Consolidation of Variable Interest Entities (January 2003), as may be modified
or supplemented) by separate line item in the balance sheet of the Borrower and
its Consolidated Subsidiaries as non-recourse to the Borrower and its
Subsidiaries.
“Consolidated Subsidiary” means any Subsidiary or other entity the accounts of
which, at any date, would be, in accordance with GAAP, consolidated with those
of the Borrower in its consolidated financial statements as of such date.
“Consolidated Tangible Net Worth” means, at any date, the consolidated
stockholders’ equity of the Borrower and its Consolidated Subsidiaries less
their consolidated Intangible Assets, all determined as of such date in
accordance with GAAP. For purposes of this definition “Intangible Assets” means
the amount (to the extent reflected in determining such consolidated
stockholders’ equity) of (i) all write-ups (other than write-ups resulting from
foreign currency translations and write-ups of assets of a going concern
business made within twelve months after the acquisition of such business) in
the book value of any asset owned by the Borrower or a Consolidated Subsidiary,
and (ii) all unamortized debt discount and expense, unamortized deferred
charges, goodwill, patents, trademarks, service marks, trade names, copyrights,
organization or developmental expenses and other intangible items.
“Controlled Group” means all members of a controlled group of corporations and
all trades or businesses (whether or not incorporated) under common control
which, together with the Borrower, are treated as a single employer under
Section 414(b) or 414(c) of the Code.
“Credit Party” means each of the Administrative Agent, each Issuing Lender, each
Lender and their respective successors and assigns, and “Credit Parties” means
all such Persons, collectively.
“Debt” of any Person means, at any date, without duplication, (i) all
indebtedness of such Person for borrowed money which would be classified as a
liability of such Person in accordance with GAAP on such Person’s balance
sheets, (ii) all obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments (except for notes relating to self insurance
programs of such Person and/or its Subsidiaries which are not classified as
current liabilities of such Person or any of its Subsidiaries) which would be
classified as a liability of such Person in accordance with GAAP on such
Person’s balance sheets, (iii) all obligations of such Person to pay the
deferred purchase price of property or services, except trade accounts payable
arising in the ordinary course of business and foreign exchange transactions,
(iv) all obligations of such Person as lessee under capital leases, (v) all
obligations of such Person to purchase securities (or other property) which
arise out of or in connection with the sale of the same or substantially similar
securities or property, which obligations or any portion thereof may, in
accordance with their terms, become due on or before the Maturity Date, (vi) all
non-contingent obligations of such Person to reimburse any bank or other Person
in respect of amounts actually paid under a letter of credit, a bankers
acceptance or similar instrument, (vii) all Debt of others secured by a
4
Lien on any asset of such Person, whether or not such Debt is assumed by such
Person, (viii) all Debt of others Debt Guaranteed by such Person, and (ix) all
payment obligations of such Person under any interest rate protection agreement
(including, without limitation, any interest rate swaps, caps, floors, collars
and similar agreements). Notwithstanding anything to the contrary contained
herein, “Debt” of the Borrower and its Consolidated Subsidiaries shall exclude
Debt of variable interest entities which is identified (as required by and
referenced in FASB Interpretation No. 46, Consolidation of Variable Interest
Entities (January 2003), as may be modified or supplemented) by separate line
item in the balance sheet of the Borrower and its Consolidated Subsidiaries as
non-recourse to the Borrower and its Subsidiaries.
“Debt Guarantee” by any Person means any obligation, contingent or otherwise, of
such Person directly or indirectly guaranteeing any Debt of any other Person
and, without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Debt (whether
arising by virtue of partnership arrangements, by agreement to keep-well, to
purchase assets, goods, securities or services, to take-or-pay, or to maintain
financial statement conditions or otherwise) or (ii) entered into for the
purpose of assuring in any other manner the obligee of such Debt of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); provided that the term “Debt Guarantee” shall not include endorsements
for collection or deposit in the ordinary course of business. The term “Debt
Guarantee” used as a verb has a corresponding meaning.
“Default” means any condition or event which constitutes an Event of Default or
which with the giving of notice or lapse of time or both would, unless cured or
waived, become an Event of Default.
“Defaulting Lender” means any Lender, as reasonably determined by the
Administrative Agent, that has (a) failed to fund any portion of its Loans or
participations in any Letter of Credit within three Business Days of the date
required to be funded by it hereunder unless such Lender notifies the
Administrative Agent and the Borrower in writing that such failure is the result
of such Lender’s determination that one or more conditions precedent to funding
as described in Section 3.02 (each of which conditions precedent, together with
any applicable default, shall be specifically identified in such writing) has
not been satisfied, (b) notified the Borrower, the Administrative Agent, the
applicable Issuing Lender or any Lender in writing that it does not intend to
comply with any of its funding obligations under this Agreement or has made a
public statement to the effect that it does not intend to comply with its
funding obligations under this Agreement or under other agreements in which it
commits to extend credit (unless such writing or public statement relates to
such Lender’s obligation to fund a Loan hereunder and states that such position
is based on such Lender’s determination that a condition precedent to funding as
described in Section 3.02 (which condition precedent, together with any
applicable default, shall be specifically identified in such writing or public
statement) cannot be satisfied), (c) failed, within three (3) Business Days
after request by the Administrative Agent, to confirm that it will comply with
the terms of this Agreement relating to its obligations to fund prospective
Loans and/or to fund participations in the then outstanding Letters of Credit,
(d) otherwise failed to pay over to the Administrative Agent, any Issuing Lender
or any other Lender any other amount required to be paid by it hereunder within
three (3) Business Days of the date when due, unless the subject of a good faith
dispute, or (e) (i) become or is insolvent or has a parent company that has
become or is insolvent or (ii) become the subject of a bankruptcy or insolvency
liquidation of its business or custodian, appointed for it, or has taken any
acquiescence in any such proceeding or appointment or has a parent company that
has become the subject of a bankruptcy or insolvency proceeding, or has had a
receiver, conservator, trustee, administrator, assignee for the benefit of
creditors or similar Person charged with reorganization or liquidation of its
business or custodian appointed for it, or has taken any action in furtherance
of, or
5
indicating its consent to, approval of or acquiescence in any such proceeding or
appointment; provided that a Lender shall not be a Defaulting Lender solely by
virtue of the ownership or acquisition of any equity interest in that Lender or
any parent company thereof by a Governmental Authority so long as such ownership
interest does not result in or provide such Lender with immunity from the
jurisdiction of courts within the United States or from the enforcement of
judgments or writs of attachment on its assets or permit such Lender (or such
Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts
or agreements made with such Lender. Any determination by the Administrative
Agent that a Lender is a Defaulting Lender under any one or more of clauses
(a) through (e) above shall be conclusive and binding absent manifest error, and
such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.22)
upon delivery of written notice of such determination to the Borrower, each
Issuing Lender and each Lender.
“Dollar Equivalent” means, at any time for the determination thereof, the amount
of Dollars which could be purchased with the amount of the relevant Foreign
Currency by the Administrative Agent or the applicable Issuing Lender, as the
case may be, (in accordance with normal banking procedures) at the spot exchange
rate therefor at about 2:00 p.m. (New York City time) on such date of
determination.
“Environmental Laws” means any and all federal, state, local and foreign
permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment, or to emissions,
discharges or releases of pollutants, contaminants, petroleum or petroleum
products, chemicals or industrial, toxic or hazardous substances or wastes into
the environment, including, without limitation, ambient air, surface water,
ground water, or land, or otherwise relating to the manufacture, processing,
pollutants, contaminants, petroleum or petroleum products, chemicals or
industrial, toxic or hazardous substances or wastes or the clean-up or other
remediation thereof.
and the regulations promulgated thereunder.
“Escalating LC” means each Letter of Credit that, by its terms or the terms of
the Application related thereto, provides for one or more increases in the
stated amount thereof.
“euro” means the single currency of participating member states of the European
Union.
“Eurocurrency Liabilities” has the meaning specified in Regulation D of the FRB,
“Eurodollar Rate” means, for any Interest Rate Determination Date with respect
to any Eurodollar Rate Revolving Advances for any Interest Period therefor, an
interest rate per annum (rounded upwards, if necessary, to the nearest 1/100 of
1%) equal to the rate per annum obtained by dividing (i) (a) the rate per annum
determined by the Administrative Agent by reference to the British Bankers’
Association Interest Settlement Rates (or any successor or replacement thereof
as reasonably determined by the Administrative Agent) for deposits (for delivery
on the first day of such period) with a term equivalent to such period in
Dollars, determined as of approximately 11:00 a.m. (London, England time) on
such Interest Rate Determination Date (as set forth by Bloomberg Information
Service or any successor thereto or any other service selected by Administrative
Agent which has been nominated by the British Bankers’ Association as an
authorized information vendor for the purpose of displaying such rates), or
(b) in the event the rate referenced in the preceding clause (a) is not
available, the rate per annum equal to the
6
offered quotation rate to first class banks in the London interbank market by
BNPP for deposits (for delivery on the first day of the relevant period) in
Dollars of amounts in same day funds comparable to the principal amount of the
applicable Revolving Advance of the Administrative Agent, in its capacity as a
Lender, for which the Eurodollar Rate is then being determined with maturities
comparable to such period as of approximately 11:00 a.m. (London, England time)
on such Interest Rate Determination Date, by (ii) a percentage equal to 100%
minus the Eurodollar Rate Reserve Percentage for such Interest Period.
“Eurodollar Rate Revolving Advance” has the meaning specified in
Section 2.05(b).
“Eurodollar Rate Reserve Percentage” means, with respect to any Interest Period
for any Eurodollar Rate Revolving Advance, the reserve percentage applicable on
the Interest Rate Determination Date under regulations issued from time to time
by the FRB (or any successor) for determining the maximum reserve requirement
(including, without limitation, any emergency, supplemental or other marginal
reserve requirement) for a member bank of the Federal Reserve System in New York
City with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities having a term equal to such Interest Period.
“Event of Default” has the meaning specified in Section 6.01.
“Excess” has the meaning specified in Section 2.12(b).
“Exchange Equivalent” means, at any time for the determination thereof, with
respect to any amount (the “Original Amount”) of Dollars, the amount of any
relevant Foreign Currency which would be required to buy the Original Amount of
Dollars by the Administrative Agent (in accordance with normal banking
procedures) at the spot exchange rate therefor at about 2:00 p.m. (New York City
time) on such date of determination.
“Existing Facilities” means (i) the credit facility evidenced by the
U.S.$800,000,000 Revolving Loan and Financial Letters of Credit Facility
Agreement, dated as of December 14, 2010, among the Borrower, the lenders party
thereto and Bank of America, N.A., as administrative agent, and (ii) the letter
of credit facility evidenced by the U.S.$500,000,000 Letter of Credit Facility
Agreement, dated as of September 16, 2009, among the Borrower, the lenders party
thereto and BNP Paribas, as administrative agent, as amended.
“Existing Letters of Credit” means the letters of credit described by letter of
credit number, face amount, name of beneficiary and date of expiry on Schedule
1.01(b) attached hereto.
“Expiration Date” has the meaning specified in Section 2.07(b).
“Federal Funds Rate” means, for any day (the “accrual date”), the rate per annum
(rounded upward, if necessary, to the nearest 1/100th of 1%) equal to the
members of the Federal Reserve System arranged by Federal funds brokers on the
accrual date, as published by the Federal Reserve Bank of New York on the
Business Day next succeeding such day, provided that (i) if the accrual date is
not a Business Day, the Federal Funds Rate for the accrual date shall be such
rate on such transactions on the next preceding Business Day as so published on
the next succeeding Business Day, and (ii) if no such rate is so published
7
on such next succeeding Business Day, the Federal Funds Rate for the accrual
date shall be the average rate quoted to BNPP on the accrual date (or next
preceding Business Day) on such transactions as determined by the Administrative
Agent.
“Fee Letters” means, collectively (i) that certain letter agreement among BNP
Paribas, BNP Paribas Securities Corp. and the Borrower dated as of October 12,
2012, (ii) that certain letter agreement among BNP Paribas, BNP Paribas
Securities Corp., Bank of America, N.A., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Citigroup Global Markets, Inc., The Bank of Tokyo-Mitsubishi
UFJ, Ltd. and the Borrower dated as of October 12, 2012, (iii) that certain
letter agreement among Bank of America, N.A., Merrill Lynch, Pierce, Fenner &
Smith Incorporated and the Borrower dated as of October 12, 2012, (iv) that
certain letter agreement between Citigroup Global Markets, Inc. and the Borrower
dated as of October 12, 2012 and (v) that certain letter agreement between The
Bank of Tokyo-Mitsubishi UFJ, Ltd. and the Borrower dated as of October 12,
2012, in each case, as the same may be amended, amended and restated,
“Financial Letter of Credit” means a financial standby letter of credit issued
for the account of the Borrower, or for the account of the Borrower on behalf
of, or in support of obligations of, any of the Borrower’s Subsidiaries, or
which otherwise backs bank guarantees issued by any Issuing Lender or its
correspondent bank to support such financial letters of credit, in each case
which must qualify as a financial guarantee type letter of credit under
applicable laws and regulations.
“Foreign Currency” means Pounds Sterling, euro, Japanese Yen, Australian Dollar,
New Zealand Dollar, Mexican Peso, Canadian Dollar, Singapore Dollar and/or any
other currency acceptable to the applicable Issuing Lender, as the context
requires.
“Foreign Lender” has the meaning specified in Section 2.16(b). “FRB” means the
Board of Governors of the Federal Reserve System of the United States.
“GAAP” means generally accepted accounting principles consistent with those
applied in the preparation of the financial statements referred to in
Section 4.04(a) as of and for the fiscal year ended December 31, 2011.
“Governmental Authority” means any nation or government, any state or other
political subdivision thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government
and any court or arbitrator.
“Incremental Commitment Increase” has the meaning specified in Section 2.24.
“Incremental Commitment Increase Effective Date” has the meaning specified in
Section 2.24.
“Incremental Increase Lender” means, at any time, any bank or other financial
institution that agrees to provide any portion of any Incremental Commitment
Increase in accordance with Section 2.24.
“Incremental Joinder Agreement” has the meaning specified in Section 2.24.
“Industry Standards” has the meaning specified in Section 5.03(b).
8
“Information” has the meaning specified in Section 8.10.
“Interest Period” has the meaning specified in Section 2.05(b).
Period.
“Interest Type” refers to the distinction between Revolving Advances bearing
interest at the Base Rate and Revolving Advances bearing interest at the
Eurodollar Rate.
issuance).
“Issuing Lender” means BNPP, Bank of America, N.A., The Bank of Tokyo-Mitsubishi
UFJ, Ltd. and, with the consent of the Administrative Agent (which consent shall
not be unreasonably withheld) and at the request of the Borrower, any other
Lender that agrees to be an Issuing Lender hereunder, each in its capacity as an
issuer of Letters of Credit hereunder, and its successors, and the term “Issuing
Lenders” means all such Persons, collectively.
“Joint Lead Arrangers” means each of BNP Paribas Securities Corp., Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Citigroup Global Markets, Inc. and
The Bank of Tokyo-Mitsubishi UFJ, Ltd., in their capacities as joint bookrunners
and joint lead arrangers, and their respective successors in such capacities.
“Joint Venture” means any joint venture, partnership or other minority-owned
entity (other than a Subsidiary) in which the Borrower or any of its
Subsidiaries or other Affiliates owns an interest.
“LC Disbursement” means a payment made by any Issuing Lender pursuant to a
Letter of Credit.
“LC Exposure” means at any time, the sum of (i) the aggregate undrawn amount of
all Letters of Credit at such time (provided that, with respect to any
Escalating LC, such aggregate undrawn amount shall equal the maximum amount
(after giving effect to all possible increases) available to be drawn under such
Escalating LC) plus (ii) the aggregate amount of all LC Disbursements that have
not yet been reimbursed by or on behalf of the Borrower at such time. The LC
total LC Exposure at such time. For all purposes of this Agreement, if on any
date of determination a Letter of Credit has expired by its terms but any amount
may still be drawn thereunder by reason of the operation of Rule 3.14 of the
ISP, such Letter of Credit shall be deemed to be “outstanding” in the amount so
remaining available to be drawn.
“Lender” means each Person listed on Schedule 1.01(a) and any other Person that
shall have become a party hereto pursuant to an Assignment and Assumption
Agreement or Incremental Joinder Agreement (other than any such Person that
ceases to be a party hereto pursuant to an Assignment and Assumption Agreement),
including any Incremental Increase Lender, and their successors and assigns.
“Lending Office” means, as to each Lender, its office located at its address set
forth on the signature pages hereof, or such office as may be set forth as a
Lending Office of a Lender in any Assignment and Assumption Agreement accepted
by the Administrative Agent pursuant to Section 8.06(b), or such other office as
such Lender may hereafter designate as its Lending Office by notice to the
9
“Letter of Credit” means (a) any Financial Letter of Credit or any Performance
Letter of Credit, in each case denominated in Dollars or in a Foreign Currency
issued pursuant to this Agreement, which letter of credit is in a form
reasonably acceptable to the applicable Issuing Lender, and (b) any Existing
Letter of Credit, in each case as such letter of credit may be amended,
modified, extended, renewed or replaced from time to time, in each case in
“Letter of Credit Fee” has the meaning specified in Section 2.19(b).
security interest or encumbrance of any kind in respect of such asset. For the
purposes of this Agreement, the Borrower or any Subsidiary shall be deemed to
own subject to a Lien any asset which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such asset.
“Loan Documents” means this Agreement, each Application, each Letter of Credit,
each Revolving Note, the Fee Letters, any security or collateral documents to be
delivered thereunder and any other documents or certificates to be delivered
thereunder or in connection therewith and all amendments thereto and
substitutions and replacements therefor and modifications thereof.
“Material Adverse Change” means any material and adverse change in the business,
assets, liabilities (actual or contingent), operations, condition (financial or
otherwise) or prospects of the Borrower and its Consolidated Subsidiaries (taken
as a whole) since December 31, 2011 which could reasonably be expected to
materially and adversely affect the ability of the Borrower to perform its
obligations under the Loan Documents at any time up to and including the
Maturity Date.
“Material Plan” has the meaning specified in Section 6.01(i).
“Material Subsidiary” means at any time a Subsidiary which as of such time meets
the definition of a “significant subsidiary” contained as of the date hereof in
Regulation S-X of the SEC.
“Maturity Date” means that date which is five (5) years after the Closing Date;
provided, however, that if such date is not a Business Day, the Maturity Date
shall be the next preceding Business Day.
“Maximum Rate” has the meaning specified in Section 8.18.
“Notice of Conversion/Continuation” means a notice substantially in the form of
Exhibit E attached hereto.
“Notice of Revolving Borrowing” means a notice substantially in the form of
Exhibit D attached hereto.
“Obligations” means the collective reference to all obligations and liabilities
of the Borrower to the Credit Parties (including, without limitation, the
reimbursement obligations payable hereunder and all other obligations and
liabilities of the Borrower in respect of any Letter of Credit and any Revolving
Advance and interest thereon as provided for herein, and interest accruing at
the then applicable rate
10
provided in this Agreement after the maturity of such obligations and
liabilities and interest accruing at the then applicable rate provided in this
Agreement after the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, relating to the Borrower
whether or not a claim for post-filing or post-petition interest is allowed in
such proceeding), whether direct or indirect, absolute or contingent, due or to
become due, or now existing or hereafter incurred, which may arise under, out
of, or in connection with, this Agreement, any other Loan Document or any other
document made, delivered or given in connection herewith or therewith, in each
case whether on account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without limitation, all
fees and disbursements of counsel to the Administrative Agent, the Joint Lead
Arrangers, the Issuing Lenders or the Lenders that are required to be paid by
the Borrower pursuant to the terms of this Agreement or any other Loan
Document).
“Participant Register” has the meaning specified in Section 8.06(c).
“Patriot Act” has the meaning specified in Section 8.20.
“PBGC” means the Pension Benefit Guaranty Corporation or any entity succeeding
to any or all of its functions under ERISA.
“Performance Letter of Credit” means a standby letter of credit issued for the
account of the Borrower, or for the account of the Borrower on behalf of, or in
support of obligations of, any of the Related Entities, to support, or to back
bank guarantees issued by other banks to support, the Borrower’s and the Related
Entities’ performance under specific project engineering, procurement,
construction, maintenance and related activities and/or contracts.
“Permitted Cover” means the provision of cover by arranging for the issuance of
one or more standby letters of credit issued by a bank (excluding the Lenders),
and on terms and conditions, in each case satisfactory to the Administrative
Agent and the Issuing Lenders.
“Permitted Investments” means, as at any date of determination, (i) marketable
securities (a) issued or directly and unconditionally guaranteed as to interest
and principal by the United States Government or (b) issued by any agency of the
United States the obligations of which are backed by the full faith and credit
of the United States, in each case maturing no more than one year after such
date; (ii) marketable direct obligations issued by any state of the United
States of America or any political subdivision of any such state or any public
instrumentality thereof, in each case maturing no more than one year after such
date and having, at the time of the acquisition thereof, a rating of at least
A-1 from S&P or at least P-1 from Moody’s; (iii) commercial paper maturing no
more than one year from the date of creation thereof and having, at the time of
the acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from
Moody’s; (iv) certificates of deposit or bankers’ acceptances maturing no more
than one year after such date or overnight bank deposits, in each case issued,
accepted by or of any Lender, or any commercial bank organized under the laws of
the United States of America or any state thereof or the District of Columbia,
which amounts may be withdrawn at any time without penalty, and having, at the
time of the acquisition thereof, a rating of at least A-1 from S&P or at least
P-1 from Moody’s that (a) is at least “adequately capitalized” (as defined in
the regulations of its primary Federal banking regulator) and (b) has Tier 1
capital (as defined in such regulations) of not less than $100,000,000; and (v)
shares of any U.S.-registered money market mutual fund that (a) has its assets
invested primarily and continuously in the types of investments referred to in
clauses (i) and (iv) above, and (b) has net assets of not less than
$500,000,000.
11
“Person” means an individual, a corporation, a partnership, a limited liability
company, an association, a trust or any other entity or organization, including
a government or political subdivision or an agency or instrumentality thereof.
“Plan” means at any time an employee pension benefit plan which is covered by
Title IV of ERISA or subject to the minimum funding standards under Section 412
of the Code and is either (i) maintained by the Borrower or any Subsidiary for
employees of the Borrower or any Subsidiary or (ii) maintained pursuant to a
collective bargaining agreement or any other arrangement under which more than
one employer makes contributions and to which the Borrower or any Subsidiary is
then making or accruing an obligation to make contributions or has within the
preceding five plan years made contributions.
“Ratings” has the meaning specified in the definition of “Applicable Rate.”
“Register” has the meaning specified in Section 8.06(h).
“Regulation U” means Regulation U of the FRB, as in effect from time to time.
“Related Entity” means any Subsidiary, Affiliate or Joint Venture of the
Borrower.
“Required Lenders” means, at any time, Lenders having more than 50% of the
Aggregate Commitments or, if the commitment of each Lender to make Revolving
Advances and the obligation of the Issuing Lenders to issue Letters of Credit
hereunder have been terminated pursuant to Section 6.02, Lenders holding in the
aggregate more than 50% of the aggregate outstanding amount of all Revolving
Advances and all LC Exposure (with the aggregate amount of each Lender’s risk
participation in LC Exposure being deemed “held” by such Lender for purposes of
this definition).
“Revolving Advance” has the meaning specified in Section 2.01(a).
“Revolving Borrowing” means a borrowing consisting of simultaneous Revolving
Advances of the same Interest Type and, in the case of Eurodollar Rate Revolving
Advances, having the same Interest Period, made by the Lenders pursuant to
Section 2.01.
“Revolving Facility Sublimit” means $1,000,000,000.
“Revolving Note” means a promissory note made by the Borrower in favor of a
Lender evidencing Revolving Advances made by such Lender, substantially in the
form of Exhibit F attached hereto.
12
the Borrower.
“Syndication Agent” means Bank of America, N.A., as Syndication Agent, in its
capacity as syndication agent, and its successors in such capacity.
“Taxes” has the meaning specified in Section 2.16(a).
“UCC” means the Uniform Commercial Code as in effect from time to time under the
“Unfunded Vested Liabilities” means, with respect to any Plan at any time, the
amount (if any) by which (i) the present value of all vested nonforfeitable
benefits under such Plan exceeds (ii) the fair market value of all Plan assets
allocable to such benefits, all determined as of the then most recent valuation
date for such plan, but only to the extent that such excess represents a
potential liability of a member of the Controlled Group to the PBGC or the Plan
under Title IV of ERISA.
“Unused Commitment” means, with respect to any Lender at any time, (a) such
Lender’s Commitment at such time, minus (b) the sum of (i) the aggregate
principal amount of all Revolving Advances of such Lender outstanding at such
time, plus (ii) such Lender’s LC Exposure outstanding at such time.
“Utilization” means, on any date, the sum of (i) the aggregate principal amount
of all Revolving Advances outstanding at such time, plus (ii) the total LC
Exposure outstanding at such time.
SECTION 1.02. Other Definitional Provisions.
(a) All terms defined in this Agreement shall have the meanings given
such terms herein when used in the Loan Documents or any certificate, opinion or
other document made or delivered pursuant hereto or thereto, unless otherwise
defined therein.
(b) As used in the Loan Documents and in any certificate, opinion or
other document made or delivered pursuant hereto or thereto, accounting terms
not defined in Section 1.01, and accounting terms partly defined in Section
1.01, to the extent not defined, shall have the respective meanings given to
them under GAAP.
(c) The words “hereof”, “herein”, “hereto” and “hereunder” and similar
words when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, schedule and
exhibit references contained herein shall refer to Sections hereof or schedules
or exhibits hereto unless otherwise expressly provided herein.
(d) The word “or” shall not be exclusive; “may not” is prohibitive and
not permissive.
(e) Unless the context otherwise requires, words in the singular number
include the plural, and words in the plural include the singular.
(f) Unless specifically provided in a Loan Document to the contrary,
references to time shall refer to New York City time.
13
ARTICLE II
REVOLVING ADVANCES AND LETTERS OF CREDIT
SECTION 2.01. Revolving Advances.
(a) Subject to the terms and conditions set forth herein, each Lender
severally agrees to make advances in Dollars (each a “Revolving Advance”) to the
Borrower from time to time on any Business Day during the Availability Period,
in an amount for each such Revolving Advance not to exceed such Lender’s Unused
Commitment in respect of the Revolving Facility Sublimit on such Business Day;
provided that at no time shall (i) the aggregate outstanding principal amount of
the Revolving Advances of all of the Lenders plus the aggregate LC Exposure (or
the Dollar Equivalent thereof (calculated as of the date of the requested
Revolving Advance and any other applicable date of determination)) of all of the
Lenders exceed the Aggregate Commitments or (ii) the aggregate outstanding
principal amount of the Revolving Advances of all of the Lenders plus the
aggregate LC Exposure (or the Dollar Equivalent thereof (calculated as of the
date of the requested Revolving Advance and any other applicable date of
determination)) in respect of Financial Letters of Credit exceed the Revolving
Facility Sublimit.
(b) Each Revolving Borrowing shall be in an aggregate amount of
$3,000,000 or an integral multiple of $1,000,000 in excess thereof and shall
consist of Revolving Advances made by the Lenders ratably according to their
respective Commitments in respect of the Revolving Facility Sublimit. Within
the foregoing limits, the Borrower may borrow under this Section 2.01, prepay
pursuant to Section 2.04 and reborrow under this Section 2.01.
SECTION 2.02. Making the Revolving Advances.
(a) Each Revolving Advance. Each Revolving Borrowing shall be made in
Dollars on notice received by the Administrative Agent from the Borrower
(pursuant to a Notice of Revolving Borrowing) not later than 12:00 noon (New
York City time): (i) on the Business Day prior to the date of such Revolving
Borrowing if such Revolving Borrowing consists of Base Rate Revolving Advances,
and (ii) on the third Business Day prior to the date of such Revolving Borrowing
if such Revolving Borrowing consists of Eurodollar Rate Revolving Advances.
Each such Notice of Revolving Borrowing shall be irrevocable upon receipt by the
Administrative Agent.
(b) Revolving Advances by Lenders. If the Administrative Agent receives
a Notice of Revolving Borrowing, the Administrative Agent shall promptly (and in
any event not later than 2:00 p.m. (New York City time) on the Business Day
prior to the date of such Revolving Borrowing or, if such Revolving Borrowing
consists of Eurodollar Rate Revolving Advances, the third Business Day prior to
the date of such Revolving Borrowing) give each Lender notice of such Notice of
Revolving Borrowing. Each Lender shall, before 1:30 p.m. (New York City time)
on the date of such Revolving Borrowing in the case of any Revolving Borrowing
to be made on such date, make available for the account of its Lending Office to
the Administrative Agent such Lender’s ratable portion of such Revolving
Borrowing by depositing immediately available funds in Dollars in the
Administrative Agent’s Account. Unless the Administrative Agent shall have
received written notice from a Lender prior to the date of any Revolving
Borrowing hereunder that such Lender will not make available to the
Administrative Agent such Lender’s ratable portion of such Revolving Borrowing,
the Administrative Agent may assume that such Lender has made such ratable
portion available to the Administrative Agent on the date of such Revolving
Borrowing in accordance with the terms hereof and the Administrative Agent may,
in reliance upon such assumption, but shall not be required to, make available
to or for the account of the Borrower on such date a corresponding amount. If
and to the extent that such Lender shall not have so made such ratable portion
14
available to the Administrative Agent and the Administrative Agent makes such
ratable portion available to the Borrower, such Lender and the Borrower, without
prejudice to any rights or remedies that the Borrower may have against such
Lender, severally agree to repay to the Administrative Agent forthwith on demand
such corresponding amount together with interest thereon, for each day from the
date such amount is made available to or for the account of the Borrower until
the date such amount is repaid to the Administrative Agent, at (A) in the case
of the Borrower, the interest rate applicable at the time to the Revolving
Advances comprising such Revolving Borrowing, and (B) in the case of such
compensation. If such Lender shall pay to the Administrative Agent such amount,
such amount so paid shall constitute such Lender’s Revolving Advance as part of
the relevant Revolving Borrowing for purposes of this Agreement and, to the
extent that the Borrower previously paid such amount to the Administrative
Agent, the Administrative Agent will refund to the Borrower such amount so paid,
but without interest.
(c) Disbursement of Revolving Advances. Upon fulfillment of the
applicable conditions set forth in Article III, the Administrative Agent will
make funds for any Revolving Borrowing available to the Borrower by crediting
such amount to the account designated by the Borrower in the applicable Notice
of Revolving Borrowing, subject to the Administrative Agent’s receipt of funds
from the Lenders, and provided that the Administrative Agent shall first make a
portion of such funds equal to any outstanding LC Disbursement under any Letter
of Credit and any interest accrued and unpaid thereon to and as of such date,
available to the applicable Issuing Lender for reimbursement of such LC
Disbursement and payment of such interest.
SECTION 2.03. Repayment of Revolving Advances. The Borrower shall repay
to each Lender (in accordance with the provisions of Section 2.14(a)) on the
Maturity Date the aggregate principal amount of all Revolving Advances owing to
such Lender outstanding on the Maturity Date.
SECTION 2.04. Optional Prepayments of Revolving Advances; Voluntary
Termination or Reduction of Commitments.
(a) Optional Prepayments. The Borrower may, upon prior notice to the
Administrative Agent (which shall be given not later than 12:00 noon (New York
City time) on the day of prepayment in the case of prepayment of Base Rate
Revolving Advances and three Business Days in advance in the case of prepayment
of Eurodollar Rate Revolving Advances) stating the proposed date and aggregate
principal amount of the prepayment and the Interest Type of Revolving Advances
to be prepaid (and if such notice is given the Borrower shall), prepay in whole
or in part, without premium or penalty, the outstanding principal of Revolving
Advances of such Interest Type, together with, in the case of any prepayment of
Eurodollar Rate Revolving Advances, interest thereon to the date of such
prepayment on the principal amounts prepaid (plus, in the case of prepayment of
Eurodollar Rate Revolving Advances prior to the end of the applicable Interest
Period, any additional amount for which the Borrower shall be obligated pursuant
to Section 8.03(d)); provided, however, that each partial prepayment of
Revolving Advances shall be in an aggregate principal amount of not less than
$3,000,000 or an integral multiple of $1,000,000 in excess thereof.
(b) Application of Prepayments. Prepayments of the Revolving Advances
made pursuant to this Section 2.04 shall be first applied to prepay LC
Disbursements then outstanding until such LC Disbursements are paid in full, and
second applied to prepay Revolving Advances then outstanding comprising part of
the same Revolving Borrowings until such Revolving Advances are paid in full.
The amount remaining (if any) after the prepayment in full of the Revolving
Advances then outstanding shall be applied as set forth in Section 2.14(d).
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(c) Voluntary Termination or Reduction of Commitments. The Borrower may,
upon notice to the Administrative Agent, irrevocably terminate the Aggregate
Commitments, or from time to time permanently reduce the Aggregate Commitments;
provided that (i) any such notice shall be received by the Administrative Agent
not later than 1:00 p.m. (New York City time) five Business Days prior to the
aggregate amount of $10,000,000 or any whole multiple of $1,000,000 in excess
thereof, and (iii) the Borrower shall not terminate or reduce the Aggregate
hereunder, (x) the sum of the aggregate LC Exposure (or the Dollar Equivalent
thereof) plus the aggregate outstanding principal amount of the Revolving
Advances of all of the Lenders would exceed the Aggregate Commitments or (y) the
sum of the aggregate LC Exposure (or the Dollar Equivalent thereof) in respect
of Financial Letters of Credit plus the aggregate outstanding principal amount
of the Revolving Advances of all of the Lenders would exceed the Revolving
Facility Sublimit. The Administrative Agent will promptly notify the Lenders of
any such notice of termination or reduction of the Aggregate Commitments. Any
reduction of the Aggregate Commitments shall be applied to the Commitment of
each Lender according to its Applicable Percentage. All fees accrued in respect
of the Aggregate Commitments until the effective date of any termination or
reduction of the Aggregate Commitments shall be paid on the effective date of
such termination or reduction, as applicable.
SECTION 2.05. Interest on Revolving Advances. The Borrower shall pay
interest on the unpaid principal amount of each Revolving Advance from the date
of such Revolving Advance until such principal is paid in full at the applicable
rate set forth below.
(a) Interest on Base Rate Revolving Advances. Except as otherwise
provided in this Agreement, the Borrower shall pay interest on the unpaid
principal amount of each Base Rate Revolving Advance, from the date of such Base
Rate Revolving Advance until such principal amount is paid in full, payable
quarterly in arrears on the last Business Day of each March, June, September and
December, commencing on the first such date to occur after the Closing Date, and
on the Maturity Date, at a fluctuating interest rate per annum equal, subject to
Section 2.05(d), to the Base Rate plus the Applicable Rate in effect from time
to time.
(b) Interest Periods for Eurodollar Rate Revolving Advances. The
Borrower may, pursuant to Section 2.05(c), elect to have the interest on the
principal amount of all or any portion of any Revolving Advances made or to be
made to the Borrower under Section 2.01, in each case ratably according to the
respective outstanding principal amounts of Revolving Advances owing to each
Lender (each such principal amount owing to a Lender as to which such election
has been made being a “Eurodollar Rate Revolving Advance” owing to such Lender),
determined and payable for a specified period (an “Interest Period” for such
Eurodollar Rate Revolving Advance) in accordance with Section 2.05(c), provided,
however, that the Borrower may not (i) make any such election with respect to
any LC Disbursements, or (ii) have more than ten Eurodollar Rate Revolving
Advances owing to any Lender outstanding at any one time. Each Interest Period
shall be one, two, three, six, nine or twelve months, or such other periods as
may be agreed by all Lenders, at the Borrower’s election pursuant to Section
2.05(c); provided, however, that:
(i) the first day of an Interest Period for any Eurodollar Rate
Revolving Advance shall be either the last day of any then current Interest
Period for such Revolving Advance or, if there shall be no then current Interest
Period for such Revolving Advance, any Business Day;
(ii) whenever the last day of any Interest Period would otherwise
occur on a day other than a Business Day, the last day of such Interest Period
shall be extended to occur on the next succeeding Business Day; provided,
however, that if such extension would cause the last day of such
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Interest Period to occur in the next following month, the last day of such
Interest Period shall occur on the next preceding Business Day;
(iii) whenever the first day of any Interest Period occurs on a day of
the month for which there is no numerically corresponding day in the calendar
month that succeeds such initial calendar month by the number of months equal to
the number of months of such Interest Period, such Interest Period shall end on
the last Business Day of such succeeding calendar month; and
(c) Interest on Eurodollar Rate Revolving Advances. The Borrower may
from time to time, on the condition that no Default or Event of Default has
occurred and is continuing, and subject to the provisions of Sections 2.05(b)
and 2.05(e), elect to pay interest on all or any portion of any Revolving
Advances during any Interest Period therefor at a rate per annum equal to the
sum of the Eurodollar Rate for such Interest Period for such Revolving Advances
plus the Applicable Rate in effect from time to time, by notice, specifying the
amount of the Revolving Advances as to which such election is made (which amount
shall aggregate at least $3,000,000 or any multiple of $1,000,000 in excess
thereof) and the first day and duration of such Interest Period, received by the
Administrative Agent before 12:00 noon (New York City time) three Business Days
prior to the first day of such Interest Period. If the Borrower has made such
election for Eurodollar Rate Revolving Advances for any Interest Period, the
Borrower shall pay interest on the unpaid principal amount of such Eurodollar
Rate Revolving Advances during such Interest Period, payable in arrears on the
last day of such Interest Period and, in the case of any Interest Period which
is longer than three months, on each three-month anniversary of the first day of
such Interest Period, in each case at a rate equal, subject to Section 2.05(d),
to the sum of the Eurodollar Rate for such Interest Period for such Eurodollar
Rate Revolving Advances plus the Applicable Rate in effect from time to time
during such Interest Period. On the last day of each Interest Period for any
Eurodollar Rate Revolving Advance, the unpaid principal balance thereof shall
automatically become and bear interest as a Base Rate Revolving Advance, except
to the extent that the Borrower has elected to pay interest on all or any
portion of such amount for a new Interest Period commencing on such day in
accordance with this Section 2.05(c). Each notice by the Borrower under this
Section 2.05(c) shall be irrevocable upon receipt by the Administrative Agent.
(d) Default Interest. Upon the occurrence and during the continuance of
an Event of Default, (i) interest shall accrue, after as well as before
judgment, on any Revolving Advance then outstanding at a rate that is 2% per
annum in excess of the interest rate otherwise payable under this Agreement with
respect to such Revolving Advance (which, for the avoidance of doubt, shall
include the Applicable Rate); provided that, in the case of any Eurodollar Rate
Revolving Advance, upon the expiration of the Interest Period in effect at the
time any such increase in interest rate is effective such Eurodollar Rate
Revolving Advance shall thereupon become a Base Rate Revolving Advance and shall
thereafter bear interest, after as well as before judgment, at a rate which is
2% per annum in excess of the interest rate otherwise payable under this
Agreement for Base Rate Revolving Advances, (ii) Letter of Credit Fees shall
accrue, after as well as before judgment, at a rate which is 2% per annum in
excess of the rate otherwise payable under this Agreement, (iii) reimbursement
obligations in respect of LC Disbursements payable under Section 2.09(a) shall
excess of the Letter of Credit Fee plus the Base Rate in effect from time to
time and (iv) interest shall accrue, to the fullest extent permitted by law,
after as well as before judgment, and except as otherwise provided in Section
2.11 or clauses (i), (ii) or (iii) above, on any overdue principal, interest or
other amounts payable hereunder (including the Commitment Fee) at a rate that is
Agreement with respect to Base Rate Revolving Advances. Such interest and other
amounts shall be payable upon demand. Payment or acceptance of the increased
rates of interest provided for in this Section 2.05(d) is not a permitted
17
alternative to timely payment and shall not constitute a waiver of any Event of
Default or otherwise prejudice or limit any rights or remedies of the
Administrative Agent, any Lender or any other Credit Party.
(e) Suspension of Eurodollar Rate Revolving Advances.
(i) Illegality. Notwithstanding any other provision of this
Agreement, if the introduction of or any change in or in the interpretation of
any law or regulation shall make it unlawful, or any central bank or other
perform its obligations hereunder to make Eurodollar Rate Revolving Advances or
to continue to fund or maintain Eurodollar Rate Revolving Advances hereunder,
then, on notice thereof and demand therefor by such Lender to the Borrower
through the Administrative Agent, (i) each Eurodollar Rate Revolving Advance
will automatically, upon such demand, convert into a Base Rate Revolving
Advance, and (ii) the obligation of the Lenders to make, or to convert Revolving
Advances into, Eurodollar Rate Revolving Advances shall be suspended until the
Administrative Agent shall notify the Borrower that such Lender has determined
that the circumstances causing such suspension no longer exist.
(ii) Other Circumstances. If, with respect to any Eurodollar Rate
Revolving Advances, (A) the Administrative Agent shall determine in good faith
(which determination shall be conclusive) that the Eurodollar Rate cannot be
determined in accordance with the definition thereof, or (B) the Required
Lenders notify the Administrative Agent that the Eurodollar Rate for any
Interest Period for such Revolving Advances will not adequately reflect the cost
to such Lenders of making, funding or maintaining their Eurodollar Rate
Revolving Advances for such Interest Period, the Administrative Agent shall
forthwith so notify the Borrower and the Lenders, whereupon (i) each such
Eurodollar Rate Revolving Advance will automatically, on the last day of the
then existing Interest Period therefor, convert into a Base Rate Revolving
Advance and (ii) the obligation of the Lenders to make, or to convert Revolving
Administrative Agent shall notify the Borrower that such Lenders have determined
(f) Suspension on Event of Default. Upon the occurrence and during the
continuance of any Event of Default, (i) each Eurodollar Rate Revolving Advance
will automatically, on the last day of the then existing Interest Period
therefor, convert into a Base Rate Revolving Advance and (ii) the obligation of
the Lenders to make, or to convert Revolving Advances into, Eurodollar Rate
Revolving Advances shall be suspended.
SECTION 2.06. Conversion and Continuation of Revolving Advances.
(a) Optional. So long as no Default or Event of Default shall have
occurred and then be continuing, the Borrower shall have the option: (i) to
convert at any time all or any part of any Revolving Advance equal to $3,000,000
and integral multiples of $1,000,000 in excess of that amount from one Interest
Type comprising the same Revolving Borrowing into Revolving Advances of the
other Interest Type; provided, a Eurodollar Rate Revolving Advance may only be
converted on the expiration of the Interest Period applicable to such Eurodollar
Rate Revolving Advance unless the Borrower shall pay all amounts due under
Section 8.03(d) in connection with any such conversion; or (ii) upon the
expiration of any Interest Period applicable to any Eurodollar Rate Revolving
Advance, to continue all or any portion of such Revolving Advance equal to
$3,000,000 and integral multiples of $1,000,000 in excess of that amount as a
Eurodollar Rate Revolving Advance. The Borrower shall deliver a Notice of
Conversion/Continuation to the Administrative Agent no later than 12:00 noon
(New York City time) at least one Business Day in advance of the proposed
conversion date (in the case of a conversion to a Base Rate Revolving Advance)
and at least three Business Days in advance of the proposed
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conversion/continuation date (in the case of a conversion to, or a continuation
of, a Eurodollar Rate Revolving Advance). Except as otherwise provided herein,
a Notice of Conversion/Continuation for conversion to, or continuation of, any
Eurodollar Rate Revolving Advances shall be irrevocable and binding on the
Borrower and shall be subject to Section 8.03(d). Each conversion of Revolving
Advances comprising part of the same Revolving Borrowing shall be made ratably
among the Lenders in accordance with their applicable Commitments in respect of
the Revolving Facility Sublimit.
(b) Mandatory. On the date on which the aggregate unpaid principal
amount of Eurodollar Rate Revolving Advances comprising any Revolving Borrowing
shall be reduced, by payment or prepayment or otherwise, to less than
$3,000,000, such Revolving Advances shall automatically convert into Base Rate
Revolving Advances.
SECTION 2.07. Issuance of Letters of Credit.
(a) Letter of Credit Request. Subject to the terms and conditions set
forth herein, the Borrower may request the issuance of, and each Issuing Lender,
in reliance on the agreements of the Lenders set forth in Section 2.08 hereof,
agrees to issue Financial Letters of Credit and Performance Letters of Credit at
any time and from time to time during the period from the Closing Date through
the date that is seven Business Days prior to the Maturity Date. To request the
issuance of a Letter of Credit, the Borrower shall deliver to the applicable
Issuing Lender and the Administrative Agent (reasonably in advance of the
requested date of issuance, and, in any event, not less than five Business Days
prior to such requested date of issuance) an Application requesting the issuance
of such Letter of Credit and specifying the date of issuance (which shall be a
Business Day), the address of the beneficiary thereof, the amount and currency
of such Letter of Credit, the type of such Letter of Credit (Financial Letter of
Credit or Performance Letter of Credit) and such other information as shall be
necessary to prepare such Letter of Credit (and the Administrative Agent shall
promptly provide notice to each Lender of each issuance of a Letter of Credit
hereunder). To request the amendment of a Letter of Credit, the Borrower shall
deliver to the applicable Issuing Lender and the Administrative Agent
(reasonably in advance of the requested date of amendment, and, in any event,
not less than three Business Days prior to such requested date of amendment) an
Application requesting the amendment of such Letter of Credit and specifying
such other information as shall be necessary to prepare such amendment (and the
Administrative Agent shall promptly provide notice to each Lender of each
amendment of a Letter of Credit hereunder). Notwithstanding anything to the
contrary contained herein, no Issuing Lender shall issue or amend any Letter of
Credit if, after giving effect to such issuance or amendment, (i) the aggregate
LC Exposure (or the Dollar Equivalent thereof) plus the aggregate outstanding
principal amount of the Revolving Advances of all of the Lenders shall exceed
the Aggregate Commitments or (ii) the aggregate LC Exposure (or the Dollar
Equivalent thereof) in respect of Financial Letters of Credit plus the aggregate
outstanding principal amount of the Revolving Advances of all of the Lenders
shall exceed the Revolving Facility Sublimit. The applicable Issuing Lender
shall obtain confirmation of the immediately preceding sentence in writing from
the Administrative Agent prior to issuing or amending any Letter of Credit
hereunder. The Borrower’s reimbursement obligations in respect of each Existing
Letter of Credit, and each Lender’s participation obligations in connection
therewith, shall be governed by the terms of this Agreement.
(b) Terms of Letters of Credit. Each Letter of Credit shall expire on an
expiry date (such date being the “Expiration Date”) not later than the seventh
Business Day prior to the Maturity Date. In the event that the applicable
Issuing Lender’s office is closed on the applicable Expiration Date, such date
shall be extended to the next Business Day on which such office is open. Each
Letter of Credit shall be issued hereunder so long as the applicable Issuing
Lender, in its sole discretion, determines that (i) such issuance is lawful,
(ii) in the case of Financial Letters of Credit, such Letter of Credit qualifies
as (x) a financial guarantee-type letter of credit under applicable rules and
regulations and (y) in the case of
19
backing Financial Letters of Credit, an independent undertaking for regulatory
purposes, (iii) in the case of Performance Letters of Credit, such Letter of
Credit qualifies as (x) a performance based letter of credit under applicable
rules and regulations and (y) in the case of backing Performance Letters of
Credit, an independent undertaking for regulatory purposes and (iv) such
issuance does not violate any terms or provisions of this Agreement or any
limitations on the amount of Letters of Credit an Issuing Lender may issue
hereunder as separately agreed between the Issuing Lender and the Borrower.
Each Letter of Credit shall be denominated in Dollars or in a Foreign Currency.
The face amount of any Letter of Credit shall not be less than $100,000 (or the
Exchange Equivalent thereof determined as of the date of issuance) or such
lesser amount as is acceptable to the applicable Issuing Lender. At no time
shall (i) the aggregate outstanding principal amount of the Revolving Advances
of all of the Lenders plus the aggregate LC Exposure (or the Dollar Equivalent
thereof) of all of the Lenders exceed the Aggregate Commitments or (ii) the
aggregate outstanding principal amount of the Revolving Advances of all of the
Lenders plus the aggregate LC Exposure (or the Dollar Equivalent thereof) in
respect of Financial Letters of Credit exceed the Revolving Facility Sublimit.
The applicable Issuing Lender shall not be under any obligation to issue or
amend any Letter of Credit if (i) the issuance or amendment of such Letter of
Credit would violate one or more policies of the applicable Issuing Lender or
any limitations on the amount of Letters of Credit such Issuing Lender may issue
hereunder as separately agreed between the Issuing Lender and the Borrower or
(ii) any order, judgment or decree of any Governmental Authority or arbitrator
shall by its terms purport to enjoin or restrain the applicable Issuing Lender
from issuing or amending such Letter of Credit, or any law applicable to such
Issuing Lender or any request or directive from any Governmental Authority with
jurisdiction over such Issuing Lender shall prohibit, or request that such
Issuing Lender refrain from, the issuance of letters of credit generally or such
Letter of Credit in particular. In the event of any inconsistency between the
terms and conditions of any Application delivered by the Borrower pursuant to
Section 3.02 and the terms and conditions of this Agreement, the terms and
conditions of this Agreement shall control. The applicable Issuing Lender will
promptly deliver to the Administrative Agent a true and complete copy of each
Letter of Credit issued by it hereunder and each amendment thereto.
(c) Letters of Credit Issued on behalf of Subsidiaries and Other Related
Entities. Notwithstanding that a Letter of Credit issued or outstanding
hereunder is in support of any obligations of, or is for the account of the
Borrower on behalf of a Subsidiary or any other Related Entity, the Borrower
shall be unconditionally obligated to reimburse the applicable Issuing Lender
hereunder for any and all drawings under such Letter of Credit relating
thereto. The Borrower will, at its expense, promptly execute, acknowledge and
deliver such further documents and do such other acts and things as the
Administrative Agent or the applicable Issuing Lender may reasonably request in
order to effect fully the purposes of this Section 2.07(c).
(d) Applicability of ISP. Unless otherwise expressly agreed by the
applicable Issuing Lender and the Borrower when a Letter of Credit is issued
(including any such agreement applicable to an Existing Letter of Credit), the
rules of the ISP shall apply to each Letter of Credit.
(e) Existing Letters of Credit. All Existing Letters of Credit shall be
deemed to have been issued pursuant hereto, and from and after the Closing Date
shall be subject to and governed by the terms and conditions hereof.
SECTION 2.08. Participations in Letters of Credit.
On the Closing Date with respect to each Existing Letter of Credit and upon the
issuance of any other Letter of Credit (or upon a Person becoming a Lender
hereunder), in each case without any further action on the part of the Issuing
Lenders or the Lenders, the applicable Issuing Lender hereby grants to each
Lender, and each Lender hereby acquires from the applicable Issuing Lender, a
Percentage of the aggregate amount available to be
20
drawn under such type of Letter of Credit (Financial Letter of Credit or
Performance Letter of Credit). In consideration and in furtherance of the
foregoing, each such Lender hereby absolutely and unconditionally agrees to pay
to the Administrative Agent, for the account of the applicable Issuing Lender,
such Lender’s Applicable Percentage (calculated in accordance with the
Commitments in respect of the applicable type of Letter of Credit) of each LC
Disbursement made by the applicable Issuing Lender and not reimbursed for any
reason by the Borrower on the date due as provided in Section 2.09 hereof, or of
any reimbursement payment required to be refunded to the Borrower for any
reason. Each Lender acknowledges and agrees that its obligation to acquire
participations and make payments pursuant to this paragraph in respect of each
Letter of Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever (other than the issuance of any Letter of Credit in
excess of the amounts described in Section 2.07(a) as of the date of issuance
and other than amendments to any Letter of Credit in violation of Section 8.05
to provide for an Expiration Date subsequent to the Maturity Date), including
the occurrence and continuance of a Default or such participation or payment
exceeding such Lender’s Commitments or the Aggregate Commitments or the
Revolving Facility Sublimit by reason of currency fluctuations, and that each
reduction whatsoever.
SECTION 2.09. Reimbursement in Respect of Letters of Credit.
(a) Reimbursement Obligations. If any Issuing Lender shall make any LC
Disbursement, such Issuing Lender shall promptly notify the Borrower and the
Administrative Agent of such LC Disbursement, and the Borrower shall reimburse
such Issuing Lender through the Administrative Agent in an amount equal to such
LC Disbursement by paying such Issuing Lender through the Administrative Agent
in Dollars an amount equal to such LC Disbursement (or the Dollar Equivalent
thereof, as applicable): (i) not later than 2:00 p.m. (New York City time) on
the Business Day immediately following the date that such Issuing Lender
notifies the Borrower that such LC Disbursement is made by such Issuing Lender
or (ii), if the Borrower shall have received notice of such LC Disbursement
later than 2:00 p.m. (New York City time) on any Business Day or on a day that
is not a Business Day, not later than 2:00 p.m. (New York City time) on the
immediately following Business Day. If the Borrower fails to make such payment
under this paragraph at the time specified in the preceding sentence, the
applicable Issuing Lender shall notify each Lender and the Administrative Agent
of the applicable LC Disbursement, the payment in Dollars then due from the
Borrower in respect thereof and such Lender’s Applicable Percentage thereof.
The amounts set forth in such notice shall be conclusive absent manifest error.
Upon the receipt of such notice, (x) the Borrower shall be deemed to have
submitted, as of the date that such LC Disbursement is made, a Notice of
Revolving Borrowing (and shall be deemed to have made certifications,
representations and warranties set forth therein) for a Revolving Advance
consisting of a Base Rate Revolving Advance in the amount of such LC
Disbursement (or the Dollar Equivalent thereof, as applicable), (y) if all terms
and conditions set forth herein for making a Revolving Advance (other than the
receipt of a Notice of Revolving Borrowing) shall have been satisfied, such
Revolving Advance shall be made as provided in Sections 2.01 and 2.02 except
that the amount of such Revolving Advance shall be disbursed to the applicable
Issuing Lender and (z) such Revolving Advance shall be subject to and governed
by the terms and conditions hereof. In the event a Revolving Advance is not
made as provided in the immediately preceding sentence for any reason (including
as a result of any failure to fulfill the applicable conditions set forth in
Section 2.02 or Article III) or any Revolving Advance made pursuant to the
immediately preceding sentence is insufficient to reimburse the applicable
Issuing Lender for such LC Disbursement in full, each Lender shall forthwith pay
to the applicable Issuing Lender through the Administrative Agent in Dollars its
Applicable Percentage of the unreimbursed LC Disbursement. If any amount
required to be paid by any Lender in respect of an unreimbursed LC Disbursement
pursuant to this Section 2.09 is not made available to the applicable Issuing
Lender by such Lender on the date such payment is due (the “due date”), the
applicable Issuing Lender shall be entitled to recover from such Lender, on
demand, such amount with interest thereon calculated from the due date at the
greater of the
21
Federal Funds Rate and a rate determined by the Administrative Agent in
accordance with banking industry rules on interbank compensation. Promptly
following receipt by the Administrative Agent of any payment from the Borrower
pursuant to this Section 2.09, to the extent that Lenders have made payments
pursuant to this Section 2.09 to reimburse such Issuing Lender, then the
Administrative Agent shall distribute such payment received from the Borrower to
such Lenders as their interests may appear. Any payment made by a Lender
pursuant to this paragraph to reimburse any Issuing Lender for any LC
Disbursement shall not relieve the Borrower of its obligation to reimburse such
LC Disbursement. Each Lender acknowledges and agrees that its obligations under
this Section 2.09 shall survive the payment by the Borrower of all LC
Disbursements and any termination of this Agreement. Without limiting the
foregoing, in the event that any reimbursement of an LC Disbursement by the
Borrower to any Issuing Lender is required to be repaid to the Borrower
(pursuant to a proceeding in bankruptcy or otherwise), then the applicable
Issuing Lender shall continue to be entitled to recover from each Lender, on
demand, the portion of such repaid amount as shall be determined in accordance
with this Section 2.09.
(b) Obligations Absolute. Subject to the provisions of this Agreement,
the Borrower’s obligation to reimburse LC Disbursements as provided in
Section 2.09(a) shall be absolute, unconditional and irrevocable and shall be
performed strictly in accordance with the terms of this Agreement under any and
all circumstances whatsoever and irrespective of (i) any lack of validity or
enforceability of any Letter of Credit or this Agreement, or any term or
provision therein or herein, (ii) any draft or other document presented under
any Letter of Credit proving to be forged, fraudulent or invalid in any respect
or any statement therein being untrue or inaccurate in any respect,
(iii) payment by any Issuing Lender under any Letter of Credit against
presentation of a draft or other document that does not comply with the terms of
such Letter of Credit, (iv) the existence of any claim, setoff, defense or other
right that the Borrower or any Subsidiary or Affiliate thereof may at any time
have against any beneficiary of any Letter of Credit, any Credit Party or any
other Person, whether under this Agreement or any other related or unrelated
agreement or transaction, or (v) any other event or circumstance whatsoever,
whether or not similar to any of the foregoing, that might, but for the
provisions of this Section 2.09, constitute a legal or equitable discharge of,
or provide a right of setoff against, the Borrower’s obligations hereunder. The
Lenders, the Issuing Lenders and the Administrative Agent shall not have any
liability or responsibility by reason of or in connection with the issuance or
transfer of any Letter of Credit or any payment or failure to make any payment
thereunder (irrespective of any of the circumstances referred to in the
consequence arising from causes beyond the control of any Issuing Lender. The
parties hereto expressly agree that, in the absence of gross negligence or
willful misconduct on the part of the applicable Issuing Lender (as finally
determined by a court of competent jurisdiction), such Issuing Lender shall be
deemed to have exercised care in each determination relating to the foregoing.
In furtherance of the foregoing and without limiting the generality thereof, the
parties agree that, with respect to documents presented which appear on their
face to be in substantial compliance with the terms of any Letter of Credit, the
applicable Issuing Lender may, in its sole discretion, either accept and make
payment upon such documents without responsibility for further investigation,
regardless of any notice or information to the contrary, or refuse to accept and
make payment upon such documents if such documents are not in strict compliance
with the terms of such Letter of Credit.
SECTION 2.10. Disbursement Procedures for Letters of Credit; Reporting.
(a) Disbursement Procedures for Letters of Credit. The applicable Issuing
Lender shall, promptly following its receipt thereof, examine all documents
purporting to represent a demand for payment under a Letter of Credit. The
applicable Issuing Lender shall promptly notify the Administrative Agent and the
Borrower by telephone (confirmed by telecopy) of such demand for payment and
whether
22
such Issuing Lender has made or will make an LC Disbursement thereunder;
provided that any failure to give or delay in giving such notice shall not
relieve the Borrower of its obligation to reimburse such Issuing Lender or the
obligations of the Lenders with respect to any such LC Disbursement.
(b) Reporting. Each Issuing Lender shall, no later than the tenth
Business Day following the last day of each month, provide to the Administrative
Agent (and the Administrative Agent shall forward to the Lenders) schedules, in
form and substance reasonably satisfactory to the Administrative Agent, showing
the date of issue, account party, applicable currency, amount in such currency
and Expiration Date for each Letter of Credit issued by such Issuing Lender
hereunder and outstanding at any time during such month.
SECTION 2.11. Interest on LC Disbursements and Reimbursement of Other
Amounts.
In the event the Borrower fails to reimburse any applicable Issuing Lender in
full for any LC Disbursement by the time prescribed in Section 2.09(a) and a
Revolving Advance is not made as provided in Section 2.09(a) or any Revolving
Advance made pursuant to Section 2.09(a) is insufficient to reimburse the
applicable Issuing Lender for such LC Disbursement in full, (i) the unpaid or
unreimbursed amount thereof shall bear interest, for each day from and including
the date such LC Disbursement is made to but excluding the date that the
Borrower reimburses such LC Disbursement, after as well as before judgment, at a
rate per annum equal to the sum of (x) the Letter of Credit Fee and (y) the Base
Rate plus 2.0%, and (ii) the Borrower shall also reimburse the applicable
Issuing Lender upon demand for any losses incurred by such Issuing Lender in
connection with changes in the foreign exchange rates as a result of the
Borrower’s failure to reimburse such LC Disbursement by the time prescribed in
Section 2.09(a). Interest accrued pursuant to this Section 2.11 shall be for the
account of the applicable Issuing Lender, except that interest accrued on and
after the date of payment by any Lender pursuant to Section 2.09(a) to reimburse
the applicable Issuing Lender shall be for the account of such Lender to the
SECTION 2.12. Cash Collateralization.
(a) Deposit of Collateral Upon an Event of Default. If any Event of
Default shall occur and be continuing, then on the Business Day that the
Borrower receives notice from the Administrative Agent or the Required Lenders,
as applicable, demanding the deposit of cash collateral pursuant to this
paragraph, the Borrower shall deposit in an account with the Administrative
Agent, in the name of the Administrative Agent and for the benefit of the
Lenders, an amount in cash in Dollars equal to the Dollar Equivalent of the
aggregate LC Exposure as of such date plus any accrued and unpaid fees thereon;
provided that (i) the obligation to deposit such cash collateral shall become
effective immediately, and such deposit shall become immediately due and
payable, without demand or other notice of any kind, upon the occurrence of any
Event of Default described in paragraph (g) or (h) of Section 6.01 and (ii) the
Borrower shall be obligated, from time to time and upon demand by the
Administrative Agent, to deposit additional amounts into said account in cash in
Dollars as necessary to maintain an amount on deposit equal to the amount
(including, with respect to LC Exposure denominated in Foreign Currencies, the
Dollar Equivalent thereof) of the total aggregate LC Exposure plus any accrued
and unpaid fees thereon (as determined at any time).
(b) Deposit of Collateral for Foreign Exchange Differential. In addition
to the foregoing, if on any Computation Date (as defined below) (i) the
outstanding principal amount of Revolving Advances plus the Dollar Equivalent of
aggregate LC Exposure exceeds the Aggregate Commitments or (ii) the outstanding
principal amount of Revolving Advances plus the Dollar Equivalent of aggregate
LC Exposure in respect of Financial Letters of Credit exceeds the Revolving
Facility Sublimit (any such
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excess amounts described in the foregoing clauses (i) and (ii), the “Excess”),
in each case, by $10,000,000 or more, the Administrative Agent shall provide
notice thereof to the Borrower and demand the deposit of cash collateral
pursuant to this paragraph. On the Business Day on which the Borrower receives
such notice, the Borrower shall deposit in an account with the Administrative
Lenders and the Issuing Lenders, an amount in cash in Dollars equal to the full
amount of such Excess; provided that the Borrower shall be obligated, from time
to time and upon demand by the Administrative Agent, to deposit additional
amounts into said account in cash in Dollars as necessary to maintain an amount
on deposit equal to the Excess (as determined at any time). The Administrative
Agent shall produce copies of any calculations or reports relating to the
foregoing upon written request from the Borrower or any Lender. The
Administrative Agent may, and at the instruction of the Required Lenders or the
Borrower shall, undertake such calculations at any time; provided that in any
event the Administrative Agent shall undertake such calculations at least once
per calendar quarter and, in the case of any request by the Borrower, not more
often than once per week, and the Administrative Agent shall not be required to
undertake such calculations more frequently than once per calendar month without
its consent. Each day upon or as of which the Administrative Agent undertakes
the calculations described above in this Section 2.12(b) is referred to herein
as a “Computation Date”. If the Borrower is required to provide an amount of
cash collateral under this clause (b) as a result of any Excess, and the
Administrative Agent shall subsequently determine on any Computation Date that
the amount of such Excess is less than the amount on deposit in respect of the
existence of such Excess, then (provided there is no Default then in existence)
such excess amount of cash, if greater than $1,000,000 (to the extent not
applied as aforesaid), shall be returned to the Borrower within three
(3) Business Days after request therefor by the Borrower.
(c) Deposit of Collateral for Defaulting Lenders. In addition to the
foregoing and subject to Section 2.22, if any Lender becomes a Defaulting Lender
and while any LC Exposure exists, for so long as such Lender is a Defaulting
Lender and such LC Exposure exists, then within two (2) Business Days following
notice by the Administrative Agent demanding the deposit of cash collateral
pursuant to this paragraph, the Borrower shall (i) deposit in an account with
the Administrative Agent, in the name of the Administrative Agent and for the
benefit of the Lenders, and/or (ii) subject to the following proviso (2),
provide Permitted Cover, in each case an amount in cash in Dollars equal to the
Dollar Equivalent of such Defaulting Lender’s Applicable Percentage of the
aggregate LC Exposure as of such date; provided that (1) the Borrower shall be
obligated, from time to time and within two (2) Business Days following notice
by the Administrative Agent demanding the deposit of additional cash collateral
and/or Permitted Cover pursuant to this paragraph, to deposit additional amounts
into said account in cash in Dollars, and/or to provide additional Permitted
Cover, in each case as necessary to maintain an amount on deposit and/or
Permitted Cover equal to the Dollar Equivalent of such Defaulting Lenders’
Applicable Percentage of the then aggregate LC Exposure and (2) the foregoing
option to provide Permitted Cover in lieu of cash collateral shall only be
available to the Borrower for a period not to exceed one (1) month after such
notice by the Administrative Agent demanding deposit of cash collateral and upon
the expiration of such period, the Borrower shall deposit cash collateral in the
amount of such Defaulting Lender’s LC Exposure as contemplated by this clause
(c) and the failure to provide such deposit shall constitute an Event of
Default. Payment by the Borrower of such cash collateral or provision of
Permitted Cover shall not relieve the Defaulting Lender of its obligations
hereunder, and the Borrower shall retain all of its rights and remedies
hereunder and under applicable law against any such Defaulting Lender.
(d) Cash Collateral Accounts. Each deposit and Permitted Cover under
Sections 2.12(a), (b) and (c) shall be held by the Administrative Agent (subject
to Section 7.09) as collateral for the payment and performance of the
obligations of the Borrower under this Agreement. The Administrative Agent shall
have exclusive dominion and control, including the exclusive right of
withdrawal, over such account. If required by the Administrative Agent, the
Borrower shall enter into any pledge or security agreement and any UCC financing
statement with respect to such cash collateral in favor of the
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Administrative Agent as the Administrative Agent shall require. Such deposits
shall be invested in Permitted Investments selected by the Administrative Agent
in its sole discretion. All losses and expenses incurred as a result of such
activities shall be for the account of the Borrower. Interest or profits, if
any, on such investments shall accumulate in such accounts for the account of
the Borrower. Moneys in such accounts shall be applied by the Administrative
Agent (i) to reimburse Issuing Lenders for LC Disbursements for which they have
not been reimbursed; and (ii) to the extent not so applied, may be held for the
satisfaction of the reimbursement obligations of the Borrower for the LC
Exposure at such time or any other Obligations or to cover any losses in respect
of any Excess; provided that moneys in such accounts relating to the Borrower’s
obligations under Section 2.12(c) shall be applied by the Administrative Agent
to reimburse the Issuing Lenders on a ratable basis for the applicable
Defaulting Lender’s Applicable Percentage of LC Disbursements for which the
Issuing Lenders have not been reimbursed. If the Borrower is required to
an Event of Default, and all Defaults are subsequently cured or waived and no
Excess is then in existence, such amount (to the extent not applied as
aforesaid) shall be returned to the Borrower within three Business Days after
request therefor by the Borrower. If the Borrower is required to provide an
amount of cash collateral hereunder as a result of any Excess, and the
Administrative Agent shall subsequently determine that the amount of such Excess
is equal to or less than the amount on deposit in respect of the existence of
such Excess, provided there is no Default then in existence, such excess amount
of cash, if greater than $1,000,000 (to the extent not applied as aforesaid),
shall be returned to the Borrower within three Business Days after request
therefor by the Borrower. If the Borrower is required to provide an amount of
cash collateral hereunder as a result of any Lender becoming a Defaulting
Lender, and such Lender ceases to be a Defaulting Lender or the LC Exposure and
Revolving Advances outstanding are subsequently reduced such that the amount of
cash collateral provided therefor exceeds such Defaulting Lender’s Applicable
Percentage of the sum of the LC Exposure and Revolving Advances outstanding,
such cash collateral (or excess amount of cash collateral, if applicable), to
the extent not previously applied to the Defaulting Lender’s obligations
hereunder, shall be returned to the Borrower within three (3) Business Days
after request therefor by the Borrower.
(e) Custody of Cash Collateral. Beyond the exercise of reasonable care
in the custody thereof and investment of cash collateral deposits pursuant to
the terms hereof, the Administrative Agent shall have no duty as to any cash
collateral in its possession or control or in the possession or control of any
agent or bailee or any income thereon or as to the preservation of rights
against prior parties or any other rights pertaining thereto. The
Administrative Agent shall be deemed to have exercised reasonable care in the
custody and preservation of the cash collateral in its possession if the cash
collateral is accorded treatment substantially equal to that which it accords
its own property and shall not be liable or responsible for any loss or damage
to any of the cash collateral or for any diminution in the value thereof by
reason of the act or omission of any agent or bailee selected by the
Administrative Agent in good faith. All expenses and liabilities incurred by
the Administrative Agent in connection with taking, holding and disposing of any
cash collateral (including customary custody and similar fees with respect to
any cash collateral held directly by the Administrative Agent), shall be paid by
the Borrower from time to time upon demand.
SECTION 2.13. Obligations.
Anything in this Agreement to the contrary notwithstanding, each of the Borrower
and each Lender shall continue to be bound by all of its obligations hereunder,
including without limitation, its obligations under Sections 2.03, 2.08 and
2.09, until such time as all outstanding Revolving Advances have been paid in
full, each Letter of Credit has expired and no further Obligation, LC Exposure
or Commitment exists.
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SECTION 2.14. General Provisions as to Payments.
(a) Manner and Time of Payment. The Borrower shall make each payment
hereunder (including, without limitation, in respect of the LC Disbursements),
and interest thereon, and all fees due in respect of the transactions
contemplated by this Agreement in Dollars in Federal or other funds immediately
available in New York, New York, to the Administrative Agent at its address
referred to in Section 8.01(a). Except as otherwise provided in
Section 2.05(b)(ii), whenever any such payment shall be due on a day which is
not a Business Day, the date for payment thereof shall be extended to the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or additional compensation.
If the date for any payment of principal is extended by operation of law or
otherwise, interest thereon shall be payable for such extended time. Any
payment made by the Borrower after 2:00 p.m. (New York City time) on any day
shall be deemed to have been made on the next Business Day for the purpose of
calculating interest on amounts outstanding in respect of any Obligations. All
payments required to be made by the Borrower hereunder shall be made in Dollars
and shall be made without setoff or counterclaim.
(b) Application of Payments to Principal and Interest. All payments in
respect of the principal amount of any Obligations hereunder shall include
payment of accrued interest on the principal amount being repaid or prepaid, and
all such payments (and, in any event, any payments in respect of any Obligations
on a date when interest is due and payable with respect to such Obligations)
shall be applied to the payment of interest before application to principal.
(c) Apportionment of Payments. The Administrative Agent will promptly
distribute to each Lender its ratable share of each payment received by the
Administrative Agent which is for the account of the Lenders.
(d) Application of Funds. (i) All payments received from the Borrower by
the Administrative Agent which are not reasonably identifiable by the
Administrative Agent shall be applied by the Administrative Agent against the
Obligations, and (ii) any amounts received on account of the Obligations after
the exercise of remedies provided for in Section 6.02 (or after the Revolving
Advances have automatically become immediately due and payable and the LC
Exposure has automatically been required to be cash collateralized as set forth
in the proviso to Section 6.02), in each case in the following order of
priority: (A) to the payment of all amounts for which the Administrative Agent
is entitled to compensation, reimbursement and indemnification under any Loan
Document and all advances made by the Administrative Agent thereunder for the
account of the Borrower, and to the payment of all reasonable costs and expenses
paid or incurred by the Administrative Agent in connection with the Loan
Documents, all in accordance with Sections 7.09 and 8.03 and the other terms of
this Agreement and the Loan Documents; (B) thereafter, to the extent of any
excess such proceeds, to the payment of all other Obligations for the ratable
benefit of the holders thereof (subject to the provisions of
Section 2.14(b) hereof); and (C) thereafter, to the extent of any excess such
proceeds, to the Borrower or as otherwise required by applicable law.
(e) Obligations of Lenders Several. The obligations of the Lenders
hereunder to make Revolving Advances, to fund participations in Letters of
Credit and to make payments pursuant to Section 7.06 are several and not joint.
The failure of any Lender to make the Revolving Advance to be made by it as part
of any Revolving Borrowing, to fund any such participation or to make any
payment under Section 7.06 on any date required hereunder shall not relieve any
Revolving Advance, to purchase its participation or to make its payment under
Section 7.06.
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SECTION 2.15. Computation of Interest and Fees.
Interest on all amounts owed hereunder shall be computed on the basis of a year
of 360 days, except that interest computed by reference to the Base Rate
(calculated at other than the Federal Funds Rate or the Eurodollar Rate) shall
be computed on the basis of a year of 365 days or, if applicable, 366 days, and
in each case all interest hereunder shall be payable for the actual number of
days elapsed (including the first day but excluding the last day). All fees due
and payable hereunder shall, unless expressly otherwise provided for, be
computed on the basis of a year of 360 days for the actual number of days
elapsed.
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SECTION 2.16. Taxes; Net Payments.
(a) Net Payments. Any and all payments by the Borrower under this
Agreement shall be made free and clear of and without deduction for any and all
current or future taxes, levies, imposts, deductions, fees, assessments, duties,
charges or withholdings and all liabilities with respect thereto excluding
(i) income taxes imposed on the net income of any Lender; (ii) franchise taxes
imposed on the net income of any Lender, in each case by the jurisdiction under
the laws of which such Lender is organized, domiciled, resident or doing
business or any political subdivision thereof and (iii) any United States
federal withholding taxes imposed under FATCA (all such non-excluded taxes,
levies, imposts, deductions, fees, assessments, duties, charges, withholdings
and liabilities, collectively or individually, “Taxes”). If the Borrower shall
be required to deduct any Taxes from or in respect of any sum payable hereunder
to a Lender (i) the sum payable shall be increased by the amount (an “additional
amount”) necessary so that after making all required deductions such Lender
shall receive an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions and (iii) the
Borrower shall pay the full amount deducted to the relevant Governmental
Authority in accordance with applicable law. Within 30 days after the date of
any payment of Taxes pursuant to this paragraph (a), the Borrower shall furnish
to the Administrative Agent a receipt issued by the relevant Governmental
Authority or other evidence satisfactory to the Administrative Agent of payment
thereof. The Borrower will indemnify each Lender (subject to such Lender having
complied with paragraph (b) below) and hold each Lender harmless for the full
amount of all Taxes paid or payable by such Lender with respect to this
Agreement and any and all amounts received by such Lender hereunder, and any
liability (including penalties, interest and expenses (including reasonable
attorneys fees and expenses)) arising therefrom or with respect thereto whether
or not such Taxes were correctly or legally asserted by the relevant
liability prepared by such Lender, absent manifest error, shall be final,
conclusive and binding for all purposes. The obligations of the Borrower under
this Section 2.16 shall survive the termination of this Agreement and the
Commitments and the payment of all amounts payable under the Loan Documents.
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(b) Evidence of Exemption from Withholding. Each Lender which is a
foreign corporation within the meaning of Section 1442 of the Code, including
(each, a “Foreign Lender”), shall deliver to the Borrower such certificates,
documents or other evidence as the Borrower may reasonably require from time to
time as are necessary to establish that such Foreign Lender is not subject to
withholding (or is subject to a reduced rate of withholding) under Section 1441
or 1442 of the Code or as may be necessary to establish, under any law hereafter
imposing upon the Borrower, an obligation to withhold any portion of the
payments made by the Borrower under the Loan Documents, that payments to the
Administrative Agent for the account of such Foreign Lender are not subject to
withholding (or are subject to a reduced rate of withholding), in any event to
include: (i) two original copies of Internal Revenue Service Form W-8BEN, W-8ECI
or W-8IMY, as appropriate (or any successor forms), properly completed and duly
executed by such Foreign Lender, and such other documentation required under the
Code and reasonably requested by the Borrower, to establish that such Foreign
Lender is not subject to, or is subject to a reduced rate of, deduction or
withholding of United States federal income tax with respect to any payments to
such Foreign Lender of principal, interest, fees or other amounts payable under
any of the Loan Documents, or (ii) if such Foreign Lender is not a “bank” or
other Person described in Section 881(c)(3) of the Code and cannot deliver
either Internal Revenue Service Form W-8BEN (to the extent such form would
document a claim or exemption from withholding pursuant to an applicable income
tax treaty) or W-8ECI or W-8IMY pursuant to clause (i) above, a Certificate re
Non-Bank Status together with two original copies of Internal Revenue Service
Form W-8BEN (or any successor form) (to the extent such forms document the
status of the Foreign Lender as other than a United States Person), properly
completed and duly executed by such Foreign Lender, and such other documentation
required under the Code and reasonably requested by the Borrower to establish
that such Foreign Lender is not subject to deduction or withholding of United
States federal income tax with respect to any payments to such Foreign Lender of
interest under any of the Loan Documents. If the form provided by a Lender at
the time such Lender first becomes a party to this Agreement indicates a United
States federal withholding tax rate in excess of zero, United States federal
withholding tax at such rate shall be considered excluded from “Taxes” as
defined in Section 2.16(a).
(c) FATCA. If a payment made to a Lender under any Loan Document
would be subject to United States federal withholding tax imposed by FATCA if
withhold from such payment. Solely for purposes of this paragraph (c), “FATCA”
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(d) Indemnification by the Lenders. Each Lender shall severally
indemnify the Administrative Agent, within 30 days after demand therefor, for
(i) any Taxes attributable to such Lender (but only to the extent that the
Borrower has not already indemnified the Administrative Agent for such Taxes and
without limiting the obligation of the Borrower to do so), (ii) any taxes,
levies, imposts, deductions, fees, assessments, duties, charges or withholdings
attributable to such Lender’s failure to comply with the provisions of
Section 8.06(c) relating to the maintenance of a Participant Register and
(iii) any taxes, levies, imposts, deductions, fees, assessments, duties, charges
or withholdings excluded by the first sentence of paragraph (a) above
expenses arising therefrom or with respect thereto, whether or not such amounts
delivered to any Lender by the Administrative Agent shall be conclusive absent
manifest error. Each Lender hereby authorizes the Administrative Agent to set
off and apply any and all amounts at any time owing to such Lender under any
Loan Document or otherwise payable by the Administrative Agent to the Lender
from any other source against any amount due to the Administrative Agent under
this paragraph (d).
SECTION 2.17. Increased Costs.
(a) Change in Law, Etc. In the event that any law, regulation, treaty or
directive hereafter enacted, promulgated, approved or issued or any change in
any currently existing law, regulation, treaty or directive therein or in the
interpretation or application thereof by any Governmental Authority charged with
the administration thereof or compliance by any Credit Party (or any Person
directly or indirectly owning or controlling such Credit Party) with any request
or directive, whether or not having the force of law, from any central bank or
other Governmental Authority, agency or instrumentality (including, without
limitation, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act
and all requests, rules, guidelines or directives thereunder or issued in
Banking Supervision (or any successor or similar authority) or the United States
or foreign regulatory authorities, in each case pursuant to Basel III, in each
case regardless of the date enacted, adopted or issued):
(i) does or shall subject any Credit Party to any taxes, levies,
imposts, deductions, fees, assessments, duties, charges or withholdings (other
than (A) Taxes, (B) taxes, levies, imposts, deductions, fees, assessments,
duties, charges or withholdings excluded by the first sentence of
Section 2.16(a)) on its loans, loan principal, letters of credit, commitments,
or other obligations, or its deposits, reserves, other liabilities or capital
attributable thereto; or
(ii) does or shall impose, modify or make applicable any reserve,
special deposit, compulsory loan, assessment, increased cost or similar
requirement against assets held by, or deposits of, or advances or loans by, or
other credit extended by, or any other acquisition of funds by, any office of
such Credit Party in respect of any Eurodollar Rate Revolving Advance or any
Letter of Credit or participations therein (except any such reserve requirement
reflected in the definition of Eurodollar Rate);
and the result of any of the foregoing is to increase the cost to such Credit
Party of agreeing to make or of making, funding or maintaining Revolving
Advances or of making, issuing, renewing, creating or maintaining any Letter of
Credit or participation therein, or its commitment to lend or to issue or create
any such Letter of Credit or participate therein, or to reduce any amount
receivable hereunder in respect of any Revolving Advance or any Letter of Credit
or participation therein, then, in any such case, the Borrower shall pay such
Credit Party, upon its demand, any additional amounts necessary to compensate
30
such Credit Party for such additional cost or reduction in such amount
receivable which such Credit Party deems to be material as determined by such
Credit Party. A statement setting forth the calculations of any additional
amounts payable pursuant to the foregoing sentence submitted by a Credit Party
to the Borrower shall be conclusive absent manifest error. The obligations of
the Borrower under this Section 2.17 shall survive the termination of this
Agreement and the Commitments and payment of the Obligations and all other
amounts payable under the Loan Documents. Failure to demand compensation
pursuant to this Section 2.17 shall not constitute a waiver of such Credit
Party’s right to demand such compensation. To the extent that any increased
costs of the type referred to in this Section 2.17 are being incurred by a
Credit Party and such costs can be eliminated or reduced by the transfer of such
Credit Party’s participation or Commitment to another of its branches, and to
the extent that such transfer is not inconsistent with such Credit Party’s
internal policies of general application and only if, as determined by such
Credit Party in its sole discretion, the transfer of such participation or
Commitment, as the case may be, would not otherwise materially adversely affect
such participation or such Credit Party, the Borrower may request, and such
Lender shall use reasonable efforts to effect, such transfer.
(b) Capital Adequacy. If after the date hereof, any Lender shall have
determined that the adoption of any applicable law, rule or regulation regarding
capital adequacy or liquidity requirements, or any change therein, or any change
in the interpretation or administration thereof by any Governmental Authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or its Lending Office) with
any request or directive regarding capital adequacy or liquidity requirements
(whether or not having the force of law) of any such Governmental Authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on such Lender’s capital as a consequence of its obligations
hereunder to a level below that which such Lender could have achieved but for
such adoption, change or compliance (taking into consideration such Lender’s
policies with respect to capital adequacy and liquidity) by an amount deemed by
such Lender to be material, then from time to time, within 10 Business Days
after demand by such Lender (with a copy to the Administrative Agent), the
Borrower shall pay to such Lender such additional amount or amounts as will
compensate such Lender for such reduction.
(c) Notification. Each Lender will promptly notify the Borrower and the
Administrative Agent of any event of which it has knowledge, occurring after the
date hereof, which will entitle such Lender to compensation pursuant to this
Section 2.17. A certificate of any Lender claiming compensation under this
Section 2.17 and setting forth the additional amount or amounts to be paid to it
hereunder shall be conclusive in the absence of manifest error.
SECTION 2.18. Illegality.
Notwithstanding anything herein to the contrary, no Issuing Lender shall at any
time be obligated to issue a Letter of Credit or agree to any extension or
amendment thereof if such issuance, creation, extension or amendment would
conflict with, or cause any Issuing Lender to exceed any limits imposed by, any
law or requirements of any applicable Governmental Authority.
SECTION 2.19. Fees.
(a) The Borrower agrees to pay to the Administrative Agent, for the
account of each Lender in accordance with its Applicable Percentage, a
commitment fee (the “Commitment Fee”) equal to the product of the Applicable
Rate then in effect times the average daily amount by which (i) the Aggregate
Commitments in effect from time to time exceed (ii) the Utilization from time to
time. The Commitment Fee shall accrue at all times during the Availability
Period through and including the last Business Day of March, June, September and
December of each year, including at any time during which one or more of the
conditions in Article III is not met, and shall be payable in arrears on the
third
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Business Day following the last Business Day of March, June, September and
December of each year, commencing on the first such date to occur after the
Closing Date, and on the last day of the Availability Period. Notwithstanding
the foregoing or anything else contained in this Agreement to the contrary, for
purposes of calculating the LC Exposure in connection with determining the
applicable Commitment Fee, the parties hereto acknowledge and agree that to the
extent any Escalating LC is then issued and outstanding, the applicable
Commitment Fee shall accrue at 150% of the Commitment Fee which would be
applicable solely by reference to the Applicable Rate multiplied by the
difference between (x) the maximum amount (after giving effect to all possible
increases) available to be drawn thereunder and (y) the amount then available to
be drawn under such Escalating LC.
(b) The Borrower agrees to pay to the Administrative Agent, for the
account of each Lender in accordance with its Applicable Percentage, a letter of
credit fee (the “Letter of Credit Fee”), calculated daily with respect to such
Lender’s participations in Letters of Credit issued hereunder, equal to the
product of (i) the Applicable Rate then in effect times (ii) the actual daily
maximum face or stated amount of each Letter of Credit outstanding (in the case
of any Escalating LC, such amount shall equal the amount then available to be
drawn under such Escalating LC). Letter of Credit Fees payable pursuant to this
paragraph (b) shall accrue through and including the last Business Day of March,
June, September and December of each year and be payable in arrears on the third
Closing Date; provided that all such fees shall be payable on the date on which
all Commitments terminate and any such fees accruing after the date on which all
Commitments terminate shall be payable on demand. The sum of each daily
calculation, if in a currency other than Dollars, shall be converted to the
Dollar Equivalent thereof on the date the applicable payment is due.
(c) The Borrower agrees to pay directly to each Issuing Lender, for its
own account, a fronting fee with respect to each Letter of Credit issued by such
Issuing Lender, at the rate per annum, and computed on the basis, separately
agreed upon between the Borrower and such Issuing Lender, which fronting fee
will be paid on a quarterly basis in arrears. Such fronting fee payable to any
Issuing Lender shall accrue through and including the last Business Day of
March, June, September and December of each year and be payable in arrears on
the third Business Day following the last Business Day of March, June,
September and December (or such other day as specified by the applicable Issuing
Lender) of each year, commencing on the first such date to occur after the
Commitments terminate shall be payable on demand. In addition, the Borrower
shall pay directly to each Issuing Lender, for its own account, such Issuing
Lender’s standard fees with respect to the issuance, amendment, renewal or
extension of any Letter of Credit or processing of drawings thereunder in the
amounts and at the times separately agreed upon.
(d) In addition to any of the foregoing fees, the Borrower agrees to pay
to the Administrative Agent, the Joint Lead Arrangers and their Affiliates such
other fees in the amounts and at the times separately agreed upon.
(e) All fees payable hereunder shall be paid on the dates due, in Dollars
and in immediately available funds, to the Administrative Agent (or to the
applicable Issuing Lender, in the case of fees payable to it) for distribution,
in the case of Commitment Fees and Letter of Credit Fees, to the Lenders. Fees
paid shall not be refundable under any circumstances. Any fee not due on a
specific date shall be due on demand.
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SECTION 2.20. Evidence of Debt.
(a) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to such Lender
resulting from each Revolving Advance made by such Lender, including the amounts
of principal and interest payable and paid to such Lender from time to time
hereunder.
(b) The Administrative Agent shall maintain accounts in which it shall
record (i) the amount of each Revolving Advance made hereunder, the Interest
Type thereof and the Interest Period applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from the
Borrower to each Lender hereunder and (iii) the amount of any sum received by
the Administrative Agent hereunder for the account of the Lenders and each
Lender’s share thereof.
(c) The entries made in the accounts maintained pursuant to
paragraph (a) or (b) of this Section shall be prima facie evidence of the
existence and amounts of the obligations recorded therein; provided that the
failure of any Lender or the Administrative Agent to maintain such accounts or
any error therein shall not in any manner affect the obligation of the Borrower
to repay the Revolving Advances in accordance with the terms of this Agreement.
(d) Upon the request of any Lender made through the Administrative Agent,
the Borrower shall execute and deliver to such Lender (through the
Administrative Agent) a Revolving Note, which shall evidence such Lender’s
Revolving Advances in addition to such accounts maintained pursuant to
paragraph (a) or (b) of this Section. Each Lender may attach schedules to its
Revolving Note and endorse thereon the date, Interest Type (if applicable),
amount and maturity of its Revolving Advances and payments with respect thereto.
SECTION 2.21. Use of Proceeds.
The proceeds of the Revolving Advances (other than any Revolving Advances made
pursuant to Section 2.09(a)) shall be available (and the Borrower agrees that it
shall use such proceeds) to refinance in part the Existing Facilities and to
provide working capital for the Borrower and its Subsidiaries and, subject to
the provisions of this Agreement and the other Loan Documents, for other general
corporate purposes of the Borrower and its Subsidiaries. No portion of the
proceeds of any borrowing under this Agreement shall be used by the Borrower or
any of its Subsidiaries in any manner that might cause the borrowing or the
application of such proceeds to violate Regulation U or any other regulation of
the FRB or to violate the Securities Exchange Act of 1934, as amended from time
to time, and any successor statute, in each case as in effect on the date or
dates of such borrowing and such use of proceeds.
SECTION 2.22. Defaulting Lenders.
Notwithstanding any provision of this Agreement to the contrary, if any Lender
becomes a Defaulting Lender, then the following provisions shall apply for so
long as such Lender is a Defaulting Lender:
(a) if any LC Exposure exists at the time a Lender is a Defaulting
Lender, all or any part of such Defaulting Lender’s LC Exposure shall be
reallocated among the Non-Defaulting Lenders in accordance with their respective
Applicable Percentages (calculated (x) without regard to such Defaulting
Lender’s Commitment and (y) in accordance with the Commitments in respect of the
applicable type of Letter of Credit) but only to the extent that (i) the
conditions set forth in Section 3.02 are satisfied at the time of such
reallocation (and, unless the Borrower shall have otherwise notified the
Administrative Agent at such time, the Borrower shall be deemed to have
represented and warranted that
33
such conditions are satisfied at such time), and (ii) such reallocation does not
cause any Non-Defaulting Lender’s Applicable Percentage (calculated (x) without
regard to such Defaulting Lender’s Commitment and (y) in accordance with the
Commitments in respect of the applicable type of Letter of Credit) of the
Utilization to exceed such Non-Defaulting Lender’s Commitment in respect of the
applicable type of Letter of Credit. No reallocation hereunder shall constitute
a waiver or release of any claim of any party hereunder against a Defaulting
Lender arising from that Lender having become a Defaulting Lender, including any
claim of a Non-Defaulting Lender as a result of such Non-Defaulting Lender’s
increased exposure following such reallocation;
(b) if the reallocation described in clause (a) above cannot, or can
only partially, be effected, the Borrower shall within two (2) Business Days
following notice by the Administrative Agent cash collateralize or (to the
extent permitted by Section 2.12(c)) provide Permitted Cover for such Defaulting
Lender’s LC Exposure in accordance with the procedures set forth in Section 2.12
for so long as such LC Exposure is outstanding and to the extent such LC
Exposure is not otherwise reallocated pursuant to clause (a) above;
(c) the Commitment and LC Exposure of such Defaulting Lender shall not
be included in determining whether all Lenders or the Required Lenders have
taken or may take any action hereunder (including any consent to any amendment
or waiver pursuant to Section 8.05), provided that any waiver, amendment or
modification extending or increasing the Commitment of such Defaulting Lender or
reducing the principal of any LC Disbursement made by such Defaulting Lender
shall require the consent of such Defaulting Lender;
(d) (i) if such Defaulting Lender’s LC Exposure is reallocated
pursuant to the foregoing clause (a), the Borrower shall (x) pay to each
Non-Defaulting Lender that portion of any Letter of Credit Fees otherwise
payable to such Defaulting Lender pursuant to Section 2.19(b) with respect to
such Defaulting Lender’s LC Exposure that has been reallocated to such
Non-Defaulting Lender and (y) not be required to pay the Commitment Fees to such
Defaulting Lender pursuant to Section 2.19(a) with respect to such reallocated
portion of such Defaulting Lender’s LC Exposure, (ii) if the Borrower cash
collateralizes or provides (to the extent permitted by Section 2.12(c))
Permitted Cover for any portion of such Defaulting Lender’s LC Exposure pursuant
to the foregoing clause (b), the Borrower shall not be required to pay the
Letter of Credit Fees or Commitment Fees to such Defaulting Lender pursuant to
Sections 2.19(a) and (b) with respect to such Defaulting Lender’s LC Exposure
during the period such Defaulting Lender’s LC Exposure is cash collateralized or
covered by Permitted Cover and (iii) if any portion of such Defaulting Lender’s
LC Exposure is neither reallocated nor cash collateralized pursuant to this
Section 2.22, the Borrower shall pay to the applicable Issuing Lenders the
amount of any such Letter of Credit Fees otherwise payable to such Defaulting
Lender pursuant to Section 2.19(b); and
(e) no Issuing Lender shall be required to issue, amend or increase
any Letter of Credit unless it is satisfied that cash collateral or (to the
extent permitted by Section 2.12(c)) Permitted Cover will be provided by the
Borrower in accordance with the foregoing clause (b).
If the Borrower, the Administrative Agent and each Issuing Lender agree in
writing that a Lender is no longer a Defaulting Lender, the Administrative Agent
will so notify the parties hereto, whereupon as of the effective date specified
in such notice and subject to any conditions set forth therein (which may
include arrangements with respect to any cash collateral), that Lender will, to
the extent applicable, purchase at par that portion of outstanding Loans of the
other Lenders or take such other actions as the Administrative Agent may
determine to be necessary to cause the Loans and funded and unfunded
participations in Letters of Credit to be held pro rata by the Lenders in
accordance with the Commitments then in effect (without giving effect to
Section 2.22(a)), whereupon such Lender will cease to be a
34
Defaulting Lender; provided that no adjustments will be made retroactively with
respect to fees accrued or payments made by or on behalf of the Borrower while
that Lender was a Defaulting Lender; and provided, further, that except to the
extent otherwise expressly agreed by the affected parties, no change hereunder
from Defaulting Lender to Lender will constitute a waiver or release of any
claim of any party hereunder arising from that Lender’s having been a Defaulting
Lender.
SECTION 2.23. Replacement of Lenders.
If any Lender requests compensation under Section 2.17, or if the Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.16, or if any
Lender is a Defaulting Lender, or if any Lender does not consent to a proposed
amendment, waiver, consent or modification with respect to any Loan Document
that requires the consent of each Lender and that has been approved by the
Required Lenders, then the Borrower may, at its sole expense and effort, upon
notice to such Lender and the Administrative Agent, require such Lender to
assign and delegate (in accordance with and subject to the restrictions
contained in, and consents required by, Section 8.06), without recourse, all of
their interests, rights and obligations under this Agreement and the related
Loan Documents to an assignee that shall assume such obligations (which assignee
may be another Lender, if a Lender accepts such assignment), provided that:
assignment fee specified in Section 8.06(b);
aggregate outstanding amount of its LC Disbursements and/or Revolving Advances,
as the case may be, accrued interest thereon, accrued fees and all other amounts
payable to it hereunder and under the other Loan Documents from the assignee (to
the extent of such outstanding LC Disbursements and/or Revolving Advances, as
the case may be, and accrued interest and fees) or the Borrower (in the case of
all other amounts);
compensation under Section 2.17 or payments required to be made pursuant to
Section 2.16, such assignment will result in a reduction in such compensation or
payments thereafter; and
(d) such assignment does not conflict with applicable laws.
cease to apply.
SECTION 2.24. Incremental Commitments.
The Borrower may at any time, and from time to time, by notice to the
Administrative Agent, request an increase in the Aggregate Commitments
(including, as applicable, an increase in the Revolving Facility Sublimit)
provided for under this Agreement by an amount (in the aggregate for all such
requests) not exceeding $500,000,000 (each such increase, an “Incremental
Commitment Increase”); provided, that (i) the maximum Aggregate Commitment
hereunder shall not at any given time be in excess of $2,300,000,000, (ii) the
maximum Revolving Facility Sublimit shall not at any given time be in excess of
$1,500,000,000, (iii) any such Incremental Commitment Increase shall be in a
minimum amount of $25,000,000 and any whole multiple of $10,000,000 in excess
thereof and (iv) each Incremental Commitment Increase will be treated as a
Commitment under this Agreement; provided, further, that (i) no Lender shall be
required to provide all or any portion of such Incremental Commitment Increase
and
35
(ii) no Default or Event of Default shall have occurred and be continuing or
would result after giving effect to such Incremental Commitment Increase on the
Incremental Commitment Increase Effective Date. To achieve the full amount of a
requested increase, the Borrower may also invite additional banks or other
financial institutions to become Incremental Increase Lenders pursuant to a
joinder agreement in form and substance satisfactory to the Administrative Agent
(each such joinder agreement, an “Incremental Joinder Agreement”); provided that
each Incremental Increase Lender shall be subject to the approval of the
Administrative Agent and each Issuing Lender (such approval in each case not to
be unreasonably withheld or delayed) and the approval of the Borrower, but not
the approval of any other Lender. If the Aggregate Commitments are increased in
accordance with this Section, the Administrative Agent and the Borrower shall
determine the effective date (the “Incremental Commitment Increase Effective
Date”) and the final allocation of such increase. The Administrative Agent
shall promptly notify the Borrower and the Lenders of the final allocation of
such increase and the Incremental Commitment Increase Effective Date.
On each Incremental Commitment Increase Effective Date, each Lender, immediately
prior to all Incremental Commitment Increases occurring on such Incremental
Commitment Increase Effective Date, will automatically and without further
action be deemed to have assigned to each Incremental Increase Lender providing
a portion of the Incremental Commitment Increase on such Incremental Commitment
Increase Effective Date, and each such Incremental Increase Lender will
automatically and without further action be deemed to have assumed, a portion of
such Lender’s participations hereunder in outstanding Letters of Credit such
that, after giving effect to each such deemed assignment and assumption of
participations, each Lender (including each Incremental Increase Lender) shall
hold its Applicable Percentage (including any additional Commitments of the
Incremental Increase Lenders) of the participations hereunder in Letters of
Credit.
Notwithstanding anything to the contrary set forth herein, the terms of each
Incremental Commitment Increase shall be identical to the Commitments made as of
the Closing Date except that the Applicable Rate in respect of the Letter of
Credit Fee and/or the Commitment Fee and any other pricing terms (including
upfront fees) shall be determined by the Company and the applicable Incremental
Increase Lenders.
As a condition precedent to such increase, the Borrower shall deliver to the
Administrative Agent a certificate signed by a senior vice president, the chief
financial officer or the treasurer of the Borrower (i) certifying that such
Incremental Commitment Increase and the performance of the Borrower’s
obligations thereunder (in form and substance reasonably satisfactory to the
Administrative Agent) have been duly authorized (and attaching any evidence
thereof reasonably requested by the Administrative Agent), and (ii) certifying
that, as of the Incremental Commitment Increase Effective Date, before and after
giving effect to such Incremental Commitment Increase, (A) the representations
and warranties contained in Article IV and the other Loan Documents are true
(except that for such purposes, the representations and warranties contained in
Section 4.04(a) shall be deemed to refer to the most recent statements furnished
pursuant to Section 5.01(a)), (B) no default or event of default under any
project engineering, procurement, construction, maintenance and related
activities and/or contracts of the Borrower or any of its Subsidiaries shall
have occurred and be continuing which could reasonably be expected to materially
and adversely affect the ability of the Borrower to perform its obligations
under the Loan Documents and (C) no Default shall have occurred and be
continuing.
Solely with respect to any Incremental Commitment Increase, this Section shall
supersede any provisions in Sections 2.14(c), 2.14(d), 8.04 or 8.05 to the
contrary. In connection with any Incremental Commitment Increase, the
Administrative Agent and the Company may, without the consent of any Lenders,
effect such amendments to any Loan Documents as may be necessary or appropriate,
in the opinion of the Administrative Agent, to effect the provisions of this
Section 2.24.
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ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.01. Closing Date.
The effectiveness of this Agreement is subject to the satisfaction of the
following conditions precedent:
(a) Receipt of Documentation. The Administrative Agent shall have
received:
(i) counterparts of this Agreement signed by the Borrower, the
Administrative Agent, each Issuing Lender as of the Closing Date and each
Lender;
(ii) a certificate, dated the Closing Date, of the Secretary or
Assistant Secretary of the Borrower, substantially in the form of Exhibit C:
(A) attaching a true and complete copy of the resolutions of its Board of
Directors authorizing the execution and delivery of this Agreement and the other
Loan Documents by the Borrower and the performance of the Borrower’s obligations
thereunder, and of all other documents evidencing other necessary action (in
form and substance reasonably satisfactory to the Administrative Agent) taken by
it to authorize the Loan Documents and the transactions contemplated thereby,
(B) attaching a true and complete copy of its certificate of incorporation and
bylaws, (C) certifying that said certificate of incorporation and bylaws are
true and complete copies thereof, are in full force and effect and have not been
amended or modified, and (D) setting forth the incumbency of its officer or
officers who may sign the Loan Documents, including therein a signature specimen
of such officer or officers;
(iii) a certificate of good standing for the Borrower from the
Secretary of State for the State of Delaware, dated a recent date prior to the
Closing Date; and
(iv) a certificate, dated the Closing Date, signed by a senior vice
president, the chief financial officer or the treasurer of the Borrower to the
effect set forth in paragraphs (b) and (c) of Section 3.02 and certifying
(A) that, as of the Closing Date, there exists no Material Adverse Change and
(B) the current Ratings.
(b) Opinions. The Administrative Agent shall have received an opinion of
counsel for the Borrower, substantially in the form of Exhibit A, covering such
matters relating to the transactions contemplated hereby as the Administrative
Agent may reasonably request, dated the Closing Date.
(c) Termination of Existing Credit Facilities. Each of the Existing
Facilities shall have been terminated and any obligations thereunder (other than
the Existing Letters of Credit) shall have been repaid and the commitments
thereunder shall have been terminated and each Existing Letter of Credit shall
have become a Letter of Credit hereunder.
(d) Fees and Expenses Due to the Credit Parties. All fees and expenses
due and payable to the Administrative Agent, the Joint Lead Arrangers and any
other Credit Party shall have been paid.
(e) Fees and Expenses of Special Counsel. The fees and expenses of
Sidley Austin LLP, special counsel to the Administrative Agent, in connection
with the preparation, negotiation and closing of the Loan Documents shall have
been paid.
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SECTION 3.02. Conditions to All Revolving Advances and Letters of
Credit.
The following conditions must be satisfied prior to the making of each Revolving
Advance and the issuance of each Letter of Credit:
(a) Notice; Application. In the case of the making of a Revolving
Advance, the Administrative Agent shall have received a Notice of Revolving
Borrowing. In the case of the issuance of a Letter of Credit, the
Administrative Agent and the applicable Issuing Lender shall have received:
(i) the notice required by Section 2.07(a) hereof; and (ii) an Application in
the form required by the applicable Issuing Lender duly completed by the
Borrower.
(b) Absence of Litigation. There shall be no injunction, writ,
preliminary restraining order or other order of any nature issued by any
Governmental Authority in any respect directly affecting the transactions
provided for herein and no action or proceeding by or before any Governmental
Authority shall have been commenced and be pending or, to the knowledge of the
Borrower, threatened, seeking to prevent or delay the transactions contemplated
by the Loan Documents or challenging any other terms and provisions hereof or
thereof or seeking any damages in connection therewith.
(c) Representations and Warranties; No Default. After giving effect to
the applicable Revolving Borrowing or the issuance of the applicable Letter of
Credit: (i) no Default shall have occurred and be continuing, (ii) all
representations and warranties of the Borrower contained in Article IV of this
Agreement (other than the representation and warranty of the Borrower contained
in Section 4.04(b) hereof) shall be true (except that for purposes of this
Section 3.02, the representations and warranties contained in
pursuant to Section 5.01(a)), and (iii) no default or event of default under any
(d) Commitments and LC Exposure. Both before and immediately after giving
effect to the applicable Revolving Borrowing or the issuance of the applicable
Letter of Credit, (i) the Dollar Equivalent of the total LC Exposure plus the
outstanding principal amount of all Revolving Advances shall not exceed the
Aggregate Commitments and (ii) the Dollar Equivalent of the total LC Exposure in
respect of Financial Letters of Credit plus the outstanding principal amount of
all Revolving Advances shall not exceed the Revolving Facility Sublimit.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.01. Corporate Existence and Power.
The Borrower is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware and has all corporate powers
and all material governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted.
SECTION 4.02. Corporate and Governmental Authorization; Contravention.
The execution, delivery and performance by the Borrower of this Agreement and
the other Loan Documents (i) are within the Borrower’s corporate power,
(ii) have been duly authorized by all necessary corporate action, (iii) require
no action by or in respect of, or filing with, any governmental body, agency
38
or official, (iv) do not contravene or constitute a default under any provision
of applicable law or regulation, or of the certificate of incorporation or
by-laws of the Borrower, and (v) do not contravene or constitute a default
under, or result in the creation of any Lien under, any material agreement,
judgment, injunction, order, decree or other instrument binding upon the
Borrower.
SECTION 4.03. Binding Effect.
This Agreement has been duly executed and delivered by the Borrower and
constitutes a valid and binding agreement of the Borrower, enforceable in
SECTION 4.04. Financial Information.
(a) Balance Sheet. The consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of December 31, 2011 and the related consolidated
statements of earnings and of cash flow for the fiscal year then ended, reported
on by Ernst & Young LLP and set forth in the Borrower’s 2011 Form 10-K, a copy
of which has been made available to each of the Lenders, fairly present, in
conformity with GAAP, the consolidated financial position of the Borrower and
its Consolidated Subsidiaries as of such date and their consolidated results of
operations and changes in financial position for such fiscal year.
(b) Material Adverse Change. There exists no Material Adverse Change.
SECTION 4.05. Litigation.
There is no action, suit or proceeding pending or to the knowledge of the
Borrower threatened against or affecting the Borrower or any of its Subsidiaries
before any court or arbitrator or any governmental body, agency or official
(i) which could reasonably be expected to have a material adverse effect on the
business, consolidated financial position or consolidated results of operations
of the Borrower and its Consolidated Subsidiaries, taken as a whole, and the
Borrower’s ability to perform its obligations under the Loan Documents at any
time up to and including the Maturity Date, or (ii) which purports to affect the
legality, validity or enforceability of this Agreement or any other Loan
Document.
SECTION 4.06. Compliance with ERISA.
The Borrower and its Subsidiaries have fulfilled their obligations under the
minimum funding standards of ERISA with respect to each Plan and are in
compliance in all material respects with the currently applicable provisions of
ERISA, noncompliance with which could reasonably be expected to have a material
adverse effect on the business, consolidated financial position or consolidated
results of operations of the Borrower and its Consolidated Subsidiaries, taken
as a whole, and the Borrower’s ability to perform its obligations under the Loan
Documents at any time up to and including the Maturity Date.
SECTION 4.07. Taxes.
The Borrower and its Subsidiaries have filed all United States Federal income
tax returns and all other material tax returns which are required to be filed by
them and have paid all taxes due pursuant to such returns or pursuant to any
assessment received by the Borrower or any Subsidiary other than any such taxes
or assessments being currently contested in good faith and other than where the
failure to so file or pay would not have a material adverse effect on the
business, financial position, results of operations or properties of the
Borrower and its Consolidated Subsidiaries taken as a whole or, alternatively,
on the ability of the Borrower to perform its obligations under the Loan
Documents at any
39
time up to and including the Maturity Date. The charges, accruals and reserves
on the books of the Borrower and its Subsidiaries in respect of taxes or other
governmental charges are adequate.
SECTION 4.08. Material Subsidiaries.
Each of the Borrower’s Material Subsidiaries is duly organized or formed,
incorporation or organization, and has all requisite power and authority and all
material governmental licenses, authorizations, consents and approvals required
to carry on its business as now conducted.
SECTION 4.09. Not an Investment Company.
The Borrower is not an “investment company” within the meaning of the Investment
SECTION 4.10. Business of the Borrower; Use of Proceeds.
The Borrower is not engaged in the business of extending credit for the purpose
of purchasing or carrying margin stock (within the meaning of Regulation U), and
no Revolving Advance or LC Disbursement will be used to purchase or carry any
carrying any margin stock. To the extent permitted by Section 2.07(b), the
purpose of (i) each Financial Letter of Credit shall be to support the
obligations of the Borrower or any of the Borrower’s Subsidiaries as a financial
guarantee type letter of credit or to back bank guarantees issued by any Issuing
Lender or its correspondent bank to support such Financial Letters of Credit and
(ii) each Performance Letter of Credit shall be to support, or to back bank
construction, maintenance and related activities and/or contracts. Neither the
issuance of any Letter of Credit or the making of any Revolving Advance nor the
payment of any Obligation will violate any applicable law or regulation.
SECTION 4.11. No Misleading Statements.
No written information, exhibit or report furnished by or at the direction of
the Borrower or any Subsidiary to the Administrative Agent or any Lender in
connection with this Agreement contains any material misstatement of fact or
omits to state a material fact or any fact necessary to make the statements
contained therein not misleading.
SECTION 4.12. Environmental Matters.
In the ordinary course of its business, the Borrower conducts an ongoing review
of the effect of Environmental Laws on the business, operations and properties
of the Borrower and its Subsidiaries, in the course of which it identifies and
evaluates associated liabilities and costs (including, without limitation, any
capital or operating expenditures required for clean-up or closure of properties
now or previously owned, any capital or operating expenditures required to
achieve or maintain compliance with environmental protection standards imposed
by law or as a condition of any license, permit or contract, any related
constraints on operating activities, including any periodic or permanent
shutdown of any facility or reduction in the level of or change in the nature of
operations conducted thereat and any actual or potential liabilities to third
parties, including employees, and any related costs and expenses). On the basis
of this review, the Borrower has reasonably concluded that Environmental Laws
are not likely to have a material adverse effect on the business, financial
condition, results of operations or properties of the Borrower and its
Consolidated Subsidiaries, considered as a whole, or, alternatively, on the
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time up to and including the Maturity Date.
SECTION 4.13. No Default.
No Default or Event of Default has occurred and is continuing or would result
from the consummation of the transactions contemplated by this Agreement or any
other Loan Document.
ARTICLE V
COVENANTS
The Borrower agrees that, so long as any Lender has any Commitment or any LC
Exposure or any other Obligation hereunder remains outstanding:
SECTION 5.01. Information.
The Borrower will deliver to each of the Lenders:
(a) Annual Financial Statements. As soon as available and in any event
within 100 days after the end of each fiscal year of the Borrower, a
consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as
of the end of such fiscal year and the related consolidated statements of
earnings and cash flow for such fiscal year, as set forth in the Borrower’s
annual report for the fiscal year then ended as filed with the SEC on form 10-K,
setting forth in each case in comparative form the figures for the previous
fiscal year, audited and accompanied by a report and opinion of Ernst & Young
LLP or other independent public accountants of nationally recognized standing,
which report and opinion shall be prepared in a manner acceptable to the SEC and
shall not be subject to any “going concern” or like qualification or exception
or any qualification or exception as to the scope of such audit;
(b) Quarterly Financial Statements. As soon as available and in any
event within 55 days after the end of each of the first three quarters of each
fiscal year of the Borrower, an unaudited consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of the end of such quarter and the
related consolidated statements of earnings and cash flow for such quarter and
for the portion of the Borrower’s fiscal year ended at the end of such quarter,
as set forth in the Borrower’s quarterly report for the fiscal quarter then
ended as filed with the SEC on Form 10-Q, all certified by the chief financial
officer or the chief accounting officer of the Borrower that they are
(i) complete and fairly present the financial condition of the Borrower and its
Consolidated Subsidiaries as at the dates indicated and the results of their
operations and changes in their cash flow for the periods indicated;
(ii) disclose all liabilities of the Borrower and its Consolidated Subsidiaries
that are required to be reflected or reserved against under GAAP, whether
liquidated or unliquidated, fixed or contingent; and (iii) have been prepared in
accordance with GAAP (subject to normal year-end adjustments);
(c) Certificate of Chief Financial Officer. Simultaneously with the
delivery of each set of financial statements referred to in paragraphs (a) and
(b) above, a certificate of the chief financial officer, the treasurer or the
chief accounting officer of the Borrower (i) setting forth in reasonable detail
the calculations required to establish whether the Borrower was in compliance
with the requirements of Section 5.07 on the date of such financial statements,
(ii) stating whether any Default exists on the date of such certificate and, if
any Default then exists, setting forth the details thereof and the action which
the Borrower is taking or proposes to take with respect thereto, and
(iii) describing the parties, subject matter, and nature and amount of relief
granted to the prevailing party in any litigation or proceeding in which a final
judgment or order which is either for the payment of money in an amount equal to
or exceeding
41
$25,000,000 (or the Exchange Equivalent thereof) or which grants any material
non-monetary relief to the prevailing party therein was rendered against the
Borrower or any Subsidiary (whether or not satisfied or stayed) during the most
recently ended fiscal quarter;
(d) Notice of Default. Forthwith upon knowledge of the occurrence of any
Default, a certificate of the chief financial officer, the treasurer or the
chief accounting officer of the Borrower setting forth the details thereof and
the action which the Borrower is taking or proposes to take with respect
thereto;
(e) Other Financial Statements. Promptly upon the mailing thereof to the
shareholders of the Borrower generally, copies of all financial statements,
reports and proxy statements so mailed;
(f) SEC Filings. Promptly upon the filing thereof, copies of (i) all
registration statements (other than the exhibits thereto and any registration
statements on Form S-8 or its equivalent) and reports on Forms 10-K, 10-Q and
8-K (or their equivalents) which the Borrower or any Subsidiary shall have filed
with the SEC, and (ii) all other reports which the Borrower or any Subsidiary
shall have filed with the SEC or any national securities exchange, unless the
Borrower or such Subsidiary is not permitted to provide copies thereof to the
Lenders pursuant to applicable laws or regulations;
(g) ERISA Reportable Events. If and when any member of the Controlled
Group (i) gives or is required to give notice to the PBGC of any “reportable
event” (as defined in Section 4043 of ERISA) with respect to any Plan which
might constitute grounds for a termination of such Plan under Title IV of ERISA,
or knows that the plan administrator of any Plan has given or is required to
give notice of any such reportable event, a copy of the notice of such
reportable event given or required to be given to the PBGC; (ii) receives notice
of complete or partial withdrawal liability in excess of $20,000,000 (or the
Exchange Equivalent thereof) under Title IV of ERISA, a copy of such notice; or
(iii) receives notice from the PBGC under Title IV of ERISA of an intent to
terminate or appoint a trustee to administer any Plan, a copy of such notice;
(h) Notice of Rating Change. Promptly upon the Borrower’s obtaining
knowledge thereof, notice of any withdrawal or change or proposed withdrawal or
change in any Ratings;
(i) Notices from Beneficiaries. Immediately upon the Borrower’s receipt
thereof, a copy of any writing delivered by any beneficiary under any Letter of
Credit to the Borrower or any of its Subsidiaries indicating such beneficiary’s
intention to draw under the applicable Letter of Credit;
(j) Notice of Changes in Accounting Policies. Promptly following any
such change, notice of any material change in accounting policies or financial
reporting practices by the Borrower or any Subsidiary; and
(k) Other Financial Information. From time to time such additional
information regarding the financial position or business of the Borrower or any
Subsidiary as the Administrative Agent, at the reasonable request of any Lender,
may request.
Documents required to be delivered pursuant to Section 5.01(a), (b), (e), (f) or
(k) (to the extent any such documents are included in materials otherwise filed
with the SEC) may be delivered electronically (including, without limitation,
via Debt Domain or any similar platform) and if so delivered, shall be deemed to
have been delivered on the date on which the Borrower posts such documents, or
provides a link thereto on the Borrower’s website on the Internet at the website
address listed on the Borrower’s signature page hereto; provided that: (i) the
Borrower shall deliver paper copies of such documents to the Administrative
Agent or any Lender that requests the Borrower to deliver such paper copies
until a
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written request to cease delivering paper copies is given by the Administrative
Agent or such Lender, and (ii) the Borrower shall notify the Administrative
Agent and each Lender (by telecopier or electronic mail) of the posting of any
such documents and provide to the Administrative Agent by electronic mail
electronic versions (i.e., soft copies) of such documents. The Administrative
Agent shall have no obligation to request the delivery or to maintain copies of
the documents referred to above, and in any event shall have no responsibility
to monitor compliance by the Borrower with any such request for delivery, and
each Lender shall be solely responsible for requesting delivery to it or
maintaining its copies of such documents.
SECTION 5.02. Payment of Obligations.
The Borrower will pay and discharge, and will cause each Subsidiary to pay and
discharge, at or before maturity, all their respective material obligations and
liabilities, except where the same may be contested in good faith by appropriate
proceedings or where the failure to so pay and discharge would not have a
material adverse effect on the consolidated financial position of the Borrower
and its Consolidated Subsidiaries, and will maintain, and will cause each
Subsidiary to maintain, in accordance with GAAP, appropriate reserves for the
accrual of any of the same.
SECTION 5.03. Maintenance of Property; Insurance.
(a) Maintenance of Property. The Borrower will keep, and will cause each
Material Subsidiary to keep, all material items of property useful and necessary
in its business in good working order and condition, ordinary wear and tear and
damage from casualty excepted.
(b) Insurance. The Borrower will maintain, and will cause each
Subsidiary to maintain, with financially sound and reputable insurance
companies, insurance on all their real and personal property in at least such
amounts and against at least such risks as are usually insured against by
companies of established repute engaged in the same or similar business as the
Borrower or such Subsidiary and owning similar assets (“Industry Standards”),
except where such risks are covered by self insurance so long as the amount of
such self insurance and the risks covered thereby are consistent with Industry
Standards. The Borrower will promptly furnish to the Lenders such information as
to insurance carried or self insurance maintained as may be reasonably requested
in writing by the Administrative Agent on behalf of any Lender.
SECTION 5.04. Conduct of Business and Maintenance of Existence.
The Borrower will preserve, renew and keep in full force and effect, and will
cause each Material Subsidiary to preserve, renew and keep in full force and
effect, its respective legal existence and good standing under the laws of the
jurisdiction of its organization and its respective rights, privileges and
franchises necessary or desirable in the normal conduct of business; provided
that nothing in this Section 5.04 shall prevent the Borrower or any Subsidiary
from (i) merging into, consolidating with, or selling, leasing or otherwise
transferring all of its assets to the Borrower or a Subsidiary (so long as, in
the case of the Borrower taking any such action, the applicable Subsidiary
assumes all Obligations pursuant to a written agreement acceptable to the
Administrative Agent), or (ii) abandoning or disposing of any of its assets or
abandoning or terminating any right or franchise if (A) disposition or
termination does not violate any other provision of this Agreement and (B) all
such abandonments, dispositions and terminations do not in the aggregate
materially and adversely affect the business, assets, financial condition or
as a whole, or, alternatively, the ability of the Borrower to perform its
Maturity Date.
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SECTION 5.05. Compliance with Laws.
The Borrower will comply, and cause each Subsidiary to comply, in all material
respects with all applicable laws, ordinances, rules, regulations, orders, and
requirements of governmental authorities (including, without limitation, ERISA,
Environmental Laws and the rules and regulations thereunder), except where
failure to so comply would not have a material adverse effect on the business,
financial position, results of operations or properties of the Borrower and its
Consolidated Subsidiaries taken as a whole or, alternatively, on the ability of
the Borrower to perform its obligations under the Loan Documents at any time up
to and including the Maturity Date.
SECTION 5.06. Keeping of Records; Inspection of Property, Books and
Records.
The Borrower will keep, and will cause each Subsidiary to keep, proper books of
record and account in accordance with GAAP consistently applied; and will
permit, and will cause each Subsidiary to permit, the Administrative Agent, any
of the Lenders or any agents or representatives of the Administrative Agent or
any Lender, at the Administrative Agent’s or such Lender’s expense, to visit and
inspect any of its respective properties, to examine any of its respective books
and records and (subject to Section 8.10) to discuss its respective affairs,
finances and accounts with any of its respective officers, directors, employees
and independent public accountants, all at such times and as often as may
reasonably be desired, in each case upon reasonable notice and during normal
business hours. Notwithstanding anything to the contrary in this Section 5.06,
none of the Borrower or any of its Subsidiaries will be required to disclose,
permit the inspection, examination or discussion of, any document, information
or other matter in respect of which such disclosure is then prohibited by law or
any agreement binding on the Borrower or any of its Subsidiaries.
SECTION 5.07. Debt.
(a) Debt to Tangible Net Worth Ratio. The ratio of Consolidated Debt to
Consolidated Tangible Net Worth will at no time exceed 1.00 to 1.00.
(b) Total Debt. The total Debt of all Consolidated Subsidiaries of the
Borrower, excluding the Debt, if any, owed by such Consolidated Subsidiaries to
the Borrower or another Consolidated Subsidiary of the Borrower, will at no time
exceed an amount equal to $600,000,000 (or the Exchange Equivalent thereof).
SECTION 5.08. Negative Pledge.
Neither the Borrower nor any Subsidiary will create, assume or suffer to exist
any Lien securing Debt on any asset now owned or hereafter acquired by it, or
assign any right to receive income, except:
(i) Liens existing on the date of this Agreement and disclosed on
Schedule 5.08 attached hereto and any renewals or extensions thereof, provided
that the property covered thereby is not changed;
(ii) any Lien existing on any asset of any Person at the time such
Person becomes a Subsidiary or is merged into or consolidated with an Borrower
or a Subsidiary; provided that (i) such Lien is not created in contemplation of
such event, (ii) such Lien shall not apply to any other property or asset of the
Borrower or any of its Subsidiaries, and (iii) such Lien shall secure only those
obligations which it secures on the date of such acquisition or the date such
Person becomes a Subsidiary, as the case may be;
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(iii) any Lien on any asset securing Debt incurred or assumed for the
purpose of financing all or any part of the cost of acquiring or constructing
such asset; provided that (i) such Lien attaches to such asset concurrently with
or within 180 days after the acquisition or construction thereof and (ii) such
Lien shall not apply to any other property or asset of the Borrower or any of
its Subsidiaries;
(iv) any Lien existing on any asset prior to the acquisition thereof by
the Borrower or a Subsidiary and not created primarily in contemplation of such
acquisition;
(v) any Lien arising out of the refinancing, extension, renewal or
refunding of any Debt secured by any Lien permitted by any of the foregoing
clauses of this Section 5.08, provided that such Debt is not increased and is
not secured by any additional assets;
(vi) Liens securing judgments for the payment of money not constituting
an Event of Default under Section 6.01(j);
(vii) any Lien on or with respect to the property or assets of any
Subsidiary securing obligations owing to the Borrower or another Subsidiary;
(viii) rights of offset and bankers’ liens in connection with Debt
permitted hereby; and
(ix) Liens not otherwise permitted by the foregoing clauses of this
Section 5.08 securing Debt in an aggregate principal amount at any time
outstanding not to exceed ten percent (10%) of Consolidated Tangible Net Worth.
SECTION 5.09. Consolidations, Mergers and Sales of Assets.
The Borrower will not (i) except to the extent expressly permitted in
Section 5.04 hereof, consolidate or merge with or into any other Person;
provided that the Borrower may merge with a Person if (A) the Borrower is the
surviving corporation to such merger and (B) after giving effect to any such
merger no Default shall have occurred hereunder and all representations and
warranties shall be true and correct or (ii) except as permitted pursuant to the
foregoing clause (i), sell, lease or otherwise transfer, directly or indirectly,
all or any substantial part of the assets of the Borrower and its Consolidated
Subsidiaries, taken as a whole.
SECTION 5.10. Payment of Taxes, Etc.
The Borrower will pay, and will cause each Subsidiary to pay, before the same
become delinquent, all taxes, assessments and governmental charges imposed upon
it or any of its properties, except where the same may be contested in good
faith by appropriate proceedings, or where any failure to so pay would not have
a material adverse effect on the business, financial position, results of
operations or properties of the Borrower and its Consolidated Subsidiaries taken
as a whole or, alternatively, on the ability of the Borrower to perform its
Maturity Date, and the Borrower will maintain, and will cause each Subsidiary to
maintain, in accordance with GAAP, appropriate reserves for the accrual of the
same.
SECTION 5.11. Pari-passu Obligations.
The obligations under this Agreement shall constitute direct, unconditional,
senior, unsubordinated, general obligations of the Borrower and will rank at
least pari-passu (in priority of
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payment) with all other existing and future senior, unsecured, unsubordinated
obligations of the Borrower resulting from any indebtedness for borrowed money
or Debt Guarantee.
SECTION 5.12. Further Assurances.
At any time or from time to time upon the request of the Administrative Agent,
the Borrower will, at its expense, promptly execute, acknowledge and deliver
such further documents (including collateral agreements, UCC financing
statements and the like pursuant to Section 2.12) and do such other acts and
things as the Administrative Agent may reasonably request in order to effect
fully the purposes of the Loan Documents.
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default.
Each of the following events (each an “Event of Default”) shall constitute an
Event of Default hereunder:
(a) the Borrower shall fail to pay (i) when due, any amount of principal
of any Revolving Advance or any LC Disbursement, or (ii) within three days after
the same becomes due, any interest on any Revolving Advance or any LC
Disbursement, any fees or any other amount payable hereunder; or
(b) the Borrower shall fail to observe or perform any covenant contained
in Section 2.12 or Sections 5.07 to 5.11, inclusive; or
(c) the Borrower shall fail to observe or perform any covenant or
agreement contained in this Agreement (other than those covered by paragraph
(a) or (b) above) for 30 days after the earlier to occur of (i) written notice
thereof having been given to the Borrower by the Administrative Agent at the
request of any Lender or (ii) actual knowledge thereof by the Borrower or any of
its Subsidiaries of such failure; or
(d) any representation, warranty, certification or statement made by the
Borrower in this Agreement or in any certificate, financial statement or other
document delivered pursuant to this Agreement shall prove to have been incorrect
in any material respect when made (or deemed made); or
(e) the Borrower or any Subsidiary shall fail to make any payment in
respect of any Debt (other than the Obligations) having an aggregate principal
amount of at least $100,000,000 (or the Exchange Equivalent thereof) when due or
within any applicable grace period; or
(f) any event shall occur or condition shall exist which results in the
acceleration of the maturity of any Debt of the Borrower or any Subsidiary
having an aggregate principal amount of at least $100,000,000 (or the Exchange
Equivalent thereof); or such Debt shall be declared due and payable, or required
to be prepaid (other than by a regularly scheduled required prepayment), prior
to the stated maturity thereof, excluding, however, prepayments of Debt required
upon disposition in the ordinary course of business of collateral securing such
Debt so long as such Liens and dispositions are permitted hereby; or, for the
avoidance of doubt, such Debt shall be required to be cash collateralized prior
to the stated maturity thereof as a result of any event of default with respect
to such Debt (excluding cash collateralization solely as a result of currency
exchange fluctuations or Defaulting Lenders); or
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(g) the Borrower or any Subsidiary shall commence a
voluntary case or other proceeding seeking to adjudicate the Borrower or any
Subsidiary having total assets of $100,000,000 (or the Exchange Equivalent
thereof) or more as bankrupt or insolvent, seeking liquidation, reorganization
or other relief with respect to itself or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking the entry
of an order for relief or the appointment of a trustee, receiver, liquidator,
custodian or other similar official for it or for any substantial part of its
property, or shall consent to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or other proceeding
commenced against it, or shall make a general assignment for the benefit of
creditors, or shall fail generally to pay its debts as they become due, or shall
admit in writing its inability to pay its debts generally, or shall take any
corporate action to authorize any of the foregoing; or
(h) an involuntary case or other proceeding shall be
commenced against the Borrower or any Subsidiary having total assets of
$100,000,000 (or the Exchange Equivalent thereof) or more seeking to adjudicate
it as bankrupt or insolvent, seeking liquidation, reorganization or other relief
with respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect, or seeking the entry of an order for
relief or the appointment of a trustee, receiver, liquidator, custodian or other
similar official for it or for any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed and unstayed for a
period of 30 days; or an order for relief shall be entered against the Borrower
or any Subsidiary having total assets of $100,000,000 (or the Exchange
Equivalent thereof) or more under the federal bankruptcy laws as now or
hereafter in effect; or
(i) any member of the Controlled Group shall fail to
pay when due an amount or amounts aggregating in excess of $50,000,000 (or the
Exchange Equivalent thereof) which it shall have become liable to pay to the
PBGC or to a Plan under Title IV of ERISA except where the failure to so pay
would not (in the opinion of the Required Lenders) have a material adverse
effect on the business, financial position, results of operations or properties
of the Borrower and its Consolidated Subsidiaries taken as a whole or
alternatively, on the Borrower’s ability to perform its obligations under the
Loan Documents at any time up to and including the Maturity Date; or notice of
intent to terminate a Plan or Plans having aggregate Unfunded Vested Liabilities
in an amount that would have a material adverse effect on the Borrower and its
Consolidated Subsidiaries taken as a whole and the Borrower’s ability to perform
its obligations under the Loan Documents at any time up to and including the
Maturity Date (collectively, a “Material Plan”) shall be filed under Title IV of
ERISA by any member of the Controlled Group, any plan administrator or any
combination of the foregoing; or the PBGC shall institute proceedings under
Title IV of ERISA to terminate or to cause a trustee to be appointed to
administer any Material Plan or a proceeding shall be instituted by a fiduciary
of any Material Plan against any member of the Controlled Group to enforce
Section 515 of ERISA and such proceeding shall not have been dismissed within 30
days thereafter; or a condition shall exist by reason of which the PBGC would be
entitled to obtain a decree adjudicating that any Material Plan must be
terminated; or
(j) to the extent not insured against, one or more
final judgments or orders for the payment of money aggregating in excess of
$100,000,000 (or the Exchange Equivalent thereof) shall be rendered against the
Borrower or any Subsidiary and either (i) enforcement proceedings shall have
been commenced by any creditor upon any such judgments or orders or (ii) any of
such judgments or orders shall continue unsatisfied and unstayed by reason of a
pending appeal or otherwise for a period of 30 days; or
(k) (i) any Person or group of Persons (within the meaning
of Section 13 or 14 of the Securities Exchange Act of 1934, as amended) shall
have acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated
by the SEC under said Act) of 35% or more of the outstanding shares of common
stock of the Borrower; or (ii) at any time during any period of twelve
consecutive calendar months a majority of the Board of Directors of the Borrower
shall not consist of individuals who
47
were either directors of the Borrower on the first day of such period (“original
directors”) or appointed as or nominated to be directors either (A) by
individuals including a majority of those of the original directors who have
not, prior to such appointment or nomination, resigned or died, or (B) by a duly
constituted committee of the Board of Directors of the Borrower, a majority of
which consists of the original directors; or
(l) all or any substantial part of the property of the
Borrower and its Subsidiaries (taken as a whole) shall be condemned, seized or
otherwise appropriated, or custody or control of such property shall be assumed,
by any court or governmental agency of competent jurisdiction, and such property
shall be retained for a period of 30 days, which condemnation, seizure or other
appropriation could reasonably be expected to have a material adverse effect on
the business, consolidated financial position or consolidated results of
operations of the Borrower and its Consolidated Subsidiaries, taken as a whole,
and the Borrower’s ability to perform its obligations under the Loan Documents
at any time up to and including the Maturity Date; or
(m) any provision of any Loan Document, at any time after its
execution and delivery and for any reason other than as expressly permitted
hereunder or thereunder or satisfaction in full of all the Obligations, ceases
to be in full force and effect; or the Borrower contests in any manner the
validity or enforceability of any provision of any Loan Document; or the
Borrower denies that it has any or further liability or obligation under any
Loan Document, or purports to revoke, terminate or rescind any provision of any
Loan Document.
SECTION 6.02. Remedies.
Upon the occurrence and during the continuance of any Event of Default (other
than any event specified in paragraph (g) or (h) of Section 6.01): (a) the
Required Lenders, require, without notice or demand, either or both of the
following, at the same or different times: (i) that any or all of the LC
Exposure, the Revolving Advances and all other Obligations, although not yet
due, be immediately due and payable, and thereupon such LC Exposure, Revolving
Advances and all other such Obligations shall be immediately due and payable,
without presentment, demand, protest or any notice of any kind, all of which are
hereby expressly waived by the Borrower, and (ii) that all Commitments be
terminated, and thereupon all Commitments shall terminate immediately; and in
any event, the Administrative Agent shall have in any jurisdiction where
enforcement is sought, in addition to all other rights and remedies, the rights
and remedies of a secured party under the UCC; and (b) the Administrative Agent
shall, at the request of, or may, with the consent of, the Required Lenders,
require the Borrower to deposit cash collateral in Dollars with the
Administrative Agent and otherwise perform all of its obligations under
Section 2.12; provided that upon the occurrence of any event specified in
paragraph (g) or (h) of Section 6.01, (x) such cash collateral referred to in
clause (b) above shall be immediately deposited with the Administrative Agent in
accordance with the provisions of Section 2.12 and (y) all Commitments shall
automatically terminate and such amounts shall automatically become and be due
and payable, without presentment, demand, protest or any notice of any kind, all
of which are hereby expressly waived by the Borrower.
ARTICLE VII
THE ADMINISTRATIVE AGENT
SECTION 7.01. Appointment and Authorization.
Each of the Lenders and each Issuing Lender hereby irrevocably appoints BNPP to
act on its behalf as the Administrative Agent hereunder and under the other Loan
Documents and authorizes the
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Administrative Agent to take such actions on its behalf and to exercise such
powers as are delegated to the Administrative Agent by the terms hereof or
thereof, together with such actions and powers as are reasonably incidental
thereto. The provisions of this Article are solely for the benefit of the
Administrative Agent, the Lenders and the Issuing Lenders, and the Borrower
shall not have rights as a third party beneficiary of any of such provisions.
SECTION 7.02. Rights as a Lender.
The Person serving as the Administrative Agent hereunder shall have the same
exercise the same as though it were not the Administrative Agent and the term
“Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the
context otherwise requires, include the Person serving as the Administrative
Agent hereunder in its individual capacity. Such Person and its Affiliates may
accept deposits from, lend money to, act as the financial advisor or in any
other advisory capacity for and generally engage in any kind of business with
the Borrower or any Subsidiary or other Affiliate thereof as if such Person were
not the Administrative Agent hereunder and without any duty to account therefor
to the Lenders.
SECTION 7.03. Reliance by Administrative Agent.
statement, instrument, document or other writing (including any electronic
message, Internet or intranet website posting or other distribution) believed by
it to be genuine and to have been signed, sent or otherwise authenticated by the
proper Person. The Administrative Agent also may rely upon any statement made
to it orally or by telephone and believed by it to have been made by the proper
Person, and shall not incur any liability for relying thereon. In determining
compliance with any condition hereunder to the making of a Revolving Advance, or
the issuance of a Letter of Credit, that by its terms must be fulfilled to the
satisfaction of a Lender or the applicable Issuing Lender, the Administrative
Agent may presume that such condition is satisfactory to such Lender or such
Issuing Lender unless the Administrative Agent shall have received notice to the
contrary from such Lender or such Issuing Lender prior to the making of such
Revolving Advance or the issuance of such Letter of Credit. The Administrative
Agent may consult with legal counsel (who may be counsel for the Borrower),
independent accountants and other experts selected by it, and shall not be
liable for any action taken or not taken by it in accordance with the advice of
any such counsel, accountants or experts.
SECTION 7.04. Delegation of Duties.
The Administrative Agent may perform any and all of its duties and exercise its
rights and powers hereunder or under any other Loan Document by or through any
one or more sub agents appointed by the Administrative Agent. The
Administrative Agent and any such sub agent may perform any and all of its
duties and exercise its rights and powers by or through their respective Related
Parties. The exculpatory provisions of this Article shall apply to any such sub
agent and to the Related Parties of the Administrative Agent and any such sub
agent, and shall apply to their respective activities in connection with the
syndication of the credit facilities provided for herein as well as activities
as Administrative Agent.
SECTION 7.05. Exculpatory Provisions.
the generality of the foregoing, the Administrative Agent:
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duties, regardless of whether a Default has occurred and is continuing;
(b) shall not have any duty to take any discretionary
powers expressly contemplated hereby or by the other Loan Documents that the
Administrative Agent is required to exercise as directed in writing by the
expressly provided for herein or in the other Loan Documents), provided that the
Administrative Agent shall not be required to take any action that, in its
opinion or the opinion of its counsel, may expose the Administrative Agent to
liability or that is contrary to any Loan Document or applicable law; and
in the other Loan Documents, have any duty to disclose, and shall not be liable
for the failure to disclose, any information relating to the Borrower or any of
its Affiliates that is communicated to or obtained by the Person serving as the
Administrative Agent or any of its Affiliates in any capacity.
circumstances as provided in Sections 6.02 and 8.05) or (ii) in the absence of
Lender or an Issuing Lender.
of any condition set forth in Article III or elsewhere herein, other than to
Administrative Agent.
SECTION 7.06. Indemnification.
To the extent that the Borrower for any reason fails to indefeasibly pay any
amount required pursuant to Section 8.03(a) or Section 8.03(c) to be paid by it
to the Administrative Agent (or any sub-agent thereof), any Issuing Lender or
any Related Party of any of the foregoing, each Lender severally agrees to pay
to the Administrative Agent (or any such sub-agent), such Issuing Lender or such
Related Party, as the case may be, such Lender’s Applicable Percentage
(determined as of the time that the applicable unreimbursed expense or indemnity
payment is sought) of such unpaid amount, provided that the unreimbursed expense
or indemnified loss, claim, damage, liability or related expense, as the case
may be, was incurred by or asserted against the Administrative Agent (or any
such sub-agent) or such Issuing Lender in its capacity as such, or against any
Related Party of any of the foregoing acting for the Administrative Agent (or
any such sub-agent) or such Issuing Lender in connection with such capacity.
The obligations of the Lenders under this Section 7.06 are subject to the
provisions of Section 2.14(e).
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SECTION 7.07. Non-Reliance on Administrative Agent and
Other Lenders.
Each Lender and each Issuing Lender acknowledges that it has, independently and
without reliance upon the Administrative Agent or any other Lender or any of
Agreement. Each Lender and each Issuing Lender also acknowledges that it will,
Lender or any of their Related Parties and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any other Loan Document or any related agreement or any document furnished
hereunder or thereunder.
SECTION 7.08. Resignation of Administrative Agent.
(a) The Administrative Agent may at any time
give notice of its resignation to the Lenders, the Issuing Lenders and the
Borrower. Upon receipt of any such notice of resignation, the Required Lenders
shall have the right, in consultation with the Borrower, to appoint a successor,
which shall be a bank with an office in the United States, or an Affiliate of
any such bank with an office in the United States. If no such successor shall
have been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Administrative Agent gives notice
of its resignation, then the retiring Administrative Agent may on behalf of the
Lenders and the Issuing Lenders, appoint a successor Administrative Agent
meeting the qualifications set forth above; provided that if the Administrative
Agent shall notify the Borrower and the Lenders that no qualifying Person has
effective in accordance with such notice and (1) the retiring Administrative
Agent shall be discharged from its duties and obligations hereunder and under
the other Loan Documents (except that in the case of any collateral security
held by the Administrative Agent on behalf of the Lenders or an Issuing Lender
under any of the Loan Documents, the retiring Administrative Agent shall
continue to hold such collateral security until such time as a successor
Administrative Agent is appointed), and (2) all payments, communications and
determinations provided to be made by, to or through the Administrative Agent
shall instead be made by or to each Lender and each Issuing Lender directly,
until such time as the Required Lenders appoint a successor Administrative Agent
as provided for above in this Section. Upon the acceptance of a successor’s
appointment as Administrative Agent hereunder, such successor shall succeed to
and become vested with all of the rights, powers, privileges and duties of the
retiring (or retired) Administrative Agent, and the retiring Administrative
Agent shall be discharged from all of its duties and obligations hereunder or
under the other Loan Documents (if not already discharged therefrom as provided
above in this Section) . The fees payable by the Borrower to a successor
Administrative Agent shall be the same as those payable to its predecessor
unless otherwise agreed between the Borrower and such successor. After the
retiring Administrative Agent’s resignation hereunder and under the other Loan
Documents, the provisions of this Article and Section 8.03 shall continue in
effect for the benefit of such retiring Administrative Agent, its sub agents and
their respective Related Parties in respect of any actions taken or omitted to
be taken by any of them while the retiring Administrative Agent was acting as
Administrative Agent.
(b) Any resignation by BNPP as Administrative
Agent pursuant to this Section shall also constitute its resignation as an
Issuing Lender. Upon the acceptance of a successor’s appointment as
Administrative Agent hereunder, (a) such successor shall succeed to and become
Issuing Lender, (b) the retiring Issuing Lender shall be discharged from all of
their respective duties and obligations hereunder or under the other Loan
Documents, and (c) the successor Issuing Lender shall issue letters of credit in
substitution for the Letters of Credit, if any, outstanding at the time of such
succession or make other arrangements satisfactory to the retiring Issuing
Lender to effectively assume the obligations of the retiring Issuing Lender with
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SECTION 7.09. Agent With Respect to Cash Collateral
Accounts.
Each Lender hereby authorizes the Administrative Agent, on behalf of and for the
benefit of Lenders, to be the agent for and representative of the Lenders and
the Issuing Lenders with respect to any cash collateral accounts. Anything
contained in any of the Loan Documents to the contrary notwithstanding, the
Borrower, the Administrative Agent, each Lender and each Issuing Lender hereby
agree that no Lender or Issuing Lender shall have any right individually to
realize upon any cash collateral accounts, it being understood and agreed that
all powers, rights and remedies hereunder may be exercised solely by the
Administrative Agent, on behalf of the Lenders and the Issuing Lenders, in
accordance with the terms hereof. In furtherance, and not by limitation, of the
foregoing, without written consent or authorization from the Lenders or the
Issuing Lenders, the Administrative Agent may, in accordance with the terms of
this Agreement, release any Lien encumbering any of the cash collateral and
execute any documents or instruments necessary to accomplish any of the
foregoing.
SECTION 7.10. No Other Duties, etc.
Anything herein to the contrary notwithstanding, none of the Joint Lead
Arrangers, the Syndication Agent, the Co-Documentation Agents or any other agent
(other than the Administrative Agent) listed on the cover page hereof shall have
any powers, duties or responsibilities under this Agreement or any of the other
Loan Documents, except in its capacity, as applicable, as the Administrative
Agent, a Lender or an Issuing Lender hereunder.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Notices.
(a) Except in the case of notices and other communications
expressly permitted to be given by telephone, all notices, requests and other
communications to any party hereunder shall be in writing (including telecopy
and including electronic mail and Internet or intranet websites such as Debt
Domain or any similar platform to the extent provided in Section 8.01(b)) and
shall be given to such party at its address, telecopy number or electronic mail
address set forth on the signature pages hereof or such other address, telecopy
number or electronic mail address as such party may hereafter specify for the
purpose by notice to the Administrative Agent, the Issuing Lenders and the
Borrower. Each such notice, request or other communication shall be effective
(i) if given by mail, 72 hours after such communication is deposited in the
mails with first class postage prepaid, addressed as aforesaid, (ii) if given by
telecopy, when such telecopy has been received by the addressee thereof,
(iii) if delivered through electronic communications (including electronic mail
and Internet or intranet websites such as Debt Domain or any similar platform)
to the extent provided in Section 8.01(b) below, as provided in such
Section 8.01(b) or (iv) if given by any other means, when delivered at the
address specified in this Section 8.01(a); provided that notices to the
Administrative Agent or any Issuing Lender under Article II shall not be
effective until received. The Administrative Agent and the Issuing Lenders
shall not be liable for any errors in transmission or the illegibility of any
telecopied documents. In the event the Borrower sends the Administrative Agent
or any Issuing Lender a manually signed confirmation of previously sent
facsimile instructions, the Administrative Agent and the Issuing Lenders shall
have no duty to compare it against the previous instructions received by the
Administrative Agent or the Issuing Lenders nor shall the Administrative Agent
or any Issuing Lender have any responsibility should the contents or the written
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confirmation differ from the facsimile instructions acted upon by the
Administrative Agent or any Issuing Lender.
(b) Notices and other communications to the Lenders and
the Issuing Lenders hereunder may be delivered or furnished by electronic
communication (including e-mail and Internet or intranet websites such as Debt
Domain or any similar platform) pursuant to procedures approved by the
Administrative Agent; provided that (i) the foregoing shall not apply to notices
to any Lender or the Issuing Lenders pursuant to Article II if such Lender or
such Issuing Lender, as applicable, has notified the Administrative Agent that
it is incapable of receiving notices under such Article by electronic
communication and (ii) in the case of notices and other communications posted to
an Internet or intranet website (such as Debt Domain or any similar platform),
notice thereof shall be sent to each intended recipient at its e-mail address
that such notice or communication is available and identifying the website
address therefor. The Administrative Agent or the Borrower may, in its
electronic communications pursuant to procedures approved by it, provided that
communications.
SECTION 8.02. No Waivers.
No failure or delay by the Administrative Agent, any Issuing Lender or any
Lender in exercising any right, power or privilege hereunder or under any other
Loan Document shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by law.
SECTION 8.03. Expenses; Taxes; Indemnification.
(a) Expenses. The Borrower agrees to pay on demand:
(i) all reasonable out-of-pocket expenses incurred by the Administrative Agent,
the Joint Lead Arrangers (including the reasonable fees, charges and
disbursements of counsel), in connection with the syndication of the credit
facilities provided for herein, the preparation, negotiation, execution,
delivery and administration of this Agreement and the other Loan Documents or
any amendments, modifications or waivers of the provisions hereof or thereof
(whether or not the transactions contemplated hereby or thereby shall be
consummated), (ii) all reasonable out-of-pocket expenses incurred by any Issuing
Lender in connection with the issuance, creation, amendment, renewal or
extension of any Letter of Credit or any demand for payment thereunder and
(iii) all out-of-pocket expenses incurred by the Administrative Agent, any
Lender or any Issuing Lender (including the fees, charges and disbursements of
any counsel), in connection with the enforcement or protection of its rights
(A) in connection with this Agreement and the other Loan Documents, including
its rights under this Section, or (B) in connection with the Revolving Advances
made or Letters of Credit issued hereunder, including all such out-of-pocket
expenses incurred during any workout, restructuring or negotiations in respect
of such Revolving Advances or Letters of Credit.
(b) Taxes. The Borrower shall pay any and all transfer
taxes, documentary taxes, recording taxes, stamp taxes, excise taxes or similar
taxes or assessments or other charges payable or determined to be payable in
connection with the execution, delivery, filing and recording of the Loan
Documents and any other documents to be delivered under the Loan Documents (but
excluding taxes imposed on the net income of any Lender), and agrees to save the
Administrative Agent, each Issuing Lender and each Lender harmless from and
against any and all liabilities with respect to or resulting from the Borrower’s
delay in paying or omission to pay such taxes.
(c) Indemnification; Waiver of Consequential Damages.
The Borrower agrees to defend, indemnify, pay and hold harmless the
Administrative Agent (in its capacity as such), each Issuing Lender
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(in its capacity as such), each Lender and each of the Joint Lead Arrangers and
their Affiliates and their respective officers, directors, employees and agents
(collectively, the “Indemnitees”) from and against any and all losses,
obligations, penalties, actions, judgments, claims, damages, liabilities,
disbursements and expenses (including reasonable attorneys fees and expenses,
which may include the allocated cost of internal counsel, and settlement costs)
of any kind or nature whatsoever, whether direct, indirect or consequential, and
whether based on any federal, state or foreign laws, statutes, rules or
regulations, on common law or equitable cause or on contract or otherwise, which
may be imposed on, incurred by or asserted against the Indemnitees in any way
related to or arising out of this Agreement or the other Loan Documents, or the
transactions contemplated hereby or thereby (collectively, “Losses”), except any
such Losses (i) resulting from the gross negligence or willful misconduct of the
Indemnitees or (ii) resulting from a claim brought by the Borrower against an
under any other Loan Document, if the Borrower has obtained a final and
nonappealable judgment in its favor on such claim as determined by a court of
competent jurisdiction, provided that nothing in this Section 8.03(c) shall
obligate the Borrower to pay the normal expenses of the Administrative Agent in
the administration of this Agreement in the absence of pending or threatened
litigation or other proceedings or the claims or threatened claims of others and
then only to the extent arising therefrom.
To the fullest extent permitted by applicable law, the Borrower shall not
assert, and hereby waives, any claim against any Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
contemplated hereby, the transactions contemplated hereby or thereby, any
Revolving Advance or Letter of Credit or the use of the proceeds thereof. No
Indemnitee referred to in this Section 8.03(c) above shall be liable for any
damages arising from the use by unintended recipients of any information or
Indemnitee.
(d) Breakage. Upon demand of any Lender (with a copy to
the Administrative Agent) from time to time, the Borrower shall promptly
compensate such Lender for and hold such Lender harmless from any loss, cost or
expense reasonably incurred by it as a result of: (a) any continuation,
conversion, payment or prepayment of any Eurodollar Rate Revolving Advance on a
day other than the last day of the Interest Period for such Eurodollar Rate
Revolving Advance (whether voluntary, mandatory, automatic, by reason of
acceleration, or otherwise); or (b) any failure by the Borrower (for a reason
other than the failure of such Lender to make a Loan) to prepay, borrow,
continue or convert any Eurodollar Rate Revolving Advance on the date or in the
amount notified by the Borrower; in each case, including any loss or expense
arising from the liquidation or reemployment of funds obtained by it to maintain
such Eurodollar Rate Revolving Advance or from fees payable to terminate the
deposits from which such funds were obtained but excluding any loss of
anticipated profits. The Borrower shall also pay any customary administrative
fees charged by such Lender in connection with the foregoing.
(e) Survival. The obligations of the Borrower under this
Section 8.03 shall survive the termination of this Agreement, the termination of
the Aggregate Commitments hereunder and payment of the Obligations.
SECTION 8.04. Sharing of Set-Offs. Each Lender agrees
that if it shall, by exercising any right of set-off or counterclaim or
otherwise, receive payment of a proportion of the aggregate amount of principal
and interest due with respect to any Obligations owing to such Lender which is
greater than the proportion received by any other Lender in respect of the
aggregate amount of
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principal and interest due with respect to Obligations owing to such other
Lender, the Lender receiving such proportionately greater payment shall purchase
such participations in the LC Exposure of the other Lenders or Revolving
Advances of the other Lenders, and such other adjustments shall be made, as may
be required so that all such payments of principal and interest with respect to
the LC Exposure of the Lenders or Revolving Advances of the Lenders shall be
shared by the Lenders pro rata; provided that nothing in this Section 8.04 shall
impair the right of any Lender to exercise any right of set-off or counterclaim
it may have and to apply the amount subject to such exercise to the payment of
indebtedness of the Borrower other than its LC Exposure or other Obligations
owing to such Lender. The Borrower agrees, to the fullest extent it may
effectively do so under applicable law, that any holder of any participation in
any Revolving Advances or a participation in any LC Exposure, whether or not
acquired pursuant to the foregoing arrangements, may exercise rights of set-off
or counterclaim and other rights with respect to such participation as fully as
if such holder of a participation were a direct creditor of the Borrower in the
amount of such participation. If under any applicable bankruptcy, insolvency or
other similar law, any Lender receives a secured claim in lieu of a set-off to
which this Section 8.04 would apply, such Lender shall, to the extent
practicable, exercise its rights in respect of such secured claim in a manner
consistent with the rights of the Lenders entitled under this Section 8.04 to
share in the benefits of any recovery on such secured claim. The Borrower hereby
authorizes BNPP and each other Lender, in accordance with the provisions of this
Section 8.04, to so set-off and apply any and all such deposits held and other
indebtedness owing by BNPP or such other Lender to or for the credit or the
account of the Borrower and hereby authorizes BNPP and each such other Lender to
permit such set-off and application by BNPP or such other Lender; provided that
any such set-off rights shall not apply to the accounts or deposits of any of
Borrower’s foreign Subsidiaries.
SECTION 8.05. Amendments and Waivers. Any provision of
this Agreement or any other Loan Document may be amended or waived if, but only
if, such amendment or waiver is in writing and is signed by the Borrower and the
Required Lenders (and, if the rights or duties of the Administrative Agent or
any Issuing Lender are affected thereby, by the Administrative Agent or each
affected Issuing Lender, as the case may be); provided that no such amendment,
waiver or modification shall: (i) extend or increase any Commitment of any
Lender or subject any Lender to any additional obligation without the written
consent of such Lender, (ii) reduce the principal of or rate or amount of
interest on any Revolving Advance or any LC Disbursement or any fees without the
written consent of each Lender directly affected thereby, (iii) postpone any
date fixed by this Agreement or any other Loan Document for any payment of
principal, interest, fees or other amounts due to the Lenders (or any of them)
hereunder or under any other Loan Document without the written consent of each
Lender directly affected thereby, (iv) extend the terms of any Letter of Credit
(other than as set forth below) without the written consent of each Lender
directly affected thereby, (v) amend this Section 8.05 without the written
consent of each Lender, (vi) change Section 2.14(c), Section 2.14(d) or
Section 8.04 or any other provision of this Agreement in a manner that would
alter the pro rata sharing or disbursement of payments required thereby without
the written consent of each Lender, or (vii) change the percentage of the
Commitments or the number of Lenders which shall be required for the Lenders or
any of them to take any action under this Section 8.05 or any other provision of
this Agreement without the written consent of each Lender; provided further,
that each of the Fee Letters may be amended, or rights or privileges thereunder
waived, in a writing executed only by the parties thereto. Notwithstanding the
foregoing, so long as no Default or Event of Default has occurred and is
continuing, (a) the Expiration Date of any Letter of Credit may be extended with
the consent of the applicable Issuing Lender and the Borrower to a date not
later than the seventh Business Day prior to the Maturity Date, and (b) any
Letter of Credit may be amended in any other manner with the consent of the
applicable Issuing Lender and the Borrower so long as such Letter of Credit, as
so amended, complies with Section 2.07 of this Agreement.
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SECTION 8.06. Successors and Assigns.
(a) Binding Agreement. The provisions of this Agreement
respective successors and assigns, except that the Borrower may not assign or
otherwise transfer any of its rights under this Agreement without the consent of
each Lender.
(b) Successors and Assigns. (i) Each Lender may assign
to one or more banks or other entities all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Commitments and the Revolving Advances and LC Exposure held by
it); provided, however, that (A) each such assignment shall be of a constant,
and not a varying, percentage of all rights and obligations under this
Agreement, (B) the aggregate amount of the Commitments, Revolving Advances and
LC Exposure of the assigning Lender being assigned pursuant to each such
assignment shall (1) not be less than $5,000,000 and shall be an integral
multiple of $1,000,000 or (2) be the remaining amount of such Lender’s
Commitments, Revolving Advances and LC Exposure, (C) each such assignment and
proposed assignee is subject to the prior written consent of the Administrative
Agent, the Issuing Lenders and, so long as no Default has occurred and is
continuing, the Borrower (which consents shall not be unreasonably withheld);
provided that the Borrower shall be deemed to have consented to any such
assignment unless it shall object thereto by written notice to the
thereof; provided further, however, that the consent of the Administrative
Agent, and the Borrower shall not be required with respect to any such
assignment by any Lender to (x) an Affiliate of such Lender, (y) an Approved
Fund or (z) another Lender, (D) no such assignment shall be made to the Borrower
or any of the Borrower’s Affiliates or Subsidiaries, (E) no such assignment
shall be made to a natural person, (F) no such assignment may be made to a
competitor of the Borrower and (G) the assigning Lender shall pay or cause to be
paid to the Administrative Agent a processing and recordation fee of $3,500
(except in the case of an assignment to an Affiliate of the assigning Lender).
For each assignment, the parties to such assignment shall execute and deliver to
the Administrative Agent for its acceptance and recording an Assignment and
Assumption Agreement, together with such forms, certificates or other evidence,
if any, with respect to United States federal income tax withholding matters as
the assignee under such Assignment and Assumption Agreement may be required to
deliver pursuant to Section 2.16. Upon the execution, delivery, acceptance and
recording by the Administrative Agent, from and after the effective date
specified in any Assignment and Assumption Agreement, the assignee thereunder
shall be a party hereto and, to the extent provided in such Assignment and
Assumption Agreement, the assignor Lender thereunder shall be released from its
obligations under the Loan Documents. From and after the effective date of any
such assignment (1) the assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such assignment, have (in addition to any such rights and obligations
theretofore held by it) the rights and obligations of a Lender hereunder, shall
have Commitments equal to the Commitments assigned to it (in addition to any
Commitments theretofore held by it), and shall have LC Exposure and Revolving
Advances equal to the LC Exposure and Revolving Advances assigned to it (in
addition to any LC Exposure and Revolving Advances theretofore held by it) and
(2) the assignor thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such assignment, relinquish its
rights (other than any rights which survive the termination of this Agreement
under Section 8.03) and be released from its obligations under this Agreement
(and, in the case of an assignment covering all or the remaining portion of an
shall cease to be a party hereto). From time to time, at the request of any
Lender, the Administrative Agent shall notify the Lenders of the current
Commitments of all Lenders.
(c) Sub-Participations. Subject to Section 8.06(d), a
Lender may at any time grant sub-participations to one or more banks or other
entities in or to all or any part of its rights and obligations
56
under this Agreement, and to the extent of any such sub-participation (unless
otherwise stated therein and except as provided below) the purchaser of such
sub-participation shall, to the fullest extent permitted by law, have the same
rights and benefits hereunder as it would have if it were such Lender hereunder;
provided, however, that (i) such Lender’s obligations under this Agreement shall
remain unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations and (iii) the Borrower,
the Administrative Agent, the Lenders and the Issuing Lenders shall continue to
rights and obligations under this Agreement. Any agreement pursuant to which any
Lender may grant such a participating interest shall provide that such Lender
shall retain the sole right and responsibility to enforce the obligations of the
Borrower hereunder, including, without limitation, the right to approve any
that such sub-participation agreement may provide that such Lender will not
agree to any modification, amendment or waiver of this Agreement described in
clause (i), (ii), (iii) or (iv) of Section 8.05 without the consent of the
participant. Each Lender agrees to notify the Borrower and the Administrative
Agent of the amount of each such sub-participation and the identity of each such
sub-participant. Each Lender that sells a sub-participation shall, acting
solely for this purpose as an agent of the Borrower, maintain a register on
which it enters the name and address of each sub-participant and the principal
amounts (and stated interest) of each sub-participant’s interest in the
obligations under the Loan Documents (the “Participant Register”); provided that
no Lender shall have any obligation to disclose all or any portion of the
Participant Register (including the identity of any Participant or any
information relating to a Participant’s interest in any commitments, loans,
letters of credit or its other obligations under any Loan Document) to any
Person except to the extent that such disclosure is necessary to establish that
such commitment, loan, letter of credit or other obligation is in registered
form under Section 5f.103-1(c) of the United States Treasury Regulations. The
entries in the Participant Register shall be conclusive absent manifest error,
and such Lender shall treat each Person whose name is recorded in the
Participant Register as the owner of such sub-participation for all purposes of
this Agreement notwithstanding any notice to the contrary. For the avoidance of
doubt, the Administrative Agent (in its capacity as Administrative Agent) shall
have no responsibility for maintaining a Participant Register.
(d) Lender Treated as Owner. The Administrative Agent,
the Issuing Lenders and the Borrower may, for all purposes of this Agreement,
treat any Lender as the owner and holder of LC Exposure and Revolving Advances
until written notice of assignment shall have been received by them.
(e) No Right to Greater Payment. No assignee,
participant or other transferee of any Lender’s rights shall be entitled to
receive any greater payment under Section 2.17 than such Lender would have been
entitled to receive with respect to the rights transferred, unless such transfer
is made (i) with the Borrower’s prior written consent (which consent shall not
be unreasonably withheld) or by reason of the provisions of this Agreement
requiring such Lender to designate a different Lending Office under certain
circumstances, or (ii) at a time when the circumstances giving rise to such
greater payment did not exist.
(f) Electronic Execution of Assignments. The words
“execution,” “signed,” “signature,” and words of like import in any Assignment
and Assumption Agreement shall be deemed to include electronic signatures or the
keeping of records in electronic form, each of which shall be of the same legal
effect, validity or enforceability as a manually executed signature or the use
provided for in any applicable law, including the Federal Electronic Signatures
in Global and National Commerce Act, the New York State Electronic Signatures
and Records Act, or any other similar state laws based on the Uniform Electronic
Transactions Act.
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(g) Certain Pledges. Any Lender may at any time pledge
or assign a security interest in all or any portion of its rights under this
Agreement (including under its Revolving Note, if any) to secure obligations of
such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank or any central bank having jurisdiction over such Lender;
provided that no such pledge or assignment shall release such Lender from any of
its obligations hereunder or substitute any such pledgee or assignee for such
(h) Register. The Administrative Agent, acting solely for
this purpose as an agent of the Borrower, shall maintain at one of its offices a
and principal amounts (and stated interest) of the Revolving Notes owing to,
The entries in the Register shall be conclusive absent manifest error, and,
subject to Section 8.06(d), the Borrower, the Administrative Agent and the
Lenders shall treat each Person whose name is recorded in the Register pursuant
to the terms hereof as a Lender hereunder for all purposes of this Agreement.
The Register shall be available for inspection by the Borrower and any Lender,
at any reasonable time and from time to time upon reasonable prior notice.
SECTION 8.07. Collateral.
Each of the Lenders represents to the Administrative Agent and each of the other
Lenders that it in good faith is not relying upon any “margin stock” (as defined
in Regulation U) as collateral in the extension or maintenance of the credit
SECTION 8.08. Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW
OF THE STATE OF NEW YORK.
SECTION 8.09. Counterparts; Effectiveness.
This Agreement may be signed in any number of counterparts, each of which shall
were upon the same instrument. Delivery of an executed counterpart of a
signature page of this Agreement by telecopy shall be effective as delivery of a
manually executed counterpart of this Agreement.
SECTION 8.10. Confidentiality.
In accordance with normal procedures regarding proprietary information supplied
by customers, each of the Lenders agrees to keep confidential information
relating to the Borrower or any Subsidiary received pursuant to or in connection
with this Agreement and the transactions contemplated hereby (the
“Information”), provided that nothing herein shall be construed to prevent the
Administrative Agent, any Issuing Lender or any Lender from disclosing such
Information (i) upon the order of any court or administrative agency, (ii) upon
the request or demand of any regulatory agency or authority having jurisdiction
over the Administrative Agent, such Issuing Lender or such Lender or any of
their respective Affiliates, (iii) which has been publicly disclosed (other than
as a result of a breach of this Section), (iv) which has been lawfully obtained
on a nonconfidential basis by the Administrative Agent, any Issuing Lender or
any of the Lenders from a Person other than the Borrower, any Subsidiary, the
Administrative Agent, any Issuing Lender or any other Lender, (v) to any
participant in or assignee of, or prospective participant in or assignee of, all
or any part of the rights and obligations of the Administrative Agent, such
Issuing Lender or such Lender under this Agreement or to any actual or
prospective counterparty (or its advisors) to any securitization, swap or
derivative transaction relating to the Borrower, any Subsidiary,
58
and the Obligations (provided that such participant, assignee or counterparty,
or prospective participant, assignee or counterparty agrees to comply with the
confidentiality requirements set forth in this Section 8.10), (vi) to the
Administrative Agent’s, such Issuing Lender’s or such Lender’s independent
auditors or outside legal counsel, (vii) to its Affiliates (it being understood
confidential), (viii) to any other party to this Agreement or (ix) to the extent
required in connection with any litigation relating to this Agreement to which
the Administrative Agent, such Issuing Lender or such Lender is a party (and the
Administrative Agent, such Issuing Lender or such Lender shall use its
commercially reasonable efforts to give prior notice of any such disclosure
under this clause (ix) to the extent permitted by applicable law).
Each of the Administrative Agent, the Lenders and the Issuing Lenders
acknowledges that (a) the Information may include material non-public
information concerning the Borrower or a Subsidiary, as the case may be, (b) it
has developed compliance procedures regarding the use of material non-public
accordance with applicable law, including Federal and state securities laws.
SECTION 8.11. Captions.
All Section headings are inserted for convenience of reference only and shall
not be used in any way to modify, limit, construe or otherwise affect this
Agreement.
SECTION 8.12. Severability.
If any provision of this Agreement or the other Loan Documents is held to be
illegal, invalid or unenforceable, (a) the legality, validity and enforceability
of the remaining provisions of this Agreement and the other Loan Documents shall
not be affected or impaired thereby and (b) the parties shall endeavor in good
faith negotiations to replace the illegal, invalid or unenforceable provisions
with valid provisions the economic effect of which comes as close as possible to
that of the illegal, invalid or unenforceable provisions. The invalidity of a
provision in a particular jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 8.13. Integration.
All exhibits to a Loan Document shall be deemed to be a part thereof. The Loan
Documents embody the entire agreement and understanding among the Borrower, the
Administrative Agent, the Issuing Lenders and the Lenders with respect to the
subject matter thereof and supersede all prior agreements and understandings
among the Borrower, the Administrative Agent and the Lenders with respect to the
subject matter thereof.
SECTION 8.14. Consent To Jurisdiction; Waiver Of Venue.
(a) THE BORROWER IRREVOCABLY AND UNCONDITIONALLY SUBMITS,
FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF
THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY OR OF THE UNITED STATES FOR THE
SOUTHERN DISTRICT OF NEW YORK AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF
THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN
RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW
YORK STATE COURT
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AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE
ADMINISTRATIVE AGENT, ANY LENDER OR ANY ISSUING LENDER MAY OTHERWISE HAVE TO
BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AGAINST THE BORROWER OR ITS PROPERTIES IN THE COURTS OF ANY
JURISDICTION.
(b) THE BORROWER IRREVOCABLY AND UNCONDITIONALLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT
REFERRED TO IN PARAGRAPH (a) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE
DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING
IN ANY SUCH COURT.
SECTION 8.15. Service of Process.
EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER
PROVIDED FOR NOTICES IN SECTION 8.01. NOTHING IN THIS AGREEMENT WILL AFFECT THE
RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
APPLICABLE LAW.
SECTION 8.16. No Advisory or Fiduciary Responsibility.
In connection with all aspects of each transaction contemplated hereby, the
Borrower acknowledges and agrees, and acknowledges its Affiliates’
understanding, that: (i) the credit facility provided for hereunder and any
related arranging or other services in connection therewith (including in
connection with any amendment, waiver or other modification hereof or of any
other Loan Document) are an arm’s-length commercial transaction between the
Borrower and its Affiliates, on the one hand, and the Administrative Agent and
the Joint Lead Arrangers, on the other hand, and the Borrower is capable of
evaluating and understanding and understands and accepts the terms, risks and
conditions of the transactions contemplated hereby and by the other Loan
Documents (including any amendment, waiver or other modification hereof or
thereof); (ii) in connection with the process leading to such transaction, the
Administrative Agent and each Joint Lead Arranger each is and has been acting
solely as a principal and is not the financial advisor, agent or fiduciary, for
the Borrower or any of its Affiliates, stockholders, creditors or employees or
any other Person; (iii) none of the Administrative Agent nor any Joint Lead
Arranger has assumed or will assume an advisory, agency or fiduciary
responsibility in favor of the Borrower with respect to any of the transactions
contemplated hereby or the process leading thereto, including with respect to
(irrespective of whether the Administrative Agent or any Joint Lead Arranger has
advised or is currently advising the Borrower or any of its Affiliates on other
matters) and none of the Administrative Agent nor any Joint Lead Arranger has
any obligation to the Borrower or any of its Affiliates with respect to the
transactions contemplated hereby except those obligations expressly set forth
herein and in the other Loan Documents; (iv) the Administrative Agent and the
Joint Lead Arrangers and their respective Affiliates may be engaged in a broad
range of transactions that involve interests that differ from those of the
Borrower and its Affiliates, and none of the Administrative Agent nor any Joint
Lead Arranger has any obligation to disclose any of such interests by virtue of
any advisory, agency or fiduciary relationship;
60
and (v) the Administrative Agent and the Joint Lead Arrangers have not provided
and will not provide any legal, accounting, regulatory or tax advice with
respect to any of the transactions contemplated hereby (including any amendment,
waiver or other modification hereof or of any other Loan Document) and the
Borrower has consulted its own legal, accounting, regulatory and tax advisors to
the extent it has deemed appropriate. The Borrower hereby waives and releases,
to the fullest extent permitted by law, any claims that it may have against the
Administrative Agent and the Joint Lead Arrangers with respect to any breach or
alleged breach of any advisory, agency or fiduciary duty.
SECTION 8.17. WAIVER OF TRIAL BY JURY.
EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN
SECTION.
SECTION 8.18. Interest Rate Limitation.
Notwithstanding anything to the contrary contained in any Loan Document, the
interest paid or agreed to be paid under the Loan Documents shall not exceed the
maximum rate of non-usurious interest permitted by applicable law (the “Maximum
Rate”). If the Administrative Agent or any Lender shall receive interest in an
amount that exceeds the Maximum Rate, the excess interest shall be applied to
the principal of the Revolving Advances or, if it exceeds such unpaid principal,
refunded to the Borrower. In determining whether the interest contracted for,
charged, or received by the Administrative Agent or a Lender exceeds the Maximum
Rate, such Person may, to the extent permitted by applicable law,
(a) characterize any payment that is not principal as an expense, fee, or
premium rather than interest, (b) exclude voluntary prepayments and the effects
parts the total amount of interest throughout the contemplated term of the
Obligations hereunder.
SECTION 8.19. Judgment Currency.
(a) If for the purposes of obtaining judgment in any court
it is necessary to convert a sum due hereunder in Dollars into another currency
under this Agreement or any other Loan Document, the parties hereto agree, to
the fullest extent that they may effectively do so, that the rate of exchange
used will be that at which in accordance with normal banking procedures the
Administrative Agent could purchase Dollars with such other currency in New
York, New York at 12:00 noon (New York City time) on the Business Day preceding
that on which final judgment is given.
(b) The Borrower’s obligations hereunder shall be required
to be satisfied in Dollars. The obligation of the Borrower in respect of any
sum due from it to any Credit Party hereunder will, notwithstanding any judgment
in a currency other than Dollars, be discharged only to the extent the recipient
subtracting all expenses incurred in converting such currency to Dollars) with
such other currency on the Business
61
Day immediately following such receipt; if the Dollars so purchased are less
than the sum originally due to the recipient in Dollars, the Borrower agrees, as
a separate obligation and notwithstanding any judgment, to indemnify the
recipient against such loss, and, if the Dollars so purchased exceed the sum
originally due to the recipient in Dollars, the recipient agrees to remit to the
Borrower such excess (after subtracting all expenses incurred in converting such
currency to Dollars).
(c) The agreements in this Section 8.19 shall survive
payment of any such judgment.
SECTION 8.20. USA Patriot Act. Each Lender that is
subject to the Patriot Act (as hereinafter defined) and the Administrative Agent
(for itself and not on behalf of any Lender) hereby notifies the Borrower that
obtain, verify and record information that identifies the Borrower and each
Related Entity, which information includes the name and address of the Borrower
and each Related Entity and other information that will allow such Lender or the
Administrative Agent, as applicable, to identify the Borrower and each Related
Entity in accordance with the Patriot Act. The Borrower will, and will cause
each of its Subsidiaries to, provide, to the extent commercially reasonable or
required by requirements of law, such information and take such actions as are
reasonably requested by the Administrative Agent or any Lender to assist the
Administrative Agent and the Lenders in maintaining compliance with the Patriot
Act.
SECTION 8.21. Termination of Commitments under Existing
Facilities. Each of the signatories hereto that is also a party to (i) the
Revolving Loan and Financial Letters of Credit Facility Agreement, dated as of
December 14, 2010, among the Borrower, the lenders party thereto and Bank of
America, N.A., as administrative agent (the “2010 Credit Agreement”), and
(ii) the Letter of Credit Facility Agreement, dated as of September 16, 2009,
among the Borrower, the lenders party thereto and BNP Paribas, as administrative
agent, (as amended, the “2009 Credit Agreement”), in each case hereby agrees
that, as of the Closing Date, all of the commitments to extend credit under the
2009 Credit Agreement and the 2010 Credit Agreement to which such signatory is a
party, as the case may be, will be terminated automatically and any and all
required notices and notice periods in connection with such termination are
hereby waived and of no further force and effect.
62
above written.
FLUOR CORPORATION,
as the Borrower
By:
/s/ James M. Lucas
Name:
James M. Lucas
Title:
Senior Vice President and Treasurer
Address:
6700 Las Colinas Boulevard
Irving, Texas 75039
Attention: Jim M. Lucas
Telecopier: (469) 398-7285
Electronic Mail: jim.lucas@fluor.com
Website Address: www.fluor.com
Signature Page to
Revolving Loan And Letter Of Credit Facility Agreement
BNP PARIBAS, as Administrative Agent, an Issuing Lender and individually as a
Lender
By:
/s/ Pierre Nicholas Rogers
Name:
Pierre Nicholas Rogers
Title:
Managing Director
By:
/s/ Scott Tricarico
Name:
Scott Tricarico
Title:
Vice President
BNP Paribas
787 Seventh Avenue
Addresses for Notices to BNPP as Administrative Agent:
BNP Paribas
787 Seventh Avenue
Attention: Jamie Dillon
Telecopier: (415) 291-0563
Attention: Joseph Mack
Electronic Mail: joseph.mack@americas.bnpparibas.com
Signature Page to
With copies to:
BNP Paribas
787 Seventh Avenue
Attention: Terri Knuth
Electronic Mail:
terri.knuth@americas.bnpparibas.com
BNP Paribas
525 Washington Boulevard
Jersey City, New Jersey 07310
Attention: Wendy Lau
Telecopier: (201) 850-4020
Electronic Mail: nyls.agency.support@americas.bnpparibas.com
Attention: Dina Wilson
Addresses for Notices to BNPP as an Issuing Lender and for Other Notices
relating to Letters of Credit:
BNP Paribas
787 Seventh Avenue
Attention: Nicholas Rogers
Telecopier: (212) 841-3830
Electronic Mail:
nicholas.rogers@americas.bnpparibas.com
Attention: Jamie Dillon
Attention: Joseph Mack
Attention: Deborah Scholl
Telecopier: (312) 977-2234
Electronic Mail:
deborah.scholl@americas.bnpparibas.com
Signature Page to
With copies to:
BNP Paribas
787 Seventh Avenue
Attention: Terri Knuth
Electronic Mail:
terri.knuth@americas.bnpparibas.com
BNP Paribas
525 Washington Boulevard
Attention: Wendy Lau
Attention: Dina Wilson
Attention: Maria Albuquerque
Electronic Mail: NYTFStandby@us.bnpparibas.com
Attention: Maritza Leung
Electronic Mail:
NYTFStandby@us.bnpparibas.com
Signature Page to
as Syndication Agent, as an Issuing Lender and individually as a Lender
By:
/s/ G. Scott Lambert
Name:
G. Scott Lambert
Title:
Vice President
Addresses for Notices:
333 South Hope Street, 19th Floor
Attention: Mathew J. Griesbach, Director
Telephone: 213-621-8737
Telecopier: 415-343-0981
Electronic Mail: mathew.j.grieshbach@baml.com
Address for Notices to Bank of America as an Issuing
Lender and for other notices related to Letters of Credit
Anamaria H. Matias
1000 West Temple Street
CA9-705-07-05
Los Angeles, CA 90012
Telecopier: 213-457-8841
Electronic Mail: anamaria.h.matias@baml.com
Signature Page to
THE BANK OF TOKYO-MITSUBISHI UFJ, LTD.,
as a Co-Documentation Agent, as an Issuing Lender and individually as a Lender
By:
/s/ Thomas Danielson
Name:
Thomas Danielson
Title:
Authorized Signatory
Address for Notices:
1251 Avenue of the Americas
New York, New York 10020-1104
Attention:
U.S. Corporate Banking
Christina Schuschel
Telecopier:
212-782-6440 with a copy to
312-696-4535
Electronic Mail: c.schuschel@us.mufg.jp
Signature Page to
CITIBANK, N.A.,
as a Co-Documentation Agent and individually as a Lender
By:
/s/ Andrew Siford
Name:
Andrew Siford
Title:
Vice President
Address for Notices:
CITIBANK, N.A.
1615 Brett Road
OPS III
Attention: Anthony Severino
Telecopier: (302) 894-6108
Electronic Mail: anthony.severino@citi.com
Signature Page to
STANDARD CHARTERED BANK,
as a Lender
By:
/s/ Johanna Minayas
Name:
Johanna Minayas
Title:
Associate Director
Address for Notices:
Standard Charter Bank
1095 Avenue of the Americas
Attention: Connie An
Telecopier: 212-667-0531
Electronic Mail: connie.an@so.com
Signature Page to
CREDIT AGRICOLE CORPORATE &
INVESTMENT BANK,
as a Lender
By:
/s/ Blake Wright
Name:
Blake Wright
Title:
Managing Director
By:
/s/ James Austin
Name:
James Austin
Title:
Vice President
Address for Notices:
Credit Agricole CIB
1301 Avenue of the Americas
Attention: Jaikissoon Sanichar
Telecopier: 1-917-849-5580
Electronic Mail: Jaikissoon.sanichar@ca-cib.com
Signature Page to
as a Lender
By:
/s/ Christopher Usas
Name:
Christopher Usas
Title:
Director
Address for Notices:
Scotiabank Global Banking and Markets
Diversified West
650 West Georgia Street, 18th Floor
Vancouver, BC
Attention: Director/Managing Director
Telecopier: 604-697-2200
Electronic Mail: N/A
Signature Page to
LLOYDS TSB BANK PLC,
as a Lender
By:
/s/ Stephen Giacolone
Name:
Stephen Giacolone
Title:
Assistant Vice President — G011
By:
/s/ Candi Obrentz
Name:
Candi Obrentz
Title:
Vice President — O013
Address for Notices:
Attention:
Telecopier:
Electronic Mail:
Signature Page to
as a Lender
By:
/s/ S. Michael St. Geme
Name:
S. Michael St. Geme
Title:
Managing Director
Address for Notices:
333 South Grand Ave., 12th Floor
Attention: S. Michael St. Geme
Telecopier: 213-253-7301
Electronic Mail: stgememi@wellsfargo.com
Signature Page to
SUMITOMO MITSUI BANKING CORPORATION,
as a Lender
By:
/s/ David W. Kee
Name:
David W. Kee
Title:
Managing Director
Address for Notices:
601 S. Figueroa Street, Suite 1800
Attention: David Novoseller
Telecopier: 213-623-6812
Electronic Mail: david_s_novoseller@smbcgroup.com
Signature Page to
ING BANK N.V., Dublin Branch
as a Lender
By:
/s/ Shaun Hawley
Name:
Shaun Hawley
Title:
Vice President
By:
/s/ Aidan Neill
Name:
Aidan Neill
Title:
Director
Address for Notices:
Block 4, Dundrum Town Centre
Sandyford Road, Dundrum
Dublin 16, Ireland
Attention: Shaun Hawley
Telecopier: +353 1 638 4050
Electronic Mail: shaun.hawley@ie.ing.com
Signature Page to
SOVEREIGN BANK, N.A.,
as a Lender
By:
/s/ Peter Lopoukhine
Name:
Peter Lopoukhine
Title:
Head of Trade, Export & Commodity Finance
Address for Notices:
45 East 53rd Street
USA
Attention: Jorge Saavedra/Marisa Marson
Telecopier: 212-350-3691
Electronic Mail: jsaavedra!santander.us, mmarson@santander.us
Signature Page to
AUSTRALIA AND NEW ZEALAND BANKING
GROUP LIMITED,
as a Lender
By:
/s/ Robert Grillo
Name:
Robert Grillo
Title:
Director
Address for Notices:
277 Park Avenue, 31st Floor
New York, NY 10172
Attention: Tessie Amante/Angela Yin
Telecopier: 212-536-9265
Electronic Mail: LoanAdminNYCC1177AA2@anz.com
Signature Page to
BARCLAYS BANK PLC,
as a Lender
By:
/s/ Paras Patel
Name:
Paras Patel
Title:
Authorized Signatory
Address for Notices:
1 Churchill Place
London
E14 5HP
Attention: Samuel Coward
Telecopier: +44 (0) 20 7116 5302
Electronic Mail: Samuel.coward@barclays.com
Attention: John Davey
Telecopier: +44 (0) 207 116 4196
Electronic Mail: John.Davey@barclayscorp.com
Signature Page to
U.S. BANK, NATIONAL ASSOCIATION,
as a Lender
By:
/s/ Patrick Engel
Name:
Patrick Engel
Title:
Vice President
Address for Notices:
214 North Tryon Street
30th Floor
Charlotte, NC 28202
Attention: Patrick Engel
Telecopier: (704) 335-2815
Electronic Mail: Patrick.engel@usbank.com
Signature Page to
INTESA SANPAOLO S.P.A,
as a Lender
By:
/s/ Sergio Maggioni
Name:
Sergio Maggioni
Title:
First Vice President & Head of Business
By:
/s/ Glen Binder
Name:
Glen Binder
Title:
Vice President
Address for Notices:
1 William Street
Attention: Glen Binder
Telecopier: 212-607-3722
Electronic Mail: glen.binder@intesasanpaolo.com
Signature Page to
WESTPAC BANKING CORPORATION,
as a Lender
By:
/s/ Henrik Jensen
Name:
Henrik Jensen
Title:
Director
Corporate & Institutional Banking
Address for Notices:
Level 39, 575 Fifth Ave
New York, NY 10017-24
Attention: Henrik Jensen
Attention: Jake Muller
Electronic Mail: hjensen@westpac.com.au
jakemuller@westpac.com.au
Signature Page to
GOLDMAN SACS BANK USA,
as a Lender
By:
/s/ Mark Walton
Name:
Mark Walton
Title:
Authorized Signatory
Address for Notices:
Goldman, Sachs & Co.
30 Hudson Street, 5th Floor
Jersey City, NJ 07302
Attention: Michelle Latzoni
Telecopier: (917) 977-3966
Signature Page to
COMMITMENTS AND APPLICABLE PERCENTAGES
Lender
Aggregate
Commitment
Amount of
Aggregate
Commitment
Attributable to
Revolving Facility
Sublimit
Applicable
Percentage
BNP Paribas
$
162,500,000.00
$
90,277,777.78
9.027777778
%
$
162,500,000.00
$
90,277,777.78
9.027777778
%
Citibank, N.A.
$
162,500,000.00
$
90,277,777.78
9.027777778
%
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
$
162,500,000.00
$
90,277,777.78
9.027777778
%
Standard Chartered Bank
$
100,000,000.00
$
55,555,555.56
5.555555556
%
Credit Agricole Corporate & Investment Bank
$
100,000,000.00
$
55,555,555.56
5.555555556
%
The Bank of Nova Scotia
$
100,000,000.00
$
55,555,555.56
5.555555556
%
Lloyds TSB Bank plc
$
100,000,000.00
$
55,555,555.56
5.555555556
%
$
100,000,000.00
$
55,555,555.56
5.555555556
%
Sumitomo Mitsui Banking Corporation
$
100,000,000.00
$
55,555,555.56
5.555555556
%
ING Bank N.V.
$
100,000,000.00
$
55,555,555.56
5.555555556
%
Sovereign Bank, N.A.
$
75,000,000.00
$
41,666,666.67
4.166666667
%
Australia and New Zealand Banking Group Limited
$
75,000,000.00
$
41,666,666.67
4.166666667
%
Barclays Bank plc
$
75,000,000.00
$
41,666,666.67
4.166666667
%
$
75,000,000.00
$
41,666,666.67
4.166666667
%
Intesa Sanpaolo S.p.A.
$
50,000,000.00
$
27,777,777.76
2.777777778
%
Westpac Banking Corporation
$
50,000,000.00
$
27,777,777.76
2.777777778
%
Goldman Sachs Bank USA
$
50,000,000.00
$
27,777,777.76
2.777777778
%
Totals
$
1,800,000,000.00
$
1,000,000,000.00
100.000000000
%
EXISTING LETTERS OF CREDIT
Issuing Lender
LC No.
Iss. Date
Exp. Date
Face Amount
Type of Letter of Credit
BNP Paribas
4103074
1/20/2012
2/1/2013
US $
3,000,000.00
Financial Letter of Credit
BNP Paribas
4103076
US $
1,000,000.00
Financial Letter of Credit
BNP Paribas
4107047
9/19/2011
9/19/2013
AUD $
715,732.19
Financial Letter of Credit
BNP Paribas
4107052
AUD $
715,732.19
Financial Letter of Credit
BNP Paribas
4107056
AUD $
1,004,994.16
Financial Letter of Credit
BNP Paribas
4107057
AUD $
1,004,994.16
Financial Letter of Credit
BNP Paribas
4108518
11/15/2011
11/15/2013
US $
43,003,251.00
Financial Letter of Credit
BNP Paribas
4110346
1/24/2012
2/26/2014
INR
54,296,499.00
Financial Letter of Credit
BNP Paribas
4116445
10/9/2012
4/30/2013
INR
42,101,332.00
Financial Letter of Credit
BNP Paribas
91868285
1/3/2011
5/1/2013
US $
37,082,048.00
Financial Letter of Credit
BNP Paribas
91891861
5/18/2012
5/18/2013
US $
4,750,000.00
Financial Letter of Credit
BNP Paribas
91894629
2/7/2007
US $
1,941,586.00
Financial Letter of Credit
BNP Paribas
91903011
6/27/2011
US $
26,678,637.00
Financial Letter of Credit
BNP Paribas
91908867
6/17/2009
1/31/2013
US $
20,000,000.00
Financial Letter of Credit
BNP Paribas
91913474
12/14/2011
3/10/2013
US $
1,370,000.00
Financial Letter of Credit
BNP Paribas
91917141
6/6/2012
8/26/2013
US $
1,250,000.00
Financial Letter of Credit
BNP Paribas
91919422
12/23/2010
9/5/2013
US $
250,000.00
Financial Letter of Credit
BNP Paribas
91899047
7/23/2010
11/30/2013
US $
590,000.00
Performance Letter of Credit
BNP Paribas
91899048
US $
1,500,000.00
Performance Letter of Credit
BNP Paribas
91900063
9/17/2012
1/14/2013
US $
59,144,801.30
Performance Letter of Credit
BNP Paribas
91910637
10/12/2010
5/30/2013
INR
3,750,000.00
Performance Letter of Credit
BNP Paribas
91912436
10/29/2010
€
200,962.10
Performance Letter of Credit
BNP Paribas
4108141
10/31/11
10/31/13
THB
1,927,474.00
Performance Letter of Credit
BNP Paribas
4108142
US $
87,379.70
Performance Letter of Credit
BNP Paribas
4108810
11/28/13
THB
1,937,153.00
Performance Letter of Credit
BNP Paribas
4108812
US $
21,560.50
Performance Letter of Credit
BNP Paribas
91913698
3/25/2010
3/25/2013
US $
897,948.00
Performance Letter of Credit
BNP Paribas
91913700
US $
2,385,496.00
Performance Letter of Credit
BNP Paribas
91913899
4/6/2010
3/28/2013
US $
1,000,000.00
Performance Letter of Credit
BNP Paribas
91914858
5/24/2010
5/24/2013
THB
6,101,269.00
Performance Letter of Credit
BNP Paribas
91914859
US $
178,187.90
Performance Letter of Credit
BNP Paribas
91916670
9/15/2011
8/11/2013
US $
39,749,000.00
Performance Letter of Credit
BNP Paribas
91916853
6/19/2012
2/28/2013
US $
100,000.00
Performance Letter of Credit
BNP Paribas
91916854
7/30/2012
US $
100,000.00
Performance Letter of Credit
BNP Paribas
91916855
€
100,000.00
Performance Letter of Credit
BNP Paribas
91918271
11/30/2012
US $
3,245,000.00
Performance Letter of Credit
BNP Paribas
91918619
11/19/2010
9/9/2014
€
1,418,077.00
Performance Letter of Credit
37346
10/1/1999
USD $
100,000.00
Financial Letter of Credit
3113731
7/26/2010
7/26/2013
USD $
466,000.00
Financial Letter of Credit
3114089
8/26/2010
8/20/2013
USD $
1,691,249.00
Financial Letter of Credit
3114092
9/2/2010
USD $
150,000.00
Financial Letter of Credit
3126258
10/19/2013
€
28,786.08
Financial Letter of Credit
3125562
7/20/2012
7/20/2013
$
4,000.00
Financial Letter of Credit
Schedule 5.08
EXISTING LIENS
None.
EXHIBIT A
FORM OF OPINION OF
COUNSEL FOR THE BORROWER
[Attached]
A-1
Fluor Letterhead
November 9, 2012
To the Lenders, the Administrative Agent
and the Issuing Lenders
Referred to Below
I have acted as counsel for Fluor Corporation, a publicly traded Delaware
corporation (the “Borrower”), in connection with the $1,800,000,000 Revolving
Loan and Letter of Credit Facility Agreement (the “Credit Agreement”) dated as
of November 9, 2012 among the Borrower, the lenders party thereto from time to
time, BNP Paribas, as Administrative Agent and the Issuing Lender, Bank of
America, N.A., as Syndication Agent and Citibank, N.A. and The Bank of
Tokyo-Mitsubishi UFJ, Ltd., as Co-Documentation Agents. This opinion is
delivered pursuant to Section 3.01(b) of the Credit Agreement.
I have examined originals or copies, certified or otherwise identified to my
satisfaction, of such documents, corporate records, certificates of public
officials and other instruments and have conducted such other investigations of
fact and law as I have deemed necessary or advisable for purposes of this
opinion. In such examination, except as applied to the Borrower with respect to
the Credit Agreement, I have assumed the genuineness of all signatures, the
legal capacity of natural persons, the authenticity of all documents submitted
to me as originals, the conformity to original documents of all documents
submitted to me as certified, conformed or photostatic copies and the
authenticity of such latter documents. As used herein, “to my knowledge” and
“of which I am aware” means the conscious awareness of facts or other
information by me without independent investigation.
Upon the basis of the foregoing, I am of the opinion that:
1. The Borrower is a corporation duly incorporated, validly existing
corporate powers and all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted.
2. The execution, delivery and performance by the Borrower of the
Credit Agreement are within the Borrower’s corporate powers, have been duly
authorized by all necessary corporate action, require no action by or in respect
of, or filing with, any governmental body, agency or official, and do not
contravene or constitute a default under any provision of applicable law or
regulation, or of the restated certificate of incorporation or by-laws of the
Borrower, or, to my knowledge after due inquiry, of any material agreement,
Borrower, or result in the creation or imposition of any Lien on any asset of
the Borrower or any of its Subsidiaries.
3. The Credit Agreement has been duly executed and delivered on
behalf of the Borrower and, assuming the due execution and delivery by the other
parties thereto, constitutes the legal, valid and binding obligations of the
Borrower, enforceable against the Borrower in accordance with its terms, except
that enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, or similar laws, or by equitable principles relating to or limiting
the rights of creditors generally.
4. There is no action, suit or proceeding pending against, or to my
knowledge threatened against or affecting, the Borrower or any of its
Subsidiaries before any court or arbitrator, or any governmental body, agency or
official, which could reasonably be expected to have a material adverse effect
on the business, consolidated financial position or consolidated results of
operations of the Borrower and its Consolidated Subsidiaries, taken as in whole,
at any time up to and including the Maturity Date, or which in any manner draws
into question the legality, validity or enforceability of the Credit Agreement.
5. Each of the Borrower’s Material Subsidiaries is a corporation
duly incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all corporate powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted.
6. The Borrower is not an “investment company” within the meaning of
the Investment Company Act of 1940, as amended.
My opinion in paragraph 3 above as to the enforceability of the Credit Agreement
is subject to:
(a) public policy considerations, statutes or court decisions that may
limit the rights of a party to obtain indemnification against its own
negligence, willful misconduct or unlawful conduct; and
(b) the unenforceability under some circumstances of broadly and
vaguely stated waivers or waivers of rights granted by law where the waivers are
against public policy or prohibited by law.
I express no opinion with respect to your ability to collect attorneys’ fees and
costs in an action involving the Credit Agreement if you are not the prevailing
party in that action. I express no opinion as to any provision in the Credit
Agreement requiring written amendments and waivers insofar as it suggests that
oral or other modifications, amendments or waivers could not be effectively
agreed upon by the parties or that the doctrine of promissory estoppel might not
apply. Finally, I express no opinion as to the effect of non-compliance by you
with any state or federal laws or regulation applicable to the transactions
contemplated by the Credit Agreement because of the nature of your business.
The opinions expressed above are limited to the matters governed by the laws of
the United States of America, the State of New York and the General Corporation
Law of the State of Delaware, in each case as they exist as of the date hereof,
and I express no opinion as to the laws of any other jurisdiction. For the
purposes of paragraph 3 hereof, I have assumed that the laws of the State of New
York, which is the governing law of the Credit Agreement, are the same as the
laws of the State of California.
This opinion may not be relied upon by any other party nor may copies be
delivered or furnished to any other party nor may all or portions of this
opinion be quoted, circulated or referred to in any other document without the
Borrower’s written consent, except that this opinion may be (i) disclosed to
(x) regulatory agencies or authorities having jurisdiction over you that request
or require such disclosure, and (y) any participant in or assignee of, or
prospective participant in or assignee of, all or any part of your rights or
obligations under the Credit Agreement, and (ii) relied upon by assignees and
participants in the Revolving Advances, LC Exposure or Commitments and by any
successor Administrative Agent, in each case as though such assignees or
participants or successor Administrative Agent had been an addressee of this
opinion on the date hereof. I do not undertake to advise you of any changes in
the opinion expressed herein resulting from matters that might come or be
brought to my attention after the Closing Date.
Very truly yours,
/s/ Eric P. Helm
EXHIBIT B
[the][each](1) Assignor identified in item 1 below ([the][each, an] “Assignor”)
and [the][each](2) Assignee identified in item 2 below ([the][each, an]
“Assignee”). [It is understood and agreed that the rights and obligations of
[the Assignors][the Assignees](3) hereunder are several and not joint.](4)
Capitalized terms used but not defined herein shall have the meanings given to
them in the Credit Agreement identified below (the “Credit Agreement”), receipt
of a copy of which is hereby acknowledged by the Assignee. The Standard Terms
and Conditions set forth in Annex 1 attached hereto are hereby agreed to and
Administrative Agent as contemplated below (i) all of [the Assignor’s][the
respective Assignors’] rights and obligations in [its capacity as a
Lender][their respective capacities as Lenders] under the Credit Agreement and
any other documents or instruments delivered pursuant thereto to the extent
related to the amount and percentage interest identified below of all of such
outstanding rights and obligations of [the Assignor][the respective Assignors]
identified below (including, without limitation, the Letters of Credit included
in such facility) and (ii) to the extent permitted to be assigned under
arising under or in connection with the Credit Agreement, any other documents or
(i) and (ii) above being referred to herein collectively as [the][an] “Assigned
1.
Assignor[s]:
2.
Assignee[s]:
[for each Assignee, indicate [Affiliate][Approved Fund] of [identify Lender]]
(1) For bracketed language here and elsewhere in this form relating to the
Assignor(s), if the assignment is from a single Assignor, choose the first
bracketed language. If the assignment is from multiple Assignors, choose the
second bracketed language.
(2) For bracketed language here and elsewhere in this form relating to the
Assignee(s), if the assignment is to a single Assignee, choose the first
bracketed language. If the assignment is to multiple Assignees, choose the
second bracketed language.
(3) Select as appropriate.
(4) Include bracketed language if there are either multiple Assignors or
multiple Assignees.
B-1
3. Borrower: Fluor Corporation
4. Administrative Agent: BNP Paribas as the administrative agent
under the Credit Agreement
5. Credit Agreement: Revolving Loan and Letter of Credit Facility
Agreement, dated as of November 9, 2012, among Fluor Corporation, the Lenders
from time to time party thereto and BNP Paribas, as Administrative Agent.
Assignor[s](5)
Assignee[s](6)
Aggregate
Amount of
Commitments
for all Lenders(7)
Amount of
Commitments
Assigned
Percentage
Assigned of
Commitments
(8)
CUSIP
Number
$
$
%
$
$
%
$
$
%
[7. Trade Date: ](9)
Effective Date: , 201 [TO BE INSERTED BY
ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF
TRANSFER IN THE REGISTER THEREFOR.]
ASSIGNOR
By:
Title:
ASSIGNEE
By:
Title:
(5) List each Assignor, as appropriate.
(6) List each Assignee, as appropriate
(7) Amounts in this column and in the column immediately to the right to be
adjusted by the counterparties to take into account any payments or prepayments
made between the Trade Date and the Effective Date.
(8) Set forth, to at least 9 decimals, as a percentage of the Commitments of
all Lenders thereunder.
(9) To be completed if the Assignor and the Assignee intend that the minimum
B-2
[Consented to and](10) Accepted:
BNP PARIBAS, as
as Administrative Agent and as an Issuing Lender
By:
Title:
By:
Title:
[OTHER ISSUING LENDERS], as
as an Issuing Lender
By:
Title:
(10) To be added only if the consent of the Administrative Agent is required by
the terms of the Credit Agreement.
B-3
[Consented to:](11)
By:
Title:
(11) To be added only if the consent of the Borrower and/or other parties (e.g.
Issuing Lenders) is required by the terms of the Credit Agreement.
B-4
FLUOR CORPORATION
ASSIGNMENT AND ASSUMPTION
(i) it is the legal and beneficial owner of [the][[the relevant] Assigned
Interest, (ii) [the][such] Assigned Interest is free and clear of any lien,
encumbrance or other adverse claim and (iii) it has full power and authority,
and has taken all action necessary, to execute and deliver this Assignment and
Assumption and to consummate the transactions contemplated hereby; and
(b) assumes no responsibility with respect to (i) any statements, warranties or
representations made in or in connection with the Credit Agreement or any other
Loan Document, (ii) the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Loan Documents or any collateral
thereunder, (iii) the financial condition of the Borrower, any of its
Subsidiaries or Affiliates or any other Person obligated in respect of any Loan
Document or (iv) the performance or observance by the Borrower, any of its
Subsidiaries or Affiliates or any other Person of any of their respective
obligations under any Loan Document.
(i) it has full power and authority, and has taken all action necessary, to
execute and deliver this Assignment and Assumption and to consummate the
transactions contemplated hereby and to become a Lender under the Credit
Agreement, (ii) it meets all the requirements to be an assignee under
Section 8.06(b) of the Credit Agreement (subject to such consents, if any, as
may be required under Section 8.06(b) of the Credit Agreement), (iii) from and
after the Effective Date, it shall be bound by the provisions of the Credit
Agreement as a Lender thereunder and, to the extent of [the][the relevant]
Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it is
sophisticated with respect to decisions to acquire assets of the type
represented by [the][such] Assigned Interest and either it, or the Person
exercising discretion in making its decision to acquire [the][such] Assigned
copy of the Credit Agreement, and has received or has been accorded the
opportunity to receive copies of the most recent financial statements delivered
pursuant to Section 5.01 thereof, as applicable, and such other documents and
information as it deems appropriate to make its own credit analysis and decision
to enter into this Assignment and Assumption and to purchase [the][such]
Assigned Interest, (vi) it has, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
decision to enter into this Assignment and Assumption and to purchase
[the][such] Assigned Interest, and (vii) if it is a Foreign Lender, attached
hereto is any documentation required to be delivered by it pursuant to the terms
of the Credit Agreement, duly completed and executed by [the][such] Assignee;
and (b) agrees that (i) it will, independently and without reliance upon the
Administrative Agent, [the][any] Assignor or any other Lender, and based on such
make its own credit decisions in taking or not taking action under the Loan
Documents, and (ii) it will perform in accordance with their terms all of the
obligations which by the terms of the Loan Documents are required to be
performed by it as a Lender.
Agent shall make all payments in respect of [the][each] Assigned Interest
(including payments of principal, interest, fees and other amounts) to [the][the
relevant] Assignor for amounts which have accrued to but excluding the
B-5
Effective Date and to [the][the relevant] Assignee for amounts which have
accrued from and after the Effective Date.
3. General Provisions. This Assignment and Assumption shall be
binding upon, and inure to the benefit of, the parties hereto and their
respective successors and assigns. This Assignment and Assumption may be
executed in any number of counterparts, which together shall constitute one
instrument. Delivery of an executed counterpart of a signature page of this
Assignment and Assumption by telecopy shall be effective as delivery of a
manually executed counterpart of this Assignment and Assumption. This
Assignment and Assumption shall be governed by, and construed in accordance
with, the law of the State of New York. In the event of any inconsistency
between this Assignment and Assumption and the Credit Agreement, the provisions
of the Credit Agreement shall govern.
B-6
EXHIBIT C
FORM OF [ASSISTANT SECRETARY’S] CERTIFICATE
[ ], 2012
The undersigned, the [Assistant Secretary] of Fluor Corporation, a Delaware
corporation (the “Borrower”), hereby certifies pursuant to
Section 3.01(a)(ii) of the Revolving Loan and Letter of Credit Facility
Agreement (the “Agreement”; capitalized terms used herein but not otherwise
defined herein shall have the meanings assigned to such terms as set forth in
the Agreement), dated as of November 9, 2012, among the Borrower, the Lenders
thereunder and BNP Paribas, as Administrative Agent, that I am the duly
appointed [Assistant Secretary] of the Borrower, and further certify as follows:
1. Annexed hereto as Annex A is a true, complete and correct copy of
all resolutions of the Board of Directors of the Borrower, relating to the
Agreement and the transactions contemplated thereby, all of which resolutions
are in full force and effect on the date hereof.
2. Annexed hereto as Annexes B and C, respectively, are true,
complete and correct copies of the certificate of incorporation and the by-laws
of the Borrower, including, without limitation, all amendments thereof to the
date hereof, which certificate of incorporation and by-laws are presently in
effect on and as of the date hereof.
3. The following persons are duly elected or appointed, as the case
may be, and qualified officers of the Borrower holding the offices indicated
opposite their respective names, and the signatures appearing opposite their
respective names and offices are the genuine signatures of such persons:
Name
Title
Signature
[ ]
[ ]
C-1
IN WITNESS WHEREOF, I have hereunto set my hand as of the date first above
written.
Name:
Title:
I, [ ], hereby certify that I am the duly elected or appointed,
as the case may be, and qualified [ ] of the Borrower, as of the
date hereof.
Name:
Title:
C-2
ANNEX A
TO
[ASSISTANT SECRETARY’S] CERTIFICATE
RESOLUTIONS
ANNEX B
TO
CERTIFICATE OF INCORPORATION
ANNEX C
TO
BYLAWS
EXHIBIT D
[Date]
BNP Paribas, as Administrative Agent
for the Lenders party
to the Credit Agreement
referred to below
Attention: [ ]
BNP Paribas
787 Seventh Avenue
Telephone: [ ]
Telecopier: [ ]
E-mail: [ ]
FLUOR CORPORATION
Ladies and Gentlemen:
The undersigned, Fluor Corporation, refers to the Revolving Loan and Letter of
Credit Facility Agreement, dated as of November 9, 2012 (as amended,
supplemented, amended and restated or otherwise modified from time to time, the
“Credit Agreement”, the terms defined therein being used herein as therein
defined), among the undersigned, certain Lenders party thereto and BNP Paribas,
as Administrative Agent, and hereby gives you notice, irrevocably, pursuant to
Section 2.02 of the Credit Agreement that the undersigned hereby requests a
Revolving Borrowing under the Credit Agreement, and in that connection sets
forth below the information relating to such Revolving Borrowing (the “Proposed
Revolving Borrowing”):
(a) The Business Day of the Proposed Revolving Borrowing is
, 201 .
(b) The Revolving Advances comprising the Proposed Revolving Borrowing
are [Base Rate Revolving Advances] [Eurodollar Rate Revolving Advances].
(c) The aggregate amount of the Proposed Revolving Borrowing is
$ .
[(d) The initial Interest Period for each Eurodollar Rate Revolving
Advance made as part of the Proposed Revolving Borrowing is
month[s].]
(e) Funds are requested to be disbursed to the Borrower’s following
account:
Account No.
D-1
The undersigned hereby certifies that the following statements are true on the
date hereof, and will be true on the date of the Proposed Revolving Borrowing:
(i) there is no injunction, writ, preliminary restraining order or
other order of any nature issued by any Governmental Authority in any respect
directly affecting the transactions provided for herein and no action or
proceeding by or before any Governmental Authority shall have been commenced and
be pending or, to the knowledge of the Borrower, threatened, seeking to prevent
or delay the transactions contemplated by the Loan Documents or challenging any
other terms and provisions hereof or thereof or seeking any damages in
connection therewith;
(ii) all representations and warranties of the Borrower contained in
Article IV of the Credit Agreement (other than the representation and warranty
of the Borrower contained in Section 4.04(b) hereof) are true (except that for
purposes hereof, the representations and warranties contained in
pursuant to Section 5.01(a));
(iii) no event has occurred and is continuing, or would result from
such Proposed Revolving Borrowing or from the application of the proceeds
therefrom, that constitutes a Default;
(iv) no default or event of default under any project engineering,
procurement, construction, maintenance and related activities and/or contracts
of the Borrower or any of its Subsidiaries shall have occurred and be continuing
which could reasonably be expected to materially and adversely affect the
ability of the Borrower to perform its obligations under the Loan Documents; and
(v) both before and immediately after giving effect to the Proposed
Revolving Borrowing, (x) the outstanding aggregate principal amount of all
Revolving Advances plus the Dollar Equivalent of the total LC Exposure shall not
exceed the Aggregate Commitments and (y) the outstanding aggregate principal
amount of all Revolving Advances plus the Dollar Equivalent of the total LC
Exposure in respect of Financial Letters of Credit shall not exceed the
Revolving Facility Sublimit.
FLUOR CORPORATION
By:
Name:
Title:
D-2
EXHIBIT E
[Date]
for the Lenders party
to the Credit Agreement
referred to below
Attention: [ ]
BNP Paribas
787 Seventh Avenue
Telephone: [ ]
Telecopier: [ ]
FLUOR CORPORATION
Ladies and Gentlemen:
as Administrative Agent, hereby gives you notice, irrevocably, pursuant to
Section 2.06 of the Credit Agreement that the undersigned hereby requests a
conversion or continuation of Revolving Advances under the Credit Agreement, and
in that connection sets forth below the information relating to such conversion
or continuation:
(a) The Business Day of the
conversion/continuation is , 20 .
(b) The aggregate amount of Revolving Advances
being converted/continued is $ .
(c) Nature of conversion/continuation:
[ ] Conversion of Base Rate Revolving Advances to Eurodollar Rate Revolving
Advances
[ ] Conversion of Eurodollar Rate Revolving Advances to Base Rate Revolving
Advances
[ ] Continuation of Eurodollar Rate Revolving Advances as such
(d) If Revolving Advances are being continued as
or converted to Eurodollar Rate Revolving Advances, the duration of the new
Interest Period that commences on the conversion/continuation date is
month[s].
E-1
The undersigned hereby certifies that no event has occurred and is continuing,
or would result from such conversion or continuation, that constitutes a
Default.
FLUOR CORPORATION
By:
Name:
Title:
E-2
EXHIBIT F
FORM OF REVOLVING NOTE
, 20
FOR VALUE RECEIVED, the undersigned, FLUOR CORPORATION (the “Borrower”), hereby
promises to pay (the “Lender”),
on the Maturity Date (as defined in the Credit Agreement referred to below) the
principal amount of Revolving Advances (as defined in such Credit Agreement) due
and payable by the Borrower to the Lender on the Maturity Date under that
certain Revolving Loan and Letter of Credit Facility Agreement, dated as of
November 9, 2012 (as amended, restated, extended, supplemented or otherwise
modified in writing from time to time, the “Credit Agreement”; the terms defined
therein being used herein as therein defined), among the Borrower, certain
Lenders party thereto and BNP Paribas, as Administrative Agent.
Revolving Advance from the date of such Revolving Advance until such principal
amount is paid in full, at such interest rates, and at such times as are
specified in the Credit Agreement. All payments of principal and interest shall
be made to the Administrative Agent for the account of the Lender in Dollars in
Federal or other immediately available funds at the Administrative Agent’s
office specified in the Credit Agreement. If any amount is not paid in full
when due hereunder, such unpaid amount shall bear interest, to be paid upon
demand, from the due date thereof until the date of actual payment (and before
as well as after judgment) computed at the per annum rate set forth in the
Credit Agreement.
This Revolving Note (this “Note”) is one of the Revolving Notes referred to in
the Credit Agreement, is entitled to the benefits thereof and is subject to
optional and mandatory prepayment in whole or in part and other benefits as
provided therein. Upon the occurrence and during the continuance of one or more
of the Events of Default specified in the Credit Agreement, all amounts then
immediately due and payable, all as provided in the Credit Agreement. Revolving
Advances made by the Lender shall be evidenced by one or more loan accounts or
records maintained by the Lender and the Administrative Agent in the ordinary
course of business. In the event of any conflict between the accounts and
records maintained by the Lender and the accounts and records maintained by the
Administrative Agent in respect of such matters, the accounts and records of the
Administrative Agent shall control in the absence of manifest error. The Lender
may also attach schedules to this Note and endorse thereon the date, amount and
maturity of its Revolving Advances and payments with respect thereto.
F-1
FLUOR CORPORATION
By:
Name:
Title:
Signature Page to
Revolving Note
|
Exhibit 10.1
Argo Group International Holdings, Ltd.
Deferred Compensation Plan for Non-Employee Directors
Effective February 12, 2008
CONTENTS
ARTICLE PAGE
ARTICLE I
References, Construction and Definitions 1
ARTICLE II
Administration 4
ARTICLE III
Participation 5
ARTICLE IV
Awards, Deferrals and Matching Contributions
5
ARTICLE V
Investments and Funding of Benefit Payments 6
ARTICLE VI
Deferred Compensation Accounts 6
ARTICLE VII
Distributions from the Plan 7
ARTICLE VIII
Participant Rights 8
ARTICLE IX
Miscellaneous 9
ARGO GROUP AMENDED AND RESTATED DEFERRED COMPENSATION PLAN
FOR NON-EMPLOYEE DIRECTORS
The purpose of this Plan is to provide certain deferred compensation benefits to
non-employee members of the board of directors of Argo Group International
Holdings, Ltd. (the “Company”). The Plan and benefits provided under the Plan
are intended to be in compliance with the requirements of Section 409A of the
Code. This Plan shall be deemed an unfunded promise to pay and the rights of any
Participant or Beneficiary to benefits under this Plan shall, at all times, be
no more than that of a general and unsecured creditor of the Company.
ARTICLE I
References, Construction and Definitions
This Plan and any other documents created under this Plan are intended to be
understood by Participants. Words used in this Plan, other than as specifically
defined in this Article I, have the meaning their context dictates. If, however,
a situation arises in which an undefined word has more that one meaning, the
ambiguity shall be resolved by the Plan Administrator, pursuant to its power
under Article II.
Unless otherwise indicated, all references made in this Plan shall be to
articles and sections contained in this Plan. The headings and subheadings have
been inserted for convenience of reference only and are to be ignored in
construction of the provisions of this Plan. In the construction of this Plan,
the singular shall include the plural wherever appropriate.
The following terms (in alphabetical order) shall have the meanings set forth
opposite such terms for purposes of this Plan:
1.01 Advisory Committee: A group of one or more individuals appointed by the
Company to perform the duties of the Plan Administrator, in accordance with the
terms of the Plan.
1.02 Beneficiary: the Spouse of the Participant as of the Participant’s date of
death or, if so named, any other person or legal entity designated by the
Participant in the Participant’s Enrollment Form. If a Participant fails to
designate a Beneficiary on an Enrollment Form or each of the Participant’s
designated Beneficiaries die before benefits become payable under this Plan,
then such Participant’s Beneficiary shall be the Participant’s estate.
1.03
Benefit Payment: a payment made to a Participant or Beneficiary triggered by a
Distribution Event under this Plan equal to the sum of (a) the market value of a
Participant’s Stock Unit Account determined by reference to the closing price of
the Company’s stock on the national stock exchange on which such stock is listed
as of the date of the Distribution Event or as of the date that is exactly six
(6) months after the date of the Distribution Event, whichever is higher,
(b) the principal value of the Cash Compensation Account as of the date of the
Distribution Event, and (c) interest as provided in Section 6.04 below on the
principal value contained in the Cash
Compensation Account accrued from the date of the Distribution Event through the
date on which payment is made by the Plan Administrator.
1.04 Board: The Board of Directors of the Company.
1.05 Cash Compensation Account: An account balance shown on a separate
bookkeeping record which reflects the amount of cash compensation deferred by
each Participant that may become payable to a Participant or Beneficiary under
this Plan. The Account shall be a bookkeeping entry only and shall be utilized
solely as a devise to measure and determine the amount of any Benefit Payment to
the Participant or Beneficiary upon the occurrence of a Distribution Event.
1.06 Change in Control: The earliest of the following to occur:
(a) The date that any one person or group (as that term is defined in Treasury
Regulation Section 1.409A-3(i)(5)(v)(B)) (“Group”), acquires (or has acquired
during the 12-month period ending on the date of the most recent acquisition by
such person or Group) ownership of stock of the Company possessing 30% or more
of the total voting power of the stock of the Company; provided that if any one
person or Group is considered to effectively control the Company, the
acquisition of additional control of the Company by the same person or Group is
not considered to cause a Change in Control of the Company;
(b) The date that any one person or Group acquires ownership of the stock of
the Company that, together with stock held by such person or Group, constitutes
more than 50% of the total fair market value or total voting power of the stock
of the Company; provided that if any one person or Group is considered to own
Company, the acquisition of additional control of the Company by the same person
or Group is not considered to cause a Change in Control of the Company; provided
further that this part (b) applies only when there is a transfer or issuance of
stock of the Company and the Company’s stock remains outstanding after the
transaction;
(c) The date that a majority of the members of the Board of Directors of the
Company is replaced during any 12-month period by directors whose appointment or
election is not endorsed by a majority of the members of the Board of Directors
of the Company; or
(d) The date that any one person or Group acquires (or has acquired during the
12-month period ending on the date of the most recent acquisition by such person
or Group) assets from the Company that have a total “gross fair market value”
equal to or more than 40% of the total gross fair market value of all of the
assets of the Company immediately before such acquisition or acquisitions;
provided that a transfer of assets by the Company to a related person, as
described in Treasury Regulation Section 1.409A-3(i)(5)(vii)(B), is not
considered to cause a Change in Control of the Company. For this purpose, “gross
fair market value” means the value of the assets of the Company, or the assets
being disposed of, determined without regard to any liabilities associated with
such assets.
2
Notwithstanding anything contained herein to the contrary, it is intended
that there will be a Change in Control under this Plan only to the extent such
event or transaction would constitute a “change in control event” as such term
is defined in Treasury Regulation Section 1.409A-3(i)(5), and thus the
provisions of the definition of Change in Control shall be applied and
interpreted in a manner consistent with the provisions of such Treasury
Regulation, as amended from time to time.
1.07 Code: the Internal Revenue Code, as amended.
1.08 Company: Argo Group International Holdings, Ltd.
1.09 Deferred Compensation: the amount of compensation not yet earned which is
awarded to the Participant and which the Participant and the Company agree shall
be deferred in accordance with the Plan.
1.10 Distribution Event: the occurrence of an event set out in Section VII below
which entitles a Participant or Beneficiary to a Benefit Payment.
1.11 Effective Date: February 12, 2008.
1.12 Enrollment Form: the form made available by the Plan Administrator for each
Participant to acknowledge and accept participation in this Plan, defer fees,
and to designate a Beneficiary
1.13 ERISA: the Employee Retirement Income Security Act of 1974, as amended.
1.14 Participant: a non-employee member of the Board of Directors of the
Company. Each non-employee Board member, as of the Effective Date, shall be
deemed a Participant.
1.15 Plan: The Argo Group International Holdings, Ltd. Deferred Compensation
Plan for Non-Employee Directors, as may be amended from time to time.
1.16 Plan Administrator: The Company shall be the Plan Administrator. However,
certain individuals may be appointed to the Advisory Board pursuant to
Section 2.01 to perform the duties of Plan Administrator.
1.17 Plan Year: the 12-consecutive month period commencing January 1st of each
year and ending the following December 31st. The first Plan year shall be a
short plan year, beginning February 12, 2008 and ending December 31, 2008.
1.18 Spouse: the individual to whom the Participant is legally married as of the
date the Participant terminates services as a member of the Board.
1.19
Stock Units: bookkeeping entry units which mirror Company stock in value and are
awarded to Participants pursuant to the terms of the Plan. The value of Stock
Units shall fluctuate on an equal basis with the Company’s common stock based
upon the market price of the Company’s common stock on the national stock
exchange on which such stock is listed. Dividends awarded on Company common
stock shall be treated as awarded on Stock Units on an equal basis. The value of
such dividends shall be
3
converted into additional Stock Units (in the method described above) as of the
date such dividends are declared.
1.20 Stock Unit Account: An account balance shown on a separate bookkeeping
record, reflecting an accumulation of Stock Units for each Participant that may
become payable to a Participant or Beneficiary under this Plan. The Account
shall be a bookkeeping entry only and shall be utilized solely as a device to
measure and determine the amount of any Benefit Payment to the Participant or
Beneficiary upon the occurrence of a Distribution Event.
1.21 Termination With Cause: Termination of the Participant’s service as a
member of the Board as a result of the Participant’s dishonesty, wrongful
conduct, or willful malfeasance. Such conduct may include theft, fraud or any
act that reflects negatively on the Board, Company and/or the Company’s
employees, Advisory Committee, shareholders, or any affiliate, as determined by
the Plan Administrator in its sole and absolute discretion.
1.22 Total Disability: any medically determinable physical or mental impairment
continuous period of not less than twelve (12) months and that renders the
participant unable to engage in any substantial gainful activity.
ARTICLE II
Administration
2.01 Plan Administrator. The Company shall be the Plan Administrator and named
fiduciary of this Plan for purposes of ERISA. To perform its duties as Plan
Administrator, however, the Company may appoint one or more individuals to the
Advisory Committee to perform the duties of the Plan Administrator. Any
individual appointed to the position of Advisory Committee Member shall not be
permitted to participate in this Plan.
2.02 Duties and Powers. It shall be the principal duty of the Plan Administrator
to see that the Plan is carried out in accordance with its terms. The
performance of this duty may be accomplished by, but is not limited to, the
following actions:
(a) The Plan Administrator may exercise any and all powers necessary to
fulfill all responsibilities under the Plan.
(b) The Plan Administrator may seek advice from others in exercising its
duties under the Plan. Individuals providing such advice to the Plan
Administrator shall not be deemed to serve in an official capacity and,
therefore, will not be disqualified from participating in the Plan.
(c) The Plan Administrator shall interpret the Plan and establish such rules
and documentation as deemed reasonable, necessary and proper to implement any
and all purposes of the Plan.
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(d) Any decision made, or action taken, by the Plan Administrator arising out
of or in connection with the interpretation and administration of the Plan shall
be in the Plan Administrator’s sole discretion, except as expressly limited by
this Plan, and shall be final and conclusive in all cases.
(e) The Plan Administrator may correct any defect, supply any omission or
reconcile any inconsistency in the Plan in the manner and to the extent deemed
necessary.
ARTICLE III
Participation
3.01 Eligibility. All non-employee members of the Board are eligible participate
in the Plan.
3.02 Continued Participation. A Participant shall remain a Participant until the
earlier of the Participant’s Total Disability, retirement, death, or termination
of services as a member of the Board.
3.03 Agreement. A Participant’s acceptance of the terms and conditions of this
Plan shall be evidenced by the Enrollment Form executed by the Participant and
the Plan Administrator. Such Enrollment Form shall incorporate the provisions of
this Plan by reference and shall be considered part of this Plan.
ARTICLE IV
4.01 Awards. The Compensation Committee, at its discretion, may provide non-cash
compensation awards to Participants, which shall be credited to each individual
Participant’s Account in the form of Stock Units as of the date such award is
granted, (“Awards”).
4.02 Deferral Contributions. A Participant may defer all or part of the
Participant’s anticipated cash compensation for service as a member of the Board
within the limitations described in this Article IV. Such deferrals must be made
in writing, in accordance with the requirements of the Enrollment Form, prior to
the beginning of any Plan Year during which such cash compensation is
anticipated to be earned or within thirty (30) days after becoming a Participant
in the Plan, and such election shall be irrevocable for the applicable Plan
Year.
4.03 Deferral Amounts. A Participant may defer either fifty percent (50%) or one
hundred percent (100%) of the Participant’s anticipated cash compensation for
service as a Director each Plan Year; provided, however, that any deferral
election shall apply only to compensation for services rendered as a Director
subsequent to the date on which a deferral election is made.
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4.04 Matching Contributions. The Company shall grant a matching Award equal to
75% on all cash compensation deferred. The Award shall be converted into Stock
Units (on an equal basis with Company common stock) based upon the fair market
value of the Company’s common stock on the date the deferral amount would
otherwise have been earned as determined by the closing price of the stock on
the national stock exchange on which the stock is listed.
ARTICLE V
Investments and Funding of Benefit Payments
5.01 Source of Distributions. All distributions under this Plan shall be made by
the Company in cash.
5.02 Company Assets. The Company, at its discretion, may acquire assets in
connection with its liabilities assumed under this Plan. Such assets, if any,
acquired or held to pay benefits under the Plan shall not be deemed to be held
for the benefit of any Participant or Beneficiary, except to the extent that
such assets are restricted under the terms of a trust created to hold such
assets. To the extent any assets are held by the Company in a separate fund or
trust in connection with its liabilities assumed under this Plan, such assets
shall continue to be subject to the Company’s creditors in the event of
bankruptcy or insolvency of the Company. All assets acquired or held in
connection with the Company’s liabilities under this Plan shall remain the sole
property of the Company and part of the unpledged and unrestricted general
assets of the Company, subject only to the claims of the Employer’s general
creditors. In no event shall any Participant or Beneficiary have a greater
interest or status than that of a general and unsecured creditor as to any
assets of the Company in connection with this Plan.
5.03 Investment Risk. The Company, its officers, directors and employees shall
not be liable to any Participant or Beneficiary for any loss on the value to
Stock Units because of changes in market value, regardless if such market value
change is the result of action (or inaction) taken by the Company, its officers,
directors or employees.
ARTICLE VI
Deferred Compensation Accounts
6.01 Status of Accounts. Stock Unit Accounts and Cash Compensation Accounts
shall be established via booking entries only. The Participant shall be a
general creditor of the Company and shall not have a vested interest, a secured
position or a preferred position as to the amounts shown in such accounts. No
account established under this Plan shall be construed to be a trust account for
any Participant or Beneficiary.
6.02 Opening Balance of Stock Unit Account: Each Participant’s Stock Unit
account shall be credited with an initial balance of 1,650 Stock Units.
6.03 Value of Stock Unit Account. At any specific date the value of a
Participant’s Stock Unit Account shall be equal to the hypothetical market value
of the Stock Units recorded therein using the closing price of the Company’s
stock on the national stock exchange on which such stock is listed.
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6.04 Interest. All amounts recorded in the Cash Compensation Account shall be
credited with bookkeeping entries for interest, compounded annually, earned at a
rate two (2) percent above the prime commercial lending rate published in the
Wall Street Journal on such date or the last preceding business day, first using
the rate in effect on the date the Plan was adopted and using the prime rate in
effect on May 1 each year thereafter.
6.05 Non-Assignability of Accounts.
(a) The interests of the Participant in the Stock Unit Account or the Cash
Compensation Account shall not be assignable or otherwise available to the
Participant until actually paid to the Participant or Beneficiary following a
Distribution Event under this Plan.
(b) The interests of the Participant in the Stock Unit Account and Cash
Compensation Account shall not be subject to the rights of creditors of the
Participant and shall be exempt from execution, attachment and all other legal
or equitable process of such creditors.
ARTICLE VII
Distributions from the Plan
7.01 Distribution Events. A Participant or Beneficiary under this Plan shall be
eligible to receive a Benefit Payment under this Plan only upon the occurrence
of a Distribution Event, which shall be deemed to occur on:
(a) The date on which a Participant ceases to be a member of the Board due to
the Participant’s retirement and such cessation of membership constitutes a
(b) The date on which a Participant ceases to be a member of the Board due to
death or Total Disability.
(c) The date on which a Participant ceases to be a member of the Board for any
reason other than for death, retirement, Total Disability or Termination with
Cause and such cessation of membership constitutes a “separation from service”
within the meaning of Section 409A of the Code;
(d) The date on which a Change in Control becomes effective.
7.02 Benefit Payments.
(a)
Upon Retirement or Termination Without Cause. Upon the occurrence of a
Distribution Event due to retirement or because the Participant ceases to be a
member of the Board for any reason other than for retirement, death, Total
Disability or Termination with Cause, the Plan Administrator shall distribute
the
7
resulting Benefit Payment to the Participant or the Participant’s Beneficiary as
soon as administratively possible following the date which is six (6) months
(the “Six (6) Month Date”) after the date of the Distribution Event and in no
event later than December 31 of the calendar year in which the Six (6) Month
Date occurs.
(b) Upon Death or Total Disability. Upon the occurrence of a Distribution
Event due to death or Total Disability, the Plan Administrator shall distribute
the resulting Benefit Payment to the Participant or Participant’s Beneficiary as
soon as administratively possible immediately following the date of
Participant’s death or Total Disability and in no event later than December 31
of the calendar year in which such date occurs.
(c) Change of Control. Upon the occurrence of a Distribution Event relating to
a Change of Control, the Plan Administrator shall distribute the resulting
Benefit Payment to the Participant or Participant’s Beneficiary as soon as
administratively possible following the Six (6) Month Date after the date of the
Distribution Event and in no event later than December 31 of the calendar year
in which the Six (6) Month Date occurs.
7.03 Termination With Cause. If a Participant ceases to be a member of the Board
as a result of Termination With Cause, then the Participant’s participation in
this Plan shall terminate automatically as of the date the Participant ceases to
be a member of the Board, and the Participant shall not be entitled to any
Benefit Payment under this Plan.
7.04 Mental or Legal Incompetence. The Company, in its sole discretion, may make
a Benefit Payment to the guardian or other legal representative of a Participant
or Beneficiary, if the Participant or Beneficiary is determined by a court of
proper jurisdiction to be mentally or legally incompetent to receive such
benefit distribution. Any such distribution shall be in full and complete
satisfaction of all claims whatsoever by or on behalf of such Participant under
this Plan against the Company, the Plan Administrator, any member of the Board,
other Participants, shareholders of the Company, and any other person acting on
behalf such persons or the Company.
ARTICLE VIII
Participant Rights
8.01 Rights to Benefits. The rights and status of a Participant or Beneficiary
to the distribution of benefits or the payment of amounts under this Plan shall
be the same as the rights and status of any other general and unsecured creditor
of the Company. If the Company segregates assets in a separate fund or trust for
the payment of amounts under this Plan, such fund or trust does not create in
any Participant or Beneficiary a greater interest or status than that of a
general and unsecured creditor.
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8.02 Director Rights. No member of the Board shall have any claim or right to
benefits under this Plan, except as specifically provided in this Plan and
authorized by the Plan Administrator.
8.03 Fiduciary Indemnity. No Participant or Beneficiary shall look to, or have
any claim whatsoever against any person acting on behalf of the Company for the
distribution or payment of benefits under this Plan.
ARTICLE IX
Miscellaneous
9.01 Not an Employment Contract. THIS PLAN IS NOT AN EMPLOYMENT CONTRACT.
Participants are and shall continue to be non-employee directors. Nothing in
this Plan shall be construed to limit in any way the right of a Participant to
terminate the Participant’s services as a member of the Board, or the right of
the shareholders or Board to terminate the director’s services as a member of
the Board.
9.02 Amendment or Termination. The Company shall have the right to amend or
terminate this Plan at any time. However, any such action shall not modify the
obligation of the Company to pay a benefit to any Participant, determined as of
the date of such amendment or termination, except to the extent that such
modification is mutually agreed to by the Participant and the Company. Absent a
mutual agreement, the benefit of a Participant shall not be less than the
benefit such Participant would be entitled to receive under this Plan, as of the
date of such amendment or termination of this Plan.
9.03 Indemnification. The Company shall indemnify and hold harmless any employee
who may act on behalf of the Company in the administration of this Plan from and
against liability, loss, cost or expense (including reasonable attorneys’ fees)
incurred at any time as a result of or in connection with any claims, demands,
actions or causes of action of any person, Participant or Beneficiary, any
person claiming a benefit through or under any of them, or any other person,
party or authority claiming to have an interest in this Plan or standing to act
for any persons or groups having an interest in this Plan, for or on account of,
any of the acts or omissions (or alleged acts or omissions) of any employee,
director or officer of the Company, the Plan Administrator, or any individual
acting on behalf of the Plan Administrator, except to the extent resulting from
such person’s willful misconduct.
9.04 Tax Effects. The Company makes no warranties or representations with regard
to the tax effects or results of this Plan. Any Participant participating under
this Plan shall be deemed to have relied upon the Participant’s own tax advisors
with regard to such effects.
9.05 No Assignment; Binding Effect. Neither Participants nor Beneficiaries shall
have the right to alienate, assign, commute or otherwise encumber an Account or
potential benefit due under this Plan for any purpose whatsoever, and any
attempt to do so shall be disregarded completely as null and void. The
provisions of this Plan shall be binding on each Participant and on any other
person or entity that claims a benefit under this Plan.
9
9.06 Governing Law. This Plan shall be construed in accordance with the laws of
the State of Texas to the extent that such laws are not preempted by ERISA or
other federal laws.
9.07 Expenses. The Company shall pay all costs, expenses and fees incurred in
providing services to the Plan and all other costs and expenses of administering
and operating the Plan.
9.08 No Funding Required. The Company is not required to fund this Plan. It is
the Company’s intention that this Plan be construed as an unfunded deferred
compensation plan maintained for non-employee members of the Board.
9.09 It is the intention that the provisions of this Plan comply with
Section 409A of the Code and the rules, regulations and other authorities
promulgated thereunder (including the transition rules thereof) and all
provisions of this Plan will be construed and interpreted in a manner consistent
with Section 409A of the Code.
9.10 Entire Agreement. This Plan, as amended from time to time and supplemented
with a properly completed and executed Enrollment Form, represents the entire
agreement made between such Participant and the Company with regard to all
matters contained herein.
9.11 Severability. If any provision of this Plan is held to be illegal or
invalid for any reason, such illegality or invalidity shall not affect the
remaining parts of this Plan, and the remaining parts of this Plan shall be
construed and enforced as if such illegal and invalid provisions had never been
included.
IN WITNESS WHEREOF, the Company has executed this Plan as of this 12th day of
February, 2008.
By: /s/ Mark E. Watson III Attest: /s/ Barbara C. Bufkin Title:
President and CEO Title: Senior Vice President
10 |
Exhibit 99.1 News Contact: Eyal Harari VP Products and Marketing +972-77-774-5030 eyalh@radcom.com FOR IMMEDIATE RELEASE RADCOM wins a Multimillion Dollar LTE Deal Sixth LTE Deal Recently TEL AVIV, Israel – May 3, 2013 − RADCOM Ltd. (NASDAQ: RDCM), a leading service assurance provider, today announced the initial phase of a multi-million dollar, multi-year deal with a Tier 1 Asian operator. RADCOM’s end-to-end LTE monitoring solution will provide service assurance for one of the largest planned LTE deployments in the world. This is the sixth LTE contract RADCOM has entered recently; thus positioning RADCOM as a leader in the rapidly developing market for LTE monitoring and service assurance solutions. The ability to provide a real time feed to policy control components in the network using the QiSolve application was a major advantage for RADCOM in this deal, as it allows the service provider to maximize on RAN (Radio Access Network) monetization, as they expand network coverage. RADCOM’s Service Assurance solution for LTE, will monitor the subscribers’ QoE and provide powerful troubleshooting tools to rapidly resolve issues; thereby ensuring smooth running of the network. “We are proud to announce this major deal. RADCOM’s LTE solution was selected by this major operator after a long comparison process against leading competitors, due to its technological advantages,” said David Ripstein, RADCOM’s President and CEO. “RADCOM’s solution continues to be at the forefront of technology, and provide our customers with innovative solutions.” About RADCOM RADCOM develops, manufactures, markets and supports innovative network test and service monitoring solutions for communications service providers and equipment vendors. The Company specializes in next-generation Cellular as well as IMS, Voice, Data and VoIP networks. Its solutions are used in the development and installation of network equipment and in the maintenance and customer-care of operational networks. The Company's products facilitate fault management, network service performance monitoring and analysis, troubleshooting and pre-mediation. RADCOM's shares are listed on the NASDAQ Capital Market under the symbol RDCM. For more information, please visit www.RADCOM.com. Risks Regarding Forward-Looking Statements Certain statements made herein that use the words “estimate,” “project,” “intend,” “expect,” “believe” and similar expressions are intended to identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks and uncertainties that could cause the actual results, performance or achievements of RADCOM to be materially different from those that may be expressed or implied by such statements, including, among others, changes in general economic and business conditions and specifically, decline in the demand for RADCOM’s products, inability to timely develop and introduce new technologies, products and applications, and loss of market share and pressure on prices resulting from competition. For additional information regarding these and other risks and uncertainties associated with RADCOM’s business, reference is made to RADCOM’s reports filed from time to time with the United States Securities and Exchange Commission. RADCOM does not undertake to revise or update any forward-looking statements for any reason.
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Exhibit 10.4
EXECUTION VERSION
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this “Pledge Agreement”), dated as of October 24, 2008,
is by and among each of the subsidiaries of Transmeridian Exploration
Incorporated (“Parent”) listed on the signature pages hereof (collectively, and
together with the Additional Pledgors (as defined in Section 23), the
“Pledgors”), The Bank of New York Mellon (formerly known as The Bank of New
York), in its capacity as Collateral Agent for the benefit of the Secured
Parties referred to below (in such capacity, the “Collateral Agent”), The Bank
of New York Mellon, in its capacity as trustee under the Original Indenture
referred to below (in such capacity, the “Original Trustee”), and The Bank of
New York Mellon, in its capacity as trustee under the New Indenture referred to
below (in such capacity, the “New Trustee”).
RECITALS
WHEREAS, pursuant to that certain Indenture, dated as of December 12, 2005, as
amended by the First, Second and Third Supplemental Indentures thereto, dated as
of December 22, 2005, May 24, 2006 and the date hereof, respectively, by and
among each Pledgor, Transmeridian Exploration Inc. (“Issuer”), the Original
Trustee and the other Guarantors from time to time party thereto (as further
“Original Indenture”), Issuer has issued an aggregate $290 million principal
amount of its senior secured notes due 2010 (the “Original Notes”);
WHEREAS, pursuant to that certain Indenture, dated as of the date hereof, by and
among each Pledgor, Issuer, the New Trustee and the other Guarantors from time
to time party thereto (as amended, restated, supplemented or otherwise modified
from time to time, the “New Indenture” and, together with the Original
Indenture, the “Indentures”), Issuer will issue its senior secured notes due
2010 (the “New Notes” and, together with the Original Notes, the “Notes”) in
exchange for all or a portion of the Original Notes;
WHEREAS, pursuant to the terms of the Original Indenture, the Original Notes and
each Pledgor’s payment obligations under the Original Indenture, including
obligations to the Original Trustee, will be secured, in part, by a full and
unconditional guarantee by such Pledgor (with respect to each Pledgor, the
“Original Guarantee”) and, in turn, the Original Guarantee will be secured by,
in part, a pledge of all existing and future intercompany indebtedness owed to
each such Pledgor by Parent, Issuer or any other Restricted Subsidiary;
WHEREAS, pursuant to the terms of the New Indenture, the New Notes and each
Pledgor’s payment obligations under the New Indenture, including obligations to
the New Trustee, will be secured, in part, by a full and unconditional guarantee
by such Pledgor (with respect to each Pledgor, the “New Guarantee”) and, in
turn, the New Guarantee will be secured by, in part, a pledge of all existing
and future intercompany indebtedness owed to each such Pledgor by Parent, Issuer
or any other Restricted Subsidiary;
WHEREAS, pursuant to the terms of the Original Indenture and the New Indenture,
each Pledgor shall have granted the security interests in the Pledged Collateral
(as defined below) contemplated under this Pledge Agreement in favor of the
Collateral Agent for the ratable benefit of the holders of the Original Notes,
the holders of the New Notes, the Original Trustee, the New Trustee and the
Collateral Agent (collectively, the “Secured Parties”) to secure the Secured
Obligations (as defined below); and
WHEREAS, each Pledgor, the Collateral Agent, the Original Trustee and the New
Trustee have each agreed to enter into this Pledge Agreement pursuant to the
terms of the Original Indenture and the New Indenture to provide that the
security interests granted by each Pledgor in the Pledged Collateral in favor of
the Collateral Agent shall be granted for the ratable benefit of the Secured
Parties, to secure, among other things, the obligations of each Pledgor under
each of the Indentures.
NOW, THEREFORE, in consideration of these premises and other good and valuable
1. Definitions. The following terms that are defined in the Uniform Commercial
Code from time to time in effect in the State of New York (the “UCC”) are used
herein as so defined: Certificated Security, Control, Entitlement Order,
Financial Asset, Instrument (as defined in Section 9-102(47) of the UCC),
Investment Company Security, Securities Account, Security, Security Entitlement,
Securities Intermediary and Uncertificated Security. As used herein, the
following terms shall have the meanings ascribed to such terms in each of the
Indentures (and for greater certainty, shall be inclusive of all such meanings):
“Guarantor”, “Lien”, “Permitted Lien”, “Person” and “Restricted Subsidiary”.
2. Pledge and Grant of Security Interest. Subject to the terms and conditions of
this Pledge Agreement and to secure the performance of the Secured Obligations,
each Pledgor hereby pledges and grants to the Collateral Agent, for the ratable
benefit of the Secured Parties, a continuing security interest in any and all
right, title and interest of such Pledgor in and to the following, whether now
owned or existing or owned, acquired, or arising hereafter (collectively, the
“Pledged Collateral”):
(a) Pledged Debt. All of the existing and future indebtedness owed to such
Pledgor by Parent, Issuer or any Restricted Subsidiary, including all
indebtedness listed on Schedule 2(a) hereto and issued by the obligors named
therein, and any future indebtedness owed to such Pledgor by any obligor listed
on Schedule 2(a) hereto (collectively, together with the other interests
described in clauses (A) and (B) of this Section 2(a), the “Pledged Debt”),
(A) the instruments, if any, evidencing the Pledged Debt, and all interest,
cash, instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of the Pledged
Debt; and
(B) all additional indebtedness from time to time owed to such Pledgor by any
obligor listed on Schedule 2(a) or any other Restricted Subsidiary and the
instruments, if any, evidencing such indebtedness, and all interest, cash,
instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such
indebtedness, in each case whether or not reflected on Schedule 2(a) and whether
or not Schedule 2(a) is amended to refer to such additional indebtedness.
(b) Proceeds. All proceeds and products of the foregoing, however and whenever
acquired and in whatever form, subject to Section 10(d).
Without limiting the generality of the foregoing, it is hereby specifically
understood and agreed that each Pledgor may from time to time hereafter pledge
and deliver additional indebtedness or instruments evidencing indebtedness, to
the Collateral Agent as collateral security for the Secured Obligations. Upon
such pledge and delivery to the Collateral Agent, such additional indebtedness
or debt instruments, as the case may be, shall be deemed to be part of the
Pledged Collateral and shall be subject to the terms of this Pledge Agreement
whether or not Schedule 2(a) is amended to refer to such additional indebtedness
or instruments.
3. Security for Secured Obligations. In the case of each Pledgor, the security
interest created hereby in the Pledged Collateral of such Pledgor constitutes
continuing collateral security for all of the following, whether now existing or
hereafter incurred (the “Secured Obligations”): (a) the
2
Original Guarantee of such Pledgor and the payment and performance by such
Pledgor of all of its obligations under the Original Guarantee; (b) the New
Guarantee of such Pledgor and the payment and performance by such Pledgor of all
of its obligations under the New Guarantee; (c) all expenses and charges, legal
and otherwise, incurred by the Collateral Agent, the Original Trustee and/or the
holders of the Original Notes in enforcing such Pledgor’s obligations under the
Original Guarantee or in realizing on or protecting any security therefor,
including without limitation the security granted hereunder; and (d) all
expenses and charges, legal and otherwise, incurred by the Collateral Agent, the
New Trustee and/or the holders of the New Notes in enforcing such Pledgor’s
obligations under the New Guarantee or in realizing on or protecting any
security therefor, including without limitation the security granted hereunder.
4. Delivery of the Pledged Collateral; Perfection of Security Interest. Each
Pledgor hereby agrees that:
(a) Delivery of Instruments. Such Pledgor shall deliver as security to the
Collateral Agent, (i) simultaneously with or prior to this Pledge Agreement
becoming effective, all instruments representing or evidencing the Pledged Debt
owned by such Pledgor (excluding, unless an Event of Default (as defined below)
has occurred and is continuing and the Collateral Agent has requested such
delivery, Pledged Debt in an aggregate principal amount not in excess of
$100,000), in each case together with the delivery of signed, undated
instruments of transfer for the Pledged Debt to the Collateral Agent or its
designee; and (ii) promptly upon the receipt thereof by or on behalf of such
Pledgor, all other instruments constituting Pledged Debt owned by such Pledgor
(except, unless an Event of Default has occurred and is continuing and the
Collateral Agent has requested such delivery, instruments representing Pledged
Debt in an aggregate principal amount not in excess of $100,000). Prior to
delivery to the Collateral Agent, all such instruments constituting Pledged Debt
of each Pledgor shall be held in trust by each such Pledgor for the benefit of
the Collateral Agent pursuant hereto. All such instruments shall be delivered in
suitable form for transfer by delivery or shall be accompanied by duly executed
instruments of transfer or assignment in blank, in forms reasonably acceptable
to the Collateral Agent.
(b) Financing Statements; Other Perfection Actions. Such Pledgor hereby agrees
to prepare and file such financing statements (including continuation
statements) or amendments thereof or supplements thereto or other instruments as
are necessary or appropriate in order to perfect and maintain the security
interests granted hereunder in accordance with the UCC that specifically
describes the Pledged Collateral in such manner as is necessary or advisable.
Each Pledgor shall also execute and deliver to the Collateral Agent and/or file
such agreements, assignments or instruments (including affidavits, notices,
reaffirmations, amendments and restatements of existing documents and, subject
to the terms of each Indenture, any documents as may be necessary if the law of
any jurisdiction other than New York becomes or is applicable to the Pledged
Collateral or any portion thereof, in each case, including as the Collateral
Agent may reasonably request) and do all such other things as are necessary or
appropriate (i) to assure to the Collateral Agent its security interests
hereunder are perfected, including such financing statements (including
continuation statements) or amendments thereof or supplements thereto or other
instruments, including as the Collateral Agent may from time to time reasonably
request in order to perfect and maintain the security interests granted
hereunder in accordance with the UCC and any other personal property security
legislation in the appropriate jurisdictions, (ii) to consummate the
transactions contemplated hereby and (iii) to otherwise protect and assure the
Collateral Agent of its rights and interests hereunder.
5. Representations and Warranties. Each Pledgor hereby represents and warrants
to the Collateral Agent for the benefit of the Secured Parties that:
(a) Authorization of Pledged Collateral. The Pledged Debt pledged by such
Pledgor hereunder has been duly authorized, authenticated or issued and
delivered, is the legal, valid and binding obligation of the issuers thereof, is
evidenced by one or more promissory notes (which promissory notes, to the extent
required hereunder, have been delivered to the Collateral Agent) and is not in
default.
3
(b) Title. Such Pledgor has good and indefeasible title to the Pledged
Collateral pledged by such Pledgor hereunder and will at all times be the legal
and beneficial owner of such Pledged Collateral free and clear of any Lien,
other than Permitted Liens.
(c) Exercising of Rights. The exercise by the Collateral Agent of its rights and
remedies hereunder will not violate any law or governmental regulation or any
material contractual restriction binding on or affecting such Pledgor or any of
its property.
(d) Pledgors’ Authority. No authorization, approval or action by, and no notice
or filing with any governmental authority, the obligor of any Pledged Debt or
third party is required either (i) for the pledge made by such Pledgor or for
the granting of the security interest by such Pledgor pursuant to this Pledge
Agreement or (ii) for the exercise by any Secured Party of its rights and
remedies hereunder (except as may be required by laws affecting the offering and
sale of securities) in respect of the Pledged Collateral pledged by such Pledgor
hereunder.
(e) Security Interest/Priority. This Pledge Agreement creates a valid security
interest in favor of the Collateral Agent, for the ratable benefit of the
Secured Parties, in the Pledged Collateral pledged by such Pledgor hereunder.
The taking of possession by the Collateral Agent of the instruments (if any)
representing the Pledged Collateral of such Pledgor and the relevant instruments
of transfer and all other instruments constituting Pledged Collateral of such
Pledgor will perfect and establish the first priority of the Collateral Agent’s
security interest in all such Pledged Collateral consisting of Instruments. Upon
the filing of a UCC financing statement describing the Pledged Collateral in the
applicable filing office in the State of Texas or the District of Columbia, as
applicable, and the filing of such other documents and/or the taking by such
Pledgor of such other actions as may be required in such Pledgor’s jurisdiction
of organization and/or in the jurisdiction of organization of any applicable
obligor, issuer, partnership or limited liability company in order to perfect
such security interest, the Collateral Agent shall have a first priority
perfected security interest in all Pledged Debt of such Pledgor not evidenced by
an Instrument. Except as set forth in this Section 5(e), no action is necessary
to perfect the Collateral Agent’s security interest in respect of the Pledged
Collateral pledged by such Pledgor hereunder.
6. Covenants. Each Pledgor hereby covenants and agrees with the Collateral Agent
that it shall:
(a) Defense of Title. Warrant and defend title to and ownership of the Pledged
Collateral of such Pledgor at its own expense against the claims and demands of
all other parties claiming an interest therein; keep such Pledged Collateral
free from all Liens, other than Permitted Liens; and not sell, exchange,
transfer, assign, lease or otherwise dispose of such Pledged Collateral or any
interest therein, except as permitted under the Indentures.
(b) Further Assurances. Subject to the terms of the Indentures, promptly execute
and deliver at its expense all further instruments and documents and take all
further action that may be necessary and desirable or that the Collateral Agent
may request in order to (i) perfect and protect the security interest created
hereby in the Pledged Collateral of such Pledgor (including, without limitation,
filing of UCC financing statements and any and all other actions reasonably
necessary to satisfy the Collateral Agent that the Collateral Agent has obtained
a first priority perfected security interest in all such Pledged Collateral) and
(ii) enable the Collateral Agent to exercise and enforce its rights and remedies
hereunder in respect of the Pledged Collateral pledged by such Pledgor
hereunder.
(c) Amendments. Not make or consent to any amendment or other modification or
waiver with respect to any of the Pledged Collateral of such Pledgor or enter
into any agreement or allow to exist any restriction with respect to any of such
Pledged Collateral other than pursuant hereto or as may be permitted under the
Indentures.
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(d) Compliance with Securities Laws. File all reports and other information now
or hereafter required to be filed by such Pledgor with the United States
Securities and Exchange Commission and any other state, federal or foreign
agency in connection with the ownership of the Pledged Collateral of such
Pledgor.
7. Performance of Obligations; Advances by Collateral Agent. (a) On failure of
any Pledgor to perform any of the covenants and agreements contained herein, the
Collateral Agent may, at its sole option and in its sole discretion, but shall
not be required to, perform or cause to be performed the same and in so doing
may expend such sums as the Collateral Agent may reasonably deem advisable in
the performance thereof, including, without limitation, the payment of any
insurance premiums, the payment of any taxes, a payment to obtain a release of a
Lien or potential Lien (other than in either case a Permitted Lien),
expenditures made in defending against any adverse claim and all other
expenditures which the Collateral Agent may make for the protection of the
security interest hereof or may be compelled to make by operation of law. All
such sums and amounts so expended shall be repayable by the applicable Pledgor
promptly upon timely notice thereof and demand therefor and shall constitute
additional Secured Obligations. No such performance of any covenant or agreement
by the Collateral Agent on behalf of any Pledgor, and no such advance or
expenditure therefor, shall relieve any Pledgor of any default under the terms
of this Pledge Agreement or either Indenture. The Collateral Agent may make any
payment hereby authorized in accordance with any bill, statement or estimate
procured from the appropriate public office or holder of the claim to be
discharged without inquiry into the accuracy of such bill, statement or estimate
or into the validity of any tax assessment, sale, forfeiture, tax lien, title or
claim except to the extent such payment is being contested in good faith by the
applicable Pledgor in appropriate proceedings and against which adequate
reserves are being maintained in accordance with generally accepted accounting
principles in the United States of America, as in effect from time to time.
(b) Each Pledgor covenants and agrees to indemnify the Collateral Agent to the
same extent as each of the Original Trustee and the New Trustee is indemnified
under the terms of the applicable Indenture by Issuer, for any claims, costs,
liabilities or expense of any kind (including the fees and expenses of counsel)
arising out of or in connection with performance of its duties hereunder or with
respect to the Escrow Agreement, dated as of December 12, 2005, among Issuer,
the Original Trustee and The Bank of New York, as escrow agent (as amended,
restated, supplemented or otherwise modified from time to time), and such
expenses shall, until paid in full, constitute additional Secured Obligations.
8. Events of Default. The occurrence of an event which under the Original
Indenture would constitute an “Event of Default” (as defined in the Original
Indenture), or the occurrence of an event which under the New Indenture would
constitute an “Event of Default” (as defined in the New Indenture), in each case
shall be an event of default hereunder (each such event, an “Event of Default”).
9. Remedies.
(a) General Remedies. Upon the occurrence of an Event of Default and during the
continuation thereof, the Collateral Agent shall have, in respect of the Pledged
Collateral, in addition to the rights and remedies provided herein and in the
applicable Indenture, the rights and remedies of a secured party under the UCC
or any other applicable law.
(b) Sale of Pledged Collateral. Upon the occurrence of an Event of Default and
during the continuation thereof, without limiting the generality of this
Section 9 and without notice, the Collateral Agent may, in its sole discretion,
sell or otherwise dispose of or realize upon the Pledged Collateral, or any part
thereof, in one or more parcels, at public or private sale, at any exchange or
broker’s board or elsewhere, at such price or prices and on such other terms as
the Collateral Agent may deem commercially reasonable, for cash, credit or for
future delivery or otherwise in accordance with applicable law. To the extent
permitted by law, any holder of a Note may, in such event, bid for
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the purchase of such Pledged Collateral. Each Pledgor agrees that, to the extent
notice of sale shall be required by law and has not been waived by such Pledgor,
any requirement of reasonable notice shall be met if notice, specifying the
place of any public sale or the time after which any private sale is to be made,
is personally served on or mailed, postage prepaid, to such Pledgor, in
accordance with Section 16 at least ten (10) days before the time of such sale.
The Collateral Agent shall not be obligated to make any sale of Pledged
Collateral regardless of notice of sale having been given. The Collateral Agent
may adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned.
(c) Private Sale. Upon the occurrence of an Event of Default and during the
continuation thereof, each Pledgor recognizes that the Collateral Agent may deem
it impracticable to effect a public sale of all or any part of the Pledged
Collateral and that the Collateral Agent may, therefore, determine to make one
or more private sales of any such Pledged Collateral to a restricted group of
purchasers. Each Pledgor acknowledges that any such private sale may be at
prices and on terms less favorable to the seller than the prices and other terms
which might have been obtained at a public sale and, notwithstanding the
foregoing, agrees that such private sale shall be deemed to have been made in a
commercially reasonable manner. Each Pledgor further acknowledges and agrees
that any offer to sell such Pledged Collateral which has been (i) publicly
advertised on a bona fide basis in a newspaper or other publication of general
circulation in the financial community of New York, New York, or (ii) made
privately in the manner described above, shall be deemed to involve a “public
sale” under the UCC, and the Collateral Agent or any holder of the Notes may, in
such event, bid for the purchase of such Pledged Collateral, in each case except
to the extent limited or prohibited by applicable law.
(d) Retention of Pledged Collateral. In addition to the rights and remedies
hereunder, upon the occurrence of an Event of Default and during the
continuation thereof, the Collateral Agent may, after providing the notices
required by Sections 9-620 and 9-621 of the UCC (or any successor sections of
the UCC) or otherwise complying with the notice requirements of applicable law
of the relevant jurisdiction, accept or retain all or any portion of the Pledged
Collateral in satisfaction of the Secured Obligations. Unless and until the
Collateral Agent shall have provided such notices, however, the Collateral Agent
shall not be deemed to have retained any Pledged Collateral in satisfaction of
any Secured Obligations for any reason.
(e) Deficiency. In the event that the proceeds of any sale, collection or
realization are insufficient to pay all amounts to which the Collateral Agent or
any other Secured Party are legally entitled, each applicable Pledgor shall be
liable for the deficiency, together with the costs of collection and the
reasonable fees of any attorneys employed by the Collateral Agent to collect
such deficiency. Any surplus remaining after the full payment and satisfaction
of the Secured Obligations shall be returned to each applicable Pledgor or to
whomsoever a court of competent jurisdiction shall determine to be entitled
thereto.
(f) Other Security. To the extent that any of the Secured Obligations are now or
hereafter secured by property other than the Pledged Collateral (including,
without limitation, real and other personal property owned by any Pledgor), or
by a guarantee, endorsement or property of any other Person, then the Collateral
Agent shall have the right to proceed against such other property, guarantee or
endorsement upon the occurrence and during the continuation of any Event of
Default, and the Collateral Agent shall have the right, in its sole discretion,
to determine which rights, security, Liens, security interests or remedies the
Collateral Agent shall at any time pursue, relinquish, subordinate, modify or
take with respect thereto, without in any way modifying or affecting any of
them, any of the Collateral Agent’s rights or the Secured Obligations under this
Pledge Agreement or under either Indenture.
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(g) Enforcement Not Limited. It is understood and agreed that (i) upon the
occurrence and during the continuation of an “Event of Default” (as defined in
the Original Indenture), the Original Trustee may take and continue, and direct
the Collateral Agent to take and continue, in each case to the extent permitted
by the Original Indenture and applicable law, any enforcement action with
respect to the Note Obligations (as defined in the Original Indenture) and the
Pledged Collateral in such order and manner as it may determine in its sole
discretion and (ii) upon the occurrence and during the continuation of an “Event
of Default” (as defined in the New Indenture), the New Trustee may take and
continue, and direct the Collateral Agent to take and continue, in each case to
the extent permitted by the New Indenture and applicable law, any enforcement
action with respect to the Note Obligations (as defined in the New Indenture)
and the Pledged Collateral in such order and manner as it may determine in its
sole discretion; provided that, (i) the Original Trustee and the New Trustee
shall cooperate in good faith with the Collateral Agent in the orderly
administration of the Pledged Collateral in connection with an exercise of
remedies hereunder or under the applicable Indentures and (ii) all proceeds of
the Pledged Collateral (howsoever realized and whomsoever realizing the same)
shall in any event be applied ratably to the Secured Obligations in accordance
with Section 11 hereof.
10. Rights of the Collateral Agent.
(a) Power of Attorney. Each Pledgor hereby designates and appoints the
Collateral Agent, on behalf of the Secured Parties, and each of its designees or
agents as attorney-in-fact of such Pledgor, irrevocably and with power of
substitution, with authority to take any or all of the following actions upon
the occurrence and during the continuation of an Event of Default:
(i) to demand, collect, settle, compromise, adjust and give discharges and
releases concerning the Pledged Collateral of such Pledgor, all as the
Collateral Agent may reasonably determine in respect of the Pledged Collateral;
(ii) to commence and prosecute any actions at any court for the purposes of
collecting any of the Pledged Collateral and enforcing any other right in
respect thereof;
(iii) to defend, settle, adjust or compromise any action, suit or proceeding
brought with respect to the Pledged Collateral and, in connection therewith,
give such discharge or release as the Collateral Agent may deem to be reasonably
appropriate;
(iv) to pay or discharge taxes, Liens, security interests, or other encumbrances
levied or placed on or threatened against the Pledged Collateral;
(v) to direct any parties liable for any payment under any of the Pledged
Collateral to make payment of any and all monies due and to become due
thereunder directly to the Collateral Agent or as the Collateral Agent shall
direct;
(vi) to receive payment of and receipt for any and all monies, claims, and other
amounts due and to become due at any time in respect of or arising out of any of
the Pledged Collateral;
(vii) to sign and endorse any drafts, assignments, verifications, notices and
other documents relating to the Pledged Collateral;
(viii) to execute and deliver and/or file all assignments, conveyances,
statements, financing statements, continuation statements, pledge agreements,
affidavits, notices and other agreements, instruments and documents that the
Collateral Agent may determine necessary in order to perfect and maintain the
security interests and Liens granted in this Pledge Agreement and in order to
fully consummate all of the transactions contemplated herein;
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(ix) to exchange any of the Pledged Collateral or other property upon any
merger, consolidation, reorganization, recapitalization or other readjustment of
the obligor thereof and, in connection therewith, deposit any of the Pledged
Collateral with any committee, depository, transfer agent, registrar or other
designated agency upon such terms as the Collateral Agent may determine;
(x) to sign an instrument in writing, sanctioning the transfer of any or all of
the Pledged Collateral into the name of the Collateral Agent or into the name of
any transferee to whom the Pledged Collateral or any part thereof may be sold
pursuant to Section 9 hereof; and
(xi) to do and perform all such other acts and things as the Collateral Agent
may reasonably deem to be necessary, proper or convenient in connection with the
Pledged Collateral.
This power of attorney is a power coupled with an interest and shall be
irrevocable for so long as any of the Secured Obligations (other than contingent
indemnity obligations that survive termination of the applicable Indenture
pursuant to the stated terms thereof) remain outstanding. The Collateral Agent
shall be under no duty to exercise or withhold the exercise of any of the
rights, powers, privileges and options expressly or implicitly granted to the
Collateral Agent in this Pledge Agreement, and shall not be liable for any
failure to do so or any delay in doing so. The Collateral Agent shall not be
liable for any act or omission or for any error of judgment or any mistake of
fact or law in its individual capacity or its capacity as attorney-in-fact
except acts or omissions resulting from its gross negligence or willful
misconduct. This power of attorney is conferred on the Collateral Agent solely
to perfect, protect, preserve and realize upon its security interest in the
Pledged Collateral.
(b) Assignment by the Collateral Agent. The Collateral Agent may from time to
time assign the Secured Obligations or any portion thereof and/or the Pledged
Collateral or any portion thereof to a successor Collateral Agent, and the
assignee shall be entitled to all of the rights and remedies of the Collateral
Agent under this Pledge Agreement in relation thereto.
(c) The Collateral Agent’s Duty of Care. Other than the exercise of reasonable
care to assure the safe custody of the Pledged Collateral while being held by
the Collateral Agent hereunder, the Collateral Agent shall have no duty or
liability to preserve rights pertaining thereto, it being understood and agreed
that the Pledgors shall be responsible for preservation of all rights in the
Pledged Collateral, and the Collateral Agent shall be relieved of all
responsibility for the Pledged Collateral upon surrendering it or tendering the
surrender of it to any Pledgor. The Collateral Agent shall be deemed to have
exercised reasonable care in the custody and preservation of the Pledged
Collateral in its possession if such Pledged Collateral is accorded treatment
substantially equal to that which the Collateral Agent accords its own property,
which shall be no less than the treatment employed by a reasonable agent in the
industry, it being understood that the Collateral Agent shall not have
responsibility for (i) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities or other matters relating to any Pledged
Collateral, whether or not the Collateral Agent has or is deemed to have
knowledge of such matters, or (ii) taking any necessary steps to preserve rights
against any parties with respect to any Pledged Collateral.
(d) Distribution Rights in Respect of the Pledged Collateral.
(i) So long as no Event of Default shall have occurred and be continuing, each
Pledgor may receive and retain any and all distributions or interest paid in
respect of the Pledged Collateral of such Pledgor to the extent they are allowed
under the Indentures.
8
(ii) Upon the occurrence and during the continuation of an Event of Default:
(A) all rights of each Pledgor to receive the distributions and interest
payments which it would otherwise be authorized to receive and retain pursuant
to paragraph (i) of this subsection (d) shall cease and all such rights shall
thereupon be vested in the Collateral Agent, which shall then have the sole
right to receive and hold as Pledged Collateral such distributions and interest
payments; and
(B) all distributions and interest payments which are received by any Pledgor
contrary to the provisions of clause (A) of this subsection (ii) shall be
received in trust for the benefit of the Collateral Agent, shall be segregated
from other property or funds of such Pledgor, and shall be forthwith paid over
to the Collateral Agent as Pledged Collateral in the exact form received, to be
held by the Collateral Agent as Pledged Collateral and as further collateral
security for the Secured Obligations.
(e) Release of Pledged Collateral. The Collateral Agent may release any of the
Pledged Collateral from this Pledge Agreement or may substitute any of the
Pledged Collateral for other Pledged Collateral without altering, varying or
diminishing in any way the force, effect, Lien, pledge or security interest of
this Pledge Agreement as to any Pledged Collateral not expressly released or
substituted, and this Pledge Agreement shall continue as a first priority Lien
on all Pledged Collateral not expressly released or substituted.
11. Application of Proceeds.
(a) After the exercise of remedies by (i) the Collateral Agent, (ii) the
Original Trustee (or the holders of the Original Notes under Section 6.5 of the
Original Indenture), or (iii) the New Trustee (or the holders of the New Notes
under Section 6.5 of the New Indenture), any proceeds of the Pledged Collateral,
when received by the Collateral Agent or any other Secured Party in cash or its
equivalent, will be applied ratably in reduction of the outstanding Secured
Obligations (and, as to the Secured Obligations in respect of the Original
Indenture, in the order of priority set forth in the Original Indenture and, as
to the Secured Obligations in respect of the New Indenture, in the order of
priority set forth in the New Indenture), and each Pledgor irrevocably waives
the right to direct the application of such payments and proceeds and
acknowledges and agrees that the Collateral Agent shall have the continuing and
exclusive right to apply and reapply any and all such proceeds in the Collateral
Agent’s sole discretion, notwithstanding any entry to the contrary upon any of
its books and records.
(b) In the event that the Collateral Agent receives the proceeds of any Pledged
Collateral pursuant to any exercise of remedies hereunder or under the
Indentures or the Security Documents, and any outstanding Secured Obligations
with respect to which such proceeds are to be applied are not yet due and
payable under the applicable Indenture, the Collateral Agent shall hold such
proceeds as additional Pledged Collateral security and will deposit such
proceeds in a segregated non-interest bearing account, to be applied in
reduction of such Secured Obligations as such Secured Obligations become due and
payable in accordance with the terms of the applicable Indenture.
(c) Any Pledged Collateral, including without limitation any such Pledged
Collateral constituting proceeds, that may be received by the Original Trustee
or holders of the Original Notes in violation of this Pledge Agreement or the
Indentures shall be segregated and held in trust and promptly paid over to the
Collateral Agent, for the ratable benefit of the Secured Parties entitled
thereto, in the same form as received, with any necessary endorsements, and the
Original Trustee hereby authorizes the Collateral Agent to make any such
endorsements as agent for the Original Trustee and the holders of the Original
Notes (which authorization, being coupled with an interest, is irrevocable until
such time as this Pledge Agreement is terminated in accordance with its terms).
Any Pledged Collateral, including without limitation any such Pledged Collateral
constituting proceeds, that may be received by the New Trustee or holders of the
New Notes in violation of this Pledge Agreement or the Indentures shall be
segregated and held in trust and promptly paid over to the
9
New Trustee hereby authorizes the Collateral Agent to make any such endorsements
as agent for the New Trustee and the holders of the New Notes (which
authorization, being coupled with an interest, is irrevocable until such time as
this Pledge Agreement is terminated in accordance with its terms).
12. Costs of Counsel. If at any time hereafter, whether upon the occurrence of
an Event of Default or not, the Collateral Agent employs counsel to prepare or
consider amendments, waivers or consents with respect to this Pledge Agreement,
or to take action or make a response in or with respect to any legal or arbitral
proceeding relating to this Pledge Agreement or relating to the Pledged
Collateral, or to protect the Pledged Collateral or exercise any rights or
remedies under this Pledge Agreement or with respect to the Pledged Collateral,
then each Pledgor agrees to promptly pay the costs and expenses of the
Collateral Agent in accordance with the terms of the Indentures, all of which
costs and expenses shall constitute Secured Obligations hereunder.
13. Continuing Agreement.
(a) This Pledge Agreement shall be a continuing agreement in every respect and
shall remain in full force and effect so long as any of the Secured Obligations
(other than contingent indemnity obligations that survive termination of the
applicable Indenture pursuant to the stated terms thereof) remain outstanding.
Upon such payment and termination, this Pledge Agreement shall be automatically
terminated and the Collateral Agent shall, upon the request and at the expense
of the Pledgors, forthwith release all of the Liens and security interests
granted hereunder and shall deliver all UCC termination statements and/or other
documents prepared by and reasonably requested by Pledgors evidencing such
termination. Upon any sale, lease, transfer or other disposition of any item of
Pledged Collateral of any Pledgor in accordance with the terms of the
Indentures, the Collateral Agent will, at such Pledgor’s expense, execute and
deliver to such Pledgor such documents as such Pledgor shall reasonably request
to evidence the release of such item of Pledged Collateral from the assignment
and security interest granted hereby. Notwithstanding the foregoing, all
releases and indemnities provided hereunder shall survive termination of this
Pledge Agreement.
(b) This Pledge Agreement shall continue to be effective or be automatically
reinstated, as the case may be, if at any time payment, in whole or in part, of
any of the Secured Obligations is rescinded or must otherwise be restored or
returned by the Collateral Agent or any other Secured Party as a preference,
fraudulent conveyance or otherwise under any bankruptcy, insolvency or similar
law, all as though such payment had not been made; provided that in the event
payment of all or any part of the Secured Obligations is rescinded or must be
restored or returned, all reasonable costs and expenses (including, without
limitation, any reasonable legal fees and disbursements) incurred by the
Collateral Agent or any other Secured Party in defending and enforcing such
reinstatement shall be deemed to be included as a part of the Secured
Obligations.
(c) Upon the payment in full of the Secured Obligations in respect of the
Original Indenture, the Collateral Agent and the Original Trustee, on behalf of
itself and the holders of the Original Notes, shall promptly execute and deliver
such customary release documents and instruments and shall take such further
actions (including any amendments hereto) as the Pledgors shall reasonably
request to evidence the release of the Liens hereunder in favor of the Original
Trustee and the holders of the Original Notes.
(d) Upon the payment in full of the Secured Obligations in respect of the New
Indenture, the Collateral Agent and the New Trustee, on behalf of itself and the
holders of the New Notes, shall promptly execute and deliver such customary
release documents and instruments and shall take such further actions (including
any amendments hereto) as the Pledgors shall reasonably request to evidence the
release of the Liens hereunder in favor of the New Trustee and the holders of
the New Notes.
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14. Amendments; Waivers; Modifications. This Pledge Agreement and the provisions
hereof may be amended, waived, modified, changed, discharged or terminated only
by a written instrument signed by the parties hereto.
15. Successors in Interest. This Pledge Agreement shall create a continuing
security interest in the Pledged Collateral and shall be binding upon each
Pledgor and its successors and assigns and shall inure, together with the rights
and remedies of the Collateral Agent hereunder, to the benefit of the Collateral
Agent and the other Secured Parties and their respective successors and
permitted assigns; provided, however, that no Pledgor may assign its rights or
delegate its duties hereunder without the prior written consent of the
Collateral Agent.
16. Notices. Any notice, consent, or other communication required or permitted
to be given under this Pledge Agreement to the Collateral Agent or any Pledgor
must be in writing in the English language and delivered in person, by facsimile
or by registered or certified mail, return receipt requested, postage prepaid,
as follows:
To Collateral Agent: The Bank of New York Mellon 101 Barclay Street – 4
East New York, NY 10286 Fax No.: 212-815-5802 (or 5803) Attention:
Global Structured Finance To any Pledgor: c/o Transmeridian Exploration
Incorporated 5847 San Felipe, Suite 4300 Houston, Texas 77057
Telephone: 713-458-1100 Fax No.: 713-781-6593 Attention: Chief Financial
Officer with a copy to: Akin Gump Strauss Hauer & Feld LLP 1111 Louisiana
Street, 44th Floor Houston, Texas 77002-5200 Telephone: 713-220-5800
Fax No.: 713-236-0822 Attention: James L. Rice III
Any such notice, consent, or other communication shall be deemed to have been
given when delivered in person, sent by confirmed fax or, if given by mail, five
(5) days after such communication is deposited in the mail, certified or
registered with return receipt requested.
17. Counterparts. This Pledge Agreement and any Pledge Agreement Supplement may
be executed in counterparts, each of which where so executed and delivered shall
be an original, but all of which shall constitute one and the same instrument.
It shall not be necessary in making proof of this Pledge Agreement or any Pledge
Agreement Supplement to produce or account for more than one such counterpart.
Delivery of executed counterparts of this Pledge Agreement or any Pledge
Agreement Supplement by telecopy or in “pdf” or similar format by electronic
mail shall be effective as an original and shall constitute a representation
that an original shall be delivered upon the request of the Collateral Agent.
18. Headings. The headings of the sections and subsections hereof are provided
for convenience only and shall not in any way affect the meaning, construction
or interpretation of any provision of this Pledge Agreement.
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19. Governing Law. THIS PLEDGE AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES THEREOF (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK
GENERAL OBLIGATIONS LAW).
20. Severability. If any provision of this Pledge Agreement is determined to be
illegal, invalid or unenforceable, such provision shall be fully severable and
the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
21. Entirety. This Pledge Agreement and the Indentures represent the entire
agreement of the parties hereto and thereto with respect to the subject matter
herein, and supersede all prior agreements and understandings, oral or written,
if any, including any correspondence relating to this Pledge Agreement or either
Indenture or the transactions contemplated herein and therein; provided that the
Original Trustee shall not be charged with knowledge of any provisions of the
New Indenture or any “Security Documents” (as defined in the New Indenture) and
the New Trustee shall not be charged with knowledge of any provisions of the
Original Indenture or any “Security Documents” (as defined in the Original
Indenture).
22. Rights of Note Holders. All rights of the Collateral Agent hereunder, if not
exercised by the Collateral Agent, may be exercised by the Original Trustee or
(subject to the terms of Section 6.5 of the Original Indenture) the holders of
the Original Notes or by the New Trustee or (subject to the terms of Section 6.5
of the New Indenture) the holders of the New Notes, subject in any such case to
the proviso to Section 9(g) hereof.
23. Additional Pledgors. Upon the execution and delivery by any Person of a
pledge agreement supplement in substantially the form of Exhibit A hereto (each
a “Pledge Agreement Supplement”), such Person shall be referred to as an
“Additional Pledgor” and shall be and become a Pledgor hereunder, and each
reference in this Pledge Agreement to a “Pledgor” shall also mean and be a
reference to such Additional Pledgor, each reference in this Pledge Agreement
and the Indentures to the “Collateral” or the “Pledged Collateral” shall also
mean and be a reference to the Pledged Collateral granted by such Additional
Pledgor and each reference in this Pledge Agreement to a Schedule shall also
mean and be a reference to the schedules attached to such Pledge Agreement
Supplement.
24. Effective Time. This Pledge Agreement will not become effective until
(i) this Pledge Agreement has been executed and delivered by the parties hereto
and (ii) the Original Notes are accepted for payment and exchange in the
exchange offer described in the Offering Memorandum and Consent Solicitation
Statement dated July 23, 2008, as supplemented by the supplement thereto dated
[Remainder of Page Intentionally Blank]
12
Each of the parties hereto has caused a counterpart of this Pledge Agreement to
be duly executed and delivered as of the date first above written.
PLEDGOR:
BRAMEX MANAGEMENT, INC.,
a British Virgin Islands company
By: /s/ Earl W. McNiel Name: Earl W. McNiel Title: Vice President PLEDGOR:
TRANSMERIDIAN (KAZAKHSTAN) INCORPORATED,
JSC CASPI NEFT TME,
a Kazakhstan joint stock company
By: /s/ Anatole Kunevich Name: Anatole Kunevich Title: President PLEDGOR:
TMEI OPERATING INC.,
a Texas corporation
[Signature Page to Subsidiary Pledge Agreement]
Accepted and agreed to as of the date first above written. COLLATERAL AGENT: THE
BANK OF NEW YORK MELLON By: /s/ Vanessa Mack Name: Vanessa Mack Title:
Vice President ORIGINAL TRUSTEE: THE BANK OF NEW YORK MELLON By: /s/ Vanessa
Mack Name: Vanessa Mack Title: Vice President NEW TRUSTEE: THE BANK OF NEW
YORK MELLON By: /s/ Vanessa Mack Name: Vanessa Mack Title: Vice President
Schedule 2(a)
None.
Exhibit A
FORM OF PLEDGE AGREEMENT SUPPLEMENT
[Date of Pledge Agreement Supplement]
The Bank of New York Mellon, as the Collateral Agent for the
Secured Parties referred to in the Pledge Agreement referred to below
The Bank of New York Mellon
101 Barclay Street – 4 East
Attention: Global Structured Finance
[Name of Borrower]
Ladies and Gentlemen:
Reference is made to (a) the Indenture, dated as of December 12, 2005, as
of December 22, 2005, May 24, 2006 and October 24, 2008, respectively, by and
among Transmeridian Exploration Inc. (“Issuer”), The Bank of New York Mellon, as
Original Trustee, and the Guarantors from time to time party thereto (as further
“Original Indenture”), (b) the Indenture, dated as of October 24, 2008, by and
among Issuer, The Bank of New York Mellon, as the New Trustee, and the
Guarantors from time to time party thereto (as amended, restated, supplemented
or otherwise modified from time to time, the “New Indenture” and, together with
the Original Indenture, the “Indentures”) and (c) the Pledge Agreement, dated as
of October 24, 2008, by and among the Pledgors from time to time party thereto,
The Bank of New York Mellon, as Original Trustee, The Bank of New York Mellon,
as New Trustee, and The Bank of New York Mellon, as Collateral Agent for the
Secured Parties (as amended, restated, supplemented or otherwise modified from
time to time, the “Pledge Agreement”). Terms defined in the Pledge Agreement and
not otherwise defined herein are used herein as defined in the Pledge Agreement.
1. Grant of Security. The undersigned hereby pledges and grants to the
Collateral Agent, for the ratable benefit of the Secured Parties, a continuing
security interest in any and all right, title and interest of the undersigned in
and to the following, whether now owned or existing or owned, acquired, or
arising hereafter (collectively, the undersigned’s “Collateral”): all Pledged
Debt (including, without limitation, the indebtedness set forth on Part I of
Schedule I hereto) and all proceeds and products of the foregoing, however and
whenever acquired and in whatever form.
2. Security for Obligations. The grant of a security interest in the Collateral
by the undersigned under this Pledge Agreement Supplement and the Pledge
Agreement secures the payment of all Secured Obligations of the undersigned now
or hereafter existing under or in respect of the Indentures, whether direct or
indirect, absolute or contingent, and whether for principal, reimbursement
obligations, interest, premiums, penalties, fees, indemnifications, contract
causes of action, costs, expenses or otherwise. Without limiting the generality
of the foregoing, this Pledge Agreement Supplement and the Pledge Agreement
secure the payment of all amounts that constitute part of the Secured
Obligations and that would be owed by the undersigned to any Secured Party under
the Indentures but for the fact that such Secured Obligations are unenforceable
or not allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving any Pledgor.
3. Representations and Warranties. The undersigned hereby makes each
representation and warranty set forth in Section 5 of the Pledge Agreement with
respect to itself and the Collateral granted by it.
4. Obligations Under the Pledge Agreement. The undersigned hereby agrees, as of
the date first above written, to be bound as a Pledgor by all of the terms and
provisions of the Pledge Agreement to the same extent as each of the other
Pledgors. The undersigned further agrees, as of the date first above written,
that each reference in the Pledge Agreement to an “Additional Pledgor” or a
“Pledgor” shall also mean and be a reference to the undersigned, that each
reference in the Pledge Agreement and the Indentures to the “Pledged Collateral”
or the “Collateral”, or any part thereof, shall also mean and be a reference to
the undersigned’s Collateral or part thereof, as the case may be, and that each
reference in the Pledge Agreement to a Schedule shall also mean and be a
reference to the schedules attached hereto.
5. Governing Law. This Pledge Agreement Supplement shall be governed by, and
Very truly yours, [NAME OF ADDITIONAL PLEDGOR] By: Title:
Address for notices: c/o Transmeridian Exploration Incorporated 5847 San
Felipe, Suite 4300 Houston, Texas 77057 Telephone: 713-458-1100 Fax No.:
713-781-6593 Attention: Chief Financial Officer |
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 11, 2012 (December 6, 2012) CHEMBIO DIAGNOSTICS, INC. (Exact name of registrant as specified in its charter) Nevada 0-30379 88-0425691 (State or other jurisdiction (Commission File Number) (IRS Employer of Incorporation) Identification Number) 3661 Horseblock Road Medford, NY 11763 (Address of principal executive offices) 631-924-1135 (Registrant’s Telephone Number) N/A (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: oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ITEM 7.01.REGULATION FD DISCLOSURE. On December 6, 2012, the Company issued a press release entitled “Positive Data from Independent Study of Chembio Diagnostics’ Rapid, Point-of-Care Syphilis Test Published in Clinical Infectious Diseases”. A copy of the press release is furnished herewith as Exhibit99.1. The information in this Item 7.01 of this Form 8-K is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of that section. The information in this Item 7.01 of this Form 8-K also shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, except to the extent that the Company specifically incorporates it by reference. ITEM 9.01.FINANCIAL STATEMENTS AND EXHIBITS Exhibits. Press Release entitled “Positive Data from Independent Study of Chembio Diagnostics’ Rapid, Point-of-Care Syphilis Test Published in Clinical Infectious Diseases”dated December 6, 2012. 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. December 11, 2012Chembio Diagnostics, Inc. By:/s/ Lawrence A. Siebert Lawrence A. Siebert Chief Executive Officer EXHIBIT INDEX Exhibit Number Description Press Release entitled “Positive Data from Independent Study of Chembio Diagnostics’ Rapid, Point-of-Care Syphilis Test Published in Clinical Infectious Diseases”dated December 6, 2012.
|
EXHIBIT 10.48
FEDERAL HOME LOAN BANK OF CINCINNATI
BLANKET SECURITY AGREEMENT
This Blanket Security Agreement (the “Blanket Agreement”) is entered this
30th day of June, 2006, by and between NCB, FSB, a federal savings bank
organized under the laws of the United States (“Borrower”), the principle place
of business is located at Hillsboro, Ohio, and the FEDERAL HOME LOAN BANK OF
CINCINNATI, a corporation organized under the federal laws of the United States
of America (the “FHLBank”).
This Blanket Agreement is entered in consideration of (i) the agreement of
FHLBank from time to time to consider making secured Advances to Borrower, and
(ii) the agreements of Borrower contained in this Blanket Agreement. However,
neither this Blanket Agreement nor any Addendum, taken alone or together with
any other FHLBank document or FHLBank’s Credit Policy, should be deemed an
absolute, irrevocable or unconditional agreement or commitment by the FHLBank to
make, amend, extend, restate, relend or replace Advances hereunder or otherwise
to Borrower. FHLBank expressly reserves the right and power in its discretion to
either grant or deny any such Advance requested or secured hereunder.
1. DEFINITIONS. Each term used in this Blanket Agreement is defined in this
Section 1 as follows.
“Act” means the Federal Home Loan Bank Act, codified at 12 United
States Code Sections 1421 through 1440, as the same may be modified from time to
time, together with the regulations implementing such act, codified at 12 Code
of Federal Regulations Parts 900 through 998, as the same may be modified from
time to time.
“Advance” means an advance of funds that FHLBank makes, extends or
renews from time to time to Borrower pursuant to the Credit Policy. For purposes
of this agreement, the term “Advance” also includes any other FHLBank extension
of credit such as Letters of Credit issued on a Member’s behalf or
collateralized swaps.
“Affiliate” means an entity that is affiliated with Borrower because
(i) Borrower owns or controls such affiliate in whole or in part, (ii) such
affiliate owns or controls Borrower in whole or in part, or (iii) such entity
owns or controls both Borrower and such affiliate in whole or in part.
“Agricultural Mortgage Collateral” means any Collateral, whether now
or hereafter acquired, that consists of (i) a loan that the Borrower or the
Pledging Affiliate reports to its primary regulator is a “farm real estate
loan,” or (ii) a promissory note that the maker secures with a mortgage or deed
of trust of real property used for agricultural purposes, together with all
rights of the holder of such note under all documents pertaining to such note,
mortgage or deed of trust, and mortgaged or conveyed property, and the proceeds,
replacements, and products thereof, whether now or hereafter acquired.
1
“Applicable Document” means any contract, agreement, lease,
instrument, articles or certificates of organization or incorporation, charter,
organizational document, code of regulations, by-law, or other writing to which
FHLBank, Borrower, or any Pledging Affiliate is a party that imposes obligations
on any of them or regulates the conduct of the affairs of any of them.
“Applicable Law” means any of the following applicable to Borrower or
any Pledging Affiliate: law, statute, treaty, convention, rule, regulation,
code, decree, judgment, ordinance, guide, manual, order or other obligation
other than an Applicable Document, pursuant to which a government or any agency,
subdivision, official, or court or tribunal thereof that regulates FHLBank,
Borrower, or any Pledging Affiliate or the activities of any of them.
“Blanket Agreement” means this Blanket Security Agreement.
“Blanket Mortgage Collateral” means all of the Mortgage Collateral in
which Borrower and any applicable Pledging Affiliate has (i) an interest and
(ii) granted a security interest to FHLBank, whether now or hereafter acquired,
and the proceeds, replacements, and products thereof, whether now or hereafter
acquired.
“Borrower” means the Borrower identified in the first sentence of this
Blanket Agreement.
“Collateral” means any Mortgage Collateral or Securities Collateral,
or other collateral security, whether now or hereafter acquired, in which
Borrower or a Pledging Affiliate has granted a security interest, lien or other
collateral encumbrance in favor of FHLBank to secure Borrower’s Obligations
pursuant to this Blanket Agreement, any Addendum or amendment to it, or any
other agreement with FHLBank from time to time, whether now or hereafter
acquired, and the proceeds, replacements, and products thereof, whether now or
hereafter acquired.
“Collateral Maintenance Requirement” means the amount of Lendable
Collateral Value of Qualifying Collateral that FHLBank determines from time to
time in accordance with the Credit Policy is necessary to secure the amount of
Advances to Borrower then outstanding and unpaid.
“Commercial Real Estate Mortgage Collateral” means any Collateral,
whether now or hereafter acquired, that consists of a promissory note that the
maker secures with a mortgage or deed of trust on real property and that is used
for retail office, industrial, or other commercial use, together with all rights
of the holder of such note under all of the documents pertaining to such note,
and mortgage or deed of trust, and mortgaged or conveyed property, and the
proceeds, replacements, and products thereof, whether now or hereafter acquired.
“Credit Policy” means the Credit Policy that FHLBank issues to govern
the making of Advances to Members from time to time, including any documents or
guides referred to or incorporated in such policy, as FHLBank may modify such
Credit Policy from time to time. Any such modification is binding on Borrower
and any Pledging Affiliate. The Supplemental Real Estate Collateral Guide is a
part of the Credit Policy.
2
“Cross Collateralized Loan” means any loan or interest therein
constituting a part of Mortgage Collateral that is secured by collateral that
also secures a loan or loans or interest therein that are not included in
Mortgage Collateral. “Cross Collateralized Loan” also means a loan included in
Specific Mortgage Collateral that is secured by collateral for another loan or
loans that are not so included in Specific Mortgage Collateral or that are not
Qualifying Collateral.
“DDA” means the demand deposit account of Borrower with FHLBank.
“Deed of Trust” means a deed of trust used to secure the obligations
of an obligor on a secured loan included in Collateral in lieu of a mortgage.
“Event of Default” means any of the events described in Section 10
hereof.
“FHLBank” means the Federal Home Loan Bank of Cincinnati, a
corporation organized under the federal laws of the United States of America,
and for purposes of any indemnification or similar provision under the Blanket
Agreement, includes all officers, directors, employees and agents of FHLBank.
“Hazardous Material” means a material that, if it is released into the
environment, Applicable Laws require the owner or operator of the property at
which such release occurred to remedy the effect on the environment of such
release.
“Home Equity Line of Credit Collateral” means Collateral, whether now
or hereafter acquired, that consists of an agreement between a borrower and a
lender for the lender to advance funds to such borrower and the borrower to
repay such advances, pursuant to which the borrower grants a mortgage or deed of
trust of property that is improved with one to four units, each suitable for the
residence of one family, together with all rights of the lender under all
documents pertaining to such agreement, mortgage or deed of trust, and mortgaged
or conveyed property, and the proceeds, replacements, and products thereof,
whether now or hereafter acquired.
“Junior Mortgage Collateral” means any Collateral, whether now or
hereafter acquired, that consists of a promissory note that the maker secures
with a mortgage or deed of trust of real property and that is subject to a lien
inferior in priority to one or more mortgages or deeds of trust, together with
all rights of the holder of such note under all documents pertaining to such
note, mortgage or deed of trust, and mortgaged or conveyed property, and the
proceeds, replacements, and products thereof whether now or hereafter acquired.
“Lendable Collateral Value” means the value that FHLBank determines
from time to time that Qualifying Collateral has.
“Letter of Credit” means a letter of credit that FHLBank has issued on
behalf of Borrower, for payments of drafts on which Borrower must reimburse
FHLBank.
“Mortgage Collateral” means any Collateral, whether now or hereafter
acquired, that consists of promissory notes that the maker secures with a
mortgage or deed of trust of real property that is improved with one to four
units, each suitable for the residence of one family,
3
together with all rights of the holders of such notes under all documents
pertaining to such notes, mortgages or deeds of trust, and mortgaged or conveyed
property, and if applicable, Multi-family Mortgage Collateral, Agricultural
Mortgage Collateral, Commercial Real Estate Mortgage Collateral, Home Equity
Line of Credit Collateral, and Junior Mortgage Collateral, participations in any
of the foregoing to the extent that the Credit Policy permits from time to time,
acquired.
“MPP” means FHLBank’s Mortgage Purchase Program, as FHLBank may modify
it from time to time.
“Multi-family Mortgage Collateral” means any Collateral, whether now
or hereafter acquired, that consists of a promissory note that the maker secures
with a mortgage or deed of trust of real property that is improved with five or
more units, each suitable for the residence of one family, together with all
rights of the holders of such note under all documents pertaining to such note,
mortgage or deed of trust, and mortgaged or conveyed property, and if
applicable, participations in any of the foregoing to the extent that the Credit
Policy permits from time to time, and the proceeds, replacements, and products
thereof, whether now or hereafter acquired.
“Obligations” means all indebtedness and liabilities of Borrower and
any Pledging Affiliate to FHLBank, whether direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising, including
any extensions or renewals, and whether incurred alone or with others, as maker,
guarantor, endorser, or surety, plus interest thereon, and all costs of
collection, legal expenses and attorney fees that FHLBank pays or incurs in
administering, collecting, or enforcing any of such indebtedness or liabilities,
or realizing on security granted in this Blanket Agreement or otherwise. Such
Obligations include without limitation the obligations of Borrower to FHLBank
under the MPP Program and the obligation of Borrower to reimburse FHLBank the
amount of any drafts on any Letter of Credit that FHLBank may honor.
“One to Four Family Mortgage Collateral” means any Collateral, whether
now or hereafter acquired, that consists of promissory notes that the maker
secures with a mortgage or deed of trust of real property that is improved with
one to four units, each suitable for the residence of one family, together with
all rights of the holders of such notes under all documents pertaining to such
notes, mortgages or deeds of trust, and mortgaged or conveyed property,
participations in any of the foregoing to the extent that the Credit Policy
permits from time to time, and the proceeds, replacements, and products thereof,
“Pledging Affiliate” means an entity that is providing Collateral by
completing and executing a Pledging Affiliate Addendum in the form that FHLBank
may specify from time to time and that is affiliated with Borrower because
“Qualifying Collateral” means Collateral that FHLBank determines in
accordance with the Act and the Credit Policy, including the underwriting,
documentation, and valuation requirements incorporated therein from time to
time, must secure the repayment of Advances.
4
Excluded from Qualifying Collateral, without limitation, is Collateral that
Borrower or a Pledging Affiliate has participated or Transferred to the extent
that the Credit Policy does not authorize such participation or Transfer.
“Scorecard Validation Statistics” means any reports and underlying
schedules and statistics used to validate custom scorecard models, or vendor
provided scorecards, including without limitation, bureau scores, KS statistics,
population stability statistics and reports, characteristic analysis statistics
and reports, maximum delinquency reports and distributions, vintage analyses or
other reports showing trends in scorecard predictiveness, or any other reports
or statistics used in validating the initial or ongoing predictiveness or
scorecards or scoring systems used to underwrite or service loans pledged to the
FHLBank, including, without limitation, behavioral or bankruptcy scores and
models.
“Specific Mortgage Collateral” means the Mortgage Collateral, if any,
specifically identified in any Assignment of Mortgage that Borrower or any
Pledging Affiliate may have heretofore executed and delivered or may hereafter
execute and deliver to FHLBank from time to time.
“Securities Collateral” means obligations of the United States of
America, or obligations fully guaranteed by the United States of America, or
other securities (whether certificated or uncertificated), investment property,
financial assets, security entitlements, accounts or other equity or ownership
interests in any corporation, partnership, limited liability company, trust or
other entity, association or organization, including without limitation any
affiliate which holds or may hold, directly or indirectly, transferred assets of
the Borrower, which obligations or securities (i) are approved by the FHLBank as
Qualifying Collateral, (ii) delivered to the FHLBank’s possession or (at the
FHLBank’s sole discretion) are otherwise in the FHLBank’s control or subject to
an acceptable negative pledge, (iii) are specifically identified in any
Assignment of Securities that Borrower or any Pledging Affiliate may heretofore
have executed and delivered or may hereafter execute and deliver to FHLBank from
time to time, and (iv) are to be treated as Collateral (whether hereunder or
pursuant to other agreements with FHLBank), and all replacements therefor and
proceeds thereof (hereinafter called “Securities Collateral”).
“Status Report” means specific, pledged loan level information that
FHLBank may request from time to time. Such information may include, but is not
limited to, information identifying the borrower, account and loan numbers,
servicing information, principal, interest, tax, and insurance payment status,
payment or delinquency histories since loan origination, appraisal or underlying
collateral valuation sources, loan to value, debt to income or housing ratios
and the components used in the calculation thereof, the existence or requirement
to maintain single premium credit life insurance, the existence of prepayment
penalties, loan term data including payment amounts, interest rates, annual
percentage rates, margins, caps, floors, balloon amounts, balloon dates,
maturities, amortization periods, HUD-1 Statements or any specific information
reflected on those Statements, FICO scores, bureau scores, or internal credit
scoring model scores or results.
5
“Supplemental Collateral” means Agricultural Mortgage Collateral,
Commercial Real Estate Mortgage Collateral, Home Equity Line of Credit
Collateral, and Junior Mortgage Collateral.
“Supplemental Real Estate Collateral Guide” means FHLBank’s
Supplemental Real Estate Collateral Program Policies and Procedures, as FHLBank
may modify it from time to time. Any such modification is binding on Borrower
and any Pledging Affiliate.
“Transfer” means to sell, grant, mortgage, pledge, assign, lease,
grant a security interest in or lien on, participate or otherwise transfer,
directly or indirectly, by operation of law, or otherwise, any interest in any
item of property, whether real or personal.
“UCC” means the Uniform Commercial Code in effect in Ohio from time to
time, unless the Uniform Commercial Code in effect in Ohio directs the
application of the law of a different jurisdiction to the perfection or effect
of perfection or non-perfection of a security interest in personal property. In
the latter event, the “UCC” means the Uniform Commercial Code then in effect in
such other jurisdiction.
2. GRANT OF SECURITY INTEREST. Borrower grants and shall cause each
Pledging Affiliate to grant to FHLBank, its successors and assigns from time to
time a security interest in the Collateral identified in Exhibit A to this
Blanket Agreement and/or any Addendum to it, whether now existing or that
Borrower or any Pledging Affiliate hereafter attaches, in order to secure the
performance of the Obligations of Borrower and each Pledging Affiliate from time
to time for purposes of this Blanket Agreement. As to any rights of FHLBank as a
secured party hereunder, FHLBank shall be deemed to act as the exclusive
security agent and attorney-in-fact of Borrower and any Pledging Affiliate, as
further specified in Section 14 below. Borrower, any Pledging Affiliate, and
FHLBank may modify from time to time the Collateral in which Borrower and any
such Pledging Affiliate have granted a security interest to FHLBank by
completing and executing a Blanket Security Agreement Amendment, in the form
that FHLBank may specify from time to time.
3. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants, and
shall cause each Pledging Affiliate to represent and warrant, and each Pledging
Affiliate from time to time represents and warrants, in each case to FHLBank
effective as of the Effective Date and each time that Borrower obtains an
Advance, as follows:
(a) Borrower and each Pledging Affiliate from time to time is duly
organized and validly existing under the law governing its organization.
(b) No Applicable Law or Applicable Document limits the power of
Borrower or any Pledging Affiliate to enter this Agreement or perform its
obligations hereunder, and the execution of this Agreement by Borrower and/or
any Pledging Affiliate, will not violate or result in a default under any
Applicable Law or Applicable Document.
(c) Borrower and each Pledging Affiliate have full power and authority
to enter into this Blanket Agreement and to perform their respective obligations
hereunder.
6
(d) This Blanket Agreement is the legal, valid, and binding obligation
of Borrower and each Pledging Affiliate.
(e) The execution of this Agreement and the performance of their
respective obligations hereunder by Borrower and each Pledging Affiliate has
been duly authorized.
(f) Neither Borrower nor any Pledging Affiliate need obtain any
security exchange’s consent or approval to enter into this Blanket Agreement or
perform any of its obligations hereunder.
(g) No securities or “blue sky” law requires the registration of any
Collateral prior to or in connection with the sale of such Collateral.
(h) Borrower is either a member in good standing of FHLBank or a
nonmember that the Act authorizes to obtain or hold advances.
(i) Borrower and each Pledging Affiliate holds all of the right,
title, and interest in, to, and under the Collateral in which it has granted a
security interest to FHLBank, and such interest is free and clear of all claims,
security interests, liens, participation interests, rights of set off, or any
other encumbrances or legal or beneficial interests whatsoever other than
(i) full or partial participations in favor of Pledging Affiliates of Borrower
that have granted a security interest in such participations to FHLBank, and
(ii) the rights of other holders of security interests with which FHLBank has
entered into a written agreement governing the relative priorities of the
security interests of FHLBank and such other party in such Collateral. The title
to all such Collateral (other than that participated in whole or in part to an
Affiliate) is and remains marketable.
(j) Borrower and each Pledging Affiliate has the right and authority
to grant a security interest in the Collateral provided in this Blanket
Agreement and otherwise to perform their respective obligations under this
Blanket Agreement.
(k) Each document that Borrower or any Pledging Affiliate has given or
may give FHLBank from time to time (i) in connection with obtaining Advances,
(ii) pertinent to Collateral, or (iii) otherwise pursuant to this Blanket
Agreement, including financial statements, is and remains true and complete and
does not fail to include information that prevents the same from being
misleading.
(l) The information that Borrower and each Pledging Affiliate has or
may from time to time give to (i) FHLBank or (ii) the entity or entities having
regulatory authority over FHLBank, Borrower or any Pledging Affiliate, including
(without limitation) in connection with the Collateral and any financial
statement, is true and complete.
(m) No release of a Hazardous Material has occurred at any property
securing any item of Collateral, the effect of which on the environment
Applicable Laws would require the owner or operator of such property to remedy.
7
(n) The Qualifying Collateral in which either Borrower or any Pledging
Affiliate has granted to FHLBank a security interest has a Lendable Collateral
Value equal to or greater than the Collateral Maintenance Requirement.
(o) Each document that evidences Mortgage Collateral is genuine and in
all respects what it appears to be.
(p) The obligations of each borrower under each mortgage loan included
in Mortgage Collateral are valid and enforceable.
(q) The amount that Borrower or the applicable Pledging Affiliate
represents to FHLBank that the borrower under each mortgage loan owes on such
mortgage loan included in Mortgage Collateral is the correct amount
unconditionally due and owing, and such borrower does not dispute that such
borrower owes such amount.
(r) The lien of each mortgage included in Mortgage Collateral (other
than those liens created under the Home Equity Line of Credit Mortgage
Collateral and Junior Mortgage Collateral) is a first and best lien against the
property that it encumbers, except for the lien of nondelinquent taxes.
4. AFFIRMATIVE COVENANTS. Borrower shall, Borrower shall cause each
Pledging Affiliate to, and each Pledging Affiliate shall, do the following:
(a) furnish FHLBank from time to time evidence satisfactory to FHLBank
of the authority of representatives of Borrower or any Pledging Affiliate to
obtain, amend, or renew Advances or specify that Collateral in which Borrower or
Pledging Affiliate may grant a security interest to FHLBank;
(b) deliver to FHLBank such evidence as it may request of Borrower’s
eligibility to obtain Advances, and its interest or the applicable Pledging
Affiliate’s interest in the Collateral;
(c) permit FHLBank to enter facilities at which the Collateral or
evidence of the Collateral is located and afford FHLBank working space in such
facilities to inspect the Collateral and all documents, tangible or electronic,
related to or evidencing such Collateral;
(d) permit FHLBank to copy any document, tangible or electronic,
evidencing, relating or pertaining to the Collateral;
(e) cooperate in any inspection or audit of any document, electronic
or tangible, evidencing or relating or pertaining to Collateral that FHLBank may
deem necessary or appropriate from time to time;
(f) cause any other party acquiring an interest in Collateral to
satisfy the obligations of each Pledging Affiliate and Borrower related to such
Collateral under this Blanket Agreement;
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(g) collectively maintain Qualifying Collateral with a Lendable
Collateral Value equal to or greater than the Collateral Maintenance
Requirement;
(h) pay all taxes, assessments and any other governmental charges
levied, assessed, or imposed upon any Collateral and any constituent property
thereunder;
(i) inform FHLBank in writing promptly after any change in the
location of Borrower’s or any Pledging Affiliate’s chief executive office,
jurisdiction of organization or charter situs;
(j) inform FHLBank promptly of any occurrence or pending occurrence
that renders or may make Borrower ineligible for membership in the FHLBank;
(k) inform FHLBank promptly of any merger, consolidation, or sale of
substantially all the stock or assets of Borrower or any Pledging Affiliate, or
the acquisition by Borrower or any Pledging Affiliate of substantially all of
the stock or assets of another entity;
(l) inform FHLBank promptly of any change in (i) the physical location
of any Collateral, (ii) any servicer of any Mortgage Collateral, or (iii) any
securities intermediary holding any Securities Collateral;
(m) respond promptly, accurately, and completely to any FHLBank
inquiry concerning (i) the location of the chief executive office, jurisdiction
of organization, or charter location of Borrower or any Pledging Affiliate,
(ii) the physical location of any Collateral, (iii) the identity and other
information relating to any servicer of any Mortgage Collateral, or (iv) the
identity and any information relating to any securities intermediary holding
Securities Collateral;
(n) pay the costs that FHLBank incurs from time to time in auditing
and verifying or having third parties verify or audit on its behalf (i) the
financial condition of Borrower and each Pledging Affiliate, and (ii) the
existence of sufficient Qualifying Collateral with a Lendable Collateral Value
equal to or greater than the Collateral Maintenance Requirement to secure
Advances to Borrower outstanding from time to time;
(o) if FHLBank notifies Borrower that the Lendable Collateral Value of
Qualifying Collateral is less than the Collateral Maintenance Requirement,
either (i) immediately grant FHLBank a security interest in additional
Qualifying Collateral necessary to increase the Lendable Collateral Value of
Qualifying Collateral to the Collateral Maintenance Requirement, or (ii) repay
so much of the Advances or other extensions of credit or reduce the stated
amounts of outstanding Letters of Credit as may be necessary to thereafter make
the Lendable Collateral Value of Qualifying Collateral equal to or less than the
Collateral Maintenance Requirement;
(p) comply in all respects with the Credit Policy, as FHLBank may
amend it from time to time;
(q) deliver to FHLBank such evidence of Borrower’s or Pledging
Affiliate’s interest in the Collateral and its availability for use as
Collateral as FHLBank may from time to time request;
9
(r) provide to FHLBank upon FHLBank’s request, statements and
information with respect to the business and financial status of Borrower and
each Pledging Affiliate, including profit and loss reports, income statements,
balance sheets, and other financial information, all prepared in accordance with
generally accepted accounting principles, and with such details and formats as
FHLBank may require from time to time;
(s) if any mortgage loan included in Mortgage Collateral or in a pool
backing any Securities Collateral has been originated or serviced in violation
of any Applicable Law, including any applicable predatory lending, abusive loan
practice, or high interest loan law, notify FHLBank of such violation promptly
upon discovering such violation, and if the Credit Policy requires that any such
Mortgage Collateral must be Qualifying Collateral in order to secure the amount
of Advances, the stated amount of Letters of Credit, or any other extensions of
credit then outstanding, and FHLBank so directs, (i) grant a security interest
in or deliver a substitute Collateral that will constitute Qualifying Collateral
to replace the affected security or mortgage loan, or (ii) reduce the amount of
Advances, stated amounts of Letters of Credit, or other extensions of credit
then outstanding;
(t) if FHLBank requires, make, execute, record, and deliver to FHLBank
additional agreements, financing statements, notices, assignments, listings,
powers, and other documents in connection with all or a part of the Collateral;
(u) concurrently with the delivery of Collateral to FHLBank that
FHLBank requires or within fourteen (14) days after FHLBank requests, deliver to
FHLBank a Status Report specifying and describing the Collateral with
accompanying schedules in a format and with such details that FHLBank may
prescribe from time to time and provide such information that FHLBank requires
to value such Collateral;
(v) furnish annually and at such other times as FHLBank may request,
or cause Borrower’s external auditor or other third party consulting firm that
FHLBank has approved to furnish, an audit report, in such detail as FHLBank from
time to time may specify with respect to Collateral, Qualifying Collateral,
compliance with applicable Collateral Maintenance Requirements, and compliance
with the Credit Policy, that Borrower’s external auditor or such third party has
prepared in accordance with generally accepted auditing standards or generally
accepted accounting principles, as applicable;
(w) furnish within fourteen (14) days after FHLBank’s request any
Scorecard Validation information that Borrower or any Pledging Affiliate has on
file.
(x) whenever the authority of the persons authorized on behalf of
Borrower or any Pledging Affiliate to obtain Advances, grant a security interest
in Collateral, or execute or modify this Blanket Agreement changes, promptly
notify FHLBank of such change and give FHLBank a copy of the most current
resolution or resolutions so authorizing such representatives or a list of the
names and specimen signatures of such authorized representatives that an
authorized representative of Borrower or such Pledging Affiliate certifies to
FHLBank is accurate.
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5. NEGATIVE COVENANTS. Borrower shall not, and Borrower shall not permit
any Pledging Affiliate to:
(a) except to the extent and in the manner authorized in Section 7
hereof and in the February 26, 2004 Addendum referenced in Section 17 hereof,
Transfer any Collateral or any interest therein;
(b) suffer to exist against Borrower or any Pledging Affiliate or the
successors and assigns of either, including (without limitation) FHLBank, any
right of set off that any person or entity may exercise under or related to any
of the Collateral; or
(c) transfer possession of the Collateral to any party other than a
Pledging Affiliate, FHLBank, or a collateral agent designated by FHLBank.
6. SECURITIES COLLATERAL.
(a) If the Collateral includes Securities Collateral, Borrower shall
grant or cause one or more Obligor Entities to grant a security interest in such
Securities Collateral having a fair market value or a principal dollar amount
acceptable to FHLBank.
(b) Borrower shall, and Borrower shall cause each Pledging Affiliate
granting FHLBank a security interest in Securities Collateral to, endorse in
favor of FHLBank (in form acceptable to FHLBank) all Securities Collateral that
consists of certificated securities.
(c) FHLBank shall be an entitlement holder and in sole control of all
Securities Collateral for purposes of Article 8 of the UCC. FHLBank shall have
full power under Article 8 of the UCC to hold and dispose of such Securities
Collateral as financial assets, including the full power to exercise voting
rights and receive any proceeds or income resulting from stock splits, stock
dividends, cash dividends, or otherwise.
(d) Borrower shall, and Borrower shall cause each Pledging Affiliate
granting a security interest in Securities Collateral to, act (and consent to
such further acts) as FHLBank may request to (i) establish and maintain
FHLBank’s control over any Securities Collateral as provided in Section 8-106 of
the UCC, and (ii) obtain the agreement of (A) the issuer of any Securities
Collateral to comply with FHLBank’s instructions without any further consent of
Borrower, and (B) any securities intermediary holding Securities Collateral to
comply with FHLBank’s entitlement orders without the further consent of
Borrower.
(e) While any Event of Default is continuing and unless waived by
FHLBank, Borrower or Pledging Affiliate, as the case may be, may (i) collect and
retain any interest or principal payments, dividends, or other distributions
that the issuer of such Securities Collateral or any securities intermediary
holding such Securities Collateral may distribute, and (ii) apply any such
principal payments, dividends, and other distributions that FHLBank collects to
the principal or interest or both of the Obligations in whatever manner or order
as FHLBank in its sole discretion may elect.
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7. MORTGAGE COLLATERAL.
(a) Except to the extent that FHLBank directs otherwise, Borrower and
each Pledging Affiliate that has granted a security interest in Mortgage
Collateral may retain possession of the same for purposes of servicing,
collecting, and enforcing such Mortgage Collateral. Borrower and each Pledging
Affiliate shall hold such Mortgage Collateral and the proceeds of and
collections from such Mortgage Collateral in trust for FHLBank’s security and
benefit. Borrower shall, and shall cause each Pledging Affiliate to, comply with
all directions that FHLBank gives pursuant to this Blanket Agreement. Except to
the extent that FHLBank directs otherwise or this Blanket Agreement otherwise
provides, Borrower and each Pledging Affiliate that has granted a security
interest in Mortgage Collateral may in the ordinary course of its business
(i) retain all collections from Mortgage Collateral, (ii) release mortgages
included in Mortgage Collateral, (iii) retain all collections from Mortgage
Collateral, and act to collect delinquent payments due under Mortgage
Collateral, including exercising the remedy of foreclosure. Neither Borrower nor
any Pledging Affiliate need disclose the interest of FHLBank in such Mortgage
Collateral while so acting.
(b) FHLBank from time to time may direct Borrower and any Pledging
Affiliate that has granted a Security interest in Mortgage Collateral to
(i) segregate the documents evidencing or securing each mortgage loan that
constitutes a part of Mortgage Collateral in file folders, labeled with the name
of the borrower and/or number used to identify the loan, from the documents
evidencing or securing the other mortgage loans that constitute Mortgage
Collateral, to mark such folders and documents as Mortgage Collateral in which
FHLBank has a security interest, (ii) segregate physically all such Mortgage
Collateral from mortgage loans that do not constitute Mortgage Collateral,
(iii) segregate physically Mortgage Collateral from any other assets in
Borrower’s or such Pledging Affiliate’s possession, and (iv) segregate Mortgage
Collateral physically from loan documents that are not part of Mortgage
Collateral within a collateral vault or in a separate collateral vault.
(c) FHLBank from time to time may direct Borrower and any Pledging
Affiliate possessing Mortgage Collateral to produce (i) lists of (A) the
mortgage loans included in Mortgage Collateral and (B) the documents
constituting or pertaining to them, whether paper or electronic, and (ii)
reports containing information pertaining to the same in such detail that
FHLBank may require. Such information may include details of loan structure,
terms of loans, and underwriting. Such documents shall include the following:
ancillary security agreements, policies and certificates of insurance or
guarantees, rent assignments, FHA mortgage insurance or VA loan guarantee
certificates, title insurance policies, evidence of recordation, applications,
underwriting materials, surveys, appraisals, approvals, permits, notices,
opinions of counsel, and loan servicing data.
(d) FHLBank may from time to time direct Borrower and any Pledging
Affiliate that has granted a security interest in Mortgage Collateral to endorse
in form acceptable to FHLBank, including endorsement in blank if FHLBank so
directs, all promissory notes included in Mortgage Collateral in favor of
FHLBank and any collateral agent that FHLBank may designate.
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(e) FHLBank may from time to time direct Borrower and any Pledging
Affiliate that has granted a security interest in Mortgage Collateral to deliver
physical possession of such Mortgage Collateral, including any participation
certificates or related documents, to FHLBank or a collateral agent designated
by FHLBank.
(f) FHLBank may from time to time direct Borrower and any Pledging
Affiliate that has granted a security interest in Mortgage Collateral to (i) pay
immediately to FHLBank any and all collections from Mortgage Collateral,
(ii) deposit in an account designated by FHLBank from time to time all
collections, including checks, drafts, cash, and other remittances of payment on
Mortgage Collateral, from Mortgage Collateral, and (iii) to direct the obligors
on mortgage loans included in Mortgage Collateral to remit payments due under
such Mortgage Collateral to FHLBank or to a collateral agent or depository
designated by FHLBank from time to time. FHLBank may apply all amounts that it
receives as collections or proceeds of Mortgage Collateral to principal and
interest of the Obligations, in whatever manner or order FHLBank in its sole
discretion may elect.
(g) FHLBank may from time to time direct Borrower and any Pledging
Affiliate that has granted a security interest in Mortgage Collateral to assign
the mortgages included in such Mortgage Collateral to FHLBank, a collateral
agent designated by FHLBank or MERS, or to notify MERS of the assignment of such
Mortgage Collateral to FHLBank or such collateral agent.
(h) With regard to Specific Mortgage Collateral and, to the extent
that FHLBank shall direct, Blanket Mortgage Collateral, Borrower shall, and
shall cause any Pledging Affiliate that has granted a security interest in
Mortgage Collateral, to promptly notify FHLBank if any of the following occur:
(i) payment of the remaining principal balance of a mortgage
loan;
(ii) payment in full of a mortgage loan occurs; or
(iii) whenever (A) casualty damage to any building encumbered by
a mortgage securing a mortgage loan decreases the appraised value of such
building twenty-five percent (25%) or more, and (B) such damage cannot be
repaired promptly.
(i) Borrower or any Pledging Affiliate that has granted a security
interest in Mortgage Collateral may Transfer Mortgage Collateral to an Affiliate
of Borrower that is a Pledging Affiliate provided that Borrower or such Pledging
Affiliate first notifies FHLBank in writing of such Transfer.
(j) Borrower and any Pledging Affiliate that has granted a security
interest in Mortgage Collateral may Transfer Mortgage Collateral to any person
or entity that is not a Pledging Affiliate provided that FHLBank (i) first
approves such Transfer in writing, (ii) is otherwise reasonably deemed to have
approved such Transfer, or (iii) as further specified below:
If FHLBank has not directed delivery of the physical possession of Mortgage
Collateral to FHLBank or its designee or notified Borrower in writing that
Borrower or any Pledging Affiliate must obtain FHLBank’s written consent prior
to effecting a Transfer of any loans included in
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Mortgage Collateral, Borrower or a Pledging Affiliate may Transfer Mortgage
Collateral, as long as following such Transfer, the Qualifying Collateral has a
Lendable Collateral Value equal to or greater than the Collateral Maintenance
Requirement. In such event, (A) FHLBank shall be deemed to have approved such
Transfer, and (B) Borrower or a Pledging Affiliate, as the case may be, need not
notify FHLBank prior to effecting such Transfer.
(k) Borrower shall, and shall cause each Pledging Affiliate to insure
that (i) “all risk” property insurance covers any building or other property
securing any obligation included in Mortgage Collateral in an amount equal to
the replacement cost of such building, (ii) such other insurance as lenders in
the vicinity of such building customarily require covers such building,
(iii) all such insurance includes Borrower or the Pledging Affiliate, as the
case may be, its successors and assigns, as loss payee under a standard
mortgagee endorsement, and (iv) if FHLBank so directs, such insurance shall
provide that the insurer may not cancel it without at least ten (10) days prior
written notice to FHLBank. Borrower or any Pledging Affiliate may satisfy the
foregoing insurance requirement with a blanket insurance policy containing such
deductibles, limits of liability as FHLBank may approve in writing in advance
and issued by an insurer as FHLBank may approve in writing in advance. Any
insurer issuing such insurance must satisfy the standards that FHLBank may
establish from time to time for such insurers. FHLBank may direct from time to
time Borrower and any Pledging Affiliate to physically deliver the originals of
such insurance to FHLBank or a collateral agent designated by FHLBank. If any
such insurance required by this subsection lapses, FHLBank may obtain such
insurance in its favor at Borrower’s expense and as an additional Obligation
hereunder.
(l) Borrower shall, and shall cause each Pledging Affiliate to pay any
fees or expenses that FHLBank incurs in connection with reviewing, acquiring,
evidencing, protecting, perfecting, evaluating or realizing on its security
interest in Mortgage Collateral, including (without limitation) insurance
premiums and the fees of attorneys, accountants, evaluation consultants,
recording offices and collateral agents.
(m) Borrower shall, and shall cause each Pledging Affiliate to
originate and service all loans included in Mortgage Collateral in accordance
with all Applicable Laws, including without limitation those relating to
predatory or high cost lending or abusive loan practices.
(n) Borrower shall, and shall cause each Pledging Affiliate to enforce
the payment provisions of all mortgage loans included in Mortgage Collateral,
including collecting all amounts specified thereunder when due.
8. PAYMENT. Borrower shall, and shall cause each Pledging Affiliate to, pay
FHLBank any and all costs that FHLBank may incur in exercising its rights under
this Agreement or entering this Agreement, including reasonable attorney fees.
Such costs may include those related to the receipt, holding, redelivery, and
reassignment of Collateral, recording fees, and the expenses and disbursements
of any custodian, consultant, or appraiser or otherwise as noted in Section 7
above. If any payment is due to FHLBank pursuant to this Agreement, (i) FHLBank
may debit Borrower’s DDA to satisfy such payments and (ii) Borrower may set off
such amount that is due to FHLBank against any amount whatsoever that FHLBank
may owe
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Borrower or any Pledging Affiliate (including, without limitation, proceeds of
the repurchase of FHLBank stock owned by such Borrower or Pledging Affiliate).
9. DESTRUCTION OF NOTES; LOST NOTES. (a) If Borrower, any Pledging
Affiliate, or any holder has destroyed any promissory note or other document
that constitutes a part of Mortgage Collateral or does so in the future,
Borrower shall, and shall cause each Pledging Affiliate to, notify FHLBank of
such destruction. No Mortgage Collateral with respect to which any holder of the
note or any other document that comprises or represents such Collateral,
including Borrower or any Pledging Affiliate, may constitute Qualifying
Collateral unless FHLBank approves such Mortgage Collateral as Qualifying
Collateral. Borrower shall not and shall not permit its Pledging Affiliates to
destroy any notes or other documents included in Mortgage Collateral with a view
to substituting electronic images for such documents unless FHLBank shall have
approved the same in writing in advance. FHLBank may elect to treat any such
Mortgage Collateral as Collateral that is not Qualifying Collateral or impose on
such Collateral a higher Collateral Maintenance Requirement than similar
Mortgage Collateral with respect to which such notes or other documents
comprising or representing it have not been destroyed.
(b) If Borrower or any Pledging Affiliate has lost any note or other
document that constitutes a part of Mortgage Collateral, Borrower or such
Pledging Affiliate shall provide FHLBank an affidavit satisfactory to FHLBank
concerning the circumstances of such loss.
10. INDEMNITY. Borrower shall, and shall cause each Pledging Affiliate, to
indemnify FHLBank, defend with counsel acceptable to FHLBank, and hold FHLBank
harmless from and against all losses, damages, claims, causes of action,
liabilities, penalties, fines, costs, and expenses, including reasonable
attorney fees and litigation expenses, that FHLBank suffers, pays, or incurs as
a result of any of the following:
(i) the origination of any mortgage loan included in Mortgage
Collateral that has resulted in whole or in part from violations of Applicable
Laws, including (without limitation) those governing such origination, any
“predatory lending” laws, or any such mortgage loan otherwise does not comply in
any other respect with Applicable Laws;
(ii) Applicable Laws impose liability on FHLBank as a result of
its holding a security interest on or becoming the owner of any item of Mortgage
Collateral, including (without limitation) any liability related to a release of
a Hazardous Material at property that is security for any part of the Mortgage
Collateral;
(iii) FHLBank’s exercise and/or enforcement of its rights under
this Agreement, except in the event that a court having jurisdiction finally
determines that such an exercise and/or enforcement was in bad faith or in
wilful violation of applicable law
(iv) Borrower’s or any Pledging Affiliate’s failure to perform
any of its obligations hereunder when due;
(v) Any of Borrower’s or Pledging Affiliate’s representations or
warranties are untrue as of the time made or deemed made; or
15
(vi) Borrower’s or any Pledging Affiliate’s loss or destruction
of any document that is a part of Mortgage Collateral, including without
limitation, any promissory note.
11. DEFAULT. Any one or more of the following shall be an Event of Default
under this Agreement:
(i) failure of Borrower or any Pledging Affiliate to pay or
perform any Obligation when due;
(ii) Any representation or warranty of Borrower or any Pledging
Affiliate to FHLBank is untrue at the time made or deemed made and FHLBank deems
such representation or warranty material;
(iii) Borrower or any Pledging Affiliate fail to furnish promptly
after FHLBank’s request financial information or information related to the
Collateral, to inspect any financial records or documents pertaining to the
Collateral, or to comply promptly with any direction that FHLBank gives pursuant
to this Blanket Agreement,
(iv) failure of Qualifying Collateral to have a Lendable
Collateral Value equal to or more than the current Collateral Maintenance
Requirement that the Credit Policy requires;
(v) failure of Borrower or any Pledging Affiliate to perform any
other obligation under this Blanket Agreement within ten (10) days after FHLBank
gives notice of the need to perform the same;
(vi) an injunction or attachment issues against any part of the
property owned by Borrower or any Pledging Affiliate which FHLBank considers
materially adverse to Borrower or such Pledging Affiliate’s property;
(vii) a receiver, conservator, or liquidator is appointed for any
part of the property of Borrower or any Pledging Affiliate, or a supervisory
authority, receiver, or conservator assumes management of any part of the
business of Borrower or any Pledging Affiliate;
(viii) Borrower or any Pledging Affiliate commences any of the
following or any of the following is commenced against Borrower or any Pledging
Affiliate: proceedings in bankruptcy, arrangement, reorganization, receivership,
conservatorship, assignment for the benefit of creditors, composition, or other
similar laws or procedures for the relief of debtors;
(ix) Borrower’s membership in FHLBank or its eligibility to
borrow Advances as a nonmember state housing finance agency ceases for any
reason;
(x) FHLBank notifies Borrower that a change in the condition or
business or other affairs of Borrower or any Pledging Affiliate, financial or
otherwise, has
16
occurred that FHLBank considers to materially impair Borrower’s financial or
business status or FHLBank’s security or increases its risk; or
(xi) FHLBank in good faith deems itself insecure and so notifies
Borrower.
12. REMEDIES.
(a) Upon the occurrence of an Event of Default, FHLBank may exercise
all or one or more of the following remedies:
(i) without notice to or demand of Borrower or any Pledging
Affiliate, declare all Obligations immediately due and payable, regardless of
the other payment provisions applying to such Obligations;
(ii) exercise any remedy available to FHLBank provided in this
Blanket Agreement, the Credit Policy, the UCC, at law, or in equity, including
those rights described in Sections 6 and 7 hereof;
(iii) direct Borrower to, and Borrower shall dissolve or cause
the dissolution of any Pledging Affiliate and the distribution of the assets of
such Pledging Affiliate to Borrower;
(iv) sell the Collateral at public or private sale and distribute
the proceeds of sale to pay the Obligations in whatever manner and order of
priority FHLBank in its sole discretion may elect; in connection with any
private sale, FHLBank may do those things necessary or appropriate to comply
with applicable securities laws, including (without limitation) a sale or
private sale to the highest of two or more bidders who can qualify as buyers in
private placements;
(v) purchase the Collateral at any such public or private sale
and pay such purchase price by declaring Obligations equal to such purchase
price discharged;
(vi) pending the exercise of any other remedy, FHLBank may
liquidate the Collateral or continue to exercise control over the Collateral as
if FHLBank owned it; or
(vii) as Borrower’s or Pledging Affiliate’s attorney in fact, in
Borrower’s name, and on Borrower’s behalf, sell, assign, collect, compromise,
and release all or any part of the Collateral as fully as Borrower or any
Pledging Affiliate could acting on its own behalf; or
(viii) at FHLBank’s option, advance funds or do any other thing
necessary or appropriate to cure such Event of Default.
(b) If following the exercise of such remedies, any Obligations remain
unsatisfied, Borrower and Pledging Affiliate shall be liable for any such
deficiency. Borrower shall, and shall cause each Pledging Affiliate to, waive
any claims for damages resulting from FHLBank’s exercise of any such remedy and
not to assert any such claims.
17
(c) FHLBank may satisfy any reasonable notice requirement that
Applicable Law may impose on sale of the Collateral by mailing such notice at
least ten (10) days prior to such sale.
(d) FHLBank shall not be liable to Borrower, any Pledging Affiliate,
or any third party for any damages resulting from FHLBank’s exercise or failure
to exercise any of its remedies hereunder or for any liabilities or obligations
of Borrower or any Pledging Affiliate in connection therewith, including any of
the same under Borrower’s or any Pledging Affiliate’s contracts. FHLBank need
not do anything to preserve rights under Mortgage Collateral, send notices,
perform services, or take any action to manage any Collateral.
(e) Each right, power and remedy of FHLBank hereunder shall be
cumulative, concurrent, and in addition to each and every other right, power,
and remedy hereunder, at law, or in equity, and shall be deemed exercised by an
irrevocable power of attorney as further specified in Section 15 below.
FHLBank’s exercise of any one of such rights, powers, or remedies shall not
preclude the simultaneous or later exercise of any other such right, power, or
remedy.
13. WAIVERS; CONTINUED LIABILITY. FHLBank shall not be deemed to have
waived any of its rights in this Blanket Agreement or to the Collateral unless
FHLBank shall have made such waiver in a writing that FHLBank has signed. No
such waiver shall operate as a waiver of any other default or of the same
default on a subsequent occasion. No (i) renewal or extension of time of payment
of the Obligations at any rate of interest, (ii) release, surrender, exchange or
modification of the Collateral, (iii) release of any person primarily or
secondarily liable on the Obligations (including any maker, endorser, guarantor
or surety), (iv) delay in enforcement of payment of the Obligations, (v) delay,
omission or forbearance in exercising any right or power with respect to the
Obligations, the Collateral, or this Blanket Agreement shall affect the
liability of the Borrower or any Pledging Affiliate to the FHLBank.
14. DURATION. The term of this Blanket Agreement shall commence on the date
hereof and end on the date when the Borrower has paid in full all of the
Obligations secured hereby, and either: (i) FHLBank gives written notice to
Borrower that FHLBank will make no further Advances to Borrower, Borrower has no
further servicing obligations under the MPP to FHLBank and FHLBank has redeemed
Borrower’s stock in FHLBank, or (ii) the Borrower gives written notice to the
FHLBank that Borrower does not intend to apply for further Advances, Borrower
has no further servicing obligations under the MPP to FHLBank and FHLBank has
redeemed Borrower’s stock in FHLBank. Until such termination, this Agreement
shall be a continuing one. After such termination any liabilities hereunder of
the Borrower to FHLBank not satisfied prior to such termination shall survive
and remain in full force and effect until satisfied.
15. ATTORNEY-IN-FACT. Borrower hereby appoints FHLBank its irrevocable
attorney-in-fact, coupled with an interest, with full power of substitution, in
its name or otherwise, but at the Borrower’s sole cost and expense to
(i) transfer any shares of stock or Securities Collateral in which FHLBank has a
security interest into the name of FHLBank or its designee or assignee,
(ii) endorse on behalf of Borrower or any Pledging Affiliate any promissory
notes or other instruments in which Borrower or any Pledging Affiliate granted a
18
security interest to FHLBank, (iii) execute and/or record such documents and
instruments as FHLBank, in its sole judgment, deems necessary or appropriate to
further evidence, perfect, or effect a transfer of the security interest granted
to the FHLBank herein or otherwise, (iv) notify obligors on any item of
Collateral to make payment directly to FHLBank or its designee, (v) enter into
any extension, compromise, settlement, release, renewal, or other agreement,
(vi) take control of proceeds of Collateral and apply them to the principal or
interest of Obligations in such manner or order as FHLBank in its sole
discretion may elect, and (vii) record this Blanket Agreement as a power of
attorney where the FHLBank deems appropriate.
16. NOTICE. (a) FHLBank shall give any written notice, approval, or
direction that this Blanket Agreement provides that FHLBank shall give to
Borrower or any Pledging Affiliate by: (i) hand delivery, regular first class
mail, or any other form of physical delivery, or (ii) facsimile or e-mail,
whether or not receipt of such facsimile or e-mail is confirmed with the
Borrower or a follow-up hard copy is mailed or otherwise physically delivered to
the Borrower.
(b) Borrower and any Pledging Affiliate shall give any written notice
that this Blanket Agreement provides for Borrower or Pledging Affiliate by:
(i) registered or certified mail (postage prepaid, return receipt requested) or
some other form of delivery whereby receipt is confirmed, or (ii) facsimile or
e-mail, but only if Borrower or Pledging Affiliate confirms the delivery of a
follow-up hard copy to the FHLBank by the means specified in subsection (b)(i)
of this Section 16.
17. GENERAL. The Act and the Laws of the State of Ohio shall govern all
rights and liabilities hereunder, except that only the Act shall govern
eligibility for Advances and the rate of interest that FHLBank assesses on
Advances or other Obligations. This Agreement shall inure to the benefit and
bind the FHLBank, Borrower, each Pledging Affiliate and their respective
successors and assigns. Neither Borrower nor Pledging Affiliate may assign any
of its rights hereunder or delegate the performance of its duties without
FHLBank’s prior written approval. Any provision that any law or judicial ruling
may limit or render unenforceable in whole or in part shall not affect the
validity or enforcement of any other part of such provision or any of the other
provisions of this Blanket Agreement.
This agreement supersedes and replaces a Blanket Agreement for Advances and
Security Agreement dated November, 2000 and a Commercial Real Estate Addendum
dated October 10, 2002 but does not supersede ore replace an Addendum dated
February 26, 2004 relating to the Borrower’s sale of certain mortgage loans (the
“Loan Sale Addendum”), which shall remain in full force and effect; provided,
however, that each reference in the Loan Sale Addendum to the ‘November 2000
Security Agreement’, the ‘CRE Security Agreement’ or the ‘Original Blanket
Agreement’ shall hereafter be construed as a reference to this Agreement.
18. FORUM. AS A SPECIFICALLY BARGAINED INDUCEMENT FOR FHLBANK TO ENTER INTO
THIS BLANKET AGREEMENT AND EXTEND CREDIT TO BORROWER, ANY ACTION, SUIT OR
PROCEEDING IN RESPECT OF OR ARISING OUT OF THIS BLANKET AGREEMENT, ITS VALIDITY
OR PERFORMANCE, AT THE SOLE OPTION OF FHLBANK, ITS SUCCESSORS AND ASSIGNS, AND
WITHOUT LIMITATION ON THE ABILITY OF FHLBANK, ITS SUCCESSORS AND ASSIGNS, TO
EXERCISE ALL RIGHTS AS TO THE COLLATERAL AND OTHER SECURITY FOR THE
19
OBLIGATIONS OR INITIATE AND PROSECUTE IN ANY APPLICABLE JURISDICTION ACTIONS
RELATED TO REPAYMENT OF THE OBLIGATIONS, SHALL BE INITIATED AND PROSECUTED AS TO
ALL PARTIES AND THEIR SUCCESSORS AND ASSIGNS AT CINCINNATI, OHIO. BORROWER,
FHLBANK AND EACH PLEDGING AFFILIATE CONSENTS TO AND SUBMITS TO THE EXERCISE OF
JURISDICTION OVER ITS PERSON BY ANY COURT SITUATED AT CINCINNATI, OHIO HAVING
JURISDICTION OVER THE SUBJECT MATTER, WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY
CERTIFIED MAIL DIRECTED TO THE PARTIES AT THEIR RESPECTIVE ADDRESSES SET FORTH
HEREIN OR AS OTHERWISE PROVIDED UNDER THE LAWS OF THE STATE OF OHIO. BORROWER
AND EACH OBLIGOR WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY
OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER, AND CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE
COURT.
19. JURY TRIAL WAIVER. AS A SPECIFICALLY BARGAINED INDUCEMENT FOR FHLBANK
TO ENTER INTO THIS AGREEMENT AND EXTEND CREDIT TO BORROWER, BORROWER, EACH
PLEDGING AFFILIATE, AND FHLBANK WAIVES TRIAL BY JURY WITH RESPECT TO ANY ACTION,
CLAIM, SUIT OR PROCEEDING IN RESPECT OF OR ARISING OUT OF THIS BLANKET AGREEMENT
AND/OR THE CONDUCT OF THE RELATIONSHIP BETWEEN FHLBANK AND BORROWER AND ANY
PLEDGING AFFILIATE.
IN WITNESS WHEREOF, Borrower and FHLBank each has caused the duly
authorized representative of each to execute this Blanket Agreement.
BORROWER:
NCB, FSB
By: /s/ Steven A Brookner
Name: Steven A. Brookner
And: /s/ Richard L. Reed
Name: Richard L. Reed
20
By: /s/ Andrew S. Howell
Name: Andrew S. Howell
Title: Senior Vice President, Credit Services
And: /s/ David Eastland
Name: David Eastland
Title: Vice President, Credit Risk Management
July 14, 2006
21
[ DISTRICT OF COLUMBIA
)
The foregoing instrument was acknowledged before me this day of
June, 2006, by Steven A. Brookner and Richard L. Reed, as President and Chief
Executive Officer and Chief Financial Officer, respectively, of NCB,FSB, a
federal savings bank organized under the laws of the United States, on behalf of
the Federal Savings Bank.
/s/ Monica Y. Fisher
Notary Public
My Commission expires: January 1, 2009
22
EXHIBIT A
COLLATERAL SCHEDULE
The Collateral that Borrower is pledging and in which it is granting a security
interest pursuant to the foregoing Blanket Agreement is identified below
opposite the blank or blanks that Borrower has checked and initialed:
1. (_X_) All of Borrower’s One to Four Family Mortgage Collateral 2.
(_X_) All of Borrower’s Multi-family Mortgage Collateral 3. (_X_)
Securities Collateral identified in separate Assignment of Security documents
4. (___) All of Borrower’s Agricultural Mortgage Collateral 5. (_X_)
All of Borrower’s Commercial Real Estate Mortgage Collateral 6. (_X_) All
of Borrower’s Home Equity Line of Credit Collateral 7. (___) All of
Borrower’s Junior Mortgage Collateral 8. (_X_) All of Borrower’s
Collateral Identified in separate Assignment of Mortgage documents
23 |
As filed with the Securities and Exchange Commission on June 6 , 2013 Registration no. 333-188131 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-1/A (Amendment No 2.) REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 PREMIER ALLIANCE GROUP, INC. (Exact name of Registrant as specified in its charter) Delaware 20-0443575 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 4521 Sharon Road, Suite 300 Charlotte, North Carolina 28211 (704) 521-8077 (Address, including zip code, and telephone number, including area code, of Registrant’s executive offices) Mark S. Elliott, CEO/President Premier Alliance Group, Inc. 4521 Sharon Road, Suite 300 Charlotte, North Carolina 28211 (704) 521-8077 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies to: Stuart M. Sieger, Esq. Seth I. Rubin, Esq. Ron Ben-Bassat, Esq. Ruskin , Moscou Faltischek, P.C. 1laza Uniondale, New York 11556 516.663.6746 (Facsimile) Approximate date of commencement of proposed sale to the public: From time to time 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 Rule415 under the Securities Act, check the following box.þ 1 If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) 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(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement number 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 filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company x CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be Registered (1) Proposed Maximum Offering Price Per Unit (2) Proposed Maximum Aggregate OfferingPrice (2) Amountof RegistrationFee Common Stock, $.001 par value(3) Pursuant to Rule 416 under the Securities Act, the shares of common stock being registered hereunder include such indeterminate number of shares as may be issuable as a result of stock splits, stock dividends or similar transactions. Estimated solely for purposes of determining the registration fee pursuant to Rule 457(c) under the Securities Act. The Company is registering the following shares of common stock: (i.) 19,001,392 shares of Common Stock being registered hereby are issuable upon conversion of the Registrant’s Series D Preferred Stock; (ii.) 4,375,392 shares of Common Stock being registered hereby are issuable upon exercise of warrants granted to the holders of the Registrant’s Series D Preferred Stock; (iii.) 750,000 shares of Common Stock being registered hereby are issuable upon exercise of warrants granted to the former holders of the Registrant’s 7% convertible notes; (iv.) 120,000 shares of Common Stock being registered hereby are issuable upon exercise of warrants granted to the Placement Agent and its assigns in the sale of the Registrant’s 7% convertible notes; (v.) 1,750,135 shares of Common Stock being registered hereby are issuable upon exercise of warrants granted to the Placement Agent in the sale of the Registrant’s Series D Preferred Stock and 714,285 shares of Common Stock being registered hereby are issuable upon exercise of warrants granted to the same Placement Agent in the sale of the Registrant’s Series C Preferred Stock; (vi.) a total of 260,750 shares of Common Stock being registered held by the Placement Agent in connection with compensation paid with respect to the GreenHouse and Ecological, LLC acquisition; (vii.) 500,000 shares of Common Stock being registered hereby are issuable upon exercise of warrants granted to holders of the Registrant’s Convertible Debentures (the principal of which have now been retired; (viii.) 900,000 shares of Common Stock being registered hereby are issuable upon exercise of warrants granted to the holders Registrant’s 7% Convertible Series B Preferred Stock; (ix.) 378,940 shares of Common Stock being registered hereby are issuable upon exercise of warrants granted to registered investment advisors in the sale of the Registrant’s 7% Convertible Series B Preferred Stock; (x.) 7,142,856 shares of Common Stock being registered hereby are issuable upon conversion of the Registrant’s Series C Preferred Stock; (xi.) 7,142,856 shares of Common Stock being registered hereby are issuable upon exercise of warrants granted to the holders of the Registrant’s Series C Preferred Stock; (xii.) 600,000 shares of Common Stock being registered hereby are issuable upon exercise of warrants granted to registered investment advisors in the sale of the Registrant’s 7% Convertible Series C Preferred Stock; and, (xiii) 50,000 shares of Common Stock being registered held by a Consultant for services in 2009. 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 Section8(a) of the Securities Act or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section8(a), may determine. 2 The information in this prospectus is not complete and may be changed. The Selling Stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary 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. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION DATED June6 , 2013 PREMIER ALLIANCE GROUP, INC. 43,686,606 Shares of Common Stock The “Selling Stockholders” named in this prospectus are offering to sell up to an aggregate of 43,686,606 shares of Premier Alliance Group Inc.’s common stock as follows: (i.) 19,001,392 shares of Common Stock being registered hereby are issuable upon conversion of the Registrant’s Series D Preferred Stock; (ii.) 4,375,392 shares of Common Stock being registered hereby are issuable upon exercise of warrants granted to the holders of the Registrant’s Series D Preferred Stock; (iii.) 750,000 shares of Common Stock being registered hereby are issuable upon exercise of warrants granted to the former holders of the Registrant’s 7% convertible notes; (iv.) 120,000 shares of Common Stock being registered hereby are issuable upon exercise of warrants granted to the Placement Agent and its assigns in the sale of the Registrant’s 7% convertible notes; (v.) 1,750,135 shares of Common Stock being registered hereby are issuable upon exercise of warrants granted to the Placement Agent in the sale of the Registrant’s Series D Preferred Stock and 714,285 shares of Common Stock being registered hereby are issuable upon exercise of warrants granted to the same Placement Agent in the sale of the Registrant’s Series C Preferred Stock; (vi.) a total of 260,750 shares of Common Stock being registered held by the Placement Agent in connection with compensation paid with respect to the GreenHouse and Ecological, LLC acquisition; (vii.) 500,000 shares of Common Stock being registered hereby are issuable upon exercise of warrants granted to holders of the Registrant’s Convertible Debentures (the principal of which have now been retired; (viii.) 900,000 shares of Common Stock being registered hereby are issuable upon exercise of warrants granted to the holders Registrant’s 7% Convertible Series B Preferred Stock; (ix.) 378,940 shares of Common Stock being registered hereby are issuable upon exercise of warrants granted to registered investment advisors in the sale of the Registrant’s 7% Convertible Series B Preferred Stock; (x.) 7,142,856 shares of Common Stock being registered hereby are issuable upon conversion of the Registrant’s Series C Preferred Stock; (xi.) 7,142,856 shares of Common Stock being registered hereby are issuable upon exercise of warrants granted to the holders of the Registrant’s Series C Preferred Stock;(xii.) 600,000 shares of Common Stock being registered hereby are issuable upon exercise of warrants granted to registered investment advisors in the sale of the Registrant’s 7% Convertible Series C Preferred Stock; and, (xiii) 50,000 shares of Common Stock being registered held by a Consultant for services in 2009. We will not receive any proceeds from the sale of these securities; however, we will receive a total of approximately $15,354,600 if all the Warrants are exercised in full.Information on the Selling Stockholders and the times and manner in which they may offer and sell shares of our common stock under this prospectus is provided under “Selling Stockholders” and “Plan of Distribution.” Shares of our common stock trade on the OTC-QB Bulletin Board under the symbol “PIMO”.On June 4 , 2013 the closing price of our common stock was $0.70 per share. See “Risk Factors” beginning on Page 7 for the factors you should consider before buying shares of our common stock. Neither the Securities and Exchange Commission nor any state securities commission or other regulatory body has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. We will not receive any proceeds from the sale of these securities; however, we will receive a total of approximately $15,354,600 if all the Warrants are exercised in full.Information on the Selling Stockholders and the times and manner in which they may offer and sell shares of our common stock under this prospectus is provided under “Selling Stockholders” and “Plan of Distribution.” The Date of this Prospectus is June , 2013 3 TABLE OF CONTENTS SUMMARY 5 FORWARD LOOKING STATEMENTS 7 RISK FACTORS 7 USE OF PROCEEDS 12 DETERMINATION OF OFFERING PRICE 12 DILUTION 12 MARKET PRICE OF AND DIVIDENDS ON COMMON STOCK AND RELATED STOCKHOLDER MATTERS 12 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 14 BUSINESS 37 PROPERTY 42 MANAGEMENT 43 EXECUTIVE COMPENSATION 49 SUMMARY COMPENSATION TABLE 50 DIRECTOR COMPENSATION 50 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 53 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 56 SELLING STOCK HOLDERS 57 DESCRIPTON OF SECURITIES 65 PLAN OF DISTRIBUTION 66 LEGAL MATTERS 67 EXPERTS 67 REPORTS TO SECURITY HOLDERS 67 WHERE YOU CAN FIND MORE INFORMATION 68 FINANCIAL STATEMENTS F-1 4 SUMMARY Corporate Information We were incorporated on January 5, 2000 as Continuum Group C Inc. under the laws of the State of Nevada. Prior to November 5, 2004, we had not engaged in any business operations other than organizational activities; and other than issuing shares to stockholders, we never commenced operational activities. On November 5, 2004, we consummated a share exchange agreement dated as of October 12, 2004, among us, Premier Alliance Group, Inc., a North Carolina corporation (‘‘North Carolina Premier’’), and the shareholders of North Carolina Premier. As a result, North Carolina Premier merged with us and our name was changed to Premier Alliance Group, Inc. In 2011, we were re-domiciled under the laws of the state of Delaware. Company Summary We are a service and solution delivery firm that provides integration and consulting expertise. Our team consists of senior individuals that are trained as engineers and technology specialists, business and project consultants and analysts – these are known as our Knowledge Based Experts (KBE). Our KBEs are versed in many areas of business and primarily focus on assisting and advising our clients in dealing with critical areas that impact their business. Our primary focus is using our expertise on issues related to two key areas for customers; (i) energy usage and strategy and (ii) risk and compliance initiatives. We work with our customers to assess, design, and implement complete solutions. Our key capabilities in the energy sector help customers manage their energy use and cost via automation, technology, utility incentive programs, and alternative energy solutions. Our solutions in relation to risk and compliance are in understanding the application of various regulations and deploying processes and automation to comply. Company Overview Our core business focus is to serve as a problem solver by providing subject matter expertise through our delivery teams - 360° Intelligence Delivery. We have a focus on building our knowledge practices with talent in key industries we feel offer opportunities including: financial services, utilities, life science, technology, government and health sectors. We currently have two major delivery verticals of Energy and Sustainable Solutions and Risk/Compliance capabilities, which are being driven by energy mandates and increased regulations crossing many industries. Our Energy and Sustainable Solutions capabilities position us as a provider of energy efficiency and sustainable facilities solutions. This includes the design, engineering and installation of solutions and technologies that enable clients to reduce their energy costs and carbon footprints. Our Risk/Compliance deliveries encompass Governance, Risk & Compliance (GRC) and Business Performance & Technology as we assist clients with Risk Management, Compliance, Organizational Effectiveness, and Information Management. The Offering The shares of our common stock covered by this prospectus are being registered for resale by the Selling Stockholders, from time to time in transactions (which may include block transactions) on the OTC-QB Bulletin Board (or other markets on which shares of our common stock are then traded), in negotiated transactions, through put or call option transactions relating to the shares, through short sales of shares, or a combination of such methods of sale, at fixed prices which may be changed, at market prices prevailing at the time of sale, or at negotiated prices. To the knowledge of the Company, none of the Selling Stockholders has entered into agreements, understandings or arrangements with any underwriters or broker-dealers regarding the sale of their shares. Selling Stockholders The Selling Stockholders consist of the holders of the Company’s Series C and D Convertible Preferred Stock, the holders of warrants issued in connection with the Series C and D Convertible Preferred Stock, the holders of warrants in connection with the Company’s 7% convertible notes, which were mandatorily converted to Series D Convertible Preferred Stock on December 26, 2012, the first closing of the Series D Convertible Preferred Stock in accordance with its terms. Selling Stockholders also include holders of warrants of the Company’s previously outstanding Convertible Debentures, holders of warrants issued in connection with the Series B Convertible Preferred Stock, placement agent warrants related to each of the Series B, Series C and Series D Convertible Preferred Stock offerings, and common stock held by the Company’s primary placement agent in connection with compensation paid with respect to the Ecological, LLC acquisition. 5 The specific transactions in which these shares were acquired are detailed in the Selling Stockholders section elsewhere in this prospectus.We will receive none of the proceeds from the sale of shares by the Selling Stockholders.However, if all of the Warrants covered hereby are exercised, Premier will receive aggregate proceeds of $15,354,600, all of which will be added to Premier’s working capital. Corporate Information Our principal executive office is located at 4521 Sharon Road, Suite 300, Charlotte, North Carolina, 28211, telephone number (704) 521-8077. 6 CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION This prospectus contains certain statements relating to our future results that are considered “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.Actual results may differ materially from those expressed or implied as a result of certain risks and uncertainties, including, but not limited to, changes in political and economic conditions; interest rate fluctuation; competitive pricing pressures within our market; equity and fixed income market fluctuation; technological change; changes in law; changes in fiscal, monetary regulatory and tax policies; monetary fluctuations as well as other risks and uncertainties detailed elsewhere in this prospectus or from time-to-time in our filings with the Securities and Exchange Commission.Such forward-looking statements speak only as of the date on which such statements are made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. CERTAIN TERMS USED IN THIS REPORT When this prospectus uses the words “we,” “us,” “our,” “Premier,” and the “Company,” they refer to Premier Alliance Group, Inc.“SEC” refers to the Securities and Exchange Commission RISK FACTORS The securities offered by the Selling Stockholders involve a high degree of risk and should only be purchased by persons who can afford to lose their entire investment. Prospective purchasers should carefully consider, among other things, the following risk factors and the other information in this prospectus, including our financial statements and the notes to those statements, prior to making an investment decision. Risks Related to Our Business and Industry A DECLINE IN THE PRICE OF, OR DEMAND FOR, ANY OF OUR RISK/COMPLIANCE CONSULTING AND SOLUTION SERVICES, WOULD HARM OUR REVENUES AND OPERATING MARGINS. Our Risk/Compliance business consulting and business solutions services accounted for substantially all of our revenues in 2011, as well as the majority of our revenues during 2012 (approximately 80%). We anticipate that revenue from the Risk/Compliance business consulting and solution services will continue to constitute aportion of our revenues for the foreseeable future and anticipate that revenue in the Energy and Sustainability segment will outpace the growth of our Risk/Compliance revenues. However, a decline in the price of, or demand for, business consulting and solution services wouldharm our business. A SIGNIFICANT PORTION OF OUR BUSINESS REVENUES DEPEND ON A RELATIVELY SMALL NUMBER OF LARGE CUSTOMERS.IF ANY OF THESE CUSTOMERS DECIDE THEY WILL NO LONGER USE OUR SERVICES, REVENUES WILL DECREASE AND FINANCIAL PERFORMANCE WILL BE SEVERELY IMPACTED. To date, we have received a significant portion of revenues from large sales to a small number of customers. During 2012 and 2011, our five largest customers, together comprised approximately 45% and 52% of our total revenues, respectively. Our operating results may be harmed if we are not able to complete one or more substantial sales to any large customers or is unable to collect accounts receivable from any of the large customers in any future period. INTENSE COMPETITION IN OUR TARGET MARKETS COULD IMPAIR OUR ABILITY TO GROW AND TO ACHIEVE PROFITABILITY.IF WE DO NOT GROW, OUR COMPETITIVE ABILITY WILL BE SEVERELY RESTRICTED, WHICH WOULD DECREASE PROFITABILITY. Our competitors vary in size and in the scope and breadth of the products and services they offer. Our competitors include Deloitte, North Highland, Accenture, Honeywell, Johnson Controls, Ameresco, and Noresco as well as other national firms and a number of smaller regional firms. Many of our competitors have longer operating histories, substantially greater financial, technical, marketing, or other resources, or greater name recognition than us. Our competitors may be able to respond more quickly to new or emerging technologies and changes in customer requirements. Increased competition is likely to result in price reductions, reduced gross margins, and loss of market share, any one of which could seriously harm our business. OUR LENGTHY SALES CYCLE COULD CAUSE DELAYS IN REVENUE GROWTH, WHICH COULD MAKE IT MORE DIFFICULT TO ACHIEVE OUR GROWTH OBJECTIVES. The period between initial contact with a potential customer and that customer’s purchase of services is often long.A customer’s decision to purchase services involves a significant allocation of resources on our part, is influenced by a customer’s budgetary cycles, and in many instances involves a preferred-vendor process. To successfully sell our services, generally we must educate the potential 7 customers regarding the uses and benefits of our services, which can require significant time and resources. Many potential customers are large enterprises that generally take longer to designate preferred vendors; the typical sales cycle in connection with becoming an approved vendor has been approximately six to 12 months. Delay or failure to complete sales in a particular quarter could reduce revenues in that quarter, as well as subsequent quarters over which revenues for the sale would likely be recognized. If the sales cycle unexpectedly lengthens in general, or for one or more large orders, it would adversely affect the timing of revenues and revenue growth. If we were to experience a delay of several weeks on a large order, it could harm our ability to meet forecasts for a given quarter. WE MAY NOT BE ABLE TO SECURE NECESSARY FUNDING IN THE FUTURE AND MAY BE FORCED TO CURTAIL PLANNED GROWTH, WHICH WOULD SLOW OR STOP THE ABILITY TO GROW, INCREASE REVENUES, AND ACHIEVE PROFITABILITY. For our business to grow, substantial working capital will be required. We believe that if capital requirements increase materially from those currently planned, additional financing may be required sooner than anticipated. If we raise additional funds by issuing equity securities, the percentage of our capital stock owned by our current shareholders would be reduced, and those equity securities may have rights that are senior to those of the holders of our currently outstanding securities. Additional financing may not be available when needed on commercially acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may be forced to curtail planned growth, and we may be unable to develop or enhance planned products and services, take advantage of future opportunities, or respond to competitive pressures. THERE ARE RISKS ASSOCIATED WITH ACQUISITIONS. An integral part of our growth strategy is evaluating and, from time to time, consummating acquisitions. These transactions involve a number of risks and present financial, managerial and operational challenges, including: diversion of management’s attention from running the existing business; increased expenses, including legal, administrative and compensation expenses resulting from newly hired employees; increased costs to integrate personnel, customer base and business practices of the acquired company; adverse effects on reported operating results due to possible write-down of goodwill associated with acquisitions; and dilution to stockholders to the extent of issuance of securities in the transaction.We may not be able to acquire additional businesses on favorable terms or at all.In addition, failure to identify or complete acquisitions of suitable properties could slow our growth. OUR EXECUTIVE OFFICERS AND DIRECTORS WILL BE ABLE TO EXERT SIGNIFICANT INFLUENCE OVER US TO THE DETRIMENT OF MINORITY SHAREHOLDERS,WHICH WILL LIMIT OUR SHAREHOLDERS’ ABILITY TO INFLUENCE THE OUTCOME OF KEY DECISIONS. Our executive officers and directors collectively control approximately 37.6% of our outstanding capital stock. As a result, if they act together they will be able to influence management and affairs and all matters requiring shareholder approval, including significant corporate transactions. This concentration of ownership may have the effect of delaying or preventing any change in control of our company and might affect the market price of the common stock. MIRIAM BLECH AND ISAAC BLECH HAVE SUBSTANTIAL INFLUENCE OVER THE BUSINESS, DUE TO THEIR LARGE OWNERSHIP STAKE IN OUR CAPITAL STOCK, GIVING THEM THE ABILITY TO EXERT INFLUENCE OVER US TO THE DETRIMENT OF MINORITY SHAREHOLDERS, WHICH WILL LIMIT SHAREHOLDERS’ ABILITY TO INFLUENCE THE OUTCOME OF KEY DECISIONS. Miriam Blech currently controls approximately 9% of our outstanding voting capital stock, including 60% of our Series C preferred stock.Isaac Blech currently controls approximately 6% of our outstanding voting capital stock, including 40% of our Series C preferred stock.Together, Mr. and Mrs. Blech currently control approximately 15% of our outstanding voting capital stock, including 100% of our Series C preferred stock.The holders of a majority of the shares of Series C preferred stock have the right to appoint four members and one observer to the Board of Directors.In addition, the vote of a majority of the shares of the Series C preferred stock are required to approve, among other things, (i) any issuance of capital stock which is senior to or pari passu with the Series C preferred stock; (ii) any issuance of additional shares of preferred stock; (iii) any dividends or payments on outstanding securities; (iv) any liquidation or winding up activities of the company, (v) any change in control or change in the nature of our business, and (vi) any amendment to the articles of incorporation, by-laws or other governing documents that would result in an adverse change to the rights, preferences, or privileges of the Series C preferred stock.Accordingly, Mr. and Mrs. Blech have substantial control over the business and may decide the outcome of matters submitted to our stockholders for approval, including mergers (other than strategic mergers), consolidations and the sale of all or substantially all of the Company’s assets, and can also prevent or cause a change in control. The interests of Mr. and Mrs. Blech may differ from the interests of other stockholders. Third parties may be discouraged from making a tender offer or bid or it may make it easier for them to acquire Premier because of this concentration of ownership. 8 OUR FAILURE TO ATTRACT AND RETAIN QUALIFIED PERSONNEL COULD HAVE AN ADVERSE EFFECT ONUS. Our ability to attract and retain qualified professional and/or skilled personnel in accordance with our needs, either through direct hiring or acquisition of other firms employing such professionals, is an important factor in determining our future success. The market for these professionals is competitive, and there can be no assurance that we will be successful in our efforts to attract and retain needed personnel. Our success is also highly dependent upon the continued services of our key officers, and we do not maintain key employee insurance on any of our executive officers. If we are unable to retain qualified personnel, the roles and responsibilities of those employees will need to be filled, which may require that we devote time and resources to identifying, hiring and integrating new employees. In addition, the failure to attract and retain key employees, including officers, could impair our ability to provide services to our clients and conduct our business effectively. Risks Related to the Energy and Sustainability Solutions Segment (“ESS”) CHANGES IN LAWS, REGULATIONS AND POLICIES THAT AFFECT THE ESS BUSINESS COULD ADVERSELY AFFECT ESS SEGMENT’S FINANCIAL RESULTS. The ESS segment is subject to numerous laws, regulations and policies. Changes in the laws, regulations and policies, including the interpretation or enforcement thereof, that affect, or will affect, the ESS business, including changes in the scope of regulation by regulatory agencies, accounting standards, tax laws and regulations, trade rules and customs regulations, and the outcome and expense of legal or regulatory proceedings, and any action the ESS may take as a result could adversely affect the ESS segment. THE ESS SEGMENTS’ SUCCESS DEPENDS, IN PART, ON MAINTAINING GOOD RELATIONSHIPS WITH ITS DISTRIBUTION CHANNELS. The ESS segments success depends, in part, on its maintaining satisfactory relationships with its distribution channels. Our ESS segment does not have long-term supply or distribution contracts. The vast majority of ESS’s sales are affected on a purchase order basis that requires the ESS segment to meet expectations of delivery, quality and pricing of ESS’s products, at both the distribution channel level and at the level of the ultimate consumer who uses ESS’s products. If ESS fails to meet expected standards, its revenues would decline and this could result in a material adverse effect on its business. CONSUMERS MIGHT NOT ADOPT THE ESS ALTERNATIVE ENERGY SOLUTIONS. The power generation solutions ESS provides are relatively new alternative energy means that consumers may not adopt at levels sufficient to grow this segment of business. ESS cannot assure that consumers will choose to use its solutions at levels sufficient to sustain its business in this area. This development may be impacted by many factors, including: • Market acceptance of ESS’S products; • Cost competitiveness of these systems; • Regulatory requirements; and • Emergence of newer, more competitive technologies and products. LOSS OF FAVORABLE TAX BENEFITS AND OTHER GOVERNMENTAL INCENTIVES COULD SUBSTANTIALLY HARM THE ESS SEGMENT’S’S OPERATING MARGINS. A number of ESS’s products and services have been aided by federal tax incentives. Because alternative fuels have historically been more expensive to produce than diesel or petroleum fuel, the biofuels industry has depended on governmental incentives that have effectively brought the price of biofuels more in line with the price of diesel fuel to the end user. These incentives have supported a market for biofuels that might not exist without the incentives. Loss of these incentives may render some of ESS’s solutions unmarketable. THE DECREASE OR LACK OF INCREASE IN THE COST OF ENERGY GENERATED BY TRADITIONAL SOURCES MAY CAUSE THE DEMAND FOR ESS’S SERVICES TO DECLINE. Decreases in the costs associated with traditional sources of energy, such as prices for commodities like coal, oil and natural gas, will reduce demand for energy efficiency and renewable energy solutions. Technological progress in traditional forms of electricity generation or the discovery of large new deposits of traditional fuels could reduce the cost of electricity generated from those sources 9 and as a consequence reduce the demand for ESS’s solutions. Any of these developments could have a material adverse effect on the ESS business segment. THE FAILURE OF ESS’S SUBCONTRACTORS TO PROPERLY AND EFFECTIVELY PERFORM THEIR SERVICES COULD CAUSE DELAYS IN THE DELIVERY OF ESS’S ENERGY EFFICIENCY SOLUTIONS. The ESS business segment’s success depends on its ability to provide quality, reliable energy efficiency solutions in a timely manner, which in part requires the proper removal and installation of lighting, mechanical and electrical systems and other products by the segment’s contractors and subcontractors upon which we depend. A significant portion of ESS’s energy efficiency solutions are installed by contractors or subcontractors. Any delays, malfunctions, inefficiencies or interruptions in ESS’s energy efficiency solutions caused by improper installation could cause it to have difficulty retaining current clients and attracting new clients. Such delays could also result in additional costs that could affect the profit margin of ESS’s projects. In addition, the ESS business segment brand, reputation and growth could be negatively impacted. Risks Related to Ecological, LLC (“Ecological”) – Energy and Sustainability Solutions Segment (1) Ecological will operate as a key part of our Energy and Sustainability Solutions segment.However, we just completed the acquisition of Ecological on December, 31, 2012 and therefore are including separate risk factors for Ecological’s business. CHANGES IN LAWS, REGULATIONS AND POLICIES IN RELATION TO ENERGY EFFICIENCY MANDATES THAT AFFECT ECOLOGICAL’S BUSINESS COULD ADVERSELY AFFECT ECOLOGICAL’S FINANCIAL RESULTS. Ecological’s business plan is primarily based upon providing the services mandated by the City of New York in the Greener Greater Buildings Plan legislation, specifically local law 87. If the law is overturned, there will be an impact to the market that has developed for these services, and in turn, Ecological’s business plan. INTENSE COMPETITION IN OUR TARGET MARKETS COULD IMPAIR OUR ABILITY TO GROW AND TO ACHIEVE PROFITABILITY. The market for local law 87 work has been developing rapidly over the past two years and continues to change as new entrants enter the market and the law’s requirements are fully published. If low cost, low quality operators enter the market and drive the price of these services down, this will present a risk to the revenue projections for Ecological. Alternatively if large engineering firms begin offering these services at lower prices as a loss leader to acquire advanced services contracts, this will also affect Ecological’s potential revenue. Risks Related to Our Stock THE MARKET FOR OUR COMMON STOCK IS LIMITED. Our common stock is thinly-traded and any recently reported sales price may not be a true market-based valuation of our common stock. There can be no assurance that an active market for our common stock will develop.In addition, the stock market in general has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to operating performance.Consequently, holders of shares of our common stock may not be able to liquidate their investment in our shares. OUR EXISTING PREFERRED STOCK HAS LIQUIDATION PREFERENCES THAT MAY AFFECT COMMON STOCK HOLDERS. In the event of our dissolution, liquidation or change of control, the holders of our Series B, Series C and Series D preferred stock will receive a liquidation preference in priority over the holders of common stock.A consolidation or merger, a sale of all or substantially all of our assets, or a sale of 50% or more of our common stock would be treated as a change of control for this purpose.Therefore, it is possible that holders of common stock will not obtain any proceeds upon any such event. THE ISSUANCE OF SHARES UPON CONVERSION OF THE PREFERRED STOCK AND EXERCISE OF OUTSTANDING WARRANTS MAY CAUSE IMMEDIATE AND SUBSTANTIAL DILUTION TO EXISTING STOCKHOLDERS. The issuance of shares upon conversion of our outstanding preferred stock and exercise of warrants may result in substantial dilution to the interests of other stockholders since the selling stockholders may ultimately convert and sell the full amount issuable on conversion. 10 ANTI-DILUTION PROVISIONS OF OUR SERIES C AND SERIES D PREFERRED STOCK COULD RESULT IN DILUTION OF STOCKHOLDERS. The conversion price of the Series C and Series D Preferred Stock is subject to “full-ratchet” anti-dilution provisions for a period of 12 months following issuance, and weighted average anti-dilution thereafter, so that upon future issuances of our common stock or equivalents thereof, subject to specified exceptions, at a price below the conversion price of the preferred stock, the conversion price will be reduced, further diluting holders of our common stock. OUR COMMON STOCK MAY BE CONSIDERED A “PENNY STOCK." The SEC has adopted regulations that generally define "penny stock" to be an equity security that has a market price of less than $5.00 per share, subject to specific exemptions.This designation requires any broker or dealer selling these securities to disclose certain information concerning the transaction, obtain a written agreement from the purchaser and determine that the purchaser is reasonably suitable to purchase the securities. These rules may restrict the ability of brokers or dealers to sell our common stock and may affect the ability of investors hereunder to sell their shares.In addition, since our common stock is traded on the OTCQB, investors may find it difficult to obtain accurate quotations of the stock and may experience a lack of buyers to purchase such stock or a lack of market makers to support the stock price. THERE ARE RISKS ASSOCIATED WITH OUR STOCK TRADING ON THE OTCQB RATHER THAN A NATIONAL EXCHANGE. There are significant consequences associated with our stock trading on the OTCQB rather than a national exchange. The effects of not being able to list our securities on a national exchange include: · Limited release of the market prices of our securities; · Limited news coverage of our Company; · Limited interest by investors in our securities; · Volatility of our stock price due to low trading volume; · Increased difficulty in selling our securities in certain states due to “blue sky” restrictions; · Limited ability to issue additional securities or to secure financing. WE DO NOT INTEND TO PAY CASH DIVIDENDS ON ITS COMMON STOCK. AS A RESULT, STOCKHOLDERS WILL BENEFIT FROM AN INVESTMENT IN THE COMMON STOCK ONLY IF IT APPRECIATES IN VALUE. We have never paid a cash dividend on our common stock, and do not plan to pay any cash dividends in the foreseeable future. We currently intend to retain any future earnings to finance operations and further expand and grow the business, including growth through acquisitions. As a result, the success of an investment in our common stock will depend upon any future appreciation in its value. We cannot assure you that our common stock will appreciate in value or even maintain the price at which stockholders have purchased their shares. 11 USE OF PROCEEDS The shares of our common stock offered by this prospectus are being registered solely for the account of the Selling Stockholders.We will not receive any of the proceeds from the sale of these shares.However, if all of the Warrants offered in this prospectus were exercised, we would receive proceeds of $15,354,600 in the aggregate, which we would use for additional working capital. DETERMINATION OF OFFERING PRICE The Selling Stockholders will determine at what price they may sell the shares of common stock offered by this prospectus, and such sales may be made at prevailing market prices, or at privately negotiated prices. DILUTION The selling security holders are offering for resale common shares underlying the Series D and Series C convertible preferred stock and respective outstanding warrants. In addition, certain selling shareholders are also comprised of Series B convertible preferred stockholders’ holding detachable warrants, with related placement agent warrants, and convertible debentures issued with detachable warrants, all of which in the event exercised, existing shareholders will experience additional dilution to their ownership interest in us. Our net tangible book value as of December 31, 2012 was approximately $3,145,952, or approximately $0.14 per share. Net tangible book value per share represents our total shareholders’ equity less total intangible assets, divided by the number of shares of common stock outstanding as of December 31, 2012. MARKET PRICE OF AND DIVIDENDS ON COMMON STOCK AND RELATED STOCKHOLDER MATTERS Market information.Our common stock is traded on the OTCQB (‘‘OTCQB’’) under the symbol ‘‘PIMO”. The following table sets forth the range of high and low bid prices for our common stock for each of the periods indicated as reported by the OTCQB.These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions. On June 4, 2013, the closing price of our common stock as reported on the OTCQB was $0.70 per share. For the Fiscal Year Ending December 31, 2012: High Low March 31, 2012 $ $ June 30, 2012 September 30, 2012 December 31, 2012 For the Fiscal Year Ending December 31, 2011: March 31, 2011 $ $ June 30, 2011 September 30, 2011 December 31, 2011 For the Fiscal Year Ending December 31, 2010: March 31, 2010 $ $ June 30, 2010 September 30, 2010 December 31, 2010 We consider our common stock to be thinly traded and, accordingly, reported sales prices or quotations may not be a true market-based valuation of our common stock. Holders.As of June 4, 2013, there were approximately 452 record holders of our common stock. We believe there are more owners of our common stock whose shares are held by nominees or in street name. 12 Dividends.Holders of our common stock are entitled to receive dividends, as and when declared by our Board of Directors, out of funds legally available therefore, subject to the dividend and liquidation rights of preferred stock issued and outstanding. We have never declared or paid any dividends on our common stock, nor do we anticipate paying any cash dividends on our common stock in the foreseeable future. Securities Authorized for Issuance under Equity Compensation Plans The table below sets forth information as of June 4 , 2013 with respect to compensation plans under which our common stock is authorized for issuance.The Compensation Committee approved our 2008 Stock Incentive Plan in May 2008 and received shareholder approval in the 2009 (the “Plan”). Plan Category Number of securities to be issued upon exercise of outstanding options Weighted-average exercise price of outstanding options Number of securities remaining available for future issuance under equity compensation plans Equity compensation plans approved by shareholders (2008 Plan) Total 13 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS For the Three Months Ended March 31, 2013 and 2012 The following discussion should be read in conjunction with our financial statements and the related notes included in this Prospectus. Results of Operations Results of Operations for the Three Months Ended March 31, 2013 Compared to the Three Months Ended March 31, 2012. The result of operations described below includes the Risk/Compliance Solutions segment for the three months ended March 31, 2013 and 2012. The Energy and Sustainability Solutions segment began with the acquisition of Greenhouse Holdings, Inc. on March 5, 2012; hence, operating results for this segment are only included from March 5, 2012 through March 31, 2012.We acquired Ecological, LLC, also part of our Energy and Sustainability Solutions segment (“ESS”), on December 31, 2012; therefore, their results of operations are only included in operating results for the three months ended March 31, 2013. Total revenue for the three months ended March 31, 2013 was $5,653,000 as compared to $4,786,000 for the three months ended March 31, 2012, a net increase of $867,000, or 18.1%.This net increase is the result of several factors. During the three months ended March 31, 2013, our EES segment generated revenue of $2,172,000 compared to $254,000 for the same period during the prior year, an increase of $1,918,000 over the prior year amount. This is largely, but not solely, due to the fact that for three months ended March 31, 2012, our EES segment was then comprised only of GHH, and only for the period from the March 5, 2012 acquisition date through March 31, 2012. Of the $2,172,000 generated by the ESS segment for the three months ended March 31, 2013, GHH accounted for $1,780,000 and Ecological for $392,000. For the three months ended March 31, 2013, excluding the above impact of the ESS segment, total revenues for the Risk/Compliance segment were $3,481,000, compared to $4,551,000 for three months ended March 31, 2012, a decrease of $1,070,000 or 23.5%.An overview of each of our segments, and regions as appropriate, is necessary to understand the dynamics of the overall increase in revenue: I. Risk/Compliance Solutions Segment First, it is important to note that effective January 1, 2013, management combined previously stand-alone markets into new “regions” to achieve increasing financial operating leverage and synergies in leveraging our KBE’s, Business Development and Recruiting personnel in the newly combined regions. The Los Angeles and San Diego markets are now the Pacific Southwest Region (“PSR”), the Charlotte and Winston-Salem markets are now the Southeast Region (“SER”), and Kansas City, where we physically shut down the office in September 2012, but where we continue to service remaining client relationships, remains Kansas City. a. Revenue in the SER was $2,262,000 for the three months ended March 31, 2013 compared to $2,856,000 for the three months ended March 31, 2012, a net decrease of $594,000, or 20.8%. This market remains heavily involved in the financial institutions industry and we continue to anticipate significant Governance, Risk & Compliance (“GRC”) revenue executed statements of work with large clients that have not yet come to fruition, as clients deferred projects in 2012 and are now beginning to re-engage for these efforts. We began to see increased activity toward the end of the quarter ended March 31, 2013, executing a new $900,000 contract with a major client as well as several other contracts and we remain optimistic this region’s revenue will grow during the remainder of 2013. b. Revenue in Kansas City was $106,000 for the three months ended March 31, 2013 compared to $702,000 for the three months ended March 31, 2012, a net decrease of $596,000, or 84.9%. This decline was not unanticipated, as we no longer have an office in Kansas City, nor do we market our services there. The Kansas City market struggled since the loss of threelarge customers in early to mid-2011, due to those customers taking their IT operations offshore and in-house, respectively. Those customers accounted for approximately $2,500,000 in annual revenue.The operating loss was reduced from $338,000 in 2011 to $73,000 in 2012, but after much analysis, the decision was made to close the office in Kansas City in September 2012 due to poor future prospects in the market. c. Revenue in the PSR was $1,113,000 for the three months ended March 31, 2013 compared to $993,000 for the three months ended March 31, 2012, a net increase of $120,000, or 12.1%. The PSR market continues to show steady strong growth in all of our service offerings. d. Importantly, and as further discussed below, on a combined Risk/Compliance region basis, while gross margin dollars declined by $190,000, on net reduced revenue of $1,070,000, gross margin percentage for all Risk/Compliance regions, on a combined basis, increased from 22.6% for the three months ended March 31, 2012 to 24.1% for the three months ended March 31, 2013, reflecting an increase in the relative percentage of advisory revenue (carrying higher margins) and increased management control over staff utilization. 14 II. Energy and Sustainability Solutions Segment As aforementioned, this segment is now comprised of GHH and Ecological, with GHH beginning the segment effective upon its acquisition March 5, 2012 and Ecological added upon its acquisition December 31, 2012. a. GHH – As discussed in our Annual Report on Form 10-K, much of 2012 with GHH was spent integrating the company, evaluating and focusing its revenue targets and streams, operations and key personnel. Given the date of acquisition, its revenue contribution for the three months ended March 31, 2012 was only $254,000, and as importantly, GHH’s revenue contribution for the entire year ended December 31, 2012 was only $2,947,000, as the integration and business evaluation and refinement process described just above was occurring. GHH’s recognized revenue for the three months ended March 31, 2013 was $1,780,000 or 60% of last year’s annual total.In addition, GHH’s business plan refinement is taking root and believes its business model is now aligned for optimal growth, as evidenced by the recent execution of over $10,000,000 in firm contracts (already more than three times their entire revenue for 2012).GHH is a platform for our EES business and we are committed to this platform, as they now have projects in the alternative energy space (i.e., solar, cogeneration, etc.), which have not reached the stage of revenue recognition as well as continue to sign new contracts for Demand Response based projects. b. Ecological -Ecological’ s total revenue for the three months ended March 31, 2013 was $392,000, and comprised of i) benchmarking revenue of $214,000, ii) audit and retro-commissioning of $166,000 and LEED certification services of $12,000.The nature of the benchmarking and audit and retro-commissioning services are such that the testing must encompass two seasons (heating and cooling); hence, the contracts are spread over at least a six month period. While cash is generally received 50% upon signing of the contract and 50% upon completion, revenue is recognized on the percentage of completion basis, primarily as a % of total engineering labor hours incurred. Our synergistic opportunities with Ecological, which are already in the early stages of training and integration of personnel and marketing programs, are the Retro-Fit opportunities at their existing clients (and they have continued to add to their client base in the 1st quarter 2013) that will naturally evolve as an outcome of the statutory audits and our ability to leverage GHH’s proven successes in providing creative energy efficiency solutions and bring them to this market in concert with Ecological. Gross margin (revenue less cost of revenues, defined as all costs for billable staff for the Risk/Compliance Solutions segment and cost of goods for the ESS Solutions segment) increased from $1,081,000 for the three months ended March 31, 2012 to $1,595,000 for the three months ended March 31, 2013, and increased on a percentage basis, from 22.6% in 2012 to 28.2% in 2013 on a consolidated basis.This improvement of $514,000 was positively impacted on a gross margin basis from the Risk/Compliance segment discussed above, margins achieved by GHH of 34.0% and by Ecological of 38%. Selling, general and administrative (“SG&A”) expenses increased from $1,846,000 and 38.6% of revenue for the three months ended March 31, 2012 to $2,089,000 for the three months ended March 31, 2013, but declined on a percentage basis of revenue, from 38.6% in 2012 to 36.9% in 2013 on a consolidated basis. To properly evaluate SG&A expenses, an analysis of i) Risk/Compliance Solutions segment SG&A expenses, ii) “corporate” level SG&A expenses, and iii) ESS segment SG&A expenses must be separately examined: a. Risk/Compliance SG&A - On a combined basis, the Risk/Compliance regions reduced SG&A expenses from $600,000 and 13.2% of revenue for the three months ended March 31, 2012 to $431,000 and 12.4% of revenue for the three months ended March 31, 2013, a decrease of $169,000 or 28%. This reflects management’s emphasis on closely managing market level variable costs in the face of temporarily declining revenues in some regions. b. Corporate SG&A - Corporate SG&A expenses are currently included in the Risk/Compliance business segment; Corporate SG&A expenses for the three months ended March 31, 2013 were $884,000 or 15.6% of revenue compared to $1,031,000 or 21.5% of revenue for the three months ended March 31, 2012.This decrease of $147,000 is primarily comprised of i) a reduction in public relations/branding charges of $54,000, ii) a reduction in non-cash charges for issuances of stock options and stock warrants of $162,000, iii) a reduction in professional services-accounting of $11,000, as we continue to take substantially all work in-house, and, iv) a net reduction in corporate wages of $12,000, offset by v) an increase in legal fees of $18,000, primarily related to a Registration Statement on Form S-1 we are filing in conjunction with the Promissory Notes and Series D Preferred Stock capital raises discussed above, vi) $11,000 in employee insurance benefits cost, vii) $16,000 in increased franchise tax fees in Delaware due to the doubling of our authorized shares, viii) $24,000 increase in director fees and expenses due to the significant expansion of our Board of Directors during 2012. 15 c. Energy & Sustainability SG&A GHH – GHH’s SG&A expenses increased from $256,000 and 5.3% of consolidated revenue for the three months ended March 31, 2012 (as they were only included in results of operations from March 5, 2012 to March 31, 2012) to $562,000 and 9.9% of consolidated revenue and 31.6% of GHH revenue for the three months ended March 31, 2013. Management believes the fixed and semi-fixed cost base is now in place allowing for GHH to realize substantial revenue growth without substantial increases in these costs. Ecological – Ecological, only acquired December 31, 2012, incurred SG&A expenses of $233,000 for the three months ended March 31, 2013, representing 4.1% of consolidated revenues, but 59.3% of their revenue for the three month period. Just as with GHH, management believes the fixed and semi-fixed cost base is in place allowing for Ecological to realize substantial revenue growth without substantial increases in these costs. Loss from operations was $(590,000) or (10.4%) of total revenue for the three months ended March 31, 2013 compared to ($809.000) or (16.9%) of total revenue for the three months ended March 31, 2012.This improvement of $219,000, and importantly, a relative percentage increase of 6.5% of total revenue, is indicative of managements’ goal of achievement of scale.These losses include corporate SG&A of $884,000 and $1,031,000, for the respective periods above.Excluding corporate SG&A, “loss from operations” would actually have been income from operations of $294,000 for the three months ended March 31, 2013 and $222,000 for the three months ended March 31, 2012. We have invested over the past 18 months in building a management platform to support rapid growth and believe that substantially all fixed and semi-fixed corporate overhead costs (with the exception of non-cash grants of stock options and warrants) are in place to support that growth and we will be able to achieve the desired scale as revenues continue to grow. Other income (expense) for the three months ended March 31, 2013 resulted in income of $1,001,000 compared to expense of $1,751,000 for the three months ended March 31, 2012, and is comprised of the following items: a. In 2010 and 2011, respectively, the Company issued Debentures and Series C Preferred Stock with detachable warrants, respectively, that were deemed to be derivative instruments. On November 16, 2012, we issued 7% Redeemable Convertible Promissory Notes (“Promissory Notes”) which had 750,000 detachable warrants associated directly with the Promissory Notes, plus 120,000 detachable warrants that were issued to the registered investment advisor.On December 26, 2012, we issued our first round of Series D Preferred Stock; the Promissory Notes were mandatorily converted to Series D Preferred Stock on December 26, 2012. On January 25, 2013, the Company closed an additional private placement financing from the sale of its Series D Preferred Stock under identical terms as described above to accredited investors. On February 26, 2013, the Company closed the final private placement financing from the sale of its Series D Preferred Stock under identical terms as described above to accredited investors. For all warrants directly associated with the three issuances of Series D Preferred Stock, including the conversion of the Promissory Notes and their related warrants, the derivative liability for each of the above issuances and their related warrants was adjusted to the collective fair market value at March 31, 2013, with the collective change in value from either December 31, 2012, or their respective value at initial issuance being recorded as derivative income on the statement of operations for the three months ended March 31, 2013. b. We recorded $24,000 in non-cash income as a result of the increase in cash surrender value of the life insurance policies owned by us. c. We recorded $12,000 in interest expense primarily related to our bank line of credit. As a cumulative result of the above, income before income taxes for the three months ended March 31, 2013 was $411,000, compared to a loss before income taxes of $2,560,000 for the three months ended March 31, 2012. The effective income tax rate for the three months ended March 31, 2013 was a tax expense of 91.4% versus a tax benefit of (18.2%) for the three months ended March 31, 2012.The effective tax rate is impacted by “permanent” differences between “book” taxable income and “tax” taxable income, and for the three months ended March 31, 2013, is primarily due to: i) the book recording of the noncash derivative income of $982,000 (which has no “tax basis”), ii) the book recording of noncash income from the increase in cash surrender value of life insurance policies of $24,000, iii) taxes, net of federal benefit, and, iv) the three months ended March 31, 2013 change in the deferred tax asset valuation allowance. Income taxes were a net expense of $376,000 for the three months ended March 31, 2013 versus a tax benefit of $466,000 the three months ended March 31, 2012.We account for income taxes under FASB ASC Topic 740 “Income Taxes”. Under FASB ASC Topic 740-10-30, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis.We regularly assess the likelihood that our deferred tax assets will be realized from recoverable income taxes or recovered from future taxable income.To the 16 extent that we believe any amounts are not more likely than not to be realized through the reversal of the deferred tax liabilities and future income, we record a valuation allowance to reduce the deferred tax assets.We made the assessment in the fourth quarter of 2012, and again as of March 31, 2013, that a full valuation allowance for the all deferred tax assets (with the exception of the deferred tax assets directly related to the derivative liability) should be provided based on consideration of the net operating losses for the past two years and the uncertainty surrounding the potential future integration of expenses associated with the acquisition of Ecological, LLC, that it was no longer, at this time, more likely than not that the deferred tax assets would be recoverable.In accordance with FASB ASC 740, management will continue to monitor the status of the recoverability of deferred tax assets.Hence, the above position substantially reduced a tax benefit otherwise recognizable and resulted in the net deferred tax expense of $376,000 for the three months ended March 31, 2013, due to the reduction in the valuation of the derivative liability from December 31, 2012 to March 31, 2013, and the corresponding reduction in the deferred tax asset directly related to the derivative liability. This reduction in the deferred tax asset, directly related to the derivative liability, created the “book” only deferred tax expense, as the derivative liability has no “tax” basis. As a result of the above, we recorded net income of $35,396 for the three months ended March 31, 2013, compared to a net loss of $2,094,000 for the three months ended March 31, 2012. Taking into consideration net income/net loss, dividends paid on the Series B and C Preferred Stock (in the form of common stock of the Company) and the “deemed dividend” for the three months ended March 31, 2013 described below, net loss available for common stockholders’ for the three months ended March 31, 2013 and 2012, respectively, was $(881,000) or ($0.04) per share and $(2,415,000) or ($0.23) per share, respectively. Net income (loss) available for common stockholders’ is a function of net income (loss), less actual dividends on preferred stock, less “deemed dividends” on preferred stock.Deemed dividends on preferred stock are computed as a noncash accounting charge upon the issuance of Preferred Stock and are considered to be an “embedded beneficial conversion feature”, on which an “intrinsic value” must be calculated. For the three months ended March 31, 2013, the recording of the January 25, 2013 issuance of Series D Preferred Stock gave rise to an “embedded beneficial conversion feature”; hence, a “deemed dividend” on preferred stock. The “embedded beneficial conversion feature” associated with this preferred stock issuance was $510,000 and was recorded as an increase to the additional paid in capital account and a reduction to retained earnings / accumulated deficit. For the three months ended March 31, 2012, there was no deemed dividends on preferred stock. Dividend No dividend for common stock has been declared as of March 31, 2013, and the Company does not anticipate declaring dividends in the future. Critical Accounting Policies Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with the U.S. generally accepted accounting principles (“GAAP”). The preparation of these financial statements requires us to make significant estimates and judgments that affect the reported amount of assets, liabilities, revenues, and expenses and related disclosures of contingent assets and liabilities. We evaluate our estimates, including those related to bad debts, intangible assets and contingencies on an ongoing basis. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. While our significant accounting policies are more fully described in our consolidated financial statements appearing in our Annual Report on Form 10-K, we believe that the following critical accounting policies involve the more significant judgments and estimates used in the preparation of our consolidated financial statements and are the most critical to aid you in fully understanding and evaluating our reported financial results. Revenue Recognition We follow the guidance of the Securities and Exchange Commission’s Staff Accounting Bulletin No. 104 for revenue recognition.In general, we record revenue when persuasive evidence of any agreement exists, services have been rendered, and collectability is reasonably assured, therefore, revenue is recognized when we invoice customers for completed services at contracted rates and terms.Therefore, revenue recognition may differ from the timing of cash receipts. Valuation of Goodwill and Intangible Assets Our intangible assets include goodwill, trademarks, non-compete agreements, patents and purchased customer relationships, all of which are accounted for based on Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 350 Intangibles-Goodwill and Other. As described below, goodwill and intangible assets that have indefinite useful lives are not amortized but are tested at least annually for impairment or more frequently if events or changes in circumstances indicate that the 17 asset might be impaired. Intangible assets with limited useful lives are amortized using the straight-line method over their estimated period of benefit, ranging from two to eight years.Goodwill is tested for impairment by comparing the carrying value to the estimated fair value, in accordance with GAAP. Impairment exists if the carrying amount is greater than its estimated fair value, resulting in a write-down equal to the difference between the carry amount and the estimated fair value. The values recorded for goodwill and other intangible assets represent fair values calculated by accepted valuation methods. Such valuations require critical estimates and assumptions derived from and which include, but are not limited to i) information included in our business plan, ii) estimated cash flows, and iii) discount rates. Impairment Testing Our goodwill impairment testing is calculated at the reporting or segment unit level. Our annual impairment test has two steps. The first identifies potential impairments by comparing the fair value of the reporting or segment unit with its carrying value.If the fair value exceeds the carrying amount, goodwill is not impaired and the second step is not necessary. If the carrying value exceeds the fair value, the second step calculates the possible impairment loss by comparing the implied fair value of goodwill with the carrying amount. If the implied fair value of goodwill is less than the carrying amount, a write-down is recorded. The impairment test for the other intangible assets is performed by comparing the carrying amount of the intangible assets to the sum of the undiscounted expected future cash flows. In accordance with GAAP, which relates to impairment of long-lived assets other than goodwill, impairment exists if the sum of the future undiscounted cash flows is less than the carrying amount of the intangible asset or to its related group of assets. We predominately use discounted cash flow models derived from internal budgets in assessing fair values for our impairment testing.Factors that could change the result of our impairment test include, but are not limited to, different assumptions used to forecast future net sales, expenses, capital expenditures, and working capital requirements used in our cash flow models. In addition, selection of a risk-adjusted discount rate on the estimated undiscounted cash flows is susceptible to future changes in market conditions, and when unfavorable, can adversely affect our original estimates of fair values. In the event that our management determines that the value of intangible assets have become impaired using this approach, we will record an accounting charge for the amount of the impairment.We also engaged an independent valuation expert to assist us in performing the valuation and analysis of fair values of goodwill and intangibles. Share-Based Compensation We account for stock-based compensation based on ASC Topic 718 – Stock Compensation which requires expensing of stock options and other share-based payments (i.e., stock warrant issuances) based on the fair value of each stock option/warrant awarded. The fair value of each stock option/warrant is estimated on the date of grant using the Black-Scholes valuation model. This model requires management to estimate the expected volatility, expected dividends, and expected term as inputs to the valuation model. Fair Value of Financial Assets and Liabilities – Derivative Instruments We measure the fair value of financial assets and liabilities in accordance with GAAP, which defines fair value, establishes a framework for measuring fair value, and requires certain disclosures about fair value measurements. GAAP defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. GAAP also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. GAAP describes three levels of inputs that may be used to measure fair value: 1) Level 1 – quoted prices in active markets for identical assets or liabilities. 2) Level 2 – quoted prices for similar assets and liabilities in active markets or inputs that are observable. 3) Level 3 – inputs that are unobservable (for example cash flow modeling inputs based on assumptions). We do not use derivative financial instruments to hedge exposures to cash-flow, market or foreign-currency risks. However, we have entered into certain financial instruments and contracts, such as debt financing arrangements and freestanding common stock warrants with features that are either i) not afforded equity classification, ii) embody risks not clearly and closely related to host contracts, or iii) may be net-cash settled by the counterparty. These instruments are required to be carried as derivative liabilities, at fair value. We estimate fair values of all derivative instruments, such as free-standing common stock purchase warrants, and embedded beneficial conversion features utilizing Level 2 inputs. We use the Black-Scholes option valuation technique because it embodies all 18 of the requisite assumptions (including trading volatility, estimated terms and risk free rates) necessary to fair value these instruments.Estimating fair values of derivative financial instruments requires the development of significant and subjective inputs that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. In addition, option-based techniques are volatile and sensitive to changes in our trading market price and the trading market price of various peer companies. Since derivative financial instruments are initially and subsequently carried at fair value, our income will reflect the volatility in these estimates and assumption changes. Income Taxes The Company accounts for income taxes under FASB ASC Topic 740 “Income Taxes”.Under FASB ASC Topic 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis.Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be removed or settled. The Company regularly assesses the likelihood that its deferred tax assets will be realized from recoverable income taxes or recovered from future taxable income.To the extent that the Company believes any amounts are not more likely than not to be realized through the reversal of the deferred tax liabilities and future income, the Company records a valuation allowance to reduce its deferred tax assets.In the event the Company determines that all or part of the net deferred tax assets are not realizable in the future, an adjustment to the valuation allowance would be charged to earnings in the period such determination is made. Similarly, if the Company subsequently realizes deferred tax assets that were previously determined to be unrealizable, the respective valuation allowance would be reversed, resulting in an adjustment to earnings in the period such determination is made. FASB ASC Topic 740-10 clarifies the accounting for income taxes, by prescribing a minimum recognition threshold a tax position is required to meet before being recognized in the balance sheet. It also provides guidance on de-recognition, measurement and classification of amounts related to uncertain tax positions, accounting for and disclosure of interest and penalties, accounting in interim period disclosures and transition relating to the adoption of new accounting standards. Under FASB ASC Topic 740-10, the recognition for uncertain tax positions should be based on a more-likely-than-not threshold that the tax position will be sustained upon audit. The tax position is measured as the largest amount of benefit that has a greater than fifty percent probability of being realized upon settlement. Recent Accounting Pronouncements Since January 1, 2012, there have been several new accounting pronouncements and updates to the Accounting Standards Codification.Each of these updates has been reviewed by Management who does not believe their adoption has had or will have a material impact on the Company’s financial position or operating results. Liquidity and Capital Resources As of March 31, 2013, we had cash and cash equivalents of $9,241,000, an increase of $4,770,000 from December 31, 2012.We continue to use our revolving line of credit, increasing our balance at March 31, 2013 by $28,000 over the balance at December 31, 2012. As of March 31, 2013 our available borrowings under our revolving line of credit were $378, 000. Working capital at March 31, 2013, was $8,730,000, representing an increase of $5,103,000 compared to $3,627,000 at December 31, 2012.This net increase of $5,103,000 in working capital is the result of a number of factors, primarily: i) an increase in cash on hand as a result of the 2nd and 3rd rounds of the Series D Preferred Stock financing in January and February 2013, respectively, ii) an increase in accounts receivable of $890,000 reflecting increased revenues, iii) an increase in costs and estimated earnings in excess of billings of $241,000, reflecting increased revenue producing activity, iv) a reduction in current portion of long-term debt, reflecting the payoff of certain computer installment notes, v) an increase in accounts payable of $257,000, again a reflection of increased business activity, vi) an increase of $629,000 in billings in excess of costs and estimated earnings, due to increased business activity, where we have been able to advance collect from our customers on projects, and, vii) a decrease in accrued expenses of $71,000 (this decrease would actually have been$271,000, but for a properly accrued litigation settlement of $199,400 at December 31, 2012.This accrual, which was paid in January, was primarily non-cash, with the issuance of $169,400 in Premier stock (non-cash) and $30,000 in cash). Non-current liabilities at March 31, 2013 are $1,899,000, primarily comprised of a “book” liability related to the current valuation of all outstanding warrants, considered a derivative liability, of $1,808,000, with substantially all the remaining balance representing a deferred tax liability of $83,000. Shareholders’ equity was $22,865,000 at March 31, 2013 (representing 77.2% total assets), compared to December 31, 2012, of $17,455,000 (representing 72.7% of total assets). During the three months ended March 31, 2013, net cash used in operating activities was $629,000 and was primarily attributable to: i) the net income of $35,000, ii) increased by noncash depreciation and amortization of $97,000, iii) decreased by the noncash income of $24,000 recognized on the increase in cash surrender value under the insurance policies owned by us, iv) increased by the noncash charge for deferred income tax expense of $376,000, v) reduced by the noncash “book” income recognized for derivative income of $982,000, v) offset by the increase in accounts receivable of $890,000, reflecting increased revenues, and, vi) offset by the increase in costs and estimated earnings in excess of billings of $241,000, again reflecting increased revenue producing activity. 19 Cash used in investing activities during the three months ended March 31, 2013 of $37,000 was comprised of acquisitions of property, plant and equipment Cash provided from financing activities of $5,436,000 for the three months ended March 31, 2013 was comprised primarily of the following: i) the 2nd and 3rd (and final round) issuances of the 7% Convertible Redeemable Series D Preferred Stock in January and February 2013, respectively, with net proceeds of $5,452,000, ii) payments on long-term debt of $52,000, also reflecting the payoff of certain computer installment notes, iii) net proceeds from the revolving line of credit of $28,000, iv) offset by borrowings of $8,000 on long-term debt for office equipment needs. Financing Arrangements Effective January 23, 2013, the Company and its financial institution entered into a loan modification under the current line of credit. The Company incurred $8,275 in deferred loan costs with this modification.All terms remain the same with the maturity date extended to until July 19, 2013, as negotiations continue to increase the line of credit and the advance rate. The current line of credit is limited to a borrowing base of 75% of eligible receivables or $1,500,000. As discussed above, we have closed private placement financings from November 2012 through February 2013, resulting in net proceeds of $12,323,000, of which $2,000,000 was simultaneously used for the Ecological, LLC acquisition.Our unencumbered cash position at March 31, 2013 is $9,240,643. We believe the above unencumbered cash position and funds to be generated from operations, will meet our cash needs for operations at least through mid-2014. We might need to raise additional funds in order to fund future business acquisitions. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. However, the trading price of our common stock and a downturn in the U.S. equity and debt markets could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing. Furthermore, if we issue additional equity or debt securities, stockholders will likely experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. The inability to obtain additional capital may restrict our ability to grow. If we are unable to obtain additional financing, we will be required to further curtail our plans to acquire additional businesses. Our liquidity may be negatively impacted by the significant costs associated with our public company reporting requirements, costs associated with applicable corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the Securities and Exchange Commission. We expect all of these applicable rules and regulations to significantly increase our legal and financial compliance costs and to make some activities more time consuming and costly. Off-Balance-Sheet Arrangements As of March 31, 2013, and during the three months then ended, there were no other transactions, agreements or other contractual arrangements to which an unconsolidated entity was a party under which we (1)had any direct or contingent obligation under a guarantee contract, derivative instrument, or variable interest in the unconsolidated entity, or (2)had a retained or contingent interest in assets transferred to the unconsolidated entity. Outlook Our priority is to continue to build depth in the range of services and solutions we offer by building “areas of expertise and knowledge and increased industry specific knowledge.” We believe that achieving this goal will require a combination of merger activity and organic growth. This will in part depend on continued improvement in the U.S. business market. With our focus on capabilities related to the Energy and Risk/Compliance verticals, we must continue to adjust to the rapid change being driven by the evolving Energy sector as well as the ongoing wave of regulatory change affecting all industries.Both areas continue to increase in importance and are tied to key priority initiatives for most businesses regarding profitability and sustainability. The energy sector has a fragmented regulatory environment driven by federal, state, provincial and local processes including: reliability, building and safety, environmental regulation and codes, permitting, rate structures, tariffs, incentives, tax credits, all which are changing frequently.In addition, the metrics and values used to deal with financing of energy related projects are still maturing.However, the drivers of rising energy costs combined with power reliance issues for countries and the long term view related to our carbon footprint continue to push the energy sector forward and our involvement in energy efficiency, frequency regulation, integrated demand side management, and distributed generation and renewable energy are priorities. 20 The regulatory and compliance sector continues to evolve globally and locally.The challenges that impact specific verticals, based on industry nuances, continue to expand and create ongoing challenges for businesses related to their overall risk.Many of the growing areas within this sector impact all industries and will also overlap with our energy services as maturation continues in relation to the energy sector.This will include cyber-security, risk mitigation, ongoing regulatory and compliance initiatives and program management as we move to expand our overall capabilities and expertise. 21 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS For the Year Ended December 31, 2012 and 2011 The following discussion should be read in conjunction with our financial statements and the related notes included in this Prospectus. Results of Operations Results of Operations for the Year Ended December 31,2012Compared to the Year Ended December 31, 2011 The result of operations described below includes the Risk/Compliance Solutions segment for the entire years of 2012 and 2011.The Energy and Sustainability Solutions segment began with the acquisition of Greenhouse Holdings, Inc. on March 5, 2012; hence, operating results for this segment are only included from March 5, 2012 through December 31, 2012.We acquired Ecological, LLC, also part of our Energy and Sustainability Solutions segment (“ESS”), on December 31, 2012; and accordingly, only the balance sheet accounts have been consolidated and no operating results are included in the financial results for the year ended December 31, 2012. Total revenue for the fiscal year ended December 31, 2012 was $19,472,000 as compared to $17,946,000 for the fiscal year ended December 31, 2011, a net increase of $1,526,000, or 8.5%.This net increase is the result of several factors.During the period March 5, 2012 through December 31, 2012, the ESS segment generated revenue of $2,947,000.But for the ESS segment, total revenues (for the Risk/Compliance segment) would have been $16,525,000 for the fiscal year ended December 31, 2012 compared to $17,946,000 for the fiscal year ended December 31, 2011, a decrease of $1,421,000 or 8%.An overview of each of our markets comprising the Risk/Compliance segment is necessary to understand the dynamics of this decrease. i. Our largest decrease was in the Charlotte market in 2012 versus 2011 where total revenue declined from $10,100,000 in 2011 to $8,009,000 in 2012, a decrease of $2,091,000 or 20.1%.This market is heavily involved in the financial institutions industry and we anticipated significant Governance, Risk & Compliance (“GRC”) revenue in 2012 based on executed statements of work with large clients that did not materialize as clients continued to defer projects that had been discussed and put in place. We believe this deferral from 2012 agreements in place was largely due to an uncertain political environment and the election year.However, we did manage the fixed and variable costs of the Charlotte office and the gross and net margins were 21.8% and 15.7%, respectively, for 2012 compared to 24.5% and 19.1% for 2011.Net contribution from Charlotte decreased by $675,000 on a decrease in sales of $2,091,000. ii. The next largest decrease was in the Kansas City market.Revenue dropped from $2,800,000 in 2011 to $1,648,000 in 2012, a decrease of $1,152,000 or 41.1%.The Kansas City market has struggled since the loss of three large customers in early 2011 due to the customers taking their IT operations offshore and in-house, respectively. These customers accounted for $2,500,000 in annual revenue.The operating loss was reduced from $338,000 in 2011 to $73,000 in 2012, but after much analysis, the decision was made to close the office in Kansas City in September 2012 due to poor future prospects in the market. iii. The Winston-Salem market continued its steady growth with revenue at $2,295,000 in 2012 compared to $1,897,000 in 2011, an increase of $398,000 or 21.0%. This market showed good growth in all of our service offerings. iv. The San Diego market reported a decrease in revenue from $2,205,000 in 2011 to $1,875,000 in 2012, as a result of less focus and emphasis on pure financial consulting engagements as more emphasis was placed on risk, compliance efforts, which we believe will position us better in 2013.However, we were successful in managing through this and achieved an increase in overall gross margin from 28.6% in 2011 to 31.1% in 2012 and significantly improved its contribution margin from a negative 4.5% in 2011 to a positive 7.7%, or $144,000, in 2012. v. The Los Angeles market showed strong growth in all of our service offerings and increased revenue to $2,700,000 in 2012 from $909,000 in 2011.The Los Angeles market also increased their gross margin from 27.9% to 28.3% from to 2011 to 2012.The contribution margin from the Los Angeles office increased from 3.8% in 2011, $34,500, to 13.3%, $360,000, in 2012. vi. Importantly and as further discussed below, selling, general and administrative costs for all Risk/Compliance markets discussed above, on a combined basis, decreased from 14.54% of revenue in 2011 to 11.34% of revenue in 2012. Gross margin (revenue less cost of revenues, defined as all costs for billable staff for the Risk/Compliance Solutions segment and cost of goods for the ESS Solutions segment) increased from $4,688,000 in 2011 to $4,798,000 in 2012, but declined on a percentage basis, from 26.1% in 2011 to 24.6% in 2012 on a company-wide basis.This improvement of $110,000 in absolute dollars was negatively impacted on a gross margin basis primarily caused by the overall decline in revenue in the Risk/Compliance segment discussed above; gross margin in the Risk/Compliance Solutions segment dropped from 26.1% in 2011 to 24.9% in 2012. The primary 22 drivers of this revenue decline were the Charlotte and Kansas City markets discussed above.Excluding the Risk/Compliance Solutions segment, the ESS segment only achieved a gross margin of 23.3%.This is well below management’s targeted gross margin of 30% for this segment.The Company has spent a great deal of focus and time since the March 5, 2012 acquisition integrating Greenhouse Holdings, Inc., evaluating its revenue targets and streams, operations and key personnel.As of mid to late fourth quarter, the Company believes it has the business model aligned for optimal growth, as evidenced by the recent execution of over $10,000,000 in contracts as of March 2013 (already more than three times the entire revenue for 2012).We acquired Greenhouse Holdings, LLC as a platform for our EES business and are committed to this platform. Selling, general and administrative (“SG&A”) expenses increased from $5,845,000 and 32.6% of revenuefor the fiscal year ended December 31, 2011 to $8,187,000 and 42.0% of revenuefor the fiscal year ended December 31, 2012; an increase of $2,342,000 or 40%. Of this increase in 2012, the EES business segment alone accounted for $2,214,000, or 94.5% of the total increase (discussed below).But for the SG&A expenses from the EES segment, SG&A expenses would have been $5,973,000 or 30.7%, of revenuefor the fiscal year ended December 31, 2012 compared to $5,845,000 and 32.6% of revenue for the fiscal year ended December 31, 2011, or an increase of $128,000. It is important to note that all SG&A expenses related to the Company as a whole (executive compensation, all back office accounting, finance, human resources, costs of being a public company, etc.) are recorded in the Risk/Compliance Solutions segment.To properly evaluate SG&A expenses, an analysis of i) Risk/Compliance Solutions segment SG&A expenses, ii) “corporate” level Risk/Compliance segment SG&A expenses, and iii) EES segment costs must be examined. i. On a combined basis, the Risk/Compliance segment markets reduced SG&A expenses from $2,607,000 and 14.5% of revenue in 2011 to $1,874,000 and 11.3% of revenue in 2012, a decrease of $733,000. This reflects management’s emphasis on closely managing market level variable costs. ii. “Corporate” SG&A expenses, included in the Risk/Compliance business segment, for 2012 was $4,217,000 and 21.6% of revenue compared to $3,237,000 and 18% of revenue in 2011.This increase of $980,000 is primarily comprised of i) non-cash charges, ii) non-recurring charges and iii) natural increases from the expansion of the business and our Board of Directors. o Total accounting fees were $227,000 in 2012 compared to $146,000 in 2011.We had to pay the accounting firm for the completion of the audit of Greenhouse Holdings, Inc. (“GHH”) for the year ending December 31, 2011 in 2012 totaling approximately $48,000 – a nonrecurring cost.In addition, surrounding the acquisition in March 2012, we engaged the financial advisor used by GHH to assist with the accounting integration, resulting in a nonrecurring cost of $45,000. o As discussed above, we acquired Ecological, LLC on December 31, 2012.As a result of our agreement with a registered investment advisor, we paid $240,000 in referral fees related to this transaction. The referral fee consisted of $120,000 payable in cash and $120,000 payable in stock, with the total referral fee of $240,000 included in our statement of operations as a nonrecurring charge. o We continued to seek the best qualified independent Board of Directors for the Company.In 2012, we added five (5) highly regarded individuals to our Board of Directors.We have a policy of compensating independent Board of Directors members for their attendance at meetings and for serving on Board of Directors committees, as well as reimbursing out-of-pocket expenses.Total director fees and expenses were $149,000 in 2012 compared to $75,000 in 2011, an increase of $74,000.We also compensate Board of Directors members with warrants and options (see discussion immediately below). In 2012 our non-cash stock option / warrant expense was $779,000 compared to $218,000 in 2011, an increase of $533,000 (or 77% of the total corporate SG&A expenses increase between 2011 and 2012). Of this $786,000 expense incurred, $538,000 was directly related to grants to new and existing Board of Directors members. o Corporate personnel costs, including payroll taxes and benefits, increased $194,000 from 2011 to 2012 and is primarily attributable to 2012 representing a full year for the Company’s new CFO, Controller and a Business Development professional. o Immediately subsequent to the GHH acquisition, our public relations / branding firm was engaged to help integrate GHH / Energy and Sustainability Solutions into our overall corporate presentation.This one-time cost incurred was $57,000. o Professional services – other increased by $22,000 and reflects the additional cost of SEC compliance as in July 2012, the Company had to comply with XBRL mandates to the financial statements. o Business insurance increased $35,000 over 2011 to $163,000 and is primarily attributable to coverage’s associated with the EES business segment. 23 o Also, subsequent to the acquisition of GHH, we engaged an IR/PR firm to do a separate campaign for investor awareness.This onetime cost was $20,000. o Legal fees were $138,000 in 2012 compared to $88,000 in 2011, an increase of $50,000.This increase was all associated with one-time legal costs related to the 2012 financings which could not be capitalized, a filing with the SEC to increase the authorized common shares from 45,000,000 to 90,000,000 and the preferred shares from 5,000,000 to 10,000,000, answering inquiries from the California Securities Commission relative to GHH and costs associated with the inquiry by the Depository Trust Company. iii. In the EES business segment, acquired in March 2012, SG&A expenses totaled $2,096,000 or 71.1% of total EES revenue. o This amount is due to a one-time cost incurred for a GHH legal settlement that arose during the acquisition process which was described in the Registration Statement on Form S-4 filed February 6, 2012.This litigation was settled in late 2012, but resulted in out of pocket legal expenses of $154,000 and a settlement of $199,400 (comprised of $30,000 in cash and $169,400 in Premier stock). o GHH also had a number of smaller lawsuits that came forth after the acquisition.In 2012 we incurred over $50,000 in non-recurring costs in resolving these matters. As of year-end December 31, 2012, we have no outstanding litigation related to GHH. o The EES segment engaged a financial advisor to perform a business plan analysis on the Company’s holdings in Mexico.This nonrecurring cost totaled $15,000. o Also, with the market opportunity in the government sector, the EES segment engaged a consultant for part of 2012 for DOD research.This arrangement was completed in October 2012, and this nonrecurring cost totaled $60,000 in 2012. o Finally, nonrecurring costs of $36,000 was paid to GHH’s proxy firm to complete the acquisition transaction in March of 2012. But for the significant lawsuit settlement and other one-time charges, SG&A expenses would have been $1,581,600 or 53.7% of EES revenue.We are committed to the EES segment and based on the refinement of the business strategy and recent contract successes; we believe we are well positioned for the next 24 months. Other income (expense) for 2012 is comprised of the following items, substantially all of which are noncash expenses recorded as a result of FASB ASC requirements. · We completed an annual goodwill impairment evaluation for 2012 applying both the Step 1 and Step 2 tests as prescribed by FASB ASC 350. In determining impairment charges, the Company uses various valuation techniques including both the income approach and market approach for each reporting unit.During 2012, the Company recorded a goodwill impairment write-down of $4,378,000 related to its Energy and Sustainability Solutions business segment / reporting unit, which is reflected in the Statement of Operations. After executing the letter of intent for GHH, finalizing the Agreement of Plan and Merger and during the SEC registration statement process, it became necessary, and our Board of Directors approved, secured loans to GHH up to the date of the acquisition, which ultimately totaled $1,030,000.This was additional consideration to the 7,114,770 shares issued at $0.90 per share in the transaction.In addition, in calculating goodwill in accordance with FASB purchase accounting rules, GHH had liabilities assumed in excess of assets acquired at the date of acquisition of $1,259,000 which increased the goodwill recorded at date of acquisition.We moved forward with the transaction as we believe that GHH is the appropriate platform for our Energy and Sustainability Solutions business segment to be developed.Since the acquisition, management has worked closely with the Energy and Sustainability Solutions business segment to focus and refine its revenue targets and streams, business plan and cross selling opportunities with the Risk/Compliance business segment.Management believes at this time, that the proper groundwork has now been accomplished and the returns will be achieved in the future.Based on the Step 1 and Step 2 testing for the EES business segment, with assistance provided by an experienced independent valuation firm, we concluded that a noncash impairment write-down in 2012 of $4,378,000 was appropriate. · In 2010 and 2011, respectively, the Company issued Debentures and Series C Preferred Stock with detachable warrants, respectively, that were deemed to be derivative instruments. We issued 7% Redeemable Convertible Promissory Notes (“Promissory Notes”) on November 16, 2012 which had 750,000 detachable warrants associated directly with the Promissory Notes plus 120,000 detachable warrants that were issued to the registered investment 24 advisor.On December 26, 2012, we issued our first round of 8% Redeemable Convertible Series D Preferred Stock (“Series D Preferred Stock”); the Promissory Notes were mandatorily converted to Series D Preferred Stock. In conjunction with the issuance of the Series D Preferred Stock, we issued warrants to purchase an aggregate of 2,348,685 shares of our common stock, plus a warrant to purchase the aggregate of 939,467 shares of our common stock to our registered investment advisor. All of the above warrants are considered derivative instruments and must be valued at initial issuance and then adjusted to fair value at each reporting date.As a result, including the original Debentures and Preferred C warrants, the Company also valued the warrants associated with the Promissory Notes at issuance, conversion into Series D Preferred Stock and the original issuance of the Series D Preferred Stock.As a result, for the year ended December 31, 2012, we recognized non-cash derivative expense of $1,229,000 related to the market value fluctuation inherent in the valuation of the detachable warrants issued with the various financings aforementioned. · As a result of the initial recording of the Promissory Notes described above, we were required to record a debt discount (contra-liability account) at issuance of the Promissory Notes. Inasmuch as the Promissory Notes were mandatorily converted into Series D Preferred Stock only 46 days after their issuance, accounting rules required that the unamortized balance of the debt discount be written off (noncash) and charged to the statement of operations for the year ended December 31, 2012 as interest expense – debt discount in the amount of $354,000 was recorded. As a cumulative result of the above discussion, loss before income taxes in 2012 was $9,632,000 (comprised of $3,631,000 loss from operations and $6,001,000 loss from total other expense) compared to a loss of $641,000 in 2011. The effective income tax rate for 2012 was a tax benefit of (1.3%) versus a benefit of (107.0%) in 2011.The effective tax rate is impacted by “permanent” differences between “book” taxable income and “tax” taxable income, and is primarily due to: i) the book recording of the noncash goodwill impairment write-down of $4,378,000, ii) the book recording of the noncash derivative expense of $1,229,000, iii) the 2012 change in the deferred tax asset valuation allowance of $1,384,000, iv) state taxes, net of federal benefit of ($197,000), and v) noncash stock warrant and option compensation expense of $776,000. Income taxes were a benefit of $130,000 in 2012 versus a benefit of $686,000 in 2011.We account for income taxes under FASB ASC Topic 740 “Income Taxes”.Under FASB ASC Topic 740-10-30, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis.We regularly assess the likelihood that our deferred tax assets will be realized from recoverable income taxes or recovered from future taxable income.To the extent that we believe any amounts are not more likely than not to be realized through the reversal of the deferred tax liabilities and future income, we record a valuation allowance to reduce its deferred tax assets.We made the assessment in the fourth quarter of 2012 that a full valuation allowance for the all deferred tax assets (with the exception of the deferred tax assets directly related to the derivative liability) should be provided based on consideration of the net operating losses for the past two years, the results of the ASC 350 analysis and resulting goodwill impairment charge of $4,378,000 in its Energy and Sustainability Solution business segment and the uncertainty surrounding the potential future integration of expenses associated with the acquisition of Ecological, LLC on December 31, 2012, that it was no longer, at this time, more likely than not that the deferred tax assets would be recoverable.In accordance with FASB ASC 740, management will continue to monitor the status of the recoverability of deferred tax assets.Hence, this position substantially reduced the tax benefit otherwise recognizable and resulted in the tax benefit of only $130,000 for 2012. As a result of the above, we recorded a net loss of $9,502,000 in 2012 compared to net income of $45,000 in 2011. Net income (loss) available for common stockholders’ is a function of net income (loss) less actual dividends paid on preferred stock, less “deemed dividends” on preferred stock.Deemed dividends on preferred stock are computed as a non-cash accounting charge upon the issuance of Preferred Stock and are considered to be an “embedded beneficial conversion feature” of which an intrinsic value which must be calculated.In 2012, two distinct financing activities gave rise to “deemed dividends” on preferred stock. The first relates to the conversion of the Promissory Notes, issued November 16, 2012, upon their mandatory conversion to Series D Preferred Stock on December 26, 2012.The “embedded beneficial conversion feature” associated with this conversion was $553,000 and was recorded as an increase to the additional paid in capital account and a reduction to retained earnings / accumulated deficit.The second instance in 2012 relates to the initial issuance on December 26, 2012 of the Company’s Series D Preferred Stock. The “embedded beneficial conversion feature” associated with this conversion was $599,000 and was also recorded as an increase to the additional paid in capital account and a reduction to retained earnings / accumulated deficit. The total “deemed dividends” on preferred stock in 2012 total $1,152,000.For 2011, for the issuance of the Series C Preferred Stock, the intrinsic value of the beneficial conversion feature was determined to be $1,914,000.Therefore, taking into consideration net loss / income, the dividends actually paid on the Series B and C Preferred Stock of $321,000 in 2012 and the dividends paid on the Series B Preferred B Stock in 2011 of $44,000, and the “deemed dividends” described above, net loss available for common stockholders’ for 2012 was $(10,975,000) or ($0.78) per share and for 2011 was $(1,913,000), or ($0.24) per share. 25 Results of Operations - 2011 As Compared to 2010 Total revenue for the fiscal year ended December 31, 2011 was $17,946,000 compared to $17,117,000 for the fiscal year ended December 31, 2010, a net increase of $829,000, or 4.8%.This net increase is the result of several factors. We acquired Intronics in April 2010 and Q5 in August 2010 and 2011 was the first year of full revenues for each of these reporting units. Q5, based in California, contributed $1,200,000 of the increase in revenue in 2012. Intronics generated $3,200,000 in revenue for the period April 2010 through December 2010; however, in March and May of 2011, Intronics lost three large customers due to the customers taking their IT operations offshore and in-house, respectively, with these customers accounting for $2,500,000 in annual revenue.Accordingly, Intronics contributed $2,800,000 in revenue for entire year of 2011 compared to $3,200,000 for the eight months ended December 31, 2010, a decrease of $400,000.On an annualized basis for 2010, Intronics revenue would have been approximately $4,300,000, compared to $2,800,000 in 2011, or a decrease of $1,500,000 on an annualized to annualized basis. This decrease was more than offset by other sources, including the ERMS acquisition made January 1, 2011, which contributed $909,000 for the fiscal year ended December 31, 2011. All other markets remained stable generating improved gross and operating margins. Gross margin (defined as revenue less cost of revenues – defined as all costs for billable staff) increased from $4,142,000 in the in the fiscal year ended December 31, 2010 to $4,688,000 in the fiscal year ended December 31, 2011, and improved as a percentage of revenue, growing from 24.2 % to 26.1% on a Company wide basis. This improvement reflects increased penetration in the advisory and consulting business, which produces higher gross margins.Our legacy business (excluding the Intronics and Q5 acquisitions) also produced improved gross margins, to 26.1% in 2011 versus 24.2 % in 2010, and from a market net operating margin perspective, a contribution of 19.6% versus 18.0% in 2011 over 2010, respectively. Selling, general and administrative expenses increased $2,027,000 in the fiscal year ended December 31, 2011, from $3,818,000 to $5,845,000.This increase is attributable to two general factors.The first is the impact of the selling, general and administrative expense of Q5 and Intronics being incurred for a full year in 2011 versus a part year in 2010.This accounts for $486,000 for Intronics (acquired April 2010) and $ 442,000 for Q5 (acquired August 2010).The remainder of the increase of $1,099,000 is directly attributable to expenses incurred at the corporate level, many either first time charges, non-cash charges for stock option and warrant issuances or non-recurring items as the Company was building the platform for its future growth plans, including active acquisition efforts (see GHH acquisition described in detail above). These first time and/or non-recurring items included the following: i) $152,000 in costs associated with legal fees and warrant issuance expenses incurred in conjunction with our issuance of the Series C Preferred Stock in March 2011, ii) $58,000 in special accounting fees incurred in conjunction with both the Series C Preferred Stock issuance in March 2011 and the GHH acquisition that were not capitalizable under accounting rules, iii) $100,000 paid for consulting services directly related to pre-acquisition due diligence on the GHH acquisition (and other potential acquisition targets, prior to our hiring of a Chief Financial Officer in late October 2011), iv) $70,000 paid to an M&A search consulting firm as a search retainer for potential acquisition opportunities, v) $227,000 onetime cash payments to former acquirees under incentive arrangements, vi) during 2011, as part of our short and long term growth strategy, we committed to building a strong, well versed and recognized independent Board of Directors; accordingly, we instituted a standard program of compensatingeach Board of Directors member $2,500 for each Board of Directors meeting, and providing warrants to purchase shares of our common stock as incentives.During 2011, we were successful in building an independent Board of Directors and paid $40,000 in cash for directors’ attendance at Board of Directors meetings, and incurred non-cash charges of $80,000 for warrants to purchase shares of our common stock issued to our Directors, vii) incidental to the aforementioned process, we engaged a consulting firm to assist us in our search for qualified independent Directors, and compensated that firm in warrants valued at $21,000 to purchase shares of our common stock, viii) pursuant to our acquisition of Q5, we incurred a one-time legal fee in connection with certain non-compete provisions contained in the acquisition agreement of $32,000, ix) during 2011, SEC rules required full compliance with XBRL regulations (complex electronic conversion of all data into a mandated specific SEC electronic format) and we incurred $24,000 in one-time charges for conversion and compliance in these SEC reporting obligations; x)we also incurred $20,000 in fees for press releases and filing fees, and, xi) the Company has made a commitment to investing in its platform for future growth. Accordingly, we also made a significant investment with a public relations and marketing firm to “re-brand” Premier to inform our various markets of Premier’s enhanced capacities in light of its three M&A transactions. The all-in, one-time, cost incurred in 2011 for marketing and branding totaled $259,000.We also incurred non-cash expense for issuance of stock options as incentive to key employees in 2011 of $109,000. These specific costs outlined above total $1,172,000, and do not include other proactive steps we took during 2011 to enhance our capabilities and our strengths for the future, such as the hiring of a VP of Operations/Controller in May 2011 and the hiring of an experienced Chief Financial Officer in October 2011. The net impact of the above had a significant impact on the loss from operations for the year ended 2011 of $1,320,000 versus income from operations of $246,000 in 2010. Other income/expense totaled income of $679,000 in 2011 versus a loss of $19,000 in 2011.Other income expense consisted of the following items in 2011: i) net interest expense of $268,000, comprised primarily of non-cash amortization of debt discount related to the 9% Senior Convertible Debenture issued in May 2010 (these debentures were paid in their entirety as scheduled in 26 November 2011), ii) a non-cash loss on the decline in cash surrender value of the three officer’s life insurance policies held of $55,000 (policies which we hold and are beneficiary to), iii) a complete write-off of our investment in our Equity Method Investee, Critical Analytics during December 2011 as that company dissolved operations, and we received the final settlement check in January 2012 (the non-cash write-off in the fourth quarter of 2011 was $ 123,000), iv) we recognized non-cash derivative income of $1,550,000 related to the market value fluctuation inherent in the valuation of the warrants issued in conjunction with the Series C Preferred Stock in March 2011 and the Debenture issued in April 2010, v) we analyzed both goodwill and intangible assets in accordance with the applicable accounting literature and recorded a write-down of goodwill of $576,000 and a write-down of intangible assets-customer relationships (related to Intronics discussed above) of $139,000 in 2011, vi) we also had recorded, as part of the initial purchase price allocation in our acquisition of Q5, a liability for future payments of stock and cash based on anticipated earnings levels. These earnings targets were not achieved, so we removed the liability from the books and recorded other income (non-cash) of $363,000. The above resulted in a net loss before income taxes of $641,000 for 2011 versus income before income taxes of $227,000 in 2010. The effective income tax rate is calculated as the final calculated tax expense or tax benefit as a percentage of GAAP taxable income and can be significantly impacted by “permanent” differences between taxable income calculated from the GAAP financial statements and the taxable income calculated in accordance with tax laws. This is due primarily to such items as the book recording of the $1,550,000 in derivative income which is not included for income tax purposes, the write-off of the note payable to Q5 into income discussed above for GAAP purposes, but not considered income for the tax return, the change in the GAAP valuation allowance for deferred tax assets which does not impact the tax return, the impairment of goodwill which is not deductible for income tax purposes, and non-cash stock compensation expense recorded by the Company under accounting rules under the Black Sholes method for issuance of options and warrants which is also not deductible for income taxes, the state income taxes, net of the federal benefit and the loss recorded by the Company on the decline in the cash surrender value in officer’s life insurance policies, which is not deductible for income tax purposes.As a result, the effective income tax rate for 2011 was a tax benefit of 107.0% versus a tax of 34.3% in 2010. As a result of the Company’s tax filing, income taxes are estimated to provide a benefit of $686,000 in 2011 versus an expense of $78,000 in 2010.This benefit is primary attributable to a current tax benefit for taxes recoverable and deferred tax assets recoverable in future periods, based upon management’s determination, at that time, that such amounts were more likely than not to be realized. As a result, we recorded net income of $45,000 in 2011 versus $149,000 in 2010. Net loss available for common stockholders’ for 2011 was $(1,913,000), or $(0.24) per share, as compared to $(125,000), or $(0.02) per share for 2010.Net income (loss) available for common stockholders’ is a function of net income (loss) less actual dividends paid on preferred stock, less “deemed dividends” on preferred stock.Deemed dividends on preferred stock are computed as a non-cash accounting charge upon the issuance of the Series C Preferred Stock in March 2011. Deemed dividends are considered to be an “embedded beneficial conversion feature” which has an intrinsic value which must be calculated.In this instance the intrinsic value (a non-cash item reflected only as a reclassification within the Stockholder’s Equity accounts) was determined to be $1,914,000.Therefore, taking into consideration the respective net loss/income, the dividends actually paid on the Series B Preferred Stock of $44,000, and the “deemed dividend” described above, net loss available for common stockholders for 2011 was $(1,913,000), or $(0.24) per share, as compared to $(125,000), or $(0.02) per share for 2010. Critical Accounting Policies Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with the U.S. generally accepted accounting principles (“GAAP”). The preparation of these financial statements requires us to make significant estimates and judgments that affect the reported amount of assets, liabilities, revenues, and expenses and related disclosures of contingent assets and liabilities. We evaluate our estimates, including those related to bad debts, intangible assets and contingencies on an ongoing basis. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. While our significant accounting policies are more fully described in our consolidated financial statements appearing at the end of the Annual Report on Form 10-K, we believe that the following critical accounting policies involve the more significant judgments and estimates used in the preparation of our consolidated financial statements and are the most critical to aid you in fully understanding and evaluating our reported financial results. 27 Revenue Recognition We follow the guidance of the Securities and Exchange Commission’s Staff Accounting Bulletin No. 104 for revenue recognition.In general, we record revenue when persuasive evidence of any agreement exists, services have been rendered, and collectability is reasonably assured, therefore, revenue is recognized when we invoice customers for completed services at contracted rates and terms.Therefore, revenue recognition may differ from the timing of cash receipts. Valuation of Goodwill and Intangible Assets Our intangible assets include goodwill, trademarks, non-compete agreements, patents and purchased customer relationships, all of which are accounted for based on Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 350 Intangibles-Goodwill and Other. As described below, goodwill and intangible assets that have indefinite useful lives are not amortized but are tested at least annually for impairment or more frequently if events or changes in circumstances indicate that the asset might be impaired. Intangible assets with limited useful lives are amortized using the straight-line method over their estimated period of benefit, ranging from two to eight years.Goodwill is tested for impairment by comparing the carrying value to the estimated fair value, in accordance with GAAP. Impairment exists if the carrying amount is greater than its estimated fair value, resulting in a write-down equal to the difference between the carry amount and the estimated fair value. The values recorded for goodwill and other intangible assets represent fair values calculated by accepted valuation methods. Such valuations require critical estimates and assumptions derived from and which include, but are not limited to i) information included in our business plan, ii) estimated cash flows, and iii) discount rates. Impairment Testing Our goodwill impairment testing is calculated at the reporting or segment unit level. Our annual impairment test has two steps. The first identifies potential impairments by comparing the fair value of the reporting or segment unit with its carrying value.If the fair value exceeds the carrying amount, goodwill is not impaired and the second step is not necessary. If the carrying value exceeds the fair value, the second step calculates the possible impairment loss by comparing the implied fair value of goodwill with the carrying amount. If the implied fair value of goodwill is less than the carrying amount, a write-down is recorded. The impairment test for the other intangible assets is performed by comparing the carrying amount of the intangible assets to the sum of the undiscounted expected future cash flows. In accordance with GAAP, which relates to impairment of long-lived assets other than goodwill, impairment exists if the sum of the future undiscounted cash flows is less than the carrying amount of the intangible asset or to its related group of assets. We predominately use discounted cash flow models derived from internal budgets in assessing fair values for our impairment testing.Factors that could change the result of our impairment test include, but are not limited to, different assumptions used to forecast future net sales, expenses, capital expenditures, and working capital requirements used in our cash flow models. In addition, selection of a risk-adjusted discount rate on the estimated undiscounted cash flows is susceptible to future changes in market conditions, and when unfavorable, can adversely affect our original estimates of fair values. In the event that our management determines that the value of intangible assets have become impaired using this approach, we will record an accounting charge for the amount of the impairment.We also engaged an independent valuation expert to assist us in performing the valuation and analysis of fair values of goodwill and intangibles. Share-Based Compensation We account for stock-based compensation based on ASC Topic 718 – Stock Compensation which requires expensing of stock options and other share-based payments (ie, stock warrant issuances) based on the fair value of each stock option/warrant awarded. The fair value of each stock option/warrant is estimated on the date of grant using the Black-Scholes valuation model. This model requires management to estimate the expected volatility, expected dividends, and expected term as inputs to the valuation model. Fair Value of Financial Assets and Liabilities – Derivative Instruments We measure the fair value of financial assets and liabilities in accordance with GAAP, which defines fair value, establishes a framework for measuring fair value, and requires certain disclosures about fair value measurements. GAAP defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. GAAP also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. GAAP describes three levels of inputs that may be used to measure fair value: 28 Level 1 – quoted prices in active markets for identical assets or liabilities. Level 2 – quoted prices for similar assets and liabilities in active markets or inputs that are observable. Level 3 – inputs that are unobservable (for example cash flow modeling inputs based on assumptions). We do not use derivative financial instruments to hedge exposures to cash-flow, market or foreign-currency risks. However, we have entered into certain financial instruments and contracts, such as debt financing arrangements and freestanding common stock warrants with features that are either i) not afforded equity classification, ii) embody risks not clearly and closely related to host contracts, or iii) may be net-cash settled by the counterparty. These instruments are required to be carried as derivative liabilities, at fair value. We estimate fair values of all derivative instruments, such as free-standing common stock purchase warrants, and embedded beneficial conversion features utilizing Level 2 inputs. We use the Black-Scholes option valuation technique because it embodies all of the requisite assumptions (including trading volatility, estimated terms and risk free rates) necessary to fair value these instruments.Estimating fair values of derivative financial instruments requires the development of significant and subjective inputs that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. In addition, option-based techniques are volatile and sensitive to changes in our trading market price and the trading market price of various peer companies. Since derivative financial instruments are initially and subsequently carried at fair value, our income will reflect the volatility in these estimates and assumption changes. Recent Accounting Pronouncements Since January 1, 2011, there have been several new accounting pronouncements and updates to the Accounting Standards Codification.Each of these updates has been reviewed by Management who does not believe their adoption has had or will have a material impact on the Company’s financial position or operating results.The Company early adopted Accounting Standard Update No. 2011-08 – Intangibles – Goodwill and Other (Topic 350) Testing for Goodwill Impairment in 2011.This update provides that an entity may first assess qualitative factors to determine whether it is necessary to perform the two-step goodwill impairment test.If the qualitative factors outlined in the update are persuasive that it is more likely than not that goodwill has not been impaired, then the two-step test is not required. However, if the qualitative analysis indicates that it is not more likely than not that goodwill has not been impaired, then the requisite two-step tests always required must still be performed.The early adoption of Accounting Standard Update No. 2011-08 – Intangibles – Goodwill and Other (Topic 350) early adoption of this standard had no impact on the Company’s financial statements for the years ended December 31, 2012 and 2011, respectively. Executive Compensation Agreements We have executive compensation agreements with 3 original executives. We own three separate life insurance policies (Flexible Premium Multifunded Life), each with a face amount of $3,000,000. We pay all scheduled monthly premiums and retain all interests in each policy. If an insured employee were to die, we would pay the employee’s designated beneficiary an annual survivor’s benefit of $300,000 per year for 10 consecutive years after the employee’s death.Effective January 23, 2013, these policies were given as collateral for our line of credit. Stock Option Plan We account for stock-based compensation using the provisions of FASB ASC 718.FASB ASC 718 codification requires companies to recognize the fair value of stock-based compensation expense in the financial statements based on the grant date fair value of the options. We have only awarded stock options since May 2008. All options are approved by the Compensation Committee. We measure the fair value of restricted shares based upon the closing market price of our common stock on the date of grant. Restricted stock awards that vest in accordance with service conditions are amortized over their applicable vesting period using the straight-line method. The fair value of our stock option awards or modifications is estimated at the date of grant using the Black-Scholes option pricing model. We have changed our presentation and disclosure of stock options and warrants in this Annual Report on SEC Form 10-K for the first time. Instead of listing the details of each of the Black-Scholes inputs for each stock option and each stock warrant issued listed below, we are providing a tabular format that shows a range for each of the valuation parameters affecting issuance. We believe this provides a more concise and meaningful presentation. The following options were issued in 2011 under the 2008 Stock Incentive Plan and valued using the Black-Scholes valuation method with the key inputs varying as follows: Exercise price $1.00 - $1.10 Risk free interest rate 1.89% to 3.36% 29 Volatility 28.0% - 32.7% Expected Term 10 Years Dividend yield None On January 1, 2011, we issued options to purchase an aggregate of 82,192 shares of our common stock to an individual associated with the purchase of business from ERMS - see Note 1. The options had no vesting schedule, are exercisable at $1.00 per share and expire in 2021.The estimated fair value of the options of $11,959 was included as purchase consideration. On June 1, 2011, we issued options to purchase an aggregate of 150,000 shares of our common stock to an executive for service. The options had no vesting schedule, are exercisable at $1.10 per share and expire in 2021.The estimated fair value of the options of $63,645 is included in SG&A expenses in the statement of operations for the fiscal year ended December 31, 2011. On October 24, 2011, we issued options to purchase an aggregate of 200,000 shares of our common stock to our new Chief Financial Officer. The options have a two year vesting schedule, are exercisable at $1.00 per share and expire in 2021. The estimated fair value of the options of $74,440 and these options have a two year vesting requirement and are being expensed over the straight-line method over the two year vesting period and are included inSG&A expenses for the fiscal year ended December 31, 2011. On December 30, 2011, we issued options to purchase an aggregate of 100,000 shares of our common stock to four key employees. The options had no vesting schedule, are exercisable at $1.00 per share and expire in 2021.The estimated fair value of the options of $12,550 is included SG&A expenses in the statement of operations for the fiscal year ended December 31, 2011. The following options were issued in 2012 under the 2008 Stock Incentive Plan and valued using the Black-Scholes valuation method with the key inputs varying as follows: Exercise price $0.56 - $1.00 Risk free interest rate 0.60% to 1.15% Volatility 32.9% - 35.44% Expected Term 5 Years Dividend yield None On February 10, 2012, we issued options to purchase an aggregate of 82,192 shares of our common stock at an option price of $1.00 per share, which were valued and capitalized in the initial purchase price allocation in the acquisition of ERMS – see Note 1. On March 14, 2012, we issued options to purchase an aggregate of 75,000 shares of our common stock to three former independent directors of GHH. The options have no vesting period, are exercisable at $1.00 per share and expire in 2017.The estimated fair value of the options of $15,248 was included SG&A expenses in the statement of operations for the fiscal year ended December 31, 2012. On March 21, 2012, we issued options to purchase an aggregate of 700,000 shares of our common stock to six employees for services. Options to purchase 400,000 shares of common stock vested immediately, while the remainder vest over two years, are exercisable at $1.00 per share and expire in 2017.The estimated fair value of all the options is $103,600. The compensation expense related to the options to purchase 400,000 shares of common stock that vest immediately with a total valuation of $59,200 is included in selling, general and administrative expenses in the statement of operations.50% of the remaining options to purchase 300,000 shares of common stock vest each year for two years.These options to purchase 300,000 shares of common stock, with a total valuation of $44,400, were being amortized, using the straight-line method from March 2012 through February 2014 at the rate of $5,550 per quarter. However, effective October 1, 2012, 50,000 of these options were terminated.Therefore, the remaining 250,000 options are being amortized on the straight-line basis through February 2014 at the rate of $4,625 per quarter. On July 1, 2012, the Company issued options to purchase an aggregate of 200,000 shares of our common stock to six members of the Board of Directors as compensation for board services for the upcoming year. All of these options vest immediately and are exercisable between $0.56 and $0.62 per share and expire in 2017. The variation in the strike price is due to provisions in the 2, which provides that if an Incentive Stock Option is issued to an individual who owns, at the time of grant, more than ten percent (10%) of the total combined voting power of all classes of the Company's Common Stock, the exercise price of such Option shall be at least 110% of the Fair Market Value of the Common Stock on the date of grant and the term of the Option shall not exceed five years from the date of grant. This provision applied to Isaac Blech; hence his strike price was $0.62 per share compared the remaining Board members whose strike price was $0.56 per share. The compensation expense related to these options total $33,117 and is included in general and administrative expense. 30 On July 18, 2012, we issued options to purchase an aggregate of 300,000 shares of our common stock to a new member of the Board of Directors. Options to purchase 150,000 shares of our common stock vested immediately, while the remainder vest ratably over three years, are exercisable at $0.65 per share and expire in 2017. The estimated fair value of these options is $58,350.The compensation expense related to the options to purchase 150,000 shares of common stock that vest immediately with a total valuation of $29,175 is included in SG&A expenses in the statement of operations. The remaining options, with a total valuation of $29,175, are being amortized using the straight-line method from August 2012 through July 2015 at a rate of $810 per month. On August 14, 2012, we issued options to purchase an aggregate of 300,000 shares of our common stock to an additional new member of the Board of Directors. Options to purchase 150,000 shares of our common stock vested immediately, while the remainder vest ratably over three years, are exercisable at $0.65 per share and expire in 2017. The estimated fair value of these options is $60,630.The compensation expense related to the options to purchase 150,000 shares of common stock that vest immediately with a total valuation of $30,315 is included in SG&A expenses in the statement of operations. The remaining options, with a total valuation of $30,315, are being amortized using the straight-line method from September 2012 through August 2015 at a rate of $842 per month. On December 1, 2012, we issued options to purchase an aggregate of 50,000 shares of our common stock to a new key member of management.These options vest immediately, are exercisable at $0.80 per share and expire in 2017.The estimated fair value of these options is $5,525 and is included in SG&A expenses. On December 31, 2012, we issued options to purchase an aggregate of 200,000 shares of our common stock to an officer of the Company.These options vest immediately, are exercisable at $0.78 per share and expire in 2017.The estimated fair value of these options is $48,020 and is included in SG&A expenses. On December 31, 2012, we issued options to purchase an aggregate of 100,000 shares of our common stock to a key employee of the Company.These options vest immediately, are exercisable at $0.78 per share and expire in 2017.The estimated fair value of these options is $24,010 and is included in general and administrative expense. On December 31, 2012, we issued options to purchase an aggregate of 1,300,000 shares of our common stock to Centurion Holdings, LLC.Centurion Holdings, LLC is controlled by Joseph J. Grano, Jr. who was awarded these options upon becoming Chairman of the Board of Directors of the Company. These options vest immediately, are exercisable at $0.76 per share and expire in 2017.The estimated fair value of these options is $304,070 and is included in SG&A expenses. Warrants The following warrants were issued in 2011 and valued using the Black-Scholes valuation method with the key inputs varying as follows: Exercise price $0.77 - $1.10 Risk free interest rate 0.94% to 2.99% Volatility 28.0% - 29.8% Expected Term 5 Years Dividend yield None In connection with the Series C Convertible Preferred Stock issued on March 3, 2011, we issued warrants to purchase an aggregate of 7,142,856 shares of our common stock at an exercise price of $0.77 per share.The fair market value of these warrants was charged to additional paid-in capital as a cost of the equity raise.Additionally, pursuant to the Series C Convertible Preferred Stock offering, we issued a warrant to purchase an aggregate of 714,285 shares of our common stock to the investment bank at an exercise price of $0.77 per share, and warrants to purchase 330,000 and 30,000 shares of our common stock, respectively, with an exercise price of $.077 per share, to two consultants directly related to the offering. The warrant to purchase an aggregate of 330,000 shares of our common stock was issued for services to an individual who subsequently became a Director. The warrants to purchase an aggregate of 8,217,141 of our common stock was valued at the fair market value of the warrants at the issuance date of $2,031,277 and recorded as a derivative liability.Please see the full discussion in the section above entitled “Series C Convertible Preferred Stock” On March 3, 2011, we issued a warrant to purchase an aggregate of 240,000 shares of our common stock to a Director for services.The warrants are exercisable at $0.77 and expire on March 3, 2016. The grant date estimated fair value of the options of $59,328 is included in SG&A expenses on the statement of operations. 31 On May 2, 2011, we issued a warrant to purchase an aggregate of 50,000 shares of our common stock to a consultant for services related to investor relations/public relations. The warrants are exercisable at $1.10 and expire on May 2, 2016. The grant date estimated fair value of the options of $12,740 is included in SG&A expenses on the statement of operations. On June 1, 2011, we issued a warrant to purchase an aggregate of 33,000 shares of our common stock to a consultant for services related to a Director search for the Board of the Company. The warrants are exercisable at $1.10 and expire on June 1, 2016. The grant date estimated fair value of the options of $8,329 is included in SG&A expenses on the statement of operations. On June 10, 2011, we issued a warrant to purchase an aggregate of 50,000 shares of our common stock to each of our five independent Directors for board service. The warrants are exercisable at $1.05 and expire on June 10, 2016. The grant date estimated fair value of the options of $71,200 is included in SG&A expenses on the statement of operations. On September 16, 2011, we issued a warrant to purchase an aggregate of 100,000 shares of our common stock to a new member of the Board of Directors. The warrants are exercisable at $1.05 and expire on September 16, 2016. The grant date estimated fair value of the options of $8,490 is included in SG&A expenses on the statement of operations. On March 5, 2012, contemporaneously with the acquisition of GHH,holders of GHH warrants received the immediate right to receive warrants of Premier.Each GHH option and warrant was replaced by a Premier warrant for the number of shares of Premier common stock that a GHH warrant holder would have received if the GHH warrant had been exercised in full to immediately prior to the merger, based on the exchange ratio calculated without regard to any warrants, and excluding any adjustment resulting from ‘‘price anti-dilution’’ provisions. The aggregate exercise price of the Premier warrant was the same as that of the GHH warrant being replaced. For example, an option to purchase 1,000 GHH shares of common stock at $2.00 per share would be converted into an option to purchase a minimum of 140 Premier shares of common stock at approximately $14.33 per share. If the actual calculation would result in a fraction of a share, the same will be rounded up to a whole share.Pursuant to this provision of the Agreement and Plan of Merger, GHH warrants to purchase 1,822,567 shares of common stock were converted to Premier warrants to purchase 300,663 shares of our common stock with an average exercise price of $14.65 with varying expiration dates.In November 2012, 44,911 of these warrants were cancelled and 13,301 shares of common stock were issued. The strike price for all these warrants is significantly in excess of the fair market price of the stock and such warrants were determined to have de-minimis value at the time of the merger. The following warrants were issued in 2012 and valued using the Black-Scholes valuation method with the key inputs varying as follows: Exercise price $0.80 to $1.10 Risk free interest rate .63% to 1.22% Volatility 32.6% to 35.44% Expected term 4.75 to 5 years Dividend yield None On March 14, 2012, we issued warrants to purchase an aggregate of 33,000 shares of our common stock to a consultant for services related to a Director search for the Board of Directors. The warrants are exercisable at $1.10 and expire on March 14, 2017. The grant date estimated fair value of the warrants is $5,858, and is included in SG&A expenses on the statement of operations. On March 20, 2012, we issued warrants to purchase an aggregate of 67,000 shares of our common stock to a consultant for services as a success fee related to a Director search for the Board of Directors. The warrants are exercisable at $1.10 and expire on March 20, 2017. The grant date estimated fair value of the warrants is $8,958, and is included in SG&A expenses on the statement of operations. On March 21, 2012, we issued warrants to purchase an aggregate of 250,000 shares of our common stock to a new member of the Board of Directors. The warrants vest as follows: (i) warrants to purchase 100,000 shares of our common stock immediately, (ii) warrants to purchase 50,000 shares of our common stock on March 21, 2013, (iii) warrants to purchase 50,000 of our common stock on March 21, 2014, and, (iv) warrants to purchase 50,000 shares of our common stock on March 21, 2015. The warrants are exercisable at $0.80 and expire on March 21, 2017. Compensation expense related to these warrants will be recognized according to the vesting schedule, with the expense related to the immediately vested warrants to purchase 100,000 shares of our common stock of $20,200 recorded in the statement of operations.The warrants vesting annually from March 2013 through March 2015 are being expensed annually on a straight line basis, with each annual award being expensed monthly at $842, or $2,526 per quarter. The grant date estimated total fair value of the warrants described above and the straight line amortization of the options over the vesting period are included in SG&A expenses on the statement of operations as described above. 32 On March 21, 2012, we issued warrants to purchase an aggregate of 150,000 shares of our common stock each to two members of the Board of Directors for board services related to merger and acquisition and investor relations activity. The warrants vest immediately, are exercisable at $1.00 and expire on March 21, 2017. The grant date estimated fair value of the warrants is $44,400 and is included in SG&A expenses on the statement of operations. On May 4, 2012, we issued warrants to purchase an aggregate of 400,000 shares of our common stock to a Director for assuming additional responsibilities as Vice Chairman of the Board of Directors. The warrants vest immediately, are exercisable at $0.80 and expire on May 4, 2017. The grant date estimated fair value ofthewarrants is $54,360, and is included in SG&A expenses on the statement of operations. On July 10, 2012, we issued warrants to purchase an aggregate of 50,000 shares of our common stock to our investment relations firm as compensation. The warrants vest immediately, are exercisable at $0.80 and expire July 10, 2017. The grant date estimated fair value of the warrants is $5,085, and is included in is included in SG&A expenses on the statement of operations. On August 14, 2012, we issued warrants to purchase an aggregate of 67,000 shares of common stock to a consultant for services as a success fee related to a Director search for the Board of Directors. The warrants vest immediately, are exercisable at $1.00 and expire August 14, 2017. The grant date estimated fair value of the warrants is $13,541, and is included in SG&A expenses on the statement of operations. In connection with the 7% Redeemable Convertible Promissory Notes issued on November 16, 2012, we issued warrants to purchase an aggregate of 750,000 shares of our common stock. We accounted for the initial issuance of these 7% Redeemable Convertible Promissory Notes in accordance with FASB ASC Topic 470-20 “Debt with Conversion and Other Options”.Due to the full-ratchet anti-dilution protection in the warrants, they are considered to be derivative instruments. As such, the fair value of the warrants directly associated with the 7% Redeemable Convertible Promissory Notes at date of issuance of $117,825 was recorded as a derivative liability, the relative fair value of such warrants of $101,828 was charged to debt discount and the remainder of $15,997 was charged to derivative expense. Additionally, the fair value of the 120,000 placement warrants, $18,852, associated with the issuance was also recorded as a derivative liability with an offset to deferred financing costs. In connection with the Series D 8% Redeemable Convertible Preferred Stock issued on December 26, 2012, we issued a warrant to purchase an aggregate of 2,348,685 shares of our common stock to investors and a warrant to purchase an aggregate of 939,467 shares of our common stock to the placement agent.These warrants are recorded as a derivative liability with an offsetting charge to additional paid in capital and deferred tax asset. Employee Benefit Plan We have a 401(k) plan that covers substantially all employees. Plan participants can make voluntary contributions of up to 15% of compensation, subject to certain limitations, and we match a portion of employee contributions. Total contributions to the plan for the years ended December 31, 2012 and 2011were approximately $22,925 and $37,023 respectively, not including forfeitures that are applied to the contributions by the Company. Financial Condition and Liquidity As of December 31, 2012, we had cash and cash equivalents of $4,471,102, an increase of $1,419,695 from the prior year.We continue to use our revolving line of credit to fund operations and increased our end of year balance by $351,000 over the prior year balance.As of December 31, 2012 our available borrowings under our revolving line of credit were $406,000. Working capital at December 31, 2012, was $3,627,450, representing a decrease of $754,000 compared to December 31, 2011.This net decrease of $754,000 in working capital is the result of a number of factors: i) a reduction in income tax receivable $113,000 in 2012 as this was collected, ii) a reduction in convertible notes receivable and deferred issuance costs of $1,030,000 in 2012, as these amounts related to loans to GHH and deferred stock issuance costs which went away at acquisition March 5, 2012, iii) a net increase in costs and estimated earnings over billings of $196,000 in 2012, as % of completion accounting started only subsequent to the GHH acquisition, iv) an increase in current portion of long-term debt of $125,000, almost solely related to a GHH facility in California which will be re-financed in 2013, v) $656,000 in accounts payable, again almost solely related to the acquisition of GHH and its subsidiary companies, and vi) and increase in accrued expenses of $318,000, which is primarily attributable to the accrual of a GHH litigation settlement discussed above. Non-current liabilities of $2,470,930 are comprised of a book liability related to the current valuation of outstanding warrants considered a derivative liability of $2,385,930 with the balance of 85,000 representing a deferred tax liability.Shareholders’ equity as of December 31, 2012, was $17,455,398 (which represents 73% of total assets) compared to $7,389,599 at December 31, 2011 and 71% of total assets. 33 During the year ended December 31, 2012, net cash used in operating activities was $3,362,000 and was primarily attributable to: i) the net loss of $9,502,000, offset by, ii) depreciation and amortization of $243,000, iii) write-off of debt discount of $354,000, iv) non-cash expenses for stock warrant and options issued of $779,000, v) non-cash charge for impairment of goodwill of $4,378,000, vi) non-cash derivative expense of $1,229,000, vii) non-cash charge for stock issued for services of $120,000 to a registered investment advisor as referral fees for the Ecological transaction, and viii) a decrease in income taxes receivable of $110,000. These sources were offset by a decrease in deferred income taxes of $130,000, an increase in accounts receivable of $274,000, an increase in costs and earnings in excess of billings of $225,000, and increase in prepaid expenses of $25,000, a decrease in accounts payable and accrued expenses of $317,000 (as we used a substantial portion of the proceeds of the issuance of the 7% Promissory Note to pay down accounts payable), and a decrease in billings in excess of costs and estimated earnings of $136,000. Cash used in investing activities of $2,292,000 for the year ended December 31, 2012 was primarily comprised of the following: i) $2,000,000 for the acquisition of Ecological, LLC on December 31, 2012, ii) the incurrence of deferred stock issuance costs related to the company issuance of common stock in the acquisition of GHH in the amount of $193,000, iii) the issuance of convertible secured promissory notes to GHH in the amount of $195,000 in early 2012 (see discussion of the GHH acquisition above and the realization of these notes as a reduction in the consideration of the purchase consideration of GHH) and the assumption of $107,000 in cash in the GHH acquisition. Cash provided from financing activities of $7,073,000 for the year ended December 31, 2012 was comprised primarily of the following: i) the issuance of the Series D Preferred Stock in December 2012, with net proceeds of $6,235,000, ii) issuance of 7% Promissory Notes in November 2012 resulting in net proceeds of $636,000 (these notes were mandatory converted to Series D Preferred Stock upon their issuance in December 2012), and net proceeds from borrowings on the Company’s revolving line of credit of $351,000. These sources were offset by $37,000 in transaction costs paid on financing transactions and $119,000 in net payments on long-term debt. The following table represents the company’s most liquid assets: Cash and cash equivalents $ $ Marketable securities Investment in cost method investee $ $ Effective January 23, 2013, we and our financial institution entered into a loan modification under its current line of credit. We incurred $8,275 in deferred loan costs with this modification.All terms remain the same with the maturity date extended to until July 19, 2013, as negotiations continue to increase the line of credit and the advance rate. The current line of credit is limited to a borrowing base of 75% of eligible receivables or $1,500,000. On December 26, 2012, we closed a private placement financing from the initial sale of 7,046 shares of its 8% Redeemable Convertible Preferred Stock (“Series D Preferred Stock”) to accredited investors resulting in net proceeds of $6,234,900. $2,000,000 of these net proceeds was used in the Ecological acquisition.Additionally, on January 25, 2013, we closed an additional private placement financing from the sale of 3,955 shares of its Series D Preferred Stock to accredited investors resulting in net proceeds of $3,557,950.Finally, on February 26, 2013, we completed the final closing on our Series D Preferred Stock offering to accredited investors resulting in net proceeds of $1,894,200.The two previously described closings in 2013 (totaling $5,452,150), combined with cash on hand at December 31, 2012 ($4,471,102) and available borrowings on our revolving line of credit and funds from operations are anticipated to meet our cash needs for operations at least through mid-fiscal 2014. We will need to raise additional funds in order to fund future business acquisitions. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. However, the trading price of our common stock and a downturn in the U.S. equity and debt markets could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing. Furthermore, if we issue additional equity or debt securities, stockholders will likely experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. The inability to obtain additional capital may restrict our ability to grow. If we are unable to obtain additional financing, we will be required to further curtail our plans to acquire additional businesses. 34 Our liquidity may be negatively impacted by the significant costs associated with our public company reporting requirements, costs associated with applicable corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the Securities and Exchange Commission. We expect all of these applicable rules and regulations to significantly increase our legal and financial compliance costs and to make some activities more time consuming and costly. Outlook Our priority is to continue to build depth in the range of services and solutions we offer by building “areas of expertise and knowledge and increased industry specific knowledge.” We believe that achieving this goal will require a combination of merger activity and organic growth. This will in part depend on continued improvement in the U.S. business market. With our focus on capabilities related to the Energy and Financial Service (specifically risk, regulatory and compliance) verticals, we must continue to adjust to the rapid change being driven by the evolving Energy sector as well as the ongoing wave of regulatory change affecting all industries.Both areas continue to increase in importance and are tied to key priority initiatives for most businesses. The energy sector has a fragmented regulatory environment driven by federal, state, provincial and local processes including: reliability, building and safety, environmental regulation and codes, permitting, rate structures, tariffs, incentives, tax credits, all which are changing frequently.In addition, the metrics and values used to deal with financing of energy related projects are still maturing.However, the drivers of rising energy costs combined with power reliance issues for countries and the long term view related to our carbon footprint continue to push the energy sector forward and our involvement in energy efficiency, frequency regulation, integrated demand side management, and distributed generation and renewable energy are priorities. The regulatory and compliance sector continues to evolve globally and locally.The challenges that impact specific verticals, based on industry nuances, continue to expand and create ongoing challenges for businesses.Many of the growing areas within this sector impact all industries and will also overlap with our energy services as maturation continues in relation to the energy sector.This will include cyber-security, risk mitigation, ongoing regulatory and compliance initiatives and program management as we move to expand our overall capabilities and expertise. Contractual Obligations As of December 31, 2012, our contractual obligations consisted of the following lease and other contractual obligations: $ The leases cover office premises and leased vehicles.Of these leases a total of $52,146 is allocated for vehicle leases and $1,565,652 is for office premises. Non-cancellable contracts with talent acquisition search engines account for $58,222 of the obligations.The above schedule of contractual obligations does not include dividends on preferred stock as they have not been declared; we have the option of paying the dividends in cash or our common stock at our discretion. We have several employment agreements in place with key management which are in the normal course and have not been included in the above table. As described above, we have a loan agreement for a line of credit with a financial institution providing for a maximum line of credit of $1,500,000. On January 23, 2013, we entered into a loan modification under our line of credit under the same terms and conditions.The loan modification extended the maturity date to until July 19, 2013, as negotiations continue to increase the line of credit and the advance rate. We paid $8,275 in loan fees and expenses associated with this modification. Outstanding borrowings under this line of credit were $1,094,263 and $743,000, at December 31, 2012 and 2011, respectively. Off-Balance-Sheet Arrangements The 7% Series B Convertible Preferred Stock accrues 7 percent per annum dividends. The dividends began accruing April 30, 2010, and are cumulative.Dividends are payable annually in arrears.At December 31, 2012, $56,840 of dividends has accrued 35 on these shares, respectively.However, they are unrecorded on the Company’s books until declared. On January 28, 2013, we declared dividends on our Convertible Series B Preferred Stock and we paid the dividends in shares of our common stock.On February 1, 2013, we issued 71,050 shares of our common stock to the 7% Series B Convertible Preferred Stockholders. The 7% Series C Convertible Preferred Stock accrues 7 percent per annum dividends. The dividends began accruing March 3, 2011, and are cumulative.Dividends are payable annually in arrears. At December 31, 2012, $350,000 of dividends has accrued on these shares. However, they are unrecorded on our books until declared. On January 28, 2013, we declared dividends on our 7% Series C Convertible Preferred Stock and we paid the dividends in shares of our common stock.On February 1, 2013, we issued 437,500 shares of our common stock to the 7% Series C Convertible Preferred Stockholders. As of December 31, 2012, and during the prior year then ended, there were no transactions, agreements or other contractual arrangements to which an unconsolidated entity was a party under which we (1) had any direct or contingent obligation under a guarantee contract, derivative instrument, or variable interest in the unconsolidated entity, or (2) had a retained or contingent interest in assets transferred to the unconsolidated entity. Preferred Stock On April 30, 2010, we issued 520,000 shares of 7% Series B Convertible Preferred Stock in a private placement (the “April Private Placement”).The holders of shares of 7% Series B Convertible Preferred Stock are entitled to receive a 7 percent annual dividend until the shares are converted to common stock.In conjunction with the sale of the 7% Series B Convertible Preferred Stock we issued warrants entitling the holder to purchase shares of our common stock at an exercise price of $ 0.77 per share.The warrants are immediately exercisable and have a term of five years. On May 24, 2010, we issued an additional 440,000 shares of 7% Series B Convertible Preferred Stock pursuant to the April Private Placement. On December 6, 2010, we issued an additional 240,000 shares of 7% Series B Convertible Preferred Stock pursuant to April Private Placement. On March 1, 2011, we designated 2,500,000 shares of our preferred stock as 7% Series C Convertible Preferred Stock; $.001 par value per share (“Series C Preferred Stock”), each share of Series C Preferred Stock is priced at $2.10 and includes 3 warrants at an exercise price of $0.77 which expire in 5 years. The Series C Preferred Stock (a) is convertible into three shares of common stock, subject to certain adjustments, (b) pays 7 percent dividends per annum, payable annually in cash or shares of common stock, at our option, and (c) is automatically converted into common stock should the price of our common stock exceed $2.50 for 30 consecutive trading days. On March 3, 2011, we closed an offering of our Series C Preferred Stock.We sold 2,380,952 shares of Series C Preferred Stock and warrants to purchase an aggregate of 7,142,856 shares of our common stock for gross proceeds of $5,000,000. We targeted these proceeds for the sole purpose of strategic acquisitions. On December 26, 2012, we closed an offering of Series D 8% Redeemable Convertible Preferred Stock (“Series D Preferred Stock”) to accredited investors. We sold 7,046 shares of our Series D Preferred Stock and issued warrants to purchase an aggregate of 2,348,685 shares of our common stock at an exercise price of $ 1.125 per share, for gross proceeds of $7,046,000.In connection with the sale of these securities, $704,600 was paid and a warrant to purchase an aggregate of 939,467 shares of our common stock was issued, with an exercise price of $ 1.125 per share, to a registered broker. In addition, $100,000 and $6,500 in legal and escrow fees were paid. We received net proceeds of $6,234,900.We used $2,000,000 of these proceeds for the acquisition of Ecological, LLC, which closed on December 31, 2012.We targeted the balance of the proceeds for working capital and future mergers and acquisitions. Also on December 26, 2012, the 7% Redeemable Convertible Promissory Notes issued on November 16, 2012 became mandatorily convertible into Series D Preferred Stock.This resulted in the issuance of an additional 750 shares of Series D Preferred Stock. On January 25, 2013, we closed an additional private placement financing from the sale of our Series D Preferred Stock to accredited investors. We sold 3,955 shares of our Series D Preferred Stock and issued warrants to purchase an aggregate of 1,318,363 shares of our common stock at an exercise price of $ 1.125 per share, for gross proceeds of $3,955,001. In connection with the sale of these securities, $395,500 was paid and a warrant to purchase an aggregate of 527,334 shares of our common stock with an exercise price of $ 1.125 per share was issued to a registered broker. In addition, blue sky filing fees of $1,550 were incurred.We received net proceeds of $ 3,557,951 relating to the January 25, 2013 sale of the Series D Preferred Stock. On February 26, 2013, we closed the final private placement financing from the sale of our Series D Preferred Stock to accredited investors. We sold 2,125 shares of our Series D Preferred Stock and issued warrants to purchase an aggregate of 708,344 shares of our common stock at an exercise price of $ 1.125 per share, for gross proceeds of $2,125,000. In connection with the sale of these securities, $212,500 was paid and a warrant to purchase an aggregate of 283,334 shares of our common stock at an exercise price of $ 1.125 per share was issued to a registered broker. In addition, legal fees of $18,300 were incurred.We received net proceeds of $ 1,894,200 relating to the February 26, 2013 sale of the Series D Preferred Stock.The net proceeds of both the January 25, 2013 and the February 26, 2013 closings are targeted for working capital and future mergers and acquisitions. 36 BUSINESS Corporate Information We were incorporated on January 5, 2000 as Continuum Group C Inc. under the laws of the State of Nevada. Prior to November 5, 2004, we had not engaged in any business operations other than organizational activities; and other than issuing shares to stockholders, we never commenced operational activities. On November 5, 2004, we consummated a share exchange agreement dated as of October 12, 2004, among us, Premier Alliance Group, Inc., a North Carolina corporation (‘‘North Carolina Premier’’), and the shareholders of North Carolina Premier. As a result, North Carolina Premier merged with us and our name was changed to Premier Alliance Group, Inc. In 2011, we were re-domiciled under the laws of the state of Delaware. Company Summary We are a service and solution delivery firm that provides integration and consulting expertise. Our team consists of senior individuals that are trained as engineers and technology specialists, business and project consultants and analysts – these are known as our Knowledge Based Experts (KBE). Our KBEs are versed in many areas of business and primarily focus on assisting and advising our clients in dealing with critical areas that impact their business. Our primary focus is using our expertise on issues related to two key areas for customers; (i) energy usage and strategy and (ii) risk and compliance initiatives. We work with our customers to assess, design, and implement complete solutions. Our key capabilities in the energy sector help customers manage their energy use and cost via automation, technology, utility incentive programs, and alternative energy solutions. Our solutions in relation to risk and compliance are in understanding the application of various regulations and deploying processes and automation to comply. Company Overview Our core business focus is to serve as a problem solver by providing subject matter expertise through our delivery teams - 360° Intelligence Delivery. We have a focus on building our knowledge practices with talent in key industries we feel offer opportunities including: financial services, utilities, life science, technology, government and health sectors. We currently have two major delivery verticals of Energy and Sustainable Solutions and Risk/Compliance capabilities, which are being driven by energy mandates and increased regulations crossing many industries. Our Energy and Sustainable Solutions capabilities position us as a provider of energy efficiency and sustainable facilities solutions. This includes the design, engineering and installation of solutions and technologies that enable clients to reduce their energy costs and carbon footprints. Our Risk/Compliance deliveries encompass Governance, Risk & Compliance (GRC) and Business Performance & Technology as we assist clients with Risk Management, Compliance, Organizational Effectiveness, and Information Management. Energy and Sustainability Solutions Overview GreenHouse Holdings, Inc., a wholly owned subsidiary we acquired on March 5, 2012, operates with Ecological, LLC, which we acquired on December 31, 2012 – (see Acquisitions below) - as our Energy and Sustainability Solutions division, and has “vertical operations” consisting of Energy and Sustainable Infrastructure.The Energy and Sustainability Solutions division has as its primary focus, energy related projects. Automated Demand Response and Demand Side Management are key focus points for energy efficiency today and are expected to be a substantial market within this decade. The Energy and Sustainability Solutions division is strategically positioned to take advantage of this growing sector as it currently leads Automated Demand Response (“ADR”) programs for utilities in California as a technical coordinator.Automated Demand Response and Demand Side Management enables customers with automated load control systems, such as Energy Management Systems (EMS), to participate in demand response events without manual intervention. Hence, with this automation, the program's flexibility and ease-of-use allows customers to pre-select their level of participation and to automatically take part in demand response events. In addition, the distributed generation and renewable energy markets are also experiencing significant growth beyond the commercial sector, and have become a focus of military leaders looking for cost savings and revenue generation from these projects as a part of the Federal Leadership in Environmental, Energy and Economic Performance Act.The Energy and Sustainability Solutions division has expertise in this area and is currently engaged in the delivery of multiple distributed generation and renewable energy projects. 37 Energy Capabilities · We support local utilities as a lead service provider for program management, installation and auditing. · We assist with the expansion of Integrated Demand Side Management (IDSM) programs into new regions as incentive programs are created and launched. · We are moving toward a “one stop shop” for energy efficiency solutions. · We provide program management and turnkey integration to other energy related companies, organizations and aggregators. · We cross sell our consulting services to existing and potential commercial, industrial and utility customers, offering services in support of all three “legs” of the utility stool: (i) the demand side, (ii) the production side, and (iii) operations, finance &accounting, business process & technology, and governance, risk and compliance. · We conduct fully-integrated energy audits in conjunction with local utilities and turnkey integration of energy efficiency upgrades. · We develop and assist in executing alternative energy and energy efficiency projects to meet anticipated 2020 demands. · We develop and assist in executing solar and co-generation projects. Risk/Compliance Service Overview A typical customer of ours is an organization with complex business processes, large amounts of data to manage, and change driven by regulatory or market environments, or strategic, growth and profitability initiatives.Key areas of focus continue to be large, mandated regulatory efforts including complying with the Sarbanes-Oxley Act of 2002 (SOX), BASEL ACCORDS (for financial institutions), energy and environmental mandates, and the Dodd-Frank Wall Street Reform and Consumer Protection Act which can impact organizations across many aspects including risk assessment and management, business processes and work flow, as well as data management, data capture and reporting. Risk/Compliance Service Capabilities Risk/Compliance services are primarily provided by our KBEs within core areas of expertise: Governance, Risk & Compliance (GRC) and Business Performance & Technology (BP&T).Engagements within this realm include: · Governance Risk and Compliance · Enterprise risk management; · Control and governance frameworks; · Internal audit services; and · Regulatory and compliance efforts (i.e., BASEL ACCORDS, SOX). · Business Performance & Technology · Business process re-engineering and workflow analysis; · Business intelligence, data analytics; · Organizational effectiveness; and · System planning. Premier Acquisition Strategy In the recent past, we have made several acquisitions seeking to expand the scope of our business and achieve growth in our revenues and profitability.Our task is to have the capability to help clients deal with external change driven by various factors including energy, regulatory or market environments or internal change driven by strategic, growth, and profitability initiatives. To compete more effectively, part of the strategic growth plan for us is to identify target firms to expand or enhance our 360° Intelligence Delivery capabilities.Identifying key expanded capabilities will be important as we must continue to display the knowledge, history, and experience - Knowledge Based Expertise - as a key to continued growth and opportunity. We have focused on expanding our Knowledge Based Expertise targeting expertise relating specifically to the energy and risk/compliance sectors which can cross many industries.We believe these sectors have significant converging and touch points and create many cross sell opportunities as we work with clients. 38 Acquisitions ERMS On January 1, 2011, we purchased an advisory and consulting business from an individual (“ERMS”) and accounted for the transaction as a business combination.In consideration of the purchase, we agreed to pay (a) the sum of $90,000 in cash, and (b) issue stock options to purchase 164,384 shares of common stock with an exercise price of $1.00 and maturing in ten years.We paid $60,000 and delivered options to purchase 82,192 shares of common stock upon closing.Additional consideration was to be paid on January 15, 2012, subject to certain conditions. On February 10, 2012, we amended the above-described Agreement with ERMS to provide that the additional stock options to purchase 82,192 shares of common stock and the additional payment of $30,000 could be made in cash, stock or stock options at our discretion by February 10, 2013, if the ERMS business reporting unit gross revenue was equal to or greater than $2,000,000 and gross margin was at least 30% for the 2012 calendar year.On February 10, 2012, we issued the 82,192 options at an option price of $1.00.We had $40,805 accrued as a note payable to ERMS at December 31, 2012 for total potential obligations. On February 22, 2013, we paid the final payment of $40,805 in cash. GreenHouse Holdings, Inc. On March 5, 2012, we consummated the Agreement of Plan and Merger (“Merger Agreement”) with GreenHouse Holdings, Inc. (“GHH”).GHH is a provider of energy efficiency and sustainable facilities services and solutions and audits, designs, engineers and installs products and technologies that enable its clients to reduce their energy costs and carbon footprint. GHH has two “vertical operations,” energy efficiency solutions (“EES”) and sustainable facilities solutions (‘‘SFS’’). GHH is focused on industrial, commercial, government and military markets in the United States and abroad. Pursuant to the terms of the Merger Agreement, we agreed to issue a certain amount of our common stock on a fully diluted basis, subject to adjustments provided in the Merger Agreement. As part of the stock consideration paid to GHH, 1,331,188 shares of our common stock were placed in an escrow account.Such escrowed shares are to be released at a later date upon the achievement of certain revenue goals and the satisfaction of certain indemnification obligations. If the escrowed shares are released, GHH stockholders will own, in the aggregate, 17.1% of the combined company. The escrowed shares will accrue quarterly, on a pro-rata basis, to the extent that GHH revenues, over a four calendar quarter measurement period exceed $12 million. If these conditions are not met, the escrowed shares will be returned to us. The acquisition has been accounted for under the purchase method. The purchase method requires that the total consideration paid for an aquiree, be allocated first to the fair value of assets acquired and liabilities assumed of the acquired company.Any excess purchase price is then allocated first to identifiable intangible assets and any residual to goodwill.Intangibles are amortized into the statement of operations over their estimated useful life.Goodwill is not amortized.However, at least annually, an impairment test is required for intangibles and goodwill.See Critical Accounting Policies in the Managements’ Discussion and Analysis of Financial Condition and Result of Operations section below as well as the notes to financial statements. The purchase price was determined by the total market value of the 7,114,482 newly-issued shares (including the escrowed shares) on March 5, 2012 ($6,403,293), plus the total loans outstanding made by us to GHH at the date of the acquisition ($1,030,407), for total consideration of $7,433,700. We incurred deferred financing costs associated with the issuance of the stock (including legal fees, accounting fees, printing fees, etc.) totaling $323,963, and paid a registered investment adviser a referral fee in stock (valued at $120,639) and $64,960 in cash.These costs were charged against additional paid in capital. Ecological, LLC On December 31, 2012, through our wholly owned subsidiary, Ecological Partners, LLC, a New York limited liability company (“EPLLC”), created for the sole purpose of effectuating the acquisition, we purchased substantially all of the assets of Ecological LLC., (“Ecological”) a Delaware limited liability company, pursuant to an Asset Purchase Agreement dated November 15, 2012 (the “Agreement”). Pursuant to the Agreement, we acquired all of the assets of Ecological through our wholly owned subsidiary EPLLC. In consideration of the Purchased Assets (as defined in the Agreement), wepaid to Ecological (a) the sum of $3,000,000 in cash ($1,000,000 which was required to remain on the balance sheet of Ecological subsequent to acquisition), and (b) such number of restricted shares of our common stock equal to $3,956,256, based on the 5-day volume weighted average closing price (“VWAP”) of the common stock for the five days prior to the date the Agreement was executed, as stated on the OTC Bulletin Board (the “Shares”). Accordingly, the VWAP was $0.62 per share resulting in 6,381,059 shares being issued.In accordance with purchase accounting rules, the transaction must be valued at the stock price at the closing date at December 31, 2012 of $0.76 per share. We entered into an 39 employment agreement with Brian King, one of the principals of Ecological, and another principal, Joseph Grano, Jr., accepted the position as our Chairman of the Board of Directors. We paid a registered investment adviser a referral fee in stock (valued at $120,000) and $120,000 in cash, the sum of which, $240,000, was charged to selling, general and administrative expense as a transaction cost. Legal fees related to the issuance of stock totaling $37,324 were charged to additional paid in capital. Ecological develops and implements energy sustainability action plans for real estate portfolios, buildings, and tenants in order to reduce costs, improve efficiency, achieve regulatory compliance, and increase value. Ecological’s services range from metering and monitoring, to in-depth energy audits and analysis, to executing retrofit projects. By improving the efficiency of environmental systems, such as energy, water, and carbon, landlords can reduce costs, reposition client buildings as “green” and create higher value and yield for their real estate assets and portfolios. On December 9, 2009, New York's City Council passed legislation known as the Greener, Greater Buildings Plan (GGBP). This legislation requires all buildings in New York City that are 50,000 square feet or larger to benchmark energy and water consumption, perform an audit and retro-commissioning of base building systems, perform a lighting upgrade, and install sub-meters. Under the GGBP, NYC Local Law 87 requiring Energy Audits & Retro-commissioning processes went into effect. The Audit and Retro-Commissioning requirements will be due in groups of buildings beginning in 2013, and owners are required to do the following: · Conduct a Level II Energy Audit of base building systems; · Conduct a Retro-Commissioning of base building systems (review to ensure original systems are operating at peak performance for energy efficiency); and · Submit an Energy Efficiency Report documenting both the Energy Audit and the Retro-Commissioning. Other Developments On November 16, 2012, the Company issued $750,000 of its 7% Redeemable Convertible Promissory Notes to accredited investors. The securities consist of 7% Convertible Notes with 50% warrant coverage (the “Notes”). The Notes convert at the earlier of 15 months or automatically convert at the closing of the next round of financing into the same security as the next round of financing, at the lesser of $0.50 per share or at a 25% discount to the next round of financing. In addition, we have also agreed to issue warrants to acquire 50% of the number of shares sold at the next round of financing, with a strike price equal to the lesser of $0.65 per share or the strike price of the next warrants at such financing.The warrants have a four year term. Weighted average anti-dilution provisions are in place for one year on the stock after conversion and for three years on the warrants. We paid $29,614 in legal fees, $9,500 in diligence fees to the placement agent and a success fee of 10% or $75,000 to the placement agent. We received net proceeds of $635,886, issued 750,000 warrants to the note holders and 120,000 warrants to the placement agent. On December 26, 2012, upon the closing of a subsequent financing in which we issued our Series D 8% Redeemable Convertible Preferred Stock, the Notes were mandatorily converted into the shares of Series D 8% Redeemable Convertible Preferred Stock. We targeted these proceeds for working capital such that we could meet all of our working capital needs prior to a significant funds event. Between December 26, 2012 and February 26, 2013, we closed an offering of Series D 8% Redeemable Convertible Preferred Stock (“Series D Preferred Stock”) to accredited investors. We sold an aggregate of 13,126 shares of Series D Preferred Stock and issued warrants to purchase an aggregate of 4,375,392 shares of our common stock, with an exercise price of $1.125 per share, for gross proceeds of $13,126,001.In connection with the sale of these securities, $1,312,600 was paid and warrants to purchase an aggregate of 1,750,135 shares of our common stock were issued, with an exercise price of $1.125 per share, to a registered broker. In addition, $126,350 in fees relating to the offering was paid. We received net proceeds of $11,687,051.We used $2,000,000 of these net proceeds for the acquisition of Ecological, LLC, which closed on December 31, 2012.We targeted the balance of the proceeds for working capital and future mergers and acquisitions. Strategy Our core business focus is to provide subject matter expertise through our delivery team in a variety of ways that continue to help our clients navigate the changing business climate they must deal with. Our approach is built 100% around our people — it is about knowledge, expertise and execution. We have a focus on building our knowledge practices with talent in core areas and industries it feels offer opportunity including: energy planning and strategy, risk/compliance/regulatory, business performance and processes, all with a focus on increasing profit and mitigating risk. Our sales and delivery organization work with customers closely — a consultative approach — to understand the business direction, initiatives or issues they are dealing with. Our goal is to provide industry expertise as well as in our core disciplines to allow for successful efforts. Our typical customers have historically been Fortune 500 companies (including AIG, Southern California Edison, Duke Power, Bank of America, and Wells Fargo), and they continually seek expertise and knowledge in areas such as project planning/management, business consulting, and business analysis, evidenced by repeat business with these clients exceeding 70%. 40 With our recent acquisitions, we are better positioned to additionally service emerging business and the mid-market arena, especially as it relates to life sciences, biotech and technology focused companies. In providing services and solutions, we have five key functional areas or groups that ensure successful delivery and support to our customers: (a)Talent Acquisition — continuously sources and identifies the additional key resources we hire as we expand our business and capabilities; (b)Business Development — working with our customers in a consultative approach to understand the clients business and identify opportunities where we can assist and provide our services and solutions; (c)Service Leaders — our KBE’s work with customers on strategic and complex issues related to our core capabilities (d)Consultants/Engineers — these are KBE’s and professionals that ultimately deliver the services and solutions to our customers. (e)Operations – providing back office support and capability for the enterprise, including finance, HR and financial reporting. Talent Acquisition Our success depends on our ability to hire and retain qualified employees, specifically our KBE’s. Our Talent Acquisition team contacts prospective employment candidates by telephone, through postings on the internet, and by means of our internal recruiting software and databases. For internet postings, we maintain our own web page at www.premieralliance.com and use other internet job-posting bulletin board services as well as professional and social networking sites. We use a sophisticated computer application as our central repository to track applicants’ information, manage skills verification, and obtain background checks. We only hire candidates after they have gone through a rigorous qualification process involving multiple interviews and screening. Business Development and Service Leaders Our Business Development team and Service Leaders are our primary interface with the customer, prior to delivery of services or solutions and work together assessing profit and risk areas for clients. We develop and maintain business relationships by building knowledge on our clients businesses, environment and strategic direction as it relates to our core capabilities.Our Business Development team and Service Leaders access the same central repository system as our talent acquisition team — this allows us to link all information together to manage the process efficiently and effectively. Operations Our operations team encompasses several core functions, such as human resources (“HR”) and finance (“Finance”). Encompassed in HR is our employee relations function, providing primary support and service for our delivery team on a daily basis. This support ensures regular interaction and information sharing leading to quality services, better retention, and successful delivery to our clients. Within HR, we perform standard functions, such as benefit administration, payroll, and background processing. Finance provides all financial processing — billing, accounts payable, accounts receivable, and SEC reporting.Our goal is to centralize all operational functions for mergers and acquisitions activity. Competition The market for professional services is highly competitive. It is also highly fragmented, with many providers and no single competitor maintaining clear market leadership. Our competition varies by location, type of service provided, and the customer to whom services are provided. Our competitors fall into four categories: (i) large national or international service firms; (ii) regional specialty firms (GRC, engineering, energy); (iii) software / hardware vendors and resellers; and (iv) internal staff of our customers and potential customers. Contracts When servicing customers, we typically sign master contracts for a one to three year period. The contracts typically set rules of engagement and can include pricing guidelines. The contracts manage the relationship and are not indicators of guaranteed work. Individual contracts, or Statements of Work, are put in place (under the master agreement) for each engineer, consultant or team assigned to the client site and cover logistics of length of contract, billing information and deliverables for the particular assignment. In most cases, contracts can be terminated by either party by providing ten to thirty days’ advance notice. 41 Employees As of June 4 , 2013, we employed a total of 160 persons, as follows: 6 executive employees, 125 consultants and 29 administrative and operations personnel. We believe our employee relations are good. PROPERTY Our practice is to lease commercial office space for all of our offices. Our headquarters are located in a modern four-story building in Charlotte, North Carolina. As of June 4, 2013, we lease approximately 7,036 square feet of space at that location, under a lease that will expire in March 31, 2018. In addition we have offices in: 1. Winston Salem, North Carolina - lease approximately 2,250 square feet, under a lease that will expire in April 14, 2016. 2. San Diego, California – lease approximately 2,175 square feet, under a lease that will expire in May, 31, 2016 3. Los Angeles, California – lease approximately 1,851 square feet, under a lease that will expire in April 30, 2015. 4. Costa Mesa, California – lease approximately 3,000 square feet, under a lease that will expire in May, 19, 2016. 5. We have assumed the lease of Ecological at its present location in New York City that will expire April 30, 2016. Most of these facilities serve as sales and support offices and vary in size, depending on the number of people employed at that office. The lease terms vary from periods of less than a year to three years and generally have flexible renewal options. We believe that our existing facilities are adequate to meet our current needs. CHANGES IN AND DISAGREEMENTS WITHACCOUNTANTS ONACCOUNTING AND FINANCIAL DISCLOSURE None. 42 MANAGEMENT Directors and Executive Officers The following table sets forth the name, age and position of each of our directors and executive officers. Name Age Position Director Since Mark S. Elliott 52 Chief Executive Officer, Director Larry Brumfield 54 Chief Financial Officer Joseph Grano, Jr. 65 Chairman Graeme Booth 59 President Services John Galt 41 President Solutions Harvey Pitt 68 Director Wesley Clark 69 Director Kevin Carnahan 55 Director Gregory C. Morris 52 Director Patrick M. Kolenik 61 Director Isaac Blech 63 Director Cary W. Sucoff 61 Director Seymour Siegel 70 Director John Catsimatidis 64 Director Stated below is the principal occupation of each executive officer and director and the occupational history of each such person for at least the past five years. Mark S. Elliott, Chief Executive Officer and Director. Mr. Elliott has over 29 years of experience encompassing business, technology, finance, and strategy.In that time, Mr.Elliott has worked with such Fortune 500 companies as J. C. Penney Company, Inc. and First Union National Bank, as well as for a number of consulting organizations. He has held positions in a senior management capacity for the past 19 years. Mr.Elliott moved into the consulting arena as a regional specialist and eventually moved into management as a technical director for Contract Data Services (acquired by Vanstar Corporation and subsequently acquired by Inacom Corporation). Thisposition, which he held for five years, involved all aspects of the business from staff management, business development and strategy, to managing the profitability of a region. In this capacity he was a partner responsible for developing the company into a top service provider throughout North and South Carolina while servicing Fortune 500 companies such as First Union Corporation, Bank of America Corporation, MCI Communications, Royal and SunAlliance. Mr. Elliott was an original founder of Premier. He currently serves as Chief Executive Officer of Premier and is responsible for corporate direction, M&A activity, and strategic planning and execution.Mr. Elliott has had financial reporting and processing accountabilities within Premier for over ten years.He is adept at analyzing and evaluating financial statements and understands internal controls over financial reporting and processing. Larry Brumfield, Chief Financial Officer.Mr. Brumfield has an extensive financial based background, serving as a managing partner at LWB Development Group and Strand Capital Group LLC, as CFO at Blue Rhino Corporation and as a Director and Manager of Corporate Finance for Coopers & Lybrand (now PwC, LLP). During his time in these roles, he worked with a variety of public and private entities. Mr. Brumfield has had extensive involvement and is adept in initial public offerings and follow on stock offerings, capital raises, corporate and finance restructure events, SEC registration and regulatory filings, involvement with Boards of Directors, mergers and acquisitions, risk management, and financial analysis and planning.Mr. Brumfield is a CPA. Joseph Grano, Jr., Chairman.Mr. Grano, Chairman and Chief Executive Officer of Centurion Holdings, was previously the Chairman and Chief Executive Officer of UBS Financial Services (formerly UBS PaineWebber). Mr. Grano is a former Chairman of the NASD Board of Governors; member of the NASD’s Executive Committee; and was appointed in 2002 by President George W. Bush to serve as Chairman of the Homeland Security Advisory Council. He began his Wall Street career with Merrill Lynch after serving in Vietnam as a member of the U. S. Special Forces (Green Berets). Mr. Grano holds Honorary Doctor of Law degrees from Pepperdine University and Babson College as well as Honorary Doctor of Humane Letters degrees from Queens College, City University of New York, and Central Connecticut State University. In addition he holds an Honorary Doctor of Business Administration degree from the University of New Haven.Mr. Grano is the current Chairman of the Board for Premier Alliance Group. Graeme Booth – President over Professional Services.Mr. Booth has over thirty years of experience gained across a variety of industries including financial services, technology, manufacturing, and professional services. His experience is unique and includes partnerships within PwC, LLP and KPMG, LLP, regulatory and supervisory experience, as well as Chief Executive Officer experience in the technology sector. While in professional services, he held international, national, and service leadership positions and was 43 responsible for client service and delivery on a number of key accounts in financial services and technology. In addition, his practice leadership responsibilities spanned practice management, human resource management, business planning, internal risk management, and delivery. At Premier Alliance, Mr. Booth is responsible for leading the development and implementation of the Company’s practice area capability and is charged with driving activities around branding and market positioning. John Galt – President, Energy and Sustainability Solutions. Mr. Galt has over twenty years of experience gained across a variety of industries and positions in energy efficiency, sustainable building, and the security and intelligence sectors. Mr. Galt founded the Galt Corporation which was a development company that worked on over 100 projects nationwide in relation to energy efficiency or sustainable solutions retrofits.His experience uniquely includes time in the security and intelligence sector for the government and provides keen insight to the requirements and logistics involved with energy mandates related to this particular sector.Mr. Galt sits on the Board of Naval Special Warfare Family Foundation, is a certified Green Building Professional and a member of the U.S. Green Building Council and was most recently the CEO of GHH prior to merging with Premier Alliance. Isaac Blech, Director, Vice Chairman. Mr. Blech, over the past three decades, has established some of the leading biotechnology companies in the world. These include Celgene Corporation, ICOS Corporation, Nova Pharmaceutical Corporation, Pathogenesis Corporation, and Genetics Systems Corporation.Collectively, these companies have produced major advances in a broad array of diseases including the diagnosis and treatment of cancer, chlamydia, sexual dysfunction, cystic fibrosis, and AIDS.Their combined value is in excess of $30 billion. Celgene Corporation introduced two major cancer drugs, and has a current value of over $25 billion.ICOS Corporation discovered the drug Cialis, and was acquired by Eli Lilly and Company for over $2 billion. Nova Pharmaceutical Corporation developed a new treatment for brain cancer, and after merging with Scios Corporation, was purchased for $2 billion by Johnson and Johnson. Pathogeneses Corporation created TOBI for cystic fibrosis, the first inhaled antibiotic approved by the Food and Drug Administration, and was acquired by Chiron Corp for $660 million.Genetics Systems Corporation developed the first inexpensive and accurate test to diagnosis chlamydia, allowing tens of thousands of babies to be born to women who otherwise would have become sterile from pelvic inflammatory disease.Genetics Systems was acquired for 3% of Bristol Myers’s stock. Mr. Blech is currently a major shareholder and board member of ContraFect Corporation and Cerecor, both private companies.Mr. Blech is on the board of directors for SpendSmart Payments Company, Medgenics and is the Vice Chairman for Premier Alliance Group. Kevin Carnahan, Director. Mr. Carnahan is a past senior managing partner at Accenture LLP where he led the systems integration business. During his time at Accenture LLP, Mr. Carnahan alsoled Client Service Delivery and Quality for Financial Services, including Management Consulting, Technology (Systems Integration and IT Outsourcing) and BPO.Prior to that, Mr. Carnahan led several financial service teams in Europe. John Catsimatidis, Director. Mr. Catsimatidis is currently Chairman and CEO of the Red Apple Group and United Refining Company. Mr. Catsimatidis started out in the supermarket business. Since acquiring the Gristedes supermarkets in 1986, he has built Red Apple Group into an organization with diversified business holdings including oil refining, corporate jet leasing, convenience stores, the Hellenic Times newspaper and various real estate holdings. Mr. Catsimatidis founded and co-chairs the Brooklyn Tech Endowment Foundation, oversees the John Catsimatidis Scholarship Fund of the New York University Stern School of Business and sits on the Board of Trustees of the New School’s Milano School for Management and Urban Policy and the Executive Committee of the Columbia University Medical Center Board of Visitors.Mr. Catsimatidis has also served in the past as Chairman and CEO for United Refining Energy Corp, was a director for U.S. Corrugated, Inc and currently serves on the Board of Premier Alliance Group. Wesley Clark, Director. General Clark serves as Chairman and CEO of Wesley K. Clark & Associates, a strategic consulting firm, Co-Chairman of Growth Energy, senior fellow at UCLA's Burkle Center for International Relations, Chairman of Clean Terra, Inc., and Director of International Crisis Group. General Clark serves as a member of the Clinton Global Initiative's Energy & Climate Change Advisory Board, and ACORE's Advisory Board.General Clark retired a four star general after serving 38 years in the United States Army. He served in a number of significant staff positions, including service as the Director of Strategic Plans and Policy (J-5) and in his last assignment as Supreme Allied Commander Europe.His awards include the Presidential Medal of Freedom, Defense Distinguished Service Medal (five awards), Silver Star, Bronze Star, Purple Heart, honorary knighthoods from the British and Dutch governments, and numerous other awards from other governments, including the award of Commander of the Legion of Honor (France).He graduated first in his class at West Point and completed degrees in Philosophy, Politics and Economics at Oxford University (B.A. and M.A.) as a Rhodes Scholar.In the past, General Clark served on the boards for Rodman & Renshaw and Italy based Prysmian Sris.He currently serves on the boards of the following public companies and their respective committees: Amaya Gaming out of Canada (Compensation Committee), AMG Advanced Metallurgical Group a Dutch based company (Audit Committee), Bankers Petroleum Ltd out of Canada (Governance Committee), BNK Petroleum Inc. (Environmental Committee), Juhl Wind Inc. (Audit Committee), Rentech, Inc (Audit Committee), Torvec, Inc. (Nominating Committee) and Premier Alliance Group Patrick M. Kolenik, Director. Mr. Kolenik has a forty year history working in positions involving all areas of securities trading and management with retail brokerage firms, equities and management of trading desk personnel and investment banking.Mr. Kolenik is currently the President of Cyndel and Company, an advisory consulting company, and is a General Partner in Huntington Laurel Partners, a hedge fund.Prior to this he held a variety of roles at Sherwood Securities where he progressed to Chairman and CEO.Mr. 44 Kolenik was also the President of WinCapital Corporation, a full service brokerage firm.He has served as a board member for Sherwood Securities, Paradigm Medical, and WinCapital Corporation in the past and currently serves on the board for SpendSmart Payments Company and Premier Alliance Group. Gregory C. Morris, Director. Mr. Morris has worked in positions involving finance, investments, benefits, risk management and human resources for more than 29 years. He is currently Vice President Human Resources at Swisher Hygiene (a NASDAQ and TSX - Toronto Stock Exchange, company).In the past he was a Vice President of Sales Human Resources for Snyder’s-Lance, Inc. (a NASDAQ listed company with revenues over $1.7 billion). Prior to this he held the positions of Vice President-Human Resource Operations and Senior Director-Benefits and Risk Management for Lance, Inc for 15 years prior to a merger with Snyders.At Lance, Mr. Morris has served as the Chairman of the Risk Management Committee, chaired the Business Continuity Plan Steering Committee, and was a member of the Corporate Mergers & Acquisitions team.Prior to joining Lance, Greg held various positions with Belk Stores, Collins & Aikman and Laporte plc. Greg has also serves as a board member for the Second Harvest Food Bank of Metrolina.Mr. Morris currently serves on the audit committee for Premier Alliance Group. Harvey Pitt, Director. Mr. Pitt served as the 26th Chairman of the Securities and Exchange Commission (the “SEC”) from 2001 – 2003.From 1975 – 1978 he was the SEC’s General Counsel.For nearly a quarter of a century before rejoining the SEC, Mr. Pitt was in the private practice of law. Mr. Pitt received a J.D. degree from St. John’s University School of Law (1968), and his B.A. from the City University of New York (Brooklyn College) (1965). He was awarded an honorary doctorate in law by St. John’s University School of Law in June 2002.Mr. Pitt served as an Adjunct Professor of Law at Georgetown University Law Center (1975-84), George Washington University Law School (1974-82) and the University of Pennsylvania School of Law (1983-84).Mr. Pitt currently services on the audit committee for Premier Alliance Group. Seymour Siegel, Director. Mr. Siegel is a Certified Public Accountant, inactive, and a principal emeritus at Rothstein Kass, a national firm of accountants and consultants.Mr. Siegel was a founder of Siegel Rich & Co. CPA’s, which eventually merged into what is now known as WeiserMazars LLP, a large regional firm.He was a senior partner there until selling his interest and co-founding a business advisory firm, which later became a part of Rothstein Kass.He received his Bachelor of Business Administration from the Bernard M. Baruch School of the City College of New York.He has been a director and officer of numerous businesses, philanthropic and civic organizations.As a professional director, he has served on the boards of about a dozen public companies over the last 25 years, generally as audit committee chairman.He is currently a director and chairman of the audit committees of Hauppauge Digital, Inc., Air Industries Group, Inc., Stratus Media Group, Inc., and Premier Alliance Group, Inc.He was formerly a director of Oak Hall Capital Fund, Prime Motor Inns Limited Partnership, Noise Cancellation Technologies and Emerging Vision, Inc., among others. Cary W. Sucoff, Director.Mr. Sucoff has over twenty eight years of securities industry experience encompassing supervisory, banking and sales responsibilities. From February 2006 until December 2011, Mr. Sucoff owned and operated Equity Source Partners, LLC, a FINRA member firm which operated as a boutique investment bank.Mr. Sucoff provided investment banking and consulting services to public and private companies and institutional investors.Mr. Sucoff currently provides investment banking and consulting services to public and private companies and institutional investors.Mr. Sucoff has been a member of the Board of Trustees of New England Law/Boston for over twenty five years and is the current Chairman of the Endowment Committee.Mr. Sucoff received a B.A. from SUNY Binghamton (1974) and a J.D. from New England School of Law (1977) where he was the Managing Editor of the Law Review and graduated Magna Cum Laude. Mr. Sucoff has been a member of the Bar of the State of New York since 1978.Mr. Sucoff currently serves as a director for the following private companies: Contrafect Corp., Cerecor, Inc., and American Roadside Burgers, Inc., and in addition he serves on public boards for SpendSmart Payments Company and Premier Alliance Group. There are no family relationships among members of our management orour Board of Directors. Employment Agreements Premier has entered into an employment agreement with Mark Elliott, our Chief Executive Officer; Kevin Hasenfus and Robert Yearwood, Executive Vice Presidents and John Galt, our President over Solutions On June 1, 2011, Premier entered into a three year employment agreement with Mark Elliott. The terms of the employment agreement provide for a minimum $180,000 annual base salary unless adjusted by the Board.Additional options and stock awards may be issued upon certain milestones and as determined by Premier’s board of directors. On June 1, 2011, Premier entered into a two year employment agreement with Kevin Hasenfus. The terms of the employment agreement provide for a $180,000 annual base salary. Additional options and stock awards may be issued upon certain milestones and as determined by Premier’s board of directors. 45 On June 1, 2011, Premier entered into a two year employment agreement with Robert Yearwood. The terms of the employment agreement provide for a $180,000 annual base salary. Additional options and stock awards may be issued upon certain milestones and as determined by Premier’s board of directors. On March 5, 2012, Premier entered into a two year employment agreement with John Galt. The terms of the employment agreement provide for a $150,000 annual base salary. Additional options and stock awards may be issued upon certain milestones and as determined by Premier’s board of directors. The above summary of the employment agreements is qualified in its entirety by reference to the agreements which are filed as exhibits to our reports as described in Item 15 below. Audit Committee The primary functions of the audit committee are to represent and assist the board of directors with the oversight of: • the integrity of the Company’s consolidated financial statements and internal controls; • the combined Company’s compliance with legal and regulatory requirements; • the independent auditor’s qualifications and independence; and • the performance of the audit function by the independent auditor. The audit committee has ultimate authority to select, evaluate and, where appropriate, replace the independent auditor, approve all audit engagement fees and terms, and engage outside advisors, including its own counsel, as it deems necessary to carry out its duties. The audit committee is also responsible for performing other related responsibilities set forth in its charter. Currently, our audit committee consists of the following independent directors: Seymour Siegel (chair) Gregory C. Morris, and Harvey Pitt. Each member of our audit committee is “independent” under applicable rules promulgated by the SEC requiring that each member of the audit committee is able to read and understand fundamental financial statements, including the Company’s consolidated balance sheet, income statement and cash flow statement. In addition, Mr. Siegel meets the definition of “audit committee financial expert” under applicable SEC rules. Compensation Committee The primary function of the compensation committee is to discharge the responsibilities of the Board of Directors relating to the compensation of the combined Company’s chief executive officer and other named executive officers, employees and non-employee directors and relating to the combined Company’s retirement, welfare and other benefit plans. The compensation committee has the power to delegate authority to subcommittees and, to the extent permitted by applicable law, regulations and listing standards, may delegate authority to one or more members of the board or the combined Company’s officers. The compensation committee will oversee the combined Company’s compensation and stock-based plans. Currently, our compensation committee consists of the following independent directors: Gregory Morris (chair),Kevin Carnahan, Pat Kolenik and Cary Sucoff. Each member of our compensation committee is “independent” under applicable rules promulgated by the SEC, and that each member of the compensation committee also qualifies as a “non-employee director” under Rule 16b-3 under the Exchange Act and as an “outside director” under Section 162(m) of the Code. Nominating and Corporate Governance Committee The primary functions of the nominating and corporate governance committee are to: 46 • identify individuals qualified to become members of the combined Company’s Board of Directors; • approve and recommend candidates to fill vacancies on, or to be elected to, the Board of Directors; • develop, update as necessary, and recommend to the Board of Directors corporate governance principles and policies applicable to the combined Company; and • monitor compliance with such principles and policies. The nominating and corporate governance committee also recommends candidates for election as chief executive officer and other corporate officers, oversees succession planning for senior management and performs other related responsibilities set forth in its charter. Our nominating and corporate governance committee consists of the following members: Isaac Blech, John Catsimatidis, and Mark Elliott. Each member of our nominating and corporate governance committee is “independent” under applicable rules promulgated by the SEC. Operating Subcommittee The primary function of the operating subcommittee is to assist the Board of Directors by providing review, guidance, and oversight for the overall operation of the Company.The operating subcommittee is involved in strategic direction and initiatives including financial affairs and outlook, mergers and acquisitions, key business initiatives, business performance and business policy. The operating subcommittee consists of the following members: Mark Elliott, Kevin Carnahan, Wesley Clark, Joe Grano, Pat Kolenik, and Cary Sucoff, Section 16 Compliance Section 16(a) of the Exchange Act requires the Company’s executive officers and directors, and persons who own more than ten percent of a registered class of the Company’s equity securities, to file reports of ownership and changes of ownership on Forms 3, 4 and 5 with the Securities and Exchange Commission. Executive officers, directors and greater than ten percent stockholders are required by Securities and Exchange Commission regulation to furnish the Company’s with copies of all Forms 3, 4 and 5 they file. The Company believes that all filings required to be made by its executive officers and directors pursuant to Section 16(a) of the Exchange Act have been filed. Corporate Code of Ethics The Board is committed to legal and ethical conduct in fulfilling its responsibilities.The Board expects all directors, as well as officers and employees, to act ethically at all times.Additionally, the Board expects the Chief Executive Officer, the Chief Financial Officer, and all senior financial and accounting officials to adhere to the Company’s Code of Ethics.The Code of Ethics is posted on our Internet website at www.premieralliance.com, under the “Investor Relations” tab. Involvement in Certain Legal Proceedings To the best of our knowledge, none of our directors or executive officers has, during the past ten years, involved in any of the items below that the Company deems material to their service on behalf of the Company: • been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); • had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time; • been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity; 47 • been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; • been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or • been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Securities Exchange Act of 1934, as amended (“Exchange Act”)), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. Except as set forth in our discussion below in “Certain Relationships and Related Transactions,” none of our directors or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the Commission. Corporate Governance The Board held six formal meetings/calls and acted by unanimous written consent three times in 2012.Committee meetings are held as needed and can be conducted via telephone.The Audit Committee met three times, the Compensation Committee met one time and the Nominating Committee met two times during 2012.We expect each director to attend every meeting of the Board and the committees on which he serves.The majority of the directors attended at least 90% of the meetings of the Board and the committees on which they served in 2012 during the time in which they were appointed to the Board and the respective committees.We encourage each of the directors to attend the annual meeting ofshareholders.Mr. Pitt joined the Board in March 2012 and attended 1 of the 3 remaining Board meetings held in 2012, he was named to the Audit Committee in July andattended 1 of the 2 meetings held by this committee from July to December. Director Independence In accordance with the disclosure requirements of the SEC, and since the OTC Bulletin Board does not have its own rules for director independence, we have adopted the NASDAQ listing standards for independence.Nine of our current directors Isaac Blech, Kevin Carnahan, John Catsimatidis, Wesley Clark, Patrick Kolenik, Gregory Morris, Harvey Pitt, Seymour Siegel, and Cary Sucoffare non-employee directors and qualify as “independent” in accordance with the published listing requirements of NASDAQ.Mark Elliott does not qualify as independent because he is an employee of Premier.Joseph Grano, Jr. does not qualify as independent due to the fact that Mr. Grano was the Chairman of Ecological, LLC and participated in a transaction with Premier, relating to the acquisition of Ecological, LLC, which exceeded permissible amounts to retain such independence as set forth in NASDAQ Rule 5605(a)(2)(D). The NASDAQ rules have both objective tests and a subjective test for determining who is an “independent director.”The objective tests state, for example, that a director is not considered independent if he or she is an employee of the Company or is a partner in or executive officer of an entity to which the Company made, or from which the Company received, payments in the current or any of the past three fiscal years that exceed 5% of the recipient’s consolidated gross revenue for that year, or $200,000, whichever is greater.The subjective test states that an independent director must be a person who lacks a relationship that, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. 48 EXECUTIVE COMPENSATION Compensation Discussion and Analysis The Compensation Committee of our Board of Directors is charged with administering our executive compensation programs. The Compensation Committee evaluates the performance and, based on such evaluation, sets the compensation of our CEO/President and other executive officers and administers our equity compensation plans. Executive Compensation Policy The objectives of our executive compensation programs are to: · Attract, retain and motivate key executive personnel who possess the skills and qualities to perform successfully in the business and technology consulting industries and achieve our objective of maximizing stockholder value; · Closely align the interests of our executives with those of our stockholders; · Provide a total compensation opportunity that is competitive with our market for executive talent; and · Align our executives’ compensation to our Company’s operating performance with performance-based compensation that will provide actual compensation above the market median when the Company delivers strong financial performance and below the market median when performance is not strong. While we compete for talent with companies across all industries and sectors, we primarily focus on professional services companies in the business and technology consulting industries.While we often compete for talent outside this market, these companies define our market for compensation purposes. The Compensation Committee reviews data from these companies, along with other data as it deems appropriate, to determine market compensation levels from time to time and also can seek advice from outside compensation consultants. Compensation Components The Compensation Committee primarily uses a combination of base salary, discretionary bonuses and long-term incentive programs to compensate our executive officers. Each element aligns the interests of our executive officers with the interests of our stockholders by focusing on both our short-term and long-term performance. Base Salaries. We are committed to retaining talented executives capable of diverse responsibilities and, as a result, believe base salaries for executives should be maintained at rates at or slightly ahead of market rates. The Compensation Committee assesses base salaries for each position, based on the value of the individual’s experience, performance and/or specific skill set, in the ordinary course of business, but generally not less than once each year as part of our budget determination process. Other than market adjustments that may be required from time to time, the Compensation Committee believes annual merit percentage increases for executives, if any, should generally not exceed, in any year, the average merit increase percentage earned by our non-executives. Base salaries of the executives have not been adjusted since 2001. The board reviewed salaries of CEO’s of similar size organizations and adjusted the base salary of the CEO in June 2011 to a base of $210,000.The President of Services salary was also reviewed and adjusted to a base of $220,000 at the recommendation of the CEO. Discretionary Annual Bonuses. The Compensation Committee has the authority to award discretionary annual cash or share bonuses to our executive officers based on individual and Company performance. We believe these bonuses are an important tool in motivating and rewarding the performance of our executive officers. Performance-based cash incentive compensation is expected to be paid to our executive officers based on individual and/or overall performance standards.The Board issued a discretionary bonus to the CEO in 2012, however the CEO has deferred receipt at this point. Long-Term Incentives. The Compensation Committee also believes that a portion of each executive’s annual total compensation should be a long-term incentive, both to align each executive with the interests of our stockholders and also to provide a retention incentive.The Compensation Committee approved our 2008 Stock Incentive Plan in May 2008 and received shareholder approval in the 2009 (the “Plan”).As of December 31, 2012, 2,175,000 stock options have been granted to executives under the Plan. The Outstanding Equity Awards at Fiscal Year End Table below details the stock options granted to executives under the Plan since 2008. The following table sets forth the information as to compensation paid to or earned by our Chief Executive Officer and our two other most highly compensated executive officers during the fiscal years ended December 31, 2012 and 2011. Mark Elliott, Larry Brumfield, and Graeme Booth are referred to in this Form S-1 as our “Named Executive Officers”.As none of our Named Executive 49 Officers received any stock awards, non-equity incentive plan compensation, or nonqualified deferred compensation earnings during the fiscal years ended December 31, 2012 and 2011, we have omitted those columns from the table. SUMMARY COMPENSATION TABLE Name and Principal Position Year Salary (3) Bonus($) Option Awards (1) OtherCompensation (2) Total Compensation Mark S. Elliott Chief Executive Officer 0 0 0 Larry W. Brumfield Chief Financial Officer 0 0 0 0 Graeme Booth President of Services 0 0 0 0 1) Represents stock options granted to these executives. 2) The amount under “Other Compensation” represents a car allowance or allocations. 3) Variances from base salary include compensation per company policy for payouts of Paid Time Off not used in prior years that is ineligible to rollover year to year. DIRECTOR COMPENSATION Director Fees Earned Or Paid In Cash (1) Stock Awards Option Awards (2) ($) Non-Equity Incentive Plan Compensation Non-qualified Deferred Compensation Earnings All Other Compensation (3) Total Isaac Blech - Kevin Carnahan - Pat Kolenik - - - Greg Morris - Cary Sucoff - - - Wesley Clark(5) - Seymour Siegel(6) - Harvey Pitt (7) - Joseph J. Grano Jr. (8) - John Catsimatidis (9) - Stephen Yarbrough(10) - 50 Our standard compensation, each independent director receives a baseline of $2,500 for attendance at each regular and special meeting of the Board, and receives $1,000 for each committee meeting they attend.Messrs.’ Pitt and Catsimatidis are compensated $5,000 for attendance at each regular Board meeting and Mr. Clark is compensated $5,000 per month of service for all meetings and committee service. Our standard compensation consists of each independent director being granted options for 50,000 shares upon acceptance of a Board position.Each independent director is granted options for 25,000 shares for each year served after the first year.Mr. Carnahan was granted options for 100,000 shares upon acceptance of a Board position and will receive options for 50,000 shares annually for each year of service after the first year.Mr. Clark was granted options for 300,000 shares upon acceptance of a Board position of which 150,000 vested immediately with 50,000 vesting annually for each year of service after the first year.Mr. Catsimatidis was granted options for 300,000 shares upon acceptance of a Board position of which 150,000 vested immediately with 50,000 vesting annually for each year of service after the first year.Mr. Pitt was granted options for 250,000 shares upon acceptance of a Board position of which 100,000 vested immediately with 50,000 vesting annually for each year of service after the first year.The amount set forth in this column represents the aggregate fair value of the awards as of the grant date, computed in accordance with FASB ASC Topic 718, "Compensation-Stock Compensation." Using the Black –Scholes valuation method.The assumptions used in calculating these amounts are based on a vesting period of five years and current risk free interest rates and volatility at grant date. Mr. Kolenik and Sucoff each received $20,000 and warrants to purchase 150,000 shares each pursuant to an agreement for providing additional Board oversight related to M&A assessment and due diligence.These warrants were valued in total at $44,400 using the Black-Scholes valuation method. Mr. Blech was selected as vice chairman of the Board and received warrants to purchase 400,000 shares for this additional responsibility.These warrants were valued at $54,360 using the Black-Scholes valuation method. Mr. Clark was elected to the Board on August 20, 2012. Mr. Siegel was elected to the Board on July 5, 2012. Mr. Pitt was elected to the Board on March 20, 2012. Mr. Grano was elected to the Board on December 31, 2012.Centurion Holdings, LLC was granted options for 1,300,000 shares upon Mr. Grano’s acceptance of a board position and as Chairman of the Board.Mr. Grano is the controlling member of Centurion Holdings, LLC. Mr. Catsimatidis was elected to the Board on July 18, 2012. Mr. Yarbrough completed his Board service in June 2012. Each director is also entitled to reimbursement for his or her reasonable out-of-pocket expenses incurred in connection with travel to and from, and attendance at, meetings of our Board or its committees and related activities, including director education courses and materials. 51 DESCRIPTION OF BENEFIT PLANS 2008 Stock Incentive Plan The following table provides information about the number of outstanding equity awards held by our complete executive team including our named executive officers at December 31, 2012.As of December 31, 2012, options to purchase 2,175,000 shares of our common stock by our executives were outstanding. Outstanding Equity Awards at Fiscal Year-End Option awards Stock awards Name Number of securities underlying unexercised options (#) exercisable Number of securities underlying unexercised options (#) unexercisable Equity incentive plan awards: Number of securities underlying unexercised unearned options (#) Option exercise price Option expiration date Number of shares or units of stock that have not vested (#) Market value of shares or units of stock that have not vested Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested (#) Equity incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested Mark Elliott 3/31/17 12/2020 5/2018 Larry Brumfield 3/31/17 10/2021 Kevin Hasenfus 12/2020 5/2018 Robert Yearwood 12/2020 5/2018 Graeme Booth 3/31/17 06/2021 12/2020 6/2020 John Galt 12/31/17 LIMITS ON LIABILITY AND INDEMNIFICATION We provide Directors and Officers insurance for our current directors and officers. Our articles of incorporation eliminate the personal liability of our directors to the fullest extent permitted by law. The articles of incorporation further provide that the Company will indemnify its officers and directors to the fullest extent permitted by law.We believe that this indemnification covers at least negligence and gross negligence on the part of the indemnified parties.Insofar as indemnification for liabilities under the Securities Act may be permitted to our directors, officers, and controlling persons under the foregoing provisions or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is therefore unenforceable. 52 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth certain information, as of June 4, 2013, with respect to the beneficial ownership of our outstanding common and preferred stock by (i) each person known to own beneficially more than 5% of our each class of securities; (ii) each of our named executive officers and our directors; and (iii) all of our directors and executive officers as a group. Unless otherwise indicated in the footnotes below, we believe the persons and entities named in the table have sole voting or investment power with respect to all shares owned. And unless otherwise indicated, the address of each person is care of Premier Alliance Group, Inc., 4521 Sharon Road, Suite 300, Charlotte, North Carolina 28211. 53 Name Number of Shares of Common Stock Beneficially Owned % of Class (1) Number of Shares of Series C Preferred Stock Beneficially Owned % of Class Number of Shares of Series B Preferred Stock Beneficially Owned % of Class Number of Shares of Series D Preferred Stock Beneficially Owned % of Class Mark S. Elliott (2) 5.2% Robert N. Yearwood (3) 7.8% Kevin J. Hasenfus (3) 6.6% Gregory C. Morris (4) 0.3% Larry W. Brumfield (5) 1.3% Graeme Booth (6) 2.4% John Galt (7) 2.0% John Catsimatidis (8) 1.3% Seymour Siegel (9) 0.3% Wesley Clark (10) 1.3% Harvey Pitt (11) 1.1% Patrick Kolenik (12) 764,117 3.3% Cary Sucoff (13) 3.4% Richard Siskey (14) 4.7% Kevin Carnahan (15) 0.6% Joseph J. Grano, Jr. (16) 16.7% Isaac Blech (17) 5.5% Brian King (18) 620,466 2.7% Miriam Blech (19) 40.5% 60% River Charitable Remainder Unitrustf/b/o Isaac Blech (20) 21.3% 40% Maxim Group, LLC (21) 12.2% Philip Kolenik (22) 1.3% 13.8% Louis Eckley (22) 0.8% 8.6% Equitable Trust Company, dba Sterling Trust Custodian FBO David J. Mahoney, IRA (22) 0.8% 8.6% Rozsak Capital, LLLP (22) 0.7% 6.9% K&A Trust (22) 0.7% 6.9% Matthew McFee (22) 0.7% 6.9% Michael Burkhard & Tereasa Hawkins (22) 0.5% 5.2% Equitable Trust Company, dba Sterling Trust Custodian FBO Thomas W. Brake, IRA (22) 0.5% 5.2% Robert Kargman & Marjie Kargman JT TEN (23) 2,500,000 11.2% 10.8% Sol J. Barer (23) 7.5% 7.2% ACNYC, LLC (23) 7.5% 7.2% Transpac Investments Limited (23) 7.5% 7.2% The Peierls Foundation (23) 5.2% 5.0% All directors and named officers as a group (2)(3)(4)(5)(6)(7)(8)(10)(11) (12)(13)(14)(15)(16)(17)(18) 41.9% 100% 54 For purposes of this table, a person or group of persons is deemed to have “beneficial ownership” of any shares of common stock they have the right to acquire within 60 days of December 30, 2012. When computing beneficial ownership percentages, shares of common stock that may be acquired within 60 days are considered outstanding for that holder only, not for any other holder. The number and percentage of shares beneficially owned are based on 23,082,525 shares of common stock issued and outstanding as of March 31, 2013. Includes 575,000 shares issuable upon exercise of stock options held by Mark Elliott. The options were granted in May 2008, December 2010 and March 2012. Includes 275,000 shares issuable upon exercise of stock options held each by Kevin Hasenfus and Robert Yearwood.The options were granted in May 2008 and December 2010. Includes 50,000 shares issuable upon exercise of warrants held by Greg Morris, granted in June 2011. Also includes 25,000 shares issuable upon exercise of stock options granted in July 2012. Includes 300,000 shares issuable upon exercise of stock options held by Larry Brumfield. Includes 550,000 shares issuable upon exercise of stock options by Graeme Booth. All of the shares held (265,033) have been placed in escrow under the terms of the acquisition of GreenHouse Holdings, Inc. by the Company. This also includes 200,000 shares of common stock issuable upon exercise of stock options. Represents 300,000 shares of common stock issuable upon exercise of stock options issued July 18, 2012 upon his becoming a new member of the Board of Directors. Represents 75,000 shares of common stock issuable upon exercise of stock options. 25,000 shares were granted on March 14, 2012 for past board service with GreenHouse and an additional 50,000 on July 1, 2012 upon his being named to the Board of Directors for Premier. Represents 300,000 shares of common stock issuable upon exercise of stock options issued August 14, 2012 upon his becoming a new member of the Board of Directors. Represents 250,000 shares of common stock issuable upon exercise of warrants issued March 21, 2012 upon his becoming a new member of the Board of Directors. Includes 540,000 shares issuable upon exercise of warrants. The warrants were granted in April 2010, March 2011, June 2011 and March 2012 and expire in 5 years from issue. Also includes 155,044 shares of common stock held by Huntington Laurel Partners LP of which Mr. Kolenik is a General Partner. Mr. Kolenik shares investment and voting power of the Huntington Laurel Partners shares, and disclaims beneficial ownership to 77,522 of those shares. Also includes 25,000 shares of common stock issuable upon exercise of stock options. Includes 706,440 shares issuable upon exercise of warrants. The warrants were granted in April, June, and December of 2010 and March 2011 and June 2011, and March 2012 and expire in 5 years from issue. Also includes 25,000 shares of common stock issuable upon exercise of stock options. Includes 70,000 shares issuable upon exercise of warrants. The warrants were granted in December 2010 and expire in December 2015. Includes 100,000 shares issuable upon exercise of warrants held by Kevin Carnahan granted in September 2011. Also includes 50,000 shares of common stock issuable upon exercise of stock options granted in July 2012. Includes 2,681,613 shares received in the acquisition of Ecological, LLC by the Company.The shares are registered in the name of “Joseph C. Grano and Robert H. Silver, Trustees of The Grano Children’s Trust dtd. December 13, 2012” and 500,000 shares also received in the Ecological, LLC acquisition registered in the name of Centurion Holdings, LLC, of which Mr. Grano is a controlling member. Includes 1,300,000 shares of common stock issuable upon exercise of stock options issued to Joseph Grano, Jr, the new Chairman of the Board of Directors of the Company.The 1,300,000 options are held in the name of Centurion Holdings LLC, of which Mr. Grano is a controlling member. Represents 834,231 shares of common stock, 25,000 shares of common stock issuable upon exercise of stock options granted July 2012, and 50,000 shares of stock issuable upon exercisable upon exercise of warrants granted June 2011 and 400,000 shares of stock issuable upon exercisable upon exercise of warrants granted May 2012 upon Mr. Blech accepting the position of Vice Chairman of the Board of Directors, both held directly in the name of Isaac Blech. Includes 620,466 of common stock owned pursuant to the Company’s acquisition of Ecological, LLC on December 31, 2012 by the CEO of Ecological Partners, LLC, the Company’s wholly owned subsidiary. Represents (a) 1,428,571 shares of Series C Preferred Stock convertible into 4,285,714 shares of common stock, (b) 4,285,714 shares of common stock issuable upon the exercise of warrants and (c) 475,338 shares of Common Stock. Does not include 952,381 shares of Series C Preferred Stock convertible into 2,857,143 shares of common stock and 2,857,142 shares of common issuable upon the exercise of warrants beneficially owned by River Charitable Remainder Unitrust f/b/o Isaac Blech (the “Trust”), of which Isaac Blech is the sole trustee. Miriam Blech is Isaac Blech’s wife and a beneficiary under the Trust. Mrs. Blech disclaims beneficial ownership of the shares held by the Trust, except to the extent of any pecuniary interest therein. Mr. Blech disclaims beneficial interest in the shares held by Mrs. Blech. Represents (a) 952,381 shares of Series C Preferred Stock convertible into 2,857,142 shares of common stock, (b) 2,857,142 shares of common stock issuable upon the exercise of warrants and (c) 316,892 shares of common stock. Does not include 1,428,571 shares of Series C Preferred Stock convertible into 4,285,713 shares of common stock and 4,285,714 shares of common issuable upon the exercise of warrants beneficially owned by Miriam Blech. The sole trustee of the Trust is Isaac Blech, who has sole voting and dispositive power of the Trust. The beneficiaries of the Trust are Miriam and Isaac Blech. Mr. Blech disclaims beneficial ownership of the shares held by Mrs. Blech, except to the extent of the any pecuniary interest therein. 55 Includes 260,750 shares of common stock owned.Also includes 2,464,420 shares of common stock issuable upon exercise of warrants. The warrants were granted in March 2011 (714,285), December 2012 (939,467), January 25, 2013 (527,334), and February 26, 2013 (283,334) and expire in 5 years from issue. Represents shares of common stock underlying Series B Preferred Stock convertible on a one-to-one basis, common shares issued as dividends on the Preferred Stock and 540,000 shares of common stock issuable upon exercise of warrants collectively. Represents shares of common stock underlying Convertible Redeemable Series D Preferred Stock. Each share represents $1,000 and is convertible at $0.75.Also includes warrants at 25% total coverage on the converted common shares. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Our audit committee reviews any related party transaction, as that term is defined in Item 404 of Regulation S-K, in which we or any of our directors, nominees for director, executive officers or holders of more than 5% of our common stock or any of their immediate family members, is, was or is proposed to be a participant .Our management is responsible for determining whether a transaction contains the characteristics described above requiring review by our board of directors. Except for the transaction described below, or otherwise set forth in this proxy statement, none of our directors or executive officers and no holder of more than 5% of the outstanding shares of our common stock, and no member of the immediate family of any such director, officer or security holder, to our knowledge, had any material interest in any transaction during the fiscal year ended December 31, 2012, or in any currently proposed transaction, which would qualify as a related party transaction, as that term is defined in Item 404 of Regulation S-K On December 31, 2012 we purchased substantially all of the assets of Ecological LLC. Mr. Grano, our current Chairman of the Board, served as Chairman of Ecological, LLC at the time of the acquisition, and as such is deemed a related party for purpose of Item 404 of Regulation S-K. In consideration for the purchase of the Ecological, LLC assets, we paid approximately $7 million in cash and shares of our common stock. Mr. Grano individually received approximately $1,972,600 in consideration for the sale of the assets of Ecological, LLC. 56 SELLING STOCK HOLDERS The following table sets forth the information as to the ownership of our securities by the Selling Stockholders on June 4, 2013, at which time 23,082,525 shares of our common stock were outstanding.Unless otherwise indicated, it is assumed that each Selling Stockholder listed below possesses sole voting and investment power with respect to the shares owned as of such date by the Selling Stockholder, including those issuable upon exercise of warrants or options.Other than indicated below, none of the Selling Stockholders has had a material relationship with us or any of our predecessors or affiliates within the past three years. Unless otherwise indicated, to our knowledge none of the selling shareholders or their beneficial owners are broker-dealers or affiliated with broker-dealers A person is deemed to be a beneficial owner of securities that can be acquired by such person within 60 days from the filing of this prospectus upon the exercise of options and warrants or conversion of convertible securities.Each selling stockholder’s percentage ownership is determined by dividing the number of shares beneficially owned by that person by the total number of shares beneficially owned, increased to reflect the shares underlying the options, warrants and convertible securities that are held by such person, but not held by any other person. Selling Stock Holder (2) Shares of Common Stock Owned Before the Offering Shares of Common Stock Underlying Series B,C or D Preferred Shares Owned Before the Offering Shares of Common Stock Underlying Warrants Owned Before the Offering Total Number of Shares of Common Stock and Shares Underlying Preferred Stock and Warrants to be Offered (1) Shares of Common Stock and/or Common Stock Underlying Warrants and Preferred Stock to be Beneficially Owned After the Offering Percentage of Common Stock Beneficially Owned After the Offering American Capital Partners, LLC (3)(4) - - 0% Alan Fein (3) - - 0% Axel Merhle (3) - - 0% Joshua Lev (3) - - 0% Marissa Basile (3) - - 0% Mark I. Lev (3) - - 0% Tammy Eloshvili (3) - - 0% Maxim Partners LLC (5) - - 0% ACNYC, LLC (6) - 0% Nigel Alexander - 0% Monte D Anglin Janet S Anglin JT TEN - 0% Sol J Barer - 0% Michael Cohn Paula Cohn JT TEN - 0% David Cooper - 0% Dave A Dent - 0% Ron Eller Beth Eller JT TEN - 0% Brian Eliot Peierls - 0% U.D. Ethel F. Peierls Charitable Lead Trust (7) - 0% E. Jeffrey Peierls - 0% UD J.N. Peierls For Brian E. Peierls (7) - 0% UW J.N. Peierls for Brian E. Peierls (7) - 0% UD J.N. Peierls For E. Jeffrey Peierls (7) - 0% 57 UW J.N. Peierls for E. Jeffrey Peierls (7) - 0% The Peierls Foundation, Inc. (7) - 0% Richard Martin Reiter - 0% Mark Reutlinger Analee Reutlinger Comm Prop - 0% Michael Harold Rieber - 0% Shamus, LLC (8) - 0% ADV AMB ANES LLC DEFINED BEN PLAN (9) - 0% Henry M Tufo Carleen Tufo JT TEN - 0% Trust U/W Renee Weiss DTD 05-09-90 (10) - 0% Steven & Kaye Yost Family Trust UAD 02/07/92 (11) - 0% James L. Dritz - 0% Robert Frome - 0% Robert Kargman Marjie Kargman JT TEN - 0% Beno Michel - 0% Ray Alan Bruening - 0% Jonathan Patronik - 0% Stephen Bender - 0% David Frydrych - 0% Adolfo Carmona Donna Carmona JT TEN - 0% C. Barnes Darwin II - 0% Garfinkle Revocable Trust UAD 05/15/08 (12) - 0% James W. Thomas - 0% Victor F. Keen - 0% Frederick Fochtman Linda Fochtman JT TEN - 0% Burton Weinstein - 0% Cedarview Opportunities Master Fund, LP (13) - 0% David S. Nagelberg 2003 Revocable Trust dtd. 7/2003 (14) - 0% Arthur Luxenberg - 0% Brio Capital Master Fund Ltd. (15) - 0% Harry Newton - 0% Dominick Abel - 0% Stormy Adams - 0% William T Ahlborg Jr Living Trust (16) - 0% William S. Atkins Living Trust (17) - 0% Sidney Azeez Trust For The Family Of Michael Azeez UAD 11/30/95 (18) - 0% Robert Bahr - 0% The Bahr Family Limited Partnership (19) - 0% 58 BBB Assets, LLC(20) - 0% Irwin Blitt Revocable Trust (21) - 0% Richard W Bonenberger Jerrianne Bonenberger JT TEN - 0% Centaurian Fund LP (22) - 0% Marc Cohen - 0% Morris E Franklin - 0% Gary M Ferman - 0% James B Fryfogle - 0% Craig Geers - 0% Keith Gelles - 0% Albert Gentile and Heidi Lyn Gentile JT Ten - 0% Robert Grinberg - 0% Lamar Anderson Gwaltney - 0% Nathan Halegua - 0% Timothy P Hanley Monica Hanley Ten Com - 0% John Hawk - 0% I Craig Henderson - 0% Bruce P. Inglis and Nancy M. Inglis JT Ten - 0% Marc R Jalbert - 0% George Kalil - 0% R.M. Kargman 2012 Life Insurance UAD 07/15/12 (23) - 0% William Klingenstein - 0% Thomas Kotyk - 0% BMO Harris Bank N.A. As Directed Trustee of Lapp Libra 401(K) Plan FBO William Lapp - 0% Roger S Lash - 0% Mark J Lee - 0% Adam Lipson - 0% William Lurie - 0% Rick D. Mace - 0% Marketplace Lofts Limited Partnership (24) - 0% Ernest W. Moody Revocable Trust (25) - 0% Reed C Moskowitz - 0% Steven M Nelson - 0% Panella Living Trust UAD 05/11/04 (26) - 0% Michael Pierce - 0% Brian Potiker Revocable Trust (27) - 0% The James Brian Ramo Revocable Trust UAD 06/15/79 (28) - 0% Stephen Robertson - 0% Dyke Rogers - 0% Richard Sakakeeny - 0% Tad Sanders - 0% 59 Joshua Schein 2009 Spearfish Trust (29) - 0% Arnold E. Spangler - 0% Bryan S Spille - 0% Robert Stanger - 0% Clay Struve - 0% James Swistock - 0% James J Tiampo - 0% United Acquisition Corp (30) - 0% Shimon Vogel - 0% John Wagner - 0% Brian Warshaw Randy Warshaw JT TEN - 0% Michael Wellens - 0% Rande R Willison - 0% David Schneider - 0% Premier Partners Investments, LLLP (31) - 0% Tibor Palszabo - 0% Itasca Capital Partners, LLC(32) - 0% The Dumper Family Trust UAD 05/17/12(33) - 0% Osprey I, LLC(34) - 0% Alan H. Edelson Eileen Adelson JT TEN - 0% Richard Filip - 0% IRA FBO Steven Glassman Pershing LLC As Custodian - 0% IRA FBO Michael E. Portnoy Pershing LLC As Custodian - 0% IRA FBO Ezra P. Mager Pershing LLC As Custodian - 0% Transpac Investments Limited(35) - 0% Carl J. Domino - 0% Arthur Gronbach Gail Gronbach JTWROS - 0% Sidney K. Swank Kathryn A. Swank JT TEN - 0% Richard A. Dionysius, Jr. - 0% Greenway Capital, LP(36) - 0% The Carnahan Trust UAD 8/11/95(37) - 0% Arthur Draznin Simplified Money Purchase Pension Plan - 0% Miriam Blech (38) 28.1% River Charitable Remainder Unitrust f/b/o Isaac Blech (39) 20.7% Cary Sucoff (40) - 7,945 * 0% Francis Anderson (41) - - 0% Christopher Henderson (42) - - 0% Patrick Kolenick (43) - 1.8% Richard Siskey (44) - 4.5% Philip Kolenik - 18,314 * 0% 60 Louis Eckley - 10,855 * 0% Jennifer Schwarz & Peter Schwarz - 4,342 * 0% Jeffrey Strack and Penny Strack - 4,342 * 0% Rozsak Capital, LLLP (45) - 8,684 * 0% Joseph Magurne - 0% K&A Trust (46) - 8,684 * 0% Michael Burkhard & Teresa Hawkins - 6,513 * 0% Equity Trust Company, dba Sterling Trust Custodian fbo David J Mahoney IRA (47) - 11,036 * 0% Equity Trust Company, dba Sterling Trust Custodian fbo Todd D Beddard IRA (47) - 2,207 * 0% Equity Trust Company, dba Sterling Trust Custodian fbo Janice D Beddard Bene FBO Donald N Beddard Deed IRA (47) - 2,207 * 0% Equity Trust Company, dba Sterling Trust Custodian fbo Don W Garrett IRA (47) - 2,207 * 0% Equity Trust Company, dba Sterling Trust Custodian fbo Richard E German a/c 154549 IRA (47) - 2,207 * 0% Equity Trust Company, dba Sterling Trust Custodian fbo Carolyn B Crozier IRA (47) - 2,207 * 0% Equity Trust Company, dba Sterling Trust Custodian fbo Thomas W Brake IRA (47) - 6,622 * 0% Richard Baumer - 4,414 * 0% Equity Trust Company, dba Sterling Trust Custodian fbo Ann H Militch IRA (47) - 4,414 * 0% Equity Trust Company, dba Sterling Trust Custodian fbo Rajeev Jindal IRA (47) - 0% Matthew McFee - 0% Maureen Kerr - 0% Jenco Business Advisors, Inc. (48) - 0% Jerrold Novack - 0% Cape One Financial Master Fund Ltd. (49) - - 0% TOTAL: *Less than 1% 61 Represents the number of shares held by the selling stockholders which we have agreed to include in this Registration Statement. Assumes all of the shares being offered under this prospectus will be sold by the selling stockholders.However, we are unable to determine the exact number of shares that will actually be sold or when or if sales will occur. Represents the shares of common stock underlying the warrants issued to the placement agent in connection with the sale of the Registrant’s 7% convertible notes, which convertible notes were subsequently converted into the Registrant’s 8% Convertible Redeemable Series D Preferred Stock. Michael Cahill is the President of American Capital Partners, LLC. As a result of the foregoing, he may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the sharesof common stock beneficially owned by American Capital Partners, LLC. American Capital Partners, LLC is a registered broker-dealer and received the securities referenced in the Selling Stockholder table as compensation in connection with a capital raising transaction. Maxim Partners LLC owns 92% of Maxim Group LLC, a registered broker dealer. MJR Holdings LLC owns 73.15% of Maxim Partners LLC. Mike Rabinowitz is the principal manager of MJR Holdings and has principal voting and dispositive power with respect to the securities owned by Maxim Partners LLC. The selling shareholderreceived its warrants as compensation for placement agent services provided to the Registrant in connection with the private placement of the Registrant’s Series D Preferred Stock (1,750,135), as referral fees (104,906) for the Registrants acquisition of GreenHouse Holdings and (155,844) for the Registrant’s acquisition of Ecological, LLC, and as compensation for placement agent services provided to the Registrant in connection with the private placement of the Registrant’s Series C Preferred Stock (714,285). Maxim Group, LLC is a registered broker-dealer and received the securities referenced in the Selling Stockholder table as compensation in connection with a capital raising transaction. Andrew Cader is the managing member of ACNYC, LLC. As a result of the foregoing, he may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the sharesof common stock beneficially owned by ACNYC, LLC. E. Jeffrey Peierls is the Trustee for these selling stockholders. As a result of the foregoing, he may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the sharesof common stock beneficially owned by these selling stockholders. David E. Smith is the Trading Advisor for Shamus, LLC. As a result of the foregoing, he may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the sharesof common stock beneficially owned by Shamus, LLC. Richard Stillman is the Trustee of ADV AMB ANES LLC DEFINED BEN PLAN. As a result of the foregoing, he may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the sharesof common stock beneficially owned by ADV AMB ANES LLC DEFINED BEN PLAN. Peter H. Weiss is the Trustee of Trust U/W Renee Weiss DTD 05-09-90. As a result of the foregoing, he may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the sharesof common stock beneficially owned by Trust U/W Renee Weiss DTD 05-09-90. Steven & Kaye Yost are the Trustees of the Steven & Kaye Yost Family Trust UAD 02/07/92. As a result of the foregoing, they may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the sharesof common stock beneficially owned by the Steven & Kaye Yost Family Trust UAD 02/07/92. Morris Garfinkle is the Trustee of Garfinkle Revocable Trust UAD 05/15/08. As a result of the foregoing, he may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the sharesof common stock beneficially owned by Garfinkle Revocable Trust UAD 05/15/08. Burton Weinstein is the Managing Partner of Cedarview Opportunities Master Fund, LP. As a result of the foregoing, he may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the sharesof common stock beneficially owned by Cedarview Opportunities Master Fund, LP. David S. Nagelberg is the Trustee of David S. Nagelberg 2003 Revocable Trust dtd. 7/2003. As a result of the foregoing, he may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the sharesof common stock beneficially owned by David S. Nagelberg 2003 Revocable Trust dtd. 7/2003. Shaye Hirsch is the Director of Brio Capital Master Fund Ltd. As a result of the foregoing, he may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the sharesof common stock beneficially owned by Brio Capital Master Fund Ltd. William T Ahlborg Jr. is the Trustee of William T Ahlborg Jr Living Trust. As a result of the foregoing, he may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the sharesof common stock beneficially owned by William T Ahlborg Jr Living Trust. William S. Atkins is the Trustee of the William S. Atkins Living Trust. As a result of the foregoing, he may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the sharesof common stock beneficially owned by William S. Atkins Living Trust. Michael Azeez is the Trustee of the Sidney Azeez Trust For The Family Of Michael Azeez UAD 11/30/95. As a result of the foregoing, he may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the sharesof common stock beneficially owned by Sidney Azeez Trust For The Family Of Michael Azeez UAD 11/30/95. Robert Bahr is the Trustee of The Bahr Family Limited Partnership. As a result of the foregoing, he may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the sharesof common stock beneficially owned by The Bahr Family Limited Partnership. M. Robert Ching is the Managing Partner of BBB Assets, LLC. As a result of the foregoing, he may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the sharesof common stock beneficially owned by BBB Assets, LLC. 62 Irwin Blitt is the Trustee of the Irwin Blitt Revocable Trust. As a result of the foregoing, he may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the sharesof common stock beneficially owned by Irwin Blitt Revocable Trust. Jody Eisenman is the Managing Partner of Centaurian Fund LP. As a result of the foregoing, he may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the sharesof common stock beneficially owned by Centaurian Fund LP. Centaurian Fund LP is a registered investment company under the Investment Company Act of 1940. Edward J. Bartlett, Jr. is the Trustee of the R.M. Kargman 2012 Life Insurance UAD 07/15/12. As a result of the foregoing, he may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the sharesof common stock beneficially owned by R.M. Kargman 2012 Life Insurance UAD 07/15/12. Jeffrey F. Stonberg is the President of Stonberg Holding Group, the General Partner of Marketplace Lofts Limited Partnership. As a result of the foregoing, he may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the sharesof common stock beneficially owned by Marketplace Lofts Limited Partnership Ernest W. Moody is the Trustee of the Ernest W. Moody Revocable Trust. As a result of the foregoing, he may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the sharesof common stock beneficially owned by Ernest W. Moody Revocable Trust. Joseph A. Panella is the Trustee of Panella Living Trust UAD 05/11/04. As a result of the foregoing, he may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the sharesof common stock beneficially owned by Panella Living Trust UAD 05/11/04. Brian Potiker is the Trustee of the Brian Potiker Revocable Trust. As a result of the foregoing, he may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the sharesof common stock beneficially owned by the Brian Potiker Revocable Trust. James B. Ramo is the Trustee of The James Brian Ramo Revocable Trust UAD 06/15/79. As a result of the foregoing, he may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the sharesof common stock beneficially owned by The James Brian Ramo Revocable Trust UAD 06/15/79. Brandon Schein is the Trustee of the Joshua Schein 2009 Spearfish Trust. As a result of the foregoing, he may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the sharesof common stock beneficially owned by Joshua Schein 2009 Spearfish Trust. John A. Catsimatidis is the Chairman and Chief Executive Officer of United Acquisition Corp. As a result of the foregoing, he may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the sharesof common stock beneficially owned by United Acquisition Corp. Irwin Gross is the Managing Partner of Premier Partners Investments, LLLP. As a result of the foregoing, he may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the sharesof common stock beneficially owned by Premier Partners Investments, LLLP. Michael Wallace is the Managing Member of Itasca Capital Partners, LLC. As a result of the foregoing, he may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the sharesof common stock beneficially owned by Itasca Capital Partners, LLC. Robert S. Dumper, Jr. is the Co-Trustee of The Dumper Family Trust UAD 05/17/12. As a result of the foregoing, he may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the sharesof common stock beneficially owned by The Dumper Family Trust UAD 05/17/12. Arthur Burns is the Managing Member of Osprey I, LLC. As a result of the foregoing, he may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the sharesof common stock beneficially owned by Osprey I, LLC. Cheong Kok Yen is the Director of Transpac Investments Limited. As a result of the foregoing, he may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the sharesof common stock beneficially owned by Transpac Investments Limited. Robert K. Green is the General Partner of Greenway Capital, LP. As a result of the foregoing, he may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the sharesof common stock beneficially owned by Greenway Capital, LP. Kevin Carnahan and Laurie Carnahan are the Trustee of The Carnahan Trust UAD 8/11/95. As a result of the foregoing, they may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the sharesof common stock beneficially owned by The Carnahan Trust UAD 8/11/95. Represents (a) 1,428,571 shares of Series C Preferred Stock convertible into 4,285,713 shares of common stock, and (b) 4,285,714 shares of common stock issuable upon the exercise of Series C Warrants.Does not include 952,381 shares of Series C Preferred Stock convertible into 2,857,143 shares of common stock and 2,857,142 shares of common issuable upon the exercise of Series C Warrants beneficially owned by the Trust, of which Isaac Blech is the sole trustee.Miriam Blech is Isaac Blech’s wife and a beneficiary under the Trust.Mrs. Blech disclaims beneficial ownership of the shares held by the Trust, except to the extent of any pecuniary interest therein. Represents (a) 952,381 shares of Series C Preferred Stock convertible into 2,857,143 shares of common stock, and (b) 2,857,142 shares of common stock issuable upon the exercise of Series C Warrants.Does not include 1,428,571 shares of Series C Preferred Stock convertible into 4,285,713 shares of common stock and 4,285,714 shares of common issuable upon the exercise of Series C Warrants beneficially owned by Miriam Blech.The sole trustee of the Trust is Isaac Blech, who has sole voting and dispositive power of the Trust.The beneficiaries of the Trust are Miriam Blech and Isaac Blech.Mr. Blech disclaims beneficial ownership of the shares held by Mrs. Blech, except to the extent of any pecuniary interest therein. 63 Cary Sucoff was a registered securities broker until December 2011.Mr. Sucoff received: (a) in 2011 a warrant to purchase 330,000 shares of the Company’s common stock for services relating to the placement of the Series C Preferred Stock; (b) in 2010 a warrant to purchase 126,440 shares of the Company’s common stock as commission for services relating to the placement of the Series B Preferred Stock; and (c) in 2010 a warrant to purchase 50,000 shares of common stock for consulting services. Francis Anderson was a registered securities broker until December 2011.Mr. Anderson received: (a) a warrant to purchase 19,300 shares of the Company’s common stock as commission for services relating to the placement of the Series B Preferred Stock; and (b) a warrant to purchase 30,200 shares of the Company’s common stock as commission for services relating to the placement of the Series C Preferred Stock. Christopher Henderson is a registered securities broker.Mr. Henderson received a warrant to purchase 10,000 shares of the Company’s common stock as commission for services relating to the placement of the Series B Preferred Stock. Patrick Kolenik received a warrant in 2010 and 2011 to purchase a total of 340,000 shares of the Company’s common stock as compensation for consulting services. Richard Siskey received a warrant to purchase 70,000 shares of the Company’s common stock as compensation for consulting services. Jeremy L. Rozsack has sole voting control over these shares. As a result, he may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the sharesof common stock beneficially owned by Rozsak Capital, LLLP. Maxine Ganer has sole voting control over these shares. As a result, she may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the sharesof common stock beneficially owned by K&A Trust. The individual whose IRA is listed has the sole voting and investment control over these shares. Jerold Novack has sole voting control over these shares. As a result, he may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the sharesof common stock beneficially owned by Jenco Business Advisors. Reid Drescher has sole voting and investment control over these shares. As a result, he may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the sharesof common stock beneficially owned by Cape One Financial Master Fund Ltd. Mr. Drescher is also a registered securities broker. 64 DESCRIPTION OF SECURITIES The following description of our capital stock being registered herein is a summary only and is qualified in its entirety by reference to our Articles of Incorporation and Amended and Restated Bylaws, which are included as Exhibits 3.1 and 3.2 of the registration statement of which this Prospectus is a part Common Stock We are authorized to issue up to 90,000,000 shares of common stock, $0.001 par value per share.Holders of our common stock are entitled to receive dividends when and as declared by our board of directors out of funds legally available.Holders of our common stock are entitled to one vote for each share on all matters voted on by stockholders, including the election of directors.Holders of our common stock do not have any conversion, redemption or preemptive rights. In the event of our dissolution, liquidation or winding up, holders of our common stock are entitled to share ratably in any assets remaining after the satisfaction in full of the prior rights of creditors and the aggregate liquidation preference of any preferred stock then outstanding.The rights, preferences and privileges of the holders of our common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock that we may designate and issue in the future. Preferred Stock We are authorized to issue up to 10,000,000 shares of preferred stock, $0.001 par value per share. We may issue any class of preferred stock in any series. Our board of directors has the authority to establish and designate series, and to fix the number of shares included in each such series and the variations in the relative rights, preferences and limitations as between series, provided that, if the stated dividends and amounts payable on liquidation are not paid in full, the shares of all series of the same class shall share ratably in the payment of dividends including accumulations, if any, in accordance with the sums which would be payable on such shares if all dividends were declared and paid in full, and in any distribution of assets other than by way of dividends in accordance with the sums which would be payable on such distribution if all sums payable were discharged in full.Shares of each series when issued shall be designated to distinguish the shares of each series from shares of all other series. All outstanding shares of our preferred stock are fully paid and non-assessable. We have designated 15,000 shares as Series D Preferred Stock, 2,500,000 shares as Series C Preferred Stock and 2,000,000 shares as Series B Preferred Stock.Although shares of common stock underlying our Series C Preferred Stock are being registered herein, our Series C Preferred Stock and Series B Preferred Stock are not being registered herein.A brief description of the terms and conditions of the Series D Preferred Stock follows.There are 15,000 shares of Series D Preferred Stock authorized, of which 13,876 shares have been issued as of the date hereof.Each shares of Series D Preferred Stock as a purchase price and liquidation value of $1,000 and bears dividends at the rate of 8% per annum.Each share is senior in liquidation preference to Premier’s common stock and Premier’s Series B Preferred Stock, and on parity with Premier’s Series C Preferred Stock.Dividends are payable every six months in cash or common stock of Premier, at Premier’s discretion.The Series D Preferred Stock is redeemable at the option of Premier if the closing price of the Common Stock is $2.50 or more for 30 consecutive trading days.The Series D Preferred Stock is convertible into common stock initially at $0.75 per share, although the holders of 750 shares of Series D Preferred Stock issuable in exchange for the Company’s 7% convertible notes previously outstanding, have, by agreement with Premier, the right to convert their Series D Preferred Stock initially at $0.50.The number of shares of common stock issuable on conversion is the liquidation value of the shares converted, divided by the then applicable conversion price.The stated conversion prices are adjustable for stock splits, combinations, recapitalizations and reorganizations. Transfer Agent and Registrar The transfer agent and registrar for our common stock is Continental Stock Transfer & Trust Company. 65 PLAN OF DISTRIBUTION Each selling stockholder of the common stock and any of their donees, pledgees, assignees and successors-in-Each Selling Stockholder (the “Selling Stockholders”) of the securities and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their securities covered hereby on the OTCQB or any other stock exchange, market or trading facility on which the securities are traded or in private transactions.These sales may be at fixed or negotiated prices.A Selling Stockholder may use any one or more of the following methods when selling securities: · ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; · block trades in which the broker-dealer will attempt to sell the securities as agent but may position and resell a portion of the block as principal to facilitate the transaction; · purchases by a broker-dealer as principal and resale by the broker-dealer for its account; · an exchange distribution in accordance with the rules of the applicable exchange; · privately negotiated transactions; · settlement of short sales entered into after the effective date of the registration statement of which this prospectus is a part; · in transactions through broker-dealers that agree with the Selling Stockholders to sell a specified number of such securities at a stipulated price per security; · through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; · a combination of any such methods of sale; or · any other method permitted pursuant to applicable law. The Selling Stockholders may also sell securities under Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”), if available, rather than under this prospectus. Broker-dealers engaged by the Selling Stockholders may arrange for other brokers-dealers to participate in sales.Broker-dealers may receive commissions or discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for the purchaser of securities, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this Prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal transaction a markup or markdown in compliance with FINRA IM-2440. In connection with the sale of the securities or interests therein, the Selling Stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the securities in the course of hedging the positions they assume.The Selling Stockholders may also sell securities short and deliver these securities to close out their short positions, or loan or pledge the securities to broker-dealers that in turn may sell these securities.The Selling Stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or create one or more derivative securities which require the delivery to such broker-dealer or other financial institution of securities offered by this prospectus, which securities such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction). The Selling Stockholders and any broker-dealers or agents that are involved in selling the securities may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Each Selling Stockholder has informed the Company that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the securities. In no event shall any broker-dealer receive fees, commissions and markups which, in the aggregate, would exceed eight percent (8%). 66 The Company is required to pay certain fees and expenses incurred by the Company incident to the registration of the securities.The Company has agreed to indemnify the Selling Stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act. Because Selling Stockholders may be deemed to be “underwriters” within the meaning of the Securities Act, they will be subject to the prospectus delivery requirements of the Securities Act including Rule 172 thereunder.In addition, any securities covered by this prospectus which qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than under this prospectus. The Selling Stockholders have advised us that there is no underwriter or coordinating broker acting in connection with the proposed sale of the resale securities by the Selling Stockholders. We agreed to keep this prospectus effective until the earlier of (i) the date on which the securities may be resold by the Selling Stockholders without registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144, without the requirement for the Company to be in compliance with the current public information under Rule 144 under the Securities Act or any other rule of similar effect or (ii) all of the securities have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule of similar effect.The resale securities will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale securities covered hereby may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with. Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale shares may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution.In addition, the Selling Stockholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of shares of the common stock by the Selling Stockholders or any other person.We will make copies of this prospectus available to the Selling Stockholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act). LEGAL MATTERS Ruskin, Moscou Faltischek P.C. will deliver an opinion that the issuance of the shares covered by this Prospectus has been approved by our Board of Directors and that such shares, when issued, will be duly authorized, validly issued, fully paid and non-assessable shares of common stock of the Company. EXPERTS The consolidated financial statements of the Company as of and for the year ended December 31, 2012 have been audited by Cherry Bekaert, LLP, an independent registered public accounting firm, as set forth in their report therein dated March 29, 2013. The financial statements of the Company as of and for the year ended December 31, 2011 have been audited by Scharf Pera & Co., PLLC, an independent registered public accounting firm, as set forth in their report therein dated May 10, 2012, 2012.Such consolidated financial statements have been included herein by reference in reliance upon such reports given on the authority of such firms as experts in accounting and auditing. REPORTS TO SECURITY HOLDERS We furnish our stockholders with annual reports containing audited financial statements. In addition, we are required to file reports on Forms 8-K, 10-Q and 10-K with the Securities and Exchange Commission. Upon written or oral request, we will provide, without charge, each person to whom a copy of this prospectus is delivered, a copy of any document incorporated by reference in this prospectus (other than exhibits, unless such exhibits are specifically incorporated by reference in such documents). Requests should be directed to Premier Alliance Group, Inc., 4521 Sharon Road, Suite 300, Charlotte, North Carolina 28211, telephone number (704) 521-8077, Attention: Mark S. Elliott, CEO/President, or our website www.premieralliance.com. 67 WHERE YOU CAN FIND MORE INFORMATION We are subject to the informational and reporting requirements of the Securities Exchange Act of 1934 (the “Securities Exchange Act”), and, in accordance with that statute, have filed various reports, proxy statements and other information with the Securities and Exchange Commission. You may inspect these reports, proxy statements and other information at the public reference facilities of the Securities and Exchange Commission at its principal offices at treet, N.E. Washington, D.C. 20549, and at its regional offices located at 3 World Financial Center, New York, NY 10021. You can get copies of these reports and other information from these offices upon payment of the required fees. These reports and other information can also be accessed from the web site maintained by the Securities and Exchange Commission at http://www.sec.gov. The public may obtain information on operations of the public reference room by calling the Securities and Exchange Commission at (800)SEC-0330. We have filed a registration statement on FormS-1 with the Securities and Exchange Commission under the Securities Act with respect to the shares offered by this prospectus. This prospectus, which forms a part of the registration statement, provides information as to the securities covered by the filing.However, this prospectus does not contain all of the information included in the registration statement and the accompanying exhibits. You can get copies of the registration statement and the accompanying exhibits from the Securities and Exchange Commission upon payment of the required fees or it may be inspected free of charge at the public reference facilities and regional offices referred to above. You may rely only on the information contained in this prospectus, including the documents incorporated in this prospectus by reference. We have not authorized anyone to provide information that is different from that contained in this prospectus. This prospectus may only be used where it is legal to sell these securities. The information in this prospectus may not be accurate after the date appearing on the cover. 68 FINANCIAL STATEMENTS INDEX TO FINANCIAL STATEMENTS PREMIER ALLIANCE GROUP, INC. Financial Statements as of March 31, 2013 and 2012 Consolidated Balance Sheets as of March 31, 2013 (Unaudited) and December 31, 2012 ……………F-2 Consolidated Statements of Operations (Unaudited) for the Three Months Ended March 31, 2013 and March 31, 2012 …………….… F-4 Consolidated Statements of Cash Flows (Unaudited) for the Three Months Ended March 31, 2013 and March 31, 2012 …………… F-5 Notes to Consolidated Financial Statements (Unaudited) …………….F-6 Financial Statements as of December 31, 2012 and 2011 Independent Auditors’ Report on the Financial Statements as of December 31, 2012 ……………F-16 Independent Auditors’ Report on the Financial Statements as of December 31, 2011 ……………F-17 Consolidated Balance Sheets as of December 31, 2012 and 2011……………F-18 Consolidated Statements of Operations for the Years Ended December 31, 2012 and 2011……………F-20 Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2012 and 2011…F-21 Consolidated Statements of Cash Flows for the Years Ended December 31, 2012 and 2011 …………….F-23 Notes to Consolidated Financial Statements……………F-25 (F-1) PREMIER ALLIANCE GROUP, INC. CONSOLIDATED BALANCE SHEETS MARCH 31, 2, 2012 (Unaudited) March 31, December 31, ASSETS CURRENT ASSETS: Cash $ $ Accounts receivable Marketable securities Cost and estimated earnings in excess ofbillings Prepaid expenses and other current assets Total current assets PROPERTY AND EQUIPMENT - at cost less accumulated depreciation OTHER ASSETS: Goodwill Intangible assets – net Investment in cost-method investee Cash surrender value of officers’ lifeinsurance Deferred tax asset Deposits and other assets Total other assets TOTAL ASSETS $ $ See Notes to Consolidated Financial Statements (F-2) (Unaudited) March 31, December 31, 2012 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Note payable to bank $ $ Current portion of long-term debt Accounts payable Billings in excess of costs and estimatedearnings Accrued expenses Total current liabilities NONCURRENT LIABILITIES: Long term debt – net of current portion Derivative liability Deferred tax liability Total noncurrent liabilities COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Preferred stock, $.001 par value, 4,985,000shares authorized, no shares issued or outstanding Class B convertible preferred stock, $.001 par value, 2,500,000 shares authorized, 1,160,000 shares issued and outstanding 1,160 1,160 Class C convertible preferred stock, $.001 par value, 2,500,000 shares authorized, 2,380,952 shares issued and outstanding 2,381 2,381 Class D convertible preferred stock, $001 par value, 15,000 shares authorized, 13,876 and 7,796 issued and outstanding at March 31, 2013 and December 31, 2012, respectively 14 8 Common stock, $.001 par value, 90,000,000 shares authorized, 23,082,237 and 22,331,687 shares issued and outstanding at March 31, 2013 and December 31, 2012, respectively, 23,084 22,332 Additional paid-in capital Accumulated deficit ) ) Total stockholders’ equity TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ $ See Notes to Consolidated Financial Statements (F-3) PREMIER ALLIANCE GROUP, INC. CONSOLIDATED STATEMENTS OF OPERATIONS THREE MONTHS ENDED MARCH 31, 2 (Unaudited) Three months Three months ended ended March 31, 2013 March 31, 2012 NET REVENUE $ $ OPERATING EXPENSES: Cost of revenues Selling, general and administrative Depreciation and amortization Total operating expenses LOSS FROM OPERATIONS ) ) OTHER (EXPENSE) INCOME: Interest expense, net ) ) Gain on marketable securities 25 Officers’ life insurance Derivative income (expense) ) Interest income Other income Total other (expense) income ) INCOME (LOSS) BEFORE INCOME TAXES ) INCOME TAX (EXPENSE) BENEFIT ) NET INCOME (LOSS) ) PREFERRED STOCK DIVIDENDS ) ) DEEMED DIVIDEND ON PREFERRED STOCK ) NET LOSS AVAILABLE TO COMMON STOCKHOLDERS $ ) $ ) Net loss per share: Basic $ ) $ ) Diluted $ ) $ ) Weighted average number of shares: Basic Diluted See Notes to Consolidated Financial Statements (F-4) PREMIER ALLIANCE GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 2 (Unaudited) Cash flows from operating activities: Net Income (loss) $ $ ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization Increase in cash surrender value of officers’ life insurance ( 23,624 ) ) (Income) expense from change in value of derivatives ) Deferred income taxes ) Stock option / warrant compensation expense Equity in gain of equity-method investee Changes in operating assets and liabilities: Increase in accounts receivable ) ) Increase in marketable securities ) ) Increase in costs and estimated earnings in excess of billings ) ) Decrease (increase) in prepaid expenses ) Decrease (increase) in deposits and other assets ) Increase in accounts payable and accrued expenses Increase in billings in excess of costs and estimated earnings Increase in income taxes payable ) Net cash used in operating activities ) ) Cash flows from investing activities: Issuance ofnotes receivable ) Deferred stock issuance costs ) Cash acquired in GHH acquisition Purchases of property and equipment ) ) Net cash used in investing activities ( 37,298 ) ) Cash flows from financing activities: Issuance of Class D Preferred stock Payments on long-term debt ) ) Proceeds on line of credit Increase in long-term debt Net cash provided by financing activities Net increase (decrease) in cash ) Cash - beginning of period Cash - end of period $ $ See Notes to Consolidated Financial Statements (F-5) PREMIER ALLIANCE GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED MARCH 31, 2 (Unaudited) Note 1 – Basis of Presentation: The accompanying unaudited interim consolidated financial statements of Premier Alliance Group, Inc. (“Premier” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s Annual Report filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein.The results of operations for interim periods are not necessarily indicative of the results expected for the full year.Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for fiscal year 2012 as reported in the 10-K have been omitted. The consolidated financial statements include historical Premier Alliance Group, Inc. and its acquisition of GreenHouse Holdings, Inc. (hereinafter “GHH”) effective March 5, 2012 – see Note 2 below.GHH has five wholly owned subsidiaries as follows: (i) Green House Holdings, Inc., a Nevada corporation, (ii) Control Engineering, Inc., a Delaware corporation, (iii) Life Protection, Inc., a North Carolina corporation, (iv) Green House Soluciones, S. A., incorporated under the laws of Mexico, and, (v) R Squared Contracting, Inc., a California corporation.R Squared Contracting, involved in residential energy, ceased doing business in May 2011 and is a dormant corporation.See Note 2 below for further discussion of this business acquisition.On December 31, 2012, we acquired Ecological, LLC – see Note 2 below; hence, the balance sheet at December 31, 2012 includes the balance sheet of Ecological and the period from January through March 2013 includes their operations results. Note 2 – Business Combinations: Greenhouse Holdings, Inc. On March 5, 2012, the Company consummated its Agreement of Plan and Merger (“Merger Agreement”) with GHH.GHH is a provider of energy efficiency and sustainable facilities services and solutions and audits, designs, engineers and installs products and technologies that enable its clients to reduce their energy costs and carbon footprint. GHH has two “vertical operations,” energy efficiency solutions (“EES”) and sustainable facilities solutions (‘‘SFS’’). GHH is focused on industrial, commercial, government and military markets in the United States and abroad. Substantially all of GHH’s revenue has historically come from its EES business segment to this point. Pursuant to the terms of the Merger Agreement, we agreed to issue a certain amount of our common stock on a fully diluted basis, subject to adjustments provided in the Merger Agreement. As part of the stock consideration paid to GHH, 1,331,188 shares of our common stock were placed in an escrow account.Such escrowed shares are to be released at a later date upon the achievement of certain revenue goals and the satisfaction of certain indemnification obligations. If the escrowed shares are released, GHH stockholders will own, in the aggregate, 17.1% of the combined company. The escrowed shares will accrue quarterly, on a pro-rata basis, to the extent that GHH revenues, over a four calendar quarter measurement period exceed $12 million. If these conditions are not met, the escrowed shares will be returned to us. Effective March 31, 2013, the four calendar quarter measurement period pursuant to the GHH aggregate revenue required in order to release the escrowed shares expired, and the minimum revenues were not attained. However, in in spite of a number of non-controllable external factors arising, GHH made measurable progress on many fronts.The Board of Directors is taking this under immediate advisement to determine if an extension is warranted for the measurement period and the course of action for the Company. The acquisition has been accounted for under the purchase method. The purchase method requires that the total consideration paid for an aquiree, be allocated first to the fair value of assets acquired and liabilities assumed of the acquired company. Any excess purchase price is then allocated first to identifiable intangible assets and any (F-6) residual to goodwill.Intangibles are amortized into the statement of operations over their estimated useful life.Goodwill is not amortized.However, at least annually, an impairment test is required for intangibles and goodwill. See Critical Accounting Policies in the Managements’ Discussion and Analysis of Financial Condition and Result of Operations section below. The purchase price was determined by the total market value of the 7,114,482 newly-issued shares (including the escrowed shares) on March 5, 2012 ($6,403,293), plus the total loans outstanding made by us to GHH at the date of the acquisition ($1,030,407), for total consideration of $7,433,700. We incurred deferred financing costs associated with the issuance of the stock (including legal fees, accounting fees, printing fees, etc.) totaling $323,963, and paid a registered investment adviser a referral fee in stock (valued at $120,639) and $64,960 in cash.These costs were charged against additional paid in capital.The following table presents the purchase price allocation of the consideration paid, the assets acquired and the liabilities assumed: Consideration $ Assets acquired: Current assets $ Property and equipment, net Intangible assets, net Deposits and other assets Goodwill Total assets acquired Liabilities assumed: Accounts payable Accrued expenses Billings in excess of costs and estimated earnings Current notes payable Long term debt Long term notes payable Secured note payable Deferred income taxes Total liabilities assumed Net assets acquired $ In the initial purchase price allocation on March 5, 2012, $458,000 was allocated to a deferred tax asset relating to future utilization of net operating losses acquired in the GHH acquisition, subject to statutory limitations.However, after further analysis and review of operations of GHH, the Company made an adjustment during 2012 to the initial purchase price allocation, removing the deferred tax asset of $458,000 and increasing goodwill from $8,692,792 to $9,150,792. This change did not have any impact on reported results of operations during 2012. During the Company’s annual goodwill testing for 2012, pursuant to ASC 350 and its requisite Step 1 and Step 2 tests, a goodwill impairment write down of $4,378,182 was recorded for the year ended December 31, 2012, adjusting the goodwill value above of $9,150,792, to the revalued amount at December 31, 2012 of $4,772,610. Ecological, LLC On December 31, 2012, through our wholly owned subsidiary, Ecological Partners, LLC, a New York limited liability company (“EPLLC”), created for the sole purpose of effectuating the acquisition, we purchased substantially all of the assets of Ecological LLC., (“Ecological”) a Delaware limited liability company, pursuant to an Asset Purchase Agreement dated November 15, 2012 (the “Agreement”). In consideration of the Purchased Assets (as defined in the Agreement), wepaid to Ecological (a) the sum of $3,000,000 in cash ($1,000,000 of which was required to remain on the balance sheet of Ecological Partners, LLC subsequent to acquisition), and (b) such number of restricted shares of our common stock equal to $3,956,256, based (F-7) on the 5-day volume weighted average closing price (“VWAP”) of the common stock for the five days prior to the date the Agreement was executed, as stated on the OTC Bulletin Board (the “Shares”). Accordingly, the VWAP was $0.62 per share resulting in 6,381,059 shares being issued.In accordance with purchase accounting rules, the transaction must be valued at the stock price at the closing date at December 31, 2012 of $0.76 per share. We entered into an employment agreement with Brian King, one of the principals of Ecological, and another principal, Joseph Grano, Jr., accepted the position as our Chairman of the Board of Directors. We paid a registered investment adviser a referral fee in stock (valued at $120,000) and $120,000 in cash, the sum of which, $240,000, was charged to selling, general and administrative expense as a transaction cost. Legal fees related to the issuance of stock totaling $37,324 were charged to additional paid in capital. Ecological develops and implements energy sustainability action plans for real estate portfolios, buildings, and tenants in order to reduce costs, improve efficiency, achieve regulatory compliance, and increase value. Ecological’s services range from metering and monitoring, to in-depth energy audits and analysis, to executing retrofit projects. By improving the efficiency of environmental systems, such as energy, water, and carbon, landlords can reduce costs, reposition client buildings as “green” and create higher value and yield for their real estate assets and portfolios. The following table presents the purchase price allocation of the consideration paid, the assets acquired and the liabilities assumed: Consideration $ Assets acquired: Current assets $ Property & equipment Lease deposit Intangible assets Goodwill Total assets acquired Liabilities assumed: Employee flexible spendingaccount Payroll liabilities Billings in excess of costs & estimated earnings Deferred rent Total liabilities assumed Net assets acquired $ The acquired intangibles include customer relationships valued at $526,559 which are being amortized over five years beginning January 1, 2013, and trade name valued at $50,000which are being amortized over seven years also beginning January 1, 2013. The Company also acquired a deferred tax asset representing the estimated tax benefits related to net operating loss carry forwards in the acquisition in the amount of $164,910.A full valuation allowance was provided at acquisition for this deferred tax asset and at March 31, 2013.Both goodwill and intangibles outlined above are fully deductible for tax purposes as this was a taxable transaction. Note 3 – Line of Credit Modification Effective January 23, 2013, the Company and its financial institution entered into a loan modification under the current line of credit. The Company incurred $8,275 in deferred loan costs with this modification.All terms remain the same with the maturity date extended to July 19, 2013, as negotiations and alternatives are reviewed to increase the line of credit and the advance rate. The current line of credit is limited to a borrowing base of 75% of eligible receivables or $1,500,000.At December 31, 2012, the Company was not in compliance with the debt service coverage covenant contained in the loan agreement, but subsequently received a waiver from the bank (F-8) regarding such non-compliance. Outstanding borrowings at March 31, 2013 under the revolving line of credit, classified as note payable to bank on the balance sheet, were $1,122,048. Note 4 – Pro-Forma Financial Information (unaudited): The following unaudited pro-forma data summarizes the results of operations for the three months ended March 31, 2012, as if the purchase of Greenhouse Holdings, Inc. and Ecological, LLC had been completed January 1, 2012. The pro-forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place on January 1, 2012. Three Months Ended Three Months Ended March 31, 2013 March 31, 2012 Net revenues N/A * Operating loss N/A * Net loss per share – basic and fully diluted N/A * *All entities were consolidated effective January 1, 2013; therefore; the results of operations are included in their totality in these financial statements. Note 5 – Series B Convertible Preferred Stock: On April 14, 2010, the Company designated 2,000,000 shares of its preferred stock as 7% Series B Convertible Preferred Stock, $.001 par value per share (“Series B Preferred Stock”). The Series B Preferred Stock (a) is convertible into one share ofcommon stock, subject to certain adjustments, (b) pays 7% dividends per annum, payable annually in cash or shares of common stock, at the Company’s election, (c) is automatically converted into common stock if the price of the Company’s common stock exceeds $2.50, and (d) for a period of one year from the issuance date provides full-ratchet anti-dilution provisions on issuances of securities at a price less than $0.70 per share of common stock, subject to certain exceptions. These shares of preferred stock were issued in conjunction with detachable warrants. As of March 31, 2013, 1,200,000 shares of the Series B Preferred Stock have been issued, 40,000 shares have been converted into common stock, leaving 1,160,000 shares outstanding.Dividends paid in the first quarter of 2012 on these preferred shares totaled $58,718 and were paid by issuing 61,340 shares of the Company’s common stock.Dividends paid in the first quarter of 2013 on these preferred shares totaled $56,840 and were paid by issuing 71,050 shares (based on the market price of the Company’s stock at the date of issuance) of the Company’s common stock. Note 6 – Series C Convertible Preferred Stock: On March 1, 2011, and as amended on March 3, 2011, the Company designated 2,500,000 shares of its preferred stock as Series C Convertible Preferred Stock, $.001 par value per share (“Series C Preferred Stock”), each share is priced at $2.10 and includes a warrant to purchase 3 shares of common stock at an exercise price of $0.77 which expires in 5 years. The Series C Preferred Stock (a) is convertible into three shares ofcommon stock, subject to certain adjustments, (b) pays 7% dividends per annum, payable annually in cash or shares of common stock, at the Company’s election and (c) is automatically converted into common stock if the price of the Company’s common stock exceed $2.50 for 30 consecutive trading days. On March 3, 2011, the Company closed an offering of its securities to accredited investors.The Company sold 2,380,952 shares of Series C Preferred Stock and warrants to purchase 7,142,856 shares of common stock, for gross proceeds of $5,000,000. In connection with the sale of these securities a registered securities broker was paid $650,000 and was issued warrants to purchase 714,285 shares of common stock (with an exercise price of $0.77), as an advisory fee.In addition, a registered securities broker was paid $100,000 and was issued warrants to purchase 360,000 shares of common stock (with an exercise price of $0.77) as an advisory/finder’s fee.The issuance of these preferred shares contained an embedded beneficial conversion feature the intrinsic value of which is $1,913,592 and was recorded as a deemed dividend to preferred shareholders for the three months ended March 31, 2011. (F-9) The aggregate number of warrants to purchase 8,217,141 shares of common stock, issued in connection with the Series C Preferred Stock, contains full-ratchet anti-dilution provisions that require them to be recorded as a derivative instrument. The derivative liability was adjusted to the fair market value of the warrants at March 31, 2013 of $1,012,728, with the change in value of $573,180 being recorded as derivative income on the statement of operations for the three months ended March 31, 2013. Dividends were declared and paid on the Series C Preferred Stock in February 2012 in the amount of $262,500 and were paid by the issuance 354,730 shares of Company common stock. Dividends were declared and paid on the Series C Preferred Stock in February 2013 in the amount of $350,000 and were paid by the issuance 437,500 (based on the market price of the Company’s stock at the date of issuance) shares of Company common stock. Note 7 – Series D Convertible Preferred Stock: In October 2012, the Company designated up to 15,000 shares of Series D 8% Redeemable Convertible Preferred Stock (“Series D Preferred Stock”) and a warrant to purchase ¼ of the number of shares of the Company’s common stock issuable upon conversion of one share of the Preferred Stock.The purchase price of one share is $1,000.Dividends are 8% per annum, payable semi-annually in cash or shares of common stock at the Company’s option.The Series D Preferred Stock is convertible into common stock at the total purchase price divided by $0.75 (the “conversion rate”), and collectively, the “conversion price”.The warrants are for a term of five years and have a strike price of $1.125 per share. The Preferred Stock shall automatically convert into common stock, at the conversion rate, upon (i) the completion of a firm commitment underwritten public offering of the Company’s shares of common stock resulting in net proceeds to the Company of at least $10,000,000 and is offered at a price per share equal to at least 200% of the conversion price (subject to adjustment for any stock splits, stock dividends, etc.), (ii) upon the affirmative vote of the holders of a majority of the outstanding shares of Preferred Stock, or (iii) on the second anniversary of the issue date of the Preferred Stock.The Preferred Stock contains anti-dilution protection.Holders of the Preferred Stock shall vote together with the holders of common stock on an as-converted basis. On December 26, 2012, the Company closed an offering of this Series D Preferred Stock to accredited investors. The Company sold 7,046 shares of Series D Preferred Stock and 2,348,685 warrants, with an exercise price of $1.125, for gross proceeds of $7,046,000.In connection with the sale of these securities, $704,600 was paid and 939,467 warrants were issued, with an exercise price of $1.125, to a registered broker. In addition, $100,000 and $6,500 in legal and escrow fees were paid.The Company received net proceeds of $6,234,900.The issuance of this Series D Preferred Stock contained an embedded beneficial conversion feature, the intrinsic value of which was $599,084 and was recorded as a deemed dividend to preferred shareholders during the year ended December 31, 2012. The combined 3,288,152 warrants issued in connection with the Series D Preferred Stock contain full-ratchet anti-dilution provisions that require them to be recorded as a derivative instrument. The fair value of these derivatives were valued at $483,687 and recorded as a derivative liability with a corresponding non-current deferred tax asset of $184,000 at December 31, 2012.See below for total fair value of all derivatives related to all Series D Preferred Stock issuances, inclusive of the original Series D Preferred Stock issuance in December 2012, the additional Series D Preferred Stock issued in January and February 2013 (described immediately below). Additionally, the Company issued 7% Redeemable Convertible Promissory Notes and Warrants (“Promissory Notes”) on November 16, 2012.These Promissory Notes were mandatorily convertible into the “next round of financing” by the Company.The next round of financing was the Series D Preferred Stock described above.See 7% Redeemable Convertible Promissory Notes and Conversion into 8% Redeemable Convertible Series D Preferred Stock - Note 8. below for a detail description of the original issue of these Promissory Notes and their subsequent mandatory conversion into the Series D Preferred Stock. See Note 8 for further discussion of the 7% Redeemable Convertible Promissory Notes and Warrants (“Promissory Notes”) and the valuation related to the warrants directly associated with the Series D Preferred Stock resulting from the mandatory conversion of these Promissory Notes and the related derivatives and income impact for the three months ended March 31, 2013. On January 25, 2013, the Company closed an additional private placement financing from the sale of the Series D Preferred Stock under identical terms as described above to accredited investors. The Company sold 3,955 shares and 1,318,363 warrants, with an exercise price of $1.125, for gross proceeds of $3,955,001. In connection (F-10) with the sale of this issuance of securities, $395,500 was paid in cash and 527,334 warrants were issued, with an exercise price of $1.125, to a registered broker. In addition, Blue Sky filing fees of $1,550 were incurred.The Company received net proceeds of $3,557,951. The issuance of this round of Series D Preferred Stock contained an embedded beneficial conversion feature, the intrinsic value of which was $509,737, and was recorded as a deemed dividend to preferred shareholders during the three months ended March 31, 2012.Also,the combined 1,845,697 warrants issued directly associated with this January 25, 2013 additional private placement contain full-ratchet anti-dilution provisions that require them to be recorded as a derivative instrument. The fair value of these derivatives were valued at the January 25, 2013 date of issuance at $307,309 and were recorded as a derivative liability with a corresponding non-current deferred tax asset of $118,000 at that time.The fair value of these derivatives at March 31, 2013 and the change in value since their January 25, 2013 issuance are addressed below in conjunction with the total fair value of all derivatives associated with the Series D Preferred Stock, and the valuation of the derivatives associated with the 7% Redeemable Convertible Promissory Notes and Warrants (“Promissory Notes”) on November 16, 2012. On February 26, 2013, the Company closed the final private placement financing from the sale of the Series D Preferred Stock under identical terms as described above to accredited investors. The Company sold 1,125 shares and issued 708,344 warrants, with an exercise price of $1.125, for gross proceeds of $2,125,000. In connection with the sale of this issuance of securities, $212,500 was paid in cash and 283,334 warrants were issued, with an exercise price of $1.125, to a registered broker. In addition, legal fees of $18,300 were incurred.The Company received net proceeds of $1,894,200. This issuance of this final round of Series D Preferred Stock did not contain an embedded beneficial conversion feature.The combined 991,678 warrants issued directly associated with this February 26, 2013 additional private placement contain full-ratchet anti-dilution provisions that require them to be recorded as a derivative instrument. The fair value of these derivatives were valued at the February 26, 2013 date of issuance at $96,788 and were recorded as a derivative liability with a corresponding non-current deferred tax asset of $33,000 at that time.The fair value of these derivatives at March 31, 2013 and the change in value since their February 26, 2013 issuance are addressed below in conjunction with the total fair value of all derivatives associated with the Series D Preferred Stock, and the valuation of the derivatives associated with the 7% Redeemable Convertible Promissory Notes and Warrants (“Promissory Notes”) on November 16, 2012. For all warrants directly associated with the three issuances of Series D Preferred Stock, the derivative liability for each of the December 26, 2012, January 25, 2013 and February 26, 2013 warrants was adjusted to the collective fair market value of all the warrants at March 31, 2013 of $584,112, with the collective change in value from either December 31, 2012, or their respective recording at issuance on January 25, 2013 or February 26, 2013, of $303,672 was recorded as derivative income on the statement of operations for the three months ended March 31, 2013. Note 8 – 7% Redeemable Convertible Promissory Notes and Conversion into 8% Redeemable Convertible Series D Preferred Stock: On November 16, 2012, the Company issued $750,000 of its 7% Redeemable Convertible Promissory Notes (“Promissory Notes”) to accredited investors with simple interest on a 365 day basis payable on the maturity date in cash or common stock, at the Company’s option. The Securities consist of 7% Convertible Notes with 50% warrant coverage.The Promissory Notes will convert at the earlier of 15 months or will automatically convert at the closing of the next round of financing by the Company into the same security as the next round of financing, at the lesser of $0.50 per share or at a 25% discount to the next round of financing and warrants to acquire 50% of the number of shares, with a strike price of the lesser of $0.65 per share or the strike price of the next warrants at such financing.The warrants have a four year term. The Company can call the warrants if: (i) the shares underlying the warrants are registered and; (ii) the stock, subsequent to registration, trades above $1.30 a day for 10 consecutive trading days and averages in excess of 50,000 shares a day in volume. Weighted average anti-dilution provisions are in place for one year on the stock after conversion and for three years on the warrants. The Company paid $29,614 in legal fees, $9,500 in diligence fees to the placement agent and a success fee of 10% or $75,000 to the placement agent. The Company received net proceeds of $635,886, issued 750,000 warrants to the note holders and 120,000 warrants to the registered placement agent. The Company accounted for the initial issuance of these Notes in accordance with FASB ASC Topic 470-20 “Debt with Conversion and Other Options”.Due to the full-ratchet anti-dilution protection in the warrants, they are considered to be derivative instruments. As such, the fair value of the warrants directly associated with the (F-11) Promissory Notes at date of issuance of $117,825 was recorded as a derivative liability. Additionally, the fair value of the placement warrants, $18,852, associated with the issuance was also recorded as a derivative liability with a charge to deferred financing costs. In addition, the issuance of the Notes and warrants also included an embedded beneficial conversion feature of $251,828 which was recorded as a debt discount and as additional paid in capital in the fourth quarter of December 2012. In accordance with the Securities Purchase Agreement with the Promissory Notes, the Notes were mandatorily convertible into the next round of financing by the Company into the same security as the next round of financing.As discussed above, on December 26, 2012, the Company issued $7,046,000 inSeries D Preferred Stock; hence, triggering the mandatory conversion of the Notes into the Series D Preferred Stock.As a result, in the fourth quarter of December 2012, the Company had to (i) write-off the unamortized portion of the debt discount and charge the statement of operations with $339,092 in interest expense-debt discount, (ii) write-off the face value of the $750,000 Notes and all of the deferred financing costs associated with the Notes of $132,966, (iii) record the intrinsic value of the embedded beneficial conversion feature associated with the issuance of the Series D Preferred Stock in this conversion of $552,966 by charging deemed dividend to preferred shareholders with an offset to additional paid in capital, and (iv) record the issuance of the Series D Preferred Stock for the par value of the 750 shares into which the Notes converted and record the additional paid in capital of $617,035. Finally, as described above, all the warrants affiliated with the Notes are considered derivative instruments and were revalued at December 26, 2012. The increase in total derivative valuation from $136,677 at November 16, 2012 to $230,985 at December 26, 2012 of $94,308 was recorded as an increase in the derivative liability and as derivative expense in the statement of operations for the fourth quarter of 2012. There was no change in the liability amount from December 26, 2012 to year end. The derivative liability was adjusted to the fair market value of the warrants at March 31, 2013 of $159,699, with the change in value of $71,286 being recorded as derivative income on the statement of operations for the three months ended March 31, 2013. Note 9 – Convertible Debenture: On May 21, 2010, the Company issued a 9% senior secured convertible debenture in the principal amount of $350,000 with an 8% original issue discount of $28,000 (the “Debenture”). The Debenture was paid in full in November 2011.However, the Debenture was issued with detachable warrants to purchase 500,000 shares of common stock with an exercise price of $0.77 which expire in five years and contain full-ratchet and other standard anti-dilution protections. Due to the full-ratchet anti-dilution protection in the warrants, they are considered to be derivative instruments.The derivative liability was adjusted to the fair market value of the warrants at March 31, 2013 of $51,377, with the change in value of $33,973 being recorded as derivative income on the statement of operations for the three months ended March 31, 2013. (F-12) Note 10 – Stock Options and Warrants: There were no options issued in the three months ended March 31, 2013 under the 2008 Stock Incentive Plan. The following table represents the activity under the stock incentive plan as of March 31, 2013 and changes during each period: Options Shares Weighted Average Exercise Price Outstanding at December 31, 2010 Issued Outstanding at December 31, 2011 Issued Forfeitures Outstanding at December 31, 2012 Activity – January – March 2013 Outstanding at March 31, 2013 On March 5, 2012, contemporaneously with the acquisition of GHH (see Note 2 above), holders of GHH warrants received the immediate right to receive warrants of Premier.Each GHH warrant was replaced by a Premier warrant for the number of shares of Premier common stock that a GHH warrant holder would have received if the GHH warrant had been exercised in full to immediately prior to the merger, based on the exchange ratio calculated without regard to any warrants, and excluding any adjustment resulting from ‘‘price anti-dilution’’ provisions. The aggregate exercise price of the Premier warrant was the same as that of the GHH warrant being replaced. For example, a warrant to purchase 1,000 GHH shares of common stock at $2.00 per share would be converted into a warrant to purchase 140 Premier shares at approximately $14.33 per share. If the actual calculation would result in a fraction of a share, the same will be rounded up to a whole share.Pursuant to this provision of the Agreement and Plan of Merger, GHH warrants to purchase 1,822,567 shares of common stock were converted to Premier warrants to purchase 300,663 shares of common stock with an average exercise price of $14.65 with varying expiration dates. In November 2012, 44,911 (held by non-employees) of these warrants were cancelled and 13,301 shares of common stock were issued. The strike price for all these warrants is significantly in excess of the fair market price of the stock and such warrants were determined to have de-minimis value at the time of the merger. The following warrants were issued in 2013 and valued using the Black-Scholes valuation method with the key inputs as follows: Exercise price Risk free interest rate .76% Volatility 33.13% Expected term 5 Years Dividend yield None On January 1, 2013, we issued warrants to purchase 25,000 shares of common stock to its investment relations firm as compensation. The warrants vest immediately, are exercisable at $0.80 and expire January 1, 2018. The grant date estimated fair value of the warrants is $5,788, and is included in selling, general and administrative expenses on the statement of operations. In connection with the Series D 8% Redeemable Convertible Preferred Stock issued on January 25, 2013, the Company issued 1,318,363 detachable warrants and 527,334 warrants to the placement agent.These warrants contain a ratchet provision and standard anti-dilution protection and were recorded at issuance as a derivative liability with an offsetting charge to additional paid in capital and deferred tax asset. (F-13) In connection with the Series D 8% Redeemable Convertible Preferred Stock issued on February 26, 2013, the Company issued 708,344 detachable warrants and 283,334 warrants to the placement agent.These warrants contain a ratchet provision and standard anti-dilution protection and were recorded at issuance as a derivative liability with an offsetting charge to additional paid in capital and deferred tax asset. The following table represents the activity of warrants as of March 31, 2013 (there were no exercises, forfeitures, or terminations): Warrants Shares Weighted Average Exercise Price Outstanding at December 31, 2010 Issued Outstanding at December 31, 2011 Issued Issued pursuant to GHH acquisition Cancelled Outstanding at December 31, 2012 Issued Outstanding at March 31, 2013 Note 11 – Capital Stock Authorized: In April 2012, the Company increased its authorized shares of capital stock. Total shares of preferred stock were increased from 5,000,000 to 10,000,000.During 2012, the Board of Directors designated 15,000 shares of preferred stock as Series D 8% Redeemable Convertible Preferred Stock, and as of December 31, 2012, the Company had issued 7,796 shares of this Preferred Stock.On January 25, 2013, the Company issued an additional 3,955 shares of Series D 8% Redeemable Convertible Preferred Stock, and on February 26, 2013 the Company issued an additional 2,125 shares. The remaining authorized but unissued shares totaling 4,985,000 have not been designated to a specific class. Total authorized shares of common stock were increased from 45,000,000 to 90,000,000. No shares of the additional authorized common shares have been issued. During the three months ended March 31, 2013, we issued the following common stock: 1) 242,000 shares valued at $0.70 per share in a settlement reached in a dispute between Greenhouse Holding, Inc. and its former financial advisor in October 2012. This settlement valued at $169,400 was accrued in other accrued expenses at December 31, 2012.The 242,000 shares were issued on January 31, 2013. 2) On January 28, 2013 the Company declared dividends on its Series B Preferred Stock and the Company paid the dividends in Company common stock.On February 1, 2013, the Company issued 71,050 shares to the 7% Series B Convertible Preferred Stockholders. 3) On January 28, 2013 the Company declared dividends on its Series C Preferred Stock and the Company paid the dividends in Company common stock.On February 1, 2013, the Company issued 437,500 shares to the 7% Series C Convertible Preferred Stockholders. Note 12 – Segment Information: FASB ASC Topic 280, “Segment Reporting”, establishes standards for reporting information regarding operating segments in annual financial statements.The Company, effective with its acquisition of GHH on March 5, 2012, began operating in two business segments: the Risk/Compliance segment and the Energy and Sustainability (F-14) Solutions segment.For the Risk Compliance segment, the business consists of providing business advisory, consulting and resource services to clients. Premier provides services through three primary delivery channels: GRC (Governance, Risk and Compliance), BP&T (Business Performance and Technology), and F&A (Finance and Accounting). GHH, a wholly owned subsidiary, operates as the Energy and Sustainability Solutions segment of Premier, and has two “vertical operations” consisting of Energy Efficiency and Sustainable Infrastructure. GHH’s primary focus is on energy related projects.Effective with our December 31, 2012 acquisition of Ecological, LLC, they also became part of the Energy and Sustainability Solutions segment. The performance of the business is evaluated at the segment level.Cash, debt and financing matters are managed centrally.These segments operate as one from an accounting and overall executive management perspective, though each segment has senior management in place; however they are differentiated from a marketing and customer presentation perspective, though cross-selling opportunities exist and continue to be pursued.Condensed summary segment information follows for the three months ended March 31, 2013: Revenue: Risk/Compliance Solutions $ Energy and Sustainability Solutions Loss from operations: Risk/Compliance Solutions (1 ) ) Energy and Sustainability Solutions ) Total Assets: Risk/Compliance Solutions (2 ) Energy and Sustainability Solutions Note that Loss from operations – Risk/Compliance Solutions, includes the corporate overhead costs for the enterprise, totaling approximately $884,000 for the three months ended March 31, 2013. Excluding these corporate overhead charges, the Risk/Compliance Solutions segment would have shown net income from operations of approximately $399,000. Total assets for the Energy and Sustainability Solutions segment include $4,772,610 in goodwill for Greenhouse and $6,063,119 for Ecological, respectively at March 31, 2013. Note 13 – Related Party Transactions: On February 8, 2012, we paid dividends on our Series C Preferred Stock in Common Stock of the Company.Of this dividend, $105,000, equating to 141,893 shares was paid to River Charitable Remainder Unitrust f/b/o Isaac Blech, which is controlled by Isaac Blech, Vice Chairman of the Company’s Board of Directors. On February 1, 2013, we paid dividends on our Series C Preferred Stock in Common Stock of the Company.Of this dividend, $140,000, equating to 175,000, shares was paid to River Charitable Remainder Unitrust f/b/o Isaac Blech, which is controlled by Isaac Blech, Vice Chairman of the Company’s Board of Directors. During the three months ended March 31, 2012, the Company engaged two board members to provide additional services as board members related to merger and acquisition and investment relations activity.These board members each received warrants to purchase 150,000 shares of common stock for these services.In addition each board member was to be compensated $20,000.On April 27, 2012, the Company paid $20,000 each to the two board members. (F-15) REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Premier Alliance Group, Inc. and subsidiaries Charlotte, North Carolina We have audited the accompanying consolidated balance sheet of Premier Alliance Group, Inc. and subsidiaries (the “Company”) as of December 31, 2012, and the related consolidated statement of operations, stockholders’ equity, and cash flows for the year then ended.The Company’s management is responsible for these consolidated financial statements. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards as established by the Auditing Standards Board (United States) and in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.Accordingly we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2012, and the consolidated results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. /s/ Cherry Bekaert LLP Charlotte, North Carolina April 1, 2013 (F-16) Scharf Pera & Co., PLLC Certified Public Accountants 4600 Park Road Suite 112 Charlotte, North Carolina 28209 704-372-1167 Audit Committee Premier Alliance Group, Inc. Charlotte, North Carolina INDEPENDENT AUDITORS’ REPORT We have audited the accompanying balance sheet of Premier Alliance Group, Inc. as of December 31, 2011, and the related statements of operations, stockholders’ equity, and cash flows for the year then ended.These financial statements are the responsibility of the Company’s management.Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.Premier Alliance Group, Inc. is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting.Our audit included consideration of internal controls over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Premier Alliance Group, Inc. as of December 31, 2011, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. Scharf Pera & Co., PLLC Charlotte, North Carolina May 10, 2012 (F-17) PREMIER ALLIANCE GROUP, INC. BALANCE SHEETS DECEMBER 31, 2 ASSETS CURRENT ASSETS: Cash $ $ Accounts receivable Marketable securities Income tax receivable Convertible notes receivable Deferred issuance costs Costs and estimated earnings in excess of billings Deferred tax asset Prepaid expenses and other current assets Total current assets PROPERTY AND EQUIPMENT - at cost less accumulated depreciation OTHER ASSETS: Goodwill Intangible assets – net Investment in equity-method investee Investment in cost-method investee Cash surrender value of officers' life insurance Deferred income tax Deposits and other assets Total other assets TOTAL ASSETS $ $ See Notes to Financial Statements (F-18) LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Note payable $ $ Current portion of long-term debt Accounts payable Billings in excess of costs and estimated earnings Accrued expenses Total current liabilities NONCURRENT LIABILITIES: Long-term debt – net of current portion Derivative liability Deferred tax liability Total noncurrent liabilities COMMITMENTS AND CONTINGENCIES 0 0 STOCKHOLDERS' EQUITY: Preferred stock, $001 par value, 4,985,000 and 0 shares authorized at December 31, 2012 and 2011, respectively, no shares issued or outstanding Class B convertible preferred stock, no liquidation preference $.001 par value, 2,000,000 shares authorized, 1,160,000 shares issued and outstanding Class C convertible preferred stock, $.001 par value, 2,500,000 shares authorized, 2,380,952 shares issued and outstanding Class D convertible preferred stock, $.001 par value, 15,000 shares authorized, 7,796 shares issued and outstanding at December 31, 2012 8 Common stock, $.001 par value, 90,000,000 shares authorized, 22,331,687 and 8,146,325 shares issued and outstanding Additional paid-in capital Accumulated deficit ) ) Total stockholders’ equity TOTAL LIABILITIESAND STOCKHOLDERS’ EQUITY $ $ See Notes to Financial Statements (F-19) PREMIER ALLIANCE GROUP, INC. STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2 NET REVENUES $ $ OPERATING EXPENSES: Cost of revenues Selling, general and administrative Depreciation and amortization Total operating expenses LOSS FROM OPERATIONS ) ) OTHER INCOME (EXPENSE): Interest expense, net ( 86,040
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SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this “Agreement”) is dated as of April 4,
2019, between Quest Solution, Inc., a Delaware corporation (the “Company”), and
successors and assigns, a “Purchaser” and collectively, the “Purchasers”).
pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the
issue and sell to each Purchaser, and each Purchaser, severally and not jointly,
desires to purchase from the Company, securities of the Company as more fully
Agreement, and for other good and valuable consideration, the receipt and
as follows:
ARTICLE I.
DEFINITIONS
Person, as such terms are used in and construed under Rule 405 under the
Securities Act.
to Section 2.1.
case, have been satisfied or waived.
“Company Counsel” means Sichenzia Ross Ference LLP.
“Disclosure Schedules” shall have the meaning ascribed to such term in Section
3.1.
“Effective Date” means the earliest of the date that (a) the initial
Registration Statement registering all Shares and Warrant Shares has been
declared effective by the Commission, (b) all of the Shares and Warrant Shares
have been sold pursuant to Rule 144 or may be sold pursuant to Rule 144 without
information required under Rule 144 and without volume or manner-of-sale
restrictions or (c) following the one year anniversary of the Closing Date
provided that a holder of Shares or Warrant Shares is not an Affiliate of the
Company, all of the Shares and Warrant Shares may be sold pursuant to an
exemption from registration under Section 4(1) of the Securities Act without
volume or manner-of-sale restrictions and Company Counsel has delivered to the
Transfer Agent for the benefit of such holders (and, if required by a holder, to
such holder or such holder’s custodian or prime broker) a standing written
unqualified opinion that resales may then be made by such holders of the Shares
and Warrant Shares pursuant to such exemption which opinion shall be in form and
substance reasonably acceptable to such holders.
extend the term of such securities, and (c) securities issued as “restricted
securities” (as defined under Rule 144) pursuant to acquisitions or strategic
Company, provided that any such issuance shall only be to a Person (or to the
capital or to an entity whose primary business is investing in securities;
provided, further, that such securities are not entitled or allowed to have such
securities registered for resale during the period contemplated in Section
4.12(a) below.
“Indebtedness” shall have the meaning ascribed to such term in Section 3.1(bb).
“Lock-Up Agreements” means the written agreements, each in the form of Exhibit D
attached hereto, between the Company and each of the Company’s directors and
officers.
“National Exchange” means any of the Nasdaq Global Select Market, the Nasdaq
Global Market, the Nasdaq Capital Market, the New York Stock Exchange or the
NYSE American.
4.11(a).
“Per Unit Purchase Price” equals $0.30, subject to adjustment for reverse and
of any kind.
“Placement Agency Agreement” means the Placement Agency Agreement, dated the
date hereof, among the Company and the Placement Agent.
“Placement Agent” means ThinkEquity, a division of Fordham Financial Management,
Inc.
“Placement Agent’s Counsel” means Zysman, Aharoni, Gayer and Sullivan &
Worcester LLP, with offices located at 1633 Broadway, New York, New York 10019.
4.11(e).
Section 4.2(b).
term in Section 4.2(b).
the date hereof, among the Company and the Purchasers, in the form of Exhibit A
attached hereto.
set forth in the Registration Rights Agreement and covering the resale by the
Purchasers of the Shares and the Warrant Shares.
regulations promulgated thereunder.
under the Exchange Act.
paid for the Units purchased hereunder as specified below such Purchaser’s name
on the signature page of this Agreement and next to the heading “Subscription
Amount,” in United States dollars and in immediately available funds.
Section 4.11(b).
“Subsidiary” means any subsidiary of the Company as set forth on Schedule 3.1(a)
and shall, where applicable, also include any direct or indirect subsidiary of
the Company formed or acquired after the date hereof.
trading.
Select Market, the New York Stock Exchange, OTCQB or OTCQX (or any successors to
any of the foregoing).
“Transaction Documents” means this Agreement, the Warrants, the Registration
Rights Agreement, the Placement Agency Agreement, all exhibits and schedules
thereto and hereto and any other documents or agreements executed in connection
with the transactions contemplated hereunder.
“Transfer Agent” means Equity Stock Transfer, the current transfer agent of the
Company, with a mailing address of 237 W. 37th Street and a facsimile number of
(347) 584-3644, and any successor transfer agent of the Company.
“Units” “means units of the Company comprising one (1) share of Common Stock and
a Warrant to purchase one (1) share of Common Stock.
on OTCQB or OTCQX, as applicable, (c) if the Common Stock is not then listed or
quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then
reported in the OTC Pink published by OTC Markets Group, Inc. (or a similar
most recent bid price per share of the Common Stock so reported, or (d) in all
other cases, the fair market value of a share of Common Stock as determined by
an independent appraiser selected in good faith by the Purchasers of a majority
in interest of the Securities then outstanding and reasonably acceptable to the
Company, the fees and expenses of which shall be paid by the Company.
Warrants shall be exercisable immediately upon issuance and have a term of
exercise equal to five and one-half (5.5) years, in the form of Exhibit B
attached hereto.
Warrants.
ARTICLE II.
PURCHASE AND SALE
set forth herein, substantially concurrent with the execution and delivery of
this Agreement by the parties hereto, the Company shall sell, and the
Purchasers, severally and not jointly, shall purchase, up to an aggregate of
$7,000,000 of Units. Each Purchaser shall deliver to the Company, via wire
transfer, immediately available funds equal to such Purchaser’s Subscription
Amount as set forth on the signature page hereto executed by such Purchaser, and
the Company shall deliver to each Purchaser its respective Shares and a Warrant,
as determined pursuant to Section 2.2(a), and the Company and each Purchaser
shall deliver the other items set forth in Section 2.2 deliverable at the
Closing. Upon satisfaction of the covenants and conditions set forth in Sections
2.2 and 2.3, the Closing shall occur at the offices of Company Counsel or such
other location as the parties shall mutually agree. All Share prices and
exercise prices set forth herein are subject to automatic adjustment for any
stock split or reverse stock split occurring prior to Closing.
2.2 Deliveries.
(ii) a legal opinion of Company Counsel, substantially in the form of Exhibit C
attached hereto;
(iii) the Lock-Up Agreements;
(iv) a copy of the irrevocable instructions to the Transfer Agent instructing
the Transfer Agent to deliver, on an expedited basis, a certificate evidencing a
number of Shares equal to such Purchaser’s Subscription Amount divided by the
Per Unit Purchase Price, registered in the name of such Purchaser;
(v) a Warrant registered in the name of such Purchaser to purchase up to a
number of shares of Common Stock equal to 100% of the number of Shares purchased
hereunder by such Purchaser, with an exercise price equal to $0.35, subject to
adjustment therein, and a term of five and one-half (5.5) years; and
(vi) the Registration Rights Agreement duly executed by the Company.
delivered to the Company, the following:
(i) this Agreement duly executed by such Purchaser;
(ii) to the Company, such Purchaser’s Subscription Amount by wire transfer to
the account specified in writing by the Company; and
(iii) the Registration Rights Agreement duly executed by such Purchaser.
2.3 Closing Conditions.
(a) The obligations of the Company hereunder in connection with the Closing are
subject to the following conditions being met:
this Agreement.
this Agreement;
Company since the date hereof;
(v) each of the Lock-Up Agreements shall remain in full force and effect; and
(vi) from the date hereof to the Closing Date, trading in the Common Stock shall
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
Disclosure Schedules, which Disclosure Schedules shall be deemed a part hereof
and shall qualify any representation or otherwise made herein to the extent of
the disclosure contained in the corresponding section of the Disclosure
Schedules, the Company hereby makes the following representations and warranties
to each Purchaser as of the date hereof and as of the Closing Date (unless as of
a specific date, in which case they shall be accurate as of such date):
(a) Subsidiaries. All of the direct and indirect subsidiaries of the Company are
the capital stock or other equity interests of each Subsidiary free and clear of
any Liens, and all of the issued and outstanding shares of capital stock of each
of each of this Agreement and the other Transaction Documents by the Company and
Transaction Document to which the Company is a party has been (or upon delivery
will have been) duly executed by the Company and, when delivered in accordance
with the terms hereof and thereof, will constitute the valid and binding
obligation of the Company enforceable against the Company in accordance with its
transactions contemplated hereby and thereby do not and will not: (i) conflict
Effect.
than: (i) the filings required pursuant to Section 4.4 of this Agreement, (ii)
the filing with the Commission pursuant to the Registration Rights Agreement,
(iii) the notice and/or application(s) to each applicable Trading Market for the
issuance and sale of the Securities and the listing of the Shares and Warrant
Shares for trading thereon in the time and manner required thereby, and (iv) the
filing of Form D with the Commission and such filings as are required to be made
under applicable state securities laws (collectively, the “Required Approvals”).
(f) Issuance of the Securities. The Securities are duly authorized and, when
issued and paid for in accordance with the applicable Transaction Documents,
will be duly and validly issued, fully paid and nonassessable, free and clear of
all Liens imposed by the Company other than restrictions on transfer provided
for in the Transaction Documents. The Warrant Shares, when issued in accordance
with the terms of the Transaction Documents, will be validly issued, fully paid
and nonassessable, free and clear of all Liens imposed by the Company other than
restrictions on transfer provided for in the Transaction Documents. The Company
has reserved from its duly authorized capital stock the maximum number of shares
of Common Stock issuable pursuant to this Agreement and the Warrants.
(g) Capitalization. The capitalization of the Company is as set forth on
Schedule 3.1(g), which Schedule 3.1(g) shall also include the number of shares
of Common Stock owned beneficially, and of record, by Affiliates of the Company
as of the date hereof. Except as set forth on Schedule 3.1(g), the Company has
not issued any capital stock since its most recently filed periodic report under
the Exchange Act, other than pursuant to the exercise of employee stock options
under the Company’s stock incentive plans, the issuance of shares of Common
Stock to employees pursuant to the Company’s employee stock purchase plans and
pursuant to the conversion and/or exercise of Common Stock Equivalents
and sale of the Securities or as set forth in Schedule 3.1(g), there are no
Person any right to subscribe for or acquire any shares of Common Stock or the
capital stock of any Subsidiary, or contracts, commitments, understandings or
issue additional shares of Common Stock or Common Stock Equivalents or capital
stock of any Subsidiary. The issuance and sale of the Securities will not
obligate the Company or any Subsidiary to issue shares of Common Stock or other
securities to any Person (other than the Purchasers) and will not result in a
right of any holder of Company securities to adjust the exercise, conversion,
exchange or reset price under any of such securities. There are no outstanding
securities or instruments of the Company or any Subsidiary that contain any
redemption or similar provisions, and there are no contracts, commitments,
understandings or arrangements by which the Company or any Subsidiary is or may
become bound to redeem a security of the Company or such Subsidiary. The Company
does not have any stock appreciation rights or “phantom stock” plans or
agreements or any similar plan or agreement. All of the outstanding shares of
capital stock of the Company are duly authorized, validly issued, fully paid and
any preemptive rights or similar rights to subscribe for or purchase securities.
No further approval or authorization of any stockholder, the Board of Directors
or others is required for the issuance and sale of the Securities. There are no
stockholders agreements, voting agreements or other similar agreements with
respect to the Company’s capital stock to which the Company is a party or, to
the knowledge of the Company, between or among any of the Company’s
stockholders.
(h) SEC Reports; Financial Statements. Except as set forth on Schedule 3.1(h),
the Company has filed all reports, schedules, forms, statements and other
documents required to be filed by the Company under the Securities Act and the
years preceding the date hereof (or such shorter period as the Company was
required by law or regulation to file such material) (the foregoing materials,
including the exhibits thereto and documents incorporated by reference therein,
Reports prior to the expiration of any such extension. As of their respective
of the Securities Act and the Exchange Act, as applicable, and none of the SEC
which they were made, not misleading. The Company has never been an issuer
subject to Rule 144(i) under the Securities Act. The financial statements of the
Company included in the SEC Reports comply in all material respects with
applicable accounting requirements and the rules and regulations of the
Commission with respect thereto as in effect at the time of filing. Such
financial statements have been prepared in accordance with United States
generally accepted accounting principles applied on a consistent basis during
financial statements or the notes thereto and except that unaudited financial
statements may not contain all footnotes required by GAAP, and fairly present in
all material respects the financial position of the Company and its consolidated
Subsidiaries as of and for the dates thereof and the results of operations and
cash flows for the periods then ended, subject, in the case of unaudited
except as set forth on Schedule 3.1(i): (i) there has been no event, occurrence
incurred in the ordinary course of business consistent with past practice and
statements pursuant to GAAP or disclosed in filings made with the Commission,
(iii) the Company has not altered its method of accounting, (iv) the Company has
existing Company stock incentive plans. The Company does not have pending before
the Commission any request for confidential treatment of information. Except for
the issuance of the Securities contemplated by this Agreement or as set forth on
Schedule 3.1(i), no event, liability, fact, circumstance, occurrence or
development has occurred or exists, or is reasonably expected to occur or exist,
with respect to the Company or its Subsidiaries or their respective businesses,
properties, operations, assets or financial condition, that would be required to
(j) Litigation. Except as set forth on Schedule 3.1(j), there is no action,
(federal, state, county, local or foreign) (collectively, an “Action”). None of
the Actions set forth on Schedule 3.1(j) (i) adversely affects or challenges the
legality, validity or enforceability of any of the Transaction Documents or the
officer of the Company or any Subsidiary is, or is now expected to be, in
Material Adverse Effect.
judgment, decree, or order of any court, arbitrator or other governmental
comply could be reasonably expected to have, individually or in the aggregate, a
Material Adverse Effect.
therefor in accordance with GAAP and the payment of which is neither delinquent
nor subject to penalties. Any real property and facilities held under lease by
the Company and the Subsidiaries are held by them under valid, subsisting and
enforceable leases with which the Company and the Subsidiaries are in
compliance.
the date of this Agreement. Neither the Company nor any Subsidiary has received,
since the date of the latest audited financial statements included within the
SEC Reports, a written notice of a claim or otherwise has any knowledge that the
Intellectual Property Rights violate or infringe upon the rights of any Person,
except as could not have or reasonably be expected to not have a Material
Adverse Effect. To the knowledge of the Company, all such Intellectual Property
Rights are enforceable and there is no existing infringement by another Person
of any of the Intellectual Property Rights. The Company and its Subsidiaries
have taken reasonable security measures to protect the secrecy, confidentiality
Material Adverse Effect.
(r) Transactions With Affiliates and Employees. Except as set forth on Schedule
3.1(r), none of the officers or directors of the Company or any Subsidiary and,
excess of $120,000 other than for: (i) payment of salary or consulting fees for
under any stock incentive plan of the Company.
in accordance with management’s general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
specified in the Commission’s rules and forms. The Company’s certifying officers
have evaluated the effectiveness of the disclosure controls and procedures of
the Company and the Subsidiaries as of the end of the period covered by the most
control over financial reporting of the Company or its Subsidiaries.
(t) Certain Fees. Except to the Placement Agent, no brokerage or finder’s fees
or commissions are or will be payable by the Company or any Subsidiary to any
broker, financial advisor or consultant, finder, placement agent, investment
banker, bank or other Person with respect to the transactions contemplated by
the Transaction Documents. The Purchasers shall have no obligation with respect
to any fees or with respect to any claims made by or on behalf of other Persons
for fees of a type contemplated in this Section that may be due in connection
with the transactions contemplated by the Transaction Documents.
(u) Private Placement. Assuming the accuracy of the Purchasers’ representations
Purchasers as contemplated hereby. The issuance and sale of the Securities
hereunder does not contravene the rules and regulations of the Trading Market.
(v) Investment Company. The Company is not, and is not an Affiliate of, and
(w) Registration Rights. Other than each of the Purchasers, no Person has any
right to cause the Company or any Subsidiary to effect a registration under the
(x) Listing and Maintenance Requirements. The Common Stock is registered
taken no action designed to terminate, or which to its knowledge is likely to
have the effect of terminating, the registration of the Common Stock under the
Exchange Act nor has the Company received any notification that the Commission
is contemplating terminating such registration. The Company has not, in the 12
(y) Application of Takeover Protections. The Company and the Board of Directors
(z) Disclosure. Except with respect to the material terms and conditions of the
hereof.
(aa) No Integrated Offering. Assuming the accuracy of the Purchasers’
any such securities under the Securities Act, or (ii) any applicable shareholder
approval provisions of any Trading Market on which any of the securities of the
Company are listed or designated.
(bb) Solvency. Based on the consolidated financial condition of the Company as
proceeds from the sale of the Securities hereunder: (i) the fair saleable value
laws of any jurisdiction within one year from the Closing Date. Schedule 3.1(bb)
sets forth as of the date hereof all outstanding secured and unsecured
Subsidiary has commitments. Neither the Company nor any Subsidiary is in default
with respect to any Indebtedness. For the purposes of this Agreement,
“Indebtedness” means (x) any liabilities for borrowed money or amounts owed in
excess of $50,000 (other than trade accounts payable incurred in the ordinary
course of business), (y) all guaranties, endorsements and other contingent
obligations in respect of indebtedness of others, whether or not the same are or
should be reflected in the Company’s consolidated balance sheet (or the notes
thereto), except guaranties by endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of business; and
(z) the present value of any lease payments in excess of $50,000 due under
leases required to be capitalized in accordance with GAAP.
(cc) Tax Status. Except for matters that would not, individually or in the
(dd) No General Solicitation. Neither the Company nor any Person acting on
behalf of the Company has offered or sold any of the Securities by any form of
general solicitation or general advertising. Assuming the accuracy of the
Purchasers’ representations and warranties under this Agreement, the Company has
offered the Securities for sale only to the Purchasers and certain other
“accredited investors” within the meaning of Rule 501 under the Securities Act.
(ee) Foreign Corrupt Practices. Neither the Company nor any Subsidiary, to the
behalf of the Company or any Subsidiary, has: (i) directly or indirectly, used
aware) which is in violation of law or (iv) violated in any material respect any
provision of FCPA.
(ff) Accountants. The Company’s accounting firm is set forth on Schedule 3.1(ff)
of the Disclosure Schedules. To the knowledge and belief of the Company, such
accounting firm: (i) is a registered public accounting firm as required by the
ending December 31, 2018.
(gg) No Disagreements with Accountants and Lawyers. There are no disagreements
of any kind presently existing, or reasonably anticipated by the Company to
arise, between the Company and the accountants and lawyers formerly or presently
(hh) Acknowledgment Regarding Purchasers’ Purchase of Securities. The Company
(ii) Acknowledgment Regarding Purchaser’s Trading Activity. Anything in this
Sections 3.2(g) and 4.14 herein), it is understood and acknowledged by the
issued by the Company or to hold the Securities for any specified term, (ii)
negatively impact the market price of the Company’s publicly-traded securities,
any such Purchaser is a party, directly or indirectly, may presently have a
“short” position in the Common Stock and (iv) each Purchaser shall not be deemed
to have any affiliation with or control over any arm’s length counter-party in
any “derivative” transaction. The Company further understands and acknowledges
that (y) one or more Purchasers may engage in hedging activities at various
times during the period that the Securities are outstanding, including, without
limitation, during the periods that the value of the Warrant Shares deliverable
with respect to Securities are being determined, and (z) such hedging activities
(if any) could reduce the value of the existing stockholders’ equity interests
in the Company at and after the time that the hedging activities are being
conducted. The Company acknowledges that such aforementioned hedging activities
do not constitute a breach of any of the Transaction Documents.
above, compensation paid to the Placement Agent in connection with the placement
of the Securities.
(kk) Lock-Up Agreements. The Company has signed a Lock-Up Agreement with each of
the Company’s directors and officers.
(ll) Reserved.
(mm) Stock Incentive Plan. Each stock option granted by the Company under the
Company’s stock incentive plan was granted (i) in accordance with the terms of
the Company’s stock incentive plan and (ii) with an exercise price at least
equal to the fair market value of the Common Stock on the date such stock option
would be considered granted under GAAP and applicable law. No stock option
granted under the Company’s stock incentive plan has been backdated. The Company
has not knowingly granted, and there is no and has been no Company policy or
practice to knowingly grant, stock options prior to, or otherwise knowingly
coordinate the grant of stock options with, the release or other public
announcement of material information regarding the Company or its Subsidiaries
or their financial results or prospects.
(nn) Office of Foreign Assets Control. Neither the Company nor any Subsidiary
(oo) U.S. Real Property Holding Corporation. The Company is not and has never
(pp) Bank Holding Company Act. Neither the Company nor any of its Subsidiaries
(qq) Money Laundering. The operations of the Company and its Subsidiaries are
(rr) No Disqualification Events. With respect to the Securities to be offered
and sold hereunder in reliance on Rule 506 under the Securities Act, none of the
Company, any of its predecessors, any affiliated issuer, any director, executive
officer, other officer of the Company participating in the offering hereunder,
any beneficial owner of 20% or more of the Company’s outstanding voting equity
securities, calculated on the basis of voting power, nor any promoter (as that
term is defined in Rule 405 under the Securities Act) connected with the Company
in any capacity at the time of sale (each, an “Issuer Covered Person” and,
together, “Issuer Covered Persons”) is subject to any of the “Bad Actor”
provided thereunder.
(ss) Other Covered Persons. Other than the Placement Agent, the Company is not
(tt) Notice of Disqualification Events. The Company will notify the Purchasers
Disqualification Event relating to any Issuer Covered Person.
(a) Organization; Authority. Such Purchaser is either an individual or an entity
duly incorporated or formed, validly existing and in good standing under the
(b) Own Account. Such Purchaser understands that the Securities are “restricted
securities” and have not been registered under the Securities Act or any
applicable state securities law and is acquiring the Securities as principal for
Securities or any part thereof in violation of the Securities Act or any
applicable state securities law, has no present intention of distributing any of
such Securities in violation of the Securities Act or any applicable state
securities law and has no direct or indirect arrangement or understandings with
any other persons to distribute or regarding the distribution of such Securities
in violation of the Securities Act or any applicable state securities law (this
representation and warranty not limiting such Purchaser’s right to sell the
Securities pursuant to the Registration Statement or otherwise in compliance
with applicable federal and state securities laws). Such Purchaser is acquiring
the Securities hereunder in the ordinary course of its business.
(c) Purchaser Status. At the time such Purchaser was offered the Securities, it
Act.
(d) Experience of Such Purchaser. Such Purchaser, either alone or together with
its representatives, has such knowledge, sophistication and experience in
(e) General Solicitation. Such Purchaser is not purchasing the Securities as a
result of any advertisement, article, notice or other communication regarding
broadcast over television or radio or presented at any seminar or, to such
Purchaser’s knowledge, any other general solicitation or general advertisement.
(f) Access to Information. Such Purchaser acknowledges that it has had the
schedules thereto) and the SEC Reports and has been afforded (i) the opportunity
to ask such questions as it has deemed necessary of, and to receive answers
from, representatives of the Company concerning the terms and conditions of the
offering of the Shares and the merits and risks of investing in the Shares; (ii)
access to information about the Company and its financial condition, results of
operations, business, properties, management and prospects sufficient to enable
it to evaluate its investment; and (iii) the opportunity to obtain such
additional information that the Company possesses or can acquire without
unreasonable effort or expense that is necessary to make an informed investment
decision with respect to the investment. Such Purchaser acknowledges and agrees
that neither the Placement Agent nor any Affiliate of the Placement Agent has
provided such Purchaser with any information or advice with respect to the
Securities nor is such information or advice necessary or desired. Neither the
Placement Agent nor any Affiliate has made or makes any representation as to the
Purchaser.
(g) Certain Transactions and Confidentiality. Other than consummating the
transactions contemplated hereunder, such Purchaser has not directly or
understanding with such Purchaser, executed any purchases or sales, including
Short Sales, of the securities of the Company during the period commencing as of
the time that such Purchaser first received a term sheet (written or oral) from
the Company or any other Person representing the Company setting forth the
material terms of the transactions contemplated hereunder and ending immediately
party to this Agreement or to such Purchaser’s representatives, including,
without limitation, its officers, directors, employees, partners, legal and
other advisors, agents and Affiliates, such Purchaser has maintained the
confidentiality of all disclosures made to it in connection with this
Notwithstanding the foregoing, for avoidance of doubt, nothing contained herein
shall constitute a representation or warranty, or preclude any actions, with
respect to the identification of the availability of, or securing of, available
shares to borrow in order to effect Short Sales or similar transactions in the
future.
ARTICLE IV.
4.1 Transfer Restrictions.
(a) The Securities may only be disposed of in compliance with state and federal
securities laws. In connection with any transfer of Securities other than
pursuant to an effective registration statement or Rule 144, to the Company or
to an Affiliate of a Purchaser or in connection with a pledge as contemplated in
Section 4.1(b), the Company may require the transferor thereof to provide to the
acceptable to the Company, the form and substance of which opinion shall be
reasonably satisfactory to the Company, to the effect that such transfer does
not require registration of such transferred Securities under the Securities
Act. As a condition of transfer, any such transferee shall agree in writing to
be bound by the terms of this Agreement and the Registration Rights Agreement
and shall have the rights and obligations of a Purchaser under this Agreement
and the Registration Rights Agreement.
Section 4.1, of a legend on any of the Securities in the following form:
THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
APPLICABLE STATE SECURITIES LAWS. THIS SECURITY MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN
WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE
501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.
notice shall be required of such pledge. At the appropriate Purchaser’s expense,
the Company will execute and deliver such reasonable documentation as a pledgee
or secured party of Securities may reasonably request in connection with a
(c) Certificates evidencing the Shares and the Warrant Shares shall not contain
any legend (including the legend set forth in Section 4.1(b) hereof), (i) while
a registration statement (including the Registration Statement) covering the
resale of such security is effective under the Securities Act, (ii) following
any sale of such Shares or Warrant Shares pursuant to Rule 144 (assuming
cashless exercise of the Warrants), (iii) if such Shares or Warrant Shares are
eligible for sale under Rule 144 (assuming cashless exercise of the Warrants)
without volume or manner-of-sale restrictions, or (iv) if such legend is not
interpretations and pronouncements issued by the staff of the Commission). The
Company shall, at its expense, cause its counsel to issue a legal opinion to the
Transfer Agent and/or the Purchasers promptly after the Effective Date if
required by the Transfer Agent to effect the removal of the legend hereunder or
if requested by a Purchaser, and shall instruct its transfer agent to remove the
legend without requiring a medallion guarantee and provide such indemnity to its
transfer agent as the transfer agent may require to waive any medallion
guarantee requirement. If all or any portion of a Warrant is exercised at a time
when there is an effective registration statement to cover the resale of the
Warrant Shares, or if such Warrant Shares may be sold under Rule 144 (assuming
cashless exercise of the Warrants) or if such legend is not otherwise required
under applicable requirements of the Securities Act (including judicial
following the Effective Date or at such time as such legend is no longer
required under this Section 4.1(c), it will, no later than the earlier of (i)
two (2) Trading Days and (ii) the number of Trading Days comprising the Standard
Settlement Period (as defined below), in each case following the delivery by a
Purchaser to the Company or the Transfer Agent of a certificate representing
(such earlier date, the “Legend Removal Date”), deliver or cause to be delivered
to such Purchaser the Shares or Warrant Shares free from all restrictive and
other legends. The Company may not make any notation on its records or give
instructions to the Transfer Agent that enlarge the restrictions on transfer set
forth in this Section 4. The Company shall cause the Securities subject to
legend removal hereunder to be transmitted by the Transfer Agent to the
Purchaser by crediting the account of the Purchaser’s prime broker with the
Depository Trust Company System as directed by such Purchaser. As used herein,
a number of Trading Days, on the Company’s primary Trading Market with respect
to the Common Stock as in effect on the date of delivery of a stock certificate
for removal of legends.
pay to a Purchaser, in cash, the greater of (i) as partial liquidated damages
and not as a penalty, for each $1,000 of Shares and Warrant Shares (based on the
VWAP of the Common Stock on the date such Securities are submitted to the
Transfer Agent) delivered for removal of the restrictive legend and subject to
Section 4.1(c), $10 per Trading Day (increasing to $20 per Trading Day five (5)
Trading Days after such damages have begun to accrue) for each Trading Day after
the Legend Removal Date until such certificate is delivered without a legend and
(ii) if the Company fails to (i) issue and deliver (or cause to be delivered) to
a Purchaser by the Legend Removal Date a certificate representing the Securities
and other legends or (ii) if after the Legend Removal Date such Purchaser
deliver in satisfaction of a sale by such Purchaser of all or any portion of the
number of shares of Common Stock, or a sale of a number of shares of Common
Stock equal to all or any portion of the number of shares of Common Stock that
such Purchaser anticipated receiving from the Company without any restrictive
legend, then, an amount equal to the excess of such Purchaser’s total purchase
price (including brokerage commissions and other out-of-pocket expenses, if any)
for the shares of Common Stock so purchased (including brokerage commissions and
other out-of-pocket expenses, if any) (the “Buy-In Price”) over the product of
(A) such number of Shares and Warrant Shares that the Company was required to
deliver to such Purchaser by the Legend Removal Date multiplied by (B) the
lowest closing sale price of the Common Stock on any Trading Day during the
period commencing on the date of the delivery by such Purchaser to the Company
of the applicable Shares and Warrant Shares (as the case may be) and ending on
the date of such delivery and payment under this clause (ii).
(e) Each Purchaser, severally and not jointly with the other Purchasers, agrees
that such Purchaser may only sell any Securities pursuant to either the
Securities as set forth in this Section 4.1 is predicated upon the Company’s
4.2 Furnishing of Information; Public Information.
(a) If the Common Stock is not registered under Section 12(b) or 12(g) of the
Exchange Act on the date hereof, the Company shall cause the Common Stock to be
registered under Section 12(g) of the Exchange Act on or before the 60th
calendar day following the date hereof. Until the earliest of the time that (i)
no Purchaser owns Securities or (ii) the Warrants have expired, the Company
covenants to maintain the registration of the Common Stock under Section 12(b)
or 12(g) of the Exchange Act and to timely file (or obtain extensions in respect
thereof and file within the applicable grace period) all reports required to be
filed by the Company after the date hereof pursuant to the Exchange Act even if
the Company is not then subject to the reporting requirements of the Exchange
Act.
(b) At any time during the period commencing from the six (6) month anniversary
of the date hereof and ending at such time that all of the Securities may be
then if the Company (i) shall fail for any reason to satisfy the current public
Company shall fail to satisfy any condition set forth in Rule 144(i)(2) unless,
at the time of any of the events set forth in clauses (i) or (ii) above, the
Company has an effective Registration Statement registering for resale all of
the Registrable Securities (as defined in the Registration Rights Agreement) (a
reduction of its ability to sell the Securities, an amount in cash equal to two
percent (2.0%) of the aggregate Subscription Amount of such Purchaser’s
Securities remaining to be sold on the day of a Public Information Failure and
on every thirtieth (30th) day (pro-rated for periods totaling less than thirty
days) thereafter until the earlier of (a) the date such Public Information
Failure is cured, and (b) such time that such public information is no longer
required for the Purchasers to transfer the Shares and Warrant Shares pursuant
this Section 4.2(b) are referred to herein as “Public Information Failure
cured. In the event the Company fails to make Public Information Failure
Payments in a timely manner, such Public Information Failure Payments shall bear
interest at the rate of 1.5% per month (prorated for partial months) until paid
in full. Nothing herein shall limit such Purchaser’s right to pursue actual
damages for the Public Information Failure, and such Purchaser shall have the
Act of the sale of the Securities or that would be integrated with the offer or
sale of the Securities for purposes of the rules and regulations of any Trading
Market such that it would require shareholder approval prior to the closing of
such other transaction unless shareholder approval is obtained before the
closing of such subsequent transaction.
4.4 Securities Laws Disclosure; Publicity. The Company shall (a) by 9:00 a.m.
(New York City time) on the Trading Day immediately following the date hereof,
issue a press release disclosing the material terms of the transactions
contemplated hereby, and (b) file a Current Report on Form 8-K disclosing the
material terms of the transactions contemplated hereby, including the
Transaction Documents as exhibits thereto, with the Commission within the time
required by the Exchange Act. From and after the issuance of such press release,
by the Transaction Documents. In addition, effective upon the issuance of such
press release, the Company acknowledges and agrees that any and all
confidentiality or similar obligations under any agreement, whether written or
Company, with respect to any press release of any Purchaser, or without the
prior consent of each Purchaser, with respect to any press release of the
communication. Notwithstanding the foregoing, the Company shall not publicly
disclose the name of any Purchaser, or include the name of any Purchaser in any
filing with the Commission or any regulatory agency or Trading Market, without
the prior written consent of such Purchaser, except: (a) as required by federal
securities law in connection with (i) any registration statement contemplated by
the Registration Rights Agreement and (ii) the filing of final Transaction
Documents with the Commission and (b) to the extent such disclosure is required
by law or Trading Market regulations, in which case the Company shall provide
the Purchasers with prior notice of such disclosure permitted under this clause
(b).
agrees that such Purchaser shall not have any duty of confidentiality to
regulations.
4.8 Indemnification of Purchasers. Subject to the provisions of this Section
4.8, the Company will indemnify and hold each Purchaser and its directors,
Purchaser Parties, with respect to any of the transactions contemplated by the
Documents or any agreements or understandings such Purchaser Parties may have
with any such stockholder or any violations by such Purchaser Parties of state
or federal securities laws or any conduct by such Purchaser Parties which
constitutes fraud, gross negligence, willful misconduct or malfeasance). If any
action shall be brought against any Purchaser Party in respect of which
indemnity may be sought pursuant to this Agreement, such Purchaser Party shall
employ separate counsel in any such action and participate in the defense
such Purchaser Party except to the extent that (i) the employment thereof has
been specifically authorized by the Company in writing, (ii) the Company has
counsel or (iii) in such action there is, in the reasonable opinion of counsel,
a material conflict on any material issue between the position of the Company
and the position of such Purchaser Party, in which case the Company shall be
this Agreement (y) for any settlement by such Purchaser Party effected without
the Company’s prior written consent, which shall not be unreasonably withheld or
or liability is attributable to such Purchaser Party’s breach of any of the
indemnification required by this Section 4.8 shall be made by periodic payments
and the Company shall continue to reserve and keep available at all times, free
of preemptive rights, a sufficient number of shares of Common Stock for the
4.10 Listing of Common Stock. The Company hereby agrees to use best efforts to
maintain the listing or quotation of the Common Stock on the Trading Market on
which it is currently listed, and concurrently with the Closing, the Company
shall apply to list or quote all of the Common Shares and Warrant Shares on such
Trading Market and promptly secure the listing of all of the Common Shares and
Company applies to have the Common Stock traded on any other Trading Market, it
will then include in such application all of the Common Shares and Warrant
Shares and will take such other action as is necessary to cause all of the
Common Shares and Warrant Shares to be listed or quoted on such other Trading
Market as promptly as possible. The Company will then take all action reasonably
necessary to continue the listing or quotation and trading of its Common Stock
on a Trading Market and will comply in all respects with the Company’s
reporting, filing and other obligations under the bylaws or rules of the Trading
Market. The Company shall maintain the eligibility of the Common Stock for
clearing corporation, including, without limitation, by timely payment of fees
to the Depository Trust Company or such other established clearing corporation
in connection with such electronic transfer.
4.11 Participation in Future Financing.
(a) From the date hereof until the date that is the twenty four (24) month
anniversary of the Effective Date, upon any issuance by the Company or any of
its Subsidiaries of Common Stock, Common Stock Equivalents for cash
consideration, Indebtedness or a combination of units hereof (a “Subsequent
Financing”), the Purchasers shall have the right to participate in up to an
amount of the Subsequent Financing equal to an aggregate of 35% of the
Subsequent Financing (the “Participation Maximum”) on the same terms, conditions
and price provided for in the Subsequent Financing.
(b) At least three (3) Trading Days prior to the closing of the Subsequent
Financing, the Company shall deliver to each Purchaser a written notice of its
intention to effect a Subsequent Financing (a “Subsequent Financing Notice”),
which notice shall describe in reasonable detail the proposed terms of such
Subsequent Financing, the amount of proceeds intended to be raised thereunder
and the Person or Persons through or with whom such Subsequent Financing is
proposed to be effected and shall include a term sheet or similar document
relating thereto as an attachment.
(c) Any Purchaser desiring to participate in such Subsequent Financing must
time) on the second (2nd) Trading Day after all of the Purchasers have received
a Subsequent Financing Notice that such Purchaser is willing to participate in
the Subsequent Financing, the amount of such Purchaser’s participation, and
representing and warranting that such Purchaser has such funds ready, willing,
and available for investment on the terms set forth in the Subsequent Financing
Notice. If the Company receives no such notice from a Purchaser as of such
second (2nd) Trading Day, such Purchaser shall be deemed to have notified the
Company that it does not elect to participate.
(d) If by 5:30 p.m. (New York City time) on the second (2nd) Trading Day after
all of the Purchasers have received a Subsequent Financing Notice, notifications
by the Purchasers of their willingness to participate in the Subsequent
Financing (or to cause their designees to participate) is, in the aggregate,
less than the total amount of the Subsequent Financing, then the Company may
effect the remaining portion of such Subsequent Financing on the terms and with
the Persons set forth in the Subsequent Financing Notice.
all of the Purchasers have received a Subsequent Financing Notice, the Company
receives responses to a Subsequent Financing Notice from Purchasers seeking to
purchase more than the aggregate amount of the Participation Maximum, each such
Purchaser shall have the right to purchase its Pro Rata Portion (as defined
below) of the Participation Maximum. “Pro Rata Portion” means the ratio of (x)
the Subscription Amount of Securities purchased on the Closing Date by a
Purchaser participating under this Section 4.11 and (y) the sum of the aggregate
Purchasers participating under this Section 4.11.
(f) The Company must provide the Purchasers with a second Subsequent Financing
above in this Section 4.11, if the Subsequent Financing subject to the initial
forth in such Subsequent Financing Notice within five (5) Trading Days after the
date of the initial Subsequent Financing Notice.
(g) The Company and each Purchaser agree that if any Purchaser elects to
participate in the Subsequent Financing, the transaction documents related to
the Subsequent Financing shall not include any term or provision whereby such
Purchaser shall be required to agree to any restrictions on trading as to any of
the Securities purchased hereunder or be required to consent to any amendment to
or termination of, or grant any waiver, release or the like under or in
connection with, this Agreement, without the prior written consent of such
Purchaser.
(h) Notwithstanding anything to the contrary in this Section 4.11 and unless
information, by the fifth (5th) Business Day following delivery of the
Subsequent Financing Notice. If by such fifth (5th) Business Day, no public
Subsidiaries.
(i) Notwithstanding the foregoing, this Section 4.11 shall not apply in respect
of an Exempt Issuance.
4.12 Subsequent Equity Sales; Registration Statements.
(a) From the date hereof until the earliest of (i) two hundred and seventy (270)
days after the Effective Date, (ii) three hundred and sixty-five (365) days from
the Closing Date, and (iii) one hundred and twenty (120) days after the listing
of all of the Shares and Warrant Shares on a National Exchange, without the
consent of the Purchasers that purchased at least a majority of the Shares
purchased hereunder, neither the Company nor any Subsidiary shall issue, enter
into any agreement to issue or announce the issuance or proposed issuance of any
shares of Common Stock or Common Stock Equivalents, or file any registration
statement covering the issuance or resale of any shares of Common Stock or
Common Stock Equivalents.
(b) From the date hereof until such time as no Purchaser holds any of the
Warrants, the Company shall be prohibited from effecting or entering into an
agreement to effect any issuance by the Company or any of its Subsidiaries of
Common Stock or Common Stock Equivalents (or a combination of units thereof)
involving a Variable Rate Transaction. “Variable Rate Transaction” means a
transaction in which the Company (i) issues or sells any debt or equity
securities that are convertible into, exchangeable or exercisable for, or
include the right to receive, additional shares of Common Stock either (A) at a
upon, and/or varies with, the trading prices of or quotations for the shares of
securities or (B) with a conversion, exercise or exchange price that is subject
equity security or upon the occurrence of specified or contingent events
the Common Stock or (ii) enters into, or effects any transaction under, any
agreement, including, but not limited to, an equity line of credit, an
“at-the-market” offering or similar agreement, whereby the Company may issue
securities at a future determined price. Any Purchaser shall be entitled to
obtain injunctive relief against the Company to preclude any such issuance,
(c) Notwithstanding the foregoing, clause (a) of this Section 4.12 shall not
apply in respect of an Exempt Issuance, except that no Variable Rate Transaction
shall be an Exempt Issuance.
(d) If the VWAP of the Common Stock exceeds $1.00 (as adjusted for reverse and
transaction of the Common Stock that occurs after the date of this Agreement)
for five (5) or more consecutive Trading Days, clause (a) of this Section 4.12
shall terminate and be of no further force and effect.
4.13 Equal Treatment of Purchasers. No consideration (including any modification
of this Agreement) shall be offered or paid to any Person to amend or consent to
a waiver or modification of any provision of this Agreement unless the same
consideration is also offered to all of the parties to this Agreement. For
clarification purposes, this provision constitutes a separate right granted to
each Purchaser by the Company and negotiated separately by each Purchaser, and
is intended for the Company to treat the Purchasers as a class and shall not in
4.14 Certain Transactions and Confidentiality. Each Purchaser, severally and not
jointly with the other Purchasers, covenants that neither it, nor any Affiliate
purchases or sales, including Short Sales, of any of the Company’s securities
4.4. Each Purchaser, severally and not jointly with the other Purchasers,
release as described in Section 4.4, such Purchaser will maintain the
Notwithstanding the foregoing, and notwithstanding anything contained in this
announced pursuant to the initial press release as described in Section 4.4,
release as described in Section 4.4 and (iii) no Purchaser shall have any duty
of confidentiality or duty not to trade in the securities of the Company to the
described in Section 4.4. Notwithstanding the foregoing, in the case of a
4.15 Form D; Blue Sky Filings. The Company shall timely file a Form D with
thereof, promptly upon request of any Purchaser. The Company shall take such
an exemption for, or to qualify the Securities for, sale to the Purchasers at
of any Purchaser.
4.16 Capital Changes. Until the one year anniversary of the Effective Date, the
a majority in interest of the Shares, except for the reverse stock split
previously approved by the Company’s stockholders.
4.17 Acknowledgment of Dilution. The Company acknowledges that the issuance of
the Securities may result in dilution of the outstanding shares of Common Stock,
including, without limitation, its obligation to issue the Shares and Warrant
Shares pursuant to the Transaction Documents, are unconditional and absolute and
not subject to any right of set off, counterclaim, delay or reduction,
regardless of the effect of any such dilution or any claim the Company may have
against any Purchaser and regardless of the dilutive effect that such issuance
may have on the ownership of the other stockholders of the Company.
4.18 Application for Listing on Exchange. The Company shall submit an
application to have the Company’s Common Stock listed on a National Exchange
within forty-five (45) days of the Closing Date, and shall use its reasonable
best efforts to have the Shares and Warrant Shares listed on such National
Exchange as soon as practicable following the submission of such application.
4.19 Lock-Up. The Company shall not amend, modify, waive or terminate any
provision of any of the Lock-Up Agreements except to extend the term of the
lock-up period and shall enforce the provisions of each Lock-Up Agreement in
accordance with its terms. If any officer or director that is a party to a
Lock-Up Agreement breaches any provision of a Lock-Up Agreement, the Company
shall promptly use its best efforts to seek specific performance of the terms of
such Lock-Up Agreement.
ARTICLE V.
MISCELLANEOUS
the other parties, if the Closing has not been consummated on or before five (5)
Trading Days following the date hereof; provided, however, that such termination
will not affect the right of any party to sue for any breach by any other party
(or parties).
5.2 Fees and Expenses. At the Closing, the Company has agreed to reimburse
Empery Tax Efficient, LP (“Empery”) the non-accountable sum of $25,000.00 for
its legal fees and expenses, $10,000.00 of which has been paid prior to the
Closing. Accordingly, in lieu of the foregoing payments, the aggregate amount
that Empery is to pay for the Securities at the Closing shall be reduced by
$15,000.00 in lieu thereof. Except as expressly set forth in the Transaction
schedules thereto, contain the entire understanding of the parties with respect
to the subject matter hereof and thereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.
email attachment as set forth on the signature pages attached hereto at or prior
to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day
after the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile number or email attachment as set forth on the
overnight courier service or (d) upon actual receipt by the party to whom such
notice is required to be given. The address for such notices and communications
shall be as set forth on the signature pages attached hereto. To the extent that
any notice provided pursuant to any Transaction Document constitutes, or
contains material, non-public information regarding the Company or any of the
amendment, by the Company and the Purchasers holding at least a majority in
interest of the Shares then outstanding or, in the case of a waiver, by the
party against whom enforcement of any such waived provision is sought; provided,
that if any amendment, modification or waiver disproportionately and adversely
impacts a Purchaser (or group of Purchasers), the consent of such
disproportionately impacted Purchaser (or group of Purchasers) shall also be
required. No waiver of any default with respect to any provision, condition or
right.
provisions hereof.
“Purchasers.”
5.8 No Third-Party Beneficiaries. The Placement Agent shall be the third-party
hereto and the representations and warranties of the Purchasers in Section 3.2.
This Agreement is intended for the benefit of the parties hereto and their
respective successors and permitted assigns and is not for the benefit of, nor
set forth in Section 4.8 and this Section 5.8.
process in any other manner permitted by law. If any party hereto shall commence
an Action or Proceeding to enforce any provisions of the Transaction Documents,
Action or Proceeding.
5.13 Rescission and Withdrawal Right. Notwithstanding anything to the contrary
5.14 Replacement of Securities. If any certificate or instrument evidencing any
5.17 Independent Nature of Purchasers’ Obligations and Rights. The obligations
other Transaction Document, and no action taken by any Purchaser pursuant hereof
and enforce its rights, including, without limitation, the rights arising out of
Placement Agent Counsel. The Placement Agent Counsel does not represent any of
the Purchasers and only represents the Placement Agent. The Company has elected
to provide all Purchasers with the same terms and Transaction Documents for the
convenience of the Company and not because it was required or requested to do so
by any of the Purchasers. It is expressly understood and agreed that each
provision contained in this Agreement and in each other Transaction Document is
between the Company and a Purchaser, solely, and not between the Company and the
Purchasers collectively and not between and among the Purchasers.
5.18 Liquidated Damages. The Company’s obligations to pay any partial liquidated
TRIAL BY JURY.
QUEST SOLUTION, INC. Address for Notice: By: Fax: Name: Shai S.
Lustgarten, Chief Executive Officer Title: With a copy to
(which shall not constitute notice):
SIGNATURE PAGE FOR PURCHASERS FOLLOWS]
[PURCHASER SIGNATURE PAGES TO QUEST SOLUTION, INC.
SECURITIES PURCHASE AGREEMENT]
__________________________________
Name of Authorized Signatory:
____________________________________________________
Title of Authorized Signatory:
_____________________________________________________
Email Address of Authorized Signatory:
______________________________________________
_____________________________________________
Address for Delivery of Securities to Purchaser (if not same as address for
notice):
In accordance with Section 2(e) of the Warrant, the applicable Beneficial
Ownership Limitation of the Purchaser shall be: _____ 4.99% _____9.99%
Units:
Common Stock: _________________
Warrant Shares: _________________
EIN Number: _______________________
SCHEDULE 3.1(a)
SUBSIDIARIES OF THE COMPANY
● HTS Image Processing, Inc. ● Quest Marketing, Inc. ● HTS
(USA), Inc. ● Teamtronics LTD
SCHEDULE 3.1(g)
CAPITALIZATION OF THE COMPANY
As of February 28, 2019, Quest Solution, Inc.’s (“Quest” or the “Company”)
authorized capitalization consisted of 200,000,000 shares of Common Stock, of
which 71,424,614 are issued and outstanding, and 25,000,000 shares of Preferred
Stock, of which 4,828,530 shares of Series C Preferred Stock are issued and
outstanding.
As of February 28, 2019, there are 6,550,000 shares issuable upon exercise of
warrants with a weighted average exercise price of $0.21 per share outstanding.
As of February 28, 2019, there are 23,601,000 shares issuable upon exercise of
options with a weighted average exercise price of $0.238 per share outstanding.
Since the filing of the Company’s most recent filed periodic report on November
19, 2018, the Company has issued a total of 300,000 shares of its common stock
to two unrelated consulting companies.
Pursuant to the purchase agreement entered into by and between the Company,
Walefar Investments, Ltd. (“Walefar”), and Campbeltown Consulting, Ltd.,
(“Campbeltown”), dated October 5, 2018 (the “HTS Purchase Agreement”), Quest
issued to Walefar and Campbeltown a 12 month convertible promissory note with a
principal amount of $700,000 and an interest rate of six percent (6%) per annum,
where Walefar and Campbeltown received $350,000 each (the “Note”). The Note also
provides the Walefar and Campbeltown the right to convert all or any portion of
the then outstanding and unpaid principal amount and interest into fully paid
and non-assessable shares of the Company’s common stock at a conversion price of
$0.236 per share.
SCHEDULE 3.1(h)
LATE FILINGS
The Company was unable to file the following documents on a timely basis:
● Annual Report on Form 10-K for the fiscal year ended December 31, 2017
● The Company’s Current Report on Form 8-K/A filed on December 24, 2018 was
due on December 21, 2018.
All of the above listed reports were filed as soon as practicable by the
Company.
SCHEDULE 3.1(i)
MATERIAL CHANGES; UNDISCLOSED EVENTS, LIABLITITIES OR DEVELOPMENTS
Pursuant to the HTS Purchase Agreement, the Company issued to Walefar and
Campbeltown a 12 month convertible promissory note with a principal amount of
$700,000 and an interest rate of six percent (6%) per annum, where Walefar and
Campbeltown received $350,000 each (the “Note”). The Note also provides the
Walefar and Campbeltown the right to convert all or any portion of the then
outstanding and unpaid principal amount and interest into fully paid and
Pursuant to the Company’s consulting agreement with Carlos J. Nissensohn, the
Company issued to Mr. Nissensohn 1,500,000 warrants to buy shares of common
stock of the Company at an exercise price of $0.11 per share.
SCHEDULE 3.1(j)
LITIGATION
A former employee of the Company’s subsidiary, HTS (USA) Inc. filed a complaint
in California against HTS (USA) Inc., Shai Lustgarten, the Company’s CEO, and
Benjamin Kemper, the Company’s former CFO, related to his employment at HTS
(USA) Inc. The lawsuit is in the discovery stage. The Company believes that any
negative result from the aforementioned lawsuit would not have a material
adverse effect.
SCHEDULE 3.1(r)
TRANSACTIONS WITH AFFILIATES AND EMPLOYEES
On August 2, 2017, the Company entered into a consulting agreement with Carlos
J. Nissensohn, a family member of a director of the Company. The terms and
condition of the contract are as follows:
● 24-month term with 90 day termination notice by the Company ● A
monthly fee of $15,000 and a one-time signatory fee of 600,000 restricted shares
● 1,500,000 warrants to buy shares at $0.11 having a four year life and
a vesting period of 12 months in 4 quarterly and equal installments, subject to
Mr. Nissensohn’s continuous service to the Company ● In case the Company
procures debt financing during the term of this agreement, without any equity
component, Mr. Nissensohn shall be entitled to 3% of the gross funds raised,
however, if the Company is required to pay a success fee to another external
entity, then Mr. Nissensohn shall be entitled to only 2% of the gross funds
raised ● In addition to the above, in the event of an equity financing
resulting in gross proceeds of at least $3 million to the Company within 24
months of the date the contract, Mr. Nissensohn shall further be entitled to
certain warrants to be granted by the Company which upon their exercise pursuant
to their terms, Mr. Nissensohn shall be entitled to receive shares which
represent 3% of the issued share capital immediately prior to the consummation
of such investment. The warrants will carry an exercise price per warrant/share
representing 100% of the closing price per share as closed in the equity
financing. This section and the issue of the warrant are subject to the approval
of the Board of Directors of the Company. However, if the Board does not approve
the issuance of warrants; then Mr. Nissensohn will be entitled to a fee with the
equivalent value based on a Black Scholes valuation ● In addition to the
above, Mr. Nissensohn will be entitled to a $50,000 onetime payment which shall
be paid on the first day that our shares become traded on the Nasdaq or NYSE
stock markets within 24 months of the date of the contract ● In addition
to the aforementioned, in the event that Company shall close any M&A transaction
with a third party target, Mr. Nissensohn shall be entitled to a success fee in
the amount equal to 3% of the total transaction price, in any combination of
cash and shares that will be determined by the Company.
Pursuant to the HTS Purchase Agreement as described in Schedule 3.1(g) and (i),
the Company purchased 100% of the capital stock of HTS from Walefar and
Campbeltown. As consideration, the Company (i) issued to Walefar and Campbeltown
22,452,954 shares of the Company’s common stock, having a value of $5,298,897
based on the average closing price of the common stock for the 20 days’
preceding the agreement (the “Per Share Value”), (ii) cash in the amount of
$300,000, and (iii) a 12 month convertible promissory note with a principal
amount of $700,000 and an interest rate of six percent (6%) per year (the
“Note”). The Note also provides the Sellers the right to convert all or any
portion of the then outstanding and unpaid principal amount and interest into
fully paid and non-assessable shares of the Company’s common stock at a
conversion price of $0.236. The agreement constitutes a “related party
transaction” because of Company director Shai Lustgarten’s position as Chief
Executive Officer of HTS and stock ownership in HTS. Additionally, Campbeltown
is a “related party” because Carlos Jaime Nissenson, a beneficial owner of
Campbeltown, is a consultant to the Company, a principal stockholder of the
Company, and father of Company director Neev Nissenson. Carlos Jaime Nissenson
is also a stockholder and director of HTS. Pursuant to the agreement, Shai
Lustgarten received 11,226,477 shares of the Company’s common stock and Carlos
Jaime Nissenson received 11,226,477 shares of the Company’s common stock.
SCHEDULE 3.1(bb)
Indebtedness
The company owes the following amounts to the following entities/persons:
Creditor Amount Owed Scansource Inc. $8,340,465 David Marin $1,100,000
Kurt Thomet $687,500 George Zicman $165,000 Campbeltown Consulting Ltd.
$350,000 Walefar Investments Ltd. $350,000 Certus $1,050,000 Azaidian
Capital $139,219 Total $12,182,184
SCHEDULE 3.1(ff)
ACCOUNTANTS
RBSM, LLP
SCHEDULE 4.7
USE OF PROCEEDS
All net proceeds will be allocated to working capital.
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): December 20, 2012 Vu1 CORPORATION (Exact Name of Registrant as specified in charter) California (State or other jurisdiction of incorporation) 000-21864 84-0672714 (Commission File Number) (IRS Employer Identification No.) 1 Liberty Plaza, 23rd Floor,New York, NY (Address of principal executive offices) (Zip Code) (855) 881-2852 (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 of (17 CFR 240.14d-2(b)) Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act of (17 CFR 240.13e-4(c)) Item 3.02. Unregistered Sales of Equity Securities. On December 20, 2012, we completed a private placement to accredited investors of 525,000 restricted shares of our common stock, at a purchase price of $0.80 per share, for gross proceeds of $420,000.As part of the private placement, the investors were issued three-year warrants to purchase 525,000 shares of our common stock, at an exercise price of $1.50 per share. The net proceeds from the private placement, following the payment of offering-related expenses, are being used by us for purchases of inventory and for working capital and other general corporate purposes. In addition, on December 20, 2012, we entered into a settlement and release agreement with a vendor and issued 250,000 shares of our restricted common stock and three-year warrants to purchase 250,000 shares of our common stock at an exercise price of $1.50 per share, in settlement of $250,000 of trade accounts payable. Also on December 20, 2012, we entered into a settlement and release agreement with another vendor and issued 64,256 shares of our restricted common stock in settlement of $64,256 of trade accounts payable. Copies of the definitive agreements relating to the issuance and sale of the common stock and warrants are filed herewith as Exhibits 4.1 and 10.1 and are incorporated herein by reference.The foregoing summary descriptions of the definitive agreements are qualified in their entirety by reference to the full texts of each of such exhibits. The above described common stock, warrants and common stock issuable upon exercise of the warrants have not been registered under the Securities Act of 1933, and were issued and sold in reliance upon the exemption from registration contained in Section 4(2) of the Securities Act and Regulation D promulgated thereunder.These securities may not be offered or sold in the United States in the absence of an effective registration statement or exemption from the registration requirements under the Securities Act. During 2012 (prior to the sales above), we issued a total of 474,632 shares of our restricted common stock and three-year warrants to purchase 474,632 shares of our common stock at an exercise price of $2.00 per share pursuant to a private placement to accredited investors at a price of $3.50 per unit. Each unit was comprised of one share of common stock and one warrant.On January 25, 2013 we amended the terms of the private placement, reducing the purchase price of the unit to $1.00 and reducing the exercise price of the warrant to $1.50 per share.As a result of the amendment, the Company issued an additional 1,186,567 shares of common stock to those investors and increased the number of shares reserved for issuance upon the exercise of the warrants by 1,186,567. On January 25, 2012, we completed a private placement to accredited investors of 105,000 restricted shares of our common stock, at a purchase price of $1.00 per share, for gross proceeds of $105,000.As part of the private placement, the investors were issued three-year warrants to purchase 105,000 shares of our common stock, at an exercise price of $1.50 per share. Item 8.01 Other Events On December 20, 2012, we received gross proceeds of $100,000 pursuant to the terms of a Loan Agreement dated December 20, 2012.The loan is secured by a Deed of Assignment for certain inventory and all proceeds from the sale of the inventory.The loan is payable on June 23, 2013, six months from the date of the agreement.We prepaid interest of $25,000 for the term of the loan. Copies of the above Loan Agreement and Deed of Assignment are filed herewith as Exhibits 10.2 and 10.3 and are incorporated herein by reference.The foregoing summary descriptions of the agreements are qualified in their entirety by reference to the full texts of each of such exhibits. Item 9.01. Financial Statements and Exhibits. (d)Exhibits. Exhibit No.Description Form of Common Stock Purchase Warrant of Vu1 Corporation, dated December 20, 2012, for each investor. Form of Securities Purchase Agreement, dated as of December 20, 2012, between Vu1 Corporation and each investor. Loan Agreement, dated as of December 20, 2012, between Vu1 Corporation and each purchaser identified on the signature pages thereto. Deed of Assignment dated as of December 20, 2012, between Vu1 Corporation and each purchaser identified on the signature pages thereto. 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. VU1 CORPORATION Date:January 31, 2013 By:/s/ Matthew J. DeVries Matthew J. DeVries Chief Financial Officer
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 24F-2 Annual Notice of Securities Sold Pursuant to Rule 24f-2 1. Name and address of issuer: Jackson Sage Variable Annuity Account A 1 Corporate Way Lansing, MI 48951 2. The name of each series or class of securities for which this Form is filed (If the Form is being filed for all series and classes of securities of the issuer, check the box but do not list series or classes):[] Jackson Sage Variable Annuity Account A Select (JNL) C000124604 3. Investment Company Act File Number: 811-04405 Securities Act File Number: 333-185764 4(a). Last day of fiscal year for which this Form is filed: December 31, 2013 4(b). [] Check box if this Form is being filed late (i.e., more than 90 calendar days after the end of the issuer’s fiscal year.).(See Instruction A.2) 4(c). [] Check box if this is the last time the issuer will be filing this Form. 5. Calculation of registration fee: (i) Aggregate sale price of securities sold during the fiscal year pursuant to section 24(f): $ 1,747,310 (ii) Aggregate price of securities redeemed or repurchased during the fiscal year: $ 3,537,848 (iii) Aggregate price of securities redeemed or repurchased during any prior fiscal year ending no earlier than October 11, 1995 that were not previously used to reduce registration fees payable to the Commission: $ 123,976,878 (iv) Total available redemption credits [add Items 5(ii) and 5(iii)]: $ 127,514,726 (v) Net sales if Item 5(i) is greater than Item 5(iv) [subtract Item 5(iv) from Item 5(i)]: $ 0 (vi) Redemption credits available for use in future years if Item 5(i) is less than Items 5(iv) [subtract Item 5(iv) from Item 5(i)]: $ 125,767,416 (vii) Multiplier for determining registration fee (See Instruction C.9): x 0.0001288 (viii) Registration fee due [multiply Item 5(v) by item 5(vii)] (enter “0” if no fee is due): $ 0 6. Prepaid Shares If the response to Item 5(i) was determined by deducting an amount of securities that were registered under the Securities Act of 1933 pursuant to rule 24e-2 as in effect before October 11, 1997, then report the amount of securities (number of shares or other units) deducted here: If there is a number of shares or other units that were registered pursuant to rule 24e-2 remaining unsold at the end of the fiscal year for which this form is filed that are available for use by the issuer in future fiscal years, then state that number here: . 7. Interest due if this Form is being filed more than 90 days after the end of the issuer’s fiscal year (see Instruction D): +$ 0 8. Total of the amount of the registration fee due plus any interest due [line 5(viii) plus line 7]: $ 0*** 9. Date the registration fee and any interest payment was sent to the Commission’s lockbox depository: Method of Delivery: [] Wire Transfer [] Mail or other means SIGNATURES This report has been signed below by the following persons on behalf of the issuer and in the capacities and on the dates indicated. By: (Signature and Title)* /s/ Gerard A.M. Oprins Gerard A.M. Oprins Chief Financial Officer Jackson National Asset Management, LLC Date: March 24, 2014 *Please print the name and title of the signing officer below the signature. ** Gerard A.M. Oprins signs this document on behalf of the registrant pursuant to the Limited Power of Attorney filed herewith as Exhibit 99.16 to this Form 24F-2. *** Fee was previously paid with SEC accession number 0000776991-14-000005.
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Exhibit 10.3 CONFIDENTIAL TREATMENT REQUESTED: INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND MARKED WITH “**”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS ALSO BEEN PROVIDED TO THE SECURITIES AND EXCHANGE COMMISSION. Amendment Four To That CONTRACT FOR SERVICES Dated June 22, 2007 THIS Amendment (the “Fourth Amendment”) dated as of October 30, 2012 (to the Contract For Services dated June 22, 2007, as amended by the First Amendment dated January 19, 2010; the Second Amendment dated July 15, 2010 and the Third Amendment dated September 30, 2011 together with all schedules, appendices, attachments and exhibits, if any, which are incorporated herein by reference unless specifically deleted by the terms and conditions hereof,shall constitute the entire Agreement (the “Agreement”), between Sky Angel U.S. , LLC.having its principal office at 1300 Goodlette Rd North,, Naples, Florida34102 (“Company”) and NeuLion, Inc., having its principal place of business at 1600 Old Country Road, Suite 101, Plainview, New York 11803, United States (“NeuLion”), each of Company and NeuLion being a “Party” and collectively (“the Parties”). W I T N E S S E T H: WHEREAS, the Parties” desire to extend the Agreement for the continued operation of the Internet Protocol Television (“IPTV”) service as described in the Agreement; and WHEREAS, capitalized terms not defined herein shall have the meaning ascribed to them in the Agreement; NOW, THEREFORE, in consideration of the premises and mutual covenants contained in this Agreement, the Parties agree as follows: I. Term.This Agreement shall be for a period of Five (5) years commencing on October 30, 2012 and shall automatically renew thereafter for subsequent one (1) year periods, unless notice of termination is served on a Party at least one hundred twenty (120) days prior to the expiration of the Term or any subsequent Term. II. Services.The services to be provided by NeuLion under this Agreement shall consist of the setup and back office operation of an IPTV television service (the “Service”) for the North America marketplace and world wide for services wherever Company’s licenses will allow (the “Territory”), as more fully described in Exhibit A to the Contract For Services.NeuLion shall at all times monitor the development oftechnologies and services within the industry and commits to working with Company, and, to the extent such technologies and services are reasonably within the ability of NeuLion to replicate, to make such technologies and services available to Company.Costs for development, installation and maintenance as necessary shall be as determined between the Parties upon execution of appropriate amendments and attachments hereto. Company’s and NeuLion’s responsibilities shall continue as set forth in Exhibit A to the Contract for Services unless otherwise modified or replaced by the terms and conditions of this Amendment III Consideration:Exhibit B to the Contract For Services shall be deleted in its entirety and replaced with the following: i.) NeuLion Service Fees In consideration for services provided to Company, NeuLion shall receive the following fees from Company: A. Setup Fee – For NeuLion’s services to setup the infrastructure and processes for the Service’s Content encoding, management and delivery, and customer provisioning, management and billing facilities, Companyshall: 1. Pay NeuLion the following fees for setup, maintenance and management of each NeuLion Transcoder System, (the”System”) which will be owned and operated by NeuLion. a. *****; b. *****; and, c. *****. d. Company shall have the right to purchase its own video and audio cards and the reasonable cost of such video and/or audio cards shall be deducted from the price per transcoder as set forth above. 2. *****; 3. *****; and, 4. NeuLion agrees that for each NeuLion Transcoder System paid for by Company as described in item 1 above, Company may at no additional charge: a. Replace a linear broadcast channel on a NeuLion Transcoder System with a different linear broadcast channel based upon a mutually agreed upon schedule and frequency; and, b. Install, execute, and use (according to NeuLion provided specifications), NeuLion’s proprietary transcoder software on a backup computer system when the supplied NeuLion Transcoder System is temporarily inoperable because of uncontrollable events.Such authorization shall extend only until operable status is restored to the designated Computer System and in no event longer then thirty (30) days. 5. In the event NeuLion, (i) discontinues it’s IPTV business, or (ii) has a change of control in which the NeuLion successor does not provide the Service under this Agreement for any reason, or (iii) elects or is forced into bankruptcy, then Company, in addition to any other remedies at law or equity, shall have the right but not the obligation to negotiate with NeuLion a reasonable price for the licensing of NeuLion software for a period of no less than seven years. Such licensing shall include the right to continue to use or to purchase at a reasonable market price, all NeuLion hardware and equipment as required by the software for the continued operation of the Company Service to its Subscribers. Company shall provide NeuLion with written notice of its intent to exercise its right under this Section no later than thirty days following written notification by NeuLion of a triggering event under this Section. Following notification of a triggering event and during any period of negotiation under this Section the status quo shall be maintained and Company operations shall not be interrupted until negotiations are complete. In the event that Company and NeuLion cannot reach an agreed value for equipment and licenses covered by this Section, the Parties shall agree to engage a third party appraiser at Company’s cost to ascertain an equitable price. Should either of the Parties disagree with the opinion of the appraiser, the disagreeing Party shall have the right to engage, at its sole cost, a second appraiser and should the second appraiser come in at more than a ten percent (10%) difference than the initial appraisal, the two appraisals will be averaged to determine the final purchase price. In the event the second appraisal comes in at a less than ten percent (10%) deviation from the first appraisal, the greater of the two appraisals shall prevail. 6. Upon the expiration of the Agreement, in the event NeuLion and Company are unable to reach an agreement on the renewal terms, the Company shall be entitled to an extension of the terms and conditions provided for in this Agreement for a period of twenty-four (24) months, solely for the benefit of the Company’s then existing subscribers.Company must provide NeuLion with notice of its desire to extend this Agreement in writing no later than one hundred and twenty days (120) prior to the expiration of this Agreement. B. Operations Fees – For ongoing back office operations of the Services of this Agreement, NeuLion shall charge Sky Angel and retain the following Monthly Operations Fees: 1. For the legacy V1 system: a. Basic Christian Sky Angel Faith Channel Package Fee *****; Basic Christian Sky Angel Faith Channel Package Rate Table Cumulative Number of Subscribers Subscriber Unit Rate * b. *****. c. *****. d. *****. e. *****. f. *****. 2. For the V2 System: a. A Basic Christian Sky Angel Faith Channel Package Fee *****; A Basic Sky Angel Faith Basic Christian Sky Angel Faith Channel Package Rate Table Cumulative Number of Subscribers Subscriber Unit Rate * b. *****. c. *****. d. *****. e. *****. f. *****. 3. V2 Non-Grandfathered FAVE TV Subscribers a. *****. b. *****. c. *****. d. *****. e. *****. f. *****. g. *****. h. *****. i. *****. 4. Web and Multiple Device Fees: a. *****. b. *****. c. *****. 5. VOD and Other Fees a.*****. b.*****: (i) *****; and (ii).*****. (iii).For the purpose of this Section and its Sub Sections, “Advertising” shall mean all advertising spots of two minutes or less that are inserted into the program schedule of the Company’s programmers for which the Company has received additional revenue specifically for the insertion on the Advertising materials. c.Monthly Operations Fees exclude in each case, (1) shipping/handling and activation charges (“S & A Charges”) for delivery of STBs to customer premises which shall be charged at *****, (2) any additional amounts due from customerfor sales or use taxes or duties, (3) any refunds, credits and chargebacks for returned or canceled goods or services per the terms of this Agreement, and (4) credit card and other necessary transactional charges paid to third parties related to collecting payment. S & A Charges are *****. The Parties agree that the costs, charges and fees in this paragraph c, items 1, 3 and 4 are exclusively due and payable to NeuLion in execution of NeuLion’s back office operation services; d.NeuLion’s Monthly Operations Fees shall be retained by NeuLion from the Service’s customer billing; disbursement of the remaining amount of the Service’s monthly collected revenue, excluding the costs, charges and fees in paragraph c, items 1,3, and 4 above, shall be made by NeuLion to Company within thirty (30) days after the month in which such revenue was collected; and, e.NeuLion further agrees that *****. 6. Set Top Box (STB) Acquisition Fee – For STB fulfillment to Services’s customers for this Amendment including NeuLion’s STB limited warranty as described in Exhibit C to the Contract For Services, Company shall order STBs in advance and pay NeuLion for such orders as follows: a. *****; b. *****; c. *****; d. *****; and, e. *****. All fees in the Contract For Services and the existing Amendments, if not specifically addressed in this Section III (Consideration), shall remain in effect. IV. New Services: A.Additional Platforms and Addition of New Features: Upon written request from Company, NeuLion will, within 10 business days, prepare a feasibility study and cost estimate, including, but not limited to, set up, incremental and recurring costs for the addition of new platforms, features, and services to the Company Service. Upon preliminary approval of the proposal by Company, a more specific summary shall be forwarded within thirty (30) days and shall include a time table for implementation as well as complete specifications for the development and distribution of the platform and a final cost proposal. Upon acceptance by Company, a written statement of work (“SOW”) will be prepared and promptly executed by the Parties.NeuLion and Company shall each use commercially reasonable efforts to assurethe order process in this Section shall not exceed in total more than forty-five (45) days from the date of request for proposal from Company to the date of execution of an SOW.Company however, recognizes the length of time for finalizing a SOW is subject to an agreement being reached by the Parties regarding the scope of work. Each agreed upon scope of work shall include time tables for the development and implementation of the new product or service. B.HD Resolution: Company shall have the right to request that NeuLion provide the support for encoding and delivering Company selected channels in HD resolution. Upon request of Company, NeuLion will provide Company with a cost proposal for the addition of each HD channel and, upon approval by Company, promptly acquire and /or upgrade equipment and obtain necessary bandwidth to provide the HD service requested. All equipment obtained and/or provided to Company by NeuLion for encoding and distribution of any services shall be maintained, serviced, and replaced as necessary by NeuLion in accordance with the terms of the Agreement. C.Enhancements or Updates to Technology. In the event NeuLion makes available major enhancements or updates to the technology provided for in this Agreement *****. V. Reporting: A.Viewer Information: NeuLion shall use commercially reasonable efforts to develop and maintain, and at all times make available to Company, software and programs that support the transfer of customer information as requested by Company.Mutually agreed upon customer information shall include the responsibility of NeuLion to collect, and timely makeavailable to Company, information and reporting programs necessary for the efficient management of the Company’s customer relations and any reporting requirements of government and/or third parties including, but not limited to, all customer and personal and payment information and viewership reports previously provided (the”Information”).At a minimum this shall include agreed upon custom reports and agreed upon canned reports in the administrator data base and at least twenty user defined data based fields related to subscribers as well as all personal and payment information and any program and channel viewer habits and viewing choices as are reasonably obtainable.NeuLion shalluse commercially reasonable efforts to work with third party CDN’s as soon as possible to develop programs that will enable the transfer of all viewer information previously provided to Company prior to implementation of 2.0 and CDN use. Company shall work with NeuLion to identify Information necessary to meet the requirements of this Section and NeuLion will promptly supply such Information as is reasonably obtainable.If applicable, Company and NeuLion shall agree on the additional fees for such reporting requirements. VI. Termination. A.Section 12 Termination shall be removed in its entirety and replaced by the following; 1.“12. Termination. This Agreement may be terminated (i) in the event of a breach of this Agreement that has gone uncured for a period of (30) days after written notice of such breach has been given, (ii) immediately upon the insolvency of or the filing of a petition of bankruptcy by a Party, (iii) upon mutual written Agreement of the Parties and (iv) in accordance with any other provisions of this Agreement expressly addressing termination.” VII. Intentionally Left Blank VIII. Right of First Refusal: In the event NeuLion elects, or is forced by bankruptcy, government action, or any other reason to discontinue the IPTV business or any of its services *****.The price paid for the assets will be the same as any other potential purchaser shall offer in a written offer or, in the event of no offer, shall be determined in the same manner as in SectionIII (i)(A)(5) above. *****. VIII. Conflict in Terms:Any conflict in the terms and conditions of this Amendment and the Contract for Services and its Exhibits and Amendments shall be decided under the terms and conditions of this Amendment. IX. General.Except as expressly provided herein, the Agreement and all related terms and conditions shall continue in full force and effect as modified hereby. X. Assignment.NeuLion agrees that in the event of any change of control which results in a third party acquiring, or exercising any option or other ownership right that results in actual or effective control of the assets and/or operations of NeuLion,or that causes a third party to exercisecontrol of the operations and/or licenses and equipment of NeuLion regardless of its ownership interest, NeuLion shall require any third party to fulfill NeuLion's duties and responsibilities under the Agreement and shall not terminate this Agreement as a result of any change of control without the consent of Company. *****. IN WITNESS WHEREOF, the Parties have executed this Amendment this 31st day of October, 2012. By: NeuLion, Inc. By: Sky Angel U.S., LLC. (Authorized Signature) (Authorized Signature) /s/ Roy E. Reichbach /s/ Thomas Scott Roy E. Reichbach Thomas Scott Type or Print Name of Person Signing Type or Print Name of Person Signing Secretary President/COO Title Title 11/6/12 10/31/2012 Date Date
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Exhibit 10.2
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this “Agreement”) is dated as of September
21, 2006, by and between ZONE MINING LIMITED, a Nevada corporation, along with
its wholly-owned subsidiary, ZM ACQUISITION CORP., a Delaware corporation
(hereinafter referred to as the “Company”), and each purchaser identified on the
signature pages hereto (each, including its successors and assigns, a
“Purchaser” and collectively the “Purchasers”).
WITNESSETH:
pursuant to an exemption from registration contained in Section 4(2) of the
Securities Act of 1933, as amended (the “Securities Act”) and Rule 506
promulgated thereunder, the Company desires to issue and sell to Purchasers, and
Purchasers desire to purchase from the Company, securities of the Company as
more fully described in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained in this
adequacy of which are hereby acknowledged, the Company and Purchasers agree as
follows:
ARTICLE I.
DEFINITIONS
1.1 Definitions. In addition to the terms defined elsewhere in this Agreement:
(a) capitalized terms that are not otherwise defined herein have the meanings
given to such terms in the Debenture(s) (as defined herein), and (b) the
following terms have the meanings indicated in this Section 1.1:
“Action” shall have the meaning ascribed to such term in Section 3.1(i).
Person, as such terms are used in and construed under Rule 144 under the
Securities Act. With respect to a Purchaser, any investment fund or managed
account that is managed on a discretionary basis by the same investment manager
as Purchaser will be deemed to be an Affiliate of such Purchaser.
“Business Day” means any day except Saturday, Sunday and any day which shall be
a federal legal holiday in the United States or a day on which banking
institutions in the State of Texas are authorized or required by law or other
government action to close.
any of (i) an acquisition after the date hereof by an individual or legal entity
of effective control (whether through legal or beneficial ownership (as
described in Rule 13d-3 of the Exchange Act) of capital stock of the Company, by
contract or otherwise) of in excess of 40% of the voting securities of the
Company, or (ii) a replacement at one time or within a one year period of more
than one-half of the members of the Company’s board of directors which is not
approved by a majority of those individuals who are members of the board of
directors on the date hereof (or by those individuals who are serving as members
of the board of directors on any date whose nomination to the board of directors
was approved by a majority of the members of the board of directors who are
members on the date hereof), or (iii) the execution by the Company of an
agreement to which the Company is a party or by which it is bound, providing for
any of the events set forth above in (i) or (ii). Notwithstanding the foregoing,
neither (a) a Qualifying Transaction occurring simultaneously with the DIA
Transaction nor (b) the DIA Transaction shall constitute a “Change of Control
Transaction for purposes of the Transaction Documents.
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to Section 2.1.
“Closing Date” means the Business Day when all of the Transaction Documents have
been executed and delivered by the applicable parties thereto, and all
conditions precedent to (i) Purchasers’ obligations to pay the Subscription
Amount and (ii) the Company’s obligations to deliver the Securities have been
satisfied or waived. There May be multiple Closing Dates.
“Common Stock” means the common stock of Zone Mining, par value $.00001 per
share, and any securities into which such common stock shall hereinafter have
been reclassified into.
“Common Stock Equivalents” means any securities of the Company which would
entitle the holder thereof to acquire at any time Common Stock, including
without limitation, any debt, preferred stock, rights, options, warrants or
other instrument that is at any time convertible into or exchangeable for, or
otherwise entitles the holder thereof to receive, Common Stock.
“Company” means Zone Mining Limited, a Nevada corporation, and ZM Acquisition
Corp., a Delaware corporation, and such reference herein shall, when referring
to any obligation of the Company shall impose a joint and several obligation on
each such entity.
“Debentures” mean the 12% Senior Secured Convertible Debentures, in the form of
Exhibit A.
3.1 hereof.
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“DIA” shall mean Driveitaway, Inc., a Delaware corporation.
“DIA Security Agreement” means the Security Agreement, dated as of the date
hereof, between DIA and the Purchasers, in the form of Exhibit “G” attached
hereto.
“DIA Transaction” shall mean the merger if DIA with ZM Acquisition substantially
on the terms set forth in Schedule 1.1 hereto.
employees, officers, consultants or directors of the Company pursuant to any
stock or option plan currently in place as of the date hereof or adopted in
accordance with the terms of the DIA Transaction which has been duly adopted by
the Board of Directors, (b) securities upon the exercise of or conversion of any
securities issued hereunder, convertible securities, options or warrants issued
and outstanding on the date of this Agreement, provided that such securities
have not been amended since the date of this Agreement to increase the number of
such underlying shares in connection therewith, (c) securities issued pursuant
to acquisitions or strategic transactions, provided any such issuance shall only
be to a Person (or the equity owners of such Person) which is, itself or through
its subsidiaries, an operating company in a business synergistic with the
business of the Company and in which the Company receives benefits in addition
to the investment of funds, but shall not include a transaction in which the
Company is issuing securities primarily for the purpose of raising capital or to
an entity whose primary business is investing in securities, (d) shares of
Common Stock or Common Stock Equivalents issued in connection with the DIA
Transaction, and (e) shares of Common Stock or Common Stock Equivalents issued
in connection with the first Qualifying Transaction occurring after the date of
this Agreement.
“Fully Diluted Basis” shall mean all Common Stock or Common Stock Equivalents of
the Company including the exercise or conversion of all rights, options,
derivative and convertible securities and further including the conversion
(whether convertible or not) of all other common or preferred stock equivalents
outstanding or required to be issued by the Company.
“Fundamental Transaction” shall mean (A) the Company effects any merger or
consolidation of the Company with or into another Person, (B) the Company
related transactions, (C) any tender offer or exchange offer (whether by the
Stock are permitted to tender or exchange their shares for other securities,
cash or property, or (D) the Company effects any reclassification of the Common
effectively converted into or exchanged for other securities, cash or property.
Notwithstanding the foregoing, the DIA Transaction shall not constitute a
“Fundamental Transaction” for purposes of the Transaction Documents.
3
“GAAP” shall mean United States generally accepted accounting principles,
consistently applied.
“Intellectual Property” shall have the meaning ascribed to such term in Section
“Liens” means a lien, charge, security interest, encumbrance, right of first
refusal, preemptive right, or other restriction.
Section 3.1(b) hereof.
3.1(l).
“Maximum Rate” shall have the meaning ascribed to such term in Section 6.15.
of any kind.
“Public Offering Date” means the date on which the Company receives gross
proceeds equal to at least $3,000,000 from a public offering of the Common Stock
or Common Stock Equivalents which will be traded in the normal course on a
Trading Market.
“Qualifying Transaction” shall mean an equity financing wherein the Company
receives gross proceeds equal to at least $1,000,000 from the sale of Common
Stock or Common Stock Equivalents.
“Registrable Securities” means (i) all Underlying Shares (exercised and
unexercised); (ii) any securities issued or transferred to a Purchaser in
connection with or arising out of any Transaction Document; and (iii) any
securities issued or issuable upon any stock split, dividend or other
distribution recapitalization or similar event with respect to the foregoing.
“Registration Statement” means a registration statement covering the sale or
resale of the Registrable Securities.
4
exercise of the Warrant or conversion of the Debenture, ignoring any exercise
limits set forth therein.
“SBA” shall have the meaning ascribed to such term in Section 5.1.
“SBA Documents” shall have the meaning ascribed to such term in Section 5.1(b).
“SBIC” shall have the meaning ascribed to such term in Section 5.1.
“SBIC Act” shall have the meaning ascribed to such term in Section 5.1(a).
“Securities” means the Debenture, the Warrant, and the Underlying Shares.
“Security Agreement” means the Security Agreement, dated as of the date hereof,
between the Company and the Purchasers, in the form of Exhibit B attached
hereto.
“Security Documents” shall mean the Security Agreement and any other documents
and filing required thereunder in order to grant Purchasers a first priority
security interest in all of the assets of the Company.
“Subordination Agreement” shall mean Subordination Agreements in the form of
Exhibit H attached hereto from each holder of a note or other indebtedness from
DIA.
“Subsequent Financing” shall mean any cash financing by the Company or any of
its Subsidiaries of Common Stock or Common Stock Equivalents.
paid for Debentures and Warrants purchased hereunder as specified on the
Purchasers Signature Page in the corresponding column next to such Purchaser’s
name under the heading “Subscription Amount”, in United States Dollars in
immediately available funds.
“Subsidiary” means any corporation or limited liability company of which at
least 50% of the outstanding securities having ordinary voting powers for the
election of Board of Directors (or similar governing body) are at the time owned
by the Company. As used herein, the term “Company” shall be deemed to include
all of the Company’s Subsidiaries, if any.
5
“Trading Market” means, as applicable, the following markets or exchanges on
which the Common Stock is listed or quoted for trading on the date in question:
the American Stock Exchange, the New York Stock Exchange, the Nasdaq National
Market, the Nasdaq SmallCap Market, the OTC Bulletin Board or the “Pink Sheets”
published by the Pink Sheets LLC.
“Transaction Documents” means this Agreement, the Debentures, the Security
Agreement, the DIA Security Agreement, the Warrants and any other documents or
agreements executed in connection with the transactions contemplated hereunder.
“Trident” means Trident Growth Fund, L.P., a Delaware limited partnership.
“Underlying Shares” means the shares of Common Stock issuable upon exercise of
the Warrants or conversion of the Debenture, or any other shares of Common Stock
acquired by Purchasers hereby.
“Zone Mining” means Zone Mining Limited, a Nevada Corporation.
or sells any Common Stock Equivalents (A) at a conversion, exercise or exchange
issuance of such debt or equity securities, (B) with a conversion, exercise or
specified or contingent events directly or indirectly related to the business of
the Company or the market for the Common Stock, or (C) whereby the number of
underlying shares of Common Stock to be received upon exercise, conversion, or
exchange thereof, is variable in any respect in which the number of such
underlying shares could be increased. Notwithstanding the foregoing, the
presence in a Common Stock Equivalent of customary anti-dilution adjustments
which adjust a fixed conversion or exercise price or the number of shares of
Common Stock issuable thereunder based upon (a) the price at which Common Stock
is subsequently sold or issuable by the Company, (b) stock splits, combinations,
stock dividends, recapitalizations, and/or (c) Fundamental Transactions shall
not, in and of itself, result in the transaction in which the Common Stock
Equivalent is issued being a Variable Rate Transaction so long as the terms
thereof are no more favorable to the recipient than to the Purchaser.
“Warrants” means the Common Stock Purchase Warrants, in the form of Exhibit C
delivered to each Purchaser at the Closing in accordance with Section 2.2
hereof, which Warrants shall be exercisable immediately and be exercisable until
the close of business on the fifth anniversary following the Initial Exercise
Date (as defined in the Warrant). The Company and Purchasers agree that the
value of the Warrants, in the aggregate, as of the date hereof is less than
$1,000.
“ZM Acquisition” means ZM Acquisition Corp., a Delaware corporation.
6
ARTICLE II.
PURCHASE AND SALE
set forth herein, concurrent with the execution and delivery of this Agreement
by the parties hereto, the Company agrees to sell, and Purchasers agree to
purchase the Debentures and Warrants for an aggregate amount of ONE MILLION
DOLLARS ($1,000,000) (the “Aggregate Subscription Amount”). On the Closing Date,
Purchasers shall deliver to the Company via wire transfer of immediately
available funds the sum of $800,000 (less all expenses due hereunder), and the
Company shall deliver to Purchasers the Debentures, the Warrants, and the other
items set forth in Section 2.2 issuable at the Closing. On the date on which the
balance of the Aggregate Subscription Amount is funded, the Company shall
promptly pay to the order of each Purchaser a Closing Fee of 4% and an
Application Fee of 1% of the Subscription Amount actually funded by each such
Purchaser, such amounts to be offset from the funding of the balance of the
Aggregate Subscription Amount described below. Upon satisfaction of the
conditions set forth in Section 2.2, the Closing shall occur at the offices of
Trident, or such other location as the parties shall mutually agree. The balance
of the Aggregate Subscription Amount in the amount of $200,000 shall be
delivered to the Company via wire transfer of immediately available funds within
five (5) Business Days following the date on which Purchasers have sufficient
liquidity to advance such funds (less the above described fees).
2.2 Deliveries
a)
On the Closing Date, the Company shall execute and deliver or cause to be
delivered to Purchasers the following, each fully executed by the appropriate
authorized officer or officers of the Company or DIA, as applicable:
(i) this Agreement (along with all Disclosure Schedules);
(ii) the Debentures;
(iii) the Warrants;
(iv) the Security Agreement and the DIA Security Agreement along with all
Security Documents;
(v) SBA Form 480 (Size Status Declaration), SBA Form 652 (Assurance of
Compliance) and SBA Form 1031 (Portfolio Finance Report), Parts A and B, in the
forms of Exhibit D, Exhibit E and Exhibit F, respectively, attached hereto;
7
(vi) Approval by the Board of Directors of the Company, done in conformance with
all applicable law and the Bylaws of the Company, certified by the Secretary of
the Company as of the Closing Date, approving or otherwise ratifying the
transactions contemplated by this Agreement, and approving the form of this
Agreement and the Transaction Documents, and authorizing execution, delivery,
and performance thereof;
(vii) Approval by the Board of Directors of the DIA, done in conformance with
all applicable law and the Bylaws of DIA, certified by the Secretary of DIA as
of the Closing Date, approving or otherwise ratifying the transactions
contemplated by this Agreement, and approving the form of the DIA Security
Agreement, and authorizing execution, delivery, and performance thereof;
(viii) A copy of the Articles of Incorporation of the Company, as amended to
date, certified by an official of the Company’s jurisdiction of formation or
incorporation and further certified by the Secretary of the Company not to have
been altered or amended since certification by such official; a Certificate of
Good Standing dated within 30 days of the date first written above from the
Secretary of State of the Company’s jurisdiction of formation or incorporation;
and a copy of the Bylaws of the Company, certified as true and correct by the
Secretary of the Company; and
(ix) Such other instruments, documents or items as Purchasers may reasonably
request.
b)
On the Closing Date, each Purchaser shall deliver or cause to be delivered to
the Company the following:
(i) this Agreement duly executed by each Purchaser;
(ii) the sum of $800,000 (less the fees and expenses payable pursuant to Section
6.1) by wire transfer to the account as specified in writing by the Company; and
(iii) the Security Agreement and the DIA Security Agreement, duly executed by
each Purchaser.
2.3 Closing Conditions.
a)
The obligations of the Company hereunder in connection with the Closing are
8
(i) the accuracy in all material respects when made and on the Closing Date of
the representations and warranties of the Purchasers contained herein;
(ii) all obligations, covenants and agreements of Purchasers required to be
(iii) the delivery by Purchasers of the items set forth in Section 2.2(b) of
this Agreement.
b)
The obligations of Purchasers hereunder in connection with the Closing are
(i) the accuracy in all material respects on the Closing Date of the
representations and warranties of the Company contained herein;
this Agreement;
(v) the Company shall have executed a definitive merger agreement with DIA for
the DIA Transaction upon terms and conditions acceptable to Purchasers in their
sole discretion.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. Except as set forth under
the corresponding section of the disclosure schedules delivered to Purchasers
concurrently herewith (the “Disclosure Schedules”) which Disclosure Schedules
shall be deemed a part hereof, the Company hereby makes the representations and
warranties set forth below to Purchasers:
a) Subsidiaries. Except as set forth in Schedule 3.1(a), the Company does not
have any Subsidiaries.
9
b) Organization and Qualification. The Company is an entity duly incorporated,
incorporation, with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently conducted. The
Company is not in violation or default of any of the provisions of its
certificate or articles of incorporation, bylaws, or other organizational or
charter documents. The Company is duly qualified to conduct business and is in
in (i) a material adverse effect on the legality, validity or enforceability of
any Transaction Documents, (ii) a material adverse effect on the results of
operations, assets, business, prospects or financial condition of the Company,
or (iii) a material adverse effect on the Company’s ability to perform in any
material respect on a timely basis its obligations under any Transaction
Documents (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no
Proceeding has been instituted in any such jurisdiction revoking, limiting or
curtailing or seeking to revoke, limit or curtail such power and authority or
qualification.
c) Authorization; Enforcement. The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by each
of the Transaction Documents and otherwise to carry out its obligations
thereunder. The execution and delivery of each of the Transaction Documents by
the Company and the consummation by it of the transactions contemplated thereby
have been duly authorized by all necessary action on the part of the Company.
Each of the Transaction Documents has been (or upon delivery will have been)
duly executed by the Company and, when delivered in accordance with the terms
hereof, will constitute the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
performance, injunctive relief or other equitable remedies.
d) No Conflicts. The execution, delivery and performance of the Transaction
Documents by the Company and the consummation by the Company of the other
transactions contemplated thereby do not and will not: (i) conflict with or
violate any provision of the Company’s certificate or articles of incorporation,
bylaws or other organizational or charter documents, or (ii) conflict with, or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, result in the creation of any Lien upon any of
the properties or assets of the Company, or give to others any rights of
termination, amendment, acceleration or cancellation (with or without notice,
lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing a Company debt or otherwise) or other understanding to
which the Company is a party or by which any property or asset of the Company is
bound or affected, or (iii) conflict with or result in a violation of any law,
rule, regulation, order, judgment, injunction, decree or other restriction of
any court or governmental authority to which the Company is subject (including
federal and state securities laws and regulations), or by which any property or
asset of the Company is bound or affected; except in the case of each of clauses
(ii) and (iii), such as could not have or reasonably be expected to result in a
Material Adverse Effect.
10
e) Filings, Consents and Approvals. Other than as set forth on Schedule 3.1(e)
and except for filing of a Form D and/or state “blue sky” securities filings,
the Company is not required to obtain any consent, waiver, authorization or
order of, give any notice to, or make any filing or registration with, any court
or other federal, state, local or other governmental authority or other Person
in connection with the execution, delivery and performance by the Company of the
Transaction Documents.
for in the Transaction Documents. The Underlying Shares, when issued in
accordance with the terms of the Transaction Documents, will be validly issued,
fully paid and nonassessable, free and clear of all Liens imposed by the Company
or any third party. The Company has reserved from its duly authorized capital
stock a number of shares of Common Stock for issuance of a number of Underlying
Shares at least equal to the Required Minimum on the date hereof. The Company
has not, and to the knowledge of the Company, no Affiliate of the Company has
sold, offered for sale or solicited offers to buy or otherwise negotiated in
respect of any security (as defined in Section 2 of the Securities Act) that
would be integrated with the offer or sale of the Securities in a manner that
would require the registration under the Securities Act of the sale of the
Securities to Purchasers.
g) Capitalization. The capitalization of the Company is as described in Schedule
3.1(g). The Company has not issued any capital stock other than as set forth on
Schedule 3.1(g). No Person has any right of first refusal, preemptive right,
right of participation, or any similar right to participate in the transactions
and sale of the Securities or as set forth on Schedule 3.1(g), there are no
outstanding options, warrants, script rights to subscribe to, calls or
obligations convertible into or exchangeable for, or giving any Person any right
to subscribe for or acquire, any shares of the Company’s capital stock, or
contracts, commitments, understandings or arrangements by which the Company is
or may become bound to issue additional shares of its capital stock, or
securities or rights convertible or exchangeable into shares of its capital
stock. The issuance and sale of the Securities will not obligate the Company to
issue shares of Common Stock or other securities to any Person (other than
Purchasers) and will not result in a right of any holder of Company securities
to adjust the exercise, conversion, exchange or reset price under such
securities. All of the outstanding shares of capital stock of the Company are
validly issued, fully paid and nonassessable, have been issued in compliance
with all federal and state securities laws, and none of such outstanding shares
was issued in violation of any preemptive rights or similar rights to subscribe
for or purchase securities. No further approval or authorization of any
stockholder, the Board of Directors of the Company or others is required for the
issuance and sale of the Securities. Except as disclosed in Schedule 3.1(g),
there are no stockholders agreements, voting agreements or other similar
agreements with respect to the Company’s capital stock to which the Company is a
party or, to the knowledge of the Company, between or among any of the Company’s
stockholders. A complete list of stockholders of the Company that are officers,
directors and individuals holding 5% or more of the outstanding Common Stock is
included in Schedule 3.1(g).
11
h) SEC Documents. If the Company is subject to the reporting provisions of the
Exchange Act, the Company has filed all required reports, schedules, forms,
statements and other documents with the Commission. (the “SEC Documents”). As of
requirements of the Securities Act or the Exchange Act, as the case may be and
the rules and regulations of the Commission promulgated thereunder applicable to
such SEC Documents, and none of the SEC Documents contained any untrue statement
circumstances under which they were made, not misleading, except to the extent
that information contained in any SEC Document has been revised or superseded by
a later filed SEC Document. The financial statements of the Company included in
the SEC Documents comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the
Commission with respect thereto, have been prepared in accordance with GAAP
(except, in the case of unaudited statements as permitted by Form 10-Q or Form
10-QSB) applied on a consistent basis during the periods involved (except as may
be indicated in the notes thereto) and fairly present the consolidated financial
position of the Company and its consolidated subsidiaries as of the dates
thereof and the consolidated results of their operation and cash flows for the
period then ending in accordance with GAAP (subject, in the case of the
unaudited statements, to normal year end audit adjustments). Except as set forth
in the filed SEC Documents, neither the Company nor any Subsidiaries has any
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) required by GAAP to be set forth on a consolidated balance sheet
of the Company and its consolidated subsidiaries or in the notes thereto and
i) Litigation. Other than as set forth on Schedule 3.1(i), there is no action,
the knowledge of the Company, threatened against or affecting the Company, or
any of its respective properties before or by any court, arbitrator,
governmental or administrative agency or regulatory authority (federal, state,
affects or challenges the legality, validity or enforceability of any of the
Transaction Documents or the Securities or (ii) could, if there were an
Adverse Effect. Neither the Company nor any director or officer thereof, is or
has been the subject of any Action involving a claim of violation of or
fiduciary duty. There has not been, and to the knowledge of the Company, there
is not pending or contemplated, any investigation by the Commission involving
the Company or any current or former director or officer of the Company.
12
j) Labor Relations. No material labor dispute exists or, to the knowledge of the
Company, is imminent with respect to any of the employees of the Company which
k) Compliance. The Company (i) is not in default under or in violation of (and
no event has occurred that has not been waived that, with notice or lapse of
time or both, would result in a default by the Company), nor has the Company
received notice of a claim that it is in default under or that it is in
violation of, any indenture, loan or credit agreement or any other agreement or
instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) is not in
violation of any order of any court, arbitrator or governmental body, or (iii)
is not or has not been in violation of any statute, rule or regulation of any
governmental authority, including without limitation all foreign, federal, state
and local laws applicable to its business except in each case as could not
l) Regulatory Permits. The Company possesses all certificates, authorizations
regulatory authorities necessary to conduct its business as described in
Schedule 3.1(l), except where the failure to possess such permits could not have
or reasonably be expected to result in a Material Adverse Effect (“Material
Permits”), and the Company has not received any notice of Proceedings relating
to the revocation or modification of any Material Permit.
m) Title to Assets. Except as set forth on Schedule 3.1(m), the Company has good
and marketable title in (or licenses or rights to use) all personal property
that is material to the business of the Company, in each case free and clear of
all Liens. The Company does not own any real property. Any real property and
facilities held under lease by the Company are held by it under valid,
subsisting and enforceable leases of which the Company is in compliance. The
Company has not granted, and no third party has obtained in any manner, other
than as contemplated by the Transaction Documents, any security interest in the
assets of the Company. Schedule 3.1(m) sets forth and details which, if any, of
such assets are owned by any Subsidiary.
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n) Intellectual Property.
(i) Schedule 3.1(n) contains a list of the Company’s Intellectual Property. For
purposes hereof, “Intellectual Property” means any or all of the following and
all rights and goodwill, arising out of or associated therewith: (A) all United
States, international, and foreign patents and applications therefor (including
provisional applications) and all reissues, reexaminations, divisions, renewals,
extensions, provisionals, continuations and continuations-in-part thereof; (B)
all inventions (whether patentable or not), invention disclosures, improvements,
trade secrets, proprietary information, know-how, technology, technical data and
customer lists, and all documentation relating to any of the foregoing
throughout the world; (C) all international, U.S. and foreign registered
trademarks, trade names, service marks, logos, slogans, and designs,
applications to register trademarks, trade names, service marks, logos, slogans,
and designs, intent-to-use applications, or other registrations or applications
related to trademarks, service marks, common law trademarks, trade names,
service marks, logos, slogans, and designs and all associated goodwill
associated with all of the foregoing; (D) all copyrights, copyright
registrations and applications therefor, and all other rights corresponding
thereto throughout the world; (E) all industrial designs and any registrations
and applications therefor throughout the world; (F) all URL’s, domain names,
trade names, logos, slogans, designs, common law trademarks and service marks,
trademark and service mark registrations and applications therefor throughout
the world; (G) all databases and data collections and all rights therein
throughout the world; (H) all moral and economic rights of authors and
inventors, however denominated, throughout the world; (I) any other intellectual
property that is the subject of an application, certificate, filing,
registration or other document issued, filed with, or recorded with any federal,
state, local or foreign government or other public body; and (J) any similar or
equivalent rights to any of the foregoing anywhere in the world. For purposes
hereof, “Company Intellectual Property” means any Company Intellectual Property
owned or licensed by the Company, and “Company Registered Intellectual Property”
means any items of Intellectual Property described in subsections (A), (C) or
(D) of this paragraph.
(ii) No Company Intellectual Property or product or service of the Company’s
business related to the Company Intellectual Property is subject to any
Proceeding or outstanding decree, order, judgment, agreement or stipulation
restricting in any manner the use, transfer or licensing thereof by the Company,
or which may affect the validity, use or enforceability of such Company
Intellectual Property. Each item of Company Registered Intellectual Property is
valid and subsisting. All necessary registration, maintenance and renewal fees
currently due in connection with the Company Registered Intellectual Property
have been made and all necessary documents, recordations and certifications in
connection with such Company Registered Intellectual Property have been filed
with the relevant patent, copyright, trademark or other authorities in the
United States or foreign jurisdictions, as the case may be, for the purpose of
maintaining such Company Registered Intellectual Property.
(iii) The Company owns and has good and exclusive title to, or has licenses (any
Intellectual Property subject to any license to be identified as such in
Schedule 3.1(n)) (sufficient for the conduct of the Company’s business as
currently conducted) to use each item of the Company’s Intellectual Property
free and clear of any Lien; and the Company is the exclusive owner or exclusive
licensee of all trademarks and service marks, trade names and domain names used
in connection with and material to the operation or conduct of the Company’s
business, including the sale of any products or the provision of any services by
same, free and clear of all Liens. The Company Intellectual Property, other than
future improvements, derivations, and additions to be made by the Company or on
behalf of the Company, constitutes all of the Intellectual Property used or
contemplated for use in connection with the Company’s current business and in
the performance of any contract, proposal or letter of intent in connection with
same.
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(iv) To the extent that any Company Intellectual Property has been developed or
created by a third party for the Company, the Company has a written agreement
with such third party with respect thereto and the Company thereby either
(A) has obtained ownership of and is the exclusive owner of, or (B) has obtained
a license (sufficient for the conduct of the Company’s business as currently
conducted) to all of such third party’s Intellectual Property in such work,
material or invention by operation of law or by valid assignment, to the fullest
extent it is legally possible to do so, each such agreement being listed on
Schedule 3.1(n).
(v) The operation of the Company’s business as it is currently conducted,
including the Company’s design, development, marketing and sale of the products
or services of the Company (including with respect to products currently under
development) has not, does not and will not infringe or misappropriate in any
manner the Intellectual Property of any third party or, to the knowledge of the
Company, constitute unfair competition or trade practices under the laws of any
jurisdiction.
(vi) The Company has no knowledge, and has not received written notice or any
other overt threats from any third party, that the operation of the Company’s
business as it is currently conducted, or any act, product or service of the
Company’s business, infringes or misappropriates the Intellectual Property of
any third party or constitutes unfair competition or trade practices under the
laws of any jurisdiction. The Company’s Intellectual Property is not the subject
of any third party communications relating to validity or enforceability, cease
and desist orders, demand letters, warnings or prior settlement agreements. The
Company’s Intellectual Property is not currently the subject of any pending or
threatened re-examinations, oppositions, interferences, or infringement actions.
(vii) To the knowledge of the Company, no Person has or is infringing or
misappropriating any Company Intellectual Property.
(viii) The Company has taken reasonable steps to protect the rights of the
Company in the confidential information and trade secrets of the Company used in
the Company’s business or any trade secrets or confidential information of third
parties used in same, and, without limiting the foregoing, the Company has
enforced a policy requiring each employee and contractor to execute a
proprietary information/confidentiality agreement, and except under
confidentiality obligations or in the context of the attorney-client
relationship, there has not been any disclosure by the Company of any such trade
secrets or confidential information.
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o) Insurance. The Company is insured by insurers of recognized financial
directors and officers insurance at least equal to the aggregate principal
amount of the Debenture. To the best of Company’s knowledge, such insurance
contracts and policies are accurate and complete. The Company has no reason to
when such coverage expires or to obtain similar coverage from similar insurers
cost.
p) Transactions With Affiliates and Employees. None of the officers or directors
of the Company and, to the knowledge of the Company, none of the employees of
the Company is presently a party to any transaction with the Company (other than
partner, in each case in excess of $60,000 other than (i) for payment of salary
or consulting fees for services rendered, (ii) reimbursement for expenses
incurred on behalf of the Company and (iii) for other employee benefits,
including stock option agreements under any stock option plan of the Company.
q) Internal Accounting Controls. The Company maintains a system of internal
r) Certain Fees. Other than as set forth on Schedule 3.1(r), no brokerage or
finder’s fees or commissions are or will be payable by the Company to any
this Agreement. Purchasers shall have no obligation with respect to any fees or
with respect to any claims made by or on behalf of other Persons for fees of a
type contemplated in this Section that may be due in connection with the
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s) Private Placement. Assuming the accuracy of Purchasers’ representations and
required for the offer and sale of the Securities by the Company to Purchasers
as contemplated hereby.
manner so that it will not become subject to the Investment Company Act.
u) Registration Rights. Other than as set forth on Schedule 3.1(u), no Person
v) Application of Takeover Protections. The Company and its Board of Directors
under the Company’s Certificate of Incorporation (or similar charter documents)
Purchasers as a result of Purchasers and the Company fulfilling their
w) Disclosure. Except for information provided to the Purchasers by the Company
with respect to the DIA Transaction or the Qualifying Transaction, the Company
confirms that neither it nor any other Person acting on its behalf has provided
Purchasers or their agents or counsel with any information that constitutes or
might constitute material, nonpublic information except for such information
that will be publicly disclosed in documents filed with the Commission. The
Company understands and confirms that Purchasers will rely on the foregoing
representations and covenants in effecting transactions in securities of the
Company. All written statements provided to Purchasers regarding the Company,
its business and the transactions contemplated hereby, including the Disclosure
Schedules to this Agreement, furnished by or on behalf of the Company with
respect to the representations and warranties made herein are true and correct
with respect to such representations and warranties and do not contain any
under which they were made, not misleading.
17
x) No Integrated Offering. Assuming the accuracy of Purchasers’ representations
the Securities Act or any applicable shareholder approval provisions.
y) Solvency. Based on the financial condition of the Company as of the Closing
Date after giving effect to the receipt by the Company of the proceeds from the
sale of the Securities hereunder, (i) the Company’s fair saleable value of its
assets exceeds the amount that will be required to be paid on or in respect of
the Company’s existing debts and other liabilities (including known contingent
liabilities) as they mature; (ii) the Company’s assets do not constitute
unreasonably small capital to carry on its business for the current fiscal year
as now conducted and as proposed to be conducted including its capital needs
taking into account the particular capital requirements of the business
conducted by the Company, and projected capital requirements and capital
availability thereof; and (iii) the current cash flow of the Company, together
with the proceeds the Company would receive, were it to liquidate all of its
assets, after taking into account all anticipated uses of the cash, would be
sufficient to pay all amounts on or in respect of its debt when such amounts are
z) Tax Status. Except for matters that would not, individually or in the
Effect, the Company has filed all necessary federal, state and foreign income
and franchise tax returns and has paid or accrued all taxes shown as due
thereon, and the Company has no knowledge of a tax deficiency which has been
asserted or threatened against the Company.
aa) No General Solicitation. Neither the Company nor any person acting on behalf
of the Company has offered or sold any of the Securities by any form of general
solicitation or general advertising. The Company has offered the Securities for
sale only to Purchasers and certain other “accredited investors” within the
meaning of Rule 501 under the Securities Act.
bb) Foreign Corrupt Practices. Neither the Company, nor to the knowledge of the
Company, any agent or other person acting on behalf of the Company, has (i)
directly or indirectly, used any corporate funds for unlawful contributions,
gifts, entertainment or other unlawful expenses related to foreign or domestic
political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to any foreign or domestic political
parties or campaigns from corporate funds, (iii) failed to disclose fully any
contribution made by the Company (or made by any person acting on its behalf of
any material respect any provision of the Foreign Corrupt Practices Act of 1977,
as amended
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cc) Indebtedness. Other than as set forth on Schedule 3.1(cc), as of the Closing
Date, the Company has no indebtedness.
dd) No Disagreements with Accountants and Lawyers. There are no disagreements of
between the accountants and lawyers formerly or presently employed by the
Company and the Company is current with respect to any fees owed to its
accountants and lawyers.
ee) Acknowledgment Regarding Purchasers’ Purchase of Securities. The Company
arm’s length purchasers with respect to the Transaction Documents and the
transactions contemplated hereby as they relate to the Company. The Company
further acknowledges that Purchasers are not acting as a financial advisor or
Agreement and the transactions contemplated hereby and any advice given by
Purchasers or any of their respective representatives or agents to the Company
in connection with this Agreement and the transactions contemplated hereby is
merely incidental to the Purchasers’ purchase of the Securities.
ff) Material Liabilities. The sole outstanding material liabilities of the
Company are set forth on Schedule 3.1(ff) .
gg) Material Agreements. Except for those agreements set forth on Schedule
3.1(gg) hereof, there are no other material agreements to which the Company is a
party.
hh) Board of Directors. The Board of Directors of the Company consists of those
persons set forth on Schedule 3.1(hh).
ii) Financial Statements. Other than as set forth on Schedule 3.1(ii), there are
no audited financial statements of the Company.
3.2 Representations and Warranties of Purchasers. Each Purchaser hereby, for
itself and for no other Purchaser, represents and warrants as of the date hereof
and as of the Closing Date to the Company as follows:
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(a) Organization; Authority. Such Purchaser (if not an individual) is an entity
jurisdiction of its organization with full right, corporate or partnership power
the Transaction Documents and otherwise to carry out its obligations thereunder.
The execution, delivery and performance by Purchaser of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate or similar action on the part of Purchaser. Each of the Transaction
Documents to which it is a party has been duly executed by Purchaser, and when
delivered by Purchaser in accordance with the terms hereof, will constitute the
valid and legally binding obligation of Purchaser, enforceable against it in
accordance with its terms, except (i) as limited by general equitable principles
and applicable bankruptcy, insolvency, reorganization, moratorium and other laws
of general application affecting enforcement of creditors’ rights generally,
(b) Purchaser Representation. Purchaser understands that the Securities are
“restricted securities” and have not been registered or qualified, as the case
may be, under the Securities Act or any applicable state securities law by
reason of a specific exemption from the registration or qualification provisions
of the Securities Act or any applicable state securities laws, the availability
of which depends upon, among other things, the bona fide nature of the
investment intent and the accuracy of Purchaser’s representations as expressed
herein. Purchaser represents that it is acquiring the Securities for investment
as principal for its own account and not with a view to or for distribution or
resale of such Securities or any part thereof, has no present intention of
distributing any of such Securities and has no arrangement or understanding with
any other persons regarding the distribution of such Securities (this
representation and warranty not limiting Purchaser’s right to sell the
Securities pursuant to a Registration Statement or otherwise in compliance with
applicable federal and state securities laws). Purchaser is acquiring the
Securities hereunder in the ordinary course of its business. Purchaser does not
have any agreement or understanding, directly or indirectly, with any Person to
distribute any of the Securities.
(c) Purchaser Status. At the time Purchaser was offered the Securities, it was,
and at the date hereof it is, and on each date on which it exercises any
Warrants it will be either: (i) an “accredited investor” as defined in Rule
501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8)) of Regulation D promulgated under
the Securities Act or (ii) a “qualified institutional buyer” as defined in Rule
144A(a) under the Securities Act.
(d) Experience of Purchasers. Purchaser, either alone or together with its
representatives, has such knowledge, sophistication and experience in business
and financial matters so as to be capable of evaluating the merits and risks of
the prospective investment in the Securities, and has so evaluated the merits
and risks of such investment. Purchaser understands that the acquisition of the
Securities hereunder is highly a speculative investment which involves a high
degree of loss of Purchaser’s investment therein. Purchaser is able to bear the
able to afford a complete loss of such investment.
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(e) Certain Fees. Purchaser has not entered into an agreement whereby brokerage
this Agreement.
The Company acknowledges and agrees that no Purchaser has made any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 3.2.
ARTICLE IV.
4.1 Transfer Restrictions.
pursuant to an effective registration statement, the Company may require the
that such transfer does not require registration of such transferred Securities
under the Securities Act or any applicable state securities laws. As a condition
of transfer, any such transferee shall agree in writing to be bound by the terms
of this Agreement and shall have the rights of a Purchaser under this Agreement.
(b) Purchasers agree to the imprinting, so long as is required by this Section
4.1(b), of a legend on any of the Securities in substantially the following
form:
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
COMPANY.
21
The Company acknowledges and agrees that Purchasers may from time to time pledge
and, if required under the terms of such arrangement, Purchasers may transfer
pledged or secured Securities to the pledgees or secured parties. Such a pledge
or transfer would not be subject to approval of the Company and, so long as the
legend set forth in Section 4.1(b) hereof remains on the certificates evidencing
the Securities (unless the conditions of Section 4.1(c) have been satisfied), no
required in connection therewith. Further, no notice shall be required of such
pledge. At the Purchaser’s expense, the Company will execute and deliver such
reasonable documentation as a pledgee or secured party of Securities may
reasonably request in connection with a pledge or transfer of the Securities.
(c) Certificates evidencing Underlying Shares shall not contain any legend
Registration Statement covering the resale of such Underlying Shares is
effective under the Securities Act, (ii) following any sale of such Underlying
Shares pursuant to Rule 144, (iii) if such Underlying Shares are eligible for
pronouncements issued by the staff of the Commission); provided, however, in
connection with the issuance of the Underlying Shares, Purchasers hereby agrees
to adhere to and abide by all prospectus delivery requirements under the
Securities Act and rules and regulations of the Commission and all applicable
state “blue sky” securities laws and in the event that the registration
statement covering the resale of the Underlying Shares is no longer effective
under the Securities Act and the Underlying Shares are not eligible for sale
under Rule 144(k), to return such certificates to the Company so that the legend
set forth in Section 4.1(b) may be affixed to the certificates evidencing such
shares. The Company shall cause its counsel to issue a legal opinion to the
Company’s transfer agent if so required by the Company’s transfer agent to
effect the removal of the legend hereunder. If all or any portion of a Warrant
is exercised at a time when there is an effective Registration Statement to
cover the resale of the Underlying Shares, or if such shares may be sold under
Rule 144(k) or if such legend is not otherwise required under applicable
requirements of the Securities Act (including judicial interpretations thereof)
then such shares shall be issued free of all legends. The Company agrees that at
such time as such legend is no longer required under this Section 4.1(c), it
will, no later than five Business Days following the delivery by Purchasers to
the Company or the Company’s transfer agent of a certificate representing
Underlying Shares, as applicable, issued with a restrictive legend (such five
Purchasers a certificate (or certificates, as the case may be) representing such
shares that is free from all restrictive and other legends. The Company may not
the Company that enlarge the restrictions on transfer set forth in this Section.
22
(d) In addition to Purchasers’ other available remedies, the Company shall pay
to Purchasers, in cash, as partial liquidated damages and not as a penalty, the
greater of (i) $500 for each Business Day after the Legend Removal Date, the
Warrant Share Delivery Date (as defined in Section 2(e)(ii) of the Warrant), or
other such date the Underlying Shares are to be delivered to the Purchasers, as
the case may be, until such certificate is delivered with an appropriate legend
or without a restrictive legend, as the case may be; and (ii) the difference in
the Market Value of the Underlying Shares (based on the closing bid price of the
Common Stock on the then principal Trading Market on the date such Securities
are submitted to the Company’s transfer agent) on the delivery date and the date
such shares are actually received by the Holder in such form as required herein
and in the Transaction Documents. Nothing herein shall limit a Purchaser’s right
to pursue equitable remedies for the Company’s failure to deliver certificates
representing any Securities as required by the Transaction Documents, including,
(e) Purchasers agree that the removal of the restrictive legend from
certificates representing Securities as set forth in this Section 4.1 is
predicated upon the Company’s reliance that Purchasers will sell any Securities
pursuant to either the registration requirements of the Securities Act,
including any applicable prospectus delivery requirements, or an exemption
therefrom.
4.2 Acknowledgment of Dilution. The Company acknowledges that the issuance of
the Underlying Shares may result in dilution of the outstanding shares of Common
Stock, which dilution may be substantial under certain market conditions. The
Company further acknowledges that its obligations under the Transaction
Documents, including without limitation its obligation to issue the Underlying
against Purchasers and regardless of the dilutive effect that such issuance may
have on the ownership of the other stockholders of the Company.
4.3 Furnishing of Information. At any time after the date hereof, if the
Company is or becomes subject to the rules, regulations, and/or reporting
requirements of the Exchange Act and as long as any Purchaser owns restricted
Securities, the Company covenants to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to the
Exchange Act. As long as any Purchaser owns Securities, if the Company is not
required to file reports pursuant to the Exchange Act, it will prepare and
furnish to each such Purchaser and make publicly available in accordance with
Rule 144(c) such information as is required for Purchaser to sell the Underlying
Shares under Rule 144. The Company further covenants that it will take such
further action as any holder of Securities may reasonably request, all to the
extent required from time to time to enable such Person to sell such Underlying
Shares without registration under the Securities Act within the limitation of
the exemptions provided by Rule 144.
23
4.4 Integration. The Company shall not sell, offer for sale or solicit offers
Act of the sale of the Securities to Purchasers or, if then listed or quoted on
a Trading Market, that would be integrated with the offer or sale of the
Securities for purposes of the rules and regulations of any Trading Market.
4.5 Exercise Procedures. The form of Notice of Exercise and Conversion Notice
included in the Warrant and Debenture, respectively, set forth the totality of
the procedures required of Purchasers in order to exercise the respective
Warrants or convert the Debentures. No additional legal opinion or other
information or instructions shall be required of any Purchaser to exercise its
Warrant or convert their Debenture. The Company shall honor exercises of the
Warrant and conversions of the Debenture and shall deliver Underlying Shares in
accordance with the terms, conditions and time periods set forth in such
Transaction Documents.
4.6 Shareholders Rights Plan. No claim will be made or enforced by the Company
or, to the knowledge of the Company, any other Person that any Purchaser is an
“Acquiring Person” under any shareholders rights plan or similar plan or
arrangement in effect or hereafter adopted by the Company, or that Purchaser
could be deemed to trigger the provisions of any such plan or arrangement, by
virtue of receiving Securities under the Transaction Documents or under any
other agreement between the Company and any Purchaser.
4.7 Non-Public Information. The Company covenants and agrees that neither it
nor any other Person acting on its behalf will provide any Purchaser or its
agents or counsel with any information that the Company believes constitutes
material non-public information, unless prior thereto such Purchaser shall have
information. The Company understands and confirms that such Purchaser shall be
of the Company.
4.8 Use of Proceeds. Except as set forth in Schedule 4.8, the Company shall use
the net proceeds from the sale of the Securities hereunder for working capital
purposes and not for the satisfaction of any portion of the Company’s debt
(other than payment of trade payables in the ordinary course of the Company’s
business and prior practices), to redeem any Common Stock or Common Stock
Equivalents or to settle any outstanding litigation. Schedule 4.8 shall detail
the Company’s expected use of proceeds received from the sale of the Securities
hereunder.
24
4.9 Reimbursement. If any Purchaser becomes involved in any capacity in any
Proceeding by or against any Person who is a stockholder of the Company (except
as a result of sales, pledges, margin sales or any similar transaction(s) by
such Purchaser to or with any current stockholder), solely as a result of such
Purchaser’s acquisition of the Securities under this Agreement, and such
Purchaser is successful in the Proceeding the Company will reimburse Purchaser
for its reasonable legal and other expenses (including the cost of any
investigation preparation and travel in connection therewith) incurred in
connection therewith, as such expenses are incurred. The reimbursement
obligations of the Company under this paragraph shall be in addition to any
liability which the Company may otherwise have, shall extend upon the same terms
and conditions to any Affiliates of such Purchaser who are actually named in
such Action, Proceeding or investigation, and partners, directors, agents,
employees and controlling persons (if any), as the case may be, of Purchaser and
any such Affiliate, and shall be binding upon and inure to the benefit of any
successors, assigns, heirs and personal representatives of the Company,
Purchaser and any such Affiliate and any such Person. The Company also agrees
that neither any Purchaser nor any such Affiliates, partners, directors, agents,
employees or controlling persons shall have any liability to the Company or any
Person asserting claims on behalf of or in right of the Company solely as a
result of acquiring the Securities under this Agreement.
4.10 Indemnification of Purchasers. Subject to the provisions of this Section
4.10, the Company will indemnify and hold the Purchasers and their respective
directors, officers, managers, shareholders, partners, employees and agents
(each, a “Purchaser Party”) harmless from any and all losses, liabilities,
obligations, claims, contingencies, damages, costs and expenses, including all
judgments, amounts paid in settlements, court costs and reasonable attorneys’
fees and costs of investigation that any such Purchaser Party may suffer or
incur as a result of or relating to (a) any breach of any of the
representations, warranties, covenants or agreements made by the Company in this
Agreement or in the other Transaction Documents or (b) any action instituted
against any Purchaser, or any of its Affiliates, by any stockholder of the
Company who is not an Affiliate of Purchaser, with respect to any of the
transactions contemplated by the Transaction Documents (unless such action is
based upon a breach of Purchaser’s representation, warranties or covenants under
the Transaction Documents or any agreements or understandings a Purchaser may
have with any such stockholder or any violations by a Purchaser of state or
federal securities laws or any conduct by such Purchaser which constitutes
fraud, gross negligence, willful misconduct or malfeasance). If any action shall
be brought against any Purchaser Party in respect of which indemnity may be
sought pursuant to this Agreement, such Purchaser Party shall promptly notify
defense thereof with counsel of its own choosing. Any Purchaser Party shall have
the right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Purchaser Party except to the extent that (i) the employment
thereof has been specifically authorized by the Company in writing, (ii) the
Company has failed after a reasonable period of time to assume such defense and
to employ counsel or (iii) in such action there is, in the reasonable opinion of
such separate counsel, a material conflict on any material issue between the
position of the Company and the position of such Purchaser Party. The Company
will not be liable to any Purchaser Party under this Agreement (i) for any
settlement by a Purchaser Party effected without the Company’s prior written
consent, which shall not be unreasonably withheld or delayed; or (ii) to the
extent, but only to the extent that a loss, claim, damage or liability is
attributable to any Purchaser Party’s breach of any of the representations,
warranties, covenants or agreements made by such Purchaser in this Agreement or
in the other Transaction Documents or any agreements or understandings a
Purchaser may have with any stockholder of the Company who is not an Affiliate
of Purchaser or any knowing or intentional violations by a Purchaser of state or
fraud, gross negligence, willful misconduct or malfeasance.
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4.11 Reservation and Listing of Securities.
(a) The Company shall maintain a reserve from its duly authorized shares of
Common Stock for issuance pursuant to the Transaction Documents in such amount
as may be required to fulfill its obligations in full under the Transaction
Documents.
(b) If, on any date, the number of authorized but unissued (and otherwise
unreserved) shares of Common Stock is less than the Required Minimum on such
date, then the Board of Directors of the Company shall use commercially
reasonable efforts to amend the Company’s certificate or articles of
incorporation to increase the number of authorized but unissued shares of Common
Stock to at least the Required Minimum at such time, as soon as possible and in
any event not later than the 75th day after such date; and
(c) The Company shall, if then applicable: (i) in the time and manner required
by the Trading Market or if the Common Stock is listed on another Trading
Market, promptly prepare and file with such Trading Market an additional shares
listing application covering a number of shares of Common Stock at least equal
to the Required Minimum on the date of such application, (ii) take all steps
necessary to cause such shares of Common Stock to be approved for listing on the
Trading Market as soon as possible thereafter, (iii) provide to Purchasers
evidence of such listing, and (iv) maintain the listing of such Common Stock on
any date at least equal to the Required Minimum on such date on such Trading
Market.
4.12 Future Priced Securities. From the date hereof until the date that less
than 20% in principal amount of the Debentures initially issued are outstanding,
affect any Subsequent Financing involving a Variable Rate Transaction.
4.13 Equal Treatment of Purchasers. No consideration shall be offered or paid
of any of the Transaction Documents unless the same consideration is also
offered to all of the parties to the Transaction Documents. Further, the Company
shall not make any payment of principal or interest on the Debentures in amounts
which are disproportionate to the respective principal amounts outstanding on
the Debentures at any applicable time. For clarification purposes, this
provision constitutes a separate right granted to each Purchaser by the Company
and negotiated separately by each Purchaser, and is intended to treat for the
Company the Debenture holders as a class and shall not in any way be construed
as the Purchasers acting in concert or as a group with respect to the purchase,
disposition or voting of Securities or otherwise.
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4.14 Registration Rights.
(a) Piggyback Registrations.
A. At any time after the Closing Date, if the Company proposes to register any
Common Stock for sale solely for cash, either for its own account or for the
account of a stockholder or stockholders (a “Company Registration”), then the
Company shall give Purchasers written notice of its intention to do so and of
the intended method of sale (the “Registration Notice”) not fewer than 30 days
prior to the anticipated filing date of the Registration Statement effecting
such Company Registration. Purchasers may request inclusion of any Registrable
Securities in such Company Registration by delivering to the Company, within 20
days after receipt of the Registration Notice, a written notice (the “Piggyback
Notice”) stating the number of shares of Registrable Securities proposed to be
included and that such shares are to be included in any underwriting only on the
same terms and conditions as the shares of Common Stock otherwise being sold
through underwriters under such Company Registration. The Company shall use its
best efforts to cause all Registrable Securities specified in the Piggyback
Notice to be included in the Company Registration and any related offering, all
to the extent requisite to permit the sale by Purchasers of such Registrable
Securities in accordance with the method of sale applicable to the other shares
of Common Stock included in the Company Registration. If the Company fails to
file the Registrable Securities in such Registration Statement, then, at the
option of Purchasers, for each full day that the Registrable Securities are not
fully registered, Company shall Purchasers, as partial liquidated damages and
not as a penalty, the sum of $1,000 per day until the shares are registered (not
to exceed $150,000 under any circumstances).
B. The Company’s obligation to include Registrable Securities in a Company
Registration pursuant to this Section 4.16(a) shall be subject to the following
limitations:
(i) The Company shall not be obligated to include any Registrable Securities in
a registration statement (I) filed on Form S-4 or Form S-8 or such other similar
successor forms then in effect under the Securities Act, (II) pursuant to which
the Company is offering to exchange its own securities, or (III) relating to
dividend reinvestment plans.
(ii) If the managing underwriter(s), if any, of an offering related to the
Company Registration determines in its reasonable judgment that marketing
factors require a limitation of the number of shares of Common Stock that can be
included in such offering, the managing underwriter(s) may exclude the
appropriate number of shares of Common Stock held by the stockholders of the
Company, including Purchasers, from such registration. If the managing
underwriter(s) determine(s) to exclude from such offering any Registrable
Securities that Purchasers desire to include or any shares of Common Stock that
other Company stockholders with applicable registration rights desire to
include, Purchasers and such other Company stockholders (except for such Person
or Persons, if any, upon whose demand such Company Registration is being made)
shall share pro rata in the portion of such offering available to them (the
“Available Portion”), with Purchasers and each such other Company stockholder
entitled to include in such Company Registration and related offering a number
of shares of Common Stock equal to the product of (I) the Available Portion and
(II) a fraction, the numerator of which is the total number of Registrable
Securities which Purchasers desires to include in such Company Registration (in
the case of Purchasers) or the total number of shares of Common Stock which such
other Company stockholder desires to include in such Company Registration (in
the case of each such other Company stockholder) and the denominator of which is
(x) the total of the number of Registrable Securities which Purchasers desire to
include in such Company Registration plus (y) the total number of shares of
Common Stock that such other Company stockholders desire to include in such
Company Registration.
27
C. Notwithstanding anything contained herein to the contrary, the Purchasers
agree as follows:
(i) At any time when a Registration Statement is effective, upon written notice
from the Company to Purchasers that the Company has determined in good faith
that the sale of restricted stock pursuant to the Registration Statement would
require disclosure of non-public material information, Purchasers shall suspend
sales of restricted stock pursuant to such Registration Statement until such
time as the Company notifies Purchasers that such material information has been
disclosed to the public or has ceased to be material, or that sales pursuant to
such Registration Statement may otherwise be resumed; provided, however, such
restrictions shall not exceed (a) an aggregate of ninety (90) days in any year,
(b) nor more than sixty (60) days during any single period of suspension.
(ii) Notwithstanding any other provision of this Agreement, in the event that
the Company undertakes a primary offering of shares of its unissued Common
Stock, which may also include other securities, excluding a primary offering
related to an employee benefit plan (a “Primary Offering”), in which all of the
shares of restricted stock are not included, Purchasers shall not sell,
transfer, make any short sale of, grant any option for the purchase of, or enter
into any hedging or similar transaction with the same economic effect as a sale
of, any Common Stock (or other securities) of the Company held by Purchasers
(except for shares included in the Primary Offering), during the thirty (30)
days prior to the commencement of any such Primary Offering and ending ninety
(90) days after completion of any such Primary Offering, unless the Company, in
the case of a non-underwritten Primary Offering, or the managing underwriter, in
the case of an underwritten Primary Offering, otherwise agrees in writing. The
Company may impose stop-transfer instructions with respect to the shares of
Common Stock (or other securities) subject to the foregoing restriction until
the end of said ninety (90) day period.
28
(b) Provisions Applying to All Registrations Under Section 4.14.
(i) Selection of Underwriter. Any Company Registration and related offering
shall be managed by the Company; the Company shall have the power to select the
managing underwriter(s) for such offering, and shall in consultation with the
managing underwriter(s) have the power to determine the offering price, the
underwriting discounts and commissions, the terms of the underwriting agreement
and, the timing of the registration and related offering. To the extent that
Purchasers participate in a Company Registration and related offering,
Purchasers shall enter into, and sell its Registrable Securities only pursuant
to, the underwriting arranged by the Company, and shall either commit to attend
the closing of the offering and take such other actions as may be reasonably
necessary to effect Purchasers’ participation in the offering and to provide any
assurances reasonably requested by the Company and the managing underwriter(s)
in that regard, or shall deliver to the Company in custody certificates
representing all Registrable Securities to be included in the registration and
shall execute and deliver to the Company a custody agreement and a power of
attorney, each in form and substance appropriate for the purpose of effecting
Purchasers’ participation in the Company Registration and related offering and
otherwise reasonably satisfactory to the Company. If Purchasers disapprove of
the features of the Company Registration and related offering, Purchasers or
such individual Purchaser, as the case may be, may withdraw therefrom (in whole
or part) by written notice to the Company and the managing underwriter(s)
delivered no later than ten days prior to the effectiveness of the applicable
registration statement and the Registrable Securities of Purchasers shall
thereupon be withdrawn from such registration.
(ii) The Company shall furnish Purchasers such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of the Registrable Securities owned by it that are
included in such registration;
(iii) Whenever required to include Registrable Securities in any registration or
to effect the registration of any Registrable Securities pursuant to this
Agreement, the Company shall, as expeditiously as reasonably possible, prepare
and file with the Commission a registration statement with respect to such
Registrable Securities and use all commercially reasonable efforts to cause such
registration statement to become effective, and use all commercially reasonable
efforts to keep such registration statement effective until the earliest of (a)
the date as of which all such Registrable Securities have been distributed by
Purchasers, (b) the date as of which all of the Registrable Securities covered
by such registration statement may be sold without restriction pursuant to Rule
144(k)(or any successor thereto) promulgated by the Commission under the
Securities Act, and (c) two years after the Closing Date. In addition, the
Company shall use all commercially reasonable efforts to register and qualify
the securities covered by such registration statement under such other
securities or Blue Sky laws of such jurisdictions as shall be reasonably
requested by the Purchasers, provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify as a broker-dealer in
any states or jurisdictions or to do business or to file a general consent to
service of process in any of such states or jurisdictions.
29
(iv) All expenses, other than underwriting discounts and commissions incurred in
connection the registrations contemplated herein, including, without limitation,
all registration, filing and qualification fees, printers’ and accounting fees,
fees and disbursements of counsel for the Company, and the reasonable fees and
disbursements of one counsel for each selling Purchaser, shall be borne by the
Company.
(c) Subject to the terms and conditions of this Agreement and the other
Transaction Documents, the right to cause the Company to register Registrable
Securities pursuant to this Agreement may be assigned by each Purchaser to any
transferee or assignee of such securities; provided that said transferee or
assignee is a transferee or assignee of at least five percent (5%) of the such
Purchaser’s Registrable Securities.
4.15 Qualifying Transaction. Within ninety (90) days following the date of the
Debenture, the Company shall close a Qualifying Transaction.
4.16 Subordination Agreements. Concurrent with or prior to the execution of
this Agreement, the Company and DIA shall execute and deliver to Purchaser a
Subordination Agreement in the form attached hereto as Exhibit H-1 with respect
to all present and future indebtedness of DIA to the Company, and concurrent
with or prior to the closing of the DIA Transaction, each holder of a note or
other indebtedness from DIA shall execute and deliver to Purchaser a
Subordination Agreement in the form attached hereto as Exhibit H-2 with respect
to such indebtedness.
ARTICLE V.
SMALL BUSINESS INVESTMENT COMPANY
5.1 Small Business Investment Company Provisions. The Company acknowledges that
Trident is a small business investment company (“SBIC”) licensed by the United
States Small Business Administration (the “SBA”), and makes the following
representations, warranties and covenants to Trident for so long as the
Debentures held by Trident are outstanding:
(a) Small Business Concern. The Company represents and warrants that it, taken
together with its “affiliates” (as that term is defined in 13 C.F.R. §121.103),
is a “Small Business Concern” within the meaning of 15 U.S.C. §662(5), that is
Section 103(5) of the Small Business Investment Act of 1958, as amended (the
“SBIC Act”), and the regulations thereunder, including 13 C.F.R. §107, and meets
the applicable size eligibility criteria set forth in 13 C.F.R. §121.301(c)(1)
or the industry standard covering the industry in which the Company is primarily
engaged as set forth in 13 C.F.R. §121.301(c)(2). Neither the Company nor any of
its Subsidiaries presently engages in any activities for which a small business
investment company is prohibited from providing funds by the SBIC Act, including
13 C.F.R. §107.
30
(b) Small Business Administration Documentation. On or before the Closing Date,
Trident shall have received SBA Form 480 (Size Status Declaration) and SBA Form
652 (Assurance of Compliance) which have been completed and executed by the
Company, and SBA Form 1031 (Portfolio Finance Report), Parts A and B of which
have been completed by the Company (the “SBA Documents”).
(c) Inspection. The Company will permit Trident or its representatives, at the
Company’s expense, and examiners of the SBA to visit and inspect the properties
and assets of the Company, to examine its books of account and records, and to
discuss the Company’s affairs, finances and accounts with the Company’s
officers, senior management and accountants, all at such reasonable times as may
be requested by Trident or the SBA.
(d) Informational Covenant. Within sixty (60) calendar days after the end of
the Company’s fiscal year, the Company will furnish or cause to be furnished to
Trident information required by the SBA concerning the economic impact of
Trident’s investment, for (or as of the end of) each fiscal year, including but
not limited to: (i) board minutes, (ii) information concerning full-time
equivalent employees, (iii) federal, state and local income taxes paid, (iv)
gross revenue, (v) source of revenue growth, (vi) after-tax profit and loss, and
(vii) and federal, state and local income tax withholding. Such information
shall be forwarded by the Company on a form provided by Trident. The Company
also will furnish or cause to be furnished to Trident such other information
regarding the business, affairs and condition of the Company as Trident may from
(e) Use of Proceeds. The Company will deliver to Trident from time to time
promptly following Trident’s request, a written report, certified as correct by
an officer, verifying the purposes and amounts for which proceeds from the
Debenture have been disbursed. The Company will supply to Trident such
additional information and documents as it may reasonably request with respect
to the Company’s use of proceeds, and will permit Trident to have access to any
and all the Company’s records and information and personnel as Trident deems
necessary to verify how such proceeds have been or are being used, and to assure
that the proceeds have been used for the purposes specified on Schedule 4.9.
31
(f) Activities and Proceeds.
(i) Neither the Company nor any of its Affiliates will engage in any activities
or use directly or indirectly the proceeds from the Debenture for any purpose
for which a SBIC is prohibited from providing funds by the SBIC Act, including
(ii) Without obtaining the prior written approval of Trident the Company will
not change, within one (1) year of the Closing Date, the Company’s business
activity from that described on Schedule 5.1(f) to a business activity which a
SBIC is prohibited from providing funds by the SBIC Act. The Company agrees that
any such changes in its business activity without such prior written consent of
Trident will constitute a material breach of the obligations of the Company
under the Transaction Documents (an “Activity Event of Default”).
ARTICLE VI.
MISCELLANEOUS
6.1 Fees and Expenses. At the closing, the Company shall reimburse Trident for
Purchasers’ legal fees and expenses up to the amount of $10,000. Except as
expressly set forth above and in the Transaction Documents to the contrary, each
party shall pay the fees and expenses of its advisers, counsel, accountants and
other experts, if any, and all other expenses incurred by such party incident to
the negotiation, preparation, execution, delivery and performance of this
Agreement and the other Transaction Documents. The Company shall pay all
transfer agent fees, stamp taxes and other taxes and duties levied in connection
with the issuance of any Securities.
6.1 Entire Agreement. The Transaction Documents, together with the exhibits and
to the subject matter hereof and supersede all prior agreements and
6.2 Notices. Any and all notices or other communications or deliveries required
given and effective on the earliest of (a) the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number set
forth on the signature pages attached hereto prior to 5:30 p.m. (Dallas, Texas
time) on a Business Day, (b) the next Business Day after the date of
is not a Business Day or later than 5:30 p.m. (Dallas, Texas time) on any
Business Day, (c) the second Business Day following the date of mailing, if sent
by U.S. nationally recognized overnight courier service, or (d) upon actual
for such notices and communications shall be as set forth on the signature pages
attached hereto.
32
6.3 Amendments; Waivers. No provision of this Agreement may be waived or
amended except in a written instrument signed, in the case of an amendment, by
the Company and Purchasers holding a majority of the Underlying Shares or, in
the case of a waiver, by the party against whom enforcement of any such waiver
condition or requirement hereof, nor shall any delay or omission of either party
to exercise any right hereunder in any manner impair the exercise of any such
right.
6.4 Construction. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
6.5 Successors and Assigns. This Agreement shall be binding upon and inure to
without the prior written consent of each Purchaser. Each Purchaser may assign
any or all of its rights under this Agreement to any Person to whom such
Purchaser assigns or transfers any Securities, provided such transferee agrees
in writing to be bound, with respect to the transferred Securities, by the
provisions hereof that apply to such Purchaser.
6.6 No Third-Party Beneficiaries. This Agreement is intended for the benefit of
the parties hereto and their respective successors and permitted assigns and is
Person, except as otherwise set forth in Section 4.9.
6.7 Governing Law. All questions concerning the construction, validity,
Texas, without regard to the principles of conflicts of law thereof, except to
the extent that the General Corporation Law of the State of Nevada (excluding
any provisions thereof relating to conflict of laws) governs the affairs and
operation of the Company. Each party agrees that all legal proceedings
the state and federal courts sitting in the City of Dallas, Texas. Each party
hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in the City of Dallas, Texas for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein (including with respect to the enforcement of any of
the Transaction Documents), and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or
proceeding is improper or inconvenient venue for such proceeding. THE PARTIES
HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY. If either party shall commence an
action or proceeding to enforce any provisions of the Transaction Documents,
then the prevailing party in such action or proceeding shall be reimbursed by
the other party for its attorneys’ fees and other costs and expenses incurred
with the investigation, preparation and prosecution of such action or
proceeding.
33
6.8 Survival. The representations and warranties contained herein shall survive
the Closing and the delivery of the Securities until the later of the
satisfaction or complete conversion of the Debenture.
6.9 Execution. This Agreement may be executed in two or more counterparts, all
delivered to the other party, it being understood that both parties need not
facsimile transmission, such signature shall create a valid and binding
executed) with the same force and effect as if such facsimile signature page
were an original thereof.
6.10 Severability. If any provision of this Agreement is held to be invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Agreement shall not in any way be affected or
impaired thereby and the parties will attempt to agree upon a valid and
enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.
6.11 Rescission and Withdrawal Right. Notwithstanding anything to the contrary
contained in (and without limiting any similar provisions of) the Transaction
Documents, whenever a Purchaser exercises a right, election, demand or option
under a Transaction Document and the Company does not timely perform its related
obligations within the periods therein provided, then such Purchaser may rescind
or withdraw, in its sole discretion from time to time upon written notice to the
Company, any relevant notice, demand or election in whole or in part without
prejudice to its future actions and rights; provided, however, in the case of a
rescission of an exercise of a Warrant, such Purchaser shall be required to
return any shares of Common Stock subject to any such rescinded exercise notice.
6.12 Replacement of Securities. If any certificate or instrument evidencing any
thereof, or in lieu of and substitution therefor, a new certificate or
instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested. The applicants for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party costs
associated with the issuance of such replacement Securities.
6.13 Remedies. In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, Purchasers and the
described in the foregoing sentence and hereby agrees to waive in any action for
specific performance of any such obligation the defense that a remedy at law
would be adequate.
34
6.14 Payment Set Aside. To the extent that the Company makes a payment or
payments to any Purchaser pursuant to any Transaction Documents or a Purchaser
to the Company, a trustee, receiver or any other person under any law
6.15 Usury. To the extent it may lawfully do so, the Company hereby agrees not
to insist upon or plead or in any manner whatsoever claim, and will resist any
and all efforts to be compelled to take the benefit or advantage of, usury laws
claim, action or proceeding that may be brought by Purchasers in order to
enforce any right or remedy under any Transaction Documents. Notwithstanding any
provision to the contrary contained in any Transaction Documents, it is
expressly agreed and provided that the total liability of the Company under the
the maximum lawful rate authorized under applicable law or regulation (the
“Maximum Rate”), and, without limiting the foregoing, in no event shall any rate
of interest or default interest, or both of them, when aggregated with any other
sums in the nature of interest that the Company may be obligated to pay under
the Transaction Documents exceed such Maximum Rate. It is agreed that if the
maximum contract rate of interest allowed by law or regulation and applicable to
the Transaction Documents is increased or decreased by statute or any official
of interest allowed by law or regulation will be the Maximum Rate applicable to
the Transaction Documents from the effective date forward, unless such
application is precluded by applicable law or regulation. If under any
circumstances whatsoever, interest in excess of the Maximum Rate is paid by the
Company to Purchasers with respect to indebtedness evidenced by the Transaction
Documents, such excess shall be applied by Purchasers to the unpaid principal
balance of any such indebtedness or be refunded to the Company, the manner of
handling such excess to be at Purchasers’ election.
6.16 Liquidated Damages. The Company’s obligations to pay any partial
35
6.17 Confidentiality. Purchasers acknowledge that information concerning the
DIA Transaction, the Qualifying Transaction and other matters that are the
subject matter of this Agreement and which have been specifically designated as
such by the Company may constitute material non-public information under United
States federal securities laws, and that United States federal securities laws
prohibit any person who has received material non-public information relating to
the Company from purchasing or selling securities of the Company, or from
communicating such information to any person under circumstances in which it is
reasonably foreseeable that such person is likely to purchase or sell securities
of the Company. Accordingly, until such time as any such non-public information
has been adequately disseminated to the public, Purchasers shall not directly or
indirectly, make any statements, public announcements or release to trade
publications or the press with respect to the subject matter of this Agreement,
purchase or sell any securities of the Company or communicate such information
to any other person; subject, however, (i) to the right of Purchasers to
exercise rights under the Transaction Documents, (ii) disclosures required by
applicable law or the SBA, and (iii) disclosures required pursuant to any
judicial proceeding or court order.
(Signature Page Follows)
36
Exhibit 10.2
COMPANY
ZONE MINING LIMITED
By: /s/ Stephen P. Harrington
Name: Stephen P. Harrington
Title: President
ZM ACQUISTION CORP.
Title: President
Address for Notice and Delivery:
111 Presidential Blvd.
Suite 165
Bala Cynwyd, PA 19004
Telephone: (610) 771-0680
Facsimile: (___) ___-____
Attn: Stephen P. Harrington
37
Exhibit 10.2
PURCHASER SIGNATURE PAGE
PURCHASERS: SUBSCRIPTION AMOUNT: TRIDENT GROWTH FUND, L.P.
$1,000,000
By: TRIDENT MANAGEMENT, LLC, its
GENERAL PARTNER
By: /s/ Scotty Cook
Name: Scotty Cook
Title: Authorized Member
Address for Notice and Delivery
700 Gemini
Houston, TX 77058
Telephone: (281) 488-8484
Facsimile: (281) 488-5353
Attn: Larry St. Martin
38
Exhibit 10.2
ATTACHMENTS
Exhibit A
Form of Debenture
Exhibit B
Form of Security Agreement
Exhibit C
Form of Warrant
Exhibit D
SBA Form 480
Exhibit E
SBA Form 652
Exhibit F
SBA Form 1031
Exhibit G
Form of DIA Security Agreement
Exhibit H
Subordination Agreement
Schedule 1.1
Terms of DIA Transaction
Schedule 3.1(a)
Subsidiaries
Schedule 3.1(e)
Filings, Consents and Approvals
Schedule 3.1(g)
Capitalization
Schedule 3.1(i)
Litigation
Schedule 3.1(l)
Regulatory Permits
Schedule 3.1(m)
Title to Assets (Outstanding liens)
Schedule 3.1(n)
Intellectual Property
Schedule 3.1(r)
Certain Fees (Broker Fees)
Schedule 3.1(u)
Registration Rights
Schedule 3.1(cc)
Indebtedness
Schedule 3.1(ff)
Material Liabilities
Schedule 3.1(gg)
Material Agreements
Schedule 3.1(hh)
Board of Directors
Schedule 3.1(ii)
Financial Statements
Schedule 4.8
Use of Proceeds
Schedule 5.1(f)
Business Activity
39
Exhibit 10.2
DISCLOSURE SCHEDULE
40
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Exhibit 10.47
EMPLOYMENT AGREEMENT
This agreement (the “Agreement”) between Tier technologies inc.,
a California corporation (the “Company”) and Marty V. Joyce Jr. (the
“Employee”), is entered into as of October 7, 2002 (the “Effective Date”).
Those capitalized terms used in this Agreement and not otherwise defined herein
shall have the meanings given to such terms in the Agreement
Agreement
In consideration of the mutual benefits derived from this
Agreement and of the agreements, covenants and provisions hereof, the parties
A. AT-WILL EMPLOYMENT. THE COMPANY EMPLOYS EMPLOYEE AS OF EFFECTIVE
DATE IN THE CAPACITY OF SENIOR VICE PRESIDENT AND GENERAL MANAGER, COMMERCIAL
SERVICES STRATEGIC BUSINESS UNIT (SBU), REPORTING TO MR. JAMES R. WEAVER,
PRESIDENT OR HIS DESIGNEE. EMPLOYEE WILL BE BASED AT COMPANY’S OFFICES IN
BOSTON, MASSACHUSETTS. EMPLOYEE AGREES TO UNDERTAKE SUCH BUSINESS TRAVEL AS IS
CUSTOMARY TO SUCH POSITION, AND AS SHALL FROM TIME TO TIME BE REQUESTED OF HIM
BY THE COMPANY. THE PARTIES AGREE THAT EMPLOYMENT AT THE COMPANY IS AT WILL AND
MAY BE TERMINATED BY EITHER THE COMPANY OR EMPLOYEE AT ANY TIME WITH OR WITHOUT
CAUSE AND WITH OR WITHOUT NOTICE. EMPLOYEE ACKNOWLEDGES THAT EMPLOYEE HAS NO
RIGHT TO BE EMPLOYED FOR A SPECIFIC TERM AND NO RIGHT TO INSIST ON SPECIFIC
GROUNDS FOR TERMINATION. EMPLOYEE ACKNOWLEDGES AND AGREES THAT THE AT WILL
NATURE OF THIS AGREEMENT EXTENDS TO ALL EMPLOYMENT DECISIONS AND THAT ANY CHANGE
IN THE TERMS AND CONDITIONS OF EMPLOYMENT, INCLUDING WITHOUT LIMITATION WORK
ASSIGNMENTS, PRODUCTION STANDARDS, JOB RESPONSIBILITIES, COMPENSATION AND
PROMOTIONS, SHALL BE AT THE COMPANY’S SOLE DISCRETION.
1. COMPENSATION AND BENEFITS
1.1 Base Salary. In consideration of and as compensation for the
services to be performed by the Employee hereunder, the Company shall pay the
Employee a base salary (the “Base Salary”) of not less than $300,000 per year,
payable semi-monthly in arrears in accordance with the Company’s regular payroll
practices.
1.2 Incentive Compensation. At the Company’s sole discretion,
Employee may be eligible to receive additional discretionary incentive
compensation of up to 50% of base salary per year based upon annual performance
targets set for both the Commercial Strategic Business Unit and the Company.
Annual incentive compensation eligibility will be based upon the Company’s
fiscal year beginning October 1, 2002.
1.3 Options. In addition, subject to approval by the Compensation
Committee of the Tier Board of Directors, the Employee will be granted stock
options for 100,000 shares, which are subject to the provisions of the Tier
Equity Incentive Plan. Options are typically granted during the first week of
the calendar quarter following the Effective Date of your employment and are
priced by the Compensation Committee of the Board of Directors according to the
market price at the time of grant. Options vest over five years with 20% of the
total grant vesting after completion of each 12-month period from the original
date of grant. Option grant and related documents are sent to each new employee
within 30 days following the date of the grant.
1
Upon a Change of Control event, as defined in Section 1.2, the vesting of these
options shall accelerate.
1.4 “Change in Control” means
(a) a sale or other disposition of all or substantially all of the
assets of the Company;
(b) a merger or consolidation in which the Company is not the
surviving entity and in which the shareholders of the Company immediately prior
to such consolidation or merger own less than fifty percent (50%) of the
surviving entity’s voting power immediately after the transaction;
(c) a reverse merger in which the Company is the surviving entity but
the shares of the Company’s Common Stock outstanding immediately preceding the
merger are converted by virtue of the merger into other property, whether in the
form of securities, cash or otherwise, and in which the shareholders of the
Company immediately prior to such merger own less than fifty percent (50%) of
the Company’s voting power immediately after the transaction;
any other capital reorganization in which more than fifty percent (50%) of the
shares of the Company entitled to vote are exchanged.
1.5 Participation in Benefit Plans. The Employee shall be entitled to
participate in any pension plans, profit-sharing plans and group insurance,
medical, hospitalization, disability and other benefit plans maintained by the
Company from time to time, as such are generally applicable to employees of the
Company and to the extent Employee is eligible under the general provisions
thereof.
1.6 Reimbursement of Expenses. The Company shall reimburse the
Employee for all business expenses, including, without limitation, travel,
entertainment and similar expenses, incurred by the Employee on behalf of the
Company if such expenses are ordinary and necessary business expenses incurred
on behalf of the Company pursuant to standard expense reimbursement policy. The
Employee shall timely provide the Company with such itemized accounts, receipts
or documentation for such expenses as are required under the Company’s policy
regarding the reimbursement of such expenses.
In addition, the Employee will be entitled to either the reimbursement of
parking expenses at the Boston office location or provided with Company paid
parking facilities, as appropriate.
1.7 Vacation and Personal Leave. The Employee shall be entitled to
four (4) weeks of vacation per annum, pro-rated in the year of hire and
terminated and accrued on a semi-monthly basis. The Employee shall also be
entitled to other paid personal leave in accordance with The Company’s policy.
2. TERMINATION
2.1 Termination.
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(a) Termination for Cause. The Company may terminate Employee’s
employment under this Agreement, in its sole discretion, “for Cause.” Grounds
for the Company to terminate this Agreement “for Cause” shall be limited to the
(i) the Employee’s failure to substantially perform Employee’s duties
with the Company in good faith (provided in the case of illness, injury or
disability that the Company has provided reasonable accommodation under
applicable disabilities laws), after a demand for substantial performance is
delivered to Employee by the Company which identifies, in reasonable detail, the
manner in which the Company believes that the Employee has not substantially
performed Employee’s duties in good faith and such Employee has not, in the sole
discretion of the Company, improved the performance of Employee’s duties during
a period of fourteen (14) days from such demand for substantial performance;
(ii) the Employee’s commission of any act which detrimentally affects
the Company, including, without limitation, an act of dishonesty, fraud, willful
disobedience, gross misconduct ,breach of duty, intentional destruction or theft
of Tier property, material violation of Tier policies or falsification of Tier
documents;
(iii) the Employee’s commission of any act in contravention of
Employee’s undertakings contained in Section 3 hereof; or
(iv) the Employee’s conviction of a felony or a misdemeanor involving
dishonesty or moral turpitude.
(b) Termination Without Cause. The Company may terminate Employee’s
employment under this Agreement without Cause or notice at any time.
(c) Notice of Termination. Any purported termination of employment by
the Company or by the Employee shall be communicated by written notice of
termination to the other party hereto in accordance with Section 4.1 hereof.
Any notice of termination of employment given hereunder shall effect termination
as of the date specified in such notice, or, in the event no such date is
specified, on the last day of the month in which such notice is delivered or
deemed delivered as provided in Section 4.1 hereof.
(d) Effect of Termination.
(i) Upon the termination of the Employee’s employment as a result of
Employee’s disability, the Employee shall be entitled to receive for an
additional thirty (30) days after the date of such termination, Employee’s Base
Salary in effect at the time of termination and any and all benefits to which
Employee is entitled on the date of such termination under the Company’s
pension, life, disability, accident and health and other benefit plans in
accordance with the provisions of such plans.
(ii) Upon termination of the Employee’s employment as a result of
Employee’s death, the Employee’s heirs, devisees, executors or other legal
representatives shall receive for an additional thirty (30) days from the date
of death, Employee’s Base Salary in effect at the time of death.
3
(iii) If the Employee’s employment hereunder shall be terminated by the
Company without Cause, or if the Employee terminates his employment for “Good
Reason” (Good Reason being solely defined as the Company reducing the Employee’s
Base Pay as of the Effective Date of this Agreement by more than 5% without the
Employee’s consent or the Company requiring the Employee to relocate to a
location greater than 50 miles from the greater Boston metropolitan area without
the Employee’s consent), then, and only then, shall the Employee shall be
entitled to the Employee’s Base Salary and accrued and unused vacation earned
through the date of termination, subject to standard deductions and
withholdings, and upon the Employee’s furnishing to the Company an executed
waiver and release of claims, in the form of which is attached hereto as Exhibit
A, the Employee shall also be entitled to continuation of the Employee’s Base
Salary in effect at the time of termination for a period of six (6) months (the
“Severance Period”), subject to Company standard payroll schedule, deductions
and withholdings. Where termination of employment occurs as a result of a Change
of Company Control, Employee will only be entitled to continuation of base
salary for the Severance Period where Employee provides transition services for
a period of one year at the request of the Buyer, where such transition services
will be compensated at the same level as Mr. Joyce’s total compensation for the
previous 12 month period. If such transition services are requested by Buyer,
Buyer shall pay Employee for transition services at Employee’s current Base
Salary immediately prior to the Change of Control date. Such payment by Buyer
shall not reduce the amount of the Severance payment under this Section. In
addition pursuant to this Section, if Employee elects continued coverage under
federal COBRA law, the Company shall pay the premiums of Employee’s group health
insurance coverage, including coverage for Employee’s eligible dependents, for a
maximum period of six (6) months following such termination; provided, however,
that: (i) the Company shall pay premiums for Employee’s eligible dependents
only for coverage for which those eligible dependents were enrolled immediately
prior to the termination; and (ii) the Company’s obligation to pay such premiums
shall cease immediately upon the date Employee becomes covered under any other
group health plan (as an employee or otherwise).
(iv) If the Employee’s employment hereunder shall be terminated by the
Company for Cause or by the Employee by resignation for other than Good Reason,
the Company shall have no further obligation to the Employee under this
Agreement other than accrued Base Salary and other accrued benefits required by
law, prorated to the date of termination.
3. NON-COMPETITION, NON-SOLICITATION AND
CONFIDENTIALITY
3.1 Non-Competition. For the period of one year (1) from the date of
termination of Employee’s employment, the Employee shall not, directly or
indirectly:
(a) carry on or engage in with any Person engaged in, in any territory
in which the Continuing Business is carried on during Employee’s employment, any
activity that is in competition with the Continuing Business; or
(b) do or say anything which is harmful to the reputation of the
Continuing Business or which may lead any person to cease to deal with the
Continuing Business on substantially equivalent terms to those previously
offered or at all; or
4
(c) seek to contract with or engage any person who has been contracted
with or engaged to manufacture, assemble, supply or deliver products, goods,
materials or services which will be competitive with the Continuing Business.
3.2 Non-solicitation. For the period of one (1) year from the date of
indirectly:
(a) employ or solicit for employment any person whom Employee knows to
be an employee of the Company or any subsidiary of the Company or induce or
attempt to induce any such person to terminate his or her employment with the
Company or such subsidiary; or
(b) seek in competition with the Company to procure orders from or do
business with or procure directly or indirectly any other person to procure
orders from or do business with any person who has been a customer of the
Company during the time the Employee has been employed by the Company and the
two year period preceding his employment.
3.3 Confidential Information.
(a) The Employee acknowledges that the Confidential Information (as
hereinafter defined) of the Company is valuable, special and unique to the
Continuing Business, and that such Continuing Business depends on such
Confidential Information; and that the Company wishes to protect such
Confidential Information by keeping it confidential for the use and benefit of
the Company. Based on the foregoing, the Employee undertakes:
(i) to keep any and all Confidential Information in trust for the use
and benefit of the Company;
(ii) except as required by the Employee’s duties hereunder or as may
be authorized in writing by the Company, not at any time during and for a period
of one (1) year after termination of Employee’s employment with the Company, to
disclose or use, directly or indirectly, any Confidential Information of the
Company;
(iii) to take all reasonable steps necessary, or reasonably requested by
the Company, to ensure that all Confidential Information of the Company is kept
confidential for the use and benefit of the Company; and
(iv) upon termination of Employee’s employment with the Company or at
any other time the Company may in writing so request, to promptly deliver to the
Company all materials constituting Confidential Information (including all
copies thereof) that are in Employee’s possession or under Employee’s control.
Further, the Employee undertakes that, if requested by the Company, Employee
shall return any Confidential Information pursuant to this subsection and shall
not make or retain any copy of or extract from such materials.
(b) For purposes of this Section, “Confidential Information” means any
and all information developed by or for the Company of which the Employee gained
knowledge by reason of Employee’s employment with the Company under this A
5
known in the industry in which the Company is or may become engaged.
Confidential Information includes, but is not limited to, any and all
information developed by or for the Company or customers of the Company,
concerning plans, marketing and sales methods, materials, processes, business
forms, procedures, devices used by the Company or contractors or customers with
which the Company has dealt, plans for development of new products, services and
expansion into new areas or markets, internal operations and any trade secrets
and proprietary information of any type owned by the Company together with all
written, graphic and other materials relating to all or any part of the same.
(c) Employee agrees that as a condition of employment Employee will
execute and abide by the Company’s Nondisclosure and Proprietary/Confidential
Information Agreement (the “Confidentiality Agreement”), attached hereto as
Exhibit B. To the extent the Confidentiality Agreement conflicts with or is
inconsistent with this Agreement, this Agreement shall control.
3.4 Remedies.
(a) Injunctive Relief. Employee acknowledges and agrees that the
covenants and obligations contained in Sections 3.1, 3.2 and 3.3 hereof relate
to special, unique and extraordinary matters and that a violation of any of the
terms of said Sections will cause the Company irreparable injury for which
adequate remedy at law is not available. Therefore, Employee agrees that the
Company shall be entitled to an injunction, restraining order, or other
equitable relief from any court of competent jurisdiction, restraining the
Employee from committing any violation of such covenants and obligations.
(b) Remedies Cumulative. The Company’s rights and remedies in respect
of this Section are cumulative and are in addition to any other rights and
remedies the Company may have at law or in equity.
4. MISCELLANEOUS
4.1 Notices. Any written notice, required or permitted under this
Agreement, shall be deemed sufficiently given if either hand delivered or by fax
(with written confirmation of receipt) or nationally recognized overnight
courier. Written notices must be delivered to the receiving party at its
address or facsimile number on the signature page of this Agreement. The
parties may change the address or facsimile number at which written notices are
to be received in accordance with this Section.
4.2 Prevailing Party. If any litigation is commenced between the
parties hereto concerning this Agreement or their respective rights, duties and
obligations hereunder, the party prevailing in that litigation shall be entitled
to reasonable attorney’s fees, to be fixed by the court as part of the costs of
the litigation or established in a separate action brought to recover those
fees, in addition to any other relief that may be granted.
4.3 Assignment. The Employee may not assign, transfer or delegate his
rights or obligations hereunder, and any attempt to do so shall be void. This
Agreement shall be binding upon and shall inure to the benefit of the Company
6
4.4 Entire Agreement. This Agreement contains the entire agreement of
the parties hereto with respect to the subject matter hereof, and all other
prior agreements, written or oral, are hereby merged herein and are of no
further force or effect. This Agreement may be modified or amended only by a
written agreement that is signed by the Company and the Employee. No waiver of
any section or provision of this Agreement shall be valid unless such waiver is
in writing and signed by the party against whom enforcement of the waiver is
sought. The waiver by the Company of any section or provision of this Agreement
shall not apply to any subsequent breach of this Agreement. Captions to the
various Sections of this Agreement are for the convenience of the parties only
and shall not affect the meaning or interpretation of this agreement. This
Agreement may be executed in several counterparts, each of which shall be deemed
an original, but together they shall constitute one and the same instrument.
4.5 Severability. The provisions of this Agreement shall be deemed
severable, and if any part of any provision is held illegal, void or invalid
under applicable law, such provision may be changed to the extent reasonably
necessary to make the provision, as so changed, legal valid and binding. If any
provision of this Agreement is held illegal, void or invalid in its entirety,
the remaining provisions of this Agreement shall not in any way be affected or
impaired but shall remain binding in accordance with their terms.
4.6 Continuing Obligations. The provisions contained in Sections
2.1(d), 3, 4.2, 4.6 and 4.7 of this Agreement shall continue and survive the
4.7 Applicable Law. This Agreement and the rights and obligations of
the Company and the Employee hereunder shall be governed by and construed and
enforced under the laws of the Massachusetts, without reference to any
Tier Technologies, Inc.
By:
/s/ James R. Weaver
Print Name:
James R. Weaver
Title:
President
/s/ Martin V. Joyce
[Employee]
Address:
Fax Number:
7
EXHIBIT A
RELEASE AND WAIVER OF CLAIMS
In consideration of the payments and other benefits set forth in Section
2.1(d)(iii) of the Employment Agreement dated (Month) __ 2002, to which this
form is attached, I, ________, hereby furnish Tier Technologies, Inc (“the
Company”), with the following release and waiver (the “Release and Waiver”).
I hereby release, and forever discharge the Companies, its officers, directors,
agents, employees, stockholders, successors, assigns, affiliates, parent,
subsidiaries, and benefit plans, of and from any and all claims, liabilities,
demands, causes of action, costs, expenses, attorneys’ fees, damages,
indemnities and obligations of every kind and nature, in law, equity, or
otherwise, known and unknown, suspected and unsuspected, disclosed and
undisclosed, arising at any time prior to and including my employment
termination date with respect to any claims, including but not limited to those
claims relating to my employment and the termination of my employment; including
but not limited to, claims pursuant to any federal, state or local law relating
to employment, including, but not limited to, discrimination claims, claims
under any local statute governing discrimination, and the Federal Age
Discrimination in Employment Act of 1967, as amended (“ADEA”), or claims for
wrongful termination, breach of the covenant of good faith, contract claims,
tort claims, and wage or benefit claims, including but not limited to, claims
for salary, bonuses, commissions, stock, stock options, vacation pay, fringe
benefits, severance pay or any form of compensation.
I also acknowledge that I have read and understand Section 1542 of the
California Civil Code or any comparable statute under any other state, which
with the debtor.” I hereby expressly waive and relinquish all rights and
benefits under that section and any law of any jurisdiction of similar effect
with respect to any claims I may have against the Companies.
I acknowledge that, among other rights, I am waiving and releasing any rights I
may have under ADEA, that this Release and Waiver is knowing and voluntary, and
that the consideration given for this Release and Waiver is in addition to
anything of value to which I was already entitled as an employee of the
Companies. I further acknowledge that I have been advised, as required by the
Older Workers Benefit Protection Act, that: (a) the Release and Waiver granted
herein does not relate to claims which may arise after this Release and Waiver
is executed; (b) I have the right to consult with an attorney prior to executing
this Release and Waiver (although I may choose voluntarily not to do so); and if
I am over 40 years of age upon execution of this Release and Waiver: (c) I have
twenty-one (21) days from the date of termination of my employment with the
Company in which to consider this Release and Waiver (although I may choose
voluntarily to execute this Release and Waiver earlier); (d) I have seven (7)
days following the execution of this Release and Waiver to revoke my consent to
this Release and Waiver; and (e) this Release and Waiver shall not be effective
until the seven (7) day revocation period has expired.
Date:
By:
Print Name:
8
EXHIBIT B
NONDISCLOSURE and PROPRIETARY/CONFIDENTIAL
INFORMATION AGREEMENT
1. Introduction:
This is an agreement between the employee named below, hereafter referred to as
Employee, in which the Employee agrees not to disclose trade secrets or other
Confidential Information belonging to TIER, hereafter referred to as TIER, and
in which Employee further agrees not to compete with TIER, as described below.
2. Agreement:
In consideration of Employee’s association with TIER, Employee agrees to keep
all Confidential Information, as described below, including but not limited to
all trade secrets and/or confidential or proprietary information of TIER (and of
its customers, suppliers, and other third parties who entrust confidential
information to TIER) in strict confidence and to take all reasonable precautions
against accidental disclosure of the same. This agreement encompasses all
Confidential Information and TIER trade secrets known to Employee as well as
Confidential Information and/or trade secrets known to Employee during his/her
tenure with TIER. In addition, Employee agrees that he/she will not use the
Confidential Information or trade secrets of TIER, either directly or
indirectly, for any purposes except for the performance of the Employee
responsibilities in furtherance of TIER’s business, unless otherwise expressly
authorized in writing in advance.
3. Confidential Information and Proprietary Rights:
“Confidential Information” is any information, process, idea, or know-how that
is not generally known in the industry; that TIER considers confidential; that
gives TIER a competitive advantage; or that affects or relates to TIER, its
business, or its methods of operation, or which is confidential information of
third–party customers, contractors, or other parties and which is in the
possession of TIER. Examples of Confidential Information include, but are not
limited to, the following:
• Computer program listing, source code, and object code.
• Customer lists, marketing
information, financial information, business strategies, project information,
price lists, cost information, business forms, and financial records.
• Product design, contents, formulas,
packaging, marketing, or anything related to the unique character or products or
TIER’s business.
Employee understands that the above list is intended to be illustrative rather
than comprehensive, and that other Confidential Information covered by the
Agreement may currently exist or arise in the future. In the event that
Employee is not sure whether certain information is Confidential Information
within the scope of this Agreement, Employee will treat that information as
confidential unless informed in writing by TIER to the contrary. In the event
of any dispute relating to use or disclosure of Confidential Information,
Employee agrees that he/she shall have the burden of proof in establishing that
the information was not confidential or that its disclosure was authorized.
Employee understands and hereby agrees that any misappropriation, disclosure, or
misuse of Confidential Information as provided in this Agreement would cause
irreparable harm to TIER and to TIER’s business. Employee agrees to surrender
to TIER all notes, records, and documentation in any form that was supplied to
Employee by TIER or was used, created, or controlled by Employee during his/her
association with TIER upon request by TIER, and in any event upon termination of
Employee’s association with TIER. The materials to be surrendered include all
materials whether in written or machine-readable form. Employee agrees that
he/she shall not, by virtue of his/her association with TIER, acquire any rights
in any Confidential Information, good will, or other asset or property of TIER,
whether tangible or intangible, and whether or not created by Employee. If any
such rights become vested in Employee by operation of laws or otherwise,
Employee agrees to assign the same to TIER without further consideration
immediately upon TIER’s request.
Employee understands and agrees a) that any and all of his/her work product
created, or in the process of being created, during hours Employee is performing
services for TIER and/or any and all of his/her work product created or in the
process of being created outside hours Employee is performing services for TIER,
but which are related to Confidential Information of TIER, defined above, is and
shall remain the property of TIER, b) that all proprietary rights therein shall
be held by TIER, and c) that Employee shall assist in all reasonable efforts to
protect such rights for TIER, to transfer such rights to TIER, and to verify
that such rights are owned by TIER.
Confidential Information shall not be deemed to include the following: (i)
information that becomes available to the public other than through breach of
this Agreement; or (ii) information that is lawfully received by Employee from a
third party without misappropriation or breach of this Agreement.
4. Remedies:
TIER shall have all rights and remedies under the Uniform Trade Secret Act
(California Civil Code Section 3426 et seq.) and Business & Professions Code
Section 17200 et seq., in addition to all other rights, damages, and remedies
that the law and/or equity may provide. TIER’s customers, clients, and other
third parties who have entrusted TIER with Confidential Information are intended
third–party beneficiaries of this Agreement, and may enforce it for their
benefit.
9
5. Attorneys’ Fees:
If any arbitration or other action arises relating to this Agreement, the
prevailing party shall be entitled to recover all costs, expenses, and
reasonable attorneys’ fees incurred, specifically including expert witness fees.
6. Duration and Effect:
This Agreement is considered by both parties to be a binding contract, and shall
remain in effect throughout the period of association between Employee and TIER
and for one (1) year following the termination of association, except that the
obligations set forth in Paragraph 2 shall survive termination of this
Agreement. Should any provision of this Agreement be held to be invalid, void,
and shall continue in full force and effect, and such invalid, void, or
unenforceable provisions shall be deemed not to be a part of this Agreement. If
any court or other decision-making body determines that the term or area of any
covenant herein is too long or too broad to be enforceable, the term and/or area
shall be automatically amended to come within a reasonable and enforceable term
and/or area.
7. Applicable Law:
This Agreement shall be construed under the law of the District of Columbia,
without giving any effect to conflict of law principles.
Execution:
This Agreement is executed this ____ day of ___________________ .
month/year
Employee Signature
Date
Marty Joyce
Please PRINT name here
10
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Northeast Island, Corp. 100 East Cook Avenue Suite 101 Libertyville, IL 60048 July 12, 2010 Via EDGAR and FedEx Stacie D. Gorman Mail Stop 3010 Securities and Exchange Commission treet N.E. Washington, D.C. 20549 Re: Northeast Island, Corp. Amendment No. 3 to Form 10 Form 10-Q for the quarter ended April 30, 2010 Filed June 25, 2010 File No. 000-53903 Dear Ms. Gorman: By letter dated July 8, 2010, the staff (the “Staff,” “you,” or “your”) of the United States Securities & Exchange Commission (the “Commission”) provided Northeast Island, Corp. (“Northeast” or, the “Company,” “we,” “us,” or “our”) with its comments on the Company’s Amendment No. 3 to Form 10 (the “Amendment No. 3”) originally filed on June 25, 2010. We are in receipt of your letter and set forth below are the Company’s responses to the Staff’s comments. For your convenience, the questions are listed below, followed by the Company’s response. Form 10-Q for the quarter ended April 30, 2010 Exhibit 31.1 1.Please revise the certification to conform exactly to the language set forth in Item 601(b)(31) of Regulation S-K.Specifically, we note that you have added an additional paragraph [6] to your certification.We also note that your certification includes the introductory language referring to internal control over financial reporting in paragraph 4 and paragraph 4(b) despite the fact that you have not included, and are not required at this time to include, a management’s report on internal control.Please revise your certification to remove paragraphs 6 and 4(b) as well as the introductory language referring to internal control over financial reporting in paragraph 4.You are permitted to file an abbreviated amendment consisting of a cover page, explanatory note, signature page and paragraphs 1, 2, 4, and 5 of the certification. RESPONSE: We have revised Exhibit 31.1 to the Form 10-Q to conform to the language set forth in Item 601(b)(31) of Regulation S-K. Additionally, the Company acknowledges that: · The Company is responsible for the adequacy and accuracy of the disclosure in the filing; · Staff comments or changes to disclosure in response to staff comments do not foreclose the Commission fromtaking any action with respect to the filing; and · The Company may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under e federal securities laws of the United States. Sincerely, /s/ Gene Maher Gene Maher Chief Executive Officer
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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 30, 2013 SECURITIES ACT FILE NO. 002-30447 INVESTMENT COMPANY ACT FILE NO. 811-01728 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-1A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933: [X] Pre-Effective Amendment No. [ ] Post-Effective Amendment No. 65 [X] and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940: [X] Amendment No. 44 [X] (Check Appropriate Box or Boxes) NICHOLAS FUND, INC. (Exact Name of Registrant as Specified in Charter) 700 North Water Street Milwaukee, WI 53202 (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, Including Area Code (414) 272-4650 Jeffrey T. May, Senior Vice President Nicholas Fund, Inc. 700 North Water Street Milwaukee, WI 53202 (Name and Address of Agent for Service) WITH A COPY TO: K. Thor Lundgren, Esq. Jason T. Thompson, Esq. Michael Best & Friedrich LLP 100 East Wisconsin Avenue, Suite 3300 Milwaukee, WI 53202 It is proposed that this filing will become effective (check appropriate box): [ ] Immediately upon filing pursuant to paragraph (b) of Rule 485. [ x ] On July 31, 2013 pursuant to paragraph (b) of Rule 485. [ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485. [ ] On (date) pursuant to paragraph (a)(1) of Rule 485. [ ] 75 days after filing pursuant to paragraph (a)(2) of Rule 485. [ ] On (date) pursuant to paragraph (a)(2) of Rule 485. If appropriate, check the following box: [ ] This post-effective amendment designates a new effective date for a previously filed post-effective amendment. PROSPECTUS J ULY 3 1 , 2 0 1 3 Nicholas Fund, Inc. – NICSX Nicholas Fund, Inc.’s (the “Fund”) investment objective is long-term growth. The Securities and Exchange Commission has not approved or disapproved of the Fund’s shares or determined whether this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. MILWAUKEE, WISCONSIN 53202 WWW.NICHOLASFUNDS.COM TABLE OF CONTENTS Page SUMMARY 1 Investment Objective 1 Fees and Expenses of the Fund 1 Portfolio Turnover 1 Principal Investment Strategies 2 Principal Risks of Investing 2 Performance 3 Investment Adviser 3 Portfolio Managers 3 Purchase and Sale of Fund Shares 4 Tax Information 4 Payments to Broker-Dealers and Other Financial Intermediaries 4 INVESTMENT OBJECTIVE, PRINCIPAL INVESTMENT STRATEGIES, RELATED RISKS AND DISCLOSURE OF PORTFOLIO HOLDINGS 5 FINANCIAL HIGHLIGHTS 8 THE FUND’S INVESTMENT ADVISER 9 PRICING OF FUND SHARES 10 PURCHASE OF FUND SHARES 11 REDEMPTION AND EXCHANGE OF FUND SHARES 13 USE OF A PROCESSING INTERMEDIARY TO PURCHASE AND REDEEM FUND SHARES 15 FREQUENT PURCHASES AND REDEMPTIONS OF FUND SHARES 16 TRANSFER OF FUND SHARES 17 DISTRIBUTION OF FUND SHARES 17 DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAX STATUS 17 DIVIDEND AND DISTRIBUTION REINVESTMENT PLAN 18 SYSTEMATIC WITHDRAWAL PLAN 18 TAX DEFERRED ACCOUNTS 18 FOR MORE INFORMATION ABOUT THE FUND Back Cover SUMMARY Investment Objective The Fund strives to increase the value of your investment over the long-term (“long-term growth”). Fees and Expenses of the Fund The table below describes the fees and expenses that you may pay if you buy and hold shares of the Fund. Shareholder Fees (fees paid directly from your investment) Maximum Sales Charge (Load) Imposed on Purchases None Maximum Deferred Sales Charge (Load) None Maximum Sales Charge (Load) Imposed on Reinvested Dividends None Wire Redemption Fee $ 15.00 Exchange Fee None Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) Management Fees 0.65 % Distribution (12b-1) Fees None Other Expenses 0.09 % Acquired Fund Fees and Expenses 0.01 % Total Annual Fund Operating Expenses 0.75 % (1) “Acquired Fund Fees and Expenses” are those expenses incurred indirectly by the Fund as a result of acquiring investments in shares of one or more other investment companies. (2) Total Annual Fund Operating Expenses may not correlate to the “Ratio of expenses to average net assets” provided in the Financial Highlights. The information in the Financial Highlights reflects the operating expenses of the Fund and does not include Acquired Fund Fees and Expenses. Example: This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. One Three Five Ten Year Years Years Years The Example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions, your costs would be: $ 77 $ 240 $ 417 $ 930 Portfolio Turnover The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses in the example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 25.23% of the average value of the portfolio. 1 Principal Investment Strategies To pursue the Funds investment objective of long-term growth, it primarily invests in common stocks of domestic small, medium- and large-sized companies believed to have growth potential. The Fund believes a companys annual sales volume and market capitalization (the number of shares outstanding multiplied by the per share price) are the factors most illustrative of a companys size. In distinguishing company size in terms of sales volume, the Fund considers a companys sales volume relative to peer companies in the companys industry. In terms of market capitalization, the Fund generally considers companies with market capitalizations up to $2 billion as small, between $2 billion and $10 billion as medium and greater than $10 billion as large. The Fund looks for established companies with the potential for superior growth in sales and earnings in a diversified group of industries. The Funds investment philosophy is basically a long-term growth philosophy, based upon the assumption that if a company achieves superior growth in sales and earnings, eventually the companys stock will achieve superior performance. It is anticipated that a major portion of the Funds portfolio will be invested in common stocks of the types of companies, and in the manner, as described above. Principal Risks of Investing As with any mutual fund, the Fund cannot guarantee that it will achieve its goals or that its performance will be positive over any period of time. The Funds investments change in value. Consequently, the value of your Fund shares may change. If the value of the Fund shares or the values of the Funds investments go down, you may lose money. The principal risks of investing in the Fund are: Market Risk Market risk involves the possibility that the value of the Funds investments will fluctuate as the stock market fluctuates over short- or longer-term periods. Common stock prices tend to be more volatile than other investment choices. Portfolio-Specific Risk From time to time, the value of an individual company may decline due to a particular set of circumstances affecting that company, its industry or certain companies within the industry, while having little or no impact on other similar companies within the industry. Although the Fund will invest most of its assets in the securities of medium- and large- sized companies, the Fund may face additional risks due to its investments in small-sized companies. Securities of small- to medium-sized companies often fluctuate in price more than common stocks of larger companies. Selection Risk The Fund also faces selection risk, which is the risk that the stocks the Fund purchases will underperform markets or other mutual funds with similar investment objectives and strategies. Since there are risks inherent in all investments in securities, there is no assurance that the Funds objective will be achieved. 2 Performance The bar chart shown below provides some indication of the risks of investing in the Fund. The chart shows the variability of the Fund’s total return for the last ten calendar years . Updated performance information for the Fund is available on our website at www.nicholasfunds.com. (1) The Fund’s fiscal year end is March 31. The Fund’s calendar year-to-date return (six months) as of June 30, 2013 was 15.25%. For the ten calendar year periods shown in the above bar chart, the highest quarterly return was 21.93% (for the quarter ended June 30, 2009) and the lowest quarterly return was -21.15% (for the quarter ended December 31, 2008). This next table shows how the Fund’s average annual total returns for the one, five and ten year periods ending on December 31, 2012 (the Fund’s most recently completed calendar year), compared to the returns of a broad measure of market performance. The table also shows the Fund’s average annual total returns after taxes on distributions and after taxes on distributions and the redemption of all of your Fund shares. After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. One Five Ten Year Year Year Nicholas Fund, Inc. Return Before Taxes 17.57 % 6.40 % 8.70 % Return After Taxes on Distributions 16.60 % 5.35 % 7.57 % Return After Taxes on Distributions and Sale of Fund Shares 12.61 % 5.31 % 7.47 % Standard & Poor’s 500 Index (reflects no deduction for fees, expenses or taxes) 16.00 % 1.66 % 7.10 % Of course, the Fund’s past performance (before and after taxes) is no guarantee of its future returns. Investment Adviser Nicholas Company, Inc. serves as the Fund’s investment adviser (the “Adviser”). Portfolio Managers Mr. Albert O. Nicholas is the Portfolio Manager of the Fund and is primarily responsible for the day-to-day management of the Fund’s portfolio. Mr. Albert Nicholas is President and a Director of the Fund and has served as Portfolio Manager of the Fund since 1969. Mr. David O. Nicholas is Associate Portfolio Manager of the Fund. Mr. David Nicholas is a Senior Vice President of the Fund and has served as Associate Portfolio Manager of the Fund since April 2011. 3 Purchase and Sale of Fund Shares The minimum initial investment for the Fund is $500. The minimum subsequent investment is $100 except for those shareholders participating in an automatic investment plan established with the Fund, the minimum is $50. The Funds shares are redeemable. Generally, shareholders may redeem some or all of their shares without charge by the Fund on any day when the New York Stock Exchange is open by written request, by telephone request by calling 800-544-6547, by accessing your account online at www.nicholasfunds.com or by wire transfer. Tax Information Shareholders may receive distributions from the Fund of ordinary income dividends and capital gains, which may be taxable to shareholders. Payments to Broker-Dealers and Other Financial Intermediaries If you purchase the Fund through a broker-dealer or other financial intermediary (such as a bank or financial adviser), the Fund and its related companies may pay that intermediary for the sale of Fund shares and related services. Please bear in mind that these payments may create a conflict of interest by influencing the broker-dealer or other intermediary to recommend the Fund over another investment. Ask your intermediary or visit your intermediarys website for more information. 4 INVESTMENT OBJECTIVE, PRINCIPAL INVESTMENT STRATEGIES, RELATED RISKS AND DISCLOSURE OF PORTFOLIO HOLDINGS This section provides a more detailed description of the Fund’s investment objective, its principal investment strategies and related risks. The following questions and answers are designed to help you better understand the principal investment strategies and principal risks of investing in the Fund. What is the Fund’s investment objective? The investment objective of Nicholas Fund, Inc. is to increase the value of your investment over the long-term (“long-term growth”). How does the Fund pursue its investment objective? The Fund strives to meet its investment objective by investing primarily in a diversified portfolio of equity securities of large-, medium- and small-sized U.S. companies, which it believes, have growth potential. The Fund believes a company’s annual sales volume and market capitalization (the number of shares outstanding multiplied by the per share price) are the factors most illustrative of a company’s size. To determine company size in terms of sales volume, the Fund compares a company’s sales volume to peer companies in the company’s industry. In terms of market capitalization, the Fund uses the following standard: Market Capitalization Small 0 to $2 Billion Medium $2 Billion to $10 Billion Large Over $10 Billion The Fund’s investment philosophy is basically a long-term growth philosophy, based upon the assumption that if a company achieves superior growth in sales and earnings, eventually the company’s stock will achieve superior performance. The Fund looks for companies with the potential for superior growth in sales and earnings. The Fund seeks companies that it believes are well positioned to take advantage of emerging, long-term social and economic trends, and have ample financial resources to sustain their growth. The Fund considers a number of factors in assessing a company’s value, including: a company’s strategic position in its industry; sales and earnings growth; product development; quality of management; overall business prospects; and a company’s price-to-earnings ratio (including an analysis of such ratio in relation to the company’s growth rate and industry trends). In general, income is not a significant factor in selecting the Fund’s investments. The Fund does not have a pre-set asset allocation strategy which requires that it maintain a specific percentage of its assets in equity-related securities (i.e., stocks) and income-related securities (i.e., bonds). In addition, there is no minimum percentage of the Fund’s assets which must be invested in the securities of companies in any particular industry or group of industries. The Fund may not invest more than 5% of its total net assets in the securities of any one company, and not more than 25% of the value of the Fund’s total net assets may be concentrated in companies in any particular industry or group of related industries. In addition, the Fund may not hold more than 10% of the voting securities of any one company. The Fund may hold an investment for any length of time, and may buy or sell securities whenever the Fund sees an appropriate opportunity. The Fund may reduce or sell investments in companies if there is an actual or perceived deterioration in the fundamentals of a company (including the company’s financial condition or performance, management-related problems, product-line or service-line issues, 5 or industry problems). The Fund also may reduce or sell investments in companies if a companys stock price appreciates excessively in relation to its fundamental prospects. Investments in companies also may be sold if they fail to realize their growth potential or if there are other more attractive opportunities elsewhere. Certain circumstances also may arise in which the Fund takes a temporary defensive position. In the case of a temporary defensive position, which could arise from adverse market, economic, political or other conditions, the Fund may hold up to 100% of its portfolio in cash, cash equivalents or U.S. government securities. During any period in which the Fund maintains such a temporary defensive position, it may not achieve its investment objective. Percentage limitations generally apply on the date of investment by the Fund to the extent permitted by the Investment Company Act of 1940, as amended. Thus, if an investment satisfies a percentage restriction when it is made, no violation of that restriction is created by changes afterwards in the market value of the investment or total assets of the Fund. What are the principal risks of investing in Nicholas Fund? Market Risk. The value of the Funds investments, and therefore, the value of your Fund shares, may go up or down. Value changes in the Funds investments and consequently, your Fund shares, may occur because among other things, a particular stock market fluctuates. Stock markets tend to move in cycles, with periods when stock prices generally go up, known as bull markets, and periods when stock prices generally go down, referred to as bear markets. Stock prices in general may decline over short or extended periods. Thus, there is a possibility that the value of the Funds investments will decrease because of declines in the stock market, regardless of the success or failure of the operations of the Funds portfolio companies. At other times, there are specific factors that may adversely affect the value of a particular investment of the Fund, which in turn may reduce the value of the Funds investments, and consequently, your Fund shares. Portfolio-Specific Risk. From time to time, the value of an individual company may decline due to a particular set of circumstances affecting that company, its industry or certain companies within the industry, while having little or no impact on similar companies within the industry. Because the Fund invests its assets in the securities of small- and medium-sized companies the Fund may be subject to additional risks. Small-sized companies often have a limited market for their securities and limited financial resources, and are usually more affected by changes in the economy. Securities of small- to medium-sized companies also often fluctuate in price more than common stocks of larger companies. If the values of the Funds investments in small- to medium-sized companies decrease, the value of the Funds shares also may go down. Selection Risk. The Fund also is subject to selection risk, which is the risk that the stocks the Fund buys will underperform the markets or other mutual funds with similar investment objectives and strategies. Risks Related to Certain Other Portfolio Investments and Strategies. The Fund may use other investment strategies. These strategies and the associated non-principal risks are described in further detail in the Funds Statement of Additional Information (SAI), which is incorporated by reference herein. Disclosure of Portfolio Holdings. A description of the Funds policies and procedures with respect to the disclosure of the Funds portfolio securities is available in the Funds SAI. There can be no assurance that the Funds policies with respect to information about its portfolio securities will be effective or protect the Fund from the potential misuse of holdings by individuals or firms in possession of that information. The Funds complete portfolio holdings are made available to the public on a quarterly basis generally no later than 60 days after the end of each calendar quarter end. A summary of the Funds portfolio composition is also posted to the Funds website at www.nicholasfunds.com under the heading Quarterly Factsheet generally 10 days or more following a calendar quarter end. This summary composition may include the Funds top ten holdings and a breakdown by sector. 6 The Fund may use many different investment strategies in seeking its investment objective, and it has certain investment restrictions. These strategies and certain of the restrictions and policies governing the Funds investments are explained in detail in the Funds SAI, which is incorporated by reference herein. If you would like to learn more about how the Fund may invest and the Funds policies and procedures with respect to the disclosure of the Funds portfolio securities, you should request a copy of the SAI. To learn how to obtain a copy, see the back cover page of this Prospectus. As with any mutual fund, there can be no guarantee that the Fund will achieve its goals or that you will not lose money on your investment. There is no guarantee that the Funds performance will be positive over any period of time. In view of the risks inherent in all investments in securities, there is no assurance that the Funds objective will be achieved. 7 FINANCIAL HIGHLIGHTS The financial highlights table is intended to help you understand the Fund’s financial performance for the past five fiscal years ended March 31, 2013. Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). The information has been derived from the Fund’s financial statements and financial highlights which have been audited by Deloitte & Touche LLP, Independent Registered Public Accounting Firm, whose report, along with the Fund’s financial statements, financial highlights, and related notes, are incorporated by reference in the SAI and included in the Fund’s Annual Report, which may be obtained without charge by writing or calling the Fund. Years Ended March 31, NET ASSET VALUE, BEGINNING OF PERIOD $ 47.85 $ 48.18 $ 44.00 $ 27.71 $ 45.03 INCOME (LOSS) FROM INVESTMENT OPERATIONS Net investment income .09 .14 .09 .04 .18 Net gain (loss) on securities (realized and unrealized) 9.70 3.07 7.87 16.34 (12.72 ) Total from investment operations 9.79 3.21 7.96 16.38 (12.54 ) LESS DISTRIBUTIONS From and in excess of net investment income (.02 ) (.19 ) (.03 ) (.09 ) (.17 ) From net capital gain (2.61 ) (3.35 ) (3.75 ) — (4.61 ) Total distributions (2.63 ) (3.54 ) (3.78 ) (.09 ) (4.78 ) NET ASSET VALUE, END OF PERIOD $ 55.01 $ 47.85 $ 48.18 $ 44.00 $ 27.71 TOTAL RETURN 21.52 % 7.40 % 19.62 % 59.21 % (31.70 )% SUPPLEMENTAL DATA: Net assets, end of period (millions) $ 1,976.0 $ 1,686.5 $ 1,673.9 $ 1,513.1 $ 1,033.2 Ratio of expenses to average net assets .74 % .75 % .76 % .78 % .77 % Ratio of net investment income to average net assets .18 % .31 % .20 % .11 % .50 % Portfolio turnover rate 25.23 % 20.60 % 22.10 % 27.84 % 31.79 % Please consider the performance information above in light of the Fund’s investment objectives and policies, and market conditions during the reported time periods. Again, you must remember that historical performance does not necessarily indicate what will happen in the future. The value of your Fund shares may go up and down. 8 THE FUND’S INVESTMENT ADVISER Nicholas Company, Inc., located at 700 North Water Street, Suite 1010, Milwaukee, Wisconsin 53202, is the Fund’s investment adviser. The Adviser furnishes the Fund with continuous investment service and is responsible for overall management of the Fund’s business affairs, subject to supervision by the Fund’s Board of Directors. The Adviser is the investment adviser to five other mutual funds and to numerous institutions and individuals with substantial investment portfolios. The additional mutual funds it advises are: Nicholas High Income Fund, Inc., Nicholas II, Inc., Nicholas Limited Edition, Inc., Nicholas Money Market Fund, Inc. and Nicholas Equity Income Fund, Inc. As of March 31, 2013, the Adviser had approximately $3.5 billion in assets under management. The annual fee paid to the Adviser under the Investment Advisory Agreement is paid monthly and is based on the average net asset value of the Fund, as determined by valuations made at the close of each business day of the month. The following table illustrates the calculation of the Adviser’s annual fee: Annual Fee Calculation (Based on the Net Asset Value of the Fund Average Net Asset Value of the Fund) Up to and including $50,000,000 0.75 of 1% In excess of $50,000,000 0.65 of 1% For the fiscal year ended March 31, 2013, the aggregate fee paid to the Adviser was 0.65% of the Fund’s average net assets. A discussion regarding the basis for the Board of Director’s approval of the Fund’s Investment Advisory Agreement can be found in the Fund’s Semiannual Report to Shareholders for the period ended September 30. Under an Investment Advisory Agreement with the Fund, the Adviser, at its own expense and without reimbursement from the Fund, furnishes the Fund with office space, office facilities, executive officers and executive expenses (such as health insurance premiums for executive officers). The Adviser also pays all sales and promotional expenses of the Fund, other than expenses incurred in complying with laws regulating the issue or sale of securities. The Fund pays all of its operating expenses. Operating expenses include, but are not limited to, fees paid for attendance at Board meetings to directors who are not interested persons of the Adviser or officers or employees of the Fund, salaries of administrative and clerical personnel, association membership dues, auditing and accounting services, legal fees and expenses, printing, fees and expenses of any custodian or trustee having custody of Fund assets, postage, charges and expenses of dividend disbursing agents, registrars and stock transfer agents, including the cost of keeping all necessary shareholder records and accounts and handling any problems related thereto, and certain other costs related to the aforementioned items. The Fund also pays the Adviser for accounting and administrative services provided to the Fund by the Adviser that the Fund is obligated to pay under the Investment Advisory Agreement, subject to certain payment guidelines adopted by unanimous resolution of the Board of Directors. A description of the payment guidelines is included in the Fund’s SAI under “The Fund’s Investment Adviser.” Mr. Albert O. Nicholas is the Portfolio Manager of the Fund and is primarily responsible for the day-to-day management of the Fund’s portfolio. Mr. David O. Nicholas is the Associate Portfolio Manager of the Fund. Mr. Albert O. Nicholas was the sole Portfolio Manager of the Fund from its inception in July 1969 through November 1996. From November 1996 through April 2008, Messrs. Albert O. Nicholas and David O. Nicholas were Co-Portfolio Managers of the Fund. Mr. Albert O. Nicholas is President and a Director of the Fund, and a Director of the Adviser since 1967. He served as President of the Adviser from 1967 to 1998, and currently serves as Chief Executive Officer of the Adviser. Mr. Albert O. Nicholas also serves as a Portfolio Manager to another fund managed by the Adviser, and is a Chartered Financial Analyst. Mr. David O. Nicholas is a Senior Vice President of the Fund and Chief Investment Officer and a Director of the Adviser, and has been employed by the Adviser since 1986. Mr. David O. Nicholas also serves as Portfolio Manager to other funds managed by the Adviser, and is a Chartered Financial Analyst. 9 The Funds SAI provides additional information about the Portfolio Managers compensation, other accounts managed by the Portfolio Managers, and the Portfolio Managers ownership of securities in the Fund. Albert O. Nicholas is a controlling person of the Adviser through his ownership of 97% of the outstanding voting securities of the Adviser. PRICING OF FUND SHARES The Funds price per share is the net asset value (NAV) of the Fund. The NAV of the Fund is determined by dividing the total value in U.S. dollars of the Funds total net assets by the total number of shares outstanding at that time. Net assets of the Fund are determined by deducting the liabilities of the Fund from the total assets of the Fund. Securities of the Fund are valued at market value, or if a market quotation is not readily available, their fair value is determined in good faith using procedures adopted by the Board of Directors. As an example, a market quotation may not be readily available if the trading of a security is halted by its primary exchange and does not resume before the markets close or the primary exchange experiences technical difficulties. If a security is valued using fair value pricing, the Funds value for that security is likely to be different than the last quoted market value. The NAV is determined as of the close of regular trading on the New York Stock Exchange (NYSE) (usually 4:00 p.m., New York time) on each day the NYSE is open. Therefore, shares of the Fund are not priced on days when the NYSE is closed, which generally is on weekends and national holidays in the U.S.A. For a list of holidays observed by the NYSE, please contact the Fund or see the Funds SAI. Shareholder purchase, redemption and exchange orders are processed using the NAV next calculated after receipt of such request in proper order by the Fund (or an Authorized Agent of the Fund). In order to receive a days price, your request must be received in proper order by the close of regular trading on the NYSE. If you request to purchase, redeem or exchange your shares after the NYSE has closed or on a day the NYSE is closed, the NAV will be determined as of the close of the next day the NYSE is open for trading. 10 PURCHASE OF FUND SHARES TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT MINIMUM INVESTMENT $ $ $50 via the Automatic Investment Plan BY MAIL Complete and sign the Send your check along with Regular Mail: Account Application. the Invest by Mail form Nicholas Funds detached from your c/o U.S. Bancorp Fund Services, LLC Make your check payable confirmation statement. P.O. Box 701 to Nicholas Funds . Milwaukee, Wisconsin 53201-0701 Send your check payable to Nicholas Funds with your Overnight Mail: account number in the Nicholas Funds memo field. c/o U.S. Bancorp Fund Services, LLC Third Floor 615 East Michigan Street Milwaukee, Wisconsin 53202 BY INTERNET You may not make an Visit www.nicholasfunds.com www.nicholasfunds.com initial purchase of Fund and click on Account The Fund must have bank shares via the internet. Access to purchase or instructions on file to purchase exchange shares from another Fund shares this way. fund in the Nicholas complex. BY TELEPHONE 800-544-6547 You may not make an Call the Funds transfer agent, 414-276-0535 initial purchase of Fund U.S. Bancorp Fund Services The Fund must have bank shares via the telephone. LLC, during business hours instructions on file to purchase (8:00 A.M. to 7:00 P.M. Fund shares this way. Central Time). Telephone calls will be recorded. BY WIRE Complete and send in an Call U.S. Bancorp to notify U.S. Bank, N.A. Account Application. The 800-544-6547 or ABA 075000022 completed application must 414-276-0535. U.S. Bancorp Fund Services, LLC be received in advance of Account 112-952-137 the wire. Nicholas Fund, Inc. (shareholder account number) Call U.S. Bancorp to notify (shareholder registration) 800-544-6547 or 414-276-0535. AUTOMATIC INVESTMENT Not applicable. Contact the Fund for PLAN additional information. U.S. Bancorp 800-544-6547 or 414-276-0535 Other Information about Purchasing Fund Shares Your application to purchase Fund shares must be in proper order to be accepted may only be accepted by the Fund or an Authorized Agent of the Fund and is not binding until accepted. Once your purchase order has been accepted, you may not cancel or revoke it. All purchase orders must be accompanied by payment in U.S. funds. Purchase of shares will be made in full and fractional shares computed to three decimal places. 11 Your check should be drawn on a U.S. bank, savings and loan or credit union. Checks are accepted subject to collection at full face value in U.S. funds. To prevent check fraud, cashiers checks, third-party checks, Treasury checks, credit card checks, starter checks and money orders will not be accepted. The transfer agent will charge a $25 fee against your account, in addition to any loss sustained by the Fund, if any payment check is returned to the transfer agent or your Automated Clearing House (ACH) transfer does not clear. The Fund will not accept purchase or exchange orders under circumstances or in amounts considered disadvantageous for shareholders. Under the Automatic Investment Plan, you may purchase Fund shares automatically at regular intervals by authorizing the Fund to withdraw $50 or more from your personal bank account. To participate in this plan, you must complete the Automatic Investment Plan section of the application or contact the Fund at 800-544-6547 for additional information. In compliance with the USA Patriot Act of 2001, please note that the transfer agent, U.S. Bancorp Fund Services, LLC (U.S. Bancorp), will verify certain information on your Account Application as part of the Funds Anti-Money Laundering Program. As requested on the Application, you must supply your full name, date of birth, social security number and permanent street address. Mailing addresses containing a P.O. Box will not be accepted as a permanent street address. Please contact U.S. Bancorp (800-544-6547 or 414-276-0535) if you need additional assistance when completing your application. Shares of the Fund have not been registered for sale outside of the United States. The Fund generally does not sell shares to investors residing outside of the United States, even if they are U.S. Citizens or lawful permanent residents, except to investors with U.S. military APO or FPO addresses. If we do not have a reasonable belief of the identity of a customer, the account will be rejected or the customer will not be allowed to perform a transaction on the account until such information is received. The Fund also reserves the right to close the account within 5 business days if clarifying information or documentation is not received. You should be aware that deposit of purchase and exchange requests in the mail or with other independent delivery services does not constitute receipt by U.S. Bancorp or the Fund. Only bank accounts held at domestic financial institutions that are ACH members may be used for telephone or internet transactions. The ability to perform internet and telephone transactions will become effective approximately 15 business days after an application including bank instructions or a change of account options request to add or change bank instructions is received. During periods of substantial economic or market changes or due to technical difficulties, you may have difficulty making internet or telephone purchases and exchanges. If you are unable to perform your transaction via the internet or by telephone, you may purchase and exchange Fund shares by delivering the request in person or by mail. The Fund and its transfer agent are not responsible for the consequences of delays resulting from the banking or Federal Reserve wire system, or from incomplete wiring instructions. If you are making an initial investment by wire, you must first complete and return to the appropriate address an Account Application. Due to fixed expenses incurred by the Fund in maintaining individual accounts, the Fund reserves the right to redeem accounts that fall below the minimum investment required due to shareholder redemption (but not solely due to a decrease in net asset value of the Fund). In order to exercise this right, the Fund will give advance written notice of at least 30 days to the accounts below such minimum. The Funds transfer agent may charge an activity fee for certain requests, including but not limited to, requesting stop payment on a redemption check and overnight delivery of redemption proceeds. Share ownership is electronically recorded. The Funds transfer agent will credit the shareholders account with the number of shares purchased. Written confirmations are issued for all purchases of Fund shares. 12 REDEMPTION AND EXCHANGE OF FUND SHARES BY MAIL Written redemption and exchange requests must include the Regular Mail: name of the Fund, the account number(s), the amount of Nicholas Funds money or number of shares being redeemed or exchanged, c/o U.S. Bancorp Fund Services, LLC the name(s) on the account(s) and the signature(s) of each P.O. Box 701 registered account holder. If an account registration is Milwaukee, Wisconsin 53201-0701 individual, joint tenants, sole proprietorship, custodial (Uniform Transfer to Minors Act), or general partners, the Overnight Mail: written request must be signed exactly as the account is Nicholas Funds registered. If the account is owned jointly, all owners c/o U.S. Bancorp Fund Services, LLC must sign. Third Floor 615 East Michigan Street If you have certificates for your shares, you must send the Milwaukee, Wisconsin 53202 certificate(s) for the full shares with your written redemption request signature guaranteed by an eligible guarantor institution, which is a bank, savings and loan association, credit union, or member firm of a national securities exchange to the above address. A notary public is not an acceptable guarantor. BY INTERNET Visit www.nicholasfunds.com and click on Account www.nicholasfunds.com Access to redeem or exchange shares to another fund in The Fund must have bank the Nicholas complex. instructions on file to redeem Fund shares this way. BY TELEPHONE 800-544-6547 Call the Funds transfer agent, U.S. Bancorp Fund Services 414-276-0535 LLC, during business hours (8:00 A.M. to 7:00 P.M. Telephone calls will be recorded. Central Time). BY WIRE 800-544-6547 Call U.S. Bancorp to request wire redemptions. 414-276-0535 SYSTEMATIC WITHDRAWAL Contact the Fund for additional information. PLAN U.S. Bancorp 800-544-6547 or 414-276-0535 Other Information about Redeeming and Exchanging Fund Shares All redemptions and exchanges will be processed immediately upon receipt and written confirmations will be issued for all redemptions and exchanges of Fund shares. Once your redemption or exchange order has been accepted, you may not cancel or revoke it. The Fund ordinarily pays for redeemed shares within seven days after receipt of a request in proper order, except as provided by the rules of the Securities and Exchange Commission. Redemption proceeds to be wired normally will be wired on the next business day after a NAV is determined. The Fund reserves the right to hold payment up to 15 days or until notified that investments made by check have been collected, at which time payment will be made. You may instruct U.S. Bancorp to mail the proceeds to the address of record or to directly mail the proceeds to a pre-authorized bank account. Proceeds also may be wired to a pre-authorized account at a commercial bank in the United States. The transfer agent charges a $15 wire redemption fee. In addition, proceeds also may be electronically transferred through the ACH to a pre-authorized account at no cost. Please contact the Fund for the appropriate form if you are interested in setting your account up with wiring instructions or authorizing electronic transfers. 13 You can redeem and exchange your shares by internet or telephone unless you decline this option in writing. During periods of substantial economic or market changes or due to technical difficulties, you may have difficulty making internet or telephone redemptions and exchanges. If you are unable to perform your transactions via the internet or by telephone, you may redeem or exchange your shares by delivering the request in person or by mail. Procedures for redeeming and exchanging Fund shares by internet or telephone may be modified or terminated at any time by the Fund or its transfer agent. The exchange privilege may be terminated or modified only upon 60 days advance notice to shareholders. Neither the Fund nor its transfer agent will be liable for following instructions communicated by the internet or telephone which they reasonably believe to be genuine. The Fund and its transfer agent will employ reasonable procedures to confirm that instructions received by telephone are genuine, and if they do not, they may be liable for losses due to unauthorized or fraudulent instructions. The Fund will return and not process requests that contain restrictions as to the time or date redemptions and exchanges are to be effected. The Fund may require additional supporting documents for redemptions and exchanges made by corporations, executors, administrators, trustees and guardians. Specifically, if the account is registered in the name of a corporation or association, the request must be accompanied by a corporate resolution signed by the authorized person(s). A redemption or exchange request for accounts registered in the name of a legal trust must have a copy of the title and signature page of the trust agreement on file or must be accompanied by the trust agreement and signed by the trustee(s). For federal income tax purposes, redemptions and exchanges generally are treated as a sale of the shares being redeemed or exchanged. You may recognize a capital gain or loss equal to the difference between the redemption or exchange price and your cost basis for the shares being redeemed or exchanged. An exchange between the funds involving master retirement plans and IRA accounts generally is not a taxable transaction for federal tax purposes. See Dividends, Distributions and Federal Tax Status for further information. If you have an individual retirement account (IRA) or other retirement plan, you must indicate on your redemption requests whether or not to withhold federal income tax. Unless a redemption request specifies not to have federal income tax withheld, the transaction will be subject to withholding. Please consult your current IRA Disclosure Statement for any applicable fees. IRA redemptions may not be conducted using the internet. Nicholas Company, Inc. also is the Adviser to Nicholas II, Inc., Nicholas Limited Edition, Inc. and Nicholas High Income Fund, Inc., which offer both Class I and Class N shares, as well as Nicholas Equity Income Fund, Inc. and Nicholas Money Market Fund, Inc, all of which have investment objectives as discussed in separate prospectuses. If you choose to exercise the exchange privilege, your shares will be exchanged at their next determined NAV. Minimum investment requirements must be met, with the exception that if you were a shareholder of any of the Nicholas Funds discussed above as of March 1, 2005, you may qualify to exchange into the Class I shares of Nicholas II, Inc., Nicholas Limited Edition, Inc. and Nicholas High Income Fund, Inc If you exercise an exchange into the Nicholas Money Market Fund, Inc. on a day when the NYSE is open for trading but the Federal Reserve Banks are closed, your shares of the Fund will be redeemed on the day upon which the exchange request is received and your Nicholas Money Market Fund, Inc. shares will be issued. However, on days when the Federal Reserve Banks are closed, the Nicholas Money Market Fund, Inc. is unable to invest your exchanged amount; therefore you will not receive interest for this one-day period. If you are interested in exercising the exchange privilege, you must obtain the appropriate prospectus from Nicholas Company, Inc. A signature guarantee helps protect the Fund and shareholders against fraud. A signature guarantee of each owner is required in the following situations: if you change or transfer the registration of your account; 14 if you change the bank account of record for your account; if you opted out of telephone or internet privileges and would like to re-establish these on your account; upon redemption of shares when certificates have been issued for your account; when you want the redemption proceeds sent to a different address than is registered on the account; if the redemption proceeds are to be made payable to someone other than the account owner(s); any redemption transmitted by federal wire transfer to your bank not previously set up with the Fund; if a change of address request has been received by the Fund or its transfer agent within 15 days of a redemption request; and for redemption requests greater than $100,000. Your redemption will not be processed until the signature guarantee, if required, is received in proper order. A notary public is not an acceptable guarantor. The Fund may waive or modify any signature guarantee requirements at any time. If you are uncertain about what documents or instructions are necessary in order to redeem and exchange shares, please write or call U.S. Bancorp (800-544-6547 or 414-276-0535) prior to submitting a request. A redemption or exchange request will not become effective until all documents are received in proper order. USE OF A PROCESSING INTERMEDIARY TO PURCHASE AND REDEEM FUND SHARES You can purchase and redeem shares of the Fund through certain broker-dealers, financial institutions and other service providers (“Processing Intermediaries”). Certain Processing Intermediaries are, in turn, authorized to designate other intermediaries to accept purchase and redemption orders on the Fund’s behalf. If you invest in the Fund through a Processing Intermediary, the Processing Intermediary rather than you may be the shareholder of record. Processing Intermediaries may use procedures and impose restrictions in addition to or different from those applicable to shareholders who invest in the Fund directly. You should read the program materials provided by the Processing Intermediary in conjunction with this Prospectus before you invest in the Fund this way. Processing Intermediaries may charge fees or other charges for the services they provide to their customers. Such charges vary among Processing Intermediaries, but in all cases will be retained by the Processing Intermediary and not remitted to the Fund or the Adviser. The Fund also may enter into an arrangement with some Processing Intermediaries which authorizes them to process purchase and redemption orders on behalf of the Fund on an expedited basis (an “Authorized Agent”). Receipt of a purchase or redemption order by an Authorized Agent will be deemed to be received by the Fund for purposes of determining the NAV of Fund shares to be purchased or redeemed. If you place a purchase order through an Authorized Agent, you will pay the Fund’s NAV next computed after the receipt by the Authorized Agent of such purchase order, plus any applicable transaction charges imposed by the Authorized Agent. For redemption orders placed through an Authorized Agent, you will receive redemption proceeds which reflect the NAV next computed after the receipt by the Authorized Agent of the redemption order, less any redemption fees imposed by the Authorized Agent. Of course, you do not have to use the services of a Processing Intermediary, or pay the fees that may be charged for such services. You can invest directly with the Fund without a sales charge. If you hold Fund shares through a Processing Intermediary, you must redeem your shares through such Processing Intermediary. In such event, you should contact the Processing Intermediary for instructions on how to redeem. Otherwise, if you originally invested directly with the Fund, you can redeem Fund shares directly through the Fund without a redemption charge. 15 FREQUENT PURCHASES AND REDEMPTIONS OF FUND SHARES Frequent purchases and sales of fund shares may affect shareholders in various ways. Depending on various factors, including but not limited to, the size of the fund, the amount of assets the portfolio manager typically maintains in cash or cash equivalents, and the dollar amount, number and frequency of trades, short-term or excessive trading may disrupt the efficient management of the fund’s portfolio, may impact fund performance and may increase brokerage, administrative and other expenses. The Fund reserves the right to reject any purchase request, including exchange requests from other Nicholas Funds, if the Fund regards the request as disruptive or if the Fund deems the request to have the potential to be disruptive. However, the Fund cannot ensure that its efforts will eliminate all risks of market timing. The Fund discourages disruptive trading in Fund shares for abusive purposes in accordance with the policies and procedures adopted by the Fund’s Board of Directors, which are reasonably designed to detect and discourage disruptive trading. These policies and procedures apply to any account, whether an individual account or an account referred to as an “omnibus account” where a financial intermediary holds Fund shares for a number of its customers in one account. Because there is currently no generally applied standard in the marketplace as to what level of trading activity is abusive, the Board of Directors elected not to adopt rigid rules specifying what activity is abusive or how suspected abusive activity will be addressed. In adopting the Fund’s policies and procedures, the Board of Directors determined that it would be in the best interests of shareholders to provide flexibility in dealing with such activities. Under the Fund’s policies and procedures, the Fund currently uses various methods to deter disruptive activity in both individual and omnibus accounts, including but not limited to, selective monitoring of trading activity and undertaking preventive action designed to discourage and preclude disruptive traders from entering the Fund. We may consider trading in the Fund’s shares to be disruptive if we detect one or more of the following in an account: Shares traded out of the Fund within a short period of time after the shares were purchased; Two or more purchases and redemptions are made within a short period of time; A series of transactions within the Fund that is indicative of a timing pattern or strategy; or One or more large trades relative to the Fund’s overall size. The Fund reserves the right to take responsive action to trading activity deemed disruptive by the Fund’s compliance committee, even though such trades may not fall into one or more of these categories. In connection with our review of suspected disruptive trading, we may, at our option, contact the individual or entity or the financial intermediary believed to be engaged in or to have facilitated such trading. If we reasonably believe that the trading was disruptive, we will ask that investor or financial intermediary to refrain from such activity in the future. In addition, the investor or financial intermediary may be restricted from future purchases into the Fund and may also be restricted from future purchases of shares offered by any of the funds in the Nicholas fund complex. In determining what action to take with respect to suspected disruptive trading activity, the Fund will act in a manner that is consistent with the best interests of the Fund’s shareholders by making independent assessments of instances or patterns of potentially improper conduct in a manner consistent with the policies and procedures approved by the Board of Directors. While the Fund does not accommodate market timing activities engaged in for abusive purposes, the methods used by the Fund to deter and detect market timing activities involve judgments that are inherently subjective and our response to potentially disruptive trading activity may not be uniform. This means that the Fund may not take remedial action against investors detected engaging in a disruptive trade for reasons believed by the Fund to be legitimate and non-abusive. Examples of legitimate trading activities include, but may not be limited to, asset allocation, dollar cost averaging, emergency liquidations, estate planning measures or similar activities that may nonetheless arguably result in disruptive trading of Fund shares. 16 There is a risk that the Fund’s policies and procedures will prove ineffective in whole or in part to detect or prevent abusive market timing activities. For example, it may be difficult for the Fund to identify such activities engaged in by investors through the use of omnibus accounts administered by financial intermediaries who transmit purchase, exchange, or redemption orders to the Fund on behalf of their customers who are the beneficial owners. Short-term trading by these investors is likely to go undetected by the Fund. If the Fund is unable to detect and deter trading abuses, the Fund’s performance, and its long-term shareholders, may be harmed. In addition, because the Fund has not adopted specific limitations or restrictions on the trading of Fund shares, shareholders may be harmed by the extra costs and portfolio management inefficiencies that result from excessive or disruptive trading of Fund shares, even when the trading is not for abusive purposes. TRANSFER OF FUND SHARES You may transfer Fund shares in instances such as the death of a shareholder, change of account registration, change of account ownership and in cases where shares of the Fund are transferred as a gift. You can obtain documents and instructions necessary to transfer Fund shares by writing or calling U.S. Bancorp (800-544-6547 or 414-276-0535) prior to submitting any transfer requests. DISTRIBUTION OF FUND SHARES Quasar Distributors, LLC (the “Distributor”), 615 East Michigan Street, Milwaukee, Wisconsin, 53202, serves as the distributor and principal underwriter of the Funds’ shares. The Distributor is a registered broker-dealer and member of the Financial Industry Regulatory Authority (“FINRA”). DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAX STATUS The Fund intends to qualify annually as a “regulated investment company” under the Internal Revenue Code of 1986 and intends to take all other action required to ensure that little or no federal income or excise taxes will be payable by the Fund. As a result, the Fund generally will seek to distribute to its shareholders substantially all of its net investment income and net realized capital gain in one or more distributions for each fiscal year. For federal income tax purposes, dividends and distributions by the Fund, whether received in cash or invested in additional shares of the Fund, will be taxable to the Fund’s shareholders, except those shareholders that are not subject to tax on their income. Net realized long-term gains are paid to shareholders as capital gain distributions. Income distributed from the Fund’s net investment income and net realized short-term gains are paid to shareholders as ordinary income dividends. Distributions generally will be made in June and December of each year. Distributions may be taxable at different rates depending on the length of time the Fund holds a security. The Fund will provide information to shareholders concerning the character and federal tax treatment of all dividends and distributions. If you elect to receive distributions and/or capital gains paid in cash, and the U.S. Postal Service cannot deliver the check, or if a check remains outstanding for six months, the Fund reserves the right to reinvest the distribution check in your account, at the Fund’s current net asset value, and to reinvest all subsequent distributions. At the time of purchase of Fund shares, the Fund may have undistributed income or capital gains included in the computation of the NAV. Therefore, a dividend or capital gain distribution received shortly after such purchase by a shareholder may be taxable to the shareholder, although it is, in whole or in part, a return of capital and may have the effect of reducing the NAV. Under federal law, some shareholders may be subject to “backup withholding” on reportable dividends, capital gain distributions (if any) and redemption payments. Generally, shareholders subject to backup withholding will be those (i) who, to the Fund’s knowledge, have furnished an incorrect taxpayer identification number, or (ii) who have failed to declare or underreported certain income on their federal returns. When establishing an account, you must certify under penalties of perjury that the taxpayer identification number you give to the Fund is correct and that you are not subject to backup withholding. 17 The foregoing tax discussion relates to federal income taxes only and is not intended to be a complete discussion of all federal tax consequences. You should consult with a tax adviser concerning the federal, state and local tax aspects of an investment in the Fund. DIVIDEND AND DISTRIBUTION REINVESTMENT PLAN Unless you elect to accept cash in lieu of shares, all dividends and capital gain distributions are automatically reinvested in additional shares of the Fund through the Dividend and Distribution Reinvestment Plan (the “Reinvestment Plan”). You may elect to accept cash on an application to purchase shares, by telephone or by separate written notification. All reinvestments are at the NAV in effect on the dividend or distribution date and are credited to the shareholder’s account. U.S. Bancorp will notify you of the number of shares purchased and the price following each reinvestment period. You may withdraw from or thereafter elect to participate in the Reinvestment Plan at any time by giving written or telephonic notice to U.S. Bancorp. The Fund’s transfer agent must receive an election prior to the dividend record date of any particular distribution for the election to be effective for that distribution. If an election to withdraw from or participate in the Reinvestment Plan is received between a dividend record date and payment date, it shall become effective on the day following the payment date. The Fund may modify or terminate the Reinvestment Plan at any time on 30 days written notice to participants. SYSTEMATIC WITHDRAWAL PLAN If you own $10,000 or more of Fund shares at the current market value, you may open a Systematic Withdrawal Plan (the “Plan”) and receive monthly, quarterly, semiannual or annual payments for any designated amount. You may elect to have a check sent to you at your address of record, or proceeds can be sent directly to your predesignated bank account via electronic funds transfer through the Automated Clearing House network. When you participate in the Plan all income and capital gain dividends should be reinvested in shares of the Fund. U.S. Bancorp reinvests all income and capital gain dividends in shares of the Fund. You may add shares to, withdraw shares from, or terminate the Plan, at any time. Each withdrawal may be a taxable event to you. Liquidation of shares in excess of distributions may deplete or possibly use up the initial investment, particularly in the event of a market decline, and withdrawals cannot be considered a yield or income on the investment. In addition to termination of the Plan by the Fund or shareholders, the Fund’s transfer agent may terminate the Plan upon written notice mailed to the shareholders. Please contact Nicholas Company, Inc. for copies of the Plan documents. TAX DEFERRED ACCOUNTS If you are eligible, you may set up one or more tax deferred accounts. A contribution to certain of these plans also may be tax deductible. The Fund offers the following tax deferred accounts: traditional, Roth, SEP, and SIMPLE IRAs; a Master Retirement Plan for self-employed individuals and partnerships; and Coverdell Savings Accounts for qualified education expenses for children under age 18. A description of applicable service fees and application forms are available upon request from the Fund. These documents also contain a Disclosure Statement which the IRS requires to be furnished to individuals who are considering adopting these plans. It is important that you obtain up-to-date information from the Fund before opening a tax deferred account. Investors should consult with their tax adviser or legal counsel before investing in a tax deferred account. 18 Investment Adviser NICHOLAS COMPANY, INC. Milwaukee, Wisconsin Distributor QUASAR DISTRIBUTORS, LLC Milwaukee, Wisconsin Transfer Agent U.S. BANCORP FUND SERVICES, LLC Milwaukee, Wisconsin 414-276-0535 or 800-544-6547 Custodian U.S. BANK N.A. Milwaukee, Wisconsin Independent Registered Public Accounting Firm DELOITTE & TOUCHE LLP Milwaukee, Wisconsin Counsel MICHAEL BEST & FRIEDRICH LLP Milwaukee, Wisconsin FOR MORE INFORMATION ABOUT THE FUND: The Funds Statement of Additional Information (SAI), dated July 31, 2013, contains more detailed information on all aspects of Nicholas Fund, Inc., and is incorporated by reference in this Prospectus. Additional information about the Fund also is available in the Funds Annual and Semiannual Report to Shareholders. The Funds Annual Report discusses the market conditions and investment strategies that significantly affected the Funds performance during its last fiscal year. To request a free copy of the current Annual/Semiannual Report or SAI or other information about the Fund, or to make shareholder inquiries, please write or call: Nicholas Fund, Inc., 700 North Water Street, Milwaukee, Wisconsin 53202, 800-544-6547 (toll-free). Along with the Funds Annual/Semiannual Report and SAI, additional information about the Fund also can be obtained from the Funds Internet website at www.nicholasfunds.com. In addition, you can review and copy the Funds reports and SAI at the Public Reference Room of the Securities and Exchange Commission in Washington, D.C. Information on the operation of the SECs Public Reference Room may be obtained by calling the SEC at 202-551-8090. Reports and other information about the Fund also are available on the SECs Internet website at www.sec.gov. For a duplicating fee, copies of such information may be obtained by electronic request at the following e-mail address: publicinfo@sec.gov, or by writing the SECs Public Reference Section, Washington, D.C. 20549-1520. For the most current price and return information for the Fund, you may call the Fund at 800-544-6547 (toll-free) or 414-276-0535 or check the Funds website at www.nicholasfunds.com. You also can find the most current price of the Funds shares in the business section of your newspaper in the mutual fund section under the heading Nicholas Group - Nich. If you prefer to obtain this information from an on-line computer service, you can do so by using the ticker symbol NICSX or cusip number 653735100. Investment Company Act File No. 811-01728 NICHOLAS FUND, INC. - NICSX STATEMENT OF ADDITIONAL INFORMATION 700 North Water Street, Suite 1010 Milwaukee, Wisconsin 53202 414-276-0535 800-544-6547 This Statement of Additional Information is not a prospectus and contains information in addition to and more detailed than that set forth in the current Prospectus of Nicholas Fund, Inc. (the "Fund"), dated July 31, 2013. It is intended to provide you with additional information regarding the activities and operations of the Fund, and should be read in conjunction with the Fund's current Prospectus, as it may be revised from time to time, and the Fund's Annual Report for the fiscal year ended March 31, 2013, which are incorporated herein by reference. The Fund's Prospectus provides the basic information you should know before investing in the Fund. To obtain a free copy of the Fund's Prospectus and Annual Report, please write or call the Fund at the address and telephone number set forth above. NO LOAD FUND - NO SALES OR REDEMPTION CHARGE BY THE FUND Investment Adviser NICHOLAS COMPANY, INC. July 31, 2013 TABLE OF CONTENTS Page INTRODUCTION 1 INVESTMENT OBJECTIVES AND INVESTMENT STRATEGIES 1 INVESTMENT RESTRICTIONS 2 INVESTMENT RISKS 5 THE FUND'S INVESTMENT ADVISER 6 MANAGEMENT - DIRECTORS AND EXECUTIVE OFFICERS AND PORTFOLIO MANAGERS OF THE FUND 7 PROXY VOTING GUIDELINES 11 PRINCIPAL SHAREHOLDERS 12 PORTFOLIO MANAGERS OF THE FUND 13 DISTRIBUTION OF FUND SHARES 14 PURCHASE, REDEMPTION AND PRICING OF FUND SHARES 14 ANTI-MONEY LAUNDERING PROGRAM 15 DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAX STATUS 15 PORTFOLIO TRANSACTIONS AND BROKERAGE 16 PERFORMANCE DATA 18 CAPITAL STRUCTURE 19 STOCK CERTIFICATES 19 ANNUAL MEETING 20 SHAREHOLDER REPORTS 20 CUSTODIAN AND TRANSFER AGENT 20 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM AND LEGAL COUNSEL 20 FINANCIAL INFORMATION 20 INTRODUCTION Nicholas Fund, Inc. (the "Fund") was incorporated under the laws of Maryland on July 10, 1968. The Fund is an open-end, diversified management investment company registered under the Investment Company Act of 1940, as amended (the "1940 Act"). This type of investment company is commonly called a mutual fund. As an open-end investment company, it obtains its assets by continuously selling shares of its common stock, $.50 par value, to the public. Proceeds from such sales are invested by the Fund in securities of other companies. In this manner, the resources of many investors are combined and each individual investor has an interest in every one of the securities owned by the Fund. The Fund provides each individual investor with diversification by investing in the securities of many different companies in a variety of industries and furnishes experienced management to select and watch over its investments. As an open-end investment company, the Fund will redeem any of its outstanding shares on demand of the owner at their net asset value next determined following receipt of the redemption request. The investment adviser to the Fund is Nicholas Company, Inc. (the "Adviser"). INVESTMENT OBJECTIVES AND INVESTMENT STRATEGIES The investment objectives and strategies of the Fund described in this Statement of Additional Information ("SAI"), supplement the investment objectives and investment strategies disclosures included in the Fund's Prospectus under the caption "INVESTMENT OBJECTIVE, PRINCIPAL INVESTMENT STRATEGIES AND RISKS." Please read the Prospectus in conjunction with this Statement of Additional Information. Set forth below is additional information on the other Fund investment strategies and permissible investments which the Fund may use in an effort to obtain its primary objectives. Except as otherwise may be stated, all percentage limitations on the Fund's investment practices apply at the time of an investment or a transaction. Accordingly, except with respect to borrowing and restrictions on illiquid securities, a later change in any percentage resulting from a change in value of the investment or the total value of the Fund's assets will not constitute a violation of such restriction. Certain Other Investment Strategies and Portfolio Investments From time to time, the Fund may acquire the securities of unseasoned companies (i.e., companies which have a record of less than three years continuous operation) and securities issued in private placements (i.e., securities not registered for purchase by and sale to the public under the Securities Act of 1933, as amended). These types of investments are made by the Fund when the Adviser believes such investments offer the possibility of capital appreciation. The Fund may not invest more than 5% of the Fund's total assets in the securities of unseasoned companies. In addition, the Fund may not invest more than 10% of the Fund's total assets in bonds, debentures or other debt securities distributed in private placements. From time to time, the Fund may acquire debt securities and preferred stock that are convertible into or carry rights to acquire common stock, and other debt securities, such as those selling at substantial discounts. The Fund is not limited as to the maturities of the debt securities in which it invests. These types of investments are made by the Fund when the Adviser believes they offer the possibility of appreciation in value. The Fund may temporarily invest in investment grade and non-investment grade fixed income securities as a temporary defensive measure when conditions warrant. "Investment grade fixed income securities" are fixed income securities ranked in one of the top four debt security rating categories of any of the nationally recognized statistical rating organizations ("NRSROs"), or unrated but deemed by the Adviser to be comparable in quality to instruments so rated on the date of purchase. However, this policy does not prohibit the Fund from retaining a security if its credit quality is downgraded to a non-investment grade level after purchase. The Fund usually will not invest more than 5% of its total assets in non-investment grade fixed income securities. In the case of a temporary defensive position, the Fund may hold up to 100% of its portfolio in cash, cash equivalents or U.S. government securities. During any period in which the Fund maintains such a temporary defensive position, it may not achieve its investment objective. -1- The Fund may only enter into repurchase agreements with a member bank of the Federal Reserve System or a primary dealer in U.S. Government securities. Under such agreements, the Fund buys U.S. Government securities from the bank or primary dealer and simultaneously agrees to sell the securities back to the bank or primary dealer at a mutually agreed upon time and price. Not more than 20% of the Funds total net assets, taken at market, may be invested in repurchase agreements; provided, however, that repurchase agreements maturing in more than seven days may not constitute more than 10% of the Fund's total net assets, taken at market. The Fund may make borrowings but only for temporary or emergency purposes and then only in amounts not in excess of 5% of the lower of cost or market value of its total net assets. Except as otherwise may be stated, all percentage limitations on the Fund's investment practices apply at the time of an investment or a transaction. Accordingly, except with respect to borrowing and restrictions on illiquid securities, a later change in any percentage resulting from a change in value of the investment or the total value of the Fund's assets will not constitute a violation of such restriction. INVESTMENT RESTRICTIONS The Fund has adopted the following restrictions, which are matters of fundamental policy and cannot be changed without the approval of the holders of a majority of its outstanding shares or, if it is less, 67% of the shares represented at a meeting of shareholders at which 50% or more of the holders are represented in person or by proxy. 1. The Fund will not purchase securities on margin, participate in a joint trading account, sell securities short, or act as an underwriter or distributor of securities other than its own capital stock. The Fund will not lend money, except for: (a) the purchase of a portion of an issue of publicly distributed debt securities; (b) investments in repurchase agreements in an amount not to exceed 20% of the total net assets, taken at market, of the Fund; provided, however, that repurchase agreements maturing in more than seven (7) days will not constitute more than 10% of the total net assets, taken at market; and (c) the purchase of a portion of bonds, debentures or other debt securities of types commonly distributed privately to financial institutions in an amount not to exceed 10% of the Fund's total net assets, taken at market. 2. The Fund will not purchase or sell real estate or interests in real estate, commodities or commodity futures. The Fund may invest in the securities of real estate investment trusts, but not more than 10% in value of the Fund's total net assets will be so invested. 3. The Fund may make temporary bank borrowings (not in excess of 5% of the lower of cost or market value of the Fund's total assets) for emergency or extraordinary purposes. 4. The Fund will not pledge any of its assets. 5. Securities of other regulated investment companies will not be purchased, except on the open market where no commission or profits result, other than the broker's commission, or as a part of a plan of merger, consolidation or reorganization approved by shareholders of the Fund. No more than 5% of the value of the Fund's total net assets will be invested in the securities of other regulated investment companies. 6. Investments will not be made for the purpose of exercising control or management of any company. The Fund will not purchase securities of any issuer if, as a result of such purchase, the Fund would hold more than 10% of the voting securities of such issuer. 7. Not more than 5% of the Fund's total net assets, taken at market value, will be invested in the securities of any one issuer (excluding U.S. Government securities). 8. Not more than 25% of the Fund's total assets will be concentrated in companies of any one industry or group of related industries. -2- 9. The Fund will not acquire or retain any security issued by a company, if an officer or director of such company is an officer or director of the Fund, or an officer or director or shareholder or other interested person of the Adviser. The Fund will not issue senior securities. Investment Restrictions Which May Be Changed Without Shareholder Approval The Fund's Board of Directors (the "Board") has adopted the following investment restrictions which may be changed by the Board without shareholder approval: No investments are permitted in any securities issued by a company if one or more directors or shareholders or other affiliated persons of its investment adviser beneficially own more than one-half of one percent (0.5%) of such company's stock or other securities, and all of the foregoing persons owning more than one-half of one percent (0.5%) together own more than 5% of such companies stock or security Not more than 5% of its total net assets may be invested in equity securities which are not readily marketable and in securities of unseasoned companies (companies which have a record of less than three years' continuous operation) No investments are permitted in interests in oil, gas or other mineral exploration programs (but investments in securities of companies engaged in oil, gas or other mineral activities are permitted) No investments are permitted in puts, calls, straddles, spreads or any combination thereof Not more than 1% of its total net assets may be invested in restricted securities No purchase of securities of any company are permitted if, as a result of such purchase, the Fund would hold more than 10% of the voting securities of such company No investments are permitted in warrants, valued at the lower of cost or market, which exceed 5% of the value of the Fund's net assets. Included within that amount, but not to exceed 2% of the value of the Fund's net assets, may be warrants which are not listed on the New York or American Stock Exchange. Warrants acquired by the Fund in units or attached to securities may be deemed to be without value The Board will give advance notice to shareholders of any change to these investment restrictions. Except as otherwise may be stated, all percentage limitations on the Fund's investment practices apply at the time of an investment or a transaction. Accordingly, except with respect to borrowing and restrictions on illiquid securities, a later change in any percentage resulting from a change in value of the investment or the total value of the Fund's assets will not constitute a violation of such restriction. Portfolio Turnover Rate The portfolio turnover rate for the Fund is calculated by dividing the lesser of purchases or sales of portfolio investments for the reporting period by the monthly average value of the portfolio investments owned during the reporting period. The calculation excludes all securities, including options, with maturities or expiration dates at the time of acquisition that are one year or less. Portfolio turnover may vary greatly from year to year as well as within a particular year, and may be affected by changes in the holdings of specific issuers, by cash requirements for redemption of shares and by requirements which enable the Fund to receive favorable tax treatment. -3- Although the Fund's primary investment strategy does not include investing for the purpose of seeking short-term profits, securities in the portfolio will be sold whenever the investment adviser believes it is appropriate to do so in light of the Funds' investment objective without regard to the length of time a particular security may have been held. For the fiscal year ended March 31, 2013, the turnover rate for the Fund was 25.23% compared to 20.60% for the fiscal year ended March 31, 2012. The increase in the portfolio turnover rate was due to an increase in the purchases of portfolio securities. Disclosure of Portfolio Holdings The Board has approved policies and procedures developed by the Adviser governing the disclosure of the Fund's portfolio holdings. The policies and procedures are reasonably designed to ensure that disclosure of portfolio holdings and information about portfolio holdings is in the best interests of Fund shareholders and consistent with applicable law. In addition, the Fund's policies and procedures are designed to appropriately address the potential for conflicts of interest. There can be no assurance that the policy on portfolio holdings disclosure will be effective in protecting the Fund from the potential misuse of holdings by individuals or firms in possession of that information. The policy and procedures generally prohibit the disclosure of the Fund's portfolio schedule until it has been made available to the public through regulatory filing with the Securities and Exchange Commission ("SEC") or posted to the Fund's website. The Fund's complete portfolio holdings are made available to the public on a quarterly basis generally no later than 60 days after the end of each calendar quarter end. A summary of the Fund's portfolio composition is also posted to the Fund's website at www.nicholasfunds.com under the heading "Quarterly Factsheet" generally 10 days or more following a calendar quarter end. This summary composition may include the Fund's top ten holdings and a breakdown by sector. The policy and procedures provide for certain exceptions to the portfolio holdings release policy described above where (i) disclosures are made for legitimate business purposes, (ii) recipients are subject to a duty of confidentiality and (iii) recipients are subject to a duty to refrain from trading based on the disclosed information or otherwise using the information except as necessary in providing services to the Fund. At the time, the Fund has ongoing arrangements for the disclosure of portfolio holdings for legitimate business purposes with: 1. Designed employees of the Fund's Adviser in the course of performing daily operations of the Fund, including but not limited to, portfolio analysis, accounting and administration, who receive such information daily. 2. Various service providers that require such information in order to assist the Fund with its operations: the Fund's custodian, currently U.S. Bank N.A., independent registered public accounting firm, currently Deloitte & Touche LLP, legal counsel, currently Michael Best & Friedrich LLP, and proxy voting service, currently Institutional Shareholder Services Inc. (a division of RiskMetrics Group, Inc.). U.S. Bank N.A and Institutional Shareholder Services Inc. receive such information on a daily basis, while Deloitte & Touche LLP and Michael Best & Friedrich LLP receive such information as necessary in connection with professional services provided to the Fund. 3. Financial printers in connection with the printing of Fund publications for distribution to shareholders. Information is provided to printers as soon as practicable after completion of a required reporting period or a reasonable period before a publication target date. 4. Portfolio analysis services: Bloomberg and Factset. Such information is provided daily. 5. Rating and ranking organizations in connection with those firms' research on and classification of the Fund and in order to gather information about how the Fund attributes (such as turnover and industry and sector diversification) compare with those of peer funds, currently provided within 15 days of month-end: Lipper Inc., Mellon Analytical Solutions and Morningstar. -4- The Adviser's compliance committee, which is comprised of the Chief Compliance Officer and members of the Adviser's compliance committee designated by the Chief Compliance Officer, have the authority to authorize portfolio disclosures to other third-party service providers not included herein, such as, rating and ranking organizations and intermediaries that may distribute the Fund's shares. Each initial disclosure to an entity or organization of the Fund's portfolio holdings must be authorized by the Chief Compliance Officer or a member of the Adviser's compliance committee designated by the Chief Compliance Officer in accordance with policies and procedures adopted by the Adviser designed to ensure compliance with the 1940 Act and the Investment Advisor's Act of 1940. The Fund and its Adviser do not receive compensation or other consideration relating to the disclosure of information about the Fund's portfolio securities. The Fund's Board of Directors will review this policy periodically as part of its ongoing oversight of the Fund's compliance program in addition to receiving periodic reports from the Chief Compliance Officer as to the disclosures made under this policy. The Adviser's compliance committee will review compliance with and the effectiveness of the policies and procedures on an ongoing basis. INVESTMENT RISKS This section contains a summary description of the risks of other investment strategies and related investments of the Fund as discussed in this Statement of Additional Information. For a description of the principal risks of investing in the Fund, please see the "INVESTMENT OBJECTIVE, PRINCIPAL INVESTMENT STRATEGIES AND RISKS" section in the Fund's Prospectus. As with any mutual fund, there can be no guarantee that the Fund will meet its goals or that you will not lose money on your investment. There is no guarantee that the Fund's performance will be positive over any period of time. Other Risks Related to Certain Portfolio Investments and Strategies . Although the Fund generally will invest in the common stocks of large- and medium-sized companies, certain investments the Fund may acquire and certain investment techniques the Fund may use entail other risks: Liquidity, Information and Valuation Risks of Certain Portfolio Investments. Securities of unseasoned companies and securities issued in private placements, which may be acquired by the Fund from time to time, may be illiquid or volatile making it potentially difficult or impossible to sell them at the time and at the price the Fund would like. In addition, important information about these types of companies, securities or the markets in which they trade may be inaccurate or unavailable. Consequently, it may be difficult to value accurately these securities as well. Debt Securities and Preferred Stock. From time to time, the Fund may acquire debt securities and preferred stock that are convertible into or carry rights to acquire common stock, and other debt securities, such as those selling at substantial discounts. Debt securities, such as bonds, involve credit risk, which is the risk that the borrower will not make timely payments of principal and interest. Debt securities also are subject to interest rate risk, which is the risk that the value of the security may fall when interest rates rise. In general, the market price of debt securities with longer maturities will move up or down in response to changes in interest rates more than shorter-term securities. The Fund may invest in both short-term and long-term securities. The Fund is not limited as to the maturities of the debt securities in which it invests. The value of preferred stock and debt securities convertible into common stock generally will be affected by its stated dividend rate or interest rate, as applicable, and the value of the underlying common stock. As a result of the conversion feature, the dividend rate or interest rate on convertible preferred stock or convertible debt securities generally is less than would be the case if the security were not convertible. Therefore, the value of convertible preferred stock and debt securities will be affected by the factors that affect both equity securities (such as stock market movements generally) and debt securities (such as interest rates). Some convertible securities might require the Fund to sell the securities back to the issuer or a third party at a time that is disadvantageous to the Fund. -5- Fixed Income Securities. The Fund's investments in investment grade and non-investment grade fixed income securities may carry some risk. Investment grade fixed income securities described in the fourth category of the NRSROs possess speculative characteristics. In addition, non-investment grade securities tend to reflect individual corporate developments to a greater extent, tend to be more sensitive to economic conditions and tend to have a weaker capacity to pay interest and repay principal than higher rated securities. Because the market for lower rated securities may be thinner and less active than for higher rated securities, there may be market price volatility for these securities and limited liquidity in the resale market. Factors adversely impacting the market value of the Fund investments in fixed income securities also may adversely impact the Fund's net asset value. Repurchase Agreements. While the underlying obligation of a repurchase agreement purchased by the Fund is a U.S. Government security, the obligation of the seller to repurchase the security is not guaranteed by the U.S. Government. Delays or losses could result if the bank or primary dealer defaults on its repurchase obligation or becomes insolvent, which could adversely impact the Fund's net asset value. Borrowings. The use of borrowings can increase the Fund's exposure to market risk. If the Fund borrows money to make more investments than it otherwise could or to meet redemptions, the Fund's share price may be subject to greater fluctuation until the borrowing is paid off. In view of the risks inherent in all investments in securities, there is no assurance that the Fund's objectives will be achieved. THE FUND'S INVESTMENT ADVISER Nicholas Company, Inc., located at 700 North Water Street, Suite 1010, Milwaukee, Wisconsin 53202, is the Fund's investment adviser. The Adviser furnishes the Fund with continuous investment service and is responsible for overall management of the Fund's business affairs, subject to supervision by the Fund's Board of Directors. The Adviser is the investment adviser to five other mutual funds and to numerous institutions and individuals with substantial investment portfolios. The annual fee paid to the Adviser is paid monthly and is based on the average net asset value of the Fund as determined by valuations made at the close of each business day of the month. The annual fee is seventy-five one hundredths of one percent (0.75 of 1%) of the average net asset value of the Fund up to and including $50,000,000 and sixty-five one hundredths of one percent (0.65 of 1%) of the average net asset value in excess of $50,000,000. For the fiscal year ended March 31, 2013, total net assets of the Fund were $1,975,956,002. During the fiscal years ended March 31, 2013, 2012 and 2011, the Fund paid the Adviser an aggregate of $11,104,543, $10,425,812 and $9,819,417, respectively, in fees. Under an Investment Advisory Agreement with the Fund, the Adviser, at its own expense and without reimbursement from the Fund, furnishes the Fund with office space, office facilities, executive officers and executive expenses (such as health insurance premiums for executive officers). The Adviser also pays all sales and promotional expenses of the Fund, other than expenses incurred in complying with laws regulating the issue or sale of securities. In addition, the Fund is required to pay for all of its operating expenses, including, but not limited to, the costs of preparing and printing its registration statements required under the Securities Act of 1933 and the 1940 Act, and any amendments thereto, the expense of registering its shares with the Securities and Exchange Commission and in the various states, the printing and distribution costs of prospectuses mailed to existing shareholders and to persons making unsolicited requests for information, the cost of stock certificates, reports to shareholders, interest charges, taxes and legal fees and expenses. Other operating expenses that the Fund is required to pay under the Investment Advisory Agreement include accounting and administrative services provided to the Fund by the Adviser. On July 24, 2006, the Board of Directors, including a majority of the independent directors, approved a proposal by the Adviser in accordance with the terms of the Investment Advisory Agreement, subject to the following guidelines: (i) up to five basis points, on an annual basis, of the average net asset value of the Fund up to and including $2 billion and up to three basis points, on an annual basis, of the average net asset value of the Fund greater than $2 billion, based on the average net asset value of the Fund as determined by valuations made at the close of each business day of each month, and (ii) where the preceding calculation results in an annual payment of less than $50,000, the Adviser, in its discretion, may charge the Fund up to $50,000 for such services. Without regard to the actual expenses charged to the Fund by the Adviser, the quality and quantity of services may not be reduced and must be consistent with past practice. During the fiscal years ended March 31, 2013, 2012 and 2011, the Fund paid the Adviser an aggregate of $425,180, $399,064 and $375,747, respectively, in accounting and administrative fees. Prior to November 1, 2004, with limited exceptions, the Adviser did not charge, and was not -6- paid by the Fund, for providing such services. Also included as operating expenses that are paid by the Fund are fees of directors who are not interested persons of the Adviser or officers or employees of the Fund, salaries of administrative and clerical personnel, association membership dues, auditing, accounting and tax consulting services, fees and expenses of any custodian or trustees having custody of Fund assets, printing and mailing expenses, postage and charges and expenses of dividend disbursing agents, registrars and stock transfer agents, including the cost of keeping all necessary shareholder records and accounts and handling any problems related thereto, and certain other costs related to the aforementioned items. The Investment Advisory Agreement with the Adviser is not assignable and may be terminated by either party, without penalty, on 60 days notice. Otherwise, the Investment Advisory Agreement continues in effect so long as it is approved annually by (i) the Board of Directors or by a vote of a majority of the outstanding shares of the Fund and (ii) in either case, by the affirmative vote of a majority of directors who are not parties to the Investment Advisory Agreement or "interested persons" of the Adviser or of the Fund, as defined in the 1940 Act, cast in person at a meeting called for the purpose of voting for such approval. Albert O. Nicholas is President and a Director of the Fund, is Chief Executive Officer and Chairman of the Board of the Adviser, and is a controlling person of the Adviser through his ownership of 97% of the outstanding voting securities of the Adviser. David L. Johnson is Executive Vice-President of the Fund and Executive Vice-President of the Adviser. He is a brother-in-law of Albert O. Nicholas. David O. Nicholas is a Senior Vice-President of the Fund and Chief Investment Officer and a Director of the Adviser. Lynn S. Nicholas is a Senior Vice-President of the Fund and Senior Vice-President of the Adviser. David O. Nicholas and Lynn S. Nicholas are the son and daughter, respectively, of Albert O. Nicholas. Candace L. Lesak is Vice-President of the Fund and is an employee of the Adviser. Jeffrey T. May is a Senior Vice-President, Treasurer and Chief Compliance Officer of the Fund and Executive Vice-President, Treasurer and Chief Compliance Officer of the Adviser. Lawrence J. Pavelec, Senior Vice President of the Fund, is Senior Vice President of the Adviser. K. Thor Lundgren, 100 E. Wisconsin Avenue, Milwaukee, Wisconsin, is a Director of the Adviser. Mr. Lundgren is a partner with the law firm of Michael Best & Friedrich LLP, Milwaukee, Wisconsin, legal counsel to the Fund and the Adviser. MANAGEMENT - DIRECTORS AND EXECUTIVE OFFICERS AND PORTFOLIO MANAGERS OF THE FUND The overall operations of the Fund are conducted by the officers of the Fund under the control and direction of its Board of Directors. The Board of Directors governs the Fund and is responsible for protecting the interests of shareholders. The Board of Directors consists of individuals who meet periodically throughout the year to oversee the Fund's activities and review the Fund's performance. This review also includes a periodic review of the fees charged to the Fund. The following table sets forth the pertinent information about the Fund's officers and directors as of June 30, 2013. Unless otherwise listed, the business address of each director and officer is 700 North Water Street, Milwaukee, WI 53202. For each Director, information concerning the number of other directorships/trusteeships held by the Director has also been included. Each Director's education, professional training, business, not-for-profit and/or public service background and commitment to participation on the Board and to the interests of Fund shareholders contribute to his qualification to serve on the Board. In addition, the Directors have the following specific experience, qualifications, attributes and skills that are related to each Director's service in light of the Fund's business and structure: Mr. Albert Nicholas has more than forty years experience in advising the Fund, as well as over forty years executive and investment management experience in other funds and private accounts and in managing a registered investment adviser. Mr. Robert Bock has extensive board experience with expertise in corporate governance. Mr. Jay Robertson has extensive business experience, including board service and experience related to financial matters, insurance and risk management. -7- The Board is comprised of three Independent Directors, i.e., directors who are not "interested persons" as defined in the 1940 Act, and one interested director. Information for Independent Directors is set forth separately from information for the Interested Director below. The chairman of the Board, Robert Bock, is an independent director. The role of the chairman includes, among other things, coordinating communications with management and other service providers and assisting with administration of Board operations. The Board's oversight function involves supervision of the Adviser and the Fund's operations and its compliance program, with particular focus on risk management, through periodic Board reporting. The Board's role in overseeing the Fund's general risks includes receiving performance reports for the Fund and risk management reports from the Fund's Chief Compliance Officer at each regular Board meeting and regularly receiving reports regarding significant compliance risks. The Board plays a key role overseeing the Fund's financial reporting and valuation risks. The Board meets periodically with the Fund's outside auditors to discuss financial reporting and audit issues, including risk relating to financial controls. The Board has no standing committees as the three independent directors perform the functions such as those of an auditing or nominating committee. Number of Term of Portfolios Other Office and in Fund Directorships Positions Length of Complex Held by Held With Time Principal Occupations Overseen Director during Name, Age and Address Fund Served during Past Five Years by Director Past Five Years INTERESTED DIRECTOR Albert O. Nicholas, 82 (1), (3) President, (2), 44 years Chief Executive Officer and 3 None Director and Chairman of the Board, Portfolio Nicholas Company, Inc., the Manager Adviser to the Fund. He is Portfolio Manager of and primarily responsible for the day-to-day management of the portfolio of the Fund and Co-Portfolio Manager of the portfolio of Nicholas Equity Income Fund, Inc. He served as Co-Portfolio Manager of the Fund from November 1996 until April 2008 and sole Portfolio Manager of Nicholas Equity Income Fund, Inc. from April 2008 until April 2011 and previously was Co-Portfolio Manager of Nicholas Equity Income Fund, Inc. from July 2001 until April 2008. He formerly was the sole Portfolio Manager of these funds since each fund's inception. He formerly was the Co-Portfolio Manager of Nicholas High Income Fund, Inc. He is a Chartered Financial Analyst. DISINTERESTED DIRECTORS Robert H. Bock, 81 Director (2), 36 years Private Investor, Dean 5 None Emeritus of Business Strategy and Ethics, University of Wisconsin School of Business, 1997 to present. -8- Number of Term of Portfolios Other Office and in Fund Directorships Positions Length of Complex Held by Held With Time Principal Occupations Overseen Director during Name, Age and Address Fund Served during Past Five Years by Director Past Five Years Jay H. Robertson, 61 Director (2), 11 years Private Investor, April 2000 6 None to present. Chairman of the Board, Robertson-Ryan and Associates, Inc., an insurance brokerage firm from 1993 to March 2000. OFFICERS David L. Johnson, 71 (3) Executive Annual, Executive Vice President, N/A N/A Vice 33 years Nicholas Company, Inc., the President Adviser to the Fund, and employed by the Adviser since 1980. He is a Chartered Financial Analyst. Jeffrey T. May, 57 Senior Vice Annual, Executive Vice President, N/A N/A President, 20 years Treasurer and Chief Secretary, Compliance Officer, Nicholas Treasurer Company, Inc., the Adviser to and Chief the Fund, and employed by Compliance the Adviser since 1987. He is Officer Portfolio Manager of Nicholas Money Market Fund, Inc. He is a Certified Public Accountant. David O. Nicholas, 52 (3) Senior Vice Annual, Chief Investment Officer and N/A N/A President 24 years Director, Nicholas Company, and Inc., the Adviser to the Fund Associate and employed by the Adviser Portfolio since 1986. He has been Manager Associate Portfolio Manager of the Fund since April 2011. He is Portfolio Manager of and primarily responsible for the day-to-day management of the portfolios of Nicholas II, Inc. and Nicholas Limited Edition, Inc. He also served as Co-Portfolio Manager of the Fund from November 1996 until April 2008, Nicholas High Income Fund, Inc. from April 2001 until April 2008 and Nicholas Equity Income Fund, Inc. from July 2001 until April 2008. He is a Chartered Financial Analyst. Lynn S. Nicholas, 57 (3) Senior Vice Annual, Senior Vice President, N/A N/A President 28 years Nicholas Company, Inc., the Adviser to the Fund, and employed by the Adviser since 1983. She is a Chartered Financial Analyst. -9- Number of Term of Portfolios Other Office and in Fund Directorships Positions Length of Complex Held by Held With Time Principal Occupations Overseen Director during Name, Age and Address Fund Served during Past Five Years by Director Past Five Years Lawrence J. Pavelec, 54 Senior Vice Annual, Senior Vice President, N/A N/A President 8 years Nicholas Company, Inc., the Adviser to the Fund, and employed by the Adviser since April 2003. He is Portfolio Manager for and primarily responsible for the day-to-day management of the portfolio of Nicholas High Income Fund, Inc. since April 2008. He served as Co- Portfolio Manager of Nicholas High Income Fund, Inc. from April 2003 until April 2008. He was a portfolio manager for Brandes Investment Partners from 1999 to April 2003. He is a Chartered Financial Analyst. Candace L. Lesak, 55 Vice Annual, Employee, Nicholas N/A N/A President 28 years Company, Inc., the Adviser to the Fund, since 1983. She is a Certified Financial Planner. (1) Albert O. Nicholas is the only director of the Fund who is an "interested person" of the Fund, as that term is defined in the 1940 Act because Mr. Nicholas is Chief Executive Officer and a Director of the Adviser and owns 97% of the outstanding voting securities of the Adviser. (2) Until duly elected or re-elected at a subsequent annual meeting of the Fund. (3) David O. Nicholas and Lynn S. Nicholas are the son and daughter, respectively, of Albert O. Nicholas. David L. Johnson is the brother-in-law of Albert O. Nicholas. See "The Fund's Investment Adviser" for a description of the relationships of the officers of the Fund to the Adviser and the family relationships between directors of the Adviser and officers and directors of the Fund. The table below sets forth the aggregate dollar range of shares owned beneficially by each director of the Fund as of December 31, 2012. In addition, the table sets forth the dollar range of shares beneficially owned by each director of the other mutual funds that Nicholas Company, Inc. advises and are overseen by such director as of December 31, 2012. Aggregate Dollar Range of Equity Securities in All Registered Investment Dollar Range of Equity Companies Overseen by Director in Name of Director Securities in the Fund Family of Investment Companies Albert O. Nicholas Over $100,000 Over $100,000 Robert H. Bock Over $100,000 Over $100,000 Jay H. Robertson Over $100,000 Over $100,000 The Investment Advisory Agreement between the Fund and Nicholas Company, Inc. states that the Fund shall pay the directors' fees of directors who are not interested persons of Nicholas Fund, Inc. The amount of such fees is subject to increase or decrease at any time. The table below sets forth the aggregate compensation received by all directors of the Fund during the fiscal year ended March 31, 2013. No officers of the Fund receive any compensation from the Fund, but rather, are compensated by the Adviser in accordance with its Investment Advisory Agreement with the Fund. -10- Total Compensation Aggregate Pension or Retirement Estimated Annual From Fund and Fund Compensation Benefits Accrued As Benefits Upon Complex Paid to Name From the Fund (1) Part of Fund Expenses Retirement Directors (1) Albert O. Nicholas (2) $ 0 $ 0 $ 0 $ 0 Robert H. Bock (2) 14,300 0 0 33,000 Jay H. Robertson (2) 9,900 0 0 33,000 (1) During the fiscal year ended March 31, 2013, the Fund and other funds in the Nicholas Fund Complex (i.e., those funds which also have Nicholas Company, Inc. as their investment adviser, namely Nicholas Equity Income Fund, Inc., Nicholas II, Inc., Nicholas Limited Edition, Inc., Nicholas High Income Fund, Inc. and Nicholas Money Market Fund, Inc.) compensated those directors who are not "interested persons" of the Adviser in the form of meeting attendance fees. During the fiscal year ended March 31, 2013, the Fund compensated the disinterested directors at a rate of $2,475 per director per meeting attended. In addition, Mr. Bock was paid $1,100 per meeting in his capacity as Chairman of the Board. The disinterested directors did not receive any other form or amount of compensation from the Fund Complex during the fiscal year ended March 31, 2013. All other directors and officers of the Fund were compensated by the Adviser in accordance with its Investment Advisory Agreement. (2) Mr. Nicholas also is a member of the Board of Directors of Nicholas Equity Income Fund, Inc. and Nicholas Money Market Fund, Inc. Mr. Robert H. Bock also is a member of the Board of Directors of Nicholas Equity Income Fund, Inc., Nicholas II, Inc., Nicholas Limited Edition, Inc. and Nicholas High Income Fund, Inc. Mr. Robertson also is a member of the Board of Directors of Nicholas Equity Income Fund, Inc., Nicholas II, Inc., Nicholas Limited Edition, Inc., Nicholas High Income Fund, Inc. and Nicholas Money Market Fund, Inc. The Fund and the Adviser adhere to Codes of Ethics ("Codes") established and adopted by their Boards of Directors pursuant to Rule 17j-1 under the 1940 Act. The Codes govern the personal trading activities of all "Access Persons" of the Fund and the Adviser. Access Persons include every director and officer of the Adviser and the investment companies managed by the Adviser, including the Fund, as well as certain employees of the Adviser and Fund who, in connection with their regular functions and duties, make, participate in, or obtain information regarding the purchase or sale of a security by the Adviser or the Fund, or whose functions relate to the making of a recommendation with respect to such purchases or sales. The Codes are based on the principle that such Access Persons have a fiduciary duty to place the interests of the Fund and the Adviser's clients above their own. The Codes provide for trading "black out" periods of fifteen calendar days during which time Access Persons may not trade in securities which have been purchased or sold, or are being considered for purchase or sale, by the Fund or any other registered investment company or account to which the Adviser serves as investment adviser, unless the transaction is pre-approved by the Fund or the Adviser, as applicable. In addition, the Codes ban Access Persons from engaging in any manipulative or deceptive practices in connection with certain securities held or to be acquired by the Fund. The Codes also require that Access Persons obtain pre-approval prior to investing in any initial public offering or private placement. PROXY VOTING GUIDELINES As a shareholder of the companies in which the Fund invests, the Fund receives proxies to vote at those companies' annual or special meetings. The Fund has adopted Proxy Voting Policies and Procedures ("Proxy Voting Policies") pursuant to which the Fund votes shares owned by the Fund. The Fund always endeavors to vote proxies relating to portfolio securities in accordance with its best judgment as to the advancement of the Fund's investment objectives. The Fund's management reviews the Proxy Voting Policies annually. Subject to the Board's oversight, the Fund has final authority and fiduciary responsibility for voting proxies received by the Fund; however, it has delegated the implementation of the Fund's Proxy Voting Policies to a proxy voting service that is not affiliated with the Fund or its Adviser. In general, the Fund will vote in accordance with the proxy voting recommendations of Institutional Shareholder Services (a division of RiskMetrics Group, Inc.) ("ISS"). ISS is an independent firm that specializes in providing a variety of fiduciary-level proxy-related services to institutional investment managers, plan sponsors, custodians, consultants and other institutional investors. ISS services provided include in-depth research, global issuer analysis and voting recommendations. While the Fund generally will review and utilize the recommendations of ISS in making voting decisions, the Fund is in no way obligated to follow such recommendations. In addition to research and recommendations, ISS provides vote execution, reporting and recordkeeping. -11- The following is a summary of the manner in which the Fund would normally expect to vote on certain matters that typically are included in the proxies that the Fund receives each year; however, each proxy needs to be considered separately and the Fund's vote may vary depending upon the actual circumstances presented. Proxies for extraordinary matters, such as mergers, reorganizations and other corporate transactions, are necessarily considered on a case-by-case basis in light of the merits of the individual transactions. Election of Directors, Corporate Governance and Routine Matters. Generally, the Fund supports the company's nominees to serve as directors. The Fund generally supports management on routine corporate matters and matters relating to corporate governance. For example, the Fund generally expects to support management on the following matters: provisions of the corporate charter addressing indemnification of directors and officers; stock repurchase plans; and the selection of independent accountants. The types of matters on corporate governance that the Fund would expect to vote against include: the issuance of preferred shares where the board of directors has complete freedom as to the terms of the preferred; the adoption of a classified board; the adoption of poison pill plans or similar anti-takeover measures; and the authorization of a class of shares not held by the Fund with superior voting rights. Compensation Arrangements and Stock Option Plans. The Fund reviews on a case-by-case basis, utilizing ISS research, compensation arrangements and the establishment of stock option plans. The Fund generally believes, if its view of management is favorable enough that the Fund has invested in the company, arrangements that align the interests of management and shareholders are beneficial to long-term performance. However, some arrangements or plans have features that the Fund would oppose. For example, the Fund would vote against an option plan that has the potential to unreasonably dilute the interests of existing shareholders, permit equity overhang that exceed certain levels or that allow for the repricing of outstanding options. Social Policy Based Proposals. The Fund considers proposals relating to social, political and environmental issues on a case-by-case basis to determine whether they will have a financial impact on shareholder value. However, the Fund generally votes against proposals requesting reports that are duplicative, related to matters that are not material to the business or that would impose unnecessary or excessive costs. If the Fund's management believes that a material conflict of interest exists with respect to its exercise of any proxy received by the Fund, the Fund will generally rely on the recommendations of the independent proxy voting service. The Adviser's compliance staff will review any votes where a potential conflict exists and the Fund does not rely on the proxy voting services recommendations. A material conflict of interest may arise, for example, if the company to which the proxy relates is a client of the Adviser or one of its affiliates or if the Adviser or one of its affiliates has a material business relationship with that company. In August of each year the Fund files with the SEC information regarding the voting of proxies by the Fund for the 12-month period ending the preceding June 30th. Shareholders will be able to view such filings without charge on the SEC's website at http://www.sec/gov or at the Fund's website at http://www.nicholasfunds.com. Shareholders may also obtain a copy of the Proxy Voting Policies by contacting the Fund at 800-544-6547 (toll-free). PRINCIPAL SHAREHOLDERS Charles Schwab & Co., Inc. Custody Account for the Exclusive Benefit of its Customers, 211 Main Street, San Francisco, California 94105, owned of record 2,765,522 shares of the Fund, or 7.10%, as of June 30, 2013. National Financial Services Corp. for the Exclusive Benefit of Our Customers, 200 Liberty Street, New York, New York 10281, owned of record 2,514,031 shares of the Fund, or 6.45%, as of June 30, 2013. No other persons are known to the Fund to own beneficially or of record 5% or more of the shares of the Fund as of June 30, 2013. All directors and executive officers of the Fund as a group (9 persons) beneficially own 2.44% of the outstanding shares of the Fund as of June 30, 2013. -12- PORTFOLIO MANAGERS OF THE FUND For the fiscal year ended March 31, 2013, Mr. Albert O. Nicholas was the Portfolio Manager of the Fund and was primarily responsible for the day-to-day management of the Fund and Mr. David O. Nicholas was the Associate Portfolio Manager of the Fund. The following table identifies the number of accounts (other than the Fund) for which they are primarily responsible for the day-to-day management of and total assets of other such accounts within each of the following categories: registered investment companies, other pooled investment vehicles, and other accounts as of March 31, 2013. Registered Investment Companies, Pooled Investment Portfolio Manager Albert O. Nicholas Vehicles and Other Accounts 1 registered investment company with $333.1 million in total assets under management and no pooled investment vehicles or other accounts David O. Nicholas 2 registered investment company with $927.1 million in total assets under management and no pooled investment vehicles or other accounts There are no accounts with respect to which the advisory fees are based on the performance of the account. Material conflicts of interest may arise when the Fund's portfolio manager also has day-to-day management responsibilities with respect to one or more other funds or other accounts, as is the case for Mr. Albert O. Nicholas. These potential conflicts include: Allocation of Limited Time and Attention. A portfolio manager who is responsible for managing multiple funds and/or accounts may devote unequal time and attention to the management of those funds and/or accounts. The effects of this potential conflict may be more pronounced where funds and/or accounts overseen by a particular portfolio manager have different investment strategies. Pursuit of Differing Strategies. At times, a portfolio manager may determine that an investment opportunity may be appropriate for only some of the funds and/or accounts for which he exercises investment responsibility, or may decide that certain of the funds and/or accounts should take differing positions with respect to a particular security. In these cases, the portfolio manager may place separate transactions for one or more funds or accounts which may affect the market price of the security or the execution of the transaction, or both, to the detriment or benefit of one or more other funds and/or accounts. Selection of Brokers - Dealers. Portfolio managers may be able to select or influence the selection of the brokers and dealers that are used to execute securities transactions for the funds and/or accounts that they supervise. In addition to executing trades, some brokers and dealers provide portfolio managers with brokerage and research services (as those terms are defined in Section 28(e) of the Securities Exchange Act of 1934), which may result in the payment of higher brokerage fees than might have otherwise been available. These services may be more beneficial to certain funds or accounts than to others. Although the payment of brokerage commissions is subject to the requirement that the portfolio manager determine in good faith that the commissions are reasonable in relation to the value of the brokerage and research services provided to the fund, a portfolio manager's decision as to the selection of brokers and dealers could yield disproportionate costs and benefits among the funds and/or accounts that he manages. The Adviser and the Fund have adopted compliance polices and procedures that are designed to address various conflicts of interest that may arise for the Adviser and the individuals that it employs. For example, the Adviser has adopted trade allocation procedures that are designed to facilitate the fair allocation of limited investment opportunities among multiple funds and accounts. There is no guarantee, however, that the policies and procedures adopted by the Adviser and the Fund will be able to detect and/or prevent every situation in which an actual or potential conflict may appear. -13- The Fund's Portfolio Managers are employed and compensated by the Fund's Adviser, not the Fund. The Adviser compensates its portfolio managers based on the investment performance results of the funds and accounts they manage, the value of the assets in the funds and accounts they manage, in addition to the profitability of the Adviser. As of the Fund's most recently completed fiscal year, March 31, 2013, the Fund's Portfolio Managers’ compensation consisted of a base salary and an annual discretionary bonus. The Adviser reviews the base salary of each Portfolio Manager annually to ensure that it reflects their performance, is competitive within the industry and coincides with the skill level necessary to manage the Fund. The annual discretionary bonus is determined by the Adviser's Board of Directors based on a number of subjective and objective factors believed by the Adviser's Board of Directors to be material to its decision. Those factors that may be considered include, without limitation, the Fund's relative and actual long-term, intermediate, and short-term performance before taxes, the Fund's performance relative to its benchmarks and peer group, and the portfolio manager's overall contributions to the organization. The benchmarks and peer groups that the Adviser's Board of Directors may consider are determined annually in the board's discretion and may include, without limitation, the Standard and Poor's Indices and the Russell Indices. The table below identifies beneficial ownership of the Fund's shares by the Portfolio Managers as of March 31, 2013. Portfolio Managers Dollar Range of Ownership of Securities Albert O. Nicholas Over $ David O. Nicholas $ 50,001 - $100,000 DISTRIBUTION OF FUND SHARES Quasar Distributors, LLC (the "Distributor"), 615 East Michigan Street, Milwaukee, Wisconsin, 53202, is the distributor of the Funds' shares pursuant to a Distributor Agreement dated May 1, 2005. The Distributor is a registered broker-dealer and member of the Financial Industry Regulatory Authority ("FINRA"). PURCHASE, REDEMPTION AND PRICING OF FUND SHARES The sections captioned "PURCHASE OF FUND SHARES" and "REDEMPTION AND EXCHANGE OF FUND SHARES" in the Fund's Prospectus discuss how you may purchase, redeem or exchange shares of the Fund and are incorporated into this SAIs by reference. Although not anticipated, it is possible that conditions may arise in the future which would, in the opinion of the Fund's Adviser or Board of Directors, make it undesirable for the Fund to pay for all redemptions in cash. In such cases, the Board may authorize payment to be made in portfolio securities or other property of the Fund. However, the Fund has obligated itself under the 1940 Act to redeem for cash all shares presented for redemption by any one shareholder up to $250,000 (or 1% of the Fund's net assets if that is less) in any 90-day period. Securities delivered in payment of redemptions would be valued at the same value assigned to them in computing the net asset value per share. Shareholders receiving such securities would incur brokerage costs when these securities are sold. The right of redemption may be suspended and the date of payment postponed for more than seven days for any period during which the New York Stock Exchange ("NYSE") is closed other than the customary weekend and holiday closings, and may be suspended for any period during which trading on the NYSE is restricted as determined by the Securities and Exchange Commission ("SEC"), or the SEC has by order permitted such suspension, or the SEC has determined that an emergency exists as a result of which it is not reasonably practicable for the Fund to dispose of its securities or to determine fairly the value of its net assets. -14- Shareholder purchase, redemption and exchange orders are processed using the net asset value ("NAV") next calculated after receipt of such request in proper order by the Fund (or an Authorized Agent of the Fund). The NAV is determined by dividing the total value in U.S. dollars of the Fund's total net assets by the total number of shares outstanding at that time. Net assets of the Fund are determined by deducting the liabilities of the Fund from the total assets of the Fund. The NAV is determined as of the close of trading on the NYSE on each day the NYSE is open for unrestricted trading. The NYSE is open for trading Monday through Friday except New Year's Day, Martin Luther King Day, President's Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. Additionally, if any of the aforementioned holidays falls on a Saturday, the NYSE generally will not be open for trading on the preceding Friday, and when any such holiday falls on a Sunday, the NYSE will not be open for trading on the succeeding Monday, unless unusual business conditions exist (such as the ending of a monthly or yearly accounting period). Equity securities traded on a stock exchange will ordinarily be valued on the basis of the last sale price on the date of valuation, on the securities principal exchange, or in the absence of any sale on that day, the closing bid price. For valuing securities traded on the NASDAQ market, the Fund uses the NASDAQ Official Closing Price. Most debt securities, excluding short-term investments, are valued at the current evaluated bid price. Bid prices for debt securities are obtained from the Fund's pricing service, which utilizes both dealer-supplied valuations and computerized pricing models. Debt securities listed on a national exchange may be priced at the last sales price if the Fund's pricing service believes such price represents market value of the security for institutional trades. The pricing of all debt securities takes into account the fact that the Fund trades in institutional size trading units. Securities for which there are no readily available market quotations will be valued at their then current fair value using methods determined in good faith by the Board of Directors. As an example, a market quotation may not be readily available if the trading of a security is halted by its primary exchange and does not resume before the markets close or the primary exchange experiences technical difficulties. If a security is valued using fair value pricing, the Fund's value for that security is likely to be different from the last quoted market value. ANTI-MONEY LAUNDERING PROGRAM The Fund has established an Anti-Money Laundering Compliance Program (the "Program") as required by the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 ("USA PATRIOT Act"). In order to ensure compliance with this law, the Fund's Program provides for the development of internal practices, procedures and controls, designation of anti-money laundering compliance officers, an ongoing training program and an audit function to determine the effectiveness of the Program. Procedures to implement the Program include, but are not limited to, determining that the Fund's transfer agent has established proper anti-money laundering procedures, reporting suspicious and/or fraudulent activity, checking shareholder names against designated government lists, including the Office of Foreign Asset Control and a complete and thorough review of all new opening account applications. The Fund will not transact business with any person or entity whose identity cannot be adequately verified under the provisions of the USA PATRIOT Act. DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAX STATUS The Fund intends to qualify annually as a "regulated investment company" under the Internal Revenue Code of 1986 (the "Code") and intends to take all other action required to ensure that little or no federal income or excise taxes will be payable by the Fund. As a result, the Fund generally will seek to distribute to its shareholders substantially all of its net investment income and net realized capital gain in one or more distributions for each fiscal year (after utilization of any available capital loss carryovers). If the Fund fails to qualify as a regulated investment company under the Internal Revenue Code, its income will be subject to federal income tax, and dividends paid to shareholders will continue to be subject to federal income tax. The Code generally imposes a 4% nondeductible excise tax on a regulated investment company, such as the Fund, if it does not distribute to its shareholders during the calendar year an amount equal to 98% of the Fund's net investment income, with certain adjustments, for such calendar year, plus 98% of the Fund's capital gains (if any) for the one-year period ending on October 31 of such calendar year. In addition, an amount equal to any undistributed net investment income or capital gains from the previous calendar year also must be distributed to avoid the excise tax. The excise tax is imposed on the amount by which the Fund does not meet the foregoing distribution requirements. The Fund intends to make distributions necessary to avoid imposition of the excise tax. -15- For federal income tax purposes, dividends and distributions by the Fund, whether received in cash or invested in additional shares of the Fund, will be taxable to the Fund's shareholders, except those shareholders that are not subject to tax on their income. Net realized long-term gains are paid to shareholders as capital gain distributions. Income distributed from the Fund's net investment income and net realized short-term gains are paid to shareholders as ordinary income dividends. Distributions may be taxable at different rates depending on the length of time the Fund holds a security. Distributions generally will be made in June and December of each year. The Fund will provide information to shareholders concerning the character and federal tax treatment of all dividends and distributions. Dividends paid by the Fund to individual shareholders will not qualify for any dividends received exclusion; however, corporate shareholders will be eligible for a dividends received deduction, subject to a reduction for various reasons, including the fact that the total dividends received from domestic corporations in any one year are less than 100% of the Fund's gross income. At the time of purchase of Fund shares, the Fund may have undistributed income or capital gains included in the computation of the NAV. Therefore, a dividend or capital gain distribution received shortly after such purchase by a shareholder may be taxable to the shareholder, although it is, in whole or in part, a return of capital and may have the effect of reducing the NAV. Under the Code, dividends declared by the Fund to shareholders of record in December of any year will be deemed to have been received by (and will be taxable to) shareholders as of the record date, provided the dividend is actually paid by the Fund before February 1 of the following year. The foregoing tax discussion relates to federal income taxes only and is not intended to be a complete discussion of all federal tax consequences. You should consult with a tax adviser concerning the federal, state and local tax aspects of an investment in the Fund. PORTFOLIO TRANSACTIONS AND BROKERAGE The Adviser decides which securities to buy for the Fund and when to sell them. It also selects the broker or dealer who places the Fund's investment business and negotiates their commissions. The Adviser selects a broker or dealer to execute a portfolio transaction on the basis that such broker or dealer will execute the order as promptly and efficiently as possible, subject to the overriding policy of the Fund. This policy is to obtain the best market price and reasonable execution for all its transactions, giving due consideration to such factors as reliability of execution and the value of research, statistical and price quotation services provided by such broker or dealer. The research services provided by brokers consist of recommendations to purchase or sell specific securities, the rendering of advice regarding events involving specific companies and events and current conditions in specific industries, and the rendering of advice regarding general economic conditions affecting the stock market and the economy. The Fund and the Adviser are not affiliated with any broker or dealer. Purchases and sales of portfolio securities are frequently placed, without any agreement or undertaking to do so, with brokers and dealers who provide the Adviser with such brokerage and research services. Section 28(e) of the Securities Exchange Act of 1934 ("Section 28(e)") permits the Adviser, under certain circumstances, to cause the Fund to pay a broker or dealer a commission for effecting a transaction in recognition of the value of the brokerage and research service provided by the broker or dealer. Brokerage and research services include (i) furnishing advice as to the value of securities, the advisability of investing in, purchasing or selling securities, and the availability of securities or purchasers or sellers of securities; (ii) furnishing analyses and reports concerning issuers, industries, securities, economic factors and trends, portfolio strategy and the performance of accounts; and (iii) effecting securities transactions and performing functions incidental thereto. Such commissions may be less than, equal to or exceed the amount another broker or dealer would have charged for effecting the transaction. -16- The Adviser believes it is important to its investment decision-making process to have access to independent research. The Adviser understands that since the brokers and dealers rendering such services are compensated through commissions, such services would be unilaterally reduced or eliminated by the brokers and dealers if none of the Fund's transactions were placed through them. While these services have value which cannot be measured in dollars, the Adviser believes such services do not reduce the Fund's or the Adviser's expenses. Higher commissions may be paid by the Fund, provided (i) the Adviser determines in good faith that the amount is reasonable in relation to the services in terms of the particular transaction or in terms of the Adviser's overall responsibilities with respect to the accounts as to which it exercises investment discretion; (ii) such payment is made in compliance with the provisions of Section 28(e) and other applicable state and federal law; and (iii) in the Adviser's opinion, the total commissions paid by the Fund will be reasonable in relation to the benefits to the Fund over the long term. In instances where the Adviser determines that the supplemental research and statistical services are of significant value, the Adviser may place the Fund's transactions with brokers or dealers who may charge a higher commission than other brokers or dealers may have charged for the same transaction. The Adviser utilizes research and other information obtained from brokers and dealers in managing its other client accounts. On the other hand, the Adviser obtains research and information from brokers and dealers who transact trades for the Adviser's other client accounts, which is also utilized by the Adviser in managing the Fund's portfolio. The following table shows the dollar amount of brokerage commissions paid to firms by the Fund for certain research services provided and the approximate dollar amount of the transactions involved for the fiscal year ended March 31, 2013. Amount of Commissions Paid to Firms that Provided Amount of Brokerage Research Services Transactions Involved The Fund $ 568,313 $ 409,502,458 (1) The provision of such research services was not the only factor considered in the placement of all noted business with such firms. In addition, the amounts disclosed do not include commissions paid to firms who provided unsolicited research services as well as research customarily provided by brokerage firms in the normal course of business. The Adviser does not specifically negotiate commissions and charges with a broker or dealer in advance of each transaction. The approximate brokerage discount and charges are, however, generally known to the Adviser prior to effecting the transaction. In determining the overall reasonableness of the commissions paid, the Adviser compares the commission rates to those it pays on transactions for its other client accounts and to the rates generally charged in the industry to institutional investors such as the Fund. The commissions also are considered in view of the value of the research, statistical and price quotations services, if any, rendered by the broker or dealer through whom a transaction is placed. The Adviser may effect portfolio transactions with brokers or dealers who recommended the purchase of the Fund's shares. The Adviser may not allocate brokerage on the basis of recommendations to purchase shares of the Fund. Over-the-counter market purchases and sales are generally transacted directly with principal market makers, who retain the difference between their cost in a security and its selling price. In some circumstances where, in the opinion of the Adviser, better prices and executions are available elsewhere, the transactions are placed through brokers who are paid commissions directly. The Fund paid aggregate brokerage commissions of approximately $1,042,622, $1,081,856 and $811,372 in the fiscal years ended March 31, 2013, 2012 and 2011, respectively. The increase in the amount of commissions paid by the Fund during fiscal 2012 relative to fiscal 2011 was a result of an increase in the number of equity transactions in fiscal 2012. -17- The Adviser, which is the investment adviser to six registered investment companies (including the Fund) and other advisory clients (collectively, "client accounts"), may occasionally make investment decisions which would involve the purchase or sale of securities for the portfolios of more than one client account at the same time. As a result, the demand for securities being purchased or the supply of securities being sold may increase, and this could have an adverse effect on the price of those securities and/or the size of the position obtained or disposed of by the client accounts. It is the Adviser's policy not to favor one client account over another in making investment recommendations or in placing orders. The Adviser has adopted procedures that provide generally for the Adviser to aggregate (or "bunch") orders for more than one client account. An aggregated order occurs when the Adviser enters a single order for the purchase or sale of a single security on behalf of more than one client account. The Adviser may aggregate orders when it deems it to be appropriate and in the best interests of the client accounts. Pursuant to the Adviser's trade allocation procedures, client accounts will participate in any aggregated order for a security at the average share price on any given date for all of the Adviser's transactions in that security on behalf of those clients participating in the aggregated order, with transaction costs shared pro rata based on participation. When an aggregated order is only partially filled, the securities purchased generally will be allocated on a pro rata basis to each client account participating in the aggregated order based upon the initial amount requested for the account (subject to certain exceptions) and each participating account will participate at the average share price for the aggregated order on the same business day. Because a pro rata allocation may not always adequately accommodate all facts and circumstances, the trade allocation procedures allow the allocation of securities on a basis other than pro rata. For example, adjustments may be made to eliminate de minimis positions, to give priority to accounts with specialized investment policies and objectives or to consider the unique characteristics of certain accounts (e.g., available cash, industry or issuer concentration, duration or credit exposure). The Adviser also has adopted procedures governing the allocation of securities issued in initial public offerings ("IPOs") which provide that all portfolio managers for the Adviser's client accounts shall be informed of any opportunity to acquire IPO securities which is presented to or which becomes available to the Adviser or any of its clients. Each client's portfolio manager shall assess whether or not the acquisition of IPO securities is appropriate for, and in the best interests of, his client, based upon multiple factors, including but not limited to the following: (i) the investment objective of the client; (ii) risk tolerance of the client; (iii) market capitalization of the IPO issuer; (iv) nature of the IPO issuer's business and industry; (v) current composition of the client's portfolio (including cash position); and (vi) preference of the portfolio manager for IPO investment opportunities. The IPO procedures provide that a written allocation statement shall be prepared prior to the Adviser submitting an order for IPO securities which identifies the client accounts to participate, the extent of such participation and the basis for allocation among the participating clients in the event the IPO order is partially filled. The allocation in the event of a partial order fill may be based upon a number of factors including but not limited to those specified as factors to be considered in assessing whether or not a client will invest in IPO securities. The procedures provide that any deviation from the initial allocation statement shall be approved by either Albert O. Nicholas or David O. Nicholas, and the Adviser's compliance officer. The Adviser's procedures for allocation of IPO investment opportunities are designed to ensure that all clients are treated fairly and equitably. However, the procedures do not mandate allocation of IPO investment opportunities among its clients in equal amounts or pro rata based upon the size of the client account's assets. Adviser clients whose accounts are actively traded, have high portfolio turnover rates or invest heavily in all types of IPOs and secondary offerings may receive a greater percentage of IPO allocations than other client accounts without such characteristics. PERFORMANCE DATA The average annual total return of the Fund is calculated according to the following formula: P(1+T) n ERV where P equals a hypothetical initial payment of $1,000; T equals average annual total return; n equals the number of years; and ERV equals the ending redeemable value at the end of the period of a hypothetical $1,000 payment made at the beginning of the period. -18- Average annual total return, or "T" in the above formula, is computed by finding the average annual compounded rates of return over the period that would equate the initial amount invested to the ending redeemable value. Average annual total return assumes the reinvestment of all dividends and distributions. The average annual total return (after taxes on distributions) of the Fund is computed by finding the average annual compounded rates of return over the periods that would equate the initial amount invested to the ending value, according to the following formula: P(1+T) n ATV D where "P" equals a hypothetical initial payment of $1000; "T" equals average annual total return (after taxes on distributions; "n" equals the number of years; and "ATV D " equals the ending value of a hypothetical $1,000 investment made at the beginning of the stated periods at the end of the stated periods, after taxes on Fund distributions but not after taxes on redemptions. The average annual total return (after taxes on distributions and sale of Fund shares) of the Fund is computed by finding the average annual compounded rates of return over the periods that would equate the initial amount invested to the ending value, according to the following formula: P(1+T) n ATV DR where "P" equals a hypothetical initial payment of $1,000; "T" equals average annual total return (after taxes on distributions; "n" equals the number of years; and "ATVDR" equals ending value of a hypothetical $1,000 investment made at the beginning of the stated periods at the end of the stated periods, after taxes on Fund distributions and redemptions. After-tax returns for the Fund are calculated using historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. In certain cases the figure representing "Return After Taxes on Distributions and Sales of Fund Shares" may be higher than the other return figures of the same period. A higher after-tax return results when a capital loss occurs upon redemption and provides an assumed tax deduction that benefits the investor. Your actual after-tax returns depend on you tax situation and may differ from those shown. If you own Fund shares in a tax-deferred account, such as a 401(k) plan or an individual retirement account ("IRA"), this information may not apply to your investment. Cumulative total return represents the simple change in value of an investment over a stated period and may be quoted as a percentage or as a dollar amount. Total returns may be broken down into their components of income and capital (including capital gains and changes in share price) in order to illustrate the relationship between these factors and their contributions to total return. The Fund's performance data represents past performance and is not intended to predict or indicate future results. The return and principal value of an investment in the Fund will fluctuate, and an investor's redemption proceeds may be more or less than the original investment amount. CAPITAL STRUCTURE Nicholas Fund, Inc. is authorized to issue 200,000,000 shares of common stock, par value $0.50 per share. Each full share has one vote and all shares participate equally in dividends and other distributions by the Fund when and as declared by the Board, and in the residual assets of the Fund in the event of liquidation. There are no conversion or sinking fund provisions applicable to shares and shareholders have no preemptive, rights and may not cumulate their votes in the election of directors. The Funds' shares, when issued, are fully paid and non-assessable. STOCK CERTIFICATES Share ownership is recorded electronically. Accordingly, the Fund will not issue certificates evidencing shares purchased. A shareholder's account will be credited with the number of shares purchased, relieving shareholders of responsibility for safekeeping of certificates and the need to deliver them upon redemption. Written confirmations are issued for all purchases of shares. For shareholders who currently hold certificates, they may deliver certificates to the Fund's transfer agent, U.S. Bancorp Fund Services, LLC ("U.S. Bancorp"), and direct that their account be credited with the shares. -19- ANNUAL MEETING Under the laws of the State of Maryland, registered investment companies, such as the Fund, may operate without an annual meeting of shareholders under specified circumstances if an annual meeting is not required by the 1940 Act. The Fund has adopted the appropriate provisions in its Articles of Incorporation and will not hold annual meetings of shareholders unless otherwise required to do so. In the event the Fund is not required to hold annual meetings of shareholders to elect directors, the Board of Directors of the Fund will promptly call a meeting of shareholders of the Fund for the purpose of voting upon the question of removal of any director when requested in writing to do so by the record holders of not less than 10% of the outstanding shares of common stock of the Fund. The affirmative vote of two-thirds of the outstanding shares, cast in person or by proxy at a meeting called for such purpose, is required to remove a director of the Fund. The Fund will assist shareholders in communicating with each other for this purpose pursuant to the requirements of Section 16(c) of the 1940 Act. SHAREHOLDER REPORTS Shareholders will be provided at least semiannually with a report or a current prospectus showing the Fund's portfolio and other information. After the close of the Fund's fiscal year, which ends March 31, an annual report or current prospectus containing financial statements audited by the Fund's Independent Registered Public Accounting Firm, Deloitte & Touche LLP, will be sent to shareholders. CUSTODIAN AND TRANSFER AGENT U.S. Bank N.A. ("U.S. Bank") acts as Custodian of the Fund. U.S. Bancorp Fund Services, LLC, 615 East Michigan Street, Milwaukee, Wisconsin 53202, acts as Transfer Agent and Dividend Disbursing Agent of the Fund. As custodian, U.S. Bank holds all securities and cash of the Fund, delivers and receives payment for securities sold, receives and pays for securities purchased, collects income from investments and performs other duties, all as directed by the officers of the Fund. U.S. Bank and U.S. Bancorp do not exercise any supervisory function over the management of the Fund, the purchase or sale of securities or the payment of distributions to shareholders. INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM AND LEGAL COUNSEL Deloitte & Touche LLP, 555 East Wells Street, Milwaukee, Wisconsin 53202, served as the Fund's Independent Registered Public Accounting Firm for the fiscal year ended March 31, 2013. Michael Best & Friedrich LLP, 100 East Wisconsin Avenue, Milwaukee, Wisconsin 53202, counsel for the Fund, has passed upon the legality of the shares of the Fund being offered by this Prospectus. FINANCIAL INFORMATION The schedule of investments, the financial statements, the financial highlights and notes thereto and the Report of Independent Registered Public Accounting Firm contained in the Annual Report of the Fund for the fiscal year ended March 31, 2013, which have been filed with the SEC pursuant to Rule 30e-1 of the 1940 Act, are incorporated herein by reference. You may obtain a free copy of the Annual or Semiannual Report by writing or calling the Fund or view a copy on the SEC’s website at http://www.sec.gov. -20- NICHOLAS FUND, INC. PART C OTHER INFORMATION Item 28. Exhibits (a) Amended and Restated Articles of Incorporation were previously filed with the Registration Statement on Form N1-A (File No. 002-30447) and are incorporated herein by reference. (b) Amended and Restated Bylaws were previously filed with the Registration Statement on Form N1-A (File No. 002-30447) and are incorporated herein by reference. (c) Instruments Defining Rights of Security Holders is incorporated herein by reference to Registrant's Amended and Restated Articles of Incorporation and Bylaws. (d) Amended Investment Advisory Agreement was previously filed with the Registration Statement on Form N-1A (File No. 002-30447) and is incorporated herein by reference. (e) Distribution Agreement, dated as of May 1, 2005, among Quasar Distributors, LLC, Nicholas Company, Inc. and each fund in the Nicholas fund complex, including Nicholas Fund, Inc. is filed herewith. (f) Bonus or Profit Sharing Contracts is not applicable. (g) Custodian Agreement was previously filed with the Registration Statement on Form N-1A (File No. 002-30447) and is incorporated herein by reference. (h) Other Material Contracts (i) Powers of Attorney were previously filed with the Registration Statement on Form N1-A (File No. 002-30447) and are incorporated herein by reference. (i) Opinion and Consent of Counsel is filed herewith. (j) Consents of Independent Registered Public Accounting Firm is filed herewith. (k) Omitted Financial Statements is not applicable. (l) Agreement Relating to Initial Capital is not applicable. (m) Rule 12b-1 Plan is not applicable. (n) Rule 18f-3 Plan is not applicable. (o) Reserved. (p) Code of Ethics (i) Amended Code of Ethics for Registrant was previously filed with the Registration Statement on Form N-1A (File No. 002-30447) and is incorporated herein by reference. (ii) Amended Code of Ethics for Nicholas Company, Inc. was previously filed with the Registration Statement on Form N-1A (File No. 002-30447) and is incorporated herein by reference. Item 29. Persons Controlled by or Under Common Control with the Fund. No person is directly or indirectly controlled by or under common control with the Registrant. The Registrant, Nicholas Equity Income Fund, Inc., Nicholas II, Inc., Nicholas High Income Fund, Inc., Nicholas Limited Edition, Inc., and Nicholas Money Market Fund, Inc., which are all Maryland corporations, share a common investment adviser, Nicholas Company, Inc.; however, each such fund has a separate Board of Directors responsible for supervising the investment and business management services provided by the Adviser. Item 30. Indemnification. Article XIII of the Amended and Restated Articles of Incorporation of the Registrant provides for the indemnification of its officers and director against liabilities incurred in such capacities to the fullest extent permitted under Maryland General Business Corporation Law and the Investment Company Act of 1940, as amended, and the rules and regulations promulgated thereunder (the "Investment Company Act"). However, Section 7 of the Amended and Restated Bylaws of the Registrant provide that the Registrant may not indemnify any officer or director with respect to matters as to which such person has been adjudged liable because of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office. The Registrant maintains a joint errors and omissions insurance policy with a $10.0 million limit of liability under which the Registrant, the Adviser and the other funds advised by the Adviser, and each of their respective directors and officers, are named insureds. The investment adviser to the Registrant, Nicholas Company, Inc., has, by resolution of its Board of Directors, agreed to indemnify Registrant's officers, directors and employees to the extent of any deductible or retention amount required under insurance policies providing coverage to such persons in connection with liabilities incurred by them in such capacities. Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers, and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. Indemnification of the Registrant's underwriter, Quasar Distributors, LLC is provided for in the Distribution Agreement, dated as of May 1, 2005, among Quasar Distributors, LLC, Nicholas Company, Inc. and each fund in the Nicholas fund complex, including Nicholas Fund, Inc., for certain losses incurred by Quasar Distributor, LLC arising in connection with services provided under the Distribution Agreement. Item 31. Business and Other Connections of the Investment Adviser. The information required by this Item 31 with respect to any other business, profession, vocation or employment of a substantial nature engaged in during the past two fiscal years by the Registrant's investment adviser, Nicholas Company, Inc., and each director and officer of Nicholas Company, Inc. is incorporated by reference to the Adviser's Uniform Application for Investment Adviser Registration (Form ADV) on file with the Securities and Exchange Commission ("SEC"), dated January 25, 2013. The Adviser's Form ADV may be obtained, free of charge, at the SEC's website at www.adviserinfo.sec.gov. Item 32. Principal Underwriter. The Registrant's distributor, Quasar Distributors, LLC (the "Distributor"), acts as principal underwriter and distributor for the following investment companies: AC One Funds Academy Fund Trust Advantus Mutual Funds Aegis Funds Akre Funds Al Frank Funds Allied Asset Advisors Funds Alpha Funds AlphaClone ETF Fund Alpine Equity Trust Alpine Income Trust Alpine Series Trust American Trust Appleton Group Artio Global Funds Barrett Growth Fund Barrett Opportunity Fund Becker Value Equity Fund Boston Common Funds Brandes Investment Trust Brandywine Blue Funds, Inc. Brandywine Fund, Inc. Bridges Investment Fund, Inc. Bright Rock Funds Brookfield Investment Funds Brown Advisory Funds Buffalo Funds Bushido Funds CAN SLIM Select Growth Fund Capital Advisors Funds Chase Funds Coldstream Funds Collins Capital Funds Congress Funds Contravisory Funds Convergence Funds Corporate America Fund Country Funds Cove Street Capital Funds Cushing MLP Funds Davidson Funds DoubleLine Funds DSM Capital Funds Edgar Lomax Value Fund Empiric Funds, Inc. Evermore Global Investors Trust FactorShares Trust First American Funds, Inc. Fort Pitt Capital Group, Inc. Fund X Funds Geneva Advisors Funds Gerstein Fisher Funds Glenmede Fund, Inc. Glenmede Portfolios GoodHaven Funds Great Lakes Funds Greenspring Fund Guinness Atkinson Funds Harding Loevner Funds Hennessy Funds, Inc Hennessy Mutual Funds, Inc. Hennessy SPARX Funds Trust Hodges Funds Hotchkis & Wiley Funds Huber Funds Intrepid Capital Management IronBridge Funds Jacob Funds II Jacob Funds, Inc. Jensen Funds Kellner Funds Keystone Mutual Funds Kirr Marbach Partners Funds, Inc Lawson Kroeker Funds Litman Gregory Masters Funds LKCM Funds LoCorr Funds Logan Capital Funds MainGate MLP Funds Matrix Asset Advisors, Inc. MD Sass Merger Fund Monetta Fund, Inc. Monetta Trust Morgan Dempsey Funds Muhlenkamp (Wexford Trust) Muzinich Funds New Path Funds Nicholas Funds Niemann Tactical Return Fund Nuance Funds Orinda Funds O'Shaughnessy Funds Osterweis Funds Pension Partners Funds Permanent Portfolio Funds Perritt Opportunities Funds Phocas Financial Funds PIA Funds Poplar Forest Partners Fund Portfolio 21 Primecap Odyssey Funds Prospector Funds Provident Mutual Funds, Inc. Purisima Funds Rainier Funds RBC Funds Trust Reinhart Funds Roosevelt Funds Samson Funds Scharf Funds Schooner Investment Group SCS Financial Funds Shenkman Funds Smead Value Fund Snow Capital Family of Funds Strategic Income Funds Teberg Fund Thomas White Funds Thompson IM Funds, Inc. Tiedemann Funds TIFF Investment Program, Inc. Tortoise Funds Tygh Capital Management USA Mutuals Funds Villere Fund Wall Street Fund, Inc. WBI Funds Windowpane Advisors, LLC Wisconsin Capital Funds, Inc. WY Funds The board members and officers of Quasar Distributors, LLC and their positions or offices with the Registrant are identified in the following table. Unless otherwise noted, the business address for each board member or officer is Quasar Distributors, LLC, 615 East Michigan Street, Milwaukee, WI 53202. POSITION AND OFFICES WITH POSITION AND OFFICES WITH NAME UNDERWRITER REGISTRANT James R. Schoenike President, Board Member, General None Securities Principal and FINRA Executive Officer Joe D. Redwine Board Member None Robert Kern* Board Member None Joseph P. Bree* Financial Operations Principal and None Chief Financial Officer Susan L. La Fond Vice President and Treasurer None Andrew M. Strnad** Vice President and Secretary None Teresa Cowan Senior Vice President, Assistant None Secretary, General Securities Principal and Chief Compliance Officer John Kinsella Assistant Treasurer None Brett Scribner Assistant Treasurer None * 777 East Wisconsin Avenue, Milwaukee, WI 53202 ** 6602 East 75 th Street, Indianapolis, IN 46250 During the Funds' most recent fiscal year, the Distributor did not receive any net underwriting discounts or commissions, compensation on redemptions and repurchases, brokerage commissions or other compensation from the Fund. Item 33. Location of Accounts and Records. The books and records required to be maintained by Section 31(a) of the Investment Company Act of 1940 are maintained at the following locations: Records Relating to: Are located at: Registrant's Transfer Agent U.S. Bancorp Fund Services, LLC 615 East Michigan Street, 3 rd Floor Milwaukee, WI 53202 Registrant's Custodian U.S. Bank, National Association 1555 North RiverCenter Drive, Suite 302 Milwaukee, WI 53212 Registrant's Investment Adviser Nicholas Company, Inc. 700 North Water Street, Suite 1010 Milwaukee, WI 53202 Item 34. Management Services Not Discussed in Parts A and B. Not applicable. Item 35. Undertakings. None. SIGNATURES Pursuant to the requirements the Securities Act of 1933, and the Investment Company Act of 1940, each as amended, the Registrant certifies that it meets all of the requirements for effectiveness of the Registration Statement under Rule 485(b) under the Securities Act of 1933, as amended, and has duly caused this Registration Statement to be signed below on its behalf by the undersigned, thereunto duly authorized, in the City of Milwaukee and State of Wisconsin, on the 30 th day of July, 2013. Nicholas Fund, Inc. By: /s/ Jeffrey T. May Jeffrey T. May Senior Vice President, Treasurer and Principal Financial and Accounting Officer Pursuant to the requirements of the Securities Act of 1933, as amended, this Amendment to the Registration Statement has been signed below by the following persons in the capacities indicated on the 30 th day of July, 2013. /s/ Albert O. Nicholas* President (Chief Executive Albert O. Nicholas Officer), and Director /s/ Robert H. Bock* Director Robert H. Bock /s/ Jay H. Robertson* Director Jay H. Robertson * By: /s/ Jeffrey T. May Jeffrey T. May, Attorney-in-Fact pursuant to Power of Attorney previously filed. EXHIBIT INDEX Exhibit Exhibit No. Opinion and Consent of Michael Best & Friedrich LLP EX-99.i. Consent of Deloitte & Touche LLP EX-99.j.
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EXHIBIT 10.3
STOCK FORFEITURE
February 14, 2020
The undersigned holder of options of Terra Tech Corp., a Nevada corporation (the
“Company”) is the holder of 275,000 non-qualified stock options to purchase
shares of common stock of the Company, which such stock options may be vested or
unvested as of the date hereof (“Company Options”). The undersigned desires to
forfeit and have the Company cancel the Company Options (the “Forfeited
Options”) effective as of the date set forth above (the “Effective Date”).
NOW, THEREFORE, the undersigned represents, warrants and agrees as follows:
1.On the Effective Date, the Forfeited Options shall be cancelled and retired by
the Company and shall be of no further force or effect, and the undersigned
agrees that no payment by the Company to the undersigned shall be made with
respect thereto.
2.The undersigned hereby acknowledges that the Company will cancel the Forfeited
Options on the books and records of the Company.
3.The undersigned represents and warrants to the Company that the undersigned
holds good and valid title to the Forfeited Options, free and clear of all
liens, encumbrances, pledges, interests, and adverse claims whatsoever.
1
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal as of the
By:
/s/ Derek Peterson
Derek Peterson
Accepted and Acknowledged:
TERRA TECH CORP.
By:
/s/Michael Nahass
Name:
Michael Nahass
Title:
President/COO
[Signature Page to Stock Forfeiture Agreement]
2
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-6F/A AMENDMENT NO. 4 TO NOTICE OF INTENT TO ELECT TO BE SUBJECT TO SECTIONS 55 THROUGH 65 OF THE INVESTMENT COMPANY ACT OF 1940 The undersigned company (the “Company”) previously notified the Securities and Exchange Commission on Form N-6F filed on June 8, 2011 and amended on September 1, 2011, November 29, 2011 and February 24, 2012, that it intends to file a notification of election to be subject to sections 55 through 65 of the Investment Company Act of 1940 (the “Act”) and in connection with such notice submitted the following information: Name: COR Business Development Company LLC Address of Principal Office: 233 Wilshire Boulevard, Suite 830 Santa Monica, CA90401 Telephone Number: (310) 526-8400 Name and address for agent for service of process: The Corporation Trust Company Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19801 This Amendment No. 4 to the Company’s Form N-6F filed on June 8, 2011 is necessary because of delays in the completion of the Company’s registration statement, which delays were unforeseen at the time of the original filing. The undersigned hereby notifies the Securities and Exchange Commission that it intends to file a notification of election to be subject to sections 55 through 65 of the Act within ninety days of the date of this filing. The company would be excluded from the definition of an investment company by section 3(c)(1) of the Act, except that it presently proposes to make a public offering of its securities as a business development company. SIGNATURE Pursuant to the requirements of section 6(f) of the Act, the undersigned company has caused this notice of intent to elect to be subject to sections 55 through 65 of the Act pursuant to section 54(a) of the Act to be duly executed on its behalf in the City of Santa Monica and the State of California on the 24th day of May, 2012. COR Business Development Company LLC By: /s/ Steven A. Sugarman Name:Steven A. Sugarman Title:Chief Executive Officer Attest: /s/ Carlos P. Salas Name:Carlos P. Salas Title:Authorized Person
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): May 25, 2012 Commission file number MEGA WORLD FOOD HOLDING COMPANY ((Exact name of registrant as specified in its charter) Nevada 333-171046 27-4715504 (Stateorotherjurisdictionof incorporationororganization) (Commission File Number) IRSI.D. Room C1D, 6/F, Wing Hing Industrial Building, 14 Hing Yip Street Kwun Tong, Kowloon Hong Kong (Address of principal executive offices) (Zip Code) 852-21101865 (Registrant's telephone number, including area code) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 5.01 Changes in Control of Registrant. On May 25, 2012, Mr. Xiaozhong Wu resigned as Chairman, CEO and Director and Ms. Yaping He resigned as Principal Financial Officer and Principal Accounting Officer and Director and did not furnish any communication to the Company with written correspondence concerning the circumstances surrounding their resignations. On May 25, 2012, Mr. Wu transferred the following shares to the following individuals who were the same date elected new officers and directors with the title, age and percentage ownership as set forth below: Name Title Age Number of Shares of Common stock Percentage Lingling Wang CEO and Director 37 44.00% Lin Xiang Wang General Manager and Director 33 2.00% Guangqing Chen Vice General Manager and Director 44 2.00% Hanjun Shi ViceManager 34 0.12% Ke Wu CFO/Principal Accounting Officer 21 0.08% Shaoyun Zhou Manager 30 0.20% Applicable percentages are based upon 25,000,000 shares of common stock outstanding as of May 25, 2012. Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. Item 5.01 is incorporated herein by reference. In addition to assuming the positions with us on May 25, 2012 as set forth in Item 5.01 above: Lingling Wang has been Director of Shengzhou Dingcheng Agriculture Company since November 2011 and has been Director of No. 11 Apartment, a hotel, since November 2008. From August 2002 to October 2008, she was Principal of Linxiang Kid Garden. As Director, she brings her management experience as Director of other enterprises in China. Lin Xiang Wang has been Director of Shengzhou Shunjie Logistic Company since May 2007.From February 2002 to April 2007, he was on the management staff of Zhejiang Sanhua Company, a process machine parts company.As Director, he brings his management experience as Director and management staff of other enterprises in China. Guangqing Chen was Manager of Yangguang Building Company, a real estate company, from July 1998 to April 2012.As Director, he brings his management experience as Director of other enterprises in China. Shaoyun Zhou has been Manager of No. 11 Apartment, a hotel, since December 2008. Hanjun Shi Vice Manager of Shengzhou Dingcheng Agriculture Company since November 2011 and has been Vice General Manager of No. 11 Apartment, a hotel, since November 2008. Ke Wu has been accountant with Zhejiang Yashilin Garment Company since April 2010. The board of directors elects our executive officers annually. A majority vote of the directors who are in office is required to fill vacancies. Each director shall be elected for the term of one year, and until his successor is elected and qualified, or until his earlier resignation or removal. Family Relationships Linxiang Wang is younger brother of Lingling Wang. Legal Proceedings No officer, director, or persons nominated for such positions, promoter or significant employee has been involved in the last ten years in any of the following: · Any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time, · Any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses), · Being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities, · Being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated. · Having any government agency, administrative agency, or administrative court impose an administrative finding, order, decree, or sanction against them as a result of their involvement in any type of business, securities, or banking activity. · Being the subject of a pending administrative proceeding related to their involvement in any type of business, securities, or banking activity. · Having any administrative proceeding been threatened against you related to their involvement in any type of business, securities, or banking activity. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated. Mega World Food Holding Company Dated:May 31, 2012 By: /s/Lingling Wang Lingling Wang Chief Executive Officer
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Exhibit 10.54
EXECUTION COPY
Term Facility CUSIP Number: 858120AF5
$1,450,000,000
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of November 14, 2014
Among
STEEL DYNAMICS, INC.
as Borrower
and
THE INITIAL LENDERS, INITIAL ISSUING BANKS AND
SWING LINE BANK NAMED OR DESCRIBED HEREIN
as Initial Lenders, Initial Issuing Banks and Swing Line Bank
and
as Collateral Agent
and
as Administrative Agent
and
BANK OF AMERICA, N.A. and
as Syndication Agents
and
PNC CAPITAL MARKETS LLC and
and
CITIZENS BANK, N.A.,
MORGAN STANLEY SENIOR FUNDING, INC. and
SUNTRUST BANK
as Documentation Agents
TABLE OF CONTENTS
Section
Page
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.01.
Certain Defined Terms
2
Section 1.02.
Computation of Time Periods; Other Definitional Provisions
39
Section 1.03.
Accounting Terms
40
Section 1.04.
Exchange Rates; Currency Equivalents
40
Section 1.05.
Additional Alternative Currencies
40
Section 1.06.
Change of Currency
41
Section 1.07.
Letter of Credit Amounts
42
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
AND THE LETTERS OF CREDIT
Section 2.01.
The Advances and the Letters of Credit
42
Section 2.02.
Making the Advances
44
Section 2.03.
Issuance of and Drawings and Reimbursement Under Letters of Credit
48
Section 2.04.
Repayment of Advances
50
Section 2.05.
Termination or Reduction of the Commitments
52
Section 2.06.
Prepayments
53
Section 2.07.
Interest
55
Section 2.08.
Fees
55
Section 2.09.
Conversion and Continuation of Advances
57
Section 2.10.
Increased Costs, Etc.
58
Section 2.11.
Payments and Computations
59
Section 2.12.
Taxes
61
Section 2.13.
Sharing of Payments, Etc.
64
Section 2.14.
Use of Proceeds
64
Section 2.15.
Defaulting Lenders
65
Section 2.16.
Evidence of Debt
67
Section 2.17.
Increases in Credit Facilities
68
ARTICLE III
CONDITIONS OF EFFECTIVENESS, LENDING AND
ISSUANCES OF LETTERS OF CREDIT
Section 3.01.
Conditions Precedent to Initial Extension of Credit
70
Section 3.02.
Conditions Precedent to Each Borrowing and Issuance and Renewal
74
Section 3.03.
Determinations Under Section 3.01
75
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01.
Representations and Warranties of the Borrower
75
ARTICLE V
COVENANTS OF THE BORROWER
Section 5.01.
Affirmative Covenants
82
Section 5.02.
Negative Covenants
87
Section 5.03.
Reporting Requirements
96
Section 5.04.
Financial Covenants
99
ARTICLE VI
EVENTS OF DEFAULT
Section 6.01.
Events of Default
100
Section 6.02.
Actions in Respect of the Letters of Credit upon Default
103
ARTICLE VII
THE AGENTS, ETC.
Section 7.01.
Authorization and Action
103
Section 7.02.
Reliance, Etc.
103
Section 7.03.
Bank of America, PNC Bank, Wells Fargo Bank, National Association and Affiliates
104
Section 7.04.
Lender Party Credit Decision
104
Section 7.05.
Indemnification
105
Section 7.06.
Successor Agents
106
Section 7.07.
The Joint Lead Arrangers, the Syndication Agents and the Documentation Agents
107
ARTICLE VIII
MISCELLANEOUS
Section 8.01.
Amendments, Etc.
107
Section 8.02.
Notices, Etc.
108
Section 8.03.
No Waiver; Remedies
109
Section 8.04.
Costs and Expenses; Indemnification
109
Section 8.05.
111
Section 8.06.
Binding Effect
112
Section 8.07.
Assignments and Participations
112
Section 8.08.
Replacement of Lenders
115
ii
Section 8.09.
Execution in Counterparts
116
Section 8.10.
No Liability of the Issuing Banks
117
Section 8.11.
Confidentiality
117
Section 8.12.
Release of Collateral
118
Section 8.13.
Jurisdiction, Etc.
120
Section 8.14.
Governing Law
120
Section 8.15.
Reallocation and Assignment of Existing Facilities
121
Section 8.16.
Effect of this Agreement
121
Section 8.17.
121
Section 8.18.
Patriot Act Notice
122
Section 8.19.
Amendment of the Security Agreement
122
Section 8.20.
Waiver of Jury Trial
122
iii
SCHEDULES
Schedule A
-
Existing Letters of Credit
Schedule I
-
Commitments and Applicable Lending Offices
Schedule II
-
Subsidiary Guarantors
Schedule 4.01(a)
-
Loan Parties
Schedule 4.01(b)
-
Subsidiaries
Schedule 4.01(d)
-
Authorizations, Approvals, Actions, Notices and Filings
Schedule 4.01(f)
-
Disclosed Litigation
Schedule 4.01(o)
-
Plans, Multiemployer Plans and Welfare Plans
Schedule 4.01(q)
-
Open Years
Schedule 4.01(s)
-
Existing Debt
Schedule 4.01(t)
-
Surviving Debt
Schedule 4.01(u)
-
Liens
Schedule 4.01(v)
-
Investments
Schedule 4.01(w)
-
Intellectual Property
Schedule 8.19
-
Amendments to Security Agreement
EXHIBITS
Exhibit A-1
-
Form of Revolving Credit Note
Exhibit A-2
-
Form of Term Note
Exhibit B
-
Exhibit C
-
Exhibit D
-
Form of Security Agreement
Exhibit E
-
Form of Subsidiary Guaranty
Exhibit F
-
Form of Solvency Certificate
Exhibit G
-
Form of Opinion of Barrett & McNagny, LLC, Counsel to the Loan Parties
Exhibit H
-
Form of Compliance Certificate
Exhibit I
-
Form of Loan Party Acknowledgment
ANNEXES
Annex I
-
Replacement Security Agreement Schedules
iv
This SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this “Agreement”), dated as
of November 14, 2014, among STEEL DYNAMICS, INC., an Indiana corporation (the
“Borrower”), the banks, financial institutions and other lenders listed on the
signature pages hereto as “Lenders” (the “Initial Lenders”), PNC BANK, NATIONAL
ASSOCIATION (“PNC Bank”) and BANK OF AMERICA, N.A. (“Bank of America”), as the
initial issuing banks (the “Initial Issuing Banks” and, together with the
Initial Lenders, the “Initial Lender Parties”), PNC Bank, as the Swing Line Bank
(as hereinafter defined), PNC Bank, as collateral agent (together with any
successor collateral agent appointed pursuant to Article VII, in such capacity,
the “Collateral Agent”), and PNC Bank, as administrative agent (together with
any successor administrative agent appointed pursuant to Article VII, in such
capacity, the “Administrative Agent” and, together with the Collateral Agent and
the Paying Agent (as defined herein), the “Agents”), for the Lender Parties (as
hereinafter defined), Bank of America and WELLS FARGO BANK, NATIONAL ASSOCIATION
(“Wells Fargo Bank”), as Syndication Agents, JPMORGAN CHASE BANK, N.A. (“JPM
Chase Bank”), CITIZENS BANK, N.A., MORGAN STANLEY SENIOR FUNDING, INC. and
SUNTRUST BANK, as Documentation Agents, and MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED (“MLPFS”), PNC CAPITAL MARKETS LLC (“PNC Capital Markets”)
and WELLS FARGO SECURITIES, LLC (“Wells Fargo Securities”), as Joint Lead
Arrangers (in such capacity, the “Joint Lead Arrangers”) and Joint Bookrunners
(in such capacity, the “Joint Bookrunners”).
PRELIMINARY STATEMENTS:
(1) The Borrower entered into that certain Amended and Restated Credit
Agreement, originally dated as of September 29, 2011, among the Borrower, PNC
Bank, as administrative agent and collateral agent, Bank of America and Wells
Fargo Bank, as syndication agents, MLPFS, PNC Capital Markets and Wells Fargo
Securities, as joint lead arrangers and joint bookrunners, Deutsche Bank
Securities Inc. and JPMorgan Chase Bank, as documentation agents, and the
lenders from time to time party thereto (such Amended and Restated Credit
Agreement, as amended by Amendment No. 1 thereto, dated as of January 11, 2012,
and as otherwise amended, supplemented or otherwise modified from time to time
prior to the date hereof, the “Existing Credit Agreement”), pursuant to which
the lenders thereunder (the “Existing Lenders”) were committed to make
extensions of credit to the Borrower on the terms and conditions set forth
therein in an aggregate principal amount of up to $1,375,000,000, including up
to $1,100,000,000 of revolving credit loans and $275,000,000 of term loans
(collectively, the “Existing Facilities”).
(2) The Borrower desires to refinance, redenominate and/or rollover
the amounts outstanding under the Existing Facilities (the “Refinancing”), and
to increase the size of the revolving credit facility under the Existing Credit
Agreement.
(3) In order to effect the Refinancing and to finance certain ongoing
working capital and general corporate needs of the Borrower and the Subsidiary
Guarantors, the Borrower desires, among other things, to extend the maturity of
the commitments to make revolving loans (and all outstanding revolving loans
made thereunder) in an aggregate principal amount of up to
1
$1,200,000,000, to extend the outstanding term loan facility in an aggregate
principal amount of $250,000,000, and to obtain other credit extensions as set
forth herein.
(4) In connection with the foregoing, the Borrower has requested that
the Existing Credit Agreement be amended and restated in its entirety to become
effective and binding on the Borrower pursuant to the terms hereof, and the
Lenders (including the Existing Lenders that are parties hereto) have agreed
(subject to the terms of this Agreement) to amend and restate the Existing
Credit Agreement in its entirety to read as set forth herein, and it has been
agreed by the parties hereto that (a) the commitments and loans which the
Existing Lenders that are parties hereto extended to the Borrower under the
Existing Credit Agreement and the commitments and loans of new Lenders that
become parties hereto shall be extended or advanced upon the amended and
restated terms and conditions contained in this Agreement, and (b) to the extent
that commitments or loans outstanding under the Existing Credit Agreement are
not extended by the applicable Lenders holding such commitments under the
Existing Credit Agreement in connection with the Refinancing, such Obligations
shall be deemed to have been terminated and replaced with the new Revolving
Credit Commitments made under this Agreement, and prepaid with new Loans made
under this Agreement.
NOW, THEREFORE, the parties hereto hereby agree to amend and restate the
Existing Credit Agreement, and the Existing Credit Agreement is hereby amended
and restated, in its entirety as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
“Administrative Agent” has the meaning specified in the recital of parties to
this Agreement.
“Advance” means, a Revolving Credit Advance, a Swing Line Advance, a Letter of
Credit Advance or a Term Advance.
Person or is a director or officer of such Person. For purposes of this
definition, the term “control” (including the terms “controlling,” “controlled
by” and “under common control with”) of a Person means the possession, direct or
indirect, of the power to vote 5% or more of the Voting Interests of such Person
or to direct or cause the direction of the management and policies of such
Person, whether through the ownership of Voting Interests, by contract or
otherwise.
“Agents” has the meaning specified in the recital of parties to this Agreement.
“Agent Parties” has the meaning specified in Section 8.02(c)(ii).
2
“Agreement” has the meaning specified in the preamble hereof.
“Agreement Value” means, for each Hedge Agreement, on any date of determination,
an amount equal to: (a) in the case of a Hedge Agreement documented pursuant to
the Master Agreement (Multicurrency-Cross Border) published by the International
Swap and Derivatives Association, Inc. (the “Master Agreement”), the amount, if
any, that would be payable by any Loan Party or any of its Subsidiaries to its
counterparty to such Hedge Agreement, as if (i) such Hedge Agreement was being
terminated early on such date of determination, and (ii) such Loan Party or
Subsidiary was the sole “Affected Party”; or (b) in the case of a Hedge
Agreement traded on an exchange, the mark-to-market value of such Hedge
Agreement, which will be the unrealized loss on such Hedge Agreement to the Loan
Party or Subsidiary of a Loan Party party to such Hedge Agreement based on the
settlement price of such Hedge Agreement on such date of determination; or
(c) in all other cases, the mark-to-market value of such Hedge Agreement, which
will be the unrealized loss on such Hedge Agreement to the Loan Party or
Subsidiary of a Loan Party party to such Hedge Agreement as the amount, if any,
by which (i) the present value of the future cash flows to be paid by such Loan
Party or Subsidiary exceeds (ii) the present value of the future cash flows to
be received by such Loan Party or Subsidiary pursuant to such Hedge Agreement;
capitalized terms used and not otherwise defined in this definition shall have
the respective meanings set forth in the above described Master Agreement.
“Alternative Currency” means each of Euro, Sterling, Yen, Swiss Francs, Canadian
Dollars, Australian Dollars and each other currency (other than Dollars) that is
approved in accordance with Section 1.05.
“Alternative Currency Equivalent” means, at any time, with respect to any amount
denominated in Dollars, the equivalent amount thereof in the applicable
Alternative Currency as determined by the Paying Agent or the Issuing Bank, as
the case may be, at such time on the basis of the Spot Rate (determined in
respect of the most recent Revaluation Date) for the purchase of such
Alternative Currency with Dollars.
“Alternative Currency Sublimit” means an amount equal to the lesser of the
Commitments and $250,000,000. The Alternative Currency Sublimit is part of, and
not in addition to, the Commitments.
“Annual Disposition Limit” has the meaning specified in Section 5.02(e)(iii).
“Anti-Terrorism Laws” means any Laws relating to terrorism, trade sanctions
“Applicable Lending Office” means, with respect to each Lender Party, such
Lender Party’s Domestic Lending Office in the case of a Base Rate Advance and
such Lender Party’s Eurodollar Lending Office in the case of a Eurodollar Rate
Advance.
3
“Applicable Margin” means,
(i) in respect of a Revolving Credit Advance, Swing Line Advance or a Letter of
Credit Advance, (a) prior to delivery of financial statements for the fiscal
quarter ending December 31, 2014 pursuant to Section 5.03(c), (x) 1.50% in the
case of Eurodollar Rate Advances and (y) 0.50% in the case of Base Rate Advances
and (b) thereafter, a percentage per annum determined by reference to the Total
Net Leverage Ratio as set forth below:
Total Net Leverage Ratio
Base Rate
Advances
Eurodollar Rate Advances
Level I
< 1.50:1.0
0
%
1.00
%
Level II
> 1.50:1.0, but < than 2.50:1.0
0.25
%
1.25
%
Level III
> 2.50:1.0, but < than 3.75:1.0
0.50
%
1.50
%
Level IV
> 3.75:1.0, but < than 4.50:1.0
0.75
%
1.75
%
Level V
> 4.50:1.0
1.00
%
2.00
%
(ii) in respect of a Term Advance, (a) prior to delivery of financial statements
for the fiscal quarter ending December 31, 2014 pursuant to Section 5.03(c),
(x) 1.50% in the case of Eurodollar Rate Advances and (y) 0.50% in the case of
Base Rate Advances and (b) thereafter, a percentage per annum determined by
reference to the Total Net Leverage Ratio as set forth below:
Total Net Leverage Ratio
Base Rate
Advances
Eurodollar Rate Advances
Level I
< 1.50:1.0
0
%
1.00
%
Level II
0.25
%
1.25
%
Level III
0.50
%
1.50
%
Level IV
0.75
%
1.75
%
Level V
> 4.50:1.0
1.00
%
2.00
%
The Applicable Margin for each Base Rate Advance and the Applicable Margin for
each Eurodollar Rate Advance shall be determined by reference to the ratio in
effect from time to time as reflected in the financial statements most recently
delivered pursuant to Section 5.03(b) or (c), as the case may be; provided,
however, that in any event, (a) no change in the Applicable Margin shall be
effective until three Business Days after the date on which the Paying Agent
receives the financial statements required to be delivered pursuant to
4
be, and a certificate of the Financial Officer of the Borrower demonstrating
such ratio, and (b) the Applicable Margin shall be at Level V for so long as the
Borrower has not submitted to the Paying Agent the information described in
clause (a) of this proviso as and when required under Section 5.03(b) or (c), as
“Applicable Time” means, with respect to any borrowings and payments in any
Alternative Currency, the local time in the place of settlement for such
Alternative Currency as may be determined by the Paying Agent or Issuing Bank,
as the case may be, to be necessary for timely settlement on the relevant date
in accordance with normal banking procedures in the place of payment.
“Appropriate Lender” means, at any time, with respect to (a) the Revolving
Credit Facility, a Lender that has a Commitment with respect to such Facility at
such time, (b) the Letter of Credit Facility, (i) any Issuing Bank and (ii) if
the other Revolving Credit Lenders have made Letter of Credit Advances pursuant
to Section 2.03(c) that are outstanding at such time, each such other Revolving
Credit Lender, (c) the Swing Line Facility, (i) the Swing Line Bank and (ii) if
the other Revolving Credit Lenders have made Swing Line Advances pursuant to
Section 2.02(b) that are outstanding at such time, each such other Revolving
Credit Lender, and (d) the Term Facility, each Term Lender at such time.
“Assignment and Assumption” means, an assignment and assumption entered into by
a Lender Party and an Eligible Assignee, and (to the extent required) accepted
by the Paying Agent, in accordance with Section 8.07 and in substantially the
form of Exhibit C hereto.
“Australian Dollars” means the lawful currency of Australia.
“Available Amount” of any Letter of Credit means, at any time, the maximum
amount available to be drawn under such Letter of Credit at such time (assuming
compliance at such time with all conditions to drawing).
“Available Basket Amount” means, as at any date of determination, the sum of
(a) $300,000,000 plus (b) 50% of Consolidated Net Income of the Borrower for the
period commencing on January 1, 2014 and ending on the last day of the most
recently ended fiscal quarter plus (c) 100% of the aggregate net cash proceeds
received by the Borrower after the Closing Date from the issue or sale of Equity
Interests of the Borrower or any of its Subsidiaries.
“Bank of America” has the meaning specified in the recitals of parties to this
Agreement.
“Base Rate” means, for any day, a fluctuating interest rate per annum in effect
from time to time, which rate per annum shall at all times be equal to the
highest of:
(a) the Prime Rate;
5
(b) 1/2 of 1.0% per annum above the Federal
Funds Rate; and
(c) the Eurodollar Rate that would be payable
on such day for a Eurodollar Rate Advance with a one-month interest period plus
1.0%.
If for any reason the Paying Agent shall have determined (which determination
shall be conclusive absent manifest error) that it is unable to ascertain the
Federal Funds Rate, including the inability or failure of the Paying Agent to
obtain sufficient quotations in accordance with the terms thereof, the Base Rate
shall be determined without regard to clause (b) of this definition, until the
circumstances giving rise to such inability no longer exist. Any change in the
Base Rate shall be effective on the effective date of such change.
“Base Rate Advance” means, an Advance that bears interest as provided in
Section 2.07(a)(i). All Base Rate Advances shall be denominated in Dollars.
“Borrower” has the meaning specified in the recital of parties to this
Agreement.
“Borrower’s Account” means, the account of the Borrower maintained by the
Borrower with BMO Harris Bank, N.A., as confirmed in writing by the Borrower to
the Paying Agent, or such other account as the Borrower shall specify in writing
to the Paying Agent.
“Borrowing” means, a Revolving Credit Borrowing, a Swing Line Borrowing or a
Term Borrowing.
“Business Day” means any day other than a Saturday or Sunday or a legal holiday
on which commercial banks are authorized or required to be closed for business
in Pittsburgh, Pennsylvania and (i) if the applicable Business Day relates to
any Advance to which the Eurodollar Rate applies, such day must also be a day on
which dealings are carried on in the Relevant Interbank Market, (ii) with
respect to advances or payments of Advances or any other matters relating to
Advances denominated in an Alternative Currency, such day also shall be a day on
which dealings in deposits in the relevant Alternative Currency are carried on
in the Relevant Interbank Market, and (iii) with respect to advances or payments
of Advances denominated in an Alternative Currency other than the Euro or the
Canadian Dollar, such day shall also be a day on which all applicable banks into
which Advance proceeds may be deposited are open for business and foreign
exchange markets are open for business in the principal financial center of the
country of such currency and (iv) with respect to advances or payments of
Advances denominated in Euro such day shall be a TARGET Day.
“Canadian Dollar” means the lawful currency of Canada.
“Capitalized Leases” means, all leases that have been or are required to be, in
accordance with GAAP, recorded as capitalized leases.
“Cash Equivalents” means, any of the following, to the extent owned by the
Borrower or any of the Subsidiary Guarantors free and clear of all Liens other
than Liens created under the Collateral Documents having a maturity of not
greater than 400 days from the date of acquisition thereof unless otherwise
specified herein, and marketable for cash by the Borrower or
6
such Subsidiary Guarantor in no more than 30 days: (a) readily marketable
direct obligations of the Government of the United States or any agency or
instrumentality thereof or obligations unconditionally guaranteed by the full
faith and credit of the Government of the United States, (b) certificates of
deposit of or, demand or time deposits with, any commercial bank that is a
Lender Party or a member of the Federal Reserve System, issues (or the parent of
which issues) commercial paper rated as described in clause (c) below, is
organized under the laws of the United States or any State thereof and has
combined capital and surplus of at least $1 billion, (c) commercial paper in an
aggregate amount of no more than $15,000,000 per issuer outstanding at any time,
issued by any corporation organized under the laws of any State of the United
States and rated at least “Prime-2” (or the then equivalent grade) by Moody’s or
“A-2” (or the then equivalent grade) by S&P, (d) Investments, classified in
accordance with GAAP as current assets of the Borrower or any of its
Subsidiaries, in (i) money market investment programs registered under the
Investment Company Act of 1940, as amended, which are administered by financial
institutions that have the highest rating obtainable from either Moody’s or S&P,
(ii) any 2a-7 regulated money market mutual fund that has the highest long-term
credit rating obtainable from either Moody’s or S&P, and (iii) any offshore
money market mutual fund that has the highest long-term credit rating obtainable
from either Moody’s or S&P, or (e) bankers’ acceptances maturing and being
liquidated in full within 270 days after the date of purchase and issued by any
Lender that has, at the time of issuance, a short-term credit rating of at least
A-1 from S&P and at least P-1 from Moody’s.
“CDOR Rate” has the meaning specified in the definition of “Eurodollar Rate.”
“CEA” means the Commodity Exchange Act (7 U.S.C.§1 et seq.), as amended from
time to time, and any successor statute.
“CERCLA” means, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended from time to time.
“CERCLIS” means, the Comprehensive Environmental Response, Compensation and
Liability Information System maintained by the U.S. Environmental Protection
Agency.
“CFTC” means the Commodity Futures Trading Commission.
“Change in Law” means the occurrence, after the Original Closing Date, of any of
the Bank for International settlements, the Basel Committee on Banking
regulatory authorities, in each case pursuant to Basel III, shall in each case
be deemed to be a “Change in Law,” regardless of the date enacted, adopted or
issued.
7
“Change of Control” means, the occurrence of any of the following: (a) any
Person or two or more Persons acting in concert shall have acquired beneficial
ownership (within the meaning of Rule 13d-3 of the Securities and Exchange
Commission under the Securities Exchange Act of 1934), directly or indirectly,
of Voting Interests of the Borrower (or other securities convertible into such
Voting Interests) representing 35% or more of the combined voting power of all
Voting Interests of the Borrower; (b) individuals who on the Closing Date
constitute the board of directors of the Borrower (together with any new
directors whose election by the board of directors of the Borrower or whose
nomination by the board of directors of the Borrower for election by the
Borrower’s stockholders was approved by a vote of at least two-thirds of the
members of the board of directors of the Borrower then in office who either were
members of the board of directors of the Borrower on the Closing Date or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of the members of the board of directors of the
Borrower then in office; (c) any Person or two or more Persons acting in concert
shall have acquired by contract or otherwise, or shall have entered into a
contract or arrangement that, upon consummation, will result in its or their
acquisition of the power to exercise, directly or indirectly, a controlling
influence over the management or policies of the Borrower or (d) any “Change of
Control” or “Change in Control” as defined in the Indentures or under any other
Debt permitted under this Agreement.
“Closing Date” means, the first date on which the conditions set forth in
Article III shall have been satisfied.
“Collateral” means, all “Collateral” referred to in the Collateral Documents and
all other property that is or is intended to be subject to any Lien in favor of
the Collateral Agent for the benefit of the Secured Parties which, for the
avoidance of doubt, shall include the Subject Property.
“Collateral Agent” has the meaning specified in the recital of parties to this
Agreement.
“Collateral Documents” means, the Security Agreement and any other agreement
that creates or purports to create a Lien in favor of the Collateral Agent for
the benefit of the Secured Parties.
“Collateral Ratings Condition” means that, at the time of determination, the
Borrower has received and maintains (a) a corporate credit rating of at least
BBB- from S&P and a corporate family credit rating of at least Ba1 from Moody’s
(in each case, with no negative outlook or negative watch), or (b) a corporate
family credit rating of at least Baa3 from Moody’s and a corporate credit rating
of at least BB+ from S&P (in each case, with no negative outlook or negative
watch).
“Collateral Re-Pledge Date” means any date occurring during a Collateral
Suspension Period on which any of the following shall occur (a) the Borrower
shall receive either a corporate credit rating of BB or lower from S&P or a
corporate family credit rating of Ba2 or lower from Moody’s, (b) the Borrower
shall receive a corporate credit rating of no greater than BB+ from S&P and a
corporate family credit rating of no greater than Ba1 from Moody’s, (c) the
Borrower shall not receive any corporate credit rating from S&P or shall not
receive any
8
corporate family credit rating from Moody’s, or (d) the Borrower shall have
notified the Administrative Agent that it wishes the Collateral Suspension
Period to cease on such date.
“Collateral Reinstatement Date” has the meaning specified in Section 8.12.
“Collateral Suspension Period” means a period of time commencing on any Optional
Release Date and ending immediately upon the occurrence of any Collateral
Re-Pledge Date.
“Commitment” means a Revolving Credit Commitment, a Letter of Credit Commitment
or a Term Commitment.
“Commitment Fee” means (a) prior to delivery of financial statements for the
fiscal quarter ending December 31, 2014 pursuant to Section 5.03(c), 0.275% per
annum and (b) thereafter, a percentage per annum determined by reference to the
Total Net Leverage Ratio (the “Commitment Fee Percentage”) as set forth below:
Total Net Leverage Ratio
Commitment
Fee Percentage
Level I
< 1.50:1.0
0.225
%
Level II
0.250
%
Level III
0.275
%
Level IV
0.325
%
Level V
> 4.50:1.0
0.375
%
The Commitment Fee shall be determined by reference to the ratio in effect from
time to time as reflected in the financial statements most recently delivered
pursuant to Section 5.03(b) or (c), as the case may be; provided, however, that
in any event, (a) no change in the Commitment Fee shall be effective until three
Business Days after the date on which the Paying Agent receives the financial
statements required to be delivered pursuant to Section 5.03(b) or (c), as the
case may be, and a certificate of the Financial Officer of the Borrower
demonstrating such ratio, and (b) the Commitment Fee shall be at Level V for so
long as the Borrower has not submitted to the Paying Agent the information
described in clause (a) of this proviso as and when required under
Section 5.03(b) or (c), as the case may be.
“Communications” has the meaning specified in Section 8.02(c)(ii).
“Confidential Information” has the meaning specified in Section 8.10.
“Consolidated” refers to the consolidation of accounts in accordance with GAAP.
9
“Consolidated Net Income” means, of any Person for any period, the net income or
loss of such Person for such period determined on a Consolidated basis in
accordance with GAAP.
“Consolidated Net Tangible Assets” means, as of any date of determination, the
total assets less the sum of goodwill and other intangible assets, in each case
reflected on the Consolidated balance sheet of the Borrower and its Subsidiaries
as of the end of the most recently ended fiscal quarter of such Person for which
financial statements have been delivered to the Agent pursuant to Section 5.03,
determined on a Consolidated basis.
“Consolidated Net Worth” means, at any date of determination, the Consolidated
stockholders’ equity (including redeemable non-controlling interests) of the
Borrower at such time, as determined on a Consolidated basis in accordance with
GAAP.
“Consolidated Secured Debt For Borrowed Money” means, as of any date of
determination, the Consolidated Debt For Borrowed Money of the Borrower and its
Subsidiaries which is secured by any Lien on any property or assets of the
Borrower or one or more of its Subsidiaries.
“Consolidated Total Capitalization” means, at any date of determination the sum
of (a) Consolidated Debt for Borrowed Money of the Borrower and its Subsidiaries
as at such date of determination, and (b) Consolidated Net Worth as at such date
of determination.
“Contingent Obligation” means, with respect to any Person, any Obligation or
arrangement of such Person to guarantee or intended to guarantee any Debt,
leases, dividends or other payment Obligations (“primary obligations”) of any
other Person (the “primary obligor”) in any manner, whether directly or
indirectly, including, without limitation, (a) the direct or indirect guarantee,
endorsement (other than for collection or deposit in the ordinary course of
Person of the Obligation of a primary obligor, (b) the Obligation to make
take-or-pay or similar payments, if required, regardless of nonperformance by
any other party or parties to an agreement (other than Obligations to make
take-or-pay or similar payments pursuant to contracts entered into by such
Person in the ordinary course of business not inconsistent with the prior
practice of such Person) or (c) any Obligation of such Person, whether or not
contingent, (i) to purchase any such primary obligation or any property
constituting direct or indirect security therefor, (ii) to advance or supply
funds (A) for the purchase or payment of any such primary obligation or (B) to
to maintain the net worth or solvency of the primary obligor, (iii) to purchase
property, assets, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (iv) otherwise to assure or hold
harmless the holder of such primary obligation against loss in respect thereof.
The amount of any Contingent Obligation shall be deemed to be an amount equal to
the stated or determinable amount of the primary obligation in respect of which
such Contingent Obligation is made (or, if less, the maximum amount of such
primary obligation for which such Person may be liable pursuant to the terms of
the instrument evidencing such Contingent Obligation) or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof
(assuming such Person is required to perform thereunder), as determined by such
Person in good faith.
10
“Conversion,” “Convert” and “Converted” each refer to a conversion of Advances
of one Type into Advances of the other Type pursuant to Section 2.09 or 2.10.
“Covered Entity” means (a) the Borrower, each of Borrower’s Subsidiaries, all
Guarantors and all pledgors of Collateral and (b) each Person that, directly or
indirect (x) ownership of, or power to vote, 25% or more of the Voting Interests
for the election of directors of such Person or other Persons performing similar
functions for such Person, or (y) power to direct or cause the direction of the
management and policies of such Person whether by ownership of equity interests,
contract or otherwise.
“Debt” of any Person means, without duplication, (a) all indebtedness of such
Person for borrowed money, (b) all Obligations of such Person for the deferred
purchase price of property or services (other than trade payables not overdue by
more than 60 days incurred in the ordinary course of such Person’s business),
(c) all Obligations of such Person evidenced by notes, bonds, debentures or
other similar instruments, (d) all Obligations of such Person created or arising
under any conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the rights and remedies of the
seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), (e) all Obligations of such Person as
lessee under Capitalized Leases, (f) all Obligations of such Person under
acceptance, letter of credit or similar facilities, (g) all Obligations of such
Person to purchase, redeem, retire, defease or otherwise make any payment in
respect of any Equity Interests in such Person or any other Person or any
warrants, rights or options to acquire such capital stock, valued, in the case
of Redeemable Preferred Interests, at the greater of its voluntary or
involuntary liquidation preference plus accrued and unpaid dividends, (h) all
Obligations of such Person in respect of Hedge Agreements, valued at the
Agreement Value thereof, (i) all Contingent Obligations of such Person and (j)
all indebtedness and other payment Obligations referred to in
clauses (a) through (i) above of another Person secured by (or for which the
secured by) any Lien on property (including, without limitation, accounts and
or become liable for the payment of such indebtedness or other payment
Obligations.
“Debt-Cap Ratio” means, at any date of determination, the ratio of
(a) Consolidated Debt for Borrowed Money of the Borrower and its Subsidiaries as
at such date of determination, to (b) Consolidated Total Capitalization of the
Borrower and its Subsidiaries as at such date of determination.
“Debt for Borrowed Money” of any Person means, without duplication, all items
described in clauses (a), (c), (e), (f) and, to the extent it supports an
obligation of the type described in any of clauses (a), (c), (e) and (f), any
item described in clause (i) or (j), in each case of the definition of “Debt”.
“Default” means, any Event of Default or any event that would constitute an
Event of Default but for the requirement that notice be given or time elapse or
both.
“Default Termination Notice” has the meaning specified in Section 2.01(e).
11
“Defaulting Lender” means, subject to Section 2.15(b), any Lender that, as
determined by the Administrative Agent, (a) has failed to perform any of its
funding obligations hereunder, including in respect of its Advances or
participations in respect of Letters of Credit or Swing Line Advances, within
three Business Days of the date required to be funded by it hereunder, unless,
other than with respect to participations in respect of Letters of Credit or
Swing Line Advances, such Lender notifies the Administrative Agent and the
specifically identified in writing) has not been satisfied, (b) has notified the
Borrower or the Administrative Agent that it does not intend to comply with its
funding obligations or has made a public statement to that effect with respect
to its funding obligations hereunder (unless such notification or public
statement relates to such Lender’s obligation to fund an Advance (other than a
participation in respect of Letters of Credit or Swing Line Advances) hereunder
and states that such position is based on such Lender’s determination that a
condition precedent to funding (which condition precedent, together with any
applicable default, shall be specifically identified in such notification or
public statement) cannot be satisfied) or generally under other agreements in
which it commits to extend credit, (c) has failed, within three Business Days
after request by the Administrative Agent, to confirm in a manner satisfactory
to the Administrative Agent that it will comply with its funding obligations
hereunder (provided that such Lender shall cease to be a Defaulting Lender
pursuant to this clause (c) upon receipt of such written confirmation by the
Administrative Agent and the Borrower), or (d) has, or has a direct or indirect
parent company that has, (i) become the subject of a proceeding under any
bankruptcy law, (ii) had a receiver, conservator, trustee, administrator,
assignee for the benefit of creditors or similar Person charged with
reorganization or liquidation of its business or a custodian appointed for it,
or (iii) taken any action in furtherance of, or indicated its consent to,
approval of or acquiescence in any such proceeding or appointment; provided that
a Lender shall not be a Defaulting Lender solely by virtue of the ownership or
acquisition of any equity interest in that Lender or any direct or indirect
parent company thereof by a Governmental Authority so long as such ownership
disaffirm any contracts or agreements made with such Lender.
“Disclosed Litigation” has the meaning specified in Section 3.01(f).
“Documentation Agents” has the meaning specified in the recital of parties to
this Agreement.
“Dollar Equivalent” means, at any time, (a) with respect to any amount
denominated in Dollars, such amount, and (b) with respect to any amount
denominated in any Alternative Currency, the equivalent amount thereof in
Dollars as determined by the Paying Agent or the Issuing Bank, as the case may
be, at such time on the basis of the Spot Rate (determined in respect of the
most recent Revaluation Date) for the purchase of Dollars with such Alternative
Currency.
12
“Domestic Lending Office” means, with respect to any Lender Party, the office of
such Lender Party specified as its “Domestic Lending Office” opposite its name
on Schedule I hereto or in the Assignment and Assumption pursuant to which it
became a Lender Party, as the case may be, or such other office of such Lender
Party as such Lender Party may from time to time specify to the Borrower and the
Paying Agent.
“EBITDA” means, for any period, the sum, determined on a Consolidated basis, of
(a) net income (or net loss) excluding any extraordinary, unusual or
nonrecurring gains and any extraordinary, unusual or nonrecurring losses
comprised of Non-Cash Charges, (b) interest expense, (c) income tax expense,
(d) depreciation expense, (e) amortization expense and (f) unrealized gains or
losses associated with financial instruments, in each case of the Borrower and
its Subsidiaries, determined in accordance with GAAP for such period (and, in
the case of clauses (b) through (f), to the extent deducted or added in
determining the net income described in clause (a)).
“Eligibility Date” means with respect to each Loan Party and each Swap, the date
on which this Agreement or any other Loan Document becomes effective with
respect to such Swap (for the avoidance of doubt, the Eligibility Date shall be
the Effective Date of such Swap if this Agreement or any other Loan Document is
then in effect with respect to such Loan Party, and otherwise it shall be the
Effective Date of this Agreement and/or such other Loan Document(s) to which
such Loan Party is a party).
“Eligible Assignee” means, any commercial bank or financial institution
(including, without limitation any Approved Fund) as approved by the
Administrative Agent and, so long as no Default or Event of Default has occurred
and is continuing at the time of such assignment, by the Borrower (such
approvals not to be unreasonably withheld or delayed); provided, that the
Borrower shall be deemed to have consented to any such assignment unless it
shall object thereto by written notice to the Administrative Agent within five
Business Days after having received written notice thereof (it being agreed,
however, that if such written notice shall have been delivered by means of
electronic mail (pursuant to Section 8.02(b) hereof), then such notice shall be
confirmed by a telephone call to the specified contact set forth in
Section 8.02(a)); provided, however, that (a) neither any Loan Party nor any
Affiliate of a Loan Party shall qualify as an Eligible Assignee under this
definition and (b) no approval of the Administrative Agent or the Borrower shall
be required for assignments to Affiliates or Approved Funds of Lender Parties or
for assignments to Lenders.
defined in the CEA and regulations promulgated thereunder.
“EMU” means the economic and monetary union in accordance with the Treaty of
Rome 1957, as amended by the Single European Act 1986, the Maastricht Treaty of
1992 and the Amsterdam Treaty of 1998.
13
“EMU Legislation” means the legislative measures of the European Council for the
introduction of, changeover to or operation of a single or unified European
currency.
“Environmental Action” means, any action, suit, demand, demand letter, claim,
notice of non-compliance or violation, notice of liability or potential
liability, investigation, proceeding, consent order or consent agreement
relating in any way to any Environmental Law, any Environmental Permit or
Hazardous Material or arising from alleged injury or threat to health, safety or
the environment, including, without limitation, (a) by any governmental or
regulatory authority for enforcement, cleanup, removal, response, remedial or
other actions or damages and (b) by any governmental or regulatory authority or
third party for damages, contribution, indemnification, cost recovery,
compensation or injunctive relief.
“Environmental Law” means, any Federal, state, local or foreign statute, law,
ordinance, rule, regulation, code, order, writ, judgment, injunction, decree or
judicial or agency interpretation, policy or guidance relating to pollution or
protection of the environment, health, safety or natural resources, including,
without limitation, those relating to the use, handling, transportation,
treatment, storage, disposal, release or discharge of Hazardous Materials.
“Environmental Permit” means, any permit, approval, identification number,
license or other authorization required under any Environmental Law.
“Equity Interests” means, with respect to any Person, shares of capital stock of
(or other ownership or profit interests in) such Person, warrants, options or
other rights for the purchase or other acquisition from such Person of shares of
securities convertible into or exchangeable for shares of capital stock of (or
other ownership or profit interests in) such Person or warrants, rights or
options for the purchase or other acquisition from such Person of such shares
(or such other interests), and other ownership or profit interests in such
Person (including, without limitation, partnership, member or trust interests
options, rights or other interests are authorized or otherwise existing on any
date of determination.
“ERISA” means, the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the regulations promulgated and rulings issued
thereunder.
“ERISA Affiliate” means, any Person that for purposes of Title IV of ERISA is a
member of the controlled group of any Loan Party, or under common control with
any Loan Party, within the meaning of Section 414 of the Internal Revenue Code.
“ERISA Event” means, (a) (i) the occurrence of a reportable event, within the
meaning of Section 4043 of ERISA, with respect to any Plan unless the 30-day
notice requirement with respect to such event has been waived by the PBGC or
(ii) the requirements of Section 4043(b) of ERISA apply with respect to a
contributing sponsor, as defined in Section 4001(a)(13) of ERISA, of a Plan, and
an event described in paragraph (9), (10), (11), (12) or (13) of
Section 4043(c) of ERISA is reasonably expected to occur with respect to such
Plan within the following 30 days; (b) the application for a minimum funding
waiver with respect to a Plan; (c) the provision by the administrator of any
Plan of a notice of intent to
14
terminate such Plan, pursuant to Section 4041(a)(2) of ERISA (including any such
notice with respect to a plan amendment referred to in Section 4041(e) of
ERISA); (d) the cessation of operations at a facility of any Loan Party or any
ERISA Affiliate in the circumstances described in Section 4062(e) of ERISA; (e)
the withdrawal by any Loan Party or any ERISA Affiliate from a Multiple Employer
Plan during a plan year for which it was a substantial employer, as defined in
Section 4001(a)(2) of ERISA; (f) the conditions for imposition of a lien under
Section 303(k) of ERISA shall have been met with respect to any Plan; (g) the
adoption of an amendment to a Plan requiring the provision of security to such
Plan pursuant to Section 436(f) of the Internal Revenue Code; or (h) the
institution by the PBGC of proceedings to terminate a Plan pursuant to
Section 4042 of ERISA, or the occurrence of any event or condition described in
Section 4042 of ERISA that constitutes grounds for the termination of, or the
appointment of a trustee to administer, such Plan.
“Euro” means the lawful currency of the Participating Member States introduced
in accordance with the EMU Legislation.
“Eurocurrency Liabilities” has the meaning specified in the definition of
“Eurodollar Rate Reserve Percentage.”
“Eurodollar Lending Office” means, with respect to any Lender Party, the office
of such Lender Party specified as its “Eurodollar Lending Office” opposite its
name on Schedule I hereto or in the Assignment and Assumption pursuant to which
it became a Lender Party (or, if no such office is specified, its Domestic
Lending Office), or such other office of such Lender Party as such Lender Party
may from time to time specify to the Borrower and the Paying Agent.
“Eurodollar Rate” means (a) with respect to Dollar Advances to which the
Eurodollar Rate applies for any Interest Period, the interest rate per annum
determined by the Administrative Agent by dividing (the resulting quotient
rounded upwards, if necessary, to the nearest 1/100th of 1% per annum) (i) the
rate which appears on the Bloomberg Page BBAM1 (or on such other substitute
Bloomberg page that displays rates at which Dollar deposits are offered by
leading banks in the London interbank deposit market), or the rate which is
quoted by another commercially available source selected by the Administrative
Agent as an authorized information vendor for the purpose of displaying rates at
which US dollar deposits are offered by leading banks in the London interbank
deposit market from time to time (for purposes hereof, an “Alternate Source”),
at approximately 11:00 a.m., London time, two (2) Business Days prior to the
commencement of such Interest Period as the London interbank offered rate for
Dollars for an amount comparable to the principal amount of such Advance and
having a borrowing date and a maturity comparable to such Interest Period (or if
there shall at any time, for any reason, no longer exist a Bloomberg Page BBAM1
(or any substitute page) or any Alternate Source, a comparable replacement rate
determined by the Administrative Agent at such time (which determination shall
be conclusive absent manifest error)), by (ii) a number equal to 1.00 minus the
Euro-Rate Reserve Percentage. The Eurodollar Rate with respect to Dollar
Advances may also be expressed by the following formula:
Eurodollar Rate
=
London interbank offered rate quoted by Bloomberg or appropriate successor as
shown on Bloomberg Page BBAM1
1.00 – Eurodollar Rate Reserve Percentage
15
(b) with respect to Advances denominated in an Alternative Currency
that is a currency to which a published Eurodollar Rate applies for any Interest
Period, the interest rate per annum determined by Administrative Agent by
other substitute Bloomberg page that displays rates at which deposits in the
relevant Alternative Currency are offered by leading banks in the Relevant
Interbank Market), or the rate which is quoted by an Alternate Source, at
commencement of such Interest Period as the Relevant Interbank Market offered
rate for deposits in the relevant Alternative Currency for an amount comparable
to the principal amount of such Advance and having a borrowing date and a
maturity comparable to such Interest Period (or if there shall at any time, for
any reason, no longer exist a Bloomberg Page BBAM1 (or any substitute page) or
any Alternate Source, a comparable replacement rate determined by the
Administrative Agent at such time (which determination shall be conclusive
Rate Reserve Percentage. Such Eurodollar Rate may also be expressed by the
following formula:
Eurodollar Rate
=
(c) with respect to Advances denominated in Canadian Dollars for any
Interest Period, the interest rate per annum determined by Administrative Agent
by dividing (i) the interest rate per annum (the “CDOR Rate”) as determined by
the Administrative Agent, equal to the arithmetic average rate applicable to
Canadian Dollar bankers’ acceptances (C$BAs) for the applicable Interest Period
appearing on the Bloomberg page BTMM CA, rounded to the nearest 1/100th of 1%
(with 0.005% being rounded up) per annum, at approximately 11:00 a.m. (Toronto,
Ontario time), two (2) Business Days prior to the commencement of such Interest
Period, or if such day is not a Business Day, then on the immediately preceding
Business Day, provided that if such rate does not appear on the Bloomberg page
BTMM CA on such day the CDOR Rate on such day shall be the rate for such period
applicable to Canadian Dollar bankers’ acceptances quoted by a bank listed in
Schedule I of the Bank Act (Canada), as selected by the Administrative Agent, as
of 11:00 a.m. Eastern Time on such day or, if such day is not a Business Day,
then on the immediately preceding Business Day, by (ii) a number equal to 1.00
minus the Eurodollar Rate Reserve Percentage.
(d) with respect to Advances denominated in Australian Dollars for any
by dividing (i) the interest rate per annum equal to the Australian Bank Bill
Swap Bid Rate or the successor thereto as approved by the Administrative Agent
as published by
16
Bloomberg (or on any successor or substitute service providing rate quotations
comparable to those currently provided by such service, as determined by the
Administrative Agent from time to time), rounded to the nearest 1/100th of 1%
(with 0.005% being rounded up) per annum at approximately 10:00 a.m., Sydney,
Australia time, two (2) Business Days prior to the commencement of such Interest
Period, as the rate for deposits in Australian Dollars with a maturity
comparable to such Interest Period, by (ii) a number equal to 1.00 minus the
Eurodollar Rate Reserve Percentage.
The Eurodollar Rate shall be adjusted with respect to any Advance to which the
Eurodollar Rate applies that is outstanding on the effective date of any change
in the Eurodollar Rate Reserve Percentage as of such effective date. The
Administrative Agent shall give prompt notice to the Borrower of the Eurodollar
Rate as determined or adjusted in accordance herewith, which determination shall
be conclusive absent manifest error. If the Eurodollar Rate as determined by
the Administrative Agent shall be less than zero, then such rate shall be deemed
zero for purposes of this Agreement. The Eurodollar Rate for any Advances
denominated in an Alternative Currency shall be based upon the Eurodollar Rate
definition set forth in clause (b), (c) or (d) above that is applicable to the
currency in which such Advances are requested.
“Eurodollar Rate Advance” means, an Advance that bears interest as provided in
Section 2.07(a)(ii).
“Eurodollar Rate Reserve Percentage” means as of any day the maximum percentage
in effect on such day, (i) as prescribed by the Board of Governors of the
Federal Reserve System (or any successor) for determining the reserve
requirements (including supplemental, marginal and emergency reserve
requirements) with respect to eurocurrency funding (currently referred to as
“Eurocurrency Liabilities”); and (ii) to be maintained by a Lender as required
for reserve liquidity, special deposit, or similar purpose by any governmental
or monetary authority of any country or political subdivision thereof (including
any central bank), against (A) any category of liabilities that includes
deposits by reference to which a Euro-Rate is to be determined, or (B) any
category of extension of credit or other assets that includes Advances to which
a Eurodollar Rate applies.
“Events of Default” has the meaning specified in Section 6.01.
“Excluded Hedge Liability” means, with respect to each Loan Party, each of its
Swap Obligations if, and only to the extent that, all or any portion of this
Agreement or any other Loan Document that relates to such Swap Obligation is or
becomes illegal under the CEA, or any rule, regulation or order of the CFTC,
solely by virtue of such Loan Party’s failure to qualify as an Eligible Contract
Participant on the Eligibility Date for such Swap. Notwithstanding anything to
the contrary contained in the foregoing or in any other provision of this
Agreement or any other Loan Document, the foregoing is subject to the following
provisos: (a) if a Swap Obligation arises under a master agreement governing
more than one Swap, this definition shall apply only to the portion of such Swap
Obligation that is attributable to Swaps for which such guaranty or security
interest is or becomes illegal under the CEA, or any rule, regulations or order
of the CFTC, solely as a result of the failure by such Loan Party for any reason
to qualify as an Eligible Contract Participant on the Eligibility Date for such
Swap, (b) if a guarantee of a Swap Obligation would cause such obligation to be
an Excluded Hedge Liability but the grant of
17
a security interest would not cause such obligation to be an Excluded Hedge
interest, and (c) if there is more than one Loan Party executing this Agreement
or the other Loan Documents and a Swap Obligation would be an Excluded Hedge
Excluded Hedge Liabilities.
“Excluded Subsidiary” means each of Speedbird Aviation, LLC, an Indiana limited
liability company, Paragon Steel Enterprises LLC, an Indiana limited liability
company, STLD Holdings, Inc., an Indiana corporation, Dynamic Aviation LLC, an
Indiana limited liability company, OmniSource Athens, LLC, an Indiana limited
liability company, OmniSource LLC, an Indiana limited liability company, Steel
Ventures, Inc., a Delaware corporation, and Cohen & Green Salvage Co., Inc., a
North Carolina corporation, each of their respective direct and indirect
subsidiaries and each other Subsidiary of the Borrower designated by the
Borrower as an Excluded Subsidiary by written notice to the Joint Lead Arrangers
in accordance with Section 5.01(j) or Section 5.02(e)(iii); provided that, in
the event any Excluded Subsidiary guarantees any Debt of the Borrower or any
Subsidiary Guarantor (other than the Obligations set forth herein), then such
Subsidiary shall be required to execute and deliver a guaranty and a security
agreement supplement and all other necessary documents in accordance with
Section 5.01(j), and such Excluded Subsidiary shall be considered a Subsidiary
Guarantor (and cease to be an Excluded Subsidiary) for all purposes set forth
herein.
“Existing Credit Agreement” has the meaning specified in the Preliminary
Statements hereto.
“Existing Debt” means, the Debt of each Loan Party and its Subsidiaries
outstanding immediately before giving effect to the consummation of the
Transaction.
“Existing Facilities” has the meaning specified in the Preliminary Statements
hereto.
“Existing Lenders” has the meaning specified in the Preliminary Statements
hereto.
“Existing Letters of Credit” means the “Letters of Credit” issued pursuant to,
and as defined in, the terms of the Existing Credit Agreement, and listed on
Schedule A hereto.
“Existing Revolving Credit Lender” means each Person that was a “Revolving
Credit Lender” under, and as defined in, the Existing Credit Agreement
immediately prior to the occurrence of the Closing Date.
“Existing Revolving Credit Advance” means each “Revolving Credit Advance” made
under, and as defined in, the Existing Credit Agreement, and that remained
outstanding immediately prior to the occurrence of the Closing Date.
18
“Existing Term Lender” means each Person that was a “Term Lender” under, and as
defined in, the Existing Credit Agreement immediately prior to the occurrence of
the Closing Date.
“Existing Term Advance” means each “Term Advance” made under, and as defined in,
the Existing Credit Agreement, and that remained outstanding immediately prior
to the occurrence of the Closing Date.
“Extraordinary Receipt” means, any cash received by or paid to or for the
account of any Person not in the ordinary course of business, consisting of
proceeds of insurance, condemnation awards (and payments in lieu thereof) and
indemnity payments, in each case, with respect to assets constituting
Collateral; provided, however, that an Extraordinary Receipt shall not include
cash receipts received from proceeds of insurance, condemnation awards (or
payments in lieu thereof) or indemnity payments to the extent that such
proceeds, awards or payments (a) in respect of loss or damage to inventory are
applied (or in respect of which expenditures were previously incurred) to
replace or repair the inventory in respect of which such proceeds were received
in accordance with the terms of the Loan Documents, so long as such application
is made within 12 months after the occurrence of such damage or loss or (b) are
received by any Person in respect of any third party claim against such Person
and applied to pay (or to reimburse such Person for its prior payment of) such
claim and the costs and expenses of such Person with respect thereto.
“Facility” means, the Revolving Credit Facility, the Swing Line Facility, the
Letter of Credit Facility or the Term Facility.
“Federal Funds Rate” means, for any day the rate per annum (based on a year of
360 days and actual days elapsed) which is the daily federal funds open rate as
Bloomberg Screen BTMM for that day opposite the caption “OPEN” (or on such other
substitute Bloomberg Screen that displays such rate), or as set forth on such
other recognized electronic source used for the purpose of displaying such rate
as selected by the Administrative Agent (for purposes of this definition, an
“Alternate Source”) (or if such rate for such day does not appear on the
Bloomberg Screen BTMM (or any substitute screen) or on any Alternate Source, or
if there shall at any time, for any reason, no longer exist a Bloomberg Screen
BTMM (or any substitute screen) or any Alternate Source, a comparable
replacement rate determined by the Administrative Agent at such time (which
if such day is not a Business Day, the Federal Funds Rate for such day shall be
the “open” rate on the immediately preceding Business Day. If and when the
Federal Funds Rate changes, the rate of interest with respect to any advance to
which the Federal Funds Rate applies will change automatically without notice to
the Borrower or any other Loan Party, effective on the date of any such change.
“Federal Funds Effective Rate” for any day means the rate per annum (based on a
year of 360 days and actual days elapsed and rounded upward to the nearest 1/100
of 1%) announced by the Federal Reserve Bank of New York (or any successor) on
such day as being the weighted average of the rates on overnight federal funds
transactions arranged by federal funds brokers on the previous trading day, as
computed and announced by such Federal Reserve Bank (or any successor) in
substantially the same manner as such Federal Reserve
19
Bank computes and announces the weighted average it refers to as the “Federal
Funds Effective Rate” as of the date of this Agreement; provided, if such
Federal Reserve Bank (or its successor) does not announce such rate on any day,
the “Federal Funds Effective Rate” for such day shall be the Federal Funds
Effective Rate for the last day on which such rate was announced.
“Fee Letter” means each of the fee letters, dated on or prior to the date
hereof, made between or among any of the Administrative Agent, Joint Lead
Arrangers, the Initial Lender Affiliates of such Joint Lead Arrangers and the
Borrower, and entered into in respect of this Agreement and the Facilities.
“Financial Officer” means, any of the Chief Executive Officer, the Chief
Financial Officer, the Treasurer and the Assistant Secretary.
“Fiscal Year” means, a fiscal year of the Borrower and its Consolidated
Subsidiaries ending on December 31 in any calendar year.
“Fronting Exposure” means, at any time there is a Defaulting Lender, (a) with
respect to any Issuing Bank, such Defaulting Lender’s Pro Rata Share of the
outstanding Letter of Credit Advances other than any portion as to which such
Defaulting Lender’s purchase obligation has been reallocated to other Lenders or
cash collateralized in accordance with the terms hereof, and (b) with respect to
the Swing Line Bank, such Defaulting Lender’s Pro Rata Share of Swing Line
Advances other than Swing Line Advances as to which such Defaulting Lender’s
participation obligation has been reallocated to other Lenders or cash
collateralized in accordance with the terms hereof.
“Fund” means any Person (other than a natural Person) that is (or will be)
activities.
“Funded Debt” of any Person means, Debt in respect of the Advances, in the case
of the Borrower, and all other Debt of such Person that by its terms matures
more than one year after the date of determination or matures within one year
from such date but is renewable or extendible, at the option of such Person, to
a date more than one year after such date or arises under a revolving credit or
similar agreement that obligates the lender or lenders to extend credit during a
period of more than one year after such date, including, without limitation, all
amounts of Funded Debt of such Person required to be paid or prepaid within one
year after the date of determination.
“GAAP” has the meaning specified in Section 1.03.
20
“Guaranties” means, collectively, each Subsidiary Guaranty entered into from
time to time.
“Guarantors” means, the Subsidiary Guarantors.
“Hazardous Materials” means, (a) petroleum or petroleum products, by-products or
breakdown products, radioactive materials, asbestos-containing materials,
polychlorinated biphenyls and radon gas and (b) any other chemicals, materials
or substances designated, classified or regulated as hazardous or toxic or as a
pollutant or contaminant under any Environmental Law.
“Hedge Agreements” means, interest rate swap, cap or collar agreements, interest
rate future or option contracts, currency swap agreements, currency future or
option contracts and other hedging agreements.
“Hedge Bank” means, any Lender Party or an Affiliate of a Lender Party in its
capacity as a party to a Secured Hedge Agreement.
“Immaterial Subsidiaries” means, all Subsidiaries identified by the Borrower as
such; provided that (i) the total aggregate value of assets of all such
Subsidiaries does not exceed 10.0% of Consolidated Net Tangible Assets of the
Borrower and its Subsidiaries (based on the Consolidated balance sheet of the
Borrower and its Subsidiaries), as of the last day of the Fiscal Year of the
Borrower most recently ended for which financial statements have been delivered
to the Lender Parties pursuant to Section 5.03(b), (ii) the aggregate EBITDA of
all such Subsidiaries does not exceed 10.0% of Consolidated EBITDA of the
Borrower and its Subsidiaries for the period of four consecutive fiscal quarters
ended on the last day of the Fiscal Year of the Borrower most recently ended for
which financial statements have been delivered to the Lender Parties pursuant to
Section 5.03(b), based on the Consolidated financial statements of the Borrower
and its Subsidiaries, (iii) the aggregate value of assets of any such Subsidiary
does not exceed 2.50% of Consolidated Net Tangible Assets of the Borrower and
its Subsidiaries (based on the Consolidated balance sheet of the Borrower and
its Subsidiaries), as of the last day of the Fiscal Year of the Borrower most
recently ended for which financial statements have been delivered to the Lender
Parties pursuant to Section 5.03(b), and (iv) the Consolidated EBITDA of any
such Subsidiary and any of its respective Subsidiaries does not exceed 2.50% of
Consolidated EBITDA of the Borrower and its Subsidiaries for the period of four
consecutive fiscal quarters ended on the last day of the Fiscal Year of the
to the Lender Parties pursuant to Section 5.03(b), based on the Consolidated
financial statements of the Borrower and its Subsidiaries.
“Incremental Amount” means, at any time, an amount equal to the greater of
(a) the remaining Incremental Fixed Amount at such time, and (b) the maximum
aggregate principal amount such that, at the time of the incurrence of the
applicable Incremental Facility,
(i) at all times other than during a Collateral Suspension Period,
the Secured Gross Leverage Ratio for the most recently ended Measurement Period
would not exceed 2.00:1.00 (determined on a Pro Forma Basis, (x) after giving
full effect to the incurrence of the requested Incremental Facility, and
(y) assuming for such purposes that all
21
Revolving Credit Commitments under the Revolving Credit Facility, all
Incremental Revolving Credit Commitments under all previously incurred and
then-outstanding Incremental Revolving Credit Facilities, and all Incremental
Revolving Credit Commitments under the requested Incremental Revolving Facility
(if any), are fully drawn), or
(ii) at all times during any Collateral Suspension Period, (A) the
Secured Gross Leverage Ratio for the most recently ended Measurement Period
would not exceed 2.00:1.00 (as determined on a Pro Forma Basis) and (B) the
requested Incremental Facility would not exceed the remaining maximum aggregate
amount of secured indebtedness that the Borrower is then permitted to incur
under the most restrictive of all of its then-outstanding series of Senior Notes
Documents or other Related Documents (determined, in each case, (x) after giving
full effect to the incurrence of the requested Incremental Facility,
(y) assuming for such purposes that all Revolving Credit Commitments under the
Revolving Credit Facility, all Incremental Revolving Credit Commitments under
all previously incurred and then-outstanding Incremental Revolving Credit
Facilities, and all Incremental Revolving Credit Commitments under the requested
Incremental Revolving Facility (if any), are fully drawn, and (z) further
assuming for such purposes that the Facilities, each previously incurred
then-outstanding Incremental Facilities and the requested Incremental Facility
all (1) constitute Secured Debt For Borrowed Money under this Agreement and
(2) constitute secured indebtedness (or “Indebtedness” secured by “Mortgages”)
for the purposes of any then-outstanding Senior Notes Documents or other Related
Documents.
“Incremental Assumption Agreement” means an “Incremental Assumption Agreement,”
in form and substance reasonably satisfactory to the Administrative Agent and
the Lead Arrangers, made among the Borrower, the Administrative Agent, each Lead
Arranger, and one or more Incremental Term Lenders and/or Incremental Revolving
Credit Lenders.
“Incremental Facility” has the meaning specified in Section 2.17.
“Incremental Facility Effective Date” has the meaning specified in Section 2.17.
“Incremental Fixed Amount” means, at any time, the excess, if any, of
(a) $750,000,000 minus (b) the total aggregate principal amount of all
Incremental Revolving Credit Commitments and Incremental Term Commitment made
under all Incremental Facilities established prior to such time pursuant to
Section 2.17 (including, without duplication, all Incremental Term Commitments
which were subsequently funded as Incremental Term Advances, all Incremental
Term Advances which were subsequently repaid and all Incremental Revolving
Credit Commitment which were subsequently terminated).
“Incremental Lender” means an Incremental Term Lender or an Incremental
Revolving Credit Lender, as applicable.
“Incremental Revolving Credit Advances” means revolving credit advances made by
one or more Incremental Revolving Credit Lenders to the Borrower pursuant to
Section 2.01(e), and subject to the terms of Section 2.17.
22
“Incremental Revolving Credit Commitment” means the commitment of any
Incremental Revolving Credit Lender, established pursuant to Section 2.17, to
make Incremental Revolving Credit Advances to the Borrowers.
“Incremental Revolving Credit Facility” has the meaning specified in
Section 2.17.
“Incremental Revolving Credit Lender” means any bank, financial institution or
other Person with an Incremental Revolving Credit Commitment or an outstanding
Incremental Revolving Credit Advance.
“Incremental Term Advances” means term loan advances made by one or more
Incremental Term Lenders to the Borrower pursuant to Section 2.01(e).
“Incremental Term Commitment” means the commitment of any Incremental Term
Lender, established pursuant to Section 2.17, to make Incremental Term Advances
to the Borrower.
“Incremental Term Facility” has the meaning specified in Section 2.17.
“Incremental Term Lender” means any bank, financial institution or other Person
with an Incremental Term Commitment or an outstanding Incremental Term Advance.
“Indemnified Party” has the meaning specified in Section 8.04(b).
“Indentures” means, each indenture governing the Senior Notes, as each such
indenture may be amended, supplemented or otherwise modified from time to time
in accordance herewith and therewith.
“Information Memorandum” means any confidential information memorandum used by
the Joint Lead Arrangers in connection with the syndication of the Commitments.
“Initial Extension of Credit” means, the earlier to occur of the initial
Borrowing and the initial issuance of a Letter of Credit hereunder.
“Initial Issuing Banks,” “Initial Lender Parties” and “Initial Lenders” each has
the meaning specified in the recital of parties to this Agreement.
“Interest Coverage Ratio” means, at any date of determination, the ratio of
(a) Consolidated EBITDA to (b) interest payable on, and amortization of debt
discount in respect of, all Debt for Borrowed Money, in each case, of or by the
Borrower and its Subsidiaries during the four consecutive fiscal quarters most
recently ended for which financial statements are required to be delivered to
the Lender Parties pursuant to Section 5.03(b) or (c), as the case may be.
“Insufficiency” means, with respect to any Plan, the amount, if any, of its
unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA.
23
“Interest Period” means, for each Eurodollar Rate Advance comprising part of the
same Borrowing, the period commencing on the date of such Eurodollar Rate
Advance or the date of the Conversion of any Base Rate Advance into such
Eurodollar Rate Advance, and ending on the last day of the period selected by
the Borrower pursuant to the provisions below and, thereafter, each subsequent
period commencing on the last day of the immediately preceding Interest Period
and ending on the last day of the period selected by the Borrower pursuant to
the provisions below. The duration of each such Interest Period shall be one,
two, three or six months (or twelve months if consented to by all Lenders), as
the Borrower may, upon notice received by the Paying Agent not later than
11:00 A.M. (New York City time) on the third Business Day prior to the first day
of such Interest Period, select; provided, that, the duration of each Interest
Period with respect to a Eurodollar Rate Advance denominated in an Alternative
Currency shall be one month; provided, further, that:
(a) the Borrower may not select any Interest Period with respect to
any Eurodollar Rate Advance under a Facility that ends after any principal
repayment installment date for such Facility unless, after giving effect to such
selection, the aggregate principal amount of Base Rate Advances and of
Eurodollar Rate Advances having Interest Periods that end on or prior to such
principal repayment installment date for such Facility shall be at least equal
to the aggregate principal amount of Advances under such Facility due and
payable on or prior to such date;
(b) Interest Periods commencing on the same date for Eurodollar Rate
Advances comprising part of the same Borrowing shall be of the same duration;
(c) whenever the last day of any Interest Period would otherwise occur
on a day other than a Business Day, the last day of such Interest Period shall
be extended to occur on the next succeeding Business Day, provided, however,
that, if such extension would cause the last day of such Interest Period to
occur in the next following calendar month, the last day of such Interest Period
shall occur on the next preceding Business Day;
(d) whenever the first day of any Interest Period occurs on a day of
an initial calendar month for which there is no numerically corresponding day in
the calendar month that succeeds such initial calendar month by the number
of months equal to the number of months in such Interest Period, such Interest
Period shall end on the last Business Day of such succeeding calendar month; and
(e) at any one time no more than ten different Interest Periods shall
be in effect.
“Internal Revenue Code” means, the Internal Revenue Code of 1986, as amended
thereunder.
“Inventory” means, all Inventory referred to in Section 1(b) of the Security
Agreement.
“Investment” in any Person means, any loan or advance to such Person, any
purchase or other acquisition of any Equity Interests or Debt or the assets
comprising a division
24
or business unit or a substantial part or all of the business of such Person,
any capital contribution to such Person or any other direct or indirect
investment in such Person, including, without limitation, any acquisition by way
of a merger or consolidation and any arrangement pursuant to which the investor
incurs Debt of the types referred to in clause (i) or (j) of the definition of
“Debt” in respect of such Person.
“ISP Rules” has the meaning specified in Section 8.14.
“Issuing Bank” means, each Initial Issuing Bank, any other financial institution
approved as an Issuing Bank by the Paying Agent and the Borrower, any Eligible
Assignee to which all or a portion of a Letter of Credit Commitment hereunder
has been assigned pursuant to Section 8.07 so long as such Eligible Assignee
expressly agrees to perform in accordance with their terms all of the
obligations that by the terms of this Agreement are required to be performed by
it as an Issuing Bank and notifies the Paying Agent of its assumption of such
duties, for so long as such Initial Issuing Bank, financial institution or
Eligible Assignee, as the case may be, shall have a Letter of Credit Commitment
and in any case with respect to the Existing Letters of Credit, PNC Bank and
Bank of America.
“Joinder Date” has the meaning specified in Section 5.01(j).
“Joint Lead Arrangers” has the meaning specified in the recitals of parties to
this Agreement.
“Joint Venture” means a business arrangement in which two or more Persons agree
to pool their resources for the purpose of accomplishing a specific project or
other business activity and may take the form of a corporation, limited
liability company, partnership, joint stock company, trust, unincorporated
association, joint venture or other entity.
“L/C Cash Collateral Account” has the meaning specified in the Security
Agreement.
“L/C Related Documents” has the meaning specified in Section 2.04(e)(ii).
“Law” means any law(s) (including common law), constitution, statute, treaty,
regulation, rule, ordinance, opinion, issued guidance, release, ruling, order,
executive order, injunction, writ, decree, bond, judgment, authorization or
approval, lien or award of or any settlement arrangement, by agreement, consent
or otherwise, with any governmental body, foreign or domestic.
“Lender Party” means, any Lender, any Issuing Bank or the Swing Line Bank.
“Lenders” means, the Initial Lenders and each Person that shall become a Lender
hereunder pursuant to Section 8.07 or Section 2.17(c), in each case, for so long
as such Initial Lender or Person, as the case may be, shall be a party to this
Agreement.
“Letter of Credit Advance” means, an advance made by any Issuing Bank or any
Revolving Credit Lender pursuant to Section 2.03(c).
25
“Letter of Credit Agreement” has the meaning specified in Section 2.03(a).
“Letter of Credit Commitment” means, with respect to any Issuing Bank at any
time, the amount set forth opposite such Issuing Bank’s name on Schedule I
hereto under the caption “Letter of Credit Commitment” or, if such Issuing Bank
or a subsequent Issuing Bank has entered into an Assignment and Assumption, set
forth for each such Issuing Bank in the Register maintained by the Paying Agent
pursuant to Section 8.07(d) as such Issuing Bank’s “Letter of Credit
Commitment,” as such amount may be reduced at or prior to such time pursuant to
Section 2.05.
“Letter of Credit Facility” means, at any time, an amount equal to the lesser of
(a) the aggregate amount of the Issuing Banks’ Letter of Credit Commitments at
such time and (b) $200,000,000, as such amount may be reduced at or prior to
such time pursuant to Section 2.05.
“Letters of Credit” means, collectively, (a) the letters of credit issued
pursuant to Section 2.01(c) hereof from time to time and (b) the Existing
Letters of Credit.
“Lien” means, any lien, security interest or other charge or encumbrance of any
kind, or any other type of preferential arrangement, including, without
limitation, the lien or retained security title of a conditional vendor and any
easement, right of way or other encumbrance on title to real property.
“Loan Documents” means, (a) for purposes of this Agreement and the Notes and any
amendment, supplement or modification hereof or thereof, (i) this Agreement,
(ii) the Notes, (iii) the Guaranties, (iv) the Collateral Documents, (v) the Fee
Letter among the Borrower, PNC Bank and PNC Capital Markets (other than for
purposes of Section 8.01 hereof), (vi) each Letter of Credit Agreement and
(vii) each Incremental Assumption Agreement (if any), and (b) for purposes of
the Guaranties and the Collateral Documents and for all other purposes other
than for purposes of this Agreement and the Notes, (i) this Agreement, (ii) the
Notes, (iii) the Guaranties, (iv) the Collateral Documents, (v) each Fee Letter,
(vi) each Letter of Credit Agreement, (vii) each Secured Hedge Agreement,
(viii) each Secured Cash Management Agreement and (ix) each Incremental
Assumption Agreement (if any), in each case as amended.
“Loan Party” means the Borrower or any Guarantor, and “Loan Parties” means,
collectively, the Borrower and all Guarantors.
“Margin Stock” has the meaning specified in Regulation U.
“Material Adverse Change” means, any material adverse change in the business,
condition (financial or otherwise), operations, performance, properties or
prospects of the Borrower or the Borrower and its Subsidiaries taken as a whole.
“Material Adverse Effect” means, a material adverse effect on (a) the business,
prospects of the Borrower or the Borrower and its Subsidiaries, taken as a
whole, (b) the rights and remedies of any Agent or any Lender Party under any
Loan Document, (c) the ability of any Loan Party to
26
perform its Obligations under any Loan Document to which it is or is to be a
party or (d) the Transaction.
“Material Subsidiary” means any Subsidiary that is not an Immaterial Subsidiary;
provided, that in any event, all Guarantors shall be Material Subsidiaries.
“Measurement Period” means, as of each date of determination, the period of four
consecutive fiscal quarters of the Borrower then most recently ended for which
financial statements are required to have been delivered pursuant to
Section 5.03(b) or 5.03(c).
“Mesabi Nugget” means, Mesabi Nugget Delaware, LLC, a Delaware limited liability
company, Mesabi Mining, LLC, an Indiana limited liability company and Mining
Resources, LLC, an Indiana limited liability company, or their respective
parents or Subsidiaries, including, without limitation, any Excluded Subsidiary,
involved directly or indirectly in the development, application and use of the
Itmk3 technology.
“Minority Equity Interest” means Equity Interests in a Person of less than 50%
of the total Equity Interests in such Person.
“Moody’s” means Moody’s Investors Service, Inc. or any successor rating agency.
“Multiemployer Plan” means, a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, to which any Loan Party or any ERISA Affiliate is
making or accruing an obligation to make contributions, or has within any of the
preceding five plan years made or accrued an obligation to make contributions.
“Multiple Employer Plan” means, a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of any Loan
Party or any ERISA Affiliate and at least one Person other than the Loan Parties
and the ERISA Affiliates or (b) was so maintained and in respect of which any
Loan Party or any ERISA Affiliate could have liability under Section 4064 or
4069 of ERISA in the event such plan has been or were to be terminated.
“Net Cash Proceeds” means (a) with respect to any Extraordinary Receipt, the
aggregate amount of cash and Cash Equivalents received in connection therewith
and (b) with respect to the incurrence or issuance of any Debt, the excess of
(x) the sum of the cash and Cash Equivalents received in connection with such
incurrence or issuance of Debt less (y) the investment banking fees,
underwriting discounts, commissions, costs and other out-of-pocket fees and
expenses incurred the Borrower or its Subsidiaries in connection with such
incurrence or issuance of Debt to the extent such amounts were not deducted in
determining the amount referred to in clause (x).
“Net Debt For Borrowed Money” of any Person means (a) Debt for Borrowed Money,
less (b) Unrestricted Cash in an amount not to exceed $500,000,000.
“Non-Cash Charges” means, with respect to the Borrower and its Subsidiaries, for
any period, the aggregate non-cash charges and expenses reducing net income of
the
27
Borrower and its Subsidiaries for such period, all as determined on a
Consolidated basis (including, without limitation, non-cash charges for
unrealized derivative positions, inventory adjustments (lower of cost or market)
and grants of equity compensation); provided that “Non-Cash Charges” shall not
include any such charges that require an accrual of or a reserve for cash for
any future period.
“Non-Qualifying Party” means any Loan Party that fails for any reason to qualify
as an Eligible Contract Participant on the Effective Date of the applicable
Swap.(1)
“Note” means a Revolving Credit Note or a Term Note.
“Notice of Borrowing” has the meaning specified in Section 2.02(a).
“Notice of Issuance” has the meaning specified in Section 2.03(a).
“Notice of Renewal” has the meaning specified in Section 2.01(c).
“Notice of Swing Line Borrowing” has the meaning specified in Section 2.02(b).
“Notice of Termination” has the meaning specified in Section 2.01(c).
“NPL” means, the National Priorities List under CERCLA.
“Obligation” means, with respect to any Person, any payment, performance or
other obligation of such Person of any kind, including, without limitation, any
liability of such Person on any claim, whether or not the right of any creditor
to payment in respect of such claim is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, disputed, undisputed, legal,
equitable, secured or unsecured, and whether or not such claim is discharged,
stayed or otherwise affected by any proceeding referred to in Section 6.01(f).
Without limiting the generality of the foregoing, the Obligations of any Loan
Party under the Loan Documents include (a) the obligation to pay principal,
interest, Letter of Credit commissions, charges, expenses, fees, attorneys’ fees
and disbursements, indemnities and other amounts payable by such Loan Party
under any Loan Document and (b) the obligation of such Loan Party to reimburse
any amount in respect of any of the foregoing that any Lender Party, in its sole
discretion, may elect to pay or advance on behalf of such Loan Party.
Notwithstanding anything to the contrary contained in the foregoing, the
Obligations shall not include any Excluded Hedge Liabilities.
“Open Year” has the meaning specified in Section 4.01(q)(ii).
“Optional Release Conditions” has the meaning specified in Section 8.12.
“Optional Release Date” has the meaning specified in Section 8.12.
(1) NTD: The actual “Keepwell” provision is located in the Security Agreement
(as amended under Section 8.19 hereof), since it is the only document signed by
all Loan Parties.
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“Original Closing Date” means September 29, 2011.
“Other Taxes” has the meaning specified in Section 2.12(b).
“Participating Member State” means each state so described in any EMU
Legislation.
“Patriot Act” has the meaning specified in Section 8.18.
“Paying Agent” means, PNC Bank, or any successor thereto in accordance with
Article VII.
“Paying Agent’s Account” means, the account of the Paying Agent maintained by
the Paying Agent at its offices in PNC Firstside Center, 500 First Avenue,
P7-PFSC-04-I, Pittsburgh, Pennsylvania 15219, as confirmed by the Paying Agent
in writing to the Lender Parties or such other account as the Paying Agent shall
specify in writing to the Lender Parties.
“PBGC” means, the Pension Benefit Guaranty Corporation (or any successor).
“Permitted Liens” means, such of the following as to which no enforcement,
collection, execution, levy or foreclosure proceeding shall have been
commenced: (a) Liens for taxes, assessments and governmental charges or levies
to the extent not required to be paid under Section 5.01(b); (b) Liens imposed
by law, such as materialmen’s, mechanics’, carriers’, workmen’s and repairmen’s
Liens and other similar Liens arising in the ordinary course of business
securing obligations that (i) are not overdue for a period of more than 30 days
or otherwise are contested in good faith and for which a bond shall have been
posted in the amount of such obligations and (ii) individually or together with
all other Permitted Liens outstanding on any date of determination do not
materially adversely affect the use of the property to which they relate; and
(c) pledges or deposits to secure obligations under workers’ compensation laws
or similar legislation or to secure public or statutory obligations.
“Permitted Receivables Financing” means any Receivables Financing of a Permitted
Receivables Financing Subsidiary that meets the following conditions: (a) such
Permitted Receivables Financing (including financing terms, covenants,
termination events and other provisions) shall be in the aggregate economically
fair and reasonable to the Borrower and the Permitted Receivables Financing
Subsidiary, (b) all sales and/or contributions of Permitted Receivables
Financing Assets to the Permitted Receivables Financing Subsidiary shall be made
at fair market value and (c) the financing terms, covenants, termination events
and other provisions thereof shall be market terms for similar transactions and
shall be non-recourse with respect to the Borrower and its Subsidiaries but may
include Standard Securitization Undertakings; provided that a Responsible
Officer of the Borrower shall have provided a certificate to such effect to the
Administrative Agent at least five Business Days prior to the incurrence of such
Permitted Receivables Financing, together with a reasonably detailed description
of the material terms and conditions of such Permitted Receivables Financing or
drafts of the documentation relating thereto, stating that the Borrower has
determined in good faith that such terms and conditions satisfy the requirements
set out in the foregoing clauses (a) through (c), which certificate shall be
conclusive evidence that such terms and
29
conditions satisfy such requirement unless the Administrative Agent provides
notice to the Borrower of its objection during such five Business Day period.
“Permitted Receivables Financing Assets” means the accounts receivable subject
to a Permitted Receivables Financing, and related assets (including contract
rights) which are of the type customarily transferred or in respect of which
security interests are customarily granted in connection with securitizations of
accounts receivables, and the proceeds thereof.
“Permitted Receivables Financing Subsidiary” means a wholly owned Subsidiary of
the Borrower (or another Person formed for the purposes of engaging in a
Permitted Receivables Financing in which the Borrower or any Subsidiary of the
Borrower makes an Investment and to which the Borrower or any Subsidiary of the
Borrower transfers Permitted Receivables Financing Assets) that engages in no
activities other than in connection with the financing of Permitted Receivables
Financing Assets of the Borrower or its Subsidiaries, all proceeds thereof and
all rights (contingent and other), collateral and other assets relating thereto,
and any business or activities incidental or related to such business, and which
is designated by the board of directors of the Borrower or such other Person (as
provided below) as a Permitted Receivables Financing Subsidiary and (a) no
portion of the Debt or any other obligations (contingent or otherwise) of which
(i) is guaranteed by the Borrower or any other Subsidiary of the Borrower, other
than another Permitted Receivables Financing Subsidiary (excluding guarantees of
obligations (other than the principal of, and interest on, Debt) pursuant to
Standard Securitization Undertakings), (ii) is recourse to or obligates the
Borrower or any other Subsidiary of the Borrower, other than another Permitted
Receivables Financing Subsidiary, in any way other than pursuant to Standard
Securitization Undertakings or (iii) subjects any property or asset of the
Receivables Financing Subsidiary, directly or indirectly, contingently or
Securitization Undertakings, (b) with which none of the Borrower or any other
Subsidiary of the Borrower, other than another Permitted Receivables Financing
Subsidiary, has any material contract, agreement, arrangement or understanding
other than on terms no less favorable to the Borrower or such Subsidiary than
those that might be obtained at the time from Persons that are not Affiliates of
the Borrower and (c) to which none of the Borrower or any other Subsidiary of
the Borrower, other than another Permitted Receivables Financing Subsidiary, has
any obligation to maintain or preserve such entity’s financial condition or
cause such entity to achieve certain levels of operating results. Any such
designation by the board of directors of the Borrower or such other Person shall
be evidenced to the Administrative Agent by delivery to the Administrative Agent
of a certified copy of the resolution of the board of directors of the Borrower
or such other Person giving effect to such designation and a certificate
executed by a Responsible Officer certifying that such designation complied with
the foregoing conditions.
“Permitted Supplier Receivables Sale Program” means any supplier financing
arrangement or similar program (other than pursuant to a Permitted Receivables
Financing) entered into with customers of the Borrower or its Subsidiaries and
third party financial institutions purchasers, for the purpose of facilitating
the sale, by Borrower or its Subsidiaries, of accounts receivable owed by
customers of the Borrower or any Subsidiary and generated in the ordinary course
of the business of the Borrower or its Subsidiaries, so long as (a) no Default
or Event of Default has occurred and is continuing, or would result from such
sale of accounts
30
receivable, (b) each such sale of accounts receivable is for cash which is paid
at the time of such sale, (c) each such account receivable sold is not past the
date for due payment thereunder, and (d) following such sale, other than
pursuant to those non-recourse exceptions which are customary in such accounts
receivable sales programs, (i) no purchaser or other third-party financial
institution shall have any recourse to the Borrower or any of its Subsidiaries
in connection with such sale (or other related arrangement), and (ii) neither
the Borrower nor any of its Subsidiaries shall guarantee any liabilities or
obligations with respect to such sale or other related arrangement (including,
without limitation, any guarantee, surety or other credit support for any of the
obligations owed by any customer of the Borrower or any of its Subsidiaries to
such third-party financial institution under any sale or other financing
arrangement).
“Person” means, an individual, partnership, corporation (including a business
trust), limited liability company, joint stock company, trust, unincorporated
association, joint venture or other entity, or a government or any political
subdivision or agency thereof.
“Plan” means, a Single Employer Plan or a Multiple Employer Plan.
“Platform” means Debt Domain, Intralinks, Syndtrak or a substantially similar
electronic transmission system.
“Pledged Debt” has the meaning specified in the Security Agreement.
“Pledged Shares” has the meaning specified in the Security Agreement.
“PNC Bank” has the meaning specified in the recital of parties to this
Agreement.
“Preferred Interests” means, with respect to any Person, Equity Interests issued
by such Person that are entitled to a preference or priority over any other
Equity Interests issued by such Person upon any distribution of such Person’s
property and assets, whether by dividend or upon liquidation.
“Prime Rate” means, the rate publicly quoted from time to time by the
Administrative Agent. The “prime rate” is a rate set by the Administrative
Agent based upon various factors including the Administrative Agent’s costs and
desired return, general economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above, or below
such announced rate. Any change in such rate announced by the Administrative
Agent shall take effect at the opening of business on the day specified in the
public announcement of such change.
“Pro Forma Basis” means (a) with respect to the determination of the Borrower’s
compliance with the financial maintenance covenants as required pursuant to
Sections 5.04(a) and 5.04(b), that all Specified Transactions which occurred
during the Measurement Period ending on the date of determination for such
financial maintenance covenant compliance calculation shall be deemed to have
occurred on the first day of such Measurement Period; and (b) with respect to
the determination of the Borrower’s compliance with any financial covenant or
financial ratio test (other than compliance with the financial maintenance
covenants as required pursuant to Section 5.04(a) or 5.04(b)), that (i) all
Specified Transactions which occurred during the most recently ended Measurement
Period shall be
31
deemed to have occurred on the first day of such Measurement Period, and
(ii) the specific transaction with respect to which such compliance is required
to be determined (the “Subject Transaction”) shall be deemed to have occurred on
the first day of the most recently ended Measurement Period (including the
incurrence of Debt to finance (in whole or in part) the Subject Transaction (if
any), and where the Subject Transaction is an incurrence of Debt, the
substantially concurrent application of funds resulting from such incurrence;
provided, that to the extent that any calculation of Net Debt for Borrowed Money
is used in determining pro forma compliance with a Total Net Leverage Ratio test
where the Subject Transaction is the incurrence of Debt, then solely for the
purpose of such determination, none of the proceeds of such incurrence of Debt
shall be included in “Unrestricted Cash” when determining the “Net Debt for
Borrowed Money.”
“Pro Rata Share” of any amount means, with respect to any Revolving Credit
Lender at any time, the product of such amount times a fraction the numerator of
which is the amount of such Lender’s Revolving Credit Commitment at such time
(or, if the Commitments shall have been terminated pursuant to Section 2.05 or
6.01, such Lender’s Revolving Credit Commitment as in effect immediately prior
to such termination) and the denominator of which is the Revolving Credit
Facility at such time (or, if the Commitments shall have been terminated
pursuant to Section 2.05 or 6.01, the Revolving Credit Facility as in effect
immediately prior to such termination).
“Process Agent” has the meaning specified in Section 8.13.
“Qualified ECP Loan Party” means each Loan Party that on the Eligibility Date is
(a) a corporation, partnership, proprietorship, organization, trust, or other
entity other than a “commodity pool” as defined in Section 1a(10) of the CEA and
CFTC regulations thereunder that has total assets exceeding $10,000,000, or
(b) an Eligible Contract Participant that can cause another person to qualify as
an Eligible Contract Participant on the Eligibility Date under
“letter of credit or keepwell, support, or other agreement” for purposes of
“Receivables” means, all Receivables referred to in Section 1(c) of the Security
Agreement.
“Receivables Financing” means any transaction or series of transactions that may
be entered into by the Borrower or any of its Subsidiaries pursuant to which the
Borrower or any of its Subsidiaries may sell, convey or otherwise transfer to
(a) a Permitted Receivables Financing Subsidiary (in the case of a transfer by
the Borrower or any of its Subsidiaries) or (b) any other Person (in the case of
a transfer by a Permitted Receivables Financing Subsidiary), or a Permitted
Receivables Financing Subsidiary may grant a security interest in, any Permitted
Receivables Financing Assets of the Borrower or any of its Subsidiaries.
“Redeemable” means, with respect to any Equity Interest, any Debt or any other
right or Obligation, any such Equity Interest, Debt, right or Obligation that
(a) the issuer has undertaken to redeem at a fixed or determinable date or
dates, whether by operation of a sinking fund or otherwise, or upon the
occurrence of a condition not solely within the control of the issuer or (b) is
redeemable at the option of the holder.
32
“Refinancing” has the meaning specified in the Preliminary Statements.
“Register” has the meaning specified in Section 8.07(d).
“Regulation U” means, Regulation U of the Board of Governors of the Federal
Reserve System, as in effect from time to time.
“Related Documents” means, (i) the Senior Notes Debt Documents, and (ii) any
other indentures, note purchase agreements, credit agreements or similar
documents governing issuances of Debt in excess of $20,000,000 permitted under
the Credit Agreement (other than intercompany Debt) to which the Borrower or any
Subsidiary may become party following the date hereof which contain restrictions
on the activities of the Borrower or any Loan Party.
“Relevant Interbank Market” means, (a) in relation to Euro, British Pounds
Sterling, Japanese Yen or Swiss Francs, the London Interbank Market, and (b) in
relation to any other currencies, the applicable offshore interbank market.
Notwithstanding the foregoing, the references to the currencies listed in this
definition shall only apply if such currencies are or become available as
Alternative Currencies in accordance with the terms hereof.
“Reportable Compliance Event” means any event whereby any Covered Entity shall
(a) become a Sanctioned Person, (b) be charged by indictment, criminal
complaint or similar charging instrument, arraigned, or custodially detained in
connection with any Anti-Terrorism Law or any predicate crime to any
Anti-Terrorism Law, or (c) have knowledge of facts or circumstances that would
reasonably be expected to cause such Covered Entity to believe that it is
reasonably likely that any aspect of its operations is in actual or probable
violation of any Anti-Terrorism Law.
“Required Lenders” means, at any time, Lenders owed or holding at least a
majority in interest of the sum of (a) the aggregate principal amount of the
Advances outstanding at such time, (b) the aggregate Available Amount of all
Letters of Credit outstanding at such time, and (c) the aggregate Unused
Revolving Credit Commitments at such time; provided, however, that if any Lender
shall be a Defaulting Lender at such time, there shall be excluded from the
determination of Required Lenders at such time (A) the aggregate principal
amount of the Advances owing to such Lender (in its capacity as a Lender) and
outstanding at such time, (B) such Lender’s Pro Rata Share of the aggregate
Available Amount of all Letters of Credit outstanding at such time, and (C) the
Unused Revolving Credit Commitment of such Lender at such time. For purposes of
this definition, the aggregate principal amount of Swing Line Advances owing to
the Swing Line Bank and of Letter of Credit Advances owing to any Issuing Bank
and the Available Amount of each Letter of Credit shall be considered to be owed
to the Revolving Credit Lenders ratably in accordance with their respective
Revolving Credit Commitments, except to the extent a Revolving Credit Lender is
a Defaulting Lender.
“Responsible Officer” means, any officer of any Loan Party or any of its
Subsidiaries, as designated in the incumbency certificate delivered on the
Closing Date pursuant to Section 3.01(a)(viii) (as may be supplemented from time
to time).
“Restricted Payments” has the meaning specified in Section 5.02(g).
33
“Revaluation Date” means (a) with respect to any Loan, each of the following:
(i) each date of a Borrowing of a Eurodollar Rate Advance denominated in an
Alternative Currency, (ii) each date of a continuation of a Eurodollar Rate
Advance denominated in an Alternative Currency pursuant to Section 2.09, and
(iii) such additional dates as the Paying Agent shall determine or the Required
Lenders shall require; and (b) with respect to any Letter of Credit, each of the
following: (i) each date of issuance of a Letter of Credit denominated in an
Alternative Currency and monthly thereafter, (ii) each date of an amendment of
any such Letter of Credit having the effect of increasing the amount thereof
(solely with respect to the increased amount), (iii) each date of any payment by
the Issuing Bank under any Letter of Credit denominated in an Alternative
Currency, and (iv) such additional dates as the Paying Agent or any Issuing Bank
shall determine or the Required Lenders shall require.
“Revolving Credit Advance” has the meaning specified in Section 2.01(a).
“Revolving Credit Borrowing” means, a borrowing consisting of simultaneous
Revolving Credit Advances of the same Type made by the Revolving Credit Lenders.
“Revolving Credit Commitment” means, with respect to any Revolving Credit Lender
at any time, the amount set forth opposite such Lender’s name on Schedule I
hereto under the caption “Revolving Credit Commitment” or, if such Lender has
entered into one or more Assignment and Assumptions or joinder agreements, set
forth for such Lender in the Register maintained by the Paying Agent pursuant to
Section 8.07(d) as such Lender’s “Revolving Credit Commitment,” as such amount
may be reduced at or prior to such time pursuant to Section 2.05 or increased
pursuant to Section 2.17.
“Revolving Credit Facility” means, at any time, the aggregate amount of the
Revolving Credit Lenders’ Revolving Credit Commitments at such time.
“Revolving Credit Lender” means, any Lender that has a Revolving Credit
Commitment.
“Revolving Credit Note” means a promissory note of the Borrower payable to the
order of any Revolving Credit Lender, in substantially the form of Exhibit A-1
hereto, evidencing the aggregate indebtedness of the Borrower to such Lender
resulting from the Revolving Credit Advances, Letter of Credit Advances and
Swing Line Advances made by such Lender, as amended, endorsed, extended or
“S&P” means Standard & Poor’s Financial Services LLC (a subsidiary of The
McGraw-Hill Companies, Inc.) or any successor rating agency.
“Sanctioned Country” means a country subject to a sanctions program maintained
under any Anti-Terrorism Law.
“Sanctioned Person” means any individual person, group, regime, entity or thing
listed or otherwise recognized as a specially designated, prohibited, sanctioned
34
“Secured Cash Management Agreement” means, any cash management agreement,
deposit maintenance agreement, credit card services agreement (provided that the
aggregate amount of Debt owing under such credit card services agreements does
not exceed $50 million) or similar agreement between any Loan Party and a bank
which is a Lender Party or an Affiliate of a Lender Party.
“Secured Gross Leverage Ratio” means, at any date of determination, the ratio of
(x) Consolidated Secured Debt For Borrowed Money of the Borrower and its
Subsidiaries as at such date of determination, to (y) Consolidated EBITDA of the
Borrower and its Subsidiaries for the most recently ended fiscal quarter of the
Borrower for which financial statements are required to be delivered to the
Lender Parties pursuant to Section 5.03(b) or (c), as the case may be, and the
immediately preceding three fiscal quarters.
“Secured Hedge Agreement” means, any Hedge Agreement permitted under Article V
that is entered into by and between any Loan Party and any Hedge Bank.
“Secured Obligations” has the meaning specified in Section 2 of the Security
Agreement.
“Secured Parties” means, the Agents, the Lender Parties, the banks that are
party to any Secured Cash Management Agreement and the Hedge Banks.
“Security Agreement” means that certain Amended and Restated Security Agreement,
dated as of September 29, 2011, made by the Borrower and the other Loan Parties
party thereto from time to time, for the benefit of the Collateral Agent, as
amended as of the date hereof pursuant to Section 8.19 hereof and as otherwise
“Senior Notes” means, the Borrower’s (a) 61/8% senior notes due 2019, (b) 75/8%
senior notes due 2020, (c) 5.125% senior notes due 2021, (d) 63/8% senior notes
due 2022, (e) 51/4 % senior notes due 2023, and (f) 5.500% senior notes due
2024.
“Senior Notes Debt Documents” means, the Indentures and any and all other
agreements, documents, indentures and instruments pursuant to which the Senior
Notes are issued, in each case as amended, to the extent permitted under the
Loan Documents.
“Single Employer Plan” means, a single employer plan, as defined in
Party or any ERISA Affiliate and no Person other than the Loan Parties and the
ERISA Affiliates or (b) was so maintained and in respect of which any Loan Party
or any ERISA Affiliate could have liability under Section 4069 of ERISA in the
event such plan has been or were to be terminated.
“Solvent” and “Solvency” mean, with respect to any Person on a particular date,
that on such date (a) the fair value of the property of such Person is greater
than the total amount of liabilities, including, without limitation, contingent
liabilities, of such Person, (b) the present fair salable value of the assets of
such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond such Person’s ability to pay such debts and
liabilities as they mature and (d) such Person
35
is not engaged in a business or transaction, and is not about to engage in a
business or transaction, for which such Person’s property would constitute an
unreasonably small capital. For purposes of determining whether a Loan Party is
Solvent, the amount of contingent liabilities at any time of such Loan Party
shall be computed as the amount that, in the light of all the facts and
be expected to become an actual or matured liability of such Loan Party.
“Special Notice Currency” means at any time an Alternative Currency, other than
the currency of a country that is a member of the Organization for Economic
Cooperation and Development at such time located in North America or Europe.
“Specified Transaction” means any acquisition or disposition of an asset,
business or subsidiary by the Borrower or any Subsidiary of the Borrower, in
each case only to the extent that such acquisition or disposition has the effect
of increasing or decreasing the Borrower’s Consolidated Net Income by at least
$2,500,000 when such acquisition or disposition is given full Pro Forma Effect
for the most recently completed Measurement Period, assuming that such
acquisition or disposition had occurred on the first day of such Measurement
Period.
“Spot Rate” for a currency means the rate determined by the Paying Agent or any
Issuing Bank, as applicable, to be the rate quoted by the Person acting in such
capacity as the spot rate for the purchase by such Person of such currency with
another currency through its principal foreign exchange trading office at
approximately 11:00 a.m. on the date two Business Days prior to the date as of
which the foreign exchange computation is made; provided that the Paying Agent
or such Issuing Bank may obtain such spot rate from another financial
institution designated by the Paying Agent or such Issuing Bank if the Person
acting in such capacity does not have as of the date of determination a spot
buying rate for any such currency; and provided further that the Issuing Bank
may use such spot rate quoted on the date as of which the foreign exchange
computation is made in the case of any Letter of Credit denominated in an
Alternative Currency.
“Standard Securitization Undertakings” means reasonable and customary
representations, warranties, covenants and indemnities entered into by the
Borrower or any Subsidiary of the Borrower in connection with a Permitted
Receivables Financing.
“Standby Letter of Credit” means, any Letter of Credit issued under the Letter
of Credit Facility, other than a Trade Letter of Credit.
“Sterling” means the lawful currency of the United Kingdom.
“Subject Property” means, all property and assets acquired after the Closing
Date that are or are intended to be Collateral, including, without limitation,
all inventory, accounts receivable and related documents and related general
intangibles.
“Subsidiary” of any Person means, any corporation, partnership, Joint Venture,
limited liability company, trust or estate of which (or in which) more than 50%
of (a) the issued and outstanding capital stock having ordinary voting power to
elect a majority of the Board of Directors of such corporation (irrespective of
whether at the time capital stock of any other class or classes of such
corporation shall or might have voting power upon the occurrence of any
36
contingency), (b) the interest in the capital or profits of such partnership,
Joint Venture or limited liability company or (c) the beneficial interest in
such trust or estate is at the time directly or indirectly owned or controlled
by such Person, by such Person and one or more of its other Subsidiaries or by
one or more of such Person’s other Subsidiaries; provided, however, there shall
be excluded, in any event, from this definition of Subsidiary, other than for
purposes of (i) the preparation and delivery of financial statements as required
under this Agreement, and (ii) the calculation of and compliance with financial
tests and covenants as set forth in this Agreement, the Excluded Subsidiaries.
“Subsidiary Guarantors” means, the Subsidiaries of the Borrower listed on
Schedule II hereto and each other Subsidiary of the Borrower that elects to
execute and deliver a guaranty pursuant to Section 5.01(j).
“Subsidiary Guaranty” means that certain Amended and Restated Subsidiary
Guaranty, dated as of September 29, 2011, made by the Subsidiary Guarantors from
time to time party thereto in favor of the Administrative Agent, as amended from
time to time.
“Surviving Debt” means, the Senior Notes and the other Debt of each Loan Party
and its Subsidiaries outstanding immediately before and after giving effect to
the Transaction and listed on Schedule 4.01(t).
“Swap” means any “swap” as defined in Section 1a(47) of the CEA and regulations
thereunder, other than (a) a swap entered into, or subject to the rules of, a
board of trade designated as a contract market under Section 5 of the CEA, or
(b) a commodity option entered into pursuant to CFTC Regulation 32.3(a).
contract or transaction that constitutes a Swap which is also a Secured Hedge
Agreement.
“Swing Line Advance” means, an advance made by (a) the Swing Line Bank pursuant
to Section 2.01(b) or (b) any Revolving Credit Lender pursuant to
Section 2.02(b).
“Swing Line Bank” means, initially, PNC Bank, and thereafter each Person that
shall become the Swing Line Bank hereunder pursuant to Section 8.07.
“Swing Line Borrowing” means, a borrowing consisting of a Swing Line Advance
made by the Swing Line Bank pursuant to Section 2.01(b) or the Revolving Credit
Lenders pursuant to Section 2.02(b).
“Swing Line Facility” has the meaning specified in Section 2.01(b).
“Swing Line Reserve” has the meaning specified in Section 2.02(b)(i).
“Swiss Franc” means the lawful currency of Switzerland.
“TARGET2” means the Trans-European Automated Real-time Gross Settlement Express
Transfer payment system which utilizes a single shared platform and which was
launched on November 19, 2007.
37
“TARGET Day” means any day on which TARGET2 is open for the settlement of
payment in Euro.
“Taxes” has the meaning specified in Section 2.12(a).
“Term Advance” means the advances made pursuant to Section 2.01(d).
“Term Borrowing” means a borrowing consisting of simultaneous Term Advances of
the same Type made by the Term Lenders.
“Term Commitment” means, with respect to any Term Lender at any time, the amount
set forth opposite such Lender’s name on Schedule I hereto under the caption
“Term Commitment” or, if such Lender has entered into one or more Assignment and
Acceptances, set forth for such Lender in the Register maintained by the
Administrative Agent pursuant to Section 8.07(d) as such Lender’s “Term
Section 2.05 or increased pursuant to Section 2.17.
“Term Facility” means, at any time, the aggregate amount of the Term Lenders’
Term Commitments at such time.
“Term Lender” means any Lender that has a Term Commitment or is owed a Term
Advance.
“Term Note” means a promissory note of the Borrower payable to the order of any
Term Lender, in substantially the form of Exhibit A-2 hereto, evidencing the
indebtedness of the Borrower to such Lender resulting from the Term Advances
made by such Lender, as amended, endorsed, extended or otherwise modified from
time to time.
“Termination Date” means (x) in respect of the Revolving Credit Facility, the
earlier of (a) the date of termination in whole of the Revolving Credit
Commitments, and the Letter of Credit Commitment, pursuant to Section 2.05 or
6.01 and (b) November 14, 2019; (y) in the case of the Term Facility, the
earlier of (a) the date on which the Term Commitments are terminated and
advances are declared due and payable pursuant to Section 6.01 and
(b) November 14, 2019; and (z) with respect to each Incremental Facility, if
any, the date specified as such in the applicable Incremental Assumption
Agreement.
“Total Net Leverage Ratio” means, at any date of determination, the ratio of
(x) Consolidated Net Debt For Borrowed Money of the Borrower and its
Subsidiaries as at such date of determination to (y) Consolidated EBITDA of the
“Trade Letter of Credit” means, any Letter of Credit that is issued under the
Letter of Credit Facility for the benefit of a supplier of Inventory to the
Borrower or any of its Subsidiaries to effect payment for such Inventory.
38
“Transaction” means, the Refinancing and the other transactions contemplated by
the Transaction Documents.
“Transaction Documents” means, collectively, the Loan Documents and the Related
Documents (other than clause (ii) of the definition thereof).
“Type” refers to the distinction between Advances bearing interest at the Base
Rate and Advances bearing interest at the Eurodollar Rate.
“UCC” means the Uniform Commercial Code as in effect in the State of New York;
provided that, if perfection or the effect of perfection or non-perfection or
the priority of any security interest in any Collateral is governed by the
Uniform Commercial Code as in effect in a jurisdiction other than the State of
New York, the “UCC” shall mean the Uniform Commercial Code as in effect from
time to time in such other jurisdiction for purposes of the provisions hereof
relating to such perfection, effect of perfection or non-perfection or priority.
“Unrestricted Cash” means cash or Cash Equivalents of the Borrower or any of its
Subsidiaries that would not appear as “restricted” on a Consolidated balance
sheet of the Borrower and its Subsidiaries.
“Unused Revolving Credit Commitment” means, with respect to any Revolving Credit
Lender at any time, (a) such Lender’s Revolving Credit Commitment at such time
minus (b) the sum of (i) the Dollar Equivalent of the aggregate principal amount
of all Revolving Credit Advances and Letter of Credit Advances made by such
Lender (in its capacity as a Lender) and outstanding at such time plus (ii) such
Lender’s Pro Rata Share of (A) the Dollar Equivalent of the aggregate Available
Amount of all Letters of Credit outstanding at such time, (B) the Dollar
Equivalent of the aggregate principal amount of all Letter of Credit Advances
made by the Issuing Banks pursuant to Section 2.03(c) and outstanding at such
time, (C) the Swing Line Reserve at such time and (D) any Swing Line Advances
made pursuant to Section 2.02(b)(ii) at such time.
“Voting Interests” means, shares of capital stock issued by a corporation, or
equivalent Equity Interests in any other Person, the holders of which are
ordinarily, in the absence of contingencies, entitled to vote for the election
of directors (or persons performing similar functions) of such Person, even if
the right so to vote has been suspended by the happening of such a contingency.
“Welfare Plan” means, a welfare plan, as defined in Section 3(1) of ERISA, that
is maintained for employees of any Loan Party or in respect of which any Loan
Party could have liability.
“Withdrawal Liability” has the meaning specified in Part I of Subtitle E of
Title IV of ERISA.
“Yen” means the lawful currency of Japan.
Section 1.02. Computation of Time Periods; Other Definitional
Provisions. In this Agreement and the other Loan Documents in the computation
of periods of time from a
39
specified date to a later specified date, the word “from” means “from and
including” and the words “to” and “until” each mean “to but excluding.”
References in the Loan Documents to any agreement or contract “as amended” shall
mean and be a reference to such agreement or contract as amended, amended and
restated, supplemented or otherwise modified from time to time in accordance
with its terms.
Section 1.03. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles consistent with those applied in the preparation
of the financial statements referred to in Section 4.01(g) (“GAAP”).
Section 1.04. Exchange Rates; Currency Equivalents. (a) The Paying
Agent or an Issuing Bank, as applicable, shall determine the Spot Rates as of
each Revaluation Date to be used for calculating Dollar Equivalent amounts of
Borrowings and outstanding amounts denominated in Alternative Currencies. Such
Spot Rates shall become effective as of such Revaluation Date and shall be the
Spot Rates employed in converting any amounts between the applicable currencies
until the next Revaluation Date to occur. Except for purposes of financial
statements delivered by Loan Parties hereunder or calculating financial
covenants hereunder or except as otherwise provided herein, the applicable
amount of any currency (other than Dollars) for purposes of the Loan Documents
shall be such Dollar Equivalent amount as so determined by the Paying Agent or
an Issuing Bank, as applicable.
(b) Wherever in this Agreement in connection with a Borrowing,
conversion, continuation or prepayment of a Eurodollar Rate Advance or the
issuance, amendment or extension of a Letter of Credit, an amount, such as a
required minimum or multiple amount, is expressed in Dollars, but such
Borrowing, Eurodollar Rate Advance or Letter of Credit is denominated in an
Alternative Currency, such amount shall be the relevant Alternative Currency
Equivalent of such Dollar amount (rounded to the nearest unit of such
Alternative Currency, with 0.5 of a unit being rounded upward), as determined by
the Paying Agent or an Issuing Bank, as the case may be.
(a) The Borrower may from time to time request that Eurodollar Rate
Advances be made and/or Letters of Credit be issued in a currency other than
those specifically listed in the definition of “Alternative Currency;” provided
that such requested currency is a lawful currency (other than Dollars) that is
readily available and freely transferable and convertible into Dollars. In the
case of any such request with respect to the making of Eurodollar Rate Advances,
such request shall be subject to the approval of the Paying Agent and each of
the Lenders; and in the case of any such request with respect to the issuance of
Letters of Credit, such request shall be subject to the approval of the Paying
Agent and the applicable Issuing Bank.
(b) Any such request shall be made to the Paying Agent not later than
11:00 a.m., 20 Business Days prior to the date of the desired Borrowing (or such
other time or date as may be agreed by the Paying Agent and, in the case of any
such request pertaining to Letters of Credit, the applicable Issuing Bank, in
its or their sole discretion). In the case of any
40
such request pertaining to Eurodollar Rate Advances, the Paying Agent shall
promptly notify each Lender thereof; and in the case of any such request
pertaining to Letters of Credit, the Paying Agent shall promptly notify the
applicable Issuing Bank thereof. Each Lender (in the case of any such request
pertaining to Eurodollar Rate Advances) or Issuing Bank (in the case of a
request pertaining to Letters of Credit) shall notify the Paying Agent, not
later than 11:00 a.m., ten Business Days after receipt of such request whether
it consents, in its sole discretion, to the making of Eurodollar Rate Advances
or the issuance of Letters of Credit, as the case may be, in such requested
currency.
(c) Any failure by a Lender or Issuing Bank, as the case may be, to
respond to such request within the time period specified in the preceding
sentence shall be deemed to be a refusal by such Lender or Issuing Bank, as the
case may be, to permit Eurodollar Rate Advances to be made or Letters of Credit
to be issued in such requested currency. If the Paying Agent and all the
Lenders consent to making Eurodollar Rate Advances in such requested currency,
the Paying Agent shall so notify the Borrower and such currency shall thereupon
be deemed for all purposes to be an Alternative Currency hereunder for purposes
of any Borrowings of Eurodollar Rate Advances; and if the Paying Agent and
applicable Issuing Bank consent to the issuance of Letters of Credit in such
requested currency, the Paying Agent shall so notify the Borrower and such
currency shall thereupon be deemed for all purposes to be an Alternative
Currency hereunder for purposes of any Letter of Credit issuances. If the
Administrative Agent shall fail to obtain consent to any request for an
additional currency under this Section 1.05, the Paying Agent shall promptly so
notify the Borrower.
Section 1.06. Change of Currency. (a) Each obligation of the
Borrowers to make a payment denominated in the national currency unit of any
member state of the European Union that adopts the Euro as its lawful currency
after the date hereof shall be redenominated into Euro at the time of such
adoption (in accordance with the EMU Legislation). If, in relation to the
currency of any such member state, the basis of accrual of interest expressed in
this Agreement in respect of that currency shall be inconsistent with any
convention or practice in the London interbank market for the basis of accrual
of interest in respect of the Euro, such expressed basis shall be replaced by
such convention or practice with effect from the date on which such member state
adopts the Euro as its lawful currency; provided that if any Borrowing in the
currency of such member state is outstanding immediately prior to such date,
such replacement shall take effect, with respect to such Borrowing, at the end
of the then current Interest Period.
(b) Each provision of this Agreement shall be subject to such
reasonable changes of construction as the Paying Agent may from time to time
specify to be appropriate to reflect the adoption of the Euro by any member
state of the European Union and any relevant market conventions or practices
relating to the Euro.
(c) Each provision of this Agreement also shall be subject to such
specify to be appropriate to reflect a change in currency of any other country
and any relevant market conventions or practices relating to the change in
currency.
41
Section 1.07. Letter of Credit Amounts. Unless otherwise specified
herein, the amount of a Letter of Credit at any time shall be deemed to be the
Dollar Equivalent of the stated amount of such Letter of Credit in effect at
such time; provided, however, that with respect to any Letter of Credit that, by
its terms or the terms of any letter of credit application and any related
document related thereto, provides for one or more automatic increases in the
stated amount thereof, the amount of such Letter of Credit shall be deemed to be
the Dollar Equivalent of the maximum stated amount of such Letter of Credit
after giving effect to all such increases, whether or not such maximum stated
amount is in effect at such time.
ARTICLE II
Section 2.01. The Advances and the Letters of Credit.
(a) The Revolving Credit Advances. Each Revolving Credit Lender
severally agrees, on the terms and conditions hereinafter set forth, to make
advances (each, a “Revolving Credit Advance”) to the Borrower from time to time
on any Business Day during the period from the Closing Date until the
Termination Date (i) in an amount for each such Advance not to exceed such
Lender’s Unused Revolving Credit Commitment at such time, (ii) in an aggregate
amount for all revolving Credit Advances outstanding at any one time not to
exceed an amount equal to (A) the aggregate Revolving Credit Commitments of all
Revolving Credit Lenders, minus (B) the aggregate Swing Line Advances, minus
(C) the aggregate Available Amount of all outstanding Letters of Credit, in each
case at such time and (iii) in an aggregate amount for all Revolving Credit
Advances denominated in an Alternative Currency outstanding at any one time not
to exceed, together with the aggregate amount of the Dollar Equivalent of all
Letters of Credit and Letter of Credit Advances denominated in an Alternative
Currency that are outstanding at such time, the Alternative Currency Sublimit.
Each Revolving Credit Borrowing shall be in an aggregate amount equal to the
Dollar Equivalent of $5,000,000 or an integral multiple equal to the Dollar
Equivalent of $1,000,000 in excess thereof (other than a Borrowing the proceeds
of which shall be used solely to repay or prepay in full outstanding Swing Line
Advances or outstanding Letter of Credit Advances) and shall consist of
Revolving Credit Advances made simultaneously by the Revolving Credit Lenders
ratably according to their Revolving Credit Commitments. Within the limits of
each Revolving Credit Lender’s Unused Revolving Credit Commitment in effect from
time to time, the Borrower may borrow under this Section 2.01(a), prepay
pursuant to Section 2.06(a) and reborrow under this Section 2.01(a). For the
avoidance of doubt, on the Closing Date each Revolving Credit Lender that is
also an Existing Revolving Credit Lender may fund all or a portion of its
respective Closing Date Revolving Credit Advance hereunder through the cashless
exchange of its Existing Revolving Credit Advances for a new Revolving Credit
Advance hereunder, up to the full amount of such new Revolving Credit Advance.
(b) The Swing Line Advances. Subject to other arrangements as
referred to in Section 2.02(b)(i), the Borrower may request the Swing Line Bank
to make, and the Swing Line Bank may, if in its sole discretion it elects to do
so, make, on the terms and conditions hereinafter set forth, Swing Line Advances
to the Borrower in Dollars from time to time on any
42
Business Day during the period from the Closing Date until the Termination Date
(i) in an aggregate amount for all Swing Line Advances not to exceed at any time
outstanding $60,000,000 (the “Swing Line Facility”) and (ii) if made pursuant to
Section 2.02(b)(i), in an amount not at any time exceeding the amount of the
then applicable Swing Line Reserve. No Swing Line Advance shall be used for the
purpose of funding the payment of principal of any other Swing Line Advance.
Each Swing Line Borrowing shall be in a minimum amount of no less than $100,000
and in multiples of $100,000 in excess thereof, and shall be made as a Base Rate
Advance. Within the limits of the Swing Line Facility and within the limits
referred to in clause (ii) above, so long as the Swing Line Bank, in its sole
discretion, elects to make Swing Line Advances, the Borrower may borrow under
this Section 2.01(b), repay pursuant to Section 2.04(d) or prepay pursuant to
Section 2.06(a) and reborrow under this Section 2.01(b).
(c) The Letters of Credit. Each Issuing Bank severally agrees, on the
terms and conditions hereinafter set forth, to issue (or cause its Affiliate
that is a commercial bank to issue on its behalf) letters of credit for the
account of the Borrower from time to time on any Business Day during the period
from the Closing Date until the date that is 60 days before the Termination
Date, in an aggregate Available Amount (i) for each such Letter of Credit,
together with all other outstanding Letters of Credit not to exceed at any time
the Letter of Credit Facility at such time, (ii) for each such Letter of Credit
not to exceed at any time the lesser of (x) such Issuing Bank’s Letter of Credit
Commitment at such time and (y) the Unused Revolving Credit Commitments of the
Revolving Credit Lenders at such time and (iii) for each such Letter of Credit
denominated in an Alternative Currency not to exceed, together with all other
outstanding Letters of Credit, Letter of Credit Advances and Revolving Credit
Advances denominated in an Alternative Currency, the Alternative Currency
Sublimit. It is understood and agreed that the Existing Letters of Credit shall
be deemed to be Letters of Credit issued hereunder for all purposes under this
Agreement and the Loan Documents. No Letter of Credit shall have an expiration
date (including all rights of the Borrower or the beneficiary to require
renewal) later than the earlier of 60 days before the Termination Date and
(A) in the case of a Standby Letter of Credit, one year (constituting 365 days
or 366 days, as the case may be) after the date of issuance thereof, but may by
its terms be renewable annually upon notice (a “Notice of Renewal”) given to the
Issuing Bank and the Paying Agent on or prior to any date for notice of renewal
set forth in such Letter of Credit but in any event at least ten Business Days
prior to the date of the proposed renewal of such Standby Letter of Credit and
upon fulfillment of the applicable conditions set forth in Article III unless
such Issuing Bank has notified the Borrower (with a copy to the Paying Agent) on
or prior to the date for notice of termination set forth in such Letter of
Credit but in any event at least ten Business Days prior to the then effective
expiration date of its election not to renew such Standby Letter of Credit (a
“Notice of Termination”; it being understood and agreed that an Issuing Bank
shall not be entitled to issue a Notice of Termination with respect to such a
renewal unless (i) the conditions precedent to the issuance of Letters of Credit
set forth in Section 3.02 shall not have been fulfilled or waived in accordance
herewith, or (ii) a Default shall have occurred and be continuing, or
(iii) pursuant to such renewal the effective expiration date of such Letter of
Credit would occur after the Termination Date, or (iv) such Issuing Bank shall
have procured a replacement Issuing Bank) and (B) in the case of a Trade Letter
of Credit, 60 days after the date of issuance thereof; provided that the terms
of each Standby Letter of Credit that is renewable annually shall (x) require
the Issuing Bank that issued such Standby Letter of Credit to give the
beneficiary named in such Standby Letter of Credit notice of any Notice of
Termination, (y) permit such beneficiary, upon receipt of such notice, to draw
under
43
such Standby Letter of Credit prior to the date such Standby Letter of Credit
otherwise would have been automatically renewed and (z) not, unless otherwise
agreed by the Issuing Bank, permit the expiration date (after giving effect to
any renewal) of such Standby Letter of Credit in any event to be extended to a
date later than 60 days before the Termination Date. If either a Notice of
Renewal is not given by the Borrower or a Notice of Termination is given by the
relevant Issuing Bank pursuant to the immediately preceding sentence, such
Standby Letter of Credit shall expire on the date on which it otherwise would
have been renewed; provided, however, that even in the absence of receipt of a
Notice of Renewal the relevant Issuing Bank may in its discretion, unless
instructed to the contrary by the Paying Agent or the Borrower, deem that a
Notice of Renewal had been timely delivered and in such case, a Notice of
Renewal shall be deemed to have been so delivered for all purposes under this
Agreement. Each Standby Letter of Credit shall contain a provision authorizing
the Issuing Bank thereunder to deliver to the beneficiary of such Letter of
Credit, upon the occurrence and during the continuance of an Event of Default, a
notice (a “Default Termination Notice”) terminating such Letter of Credit and
giving such beneficiary 15 days to draw such Letter of Credit. Within the
limits of the Letter of Credit Facility, and subject to the limits referred to
above, the Borrower may request the issuance of Letters of Credit under this
Section 2.01(c), repay any Letter of Credit Advances resulting from drawings
thereunder pursuant to Section 2.03(c) and request the issuance of additional
Letters of Credit under this Section 2.01(c).
(d) The Term Advances. Each Term Lender severally agrees, on the
terms and conditions hereinafter set forth, to make a single advance to the
Borrower on the Closing Date in an amount not to exceed such Lender’s Term
Commitment at such time (provided, that each Term Lender that is also an
Existing Term Lender may fund all or a portion of its respective Term Advance
hereunder through the cashless exchange of its Existing Term Advances for a new
Term Advance hereunder, up to the full amount of such new Term Advance). The
Term Borrowing shall consist of Term Advances made simultaneously by the Term
Lenders ratably according to their Term Commitments. Amounts borrowed under
this Section 2.01(d) and repaid or prepaid may not be reborrowed.
(e) Incremental Advances. Each Incremental Lender having an
Incremental Term Commitment or an Incremental Revolving Credit Commitment, as
the case may be, agrees, on the terms and conditions set forth in Section 2.17
of this Agreement and in the applicable Incremental Assumption Agreement, to
make Incremental Term Advances to the Borrower and/or Incremental Revolving
Credit Advances to the Borrower, in an aggregate principal amount not to exceed
its applicable Incremental Term Commitment or Incremental Revolving Credit
Commitment, as the case may be.
Section 2.02. Making the Advances.
(a) Except as otherwise provided in Section 2.02(b) or 2.03, each
Borrowing shall be made on notice, given not later than 12:00 P.M. (New York
City time) on the third Business Day prior to the date of the proposed Borrowing
in the case of a Borrowing consisting of Eurodollar Rate Advances in Dollars, on
the fourth Business Day prior to the date of the proposed Borrowing in the case
of a Borrowing denominated in an Alternative Currency, or on the date of the
proposed Borrowing in the case of a Borrowing consisting of Base Rate Advances,
by the Borrower to the Paying Agent, which shall give to each Appropriate Lender
44
prompt notice thereof by facsimile. Each such notice of a Borrowing (a “Notice
of Borrowing”) shall be in writing or by telephone, confirmed immediately in
writing or facsimile, in substantially the form of Exhibit B hereto, specifying
therein the requested (i) date of such Borrowing, (ii) Facility under which such
Borrowing is to be made, (iii) Type of Advances comprising such Borrowing,
(iv) aggregate amount of such Borrowing (expressed in Dollars), (v) currency of
such proposed Borrowing and (vi) in the case of a Borrowing consisting of
Eurodollar Rate Advances, initial Interest Period for each such Advance. Each
Appropriate Lender shall, before (A) 12:00 P.M. (New York City time) on the date
of such Borrowing, in the case of a Borrowing consisting of Eurodollar Rate
Advances or (B) 3:00 P.M. (New York City time) on the date of such Borrowing, in
the case of a Borrowing consisting of Base Rate Advances, make available for the
account of its Applicable Lending Office to the Paying Agent at the Paying Agent
Account, in same day funds, such Lender’s ratable portion of such Borrowing in
accordance with the respective Commitments under the applicable Facility of such
Lender and the other Appropriate Lenders. After the Paying Agent’s receipt of
such funds and upon fulfillment of the applicable conditions set forth in
Article III, the Paying Agent will make such funds available to the Borrower by
crediting the Borrower’s Account; provided, however, that, in the case of any
Revolving Credit Borrowing, the Paying Agent shall first make a portion of such
funds equal to the aggregate principal amount of any Swing Line Advances and
Letter of Credit Advances made by the Swing Line Bank or any Issuing Bank, as
the case may be, and by any other Revolving Credit Lender and outstanding on the
date of such Revolving Credit Borrowing, plus interest accrued and unpaid
thereon to and as of such date, available to the Swing Line Bank or such Issuing
Bank, as the case may be, and such other Revolving Credit Lenders for repayment
of such Swing Line Advances and Letter of Credit Advances. Notwithstanding the
foregoing, in no event shall the Swing Line Bank be required to fund any Swing
Line Advance if any Revolving Lender is at that time a Defaulting Lender, unless
the Swing Line Bank has entered into arrangements with the Borrower or such
Defaulting Lender, including, without limitation, the delivery of cash
collateral, or the reallocation of such Defaulting Lender’s purchase obligation,
in each case in a manner that is in form and substance satisfactory to such
Swing Line Bank, to eliminate such Swing Line Bank’s actual or potential
Fronting Exposure (after giving effect to Section 2.15(a)(iii)) with respect to
the Defaulting Lender arising from either the Swing Line Advance then proposed
to be funded or that Swing Line Advance and all other Swing Line Advances as to
which the Swing Line Bank has actual or potential Fronting Exposure, as it may
elect in its sole discretion.
(b) (i) Swing Line Borrowings may be made either upon notice as set
forth in Section 2.02(b)(ii) below or pursuant to this Section 2.02(b)(i) on a
daily basis under mechanics mutually agreed to by the Borrower and the Swing
Line Bank, subject in any case to the fulfillment of the applicable conditions
precedent set forth in Article III hereof. The Swing Line Reserve at any time
shall be the amount most recently established by the Borrower by written notice
to the Paying Agent confirmed in writing by the Swing Line Bank as the maximum
aggregate principal amount of Swing Line Borrowings to be permitted to be
outstanding at any one time (the “Swing Line Reserve”). Swing Line Advances
made pursuant to this Section 2.02(b)(i) shall be made without any requirement
for a prior written or telephonic request given to the Paying Agent. The Swing
Line Bank will notify the Paying Agent, on a monthly basis, of any Swing Line
Advances so made. The Swing Line Bank shall not at any time permit the
aggregate outstanding amount of the Swing Line Advances to exceed the then
applicable amount of the Swing Line Reserve.
45
(ii) Each Swing Line Borrowing, if not made in accordance with
Section 2.02(b)(i) above, shall be made on notice, given not later than
3:00 P.M. (New York City time) on the date of the proposed Swing Line Borrowing,
by the Borrower to the Swing Line Bank and the Paying Agent. Each such notice
of a Swing Line Borrowing (a “Notice of Swing Line Borrowing”) shall be in
writing or by telephone, confirmed immediately in writing, or facsimile,
specifying therein the requested (i) date of such Borrowing, (ii) amount of such
Borrowing and (iii) maturity of such Borrowing (which maturity shall be no later
than the seventh day after the requested date of such Borrowing). If, in its
sole discretion, it elects to make the requested Swing Line Advance, the Swing
Line Bank will make the amount thereof available to the Paying Agent at the
Paying Agent Account, in same day funds. After the Paying Agent’s receipt of
crediting the Borrower’s Account.
(iii) Upon written demand by the Swing Line Bank, with a copy of such
demand to the Paying Agent, each other Revolving Credit Lender shall purchase
from the Swing Line Bank, and the Swing Line Bank shall sell and assign to each
such other Revolving Credit Lender, such other Lender’s Pro Rata Share of such
outstanding Swing Line Advance as of the date of such demand, by making
available for the account of its Applicable Lending Office to the Paying Agent
for the account of the Swing Line Bank, by deposit to the Paying Agent’s
Account, in same day funds, an amount equal to the portion of the outstanding
principal amount of such Swing Line Advance to be purchased by such Lender. The
Borrower hereby agrees to each such sale and assignment, and all parties hereto
acknowledge and agree that the obligations of such other Revolving Credit
Lenders to purchase outstanding Swing Line Advances is absolute and
unconditional under all circumstances, and shall be enforceable notwithstanding
the occurrence of any Default or Event of Default, the termination of the
Revolving Credit Commitments or any other circumstances. Each Revolving Credit
Lender agrees to purchase its Pro Rata Share of an outstanding Swing Line
Advance on (i) the Business Day on which demand therefor is made by the Swing
Line Bank, provided that notice of such demand is given not later than
11:00 A.M. (New York City time) on such Business Day or (ii) the first Business
Day next succeeding such demand if notice of such demand is given after such
time. Upon any such assignment by the Swing Line Bank to any other Revolving
Credit Lender of a portion of a Swing Line Advance, the Swing Line Bank
represents and warrants to such other Lender that the Swing Line Bank is the
legal and beneficial owner of such interest being assigned by it, but makes no
other representation or warranty and assumes no responsibility with respect to
such Swing Line Advance, the Loan Documents or any Loan Party. If and to the
extent that any Revolving Credit Lender shall not have so made the amount of
such Swing Line Advance available to the Paying Agent, or if the Swing Line Bank
must disgorge or return any amounts paid by the Borrower in respect thereof,
such Revolving Credit Lender agrees to pay to the Paying Agent for the account
of the Swing Line Bank forthwith on demand such amount together with interest
thereon, for each day from the date of demand by the Swing Line Bank until the
date such amount is paid to the Paying Agent, at the Base Rate. If such Lender
shall pay to the Paying Agent such amount for the account of the Swing Line Bank
on any Business Day, such amount so paid in respect
46
of principal shall constitute a Swing Line Advance made by such Lender on such
Business Day for purposes of this Agreement, and the outstanding principal
amount of the Swing Line Advance made by the Swing Line Bank shall be reduced by
such amount on such Business Day.
(c) Anything in subsection (a) above to the contrary notwithstanding,
(i) the Borrower may not select Eurodollar Rate Advances for any Borrowing if
the aggregate amount of such Borrowing is less than $5,000,000 or if the
obligation of the Appropriate Lenders to make Eurodollar Rate Advances shall
then be suspended pursuant to Section 2.09 or 2.10 and (ii) the Revolving Credit
Advances and Term Advances may not be outstanding as part of more than ten
separate Borrowings.
(d) Each Notice of Borrowing and Notice of Swing Line Borrowing shall
be irrevocable and binding on the Borrower. In the case of any Borrowing that
the related Notice of Borrowing specifies is to be comprised of Eurodollar Rate
Advances, the Borrower shall indemnify each Appropriate Lender against any loss,
cost or expense incurred by such Lender as a result of any failure to fulfill on
or before the date specified in such Notice of Borrowing for such Borrowing the
applicable conditions set forth in Article III, including, without limitation,
any loss (including loss of anticipated profits), cost or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired by
such Lender to fund the Advance to be made by such Lender as part of such
Borrowing when such Advance, as a result of such failure, is not made on such
date.
(e) Unless the Paying Agent shall have received notice from an
Appropriate Lender prior to the date of any Borrowing under a Facility under
which such Lender has a Commitment that such Lender will not make available to
the Paying Agent such Lender’s ratable portion of such Borrowing, the Paying
Agent may assume that such Lender has made such portion available to the Paying
Agent on the date of such Borrowing in accordance with subsection (a) of this
Section 2.02 and the Paying Agent may, in reliance upon such assumption, make
available to the Borrower on such date a corresponding amount. If and to the
extent that such Lender shall not have so made such ratable portion available to
the Paying Agent, such Lender and the Borrower severally agree to repay or pay
to the Paying Agent forthwith on demand such corresponding amount and to pay
the Borrower until the date such amount is repaid or paid to the Paying Agent,
at (i) in the case of the Borrower, the interest rate applicable at such time
under Section 2.07 to Advances comprising such Borrowing and (ii) in the case of
such Lender, at the greater of the Federal Funds Effective Rate and a rate
determined by the Paying Agent in accordance with banking industry rules on
interbank compensation. If such Lender shall pay to the Paying Agent such
corresponding amount, such amount so paid shall constitute such Lender’s Advance
as part of such Borrowing for all purposes.
(f) The failure of any Lender to make the Advance to be made by it as
part of any Borrowing shall not relieve any other Lender of its obligation, if
any, hereunder to make its Advance on the date of such Borrowing, but no Lender
shall be responsible for the failure of any other Lender to make the Advance to
be made by such other Lender on the date of any Borrowing.
47
Section 2.03. Issuance of and Drawings
and Reimbursement Under Letters of Credit.
(a) Request for Issuance. Each Letter of Credit
shall be issued upon notice, given not later than 11:00 A.M. (New York City
time) on the fifth Business Day prior to the date of the proposed issuance of
such Letter of Credit, by the Borrower to any Issuing Bank, which shall give to
the Paying Agent and each Revolving Credit Lender prompt notice thereof in
writing or by facsimile. Each such notice of issuance of a Letter of Credit (a
“Notice of Issuance”) shall be in writing or by telephone, confirmed immediately
in writing, or facsimile, specifying therein the requested (i) date of such
issuance (which shall be a Business Day), (ii) Available Amount and currency
(which shall be Dollars or an Alternative Currency) of such Letter of Credit,
(iii) expiration date of such Letter of Credit, (iv) name and address of the
beneficiary of such Letter of Credit and (v) form of such Letter of Credit, and
shall be accompanied by such application and agreement for letter of credit as
such Issuing Bank may specify to the Borrower for use in connection with such
requested Letter of Credit (a “Letter of Credit Agreement”). If (x) the
requested form of such Letter of Credit is acceptable to such Issuing Bank in
its sole discretion and (y) it has not received notice of objection to such
issuance from Lenders holding at least a majority of the Revolving Credit
Commitments, such Issuing Bank will, upon fulfillment of the applicable
conditions set forth in Article III, make such Letter of Credit available to the
Borrower at its office referred to in Section 8.02 or as otherwise agreed with
the Borrower in connection with such issuance; provided that no Issuing Bank
shall be required to issue any Letter of Credit if any Lender is at that time a
Defaulting Lender, unless the Issuing Bank has entered into arrangements with
the Borrower and/or such Defaulting Lender, including, without limitation, the
delivery of cash collateral, or the reallocation of such Defaulting Lender’s
purchase obligation, in each case in a manner that is in form and substance
satisfactory to such Issuing Bank, to eliminate such Issuing Bank’s actual or
respect to the Defaulting Lender arising from either the Letter of Credit then
proposed to be issued or that Letter of Credit and all other Letter of Credit
Advances as to which the Issuing Bank has actual or potential Fronting Exposure,
as it may elect in its sole discretion. In the event and to the extent that the
provisions of any Letter of Credit Agreement shall conflict with this Agreement,
the provisions of this Agreement shall govern.
(b) Letter of Credit Reports. Each Issuing Bank
shall furnish (i) to the Paying Agent on or about the first Business Day of each
week a written report summarizing issuance and expiration dates of Letters of
Credit issued by such Issuing Bank during the previous week and drawings during
such week under all Letters of Credit, (ii) to each Revolving Credit Lender on
or about the first Business Day of each month a written report summarizing
issuance and expiration dates of Letters of Credit issued by such Issuing Bank
during the preceding month and drawings during such month under all such Letters
of Credit and (iii) to the Paying Agent and each Revolving Credit Lender on or
about the first Business Day of each calendar quarter a written report setting
forth the average daily aggregate Available Amount during the preceding calendar
quarter of all Letters of Credit issued by such Issuing Bank.
(c) Drawing and Reimbursement. Upon receipt
from the beneficiary of any Letter of Credit of any notice of drawing under such
Letter of Credit, the Issuing Bank shall notify the Borrower and the Paying
Agent thereof. In the case of a Letter of Credit denominated
48
in an Alternative Currency, the Borrower shall reimburse the Issuing Bank in
such Alternative Currency, unless (A) the Issuing Bank (at its option) shall
have specified in such notice that it will require reimbursement in Dollars, or
(B) in the absence of any such requirement for reimbursement in Dollars, the
Borrower shall have notified the Issuing Bank promptly following receipt of the
notice of drawing that the Borrower will reimburse the Issuing Bank in Dollars.
In the case of any such reimbursement in Dollars of a drawing under a Letter of
Credit denominated in an Alternative Currency, the Issuing Bank shall notify the
Borrower of the Dollar Equivalent of the amount of the drawing promptly
following the determination thereof. Not later than 11:00 a.m. on the Business
Day following the date of any payment by the Issuing Bank under a Letter of
Credit to be reimbursed in Dollars, or the Applicable Time on the date of any
payment by the Issuing Bank under a Letter of Credit to be reimbursed in an
Alternative Currency (each such date, an “Honor Date”), the Borrower shall
reimburse the Issuing Bank through the Paying Agent in an amount equal to the
amount of such drawing and in the applicable currency. If the Borrower fails to
so reimburse the Issuing Bank by such time, the Paying Agent shall promptly
notify each Lender of the Honor Date, the amount of the unreimbursed drawing
(expressed in Dollars in the amount of the Dollar Equivalent thereof in the case
of a Letter of Credit denominated in an Alternative Currency) (the “Unreimbursed
Amount”), and the amount of such Lender’s Pro Rata Share thereof. In such
event, the Borrower shall be deemed to have requested and the Issuing Bank shall
deemed to have made a Letter of Credit Advance to be disbursed on the Honor Date
in an amount equal to the Unreimbursed Amount, without regard to the minimum and
multiples specified in this Agreement for the principal amount of Base Rate
Advances, but subject to the amount of the unutilized portion of the Commitments
and the conditions set forth in Section 3.02 (other than the delivery of a
Notice of Borrowing). Any notice given by the Issuing Bank or the Paying Agent
pursuant to this Section 2.03(c) may be given by telephone if immediately
confirmed in writing; provided that the lack of such an immediate confirmation
shall not affect the conclusiveness or binding effect of such notice.
Upon any notice by any Issuing Bank to the Lenders pursuant to the foregoing
paragraph, each Revolving Credit Lender shall purchase from such Issuing Bank,
and such Issuing Bank shall sell and assign to each such Revolving Credit
Lender, such Lender’s Pro Rata Share of such outstanding Letter of Credit
Advance as of the date of such purchase, by making available for the account of
its Applicable Lending Office to the Paying Agent for the account of such
Issuing Bank, by deposit to the Paying Agent’s Account, in same day funds, an
amount in Dollars equal to the portion of the outstanding principal amount of
such Letter of Credit Advance to be purchased by such Lender; provided that no
Lender shall have any obligation to make any such purchase in respect of a
drawing under any Letter of Credit that occurs following the Termination Date.
Promptly after receipt thereof, the Paying Agent shall transfer such funds in
Dollars to such Issuing Bank. The Borrower hereby agrees to each such sale and
assignment, and all parties hereto acknowledge and agree that the obligations of
such other Revolving Credit Lenders to purchase outstanding Letter of Credit
Advances is absolute and unconditional under all circumstances, and shall be
enforceable notwithstanding the occurrence of any Default or Event of Default,
the termination of the Revolving Credit Commitments or any other circumstances.
Each Revolving Credit Lender agrees to purchase its Pro Rata Share of an
outstanding Letter of Credit Advance on (i) the Business Day on which demand
therefor is made by the applicable Issuing Bank, provided that notice of such
demand is given not later than 11:00 A.M. (New York City time) on such Business
Day, or (ii) the first Business Day next succeeding such demand if notice of
such demand is given after such time. Upon any such
49
assignment by an Issuing Bank to any Revolving Credit Lender of a portion of a
Letter of Credit Advance, such Issuing Bank represents and warrants to such
other Lender that such Issuing Bank is the legal and beneficial owner of such
interest being assigned by it, free and clear of any liens, but makes no other
representation or warranty and assumes no responsibility with respect to such
Letter of Credit Advance, the Loan Documents or any Loan Party. If and to the
such Letter of Credit Advance available to the Paying Agent, or if an Issuing
Bank must disgorge or return any amounts paid by the Borrower in respect
thereof, such Revolving Credit Lender agrees to pay to the Paying Agent for the
account of such Issuing Bank forthwith on demand such amount together with
interest thereon, for each day from the date of demand by such Issuing Bank
until the date such amount is paid to the Paying Agent, at the Federal Funds
Rate for its account or the account of such Issuing Bank, as applicable. If
such Lender shall pay to the Paying Agent such amount for the account of such
Issuing Bank on any Business Day, such amount so paid in respect of principal
shall constitute a Letter of Credit Advance denominated in Dollars made by such
Lender on such Business Day for purposes of this Agreement, and the outstanding
principal amount of the Letter of Credit Advance made by such Issuing Bank shall
be reduced by such amount on such Business Day.
(d) Failure to Make Letter of Credit Advances.
The failure of any Lender to make the Letter of Credit Advance to be made by it
on the date specified in Section 2.03(c) shall not relieve any other Lender of
its obligation hereunder to make its Letter of Credit Advance on such date, but
Letter of Credit Advance to be made by such other Lender on such date.
(e) Cash Collateral. No later than 30 days
prior to the Termination Date, in the event that any Letter of Credit has an
expiration date later than the Termination Date, the Borrower shall deposit an
amount equal to 100% of the Available Amount of all such Letters of Credit into
the L/C Cash Collateral Account.
Section 2.04. Repayment of Advances.
(a) Revolving Credit Advances. The Borrower
shall repay to the Paying Agent for the ratable account of the Revolving Credit
Lenders on the Termination Date the aggregate principal amount of the Revolving
Credit Advances then outstanding.
(b) Swing Line Advances. The Borrower shall
repay to the Paying Agent for the account of the Swing Line Bank and each other
Revolving Credit Lender that has made a Swing Line Advance the outstanding
principal amount of each Swing Line Advance made by each of them on the earlier
of the maturity date specified in the applicable Notice of Swing Line Borrowing
(which maturity shall be no later than the seventh day after the requested date
of such Borrowing) and the Termination Date.
(c) Letter of Credit Advances.
(i) The Borrower shall repay to the Paying
Agent for the account of each Issuing Bank and each other Revolving Credit
Lender that has made a Letter of
50
Credit Advance on the earlier of demand and the Termination Date the outstanding
principal amount of each Letter of Credit Advance made by each of them.
(ii) The Obligations of the Borrower under this
Agreement, any Letter of Credit Agreement and any other agreement or instrument
relating to any Letter of Credit, and the obligations of Revolving Credit
Lenders to reimburse any Issuing Bank for Letter of Credit Advances not
reimbursed by the Borrower, shall be unconditional and irrevocable, and shall be
paid strictly in accordance with the terms of this Agreement, such Letter of
Credit Agreement and such other agreement or instrument under all circumstances,
including, without limitation, the following circumstances:
(A) any lack of validity or enforceability of any
Loan Document, any Letter of Credit Agreement, any Letter of Credit or any other
agreement or instrument relating thereto (all of the foregoing being,
collectively, the “L/C Related Documents”);
(B) any change in the time, manner or place of
payment of, or in any other term of, all or any of the Obligations of the
Borrower in respect of any L/C Related Document or any other amendment or waiver
of or any consent to departure from all or any of the L/C Related Documents;
(C) the existence of any claim, set-off, defense
or other right that the Borrower may have at any time against any beneficiary or
any transferee of a Letter of Credit (or any Persons for which any such
beneficiary or any such transferee may be acting), any Issuing Bank or any other
Person, whether in connection with the transactions contemplated by the L/C
Related Documents or any unrelated transaction;
(D) any statement or any other document presented
under a Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate
in any respect;
(E) payment by any Issuing Bank under a Letter of
Credit against presentation of a draft or certificate that does not comply with
the terms of such Letter of Credit;
(F) any exchange, release or non-perfection of
any Collateral or other collateral, or any release or amendment or waiver of or
consent to departure from the Guaranties or any other guarantee, for all or any
of the Obligations of the Borrower in respect of the L/C Related Documents; or
(G) any other circumstance or happening
whatsoever, whether or not similar to any of the foregoing, including, without
limitation, any other circumstance that might otherwise constitute a defense
available to, or a discharge of, the Borrower or a Guarantor.
(d) Term Advances. The Borrower shall repay to
the Paying Agent for the ratable account of the Term Lenders, the aggregate
outstanding principal amount of the Term
51
Advances on the following dates in an amount equal to the percentage set forth
below for such date of the aggregate outstanding principal amount of the Term
Advance as of the date of the initial Term Borrowing (which amounts shall be
reduced as a result of the application of prepayments in accordance with the
order of priority set forth in Section 2.06):
Date
Percentage
March 31, 2015
1.250
%
June 30, 2015
1.250
%
September 30, 2015
1.250
%
December 31, 2015
1.250
%
March 31, 2016
1.250
%
June 30, 2016
1.250
%
September 30, 2016
1.250
%
December 31, 2016
1.250
%
March 31, 2017
1.250
%
June 30, 2017
1.250
%
September 30, 2017
1.250
%
December 31, 2017
1.250
%
March 31, 2018
1.250
%
June 30, 2018
1.250
%
September 30, 2018
1.250
%
December 31, 2018
1.250
%
March 31, 2019
1.250
%
June 30, 2019
1.250
%
September 30, 2019
1.250
%
November 14, 2019
Remaining Balance
Section 2.05. Termination or Reduction of
the Commitments.
(a) Optional. The Borrower may, upon at least
five Business Days’ notice to the Paying Agent, terminate in whole or reduce in
part the unused portions of the Letter of Credit Facility and the Unused
Revolving Credit Commitments; provided, however, that each partial reduction of
a Facility (i) shall be in an aggregate amount of $5,000,000 or an integral
multiple of $1,000,000 in excess thereof and (ii) shall be made ratably among
the Appropriate Lenders in accordance with their Commitments with respect to
such Facility.
(i) The Letter of Credit Facility shall be
permanently reduced from time to time on the date of each reduction in the
Revolving Credit Facility by the amount,
52
if any, by which the amount of the Letter of Credit Facility exceeds the
Revolving Credit Facility after giving effect to such reduction of the Revolving
Credit Facility.
(ii) The Swing Line Facility shall be
Revolving Credit Facility by the amount, if any, by which the amount of the
Swing Line Facility exceeds the Revolving Credit Facility after giving effect to
such reduction of the Revolving Credit Facility.
(iii) On the Closing Date, after giving effect to
the Term Borrowing, the aggregate Term Commitments of the Term Lenders shall be
automatically and permanently terminated.
(a) Optional. The Borrower may, upon notice not
later than 1:00 P.M. (New York City time) at least one Business Day in advance
in the case of Base Rate Advances, and not later than 1:00 P.M. (New York City
time) at least three Business Days in advance in the case of Eurodollar Rate
Advances and four Business Days in advance (or five Business Days in advance, in
the case of prepayment of Advances denominated in Special Notice Currencies) in
the case of Eurodollar Rate Advances denominated in Alternative Currencies, in
each case to the Paying Agent stating the proposed date and aggregate principal
amount of the prepayment, and if such notice is given the Borrower shall, prepay
the outstanding aggregate principal amount of the Advances comprising part of
the same Borrowing in whole or ratably in part, together with accrued interest
to the date of such prepayment on the aggregate principal amount prepaid;
provided, however, that (x) each partial prepayment shall be in an aggregate
principal amount of $5,000,000 or an integral multiple of $1,000,000 in excess
thereof and (y) if any prepayment of a Eurodollar Rate Advance is made on a date
other than the last day of an Interest Period for such Advance, the Borrower
shall also pay any amounts owing pursuant to Section 8.04(c). Each such
prepayment shall be applied, at the option of the Borrower either (i) to the
Revolving Credit Facility or (ii) to the Swing Line Advances or (iii) to the
Letter of Credit Advances or (iv) to the Term Facility or (v) to any Incremental
Facility. Notwithstanding the foregoing, prepayment of Swing Line Advances held
by the Swing Line Bank shall not require any prior notice.
(i) The Borrower shall, on the date of
receipt of the Net Cash Proceeds of any single Extraordinary Receipt in an
amount of $1,000,000 or more (or any single series of related and substantially
contemporaneous Extraordinary Receipts, in an aggregate amount of $1,000,000 or
more), by the Borrower or any of its Subsidiaries, prepay an aggregate principal
amount of the Advances comprising part of the same Borrowings and deposit an
amount in the L/C Cash Collateral Account in accordance with clause (v) below in
an amount equal to the amount of such Net Cash Proceeds. Each such prepayment
shall be applied first to the Term Facility along with any then-outstanding
Incremental Term Facilities, on a pro rata basis among the Term Facility and
each such Incremental Term Facility, in each case, ratably across all remaining
principal repayment installments of each, and second, on a pro rata basis, to
53
the Revolving Credit Facility and any then-outstanding Incremental Revolving
Credit Facilities as set forth in clause (v) below.
(ii) The Borrower shall, on each Business Day,
prepay an aggregate principal amount of the Revolving Credit Advances comprising
part of the same Borrowings, the Letter of Credit Advances and the Swing Line
Advances and deposit an amount in the L/C Cash Collateral Account in accordance
with clause (v) below in an amount equal to the amount by which (A) the sum of
the aggregate principal amount of (x) the Revolving Credit Advances, (y) the
Letter of Credit Advances and (z) the Swing Line Advances then outstanding plus
the aggregate Available Amount of all Letters of Credit then outstanding exceeds
(B) the Revolving Credit Facility on such Business Day.
(iii) The Borrower shall, on each Business Day,
pay to the Paying Agent for deposit in the L/C Cash Collateral Account an amount
sufficient to cause the aggregate amount on deposit in the L/C Cash Collateral
Account to equal the amount by which the aggregate Available Amount of all
Letters of Credit then outstanding exceeds the Letter of Credit Facility on such
Business Day.
(iv) [Reserved].
(v) Prepayments of the Revolving Credit Facility
made pursuant to clause (i), (ii), or (iii) above shall be first applied to
prepay Letter of Credit Advances then outstanding until such Advances are paid
in full, second applied to prepay Swing Line Advances then outstanding until
such Advances are paid in full, third applied to prepay Revolving Credit
Advances then outstanding comprising part of the same Borrowings until such
Advances are paid in full and fourth deposited in the L/C Cash Collateral
Account to cash collateralize 100% of the Available Amount of the Letters of
Credit then outstanding; and, in the case of prepayments of the Revolving Credit
Facility required pursuant to clause (i), (ii), or (iii) above, the amount
remaining (if any) after the prepayment in full of the Advances then outstanding
and the 100% cash collateralization of the aggregate Available Amount of Letters
of Credit then outstanding may be retained by the Borrower. Upon the drawing of
any Letter of Credit for which funds are on deposit in the L/C Cash Collateral
Account (including following the Termination Date), such funds shall be applied
to reimburse the Issuing Banks or Revolving Credit Lenders, as applicable.
(vi) If the Paying Agent notifies the Borrower at
any time that the outstanding amount of all Revolving Credit Advances, Letters
of Credit and Letter of Credit Advances denominated in Alternative Currencies at
such time exceeds the Alternative Currency Sublimit then in effect, then, within
two Business Days after receipt of such notice, the Borrower shall prepay
Revolving Credit Advances or Letter of Credit Advances in an aggregate amount
sufficient to reduce such outstanding amount as of such date of payment to an
amount not to exceed 100% of the Alternative Currency Sublimit then in effect.
(vii) All prepayments under this subsection (b) shall
be made together with accrued interest to the date of such prepayment on the
principal amount prepaid.
54
Section 2.07. Interest.
(a) Scheduled Interest. The Borrower shall pay
interest on the unpaid principal amount of each Advance owing to each Lender
from and including the date of such Advance until (but excluding) the date such
principal amount shall be paid in full, at the following rates per annum:
(i) Base Rate Advances. During such periods
as such Advance is a Base Rate Advance, a rate per annum equal at all times to
the sum of (A) the Base Rate in effect from time to time plus (B) the Applicable
Margin in effect from time to time, payable in arrears quarterly on the last day
of each March, June, September and December during such periods and on the date
such Base Rate Advance shall be Converted or paid in full.
(ii) Eurodollar Rate Advances. During such
periods as such Advance is a Eurodollar Rate Advance, a rate per annum equal at
all times during each Interest Period for such Advance to the sum of (A) the
Eurodollar Rate for such Interest Period for such Advance plus (B) the
Applicable Margin in effect on the first day of such Interest Period, payable in
arrears on the last day of such Interest Period and, if such Interest Period has
a duration of more than three months, on each day that occurs during such
Interest Period every three months from the first day of such Interest Period
and on the date such Eurodollar Rate Advance shall be Converted or paid in full.
(b) Default Interest. Upon the occurrence and
during the continuance of a Default, the Borrower shall pay interest on (i) the
unpaid principal amount of each Advance owing to each Lender, payable in arrears
on the dates referred to in clause (a)(i) or (a)(ii) above and on demand, at a
rate per annum equal at all times to 2.0% per annum above the rate per annum
required to be paid on such Advance pursuant to clause (a)(i) or (a)(ii) above
and (ii) to the fullest extent permitted by law, the amount of any interest, fee
or other amount payable under the Loan Documents that is not paid when due, from
the date such amount shall be due until such amount shall be paid in full,
payable in arrears on the date such amount shall be paid in full and on demand,
at a rate per annum equal at all times to 2.0% per annum above the rate per
annum required to be paid, in the case of interest, on the Type of Advance on
which such interest has accrued pursuant to clause (a)(i) or (a)(ii) above and,
in all other cases, on Base Rate Advances pursuant to clause (a)(i) above.
(c) Notice of Interest Period and Interest
Rate. Promptly after receipt of a Notice of Borrowing pursuant to
Section 2.02(a), a notice of Conversion pursuant to Section 2.09 or a notice of
selection of an Interest Period pursuant to the terms of the definition of
“Interest Period,” the Paying Agent shall give notice to the Borrower and each
Appropriate Lender of the applicable Interest Period and the applicable interest
rate determined by the Paying Agent for purposes of clause (a)(i) or
(a)(ii) above.
Section 2.08. Fees.
(a) Commitment Fee. The Borrower shall pay to
the Paying Agent for the account of the Revolving Credit Lenders a commitment
fee, from the Closing Date in the case of
55
each Initial Lender (and from the effective date specified in the Assignment and
Assumption pursuant to which it became a Revolving Credit Lender in the case of
each other Revolving Credit Lender) until the Termination Date, payable in
arrears quarterly on the last day of each March, June, September and December,
commencing on December 31, 2014 and on the Termination Date, at a rate per annum
equal to the Commitment Fee Percentage, in each case on the average daily
portion of the sum of (x) each Revolving Credit Lender’s Unused Revolving Credit
Commitment plus (y) such Lender’s Pro Rata Share of the Swing Line Reserve and
Swing Line Advances made pursuant to Section 2.02(b)(ii) (including all
outstanding Swing Line Advances for which the Revolving Credit Lenders have not
been required to make any purchase pursuant to Section 2.02(b)(iii)) during such
period (excluding the Pro Rata Share of any Lender that is the Swing Line Bank
who has made the relevant Swing Line Advance); provided, however, that any
commitment fee accrued with respect to any of the Commitments of a Defaulting
Lender during the period prior to the time such Lender became a Defaulting
Lender and unpaid at such time shall not be payable by the Borrower so long as
such Lender shall be a Defaulting Lender except to the extent that such
commitment fee shall otherwise have been due and payable by the Borrower prior
to such time; and provided further that no commitment fee shall accrue on any of
the Commitments of a Defaulting Lender so long as such Lender shall be a
Defaulting Lender.
(b) Letter of Credit Fees, Etc.
(i) The Borrower shall pay to the Paying
Agent for the account of each Revolving Credit Lender a commission, payable in
commencing December 31, 2014, and on the Termination Date, on such Lender’s Pro
Rata Share of the average daily aggregate Available Amount during such quarter
of Letters of Credit outstanding from time to time at the rate equal to the
Applicable Margin for Eurodollar Rate Advances; provided, however, any Letter of
Credit fees otherwise payable for the account of a Defaulting Lender with
respect to any Letter of Credit as to which such Defaulting Lender has not
provided cash collateral satisfactory to the applicable Issuing Bank pursuant to
Section 2.03(a) shall be payable, to the maximum extent permitted by law, to the
other Lenders in accordance with the upward adjustments of their respective Pro
Rata Shares allocable to such Letter of Credit pursuant to Section 2.15(a)(iii),
with the balance of such fee, if any, payable to the applicable Issuing Bank for
its own account.
(ii) The Borrower shall pay to each Issuing
Bank, for its own account, (A) an issuance fee for each Letter of Credit issued
by such Issuing Bank in an amount as the Borrower and such Issuing Bank may
agree, payable on the date of issuance and on renewal of such Letter of Credit,
and (B) such other commissions, fronting fees, transfer fees and other fees and
charges in connection with the issuance or administration of each Letter of
Credit issued by such Issuing Bank as the Borrower and such Issuing Bank shall
agree.
(c) Agents’ Fees. The Borrower shall pay to
each Agent and each Joint Lead Arranger for its own account such fees as may
from time to time be agreed between the Borrower and such Agent or such Joint
Lead Arranger, as the case may be, including the fees payable to the Joint Lead
Arrangers pursuant to any Fee Letter.
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Section 2.09. Conversion and Continuation
of Advances.
(a) Optional. Each Conversion of Advances from
one Type to another and each continuation of Eurodollar Rate Advances may be
made, subject to the provisions of Sections 2.07 and 2.10, upon the Borrower’s
irrevocable notice no later than 12:00 P.M. (New York City time) (i) on the
third Business Day prior to the date of the proposed Conversion or continuation
of Eurodollar Rate Advances denominated in Dollars or of any Conversion of
Eurodollar Rate Advances denominated in Dollars to Base Rate Advances and
(ii) on the fourth Business Day (or fifth Business Day in the case of a Special
Notice Currency) prior to the date of any Conversion or continuation of
Eurodollar Rate Advances denominated in Alternative Currencies; provided,
however, that any Conversion of Eurodollar Rate Advances into Base Rate Advances
shall be made only on the last day of an Interest Period for such Eurodollar
Rate Advances, any Conversion of Base Rate Advances into Eurodollar Rate
Advances shall be in an amount not less than the minimum amount specified in
Section 2.02(c), no Conversion of any Advances shall result in more separate
Borrowings than permitted under Section 2.02(c) and each Conversion of Advances
comprising part of the same Borrowing under any Facility shall be made ratably
among the Appropriate Lenders in accordance with their Commitments under such
Facility. Each such notice of Conversion or continuation shall, within the
restrictions specified above, specify (1) the date of such Conversion or
continuation, (2) the Advances to be Converted or continued and (3) if such
Conversion or continuation is into Eurodollar Rate Advances, the duration of the
initial Interest Period for such Advances; provided further that in the case of
a failure to timely request a continuation of Advances denominated in an
Alternative Currency, such Advances shall be continued as Eurodollar Rate
Advances in their original currency with an Interest Period of one month. No
Advance may be Converted into or continued as an Advance denominated in a
different currency, but instead must be prepaid in the original currency of such
Advance and reborrowed in the other currency.
(i) On the date on which the aggregate
unpaid principal amount of Eurodollar Rate Advances comprising any Borrowing
$5,000,000, such Advances shall automatically Convert into Base Rate Advances.
(ii) If the Borrower shall fail to select the
duration of any Interest Period for any Eurodollar Rate Advances in accordance
with the provisions contained in the definition of “Interest Period” in
Section 1.01, the Paying Agent will forthwith so notify the Borrower and the
Appropriate Lenders, whereupon each such Eurodollar Rate Advance will
automatically, on the last day of the then existing Interest Period therefor,
Convert into a Base Rate Advance.
(iii) Upon the occurrence and during the
continuance of any Default, (x) each Eurodollar Rate Advance will automatically,
on the last day of the then existing Interest Period therefor, Convert into a
Base Rate Advance and (y) the obligation of the Lenders to make, or to Convert
Advances into, Eurodollar Rate Advances shall be suspended.
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Section 2.10. Increased Costs, Etc.
(a) If, due to either (i) any Change in Law or
(ii) the compliance with any guideline or request from any central bank or other
governmental authority (whether or not having the force of law), there shall be
any increase in the cost to any Lender Party of agreeing to make or of making,
funding or maintaining Eurodollar Rate Advances (whether in Dollars or an
Alternative Currency) or of agreeing to issue or of issuing or maintaining or
participating in Letters of Credit (whether in Dollars or an Alternative
Currency) or of agreeing to make or of making or maintaining Letter of Credit
Advances (whether in Dollars or an Alternative Currency) (excluding, for
purposes of this Section 2.10, any such increased costs resulting from (x) Taxes
or Other Taxes (as to which Section 2.12 shall govern) and (y) changes in the
basis of taxation of overall net income or overall gross income by the United
States or by the foreign jurisdiction or state under the laws of which such
Lender Party is organized or has its Applicable Lending Office or any political
subdivision thereof) (collectively, “Increased Costs”), then the Borrower shall
from time to time, upon demand by such Lender Party (with a copy of such demand
to the Paying Agent), pay to the Paying Agent for the account of such Lender
Party additional amounts sufficient to compensate such Lender Party for such
Increased Costs; provided, however, that a Lender Party claiming additional
amounts under this Section 2.10(a) agrees to (at the request of the Borrower)
use reasonable efforts (consistent with its internal policy and legal and
regulatory restrictions) to designate a different Applicable Lending Office if,
in the reasonable judgment of such Lender Party, the making of such a
designation would avoid the need for, or reduce the amount of, such Increased
Costs that may thereafter accrue and would not, in the reasonable judgment of
such Lender Party, subject such Lender Party to any unreimbursed cost or expense
or be otherwise disadvantageous to such Lender Party. The Borrower hereby
agrees to pay all reasonable costs and expenses incurred by any Lender Party in
connection with such designation or assignment. A notice as to the amount of
such Increased Costs, submitted to the Borrower by such Lender Party, shall be
conclusive and binding for all purposes, absent manifest error
(b) If, due to either (i) a Change in Law or
any increase in the amount of capital or liquidity required or expected to be
maintained by any Lender Party or any corporation controlling such Lender Party
as a result of or based upon the existence of such Lender Party’s commitment to
lend or to issue or participate in Letters of Credit hereunder and other
commitments of such type or the issuance or maintenance of or participation in
the Letters of Credit (or similar contingent obligations), then, upon demand by
such Lender Party or such corporation (with a copy of such demand to the Paying
Agent), the Borrower shall pay to the Paying Agent for the account of such
Lender Party, from time to time as specified by such Lender Party, additional
amounts sufficient to compensate such Lender Party in the light of such
circumstances, to the extent that such Lender Party reasonably determines such
increase in capital or liquidity to be allocable to the existence of such Lender
Party’s commitment to lend or to issue or participate in Letters of Credit
hereunder or to the issuance or maintenance of or participation in any Letters
of Credit. A notice as to such amounts submitted to the Borrower by such Lender
Party shall be conclusive and binding for all purposes, absent manifest error.
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(c) If, with respect to any Eurodollar Rate
Advances under any Facility, the Required Lenders notify the Paying Agent that
the Eurodollar Rate for any Interest Period for such Advances will not
adequately reflect the cost to such Lenders of making, funding or maintaining
their Eurodollar Rate Advances (whether in Dollars or an Alternative Currency)
for such Interest Period, the Paying Agent shall forthwith so notify the
Borrower and the Appropriate Lenders, whereupon (i) each such Eurodollar Rate
Advance denominated in Dollars under such Facility will automatically, on the
last day of the then existing Interest Period therefor, Convert into a Base Rate
Advance and (ii) the obligation of the Appropriate Lenders to make, or to
Convert Advances into, Eurodollar Rate Advances shall be suspended until the
Paying Agent shall notify the Borrower that such Lenders have determined that
the circumstances causing such suspension no longer exist. Upon receipt of
such notice, the Borrower may revoke any pending request for a Borrowing of,
conversion to or continuation of Eurodollar Rate Loans in the affected currency
or currencies or, failing that, will be deemed to have converted such request
into a request for a borrowing of Base Rate Advances in the amounts specified
therein.
(d) Notwithstanding any other provision of this
Agreement, if any Change in Law shall make it unlawful, or any central bank or
other governmental authority shall assert that it is unlawful, for any Lender or
its Eurodollar Lending Office to perform its obligations hereunder to make
Eurodollar Rate Advances or to continue to fund or maintain Eurodollar Rate
Advances hereunder (whether denominated in Dollars or an Alternative Currency),
through the Paying Agent, (i) each Eurodollar Rate Advance denominated in
Dollars under each Facility under which such Lender has a Commitment will
automatically, upon such demand, Convert into a Base Rate Advance and (ii) the
obligation of the Appropriate Lenders to make, or to maintain Eurodollar Rate
Advances shall be suspended until the Paying Agent shall notify the Borrower
that such Lender has determined that the circumstances causing such suspension
no longer exist; provided, however, that, before making any such demand, such
Lender agrees to use reasonable efforts (consistent with its internal policy and
legal and regulatory restrictions) to designate a different Eurodollar Lending
Office if the making of such a designation would allow such Lender or its
Eurodollar Lending Office to continue to perform its obligations to make
Advances and would not, in the reasonable judgment of such Lender, be otherwise
disadvantageous to such Lender. Upon receipt of such notice, the Borrower may
revoke any pending request for a Borrowing of, conversion to or continuation of
Eurodollar Rate Loans in the affected currency or currencies or, failing that,
will be deemed to have converted such request into a request for a borrowing of
Base Rate Advances in the amounts specified therein.
Section 2.11. Payments and Computations.
(a) The Borrower shall make each payment
hereunder and under the Notes, irrespective of any right of counterclaim or
set-off, not later than 12:00 P.M. (New York City time) on the day when due to
the Paying Agent at the Paying Agent’s Account in same day funds, with payments
being received by the Paying Agent after such time being deemed to have been
received on the next succeeding Business Day; provided, that, all payments by
the Borrower hereunder with respect to principal and interest on Advances
denominated in an Alternative Currency shall be made to the Paying Agent, for
the account of the Lenders, in such
59
Alternative Currency and in same day funds not later than the Applicable Time
specified by the Paying Agent on the dates specified herein. If, for any
reason, the Borrower is prohibited by any Law from making any required payment
hereunder in an Alternative Currency, the Borrower shall make such payment in
Dollars in the Dollar Equivalent of the Alternative Currency payment amount.
The Paying Agent will promptly thereafter cause like funds to be distributed
(i) if such payment by the Borrower is in respect of principal, interest,
commitment fees or any other Obligation then payable hereunder and under the
Notes to more than one Lender Party, to such Lender Parties for the account of
their respective Applicable Lending Offices ratably in accordance with the
amounts of such respective Obligations then payable to such Lender Parties and
(ii) if such payment by the Borrower is in respect of any Obligation then
payable hereunder to one Lender Party, to such Lender Party for the account of
its Applicable Lending Office, in each case to be applied in accordance with the
terms of this Agreement. Upon its acceptance of an Assignment and Assumption
and recording of the information contained therein in the Register pursuant to
Section 8.07(d), from and after the effective date of such Assignment and
Assumption, the Paying Agent shall make all payments hereunder and under the
Notes in respect of the interest assigned thereby to the Lender Party assignee
thereunder, and the parties to such Assignment and Assumption shall make all
appropriate adjustments in such payments for periods prior to such effective
date directly between themselves.
(b) The Borrower hereby authorizes each Lender
Party and each of its Affiliates, if and to the extent payment owed to such
Lender Party is not made when due hereunder or, in the case of a Lender, under
the Note held by such Lender, to charge from time to time, to the fullest extent
permitted by law, against any or all of the Borrower’s accounts with such Lender
Party or such Affiliate any amount so due.
(c) All computations of interest based on the
Prime Rate shall be made by the Paying Agent on the basis of a year of 365 or
366 days, as the case may be, and all computations of interest based on the
Eurodollar Rate or the Federal Funds Rate and of fees (including, without
limitation, the unused commitment fee payable pursuant to Section 2.08(a)) and
Letter of Credit commissions shall be made by the Paying Agent on the basis of a
year of 360 days, in each case for the actual number of days (including the
first day but excluding the last day) occurring in the period for which such
interest, fees or commissions are payable, or, in the case of interest in
respect of Advances denominated in Alternative Currencies as to which market
practice differs from the foregoing, in accordance with such market practice;
provided that in the case of Advances denominated in Canadian Dollars, such rate
per annum shall be calculated in accordance with clause (g) below. Each
determination by the Paying Agent of an interest rate, fee or commission
hereunder shall be conclusive and binding for all purposes, absent manifest
error.
(d) Whenever any payment hereunder or under the
Notes shall be stated to be due on a day other than a Business Day, such payment
shall be made on the next succeeding Business Day, and such extension of time
shall in such case be included in the computation of payment of interest or
commitment fee, as the case may be; provided, however, that, if such extension
would cause payment of interest on or principal of Eurodollar Rate Advances to
be made in the next following calendar month, such payment shall be made on the
next preceding Business Day.
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(e) Unless the Paying Agent shall have received
notice from the Borrower prior to the date on which any payment is due to the
Paying Agent for the account of the Lenders or an Issuing Bank hereunder that
the Borrower will not make such payment, the Paying Agent may assume that the
Borrower has made such payment on such date in accordance herewith and may, in
reliance upon such assumption, distribute to the Lenders or such Issuing Bank,
as the case may be, the amount due. In such event, if the Borrower has not in
fact made such payment, then each of the Lenders or such Issuing Bank, as the
case may be, severally agrees to repay to the Paying Agent forthwith on demand
the amount so distributed to such Lender or an Issuing Bank, with interest
it to but excluding the date of payment to the Paying Agent, at the greater of
the Federal Funds Effective Rate and a rate determined by the Paying Agent in
accordance with banking industry rules on interbank compensation.
(f) If the Paying Agent receives funds for
application to the Obligations under the Loan Documents under circumstances for
which the Loan Documents do not specify the Advances or the Facility to which,
or the manner in which, such funds are to be applied, the Paying Agent may, but
shall not be obligated to, elect to distribute such funds to each Lender Party
ratably in accordance with such Lender Party’s proportionate share of the
principal amount of all outstanding Advances and the Available Amount of all
Letters of Credit then outstanding, in repayment or prepayment of such of the
outstanding Advances or other Obligations owed to such Lender Party, and for
application to such principal installments, as the Paying Agent shall direct.
(g) Interest Act (Canada). For purposes of the
Interest Act (Canada): (i) whenever any interest or fee under this Agreement is
calculated on the basis of a period of time other than a calendar year, such
rate used in such calculation, when expressed as an annual rate, is equivalent
to (x) such rate, multiplied by (y) the actual number of days in the calendar
year in which the period for which such interest or fee is calculated ends, and
divided by (z) the number of days in such period of time, (ii) the principle of
deemed reinvestment of interest shall not apply to any interest calculation
under this Agreement, and (iii) the rates of interest stipulated in this
Agreement are intended to be nominal rates and not effective rates or yields.
Section 2.12. Taxes.
(a) Any and all payments by the Borrower to or
for the account of any Lender Party or any Agent hereunder or under any Notes
shall be made free and clear of and without deduction for any and all present or
future taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, in the case of each Lender Party
and each Agent, taxes that are imposed on its overall net income by the United
States and taxes that are imposed on its overall net income (and franchise taxes
imposed in lieu thereof) by the state or foreign jurisdiction under the laws of
which such Lender Party or such Agent, as the case may be, is organized or any
political subdivision thereof and, in the case of each Lender Party, taxes that
are imposed on its overall net income (and franchise taxes imposed in lieu
thereof) by the state or foreign jurisdiction of such Lender Party’s Applicable
Lending Office or any political subdivision thereof (all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings and liabilities in
respect of payments hereunder or under the Notes being hereinafter referred to
as “Taxes”). If the Borrower shall be required by law to deduct any Taxes
61
from or in respect of any sum payable hereunder or under any Note to any Lender
Party or any Agent, (i) the sum payable by the Borrower shall be increased as
may be necessary so that after the Borrower and the Paying Agent have made all
under this Section 2.12) such Lender Party or such Agent, as the case may be,
deductions been made, (ii) the Borrower shall make all such deductions and
(iii) the Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any
present or future stamp, documentary, excise, property or similar taxes, charges
or levies that arise from any payment made hereunder or under any Notes or from
the execution, delivery or registration of, performance under, or otherwise with
respect to, this Agreement, any Notes or any other Loan Documents or the
transfer of any Notes (hereinafter referred to as “Other Taxes”).
(c) The Borrower shall indemnify each Lender
Party and each Agent for and hold them harmless against the full amount of Taxes
and Other Taxes, and for the full amount of taxes of any kind imposed or
assessed by any jurisdiction on amounts payable under this Section 2.12, imposed
on or paid by such Lender Party or such Agent (as the case may be) and any
liability (including penalties, additions to tax, interest and expenses) arising
therefrom or with respect thereto. This indemnification shall be made within
30 days from the date such Lender Party or such Agent (as the case may be) makes
written demand therefor.
(d) Within 30 days after the date of any payment
of Taxes, the Borrower shall furnish to the Paying Agent, at its address
referred to in Section 8.02, the original or a certified copy of a receipt
evidencing such payment, to the extent such a receipt is issued therefor, or
other written proof of payment thereof that is reasonably satisfactory to the
Paying Agent. In the case of any payment hereunder or under the Notes by or on
behalf of the Borrower through an account or branch outside the United States or
by or on behalf of the Borrower by a payor that is not a United States person,
if the Borrower determines that no Taxes are payable in respect thereof, the
Borrower shall furnish, or shall cause such payor to furnish, to the Paying
Agent, at such address, an opinion of counsel acceptable to the Paying Agent
stating that such payment is exempt from Taxes. For purposes of subsections
(d) and (e) of this Section 2.12, the terms “United States” and “United States
person” shall have the meanings specified in Section 7701 of the Internal
Revenue Code.
(e) Each Lender Party organized under the laws
of a jurisdiction outside the United States shall, on or prior to the date of
its execution and delivery of this Agreement in the case of each Initial Lender
Party and on the date of the Assignment and Acceptance pursuant to which it
becomes a Lender Party in the case of each other Lender Party, and from time to
time thereafter as reasonably requested in writing by the Borrower (but only so
long thereafter as such Lender Party remains lawfully able to do so), provide
each of the Paying Agent and the Borrower with two original Internal Revenue
Service Forms W-8ECI (or successor forms), as appropriate, or in the case of a
Lender Party that is claiming a reduced rate of United States withholding tax
because of a tax treaty or that has certified in writing to the Paying Agent
that it is not (i) a “bank” as defined in Section 881(c)(3)(A) of the Internal
Revenue Code, (ii) a 10-percent shareholder (within the meaning of
Section 871(h)(3)(B) of the Internal Revenue
62
Code) of the Borrower or (iii) a controlled foreign corporation related to the
Borrower (within the meaning of Section 864(d)(4) of the Internal Revenue
Code), Internal Revenue Service Form W-8BEN or any successor or other form
prescribed by the Internal Revenue Service, certifying that such Lender Party is
exempt from or entitled to a reduced rate of United States withholding tax on
payments pursuant to this Agreement or any Notes or, in the case of a Lender
Party that has certified that it is not a “bank” as described above, certifying
that such Lender Party is a foreign corporation, partnership, estate or trust.
If the forms provided by a Lender Party at the time such Lender Party first
becomes a party to this Agreement indicate a United States interest withholding
tax rate in excess of zero, withholding tax at such rate shall be considered
excluded from Taxes unless and until such Lender Party provides the appropriate
forms certifying that a lesser rate applies, whereupon withholding tax at such
lesser rate only shall be considered excluded from Taxes for periods governed by
such forms; provided, however, that if, at the effective date of the Assignment
and Assumption pursuant to which a Lender Party becomes a party to this
Agreement, the Lender Party assignor was entitled to payments under
subsection (a) of this Section 2.12 in respect of United States withholding tax
with respect to interest paid at such date, then, to such extent, the term Taxes
shall include (in addition to withholding taxes that may be imposed in the
future or other amounts otherwise includable in Taxes) United States withholding
tax, if any, applicable with respect to the Lender Party assignee on such date.
If any form or document referred to in this subsection (e) requires the
disclosure of information, other than information necessary to compute the tax
payable and information required on the date hereof by Internal Revenue Service
Forms W-8BEN or W-8ECI or the related certificate described above, that the
applicable Lender Party reasonably considers to be confidential, such Lender
Party shall give notice thereof to the Borrower and shall not be obligated to
include in such form or document such confidential information.
(f) For any period with respect to which a
Lender Party has failed to provide the Borrower with the appropriate form,
certificate or other document described in subsection (e) above (other than if
such failure is due to a Change in Law occurring after the date on which a form,
certificate or other document originally was required to be provided or if such
form, certificate or other document otherwise is not required under
subsection (e) above), such Lender Party shall not be entitled to
indemnification under subsection (a) or (c) of this Section 2.12 with respect to
Taxes imposed by the United States by reason of such failure; provided, however,
that should a Lender Party become subject to Taxes because of its failure to
deliver a form, certificate or other document required hereunder, the Borrower
shall take such steps as such Lender Party shall reasonably request to assist
such Lender Party to recover such Taxes.
(g) Any Lender Party claiming any additional
amounts payable pursuant to this Section 2.12 agrees to use reasonable efforts
(consistent with its internal policy and legal and regulatory restrictions) to
change the jurisdiction of its Applicable Lending Office if the making of such a
change would avoid the need for, or reduce the amount of, any such additional
amounts that may thereafter accrue and would not, in the reasonable judgment of
such Lender Party, be otherwise disadvantageous to such Lender Party. Nothing
in this Section 2.12 or otherwise in this Agreement shall require any Lender
Party to disclose to the Borrower any of its tax returns (or any other
information that it deems to be confidential or proprietary).
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(h) Without prejudice to the survival of any
other agreement contained herein, the agreements and obligations contained in
this Section 2.12 shall survive the payment in full of the principal of and
interest on all Notes and Advances made hereunder.
Section 2.13. Sharing of Payments, Etc.
If any Lender Party shall obtain at any time any payment (whether voluntary,
involuntary, through the exercise of any right of set-off, or otherwise, other
than as a result of an assignment pursuant to Section 8.07) (a) on account of
Obligations due and payable to such Lender Party hereunder and under the Notes
at such time in excess of its ratable share (according to the proportion of
(i) the amount of such Obligations due and payable to such Lender Party at such
time to (ii) the aggregate amount of the Obligations due and payable to all
Lender Parties hereunder and under the Notes at such time) of payments on
account of the Obligations due and payable to all Lender Parties hereunder and
under the Notes at such time obtained by all the Lender Parties at such time or
(b) on account of Obligations owing (but not due and payable) to such Lender
Party hereunder and under the Notes at such time in excess of its ratable share
(according to the proportion of (i) the amount of such Obligations owing to such
Lender Party at such time to (ii) the aggregate amount of the Obligations owing
(but not due and payable) to all Lender Parties hereunder and under the Notes at
such time) of payments on account of the Obligations owing (but not due and
payable) to all Lender Parties hereunder and under the Notes at such time
obtained by all of the Lender Parties at such time, such Lender Party shall
forthwith purchase from the other Lender Parties such interests or participating
interests in the Obligations due and payable or owing to them, as the case may
be, as shall be necessary to cause such purchasing Lender Party to share the
excess payment ratably with each of them; provided, however, that if all or any
portion of such excess payment is thereafter recovered from such purchasing
Lender Party, such purchase from each other Lender Party shall be rescinded and
such other Lender Party shall repay to the purchasing Lender Party the purchase
price to the extent of such Lender Party’s ratable share (according to the
proportion of (i) the purchase price paid to such Lender Party to (ii) the
aggregate purchase price paid to all Lender Parties) of such recovery together
with an amount equal to such Lender Party’s ratable share (according to the
proportion of (i) the amount of such other Lender Party’s required repayment to
(ii) the total amount so recovered from the purchasing Lender Party) of any
interest or other amount paid or payable by the purchasing Lender Party in
respect of the total amount so recovered; provided further that, so long as the
Obligations under the Loan Documents shall not have been accelerated, any excess
payment received by any Appropriate Lender shall be shared on a pro rata basis
only with other Appropriate Lenders. The Borrower agrees that any Lender Party
so purchasing an interest or participating interest from another Lender Party
pursuant to this Section 2.13 may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-off) with respect
to such interest or participating interest, as the case may be, as fully as if
such Lender Party were the direct creditor of the Borrower in the amount of such
interest or participating interest, as the case may be.
Section 2.14. Use of Proceeds. The
proceeds of the Advances and issuances of Letters of Credit shall be available
(and the Borrower agrees that it shall use such proceeds and Letters of Credit),
(a) in the case of Revolving Credit Advances made on the Closing Date, for the
portion of the Refinancing consisting of revolving credit and swingline loans
outstanding under the Existing Credit Agreement immediately prior to the Closing
Date, and to pay transaction costs and expenses incurred in connection
therewith, (b) in the case of Term Advances, for the portion of the Refinancing
consisting of term loans outstanding under the
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Existing Credit Agreement immediately prior to the Closing Date and (c) in the
case of Revolving Credit Advances made after the Closing Date, to provide
working capital for the Loan Parties and for other general corporate purposes,
including, without limitation, for purposes of making capital expenditures,
share repurchases permitted under Section 5.02(g) and acquisitions and other
Investments permitted under Section 5.02(f).
Section 2.15. Defaulting Lenders.
(a) Adjustments. Notwithstanding anything to
the contrary contained in this Agreement, if any Lender becomes a Defaulting
Lender, then, until such time as such Lender is no longer a Defaulting Lender,
to the extent permitted by applicable law:
(i) Waivers and Amendments. Such Defaulting
Lender’s right to approve or disapprove any amendment, waiver or consent with
respect to this Agreement shall be restricted as set forth in Section 8.01 and
in the definition of “Required Lenders.”
(ii) Reallocation of Payments. Any payment of
principal, interest, fees or other amounts received by the Paying Agent for the
account of such Defaulting Lender (whether voluntary or mandatory, at maturity,
pursuant to Article VI or otherwise, and including any amounts made available to
the Paying Agent by such Defaulting Lender pursuant to Section 8.05), shall be
applied at such time or times as may be determined by the Paying Agent as
follows: first, to the payment of any amounts owing by such Defaulting Lender
to the Paying Agent hereunder; second, to the payment on a pro rata basis of any
amounts owing by such Defaulting Lender to any Issuing Bank or Swing Line Bank
hereunder; third, if so determined by the Paying Agent or requested by an
Issuing Bank or Swing Line Bank, to be held as cash collateral for future
funding obligations of such Defaulting Lender with respect to any participation
in any Swing Line Advance or Letter of Credit; fourth, as the Borrower may
request (so long as no Default or Event of Default exists), to the funding of
any Advance in respect of which such Defaulting Lender has failed to fund its
portion thereof as required by this Agreement, as determined by the Paying
Agent; fifth, if so determined by the Paying Agent and the Borrower, to be held
in a non-interest bearing deposit account and released pro rata in order to
(x) satisfy obligations of such Defaulting Lender to fund Advances under this
Agreement and (y) be held as cash collateral for future funding obligations of
such Defaulting Lender with respect to any participation in any Swing Line
Advances and/or Letter of Credit Advances; sixth, to the payment of any amounts
owing to the Lenders, any Issuing Bank or Swing Line Bank as a result of any
judgment of a court of competent jurisdiction obtained by any Lender, any
Issuing Bank or Swing Line Bank against such Defaulting Lender as a result of
such Defaulting Lender’s breach of its obligations under this Agreement;
Agreement; and eighth, to such Defaulting Lender or as otherwise directed by a
of the principal amount of any Advances or Letter of Credit Advances in respect
of which such Defaulting Lender has not fully funded its appropriate share and
(y) such Advances or Letter of Credit
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Advances were made at a time when the conditions set forth in Section 3.02 were
satisfied or waived, such payment shall be applied solely to pay the Advances
of, and Letter of Credit Advances owed to, all non-Defaulting Lenders on a pro
rata basis prior to being applied to the payment of any Advances of, or Letter
of Credit Advances owed to, such Defaulting Lender, until such time as all
Advances and funded and unfunded participations in Letter of Credit Advances and
Swingline Advances are held by the Lender Parties pro rata in accordance with
the Commitments under the applicable Facility without giving effect to
Section 2.15(a)(iii). Any payments, prepayments or other amounts paid or
payable to a Defaulting Lender that are applied (or held) to pay amounts owed by
a Defaulting Lender or to post cash collateral pursuant to this
Section 2.15(a)(ii) shall be deemed paid to and redirected by such Defaulting
Lender, and each Lender irrevocably consents hereto.
(iii) Reallocation of Pro Rata Shares to Reduce
Fronting Exposure. During any period in which there is a Defaulting Lender, for
purposes of computing the amount of the obligation of each non-Defaulting Lender
to acquire, refinance or fund purchases in Letters of Credit Advances or Swing
Line Advances pursuant to Sections 2.02(b) and 2.03(c), the “Pro Rata Share” of
each non-Defaulting Lender shall be computed without giving effect to the
Commitment of such Defaulting Lender; provided, that, (i) each such reallocation
shall be given effect only if, (x) at the date the applicable Lender becomes a
Defaulting Lender and (y) at the date of such reallocation, no Default or Event
of Default exists; and (ii) the aggregate obligation of each non-Defaulting
Lender to acquire, refinance or fund participations in Letters of Credit
Advances and Swing Line Advances shall not exceed the positive difference, if
any, of (1) the Commitment of that non-Defaulting Lender minus (2) the aggregate
outstanding amount of the Advances of that Lender.
(iv) Certain Amounts. Except as otherwise provided
in Section 2.08, a Defaulting Lender shall be entitled to receive any and all
amounts payable to such Defaulting Lender pursuant to the terms hereof
(including, without limitation, fees, expenses, reimbursements, and repayments
and prepayments of Advances and any interest thereon) for any period during
which such Lender is a Defaulting Lender; provided, however, that such
Defaulting Lender shall only be entitled to receive fees, interest and
repayments and prepayments of Advances to the extent allocable to the sum of
(1) the outstanding principal amount of the Advances funded by it, and (2) its
Pro Rata Share of the stated amount of Letters of Credit for which it has
Section 2.03(a).
(b) Defaulting Lender Cure. If the Borrower,
the Paying Agent, Swing Line Bank and each Issuing Bank agree in writing in
their sole discretion that a Defaulting Lender is no longer a Defaulting Lender,
then the Paying Agent will so notify the parties hereto, whereupon as of the
effective date specified in such notice and subject to any conditions set forth
therein (which may include arrangements with respect to any Cash Collateral),
that Lender will, to the extent applicable, purchase at par that portion of
outstanding Advances of the other Lenders or take such other actions as the
Paying Agent may determine to be necessary to cause the Advances and funded and
unfunded participations in Letters of Credit Advances and Swing Line Advances to
be held on a pro rata basis by the Lenders in accordance with their Pro Rata
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Shares (without giving effect to Section 2.15(a)(iii)), whereupon such Lender
will cease to be a Defaulting Lender; provided that no adjustments will be made
retroactively with respect to fees accrued or payments made by or on behalf of
Section 2.16. Evidence of Debt.
(a) Each Lender Party shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower to such Lender resulting from each Advance owing to
such Lender Party from time to time, including the amounts of principal and
interest payable and paid to such Lender from time to time hereunder. The
Borrower agrees that upon notice by any Lender Party to the Borrower (with a
copy of such notice to the Paying Agent) to the effect that a promissory note or
other evidence of indebtedness is required or appropriate in order for such
Lender Party to evidence (whether for purposes of pledge, enforcement or
otherwise) the Advances owing to, or to be made by, such Lender Party, the
Borrower shall promptly execute and deliver to such Lender Party, with a copy to
the Paying Agent, a Revolving Credit Note or Term Note, as applicable,
substantially in the form of Exhibit A-1 or Exhibit A-2 hereto, respectively,
payable to the order of such Lender Party in a principal amount equal to the
Revolving Credit Commitment or Term Commitment, as applicable, of such Lender
Party. All references to Notes in the Loan Documents shall mean Notes, if any,
to the extent issued hereunder.
(b) The Register maintained by the Paying Agent
pursuant to Section 8.07(d) shall include an account for each Lender Party, in
which account shall be recorded (i) the date and amount of each Borrowing made
hereunder, the Type of Advances comprising such Borrowing and, if appropriate,
the Interest Period applicable thereto, (ii) the terms of each Assignment and
Assumption delivered to and accepted by it, (iii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender Party hereunder, and (iv) the amount of any sum received by the Paying
Agent from the Borrower hereunder and each Lender Party’s share thereof.
(c) Entries made in good faith by the Paying
Agent in the Register pursuant to subsection (b) above, and by each Lender Party
in its account or accounts pursuant to subsection (a) above, shall be prima
facie evidence of the amount of principal and interest due and payable or to
become due and payable from the Borrower to, in the case of the Register, each
Lender Party and, in the case of such account or accounts, such Lender Party,
under this Agreement, absent manifest error; provided, however, that the failure
of the Paying Agent or such Lender Party to make an entry, or any finding that
an entry is incorrect, in the Register or such account or accounts shall not
limit or otherwise affect the obligations of the Borrower under this Agreement.
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Section 2.17. Increases in Credit
Facilities.
(a) Request for Increase. Provided that
(i) there exists no Default, (ii) the Borrower shall be in compliance with the
covenants contained in Section 5.04 (as determined on a Pro Forma Basis,
(x) after giving full effect to the incurrence of the requested Incremental
Facility, and (y) assuming for such purposes that all Incremental Revolving
Credit Commitments under all previously incurred and then-outstanding
Incremental Revolving Credit Facilities, and all Incremental Revolving Credit
Commitments under the requested Incremental Revolving Facility (if any), are
fully drawn) and (iii) the incurrence of such Debt and the Liens securing such
Debt shall be permitted under the Related Documents and all other documents
evidencing Debt incurred pursuant to Section 5.02(b)(i)(C), upon written notice
to the Paying Agent, the Borrower may, from time to time, on the terms and
conditions set forth in the applicable Incremental Assumption Agreement, request
(x) an increase in the Revolving Credit Facility (each an “Incremental Revolving
Credit Facility”) or (y) the addition of one or more new term loan facilities
(each an “Incremental Term Facility” and, together with any Incremental
Revolving Credit Facility, an “Incremental Facility”); provided, that in no
event shall the aggregate principal amount of all Incremental Facilities
incurred after the Closing Date exceed the Incremental Amount at such time;
provided, further that any such request for an Incremental Facility shall be in
a minimum amount of $25,000,000. If the Borrower elects to request that
existing Revolving Credit Lenders participate in an Incremental Facility, then
at the time of sending such notice, the Borrower shall request that the Paying
Agent promptly notify the Revolving Credit Lenders of such request and (in
consultation with the Paying Agent) shall specify the time period within which
each Revolving Credit Lender is requested to respond (which shall in no event be
less than ten Business Days from the date of delivery of such notice to the
Revolving Credit Lenders).
(b) Lender Elections to Increase. If requested
by the Borrower to participate in an Incremental Facility, each Lender shall
notify the Paying Agent within such time period as set forth in the notice
referred to in clause (a) whether or not it agrees to participate in the
Incremental Facility and, if so, by what principal amount. Any Lender not
responding within such time period shall be deemed to have declined to
participate in the applicable Incremental Facility. The Paying Agent shall
notify the Borrower and each Lender of the Lenders’ responses to each request
made hereunder.
(c) Additional Lenders. Subject to the
approval of the Administrative Agent and the Joint Lead Arrangers and, in the
case of any Incremental Revolving Credit Facility, each Issuing Bank and the
Swing Line Bank (which approvals shall not be unreasonably withheld), the
Borrower may, in lieu of or in addition to requesting that existing Lenders
provide such increase, invite additional Eligible Assignees to become Lenders
pursuant to a joinder agreement in form and substance satisfactory to the
Administrative Agent and the Joint Lead Arrangers, and their respective counsel.
(d) Terms and Conditions of Incremental
Facilities. Each Incremental Revolving Credit Facility shall be on terms
applicable to the existing Revolving Credit Facility. Each Incremental Term
Facility shall be a new term loan facility in which case (A) the maturity date
of any such Incremental Term Facility shall be no earlier than the maturity date
of the Facility and (B) all other provisions of the Incremental Term Facility
shall be on terms and pursuant to documentation reasonably satisfactory to the
Joint Lead Arrangers (including, without limitation, with respect to mandatory
prepayments, covenants, interest rates and the
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amortization schedule), as set forth in the applicable Incremental Assumption
Agreement. In connection with any Incremental Facility this Agreement may be
amended pursuant to the applicable Incremental Assumption Agreement, which shall
have been executed and delivered by the Borrower, the Administrative Agent and
the Joint Lead Arrangers, to reflect any technical changes necessary to give
effect to such increase in accordance with its terms as set forth herein and to
reflect such increase as a facility hereunder, which may include the addition of
an Incremental Term Facility as a new term facility and the inclusion of any
such new term facility in calculations of amounts outstanding under this
Agreement and in the provisions relating to prepayments set forth in
Section 2.06 and to amendments and waivers set forth in Section 8.01.
(e) Effective Date and Allocations. After
satisfaction of the conditions set forth in this Section 2.17 with respect to
the applicable Incremental Facility, the Paying Agent and the Borrower shall
determine the effective date (the “Incremental Facility Effective Date”) and the
final allocation of such Incremental Facility. The Paying Agent shall promptly
notify the Borrower and the Appropriate Lenders (including Eligible Assignees
that become Lenders in accordance with clause (c) above) of the final allocation
of such Incremental Facility and the Incremental Facility Effective Date.
(f) Conditions to Effectiveness of Increase.
As a condition precedent to such Incremental Facility, the Borrower shall
deliver to the Paying Agent a certificate of each Loan Party dated as of the
Incremental Facility Effective Date (in sufficient copies for each Lender)
signed by a Responsible Officer of such Loan Party (i) certifying and attaching
the resolutions adopted by such Loan Party approving or consenting to the
Incremental Facility, and (ii) in the case of the Borrower, certifying that,
before and after giving effect to the Incremental Facility, and the drawings
thereunder on the relevant Incremental Facility Effective Date, (A) the
representations and warranties contained in Article IV and the other Loan
Documents are true and correct on and as of the Incremental Facility Effective
refer to an earlier date, in which case they are true and correct as of such
earlier date, and except that for purposes of this Section 2.17, the
representations and warranties contained in subsections (g) and (h) of
Section 4.01 shall be deemed to refer to the most recent statements furnished
pursuant to subsections (b) and (c), respectively, of Section 5.03, (B) no
Default exists or would exist after giving full pro forma effect to the
requested Incremental Facility, (C) the Borrower is in compliance with the
covenants in Section 5.04 (determined on a Pro Forma Basis (x) after giving full
effect to the incurrence of the requested Incremental Facility, and (y) assuming
for such purposes that all Incremental Revolving Credit Commitments under all
previously incurred and then-outstanding Incremental Revolving Credit
Incremental Revolving Facility (if any), are fully drawn) and (D) the incurrence
of such Debt and the Liens securing such Debt is permitted under the Related
Documents and all other documents evidencing Debt incurred pursuant to
Section 5.02(b)(i)(C) (including, in the case of an Incremental Term Facility,
after giving pro forma effect to a full drawing of such Incremental Term
Facility) (together with calculations in detail reasonably satisfactory to the
Joint Lead Arrangers). In the case of an Incremental Revolving Credit Facility,
the Borrower shall prepay any Revolving Credit Advances outstanding on the
Incremental Facility Effective Date (and pay any additional amounts required
pursuant to Section 8.04(c)) to the extent necessary to keep the outstanding
Revolving Credit
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Advances ratable with any revised Pro Rata Shares arising from any nonratable
increase in the Revolving Credit Commitments under this Section.
(g) Conflicting Provisions. This Section shall
supersede any provisions in Sections 2.13 or 8.01 to the contrary.
ARTICLE III
Section 3.01. Conditions Precedent to
Initial Extension of Credit. The effectiveness of this Second Amended and
Restated Credit Agreement, and the obligation of each Lender to make an Advance
or of any Issuing Bank to issue a Letter of Credit on the occasion of the
Initial Extension of Credit hereunder is subject to the satisfaction of the
following conditions precedent before or concurrently with such effectiveness or
Initial Extension of Credit:
on or before the Closing Date the following, each dated such day (unless
otherwise specified), in form and substance satisfactory to the Joint Lead
Arrangers and the Administrative Agent (unless otherwise specified) and (except
for the Notes) in sufficient copies for each Lender Party:
(i) Notes payable to the order of the
Lenders to the extent timely requested by such Lenders, pursuant to
Section 2.16.
(ii) The Administrative Agent shall have
received a counterpart signature page to this Agreement, duly executed by the
Borrower, and a reaffirmation of all guarantees, security interests and other
Obligations created under any of the Collateral Documents (including, without
limitation, the Security Agreement), substantially in the form of Exhibit I
hereto, and otherwise satisfactory to the Administrative Agent, duly executed by
the Borrower and each Guarantor.
(iii) Certified copies of (A) the resolutions of
the board of directors or of the members or managers of each Loan Party
approving the Transaction and each Loan Document to which it is or is to be a
party, and (B) all documents evidencing other necessary corporate action and
governmental and other third party approvals and consents, if any, with respect
to the Transaction and each Loan Document to which it is or is to be a party.
(iv) A copy of a certificate of the Secretary of
State of the jurisdiction of incorporation or organization of each Loan Party,
dated reasonably near the Closing Date, certifying (A) as to a true and correct
copy of the charter, articles of incorporation or articles of organization, as
the case may be (“Organizational Documents”) of such Loan Party and each
amendment thereto on file in such Secretary’s office and (B) that (1) such
amendments are the only amendments to such Loan Party’s Organizational Documents
on file in such Secretary’s office,
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(2) if applicable, such Loan Party has paid all franchise taxes to the date of
such certificate and (C) such Loan Party is duly incorporated or organized and
in good standing or presently subsisting under the laws of the State of the
jurisdiction of its incorporation or organization.
(v) A copy of a certificate of the Secretary of
State of each jurisdiction reasonably requested by the Joint Lead Arrangers,
dated reasonably near the Closing Date, stating that a Loan Party is duly
qualified and in good standing as a foreign entity in such State and has filed
all annual reports required to be filed to the date of such certificate.
(vi) A certificate of each Loan Party, signed on
behalf of such Loan Party by a Responsible Officer, dated the date of the
Closing Date (the statements made in which certificate shall be true on and as
of the date of the Initial Extension of Credit), certifying as to (A) the
absence of any amendments to the Organizational Documents of such Loan Party
since the date of the Secretary of State’s certificate referred to in
Section 3.01(a)(iv), (B) a true and correct copy of the bylaws or operating
agreement, as applicable, of such Loan Party as in effect on the date on which
the resolutions referred to in Section 3.01(a)(iii) were adopted and on the date
of the Closing Date, (C) the due incorporation/organization and good standing or
valid existence of such Loan Party as a corporation or limited liability company
organized under the laws of the jurisdiction of its incorporation or
organization, and the absence of any proceeding for the dissolution or
liquidation of such Loan Party, (D) the truth of the representations and
warranties contained in the Loan Documents as though made on and as of the date
of the Initial Extension of Credit and (E) the absence of any event occurring
and continuing, or resulting from the Initial Extension of Credit, that
constitutes a Default.
(vii) A certificate of a Responsible Officer of each
Loan Party certifying the names and true signatures of the officers of such Loan
Party authorized to sign each Loan Document to which it is or is to be a party
and the other documents to be delivered hereunder and thereunder.
(viii) Certified copies of each of the Related Documents,
duly executed by the parties thereto and in form and substance satisfactory to
the Lender Parties, together with all agreements, instruments and other
documents delivered in connection therewith as the Administrative Agent or the
Joint Lead Arrangers shall request.
(ix) A solvency certificate, in substantially the
form of Exhibit F, attesting to the Solvency of the Borrower and its
Consolidated Subsidiaries, taken as a Consolidated whole, both before and after
giving effect to the Transaction, from the Chief Financial Officer of the
Borrower.
(x) Audited annual financial statements dated
December 31, 2013, interim financial statements dated the end of the most recent
fiscal quarter for
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which financial statements are available, pro forma Consolidated financial
statements as to the Borrower and its Subsidiaries and forecasts prepared by
management of the Borrower, in form and substance satisfactory to the
Administrative Agent and the Joint Lead Arrangers, of balance sheets, income
statements and cash flow statements on an annual basis for each year following
the Closing Date until the Termination Date.
(xi) A Notice of Borrowing or Notice of Issuance,
as applicable, relating to the Initial Extension of Credit.
(xii) A favorable opinion of Barrett & McNagny, LLP
counsel for the Loan Parties, in substantially the form of Exhibits G hereto and
as to such other matters as the Administrative Agent or the Joint Lead Arrangers
may reasonably request, and, if applicable, a favorable opinion of appropriate
local counsel to the Loan Parties.
(xiii) Evidence satisfactory to the Administrative Agent
and the Joint Lead Arrangers that a nationally recognized Process Agent shall
have been appointed as Process Agent under Section 8.13 hereof.
(b) The Administrative Agent and the Joint Lead
Arrangers shall be satisfied with the corporate and legal structure and
capitalization of each Loan Party and each of its Subsidiaries the Equity
Interests in which Subsidiaries are being pledged pursuant to the Loan
Documents, including the terms and conditions of the charter, bylaws and each
class of Equity Interest in each Loan Party and each such Subsidiary and of each
agreement or instrument relating to such structure or capitalization.
(c) All Equity Interests of the Guarantors
shall be owned by the Borrower or one or more of the Borrower’s Subsidiaries, in
each case free and clear of any Lien other than Liens created under the Loan
Documents.
(d) The Administrative Agent and the Joint Lead
Arrangers shall be satisfied that all Existing Debt, other than Surviving Debt,
has been prepaid, redeemed or defeased in full or otherwise satisfied and
extinguished and that all Surviving Debt shall be on terms and conditions
satisfactory to the Administrative Agent and the Joint Lead Arrangers.
(e) Before giving effect to the Transaction,
there shall have occurred no Material Adverse Change since December 31, 2013.
(f) There shall exist no action, suit,
investigation, litigation or proceeding affecting any Loan Party or any of its
Subsidiaries pending or threatened before any court, governmental agency or
arbitrator that (i) could reasonably be expected to have a Material Adverse
Effect other than the matters described on Schedule 4.01(f) hereto (the
“Disclosed Litigation”) or (ii) purports to affect the legality, validity or
enforceability of any Transaction Document or the consummation of the
Transaction, and there shall have been no adverse change in the status, or
financial effect on, any Loan Party or any of its Subsidiaries, of the Disclosed
Litigation from that described on Schedule 4.01(f) hereto.
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(g) All governmental and third party consents
and approvals necessary in connection with the Transaction shall have been
obtained (without the imposition of any conditions that are not acceptable to
the Joint Lead Arrangers and the Administrative Agent) and shall remain in
effect; and no law or regulation shall be applicable in the judgment of the
Joint Lead Arrangers and the Administrative Agent, in each case that restrains,
prevents or imposes materially adverse conditions upon the Transaction.
(h) The Borrower shall have paid (i) all accrued
fees of the Joint Lead Arrangers, the Agents and the Lender Parties and all
accrued expenses of the Joint Lead Arrangers (including the accrued fees and
expenses of counsel to the Joint Lead Arrangers and the Administrative Agent,
and local counsel to the Lender Parties), and (ii) all accrued and unpaid
interest, fees, expenses, and reimbursement Obligations pursuant to the terms of
the Existing Credit Agreement or otherwise due in respect of the Existing Credit
Facilities.
(i) The Refinancing shall have been
consummated or shall be consummated or concurrently consummated with the Closing
Date, all advances and other amounts owing under the Existing Credit Agreement
shall have been repaid in full (or, at the election of the applicable Existing
Lenders which are also Initial Lenders hereunder, outstanding advances exchanged
for Advances, pursuant the applicable provisions of Section 2.01 hereof). The
commitments thereunder shall have terminated and the letters of credit issued
thereunder shall have been canceled or the reimbursement of draws thereunder
provided for in a manner acceptable to the Paying Agent (it being understood
that treating such letters of credit as Existing Letters of Credit hereunder is
acceptable to the Paying Agent), and all Liens and guaranties supporting any
Debt under the Existing Credit Agreement shall have been fully released and
terminated.
(j) The Lenders shall have received evidence
that all insurance required to be maintained pursuant to Section 5.01 hereof has
been obtained and is in effect, together with all certificates of insurance
corresponding thereto, which certificates shall name the Collateral Agent, on
behalf of the Secured Parties, as an additional insured or loss payee, as the
case may be.
(k) Each of the Security Agreement and the
Subsidiary Guaranty shall be in full force and effect, duly executed by and
enforceable against (i) the Borrower, in the case of the Security Agreement, and
(b) each Subsidiary of the Borrower that is required to be a party thereto
pursuant to the terms of this Agreement, in the case of the Security Agreement
and the Subsidiary Guaranty.
(l) The Borrower shall be in compliance with
Section 1 of the Security Agreement and shall otherwise be in compliance with
all of the terms and conditions set forth in the Security Agreement. Each
Subsidiary that is required pursuant to the terms of this Agreement to be a
party to the Security Agreement and the Subsidiary Guaranty shall be in
compliance with Section 1 of the Security Agreement and Section 1 of the
Subsidiary Guaranty and shall otherwise be in compliance with all of the terms
and conditions set forth in the Security Agreement and the Subsidiary Guaranty.
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(m) The Administrative Agent (or the Administrative
Agent’s counsel, on its behalf) shall have received certified copies of UCC,
tax, litigation and judgment lien searches, or, if applicable, equivalent
searches, each of a recent date listing all effective financing statements, lien
notices or comparable documents (together with copies of such financing
statements and documents) that name any Loan Party as debtor and that are filed
in those state and county jurisdictions in which any Loan Party is organized or
maintains its principal place of business and such other searches as the
Administrative Agent may reasonably request.
(n) The Administrative Agent (or the
Administrative Agent’s counsel, on its behalf) shall have received evidence of
the completion of all other recordings and filings of or with respect to the
Security Agreement and the taking of all other actions that the Administrative
Agent and the Collateral Agent may deem necessary or desirable in order to
perfect and maintain the Liens on the Collateral created thereby.
(o) The Lenders shall have received all
documentation and other information required by bank regulatory authorities
regulations, including the Patriot Act.
Section 3.02. Conditions Precedent to
Each Borrowing and Issuance and Renewal. The obligation of each Appropriate
Lender to make an Advance (other than a Letter of Credit Advance made by an
Issuing Bank or a Revolving Credit Lender pursuant to Section 2.03(c) and a
Swing Line Advance made by a Revolving Credit Lender pursuant to
Section 2.02(b)) on the occasion of each Borrowing (including the initial
Borrowing), and the obligation of an Issuing Bank to issue a Letter of Credit
(including the initial issuance) or renew a Letter of Credit and the right of
the Borrower to request a Swing Line Borrowing, shall be subject to the further
conditions precedent that on the date of such Borrowing or issuance or renewal
(a) the following statements shall be true (and each of the giving of the
applicable Notice of Borrowing, Notice of Swing Line Borrowing, Notice of
Issuance or Notice of Renewal and the acceptance by the Borrower of the proceeds
of such Borrowing or of such Letter of Credit or the renewal of such Letter of
Credit shall constitute a representation and warranty by the Borrower that both
on the date of such notice and on the date of such Borrowing or issuance or
renewal such statements are true):
(i) the representations and warranties
contained in each Loan Document are true and correct in all material respects
(provided, that those representations and warranties which are already qualified
as to materiality or as to Material Adverse Effect shall be true and correct in
all respects (after giving effect to such qualification therein)) on and as of
such date, before and after giving effect to such Borrowing or issuance or
renewal and to the application of the proceeds therefrom, as though made on and
as of such date, other than any such representations or warranties that, by
their terms, refer to a specific date other than the date of such Borrowing or
issuance or renewal, in which case as of such specific date;
(ii) no Default has occurred and is continuing,
or would result from such Borrowing or issuance or renewal or from the
application of the proceeds therefrom;
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(iii) [Reserved]; and
(iv) after giving effect to such Borrowing, the
Borrower is in compliance, on a Pro Forma Basis, with the covenants (including
restrictions on liens and debt) set forth in each of the Related Documents and
all other documents evidencing Debt incurred pursuant to Section 5.02(b)(i)(C);
(b) in the case of a Borrowing to be denominated
in an Alternative Currency, there shall not have occurred any change in national
or international financial, political or economic conditions or currency
exchange rates or exchange controls which in the reasonable opinion of the
Paying Agent, the Required Lenders (in the case of any Advances to be
denominated in an Alternative Currency) or the Issuing Bank (in the case of any
Letter of Credit to be denominated in an Alternative Currency) would make it
impracticable for such Borrowing to be denominated in the relevant Alternative
Currency; and
(c) the Administrative Agent shall have
received such other approvals, opinions or documents as the Administrative Agent
or the Joint Lead Arrangers may reasonably request.
Section 3.03. Determinations Under
Section 3.01. For purposes of determining compliance with the conditions
specified in Section 3.01, each Lender Party shall be deemed to have consented
to, approved or accepted or to be satisfied with each document or other matter
satisfactory to the Lender Parties unless an officer of the Paying Agent
responsible for the transactions contemplated by the Loan Documents shall have
received notice from such Lender Party prior to the Closing Date specifying its
objection thereto and, if the Initial Extension of Credit shall be made on the
Closing Date and consists of a Borrowing, such Lender Party shall not have made
available to the Paying Agent such Lender Party’s ratable portion of such
Borrowing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01. Representations and
Warranties of the Borrower. The Borrower represents and warrants as follows:
(a) Each Loan Party and each of its Subsidiaries
(i) is a corporation or a limited liability company duly organized, validly
formation, (ii) is duly qualified and in good standing as a foreign corporation
or limited liability company in each other jurisdiction in which it owns or
leases property or in which the conduct of its business requires it to so
qualify or be licensed except where the failure to so qualify or be licensed
would not be reasonably likely to have a Material Adverse Effect and (iii) has
all requisite entity power and authority (including, without limitation, all
governmental licenses, permits and other approvals) to own or lease and operate
its properties and to carry on its business as now conducted and as proposed to
be conducted. Set forth on Schedule 4.01(a) hereto is a complete and accurate
list of all Loan Parties, showing as of the date hereof (as to each
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Loan Party) the jurisdiction of its formation, the address of its principal
place of business and its U.S. taxpayer identification number or, in the case of
any non-U.S. Loan Party that does not have a U.S. taxpayer identification
number, its unique identification number issued to it by the jurisdiction of its
formation. The copy of the charter of each Loan Party and each amendment
thereto provided pursuant to Section 3.01(a)(vii) is a true and correct copy of
each such document, each of which is valid and in full force and effect.
(b) Set forth on Schedule 4.01(b) hereto is a
complete and accurate list of all Subsidiaries of each Loan Party, showing as of
the date hereof (as to each such Subsidiary) the jurisdiction of its
incorporation, the number of shares of each class of its Equity Interests
authorized, and the number outstanding, on the date hereof and the percentage of
each such class of its Equity Interests owned (directly or indirectly) by such
Loan Party and the number of shares covered by all outstanding options,
warrants, rights of conversion or purchase and similar rights at the date
hereof. All of the outstanding Equity Interests in each Loan Party’s
Subsidiaries has been validly issued, are fully paid and non-assessable and are
owned by such Loan Party or one or more of its Subsidiaries free and clear of
all Liens, except those created under the Collateral Documents.
(c) The execution, delivery and performance by
each Loan Party of each Transaction Document to which it is or is to be a party,
and the consummation of the Transaction, are within such Loan Party’s corporate
powers, have been duly authorized by all necessary corporate action, and do not
(i) contravene such Loan Party’s charter or bylaws, (ii) violate any law, rule,
regulation (including, without limitation, Regulation X of the Board of
Governors of the Federal Reserve System), order, writ, judgment, injunction,
decree, determination or award, (iii) conflict with or result in the breach of,
or constitute a default or require any payment to be made under, any contract,
loan agreement, indenture, mortgage, deed of trust, lease or other instrument
binding on or affecting any Loan Party, any of its Subsidiaries or any of their
properties or (iv) except for the Liens created under the Loan Documents, result
in or require the creation or imposition of any Lien upon or with respect to any
of the properties of any Loan Party or any of its Subsidiaries. No Loan Party
or any of its Subsidiaries is in violation of any such law, rule, regulation,
order, writ, judgment, injunction, decree, determination or award or in breach
of any such contract, loan agreement, indenture, mortgage, deed of trust, lease
or other instrument, the violation or breach of which could be reasonably likely
(d) No authorization or approval or other action
by, and no notice to or filing with, any governmental authority or regulatory
body or any other third party is required for (i) the due execution, delivery,
recordation, filing or performance by any Loan Party of any Transaction Document
to which it is or is to be a party, or for the consummation of the Transaction,
(ii) the grant by any Loan Party of the Liens granted by it pursuant to the
Collateral Documents, (iii) the perfection or maintenance of the Liens created
under the Collateral Documents (including the first priority nature thereof) or
(iv) the exercise by any Agent or any Lender Party of its rights under the Loan
Documents or the remedies in respect of the Collateral pursuant to the
Collateral Documents, except for the authorizations, approvals, actions, notices
and filings listed on Schedule 4.01(d) hereto, all of which have been duly
obtained, taken, given or made and are in full force and
76
effect. All applicable waiting periods in connection with the Transaction have
expired without any action having been taken by any competent authority
restraining, preventing or imposing materially adverse conditions upon the
Transaction or the rights of the Loan Parties or their Subsidiaries freely to
transfer or otherwise dispose of, or to create any Lien on, any properties now
owned or hereafter acquired by any of them.
(e) This Agreement has been, and each other
Transaction Document when delivered hereunder will have been, duly executed and
delivered by each Loan Party party thereto. This Agreement is, and each other
Transaction Document when delivered hereunder will be, the legal, valid and
binding obligation of each Loan Party party thereto, enforceable against such
Loan Party party in accordance with its terms.
(f) There is no action, suit, investigation,
litigation or proceeding affecting any Loan Party or any of its Subsidiaries,
including any Environmental Action, pending or threatened before any court,
governmental agency or arbitrator that (i) could be reasonably likely to have a
Material Adverse Effect (other than the Disclosed Litigation) or (ii) purports
to affect the legality, validity or enforceability of any Transaction Document
or the consummation of the Transaction, and there has been no material adverse
change in the status, or financial effect on any Loan Party or any of its
Subsidiaries, of the Disclosed Litigation from that described on
Schedule 4.01(f) hereto.
(g) The Consolidated balance sheet of the
Borrower and its Subsidiaries as at, December 31, 2013, and the related
Consolidated statement of income and Consolidated statement of cash flows of the
Borrower and its Subsidiaries for the fiscal year then ended, accompanied by an
unqualified opinion of Ernst & Young LLP, independent public accountants, and
the Consolidated balance sheet of the Borrower and its Subsidiaries as at
September 30, 2014, and the related Consolidated statements of income and
Consolidated statement of cash flows of the Borrower and its Subsidiaries for
the six months then ended, duly certified by the Chief Financial Officer of the
Borrower, copies of which have been furnished to each Lender Party, fairly
present, subject, in the case of said balance sheet as at September 30, 2014,
and said statements of income and cash flows for the three months then ended, to
year-end audit adjustments, the Consolidated financial condition of the Borrower
and its Subsidiaries as at such dates and the Consolidated results of operations
of the Borrower and its Subsidiaries for the periods ended on such dates, all in
accordance with generally accepted accounting principles applied on a consistent
basis, and since December 31, 2013, there has been no Material Adverse Change
and no event has occurred or condition arisen that could reasonably be expected
to have a Material Adverse Effect. Each reconciliation for the Borrower on a
stand-alone basis with respect to each of the financial statements referred to
above as at each such date for each such period, duly certified by the Chief
Financial Officer of the Borrower, a copy of which has been furnished to each
Lender Party, fairly present the financial condition and results of operations
of the Borrower on a stand-alone basis as at each such date.
(h) The Consolidated forecasted balance sheet,
statement of income and statement of cash flows of the Borrower and its
Subsidiaries delivered to the Lender Parties pursuant to Section 3.01(a)(xi) or
Section 5.03 were prepared in good faith on the
77
basis of the assumptions stated therein, which assumptions were fair in light of
the conditions existing at the time of delivery of such forecasts, and
represented, at the time of delivery, the Borrower’s best estimate of its future
financial performance.
(i) Neither the Information Memorandum nor
any other information, exhibit or report furnished by or on behalf of any Loan
Party to any Agent or any Lender Party in connection with the negotiation and
syndication of the Loan Documents or pursuant to the terms of the Loan Documents
fact necessary to make the statements made therein not misleading.
(j) The Borrower is not engaged in the
business of extending credit for the purpose of purchasing or carrying Margin
Stock, and no proceeds of any Advance or drawings under any Letter of Credit
will be used to purchase or carry any Margin Stock or to extend credit to others
for the purpose of purchasing or carrying any Margin Stock.
(k) Neither any Loan Party nor any of its
Subsidiaries is an “investment company,” or an “affiliated person” of, or
“promoter” or “principal underwriter” for, an “investment company,” as such
terms are defined in the Investment Company Act of 1940, as amended. Neither
any Loan Party nor any of its Subsidiaries is a “holding company,” or a
“subsidiary company” of a “holding company,” or an “affiliate” of a “holding
company” or of a “subsidiary company” of a “holding company,” as such terms are
defined in the Public Utility Holding Company Act of 1935, as amended. Neither
the making of any Advances, nor the issuance of any Letters of Credit, nor the
application of the proceeds or repayment thereof by the Borrower, nor the
consummation of the other transactions contemplated by the Transaction
Documents, will violate any provision of any such Act or any rule, regulation or
order of the Securities and Exchange Commission thereunder.
(l) Neither any Loan Party nor any of its
Subsidiaries is a party to any indenture, loan or credit agreement or any lease
or other agreement or instrument or subject to any charter or corporate
restriction that could be reasonably likely to have a Material Adverse Effect.
(m) All filings and other actions necessary or
advisable to perfect and protect the security interest in the Collateral created
under the Collateral Documents have been duly made or taken and are in full
force and effect, and the Collateral Documents create in favor of the Collateral
Agent for the benefit of the Secured Parties a valid and, together with such
filings and other actions, perfected first priority security interest in the
Collateral securing the payment of the Secured Obligations. The Loan Parties
are the legal and beneficial owners of the Collateral free and clear of any
Lien, except for the liens and security interests created or permitted under the
Loan Documents.
(n) Each Loan Party is, individually and
together with its Subsidiaries, Solvent.
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(o) Set forth on Schedule 4.01(o) hereto is a
complete and accurate list of all Plans, Multiemployer Plans and Welfare Plans.
(i) No ERISA Event has occurred or is
reasonably expected to occur with respect to any Plan that has resulted in or is
reasonably expected to result in a material liability of any Loan Party or any
ERISA Affiliate.
(ii) Schedule B (Actuarial Information) to the
most recent annual report (Form 5500 Series) for each Plan, copies of which have
been filed with the Internal Revenue Service and furnished to the Lender
Parties, is complete and accurate and fairly presents the funding status of such
Plan, and since the date of such Schedule B there has been no material adverse
change in such funding status.
(iii) Neither any Loan Party nor any ERISA
Affiliate has incurred or is reasonably expected to incur any Withdrawal
Liability to any Multiemployer Plan.
(iv) Neither any Loan Party nor any ERISA Affiliate
has been notified by the sponsor of a Multiemployer Plan that such Multiemployer
Plan is in reorganization or has been terminated, within the meaning of Title IV
of ERISA, and no such Multiemployer Plan is reasonably expected to be in
reorganization or to be terminated, within the meaning of Title IV of ERISA.
(p) Except for costs and liabilities that could
not reasonably be expected to exceed (1) reserves for environmental costs and
liabilities such as (x) those appearing on the Consolidated balance sheet of the
Borrower and its Subsidiaries from time to time as accrued liabilities or
escrowed funds, or (y) those covered by proceeds of applicable insurance
policies, letters of credit, bonds or similar risk management instruments, plus
(2) $20,000,000, in the aggregate:
(i) the operations and properties of each
Loan Party and each of its Subsidiaries comply in all material respects with all
applicable Environmental Laws and Environmental Permits, all past non-compliance
with such Environmental Laws and Environmental Permits has been resolved without
ongoing obligations or costs, and no circumstances exist that could be
reasonably likely to (A) form the basis of an Environmental Action against any
Loan Party or any of its Subsidiaries or any of their properties or (B) cause
any such property to be subject to any restrictions on ownership, occupancy, use
or transferability under any Environmental Law;
(ii) none of the properties currently or
formerly owned or operated by any Loan Party or any of its Subsidiaries is
listed or proposed for listing on the NPL or on the CERCLIS or any analogous
foreign, state or local list or is adjacent to any such property; there are no
and never have been any underground or aboveground storage tanks or any surface
impoundments, septic tanks, pits, sumps or lagoons in which Hazardous Materials
are being or have been treated, stored or disposed on any property currently
owned or operated by any Loan Party or any of its Subsidiaries or, to the best
of its knowledge, on any property
79
formerly owned or operated by any Loan Party or any of its Subsidiaries; there
is no asbestos or asbestos-containing material on any property currently owned
or operated by any Loan Party or any of its Subsidiaries; and Hazardous
Materials have not been released, discharged or disposed of on any property
currently or formerly owned or operated by any Loan Party or any of its
Subsidiaries; and
(iii) neither any Loan Party nor any of its
Subsidiaries is undertaking, and has not completed, either individually or
together with other potentially responsible parties, any investigation or
assessment or remedial or response action relating to any actual or threatened
release, discharge or disposal of Hazardous Materials at any site, location or
operation, either voluntarily or pursuant to the order of any governmental or
regulatory authority or the requirements of any Environmental Law; and all
Hazardous Materials generated, used, treated, handled or stored at, or
transported to or from, any property currently or formerly owned or operated by
any Loan Party or any of its Subsidiaries have been disposed of in a manner not
reasonably expected to result in material liability to any Loan Party or any of
its Subsidiaries.
(q) Neither any Loan Party nor any of its
Subsidiaries is party to any tax sharing agreement.
(i) Each Loan Party and each of its
Subsidiaries and Affiliates has filed, has caused to be filed or has been
included in all tax returns (Federal, state, local and foreign) required to be
filed and has paid all taxes shown thereon to be due, together with applicable
interest and penalties.
(ii) Set forth on Part I of
Schedule 4.01(q) hereto is a complete and accurate list, as of the date hereof,
of each taxable year of each Loan Party and each of its Subsidiaries and
Affiliates for which Federal income tax returns have been filed and for which
the expiration of the applicable statute of limitations for assessment or
collection has not occurred by reason of extension or otherwise (an “Open
Year”).
(iii) There are no pending tax audits or
examinations, except as set forth on Part II of Schedule 4.01(q) hereof, and no
deficiencies or other claims for unpaid taxes are proposed in writing in respect
of taxes (Federal, state, local and foreign) due from, or with respect to, any
of the Loan Parties, their Subsidiaries or Affiliates or with respect to any tax
return filed by, or in respect of, any of them, except as set forth on Part II
of Schedule 4.01(q) hereof.
(r) Neither the business nor the properties
of any Loan Party or any of its Subsidiaries are affected by any fire,
explosion, accident, strike, lockout or other labor dispute, drought, storm,
hail, earthquake, embargo, act of God or of the public enemy or other casualty
(whether or not covered by insurance) that could be reasonably likely to have a
Material Adverse Effect. Each Loan Party and each Subsidiary thereof maintains
insurance with responsible, financially sound and reputable insurance companies,
in compliance with the requirements of Section 5.01(d), and in such amounts,
with such deductibles and covering such properties and assets, and covering such
risks as is
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customarily carried by companies engaged in similar businesses and owning
similar assets and properties in localities where each such Loan Party or the
applicable Subsidiary operates.
(s) Set forth on Schedule 4.01(s) hereto is a
complete and accurate list of each individual incurrence or issuance of Existing
Debt with an outstanding principal amount in excess of $10 million as of the
Closing Date (other than Surviving Debt), showing as of the date hereof the
obligor and the principal amount outstanding thereunder.
(t) Set forth on Schedule 4.01(t) hereto is a
complete and accurate list of each individual incurrence or issuance of Debt
with an outstanding principal amount in excess of $10 million as of the Closing
Date which will remain outstanding after giving effect to the consummation of
the Transaction (and which will constitute “Surviving Debt” after the
consummation of the Transaction), showing as of the date hereof the obligor and
the principal amount outstanding thereunder, the maturity date thereof and the
amortization schedule therefor.
(u) (i) Each Loan Party and each of its
Subsidiaries has good record and marketable title in fee simple to, or valid
leasehold interests in, all real property necessary or used in the ordinary
conduct of its business, except for such defects in title as could not,
Adverse Effect.
(ii) Set forth on Schedule 4.01(u) hereto is a
complete and accurate list of all Liens on the property or assets of any Loan
Party or any of its Subsidiaries, showing as of the date hereof (x) the
lienholder thereof, (y) to the extent that the principal amount secured thereby
exceeds $5 million, the principal amount of the obligations secured thereby, and
(z) the property or assets of such Loan Party or such Subsidiary subject
thereto. The property and assets of each Loan Party and each of its
Subsidiaries is subject to no Liens, other than Liens set forth on
Schedule 4.01(u), and as otherwise permitted by Section 5.02(a).
(v) Set forth on Schedule 4.01(v) hereto is a
complete and accurate list of all Investments in excess of $25 million held by
any Loan Party or any of its Subsidiaries on the date hereof, showing as of the
date hereof the amount, obligor or issuer and maturity, if any, thereof.
(w) Set forth on Schedule 4.01(w) hereto is a
complete and accurate list of all patents, trademarks, trade names, service
marks and copyrights, and all applications therefor and licenses thereof, of
each Loan Party or any of its Subsidiaries, showing as of the date hereof the
jurisdiction in which registered, the registration number, the date of
registration and the expiration date.
(x) Neither any Loan Party nor any of its
Subsidiaries are using the proceeds of the Advances for any purpose other than
as permitted under this Agreement.
(y) The Obligations under the Loan Documents
constitute “Senior Debt” (or the equivalent term) as such term is defined in any
agreement, indenture or other
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instrument pursuant to which any Debt that is subordinated to the Obligations of
any Loan Party and each Subsidiary thereof under the Loan Documents is issued,
to which any Loan Party or any of Subsidiaries thereof is a party and that
contains such a definition or any similar definition.
(z) Anti-Money Laundering/International Trade
Law Compliance. No Covered Entity is a Sanctioned Person. To the knowledge of
the Borrower, no director, officer, employee, agent, affiliate or representative
of any Covered Entity is a Sanctioned Person. No Covered Entity, either in its
own right or through any third party, (i) has any of its assets in a Sanctioned
Country or in the possession, custody or control of a Sanctioned Person in
violation of any Anti-Terrorism Law, (ii) does business in or with, or derives
any of its income from investments in or transactions with, any Sanctioned
Country or Sanctioned Person in violation of any Anti-Terrorism Law, or
(iii) engages in any dealings or transactions prohibited by any Anti-Terrorism
Law.
ARTICLE V
COVENANTS OF THE BORROWER
Section 5.01. Affirmative Covenants. So
long as any Advance or any other Obligation of any Loan Party under any Loan
Document shall remain unpaid, any Letter of Credit shall be outstanding or any
Lender Party shall have any Commitment hereunder, the Borrower will:
(a) Compliance with Laws, Etc. Comply, and
cause each of its Subsidiaries to comply, in all material respects, with all
applicable laws, rules, regulations and orders, such compliance to include,
without limitation, compliance with ERISA, all Anti-Terrorism Laws and the
Racketeer Influenced and Corrupt Organizations Chapter of the Organized Crime
Control Act of 1970. The Loan Parties shall provide to the Lenders any
certifications or information that a Lender requests to confirm compliance by
the Loan Parties with Anti-Terrorism Laws.
(b) Payment of Taxes, Etc. Pay and discharge,
and cause each of its Subsidiaries to pay and discharge, before the same shall
become delinquent, (i) all taxes, assessments and governmental charges or levies
imposed upon it or upon its property and (ii) all lawful claims that, if unpaid,
might by law become a Lien upon its property; provided, however, that neither
the Borrower nor any of its Subsidiaries shall be required to pay or discharge
any such tax, assessment, charge or claim that is being contested in good faith
and by proper proceedings and as to which appropriate reserves are being
maintained, unless and until any Lien resulting therefrom attaches to its
property and becomes enforceable against its other creditors.
(c) Compliance with Environmental Laws.
Comply, and cause each of its Subsidiaries and all lessees and other Persons
operating or occupying its properties to comply, in all material respects, with
all applicable Environmental Laws and Environmental Permits; obtain and renew
and cause each of its Subsidiaries to obtain and renew all Environmental Permits
necessary for its operations and properties; and conduct,
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and cause each of its Subsidiaries to conduct, any investigation, study,
sampling and testing, and undertake any cleanup, removal, remedial or other
action necessary to remove and clean up all Hazardous Materials from any of its
properties, in accordance with the requirements of all Environmental Laws;
provided, however, that neither the Borrower nor any of its Subsidiaries shall
be required to undertake any such cleanup, removal, remedial or other action to
the extent that its obligation to do so is being contested in good faith and by
proper proceedings and appropriate reserves are being maintained with respect to
such circumstances.
(d) Maintenance of Insurance. Maintain, and
cause each of its Subsidiaries to maintain, insurance (i) in such amounts, with
such deductibles and covering such properties and assets, and covering such
risks as is usually carried by companies engaged in similar businesses and
owning similar assets and properties in the same localities in which the
Borrower or such Subsidiary operates, and (ii) provided by responsible,
financially sound and reputable insurance companies or associations that are not
Affiliates of any Loan Party, provided, that the Borrower and its Subsidiaries
may self-insure through one or more captive insurance subsidiaries in respect of
such risks with respect to which similarly situated companies of established
reputation engaged in similar businesses commonly self-insure, so long as
(A) such captive insurance companies do not underwrite or issue insurance (or
similar) policies (x) with an individual maximum coverage amount in excess of
$10 million or (y) with an aggregate maximum coverage amount for all such
policies in excess of $30 million, and (B) the Borrower and its Subsidiaries
shall obtain such additional or excess insurance from responsible, financially
sound and reputable insurance companies or associations that are not Affiliates
as is reasonably necessary to comply with the requirements of clause (i) of this
Section 5.01(d).
(e) Preservation of Corporate Existence, Etc.
Preserve and maintain, and cause each of its Subsidiaries to preserve and
maintain, its existence, legal structure, legal name, rights (charter and
statutory), permits, licenses, approvals, privileges and franchises; provided,
however, that (i) the Borrower may cause any of its Subsidiaries to change its
legal structure and/or legal name so long as the Borrower has taken all actions
to ensure that the Lenders maintain continuous first priority perfected liens in
respect of any Collateral effected by any such change, and such change does not
reduce, diminish, impair or otherwise disadvantage the Borrower, such Subsidiary
or the Lender Parties in any material respect, (ii) the Borrower and its
Subsidiaries may consummate any merger or consolidation permitted under
Section 5.02(d) and (iii) neither the Borrower nor any of its Subsidiaries shall
be required to preserve any right, permit, license, approval, privilege or
franchise if the Board of Directors of the Borrower or such Subsidiary shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Borrower or such Subsidiary, as the case may be, and that
the loss thereof is not disadvantageous in any material respect to the Borrower,
such Subsidiary or the Lender Parties.
(f) Visitation Rights. At any reasonable time
and from time to time, permit any of the Agents or any of the Lender Parties, or
any agents or representatives thereof, to examine and make copies of and
abstracts from the records and books of account of, and
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visit the properties of, the Borrower and any of its Subsidiaries, and to
discuss the affairs, finances and accounts of the Borrower and any of its
Subsidiaries with any of their officers or directors and with their independent
certified public accountants.
(g) Keeping of Books. Keep, and cause each of
its Subsidiaries to keep, proper books of record and account, in which full and
correct entries shall be made of all financial transactions and the assets and
business of the Borrower and each such Subsidiary in accordance with generally
accepted accounting principles in effect from time to time.
(h) Maintenance of Properties, Etc. Maintain
and preserve, and cause each of its Subsidiaries to maintain and preserve, all
of its properties that are used or useful in the conduct of its business in good
working order and condition, ordinary wear and tear excepted.
(i) Transactions with Affiliates and
Excluded Subsidiaries. Conduct, and cause each of its Subsidiaries to conduct,
all transactions otherwise permitted under the Loan Documents with any of their
Affiliates (including any Excluded Subsidiaries) on terms that are fair and
reasonable and no less favorable to the Borrower or such Subsidiary than it
would obtain in a comparable arm’s-length transaction with a Person not an
Affiliate.
(j) Covenant to Guarantee Obligations and
Give Security. Subject to the provisions of Section 8.12, upon (x) the request
of the Collateral Agent following the occurrence and during the continuance of a
Default, (y) the formation or acquisition of any new direct or indirect
Subsidiaries by any Loan Party (unless, in the case of this clause (y), the
Borrower otherwise elects by designating such Subsidiary as an Excluded
Subsidiary in a writing delivered to the Joint Lead Arrangers within 30 days
after the date of such formation or acquisition, in which case the provisions of
this Agreement that by their terms become effective upon the Borrower’s making
such election shall thereafter be in effect) or any Subsidiary’s ceasing to be
an Excluded Subsidiary pursuant to the definition of “Excluded Subsidiary” or
(z) the acquisition of any Subject Property by any Loan Party, and such Subject
Property, in the judgment of the Collateral Agent, shall not already be subject
to a perfected first priority security interest in favor of the Collateral Agent
for the benefit of the Secured Parties, then the Borrower shall, and in the case
of clause (y), may, in each case at the Borrower’s expense:
(i) in connection with the formation or
acquisition of a Subsidiary, within 30 days after the later of (x) such
formation or acquisition of any such Subsidiary and (y) the capitalization of
such Subsidiary exceeding $10 million (the later of such dates, the “Joinder
Date”), or within 30 days of any Subsidiary’s ceasing to be an Excluded
Subsidiary, cause each such Subsidiary, and cause each direct and indirect
parent of such Subsidiary (if it has not already done so), to duly execute and
deliver to the Collateral Agent a guaranty or guaranty supplement, in form and
substance satisfactory to the Collateral Agent, guaranteeing the other Loan
Parties’ obligations under the Loan Documents; provided, however, that
notwithstanding the foregoing, if the capitalization of an
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Excluded Subsidiary of the Borrower which is designated as an Excluded
Subsidiary pursuant to Section 5.02(e)(iii)(D) shall exceed $10 million at the
time of such designation, such Excluded Subsidiary shall not be prevented from
becoming an Excluded Subsidiary hereunder, and if the capitalization of an
excluded Subsidiary designated pursuant to Section 5.02(e)(iii)(D) shall at any
time after such designation exceed $10 million, such Excluded Subsidiary shall
not cease to be an Excluded Subsidiary hereunder unless such cessation is
otherwise required pursuant to another provision or requirement of this
Agreement,
(ii) within 30 days after such request, Joinder
Date or any Subsidiary’s ceasing to be an Excluded Subsidiary, furnish to the
Collateral Agent a description of the personal properties of the Loan Parties
and their respective Subsidiaries constituting Subject Property in detail
satisfactory to the Collateral Agent,
(iii) within 30 days after such request, Joinder
Date or any Subsidiary’s ceasing to be an Excluded Subsidiary, duly execute and
deliver, and cause each such Subsidiary and each direct and indirect parent of
such Subsidiary (if it has not already done so) to duly execute and deliver, to
the Collateral Agent pledges, assignments, security agreement supplements and
other security agreements, as specified by and in form and substance
satisfactory to the Collateral Agent, securing payment of all the Obligations of
the applicable Loan Party, such Subsidiary or such parent, as the case may be,
under the Loan Documents and constituting Liens on all such properties which
constitute Subject Property,
(iv) within 30 days after such request, Joinder
Date or any Subsidiary’s ceasing to be an Excluded Subsidiary, take, and cause
such Subsidiary or such parent to take, whatever action (including, without
limitation, the filing of Uniform Commercial Code financing statements, and the
giving of notices) may be necessary or advisable in the opinion of the
Collateral Agent to vest in the Collateral Agent (or in any representative of
the Collateral Agent designated by it) valid and subsisting Liens on the Subject
Property purported to be subject to the pledges, assignments, security agreement
supplements and security agreements delivered pursuant to this Section 5.01(j),
enforceable against all third parties in accordance with their terms,
(v) within 60 days after such request, Joinder
Date or any Subsidiary’s ceasing to be an Excluded Subsidiary, deliver to the
Collateral Agent, upon the request of the Collateral Agent in its sole
discretion, a signed copy of a favorable opinion, addressed to the Collateral
Agent and the other Secured Parties, of counsel for the Loan Parties acceptable
to the Collateral Agent as to the matters contained in clauses (i), (iii) and
(iv) above, as to such guaranties, guaranty supplements, pledges, assignments,
security agreement supplements and security agreements being legal, valid and
binding obligations of each Loan Party party thereto enforceable in accordance
with their terms, as to the matters contained in clause (iv) above, as to such
recordings, filings, notices, endorsements and other
85
actions being sufficient to create valid perfected Liens on such Subject
Property, and as to such other matters as the Collateral Agent may reasonably
request,
(vi) upon the occurrence and during the continuance
of a Default, promptly cause to be deposited any and all cash dividends paid or
payable to it or any of its Subsidiaries from any of its Subsidiaries from time
to time into the Collateral Account, and with respect to all other dividends
paid or payable to it or any of its Subsidiaries from time to time, promptly
execute and deliver, or cause such Subsidiary to promptly execute and deliver,
as the case may be, any and all further instruments and take or cause such
Subsidiary to take, as the case may be, all such other action as the Collateral
Agent may deem necessary or desirable in order to obtain and maintain from and
after the time such dividend is paid or payable a perfected, first priority lien
on and security interest in such dividends, and
(vii) at any time and from time to time, promptly
execute and deliver any and all further instruments and documents and take all
such other action as the Collateral Agent may deem necessary or desirable in
obtaining the full benefits of, or in perfecting and preserving the Liens of,
such guaranties, pledges, assignments, security agreement supplements and
security agreements.
(k) Further Assurances. (i) Promptly upon
request by any Agent, or any Lender Party through the Paying Agent, correct, and
cause each of its Subsidiaries promptly to correct, any defect or error that may
be discovered in any Loan Document or in the execution, acknowledgment, filing
or recordation thereof, and
(ii) Promptly upon request by any Agent, or any
Lender Party through the Paying Agent, do, execute, acknowledge, deliver,
record, re-record, file, re-file, register and re-register any and all such
further acts, deeds, conveyances, pledge agreements, assignments, financing
statements and continuations thereof, termination statements, notices of
assignment, transfers, certificates, assurances and other instruments as any
Agent, or any Lender Party through the Paying Agent, may reasonably require from
time to time in order to (A) carry out more effectively the purposes of the Loan
Documents, (B) to the fullest extent permitted by applicable law, subject any
Loan Party’s or any of its Subsidiaries’ properties, assets, rights or interests
to the Liens now or hereafter intended to be covered by any of the Collateral
Documents, (C) perfect and maintain the validity, effectiveness and priority of
any of the Collateral Documents and any of the Liens intended to be created
thereunder and (D) assure, convey, grant, assign, transfer, preserve, protect
and confirm more effectively unto the Secured Parties the rights granted or now
or hereafter intended to be granted to the Secured Parties under any Loan
Document or under any other instrument executed in connection with any Loan
Document to which any Loan Party or any of its Subsidiaries is or is to be a
party, and cause each of its Subsidiaries to do so.
(l) Performance of Related Documents.
Perform and observe, and cause each of its Subsidiaries to perform and observe,
all of the terms and provisions of each Related Document to be performed or
observed by it, maintain each such Related Document in
86
full force and effect, enforce such Related Document in accordance with its
terms, take all such action to such end as may be from time to time requested by
the Paying Agent and, upon request of the Paying Agent, make to each other party
to each such Related Document such demands and requests for information and
reports or for action as any Loan Party or any of its Subsidiaries is entitled
to make under such Related Document.
(m) Preparation of Environmental Reports. At the
request of the Joint Lead Arrangers or the Collateral Agent from time to time,
provide to the Lender Parties within 60 days after such request, at the expense
of the Borrower, an environmental site assessment report for any of its or its
Subsidiaries’ properties described in such request, prepared by an environmental
consulting firm acceptable to the Joint Lead Arrangers or the Collateral Agent,
indicating the presence or absence of Hazardous Materials and the estimated cost
of any compliance, removal or remedial action in connection with any Hazardous
Materials on such properties; without limiting the generality of the foregoing,
if the Joint Lead Arrangers or the Collateral Agent determines at any time that
a material risk exists that any such report will not be provided within the time
referred to above, the Joint Lead Arrangers or the Collateral Agent may retain
an environmental consulting firm to prepare such report at the expense of the
Borrower, and the Borrower hereby grants and agrees to cause any Subsidiary that
owns any property described in such request to grant at the time of such request
to the Joint Lead Arrangers, the Lender Parties, such firm and any agents or
representatives thereof an irrevocable non-exclusive license, subject to the
rights of tenants, to enter onto their respective properties to undertake such
an assessment.
(n) Compliance with Terms of Leaseholds. Make
all payments and otherwise perform all obligations in respect of all leases of
real property to which the Borrower or any of its Subsidiaries is a party, keep
such leases in full force and effect and not allow such leases to lapse or be
terminated or any rights to renew such leases to be forfeited or cancelled,
notify the Paying Agent of any default by any party with respect to such leases
and cooperate with the Paying Agent in all respects to cure any such default,
and cause each of its Subsidiaries to do so, except, in any case, where the
failure to do so, either individually or in the aggregate, could not be
(o) Use of Proceeds. Use the proceeds of the
Advances solely (i) for the Refinancing and to pay transaction fees and expenses
incurred in connection therewith, and (ii) to provide working capital for the
Loan Parties and for other general corporate purposes, including, without
limitation, for purposes of making capital expenditures, share repurchases
permitted under Section 5.02(g) and acquisitions and other Investments permitted
under Section 5.02(f).
(p) Anti-Money Laundering/International Trade
Law Compliance. Each Covered Entity shall comply with all Anti-Terrorism Laws.
The Borrower shall promptly notify the Agent in writing upon the occurrence of a
Reportable Compliance Event.
Section 5.02. Negative Covenants. So
Document shall remain unpaid, any Letter of
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Credit shall be outstanding or any Lender Party shall have any Commitment
hereunder, the Borrower will not, at any time:
(a) Liens, Etc. Create, incur, assume or suffer
to exist, or permit any of its Subsidiaries to create, incur, assume or suffer
to exist, any Lien on or with respect to any of its properties of any character
(including, without limitation, accounts) whether now owned or hereafter
acquired, or sign or file or suffer to exist, or permit any of its Subsidiaries
to sign or file or suffer to exist, under the Uniform Commercial Code of any
jurisdiction, a financing statement that names the Borrower or any of its
Subsidiaries as debtor, or sign or suffer to exist, or permit any of its
Subsidiaries to sign or suffer to exist, any security agreement authorizing any
secured party thereunder to file such financing statement, or assign, or permit
any of its Subsidiaries to assign, any accounts or other right to receive
income, except:
(i) Liens created under the Loan Documents;
(ii) Permitted Liens;
(iii) Liens existing on the date hereof and
described on Schedule 4.01(u) hereto;
(iv) purchase money Liens arising from financings
upon or in real property or equipment acquired or held by the Borrower or any of
its Subsidiaries in the ordinary course of business to secure the purchase price
of such property or equipment or to secure Debt incurred solely for the purpose
of financing the acquisition, construction or improvement of any such property
or equipment to be subject to such Liens, or Liens existing on any such property
or equipment at the time of acquisition (other than any such Liens created in
contemplation of such acquisition that do not secure the purchase price), or
extensions, renewals or replacements of any of the foregoing for the same or a
lesser amount; provided, however, that no such Lien shall extend to or cover any
property other than the property or equipment being acquired, constructed or
improved, and no such extension, renewal or replacement shall extend to or cover
any property not theretofore subject to the Lien being extended, renewed or
replaced; and provided further that the Debt secured by Liens permitted by this
clause (iv) shall be permitted under Section 5.02(b)(iii)(B);
(v) Liens on or with respect to the Equity
Interests or assets of a newly-formed or newly-acquired Subsidiary granted in
connection with financing the formation of, or the acquisition of all of the
Equity Interests or all or substantially all of the assets of, such Person, as
contemplated in Section 5.02(f)(vii);
(vi) Liens arising pursuant to a Permitted
Receivables Financing on receivables sold or financed in connection with such
Permitted Receivables Financing in an aggregate amount not to exceed
$500,000,000;
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(vii) Precautionary Liens arising pursuant to a
Permitted Supplier Receivables Sale Program that extend only to the accounts
receivable subject thereto; and
(viii) Liens not otherwise permitted under this
Section 5.02(a); provided that (A) such Liens shall not extend to or cover any
Collateral, and during a Collateral Suspension Period, any properties or assets
of any Loan Party that would be subject to a Lien in favor of the Collateral
Agent for the benefit of the Secured Parties had such Collateral Suspension
Period not occurred, and (B) the book value of the assets subject to such Liens
shall not exceed, in the aggregate, 15% of the book value of the Borrower’s
Consolidated property, plant and equipment, in each case as such book value is
(b) Debt. Create, incur, assume or suffer to
exist, or permit any of its Subsidiaries to create, incur, assume or suffer to
exist, any Debt, except:
(i) in the case of the Borrower or a
Subsidiary Guarantor,
(A) Debt in respect of Hedge Agreements permitted
under Section 5.02(m) hereof;
(B) Debt owed to a Subsidiary Guarantor, which
Debt (x) shall constitute Pledged Debt, (y) shall be subordinated to the
Facilities and on terms acceptable to the Joint Lead Arrangers and (z) shall be
evidenced by promissory notes in form and substance satisfactory to the Joint
Lead Arrangers and such promissory notes shall be pledged as security for the
Obligations of the holder thereof under the Loan Documents to which such holder
is a party and delivered to the Collateral Agent pursuant to the terms of the
Security Agreement; and
(C) so long as no Event of Default has occurred
and is continuing, or would result therefrom, (x) other unsecured Debt and
(y) Debt secured by Liens permitted under Section 5.02(a)(vii); provided that
before and after giving effect to such Debt, the Borrower is in compliance with
the covenants in Section 5.04, calculated on a Pro Forma Basis, based on the
financial statements most recently delivered pursuant to Section 5.03;
(ii) in the case of any Subsidiary of the
Borrower,
(A) Debt owed to the Borrower or to a Subsidiary
Guarantor, provided that, in each case, such Debt (x) shall constitute Pledged
Debt, (y) shall be subordinated to the Facilities and on terms acceptable to the
Joint Lead Arrangers and (z) shall be evidenced by promissory notes in form and
substance satisfactory to the Joint Lead Arrangers and such promissory notes
shall be pledged as security for the Obligations of the holder thereof under the
Loan Documents to which such holder is a party and delivered to the Collateral
Agent pursuant to the terms of the Security Agreement;
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(B) so long as no Event of Default has occurred
and is continuing or would result therefrom, other unsecured Debt of the
Subsidiaries of the Borrower which are not Subsidiary Guarantors in an aggregate
principal amount not to exceed $100 million at any one time outstanding; and
(C) Debt of a newly-formed or newly-acquired
Subsidiary owed to a Person financing the formation of such Subsidiary or the
acquisition of all of the Equity Interests in or all or substantially all of the
assets of such Subsidiary as contemplated by Section 5.02(f)(vii);
(iii) in the case of the Borrower and its
Subsidiaries,
(A) Debt under the Loan Documents,
and is continuing, or would result therefrom, Debt secured by Liens permitted by
Section 5.02(a)(iv); provided, that before and after giving effect to such Debt,
the Borrower is in compliance with the financial covenants set forth in
Section 5.04 hereof, calculated on a Pro Forma Basis, based on the financial
statements most recently delivered pursuant to Section 5.03;
(C) the Surviving Debt, and any Debt extending the
maturity of, or refunding or refinancing, in whole or in part, any Surviving
Debt, provided that the terms of any such extending, refunding or refinancing
Debt, and of any agreement entered into and of any instrument issued in
connection therewith, are otherwise permitted by the Loan Documents, provided
further that the principal amount of such Surviving Debt shall not be increased
above the principal amount thereof outstanding immediately prior to such
extension, refunding or refinancing (except by an amount equal to a reasonable
premium paid, and reasonable fees and expenses incurred, in connection with such
refinancing), and the direct and contingent obligors therefor shall not be
changed, as a result of or in connection with such extension, refunding or
refinancing, provided still further that the terms relating to principal amount,
amortization, maturity, collateral (if any) and subordination (if any), and
other material terms taken as a whole, of any such extending, refunding or
refinancing Debt, and of any agreement entered into and of any instrument issued
in connection therewith, are no less favorable in any material respect to the
Loan Parties or the Lender Parties than the terms of any agreement or instrument
governing the Surviving Debt being extended, refunded or refinanced and the
interest rate applicable to any such extending, refunding or refinancing Debt
does not exceed the then applicable market interest rate, and
(D) Debt incurred by a Permitted Receivables
Financing Subsidiary in a Permitted Receivables Financing.
(c) Change in Nature of Business. Make, or
permit any of its Subsidiaries to make, any material change in the nature of its
business as carried on at the date hereof.
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(d) Mergers, Etc. Merge into or consolidate
with any Person or permit any Person to merge into it, or permit any of its
Subsidiaries to do so, except that:
(i) any Subsidiary of the Borrower may merge
into or consolidate with the Borrower (so long as such Subsidiary is a
Subsidiary Guarantor) or any other Subsidiary of the Borrower, provided that, in
the case of any such merger or consolidation, the Person formed by such merger
or consolidation shall be a wholly owned Subsidiary of the Borrower, provided
further that, in the case of any such merger or consolidation to which a
Subsidiary Guarantor is a party, the Person formed by such merger or
consolidation shall be a Subsidiary Guarantor; and
(ii) in connection with any acquisition
permitted under Section 5.02(f), any Subsidiary of the Borrower may merge into
or consolidate with any other Person or permit any other Person to merge into or
consolidate with it; provided that the Person surviving such merger shall be a
wholly owned Subsidiary of the Borrower and such Person shall become a
Subsidiary Guarantor hereunder;
provided, however, that in each case, immediately after giving effect thereto,
no event shall occur and be continuing that constitutes a Default and, in the
case of any such merger to which the Borrower is a party, the Borrower is the
surviving corporation.
(e) Sales, Etc., of Assets. Sell, lease,
transfer or otherwise dispose of, or permit any of its Subsidiaries to sell,
lease, transfer or otherwise dispose of, any assets, or grant any option or
other right to purchase, lease or otherwise acquire, except:
(i) sales of Inventory in the ordinary
course of its business;
(ii) in a transaction authorized by
Section 5.02(d);
(iii) so long as no Event of Default has occurred
and is continuing or would occur after giving effect thereto, (A) sales of
assets consisting of real property, plant and equipment, (B) ordinary course
sales of impaired accounts receivables in connection with the receipt of
insurance or other proceeds in full or partial payment therefor, (C) the sale,
in one transaction or series of related transactions, of all of the Equity
Interests or all or substantially all of the assets of a Subsidiary or related
group of Subsidiaries of the Borrower that in any case constitute a single
business, and (D) the sale of a Minority Equity Interest in a Subsidiary
(provided, that if prior to such sale, such Subsidiary is a Subsidiary
Guarantor, then at the election of the Borrower (to be made by means of a
written notice to the Administrative Agent), either (x) such Subsidiary shall
remain a Guarantor and a “Subsidiary” for all purposes of this Agreement and the
other Loan Documents after such sale, and for purposes of determining compliance
with the Annual Disposition Limit (as defined below), the amount of such
disposition shall be the fair value of the Minority Equity Interests actually
sold, or (y) such Subsidiary shall cease to be a Guarantor and shall become an
Excluded Subsidiary for the purposes of this Agreement and the other Loan
Documents, and
91
for purposes of determining compliance with the Annual Disposition Limit (as
defined below), the amount of such disposition shall be deemed to be the fair
value of all of the Equity Interests in such Subsidiary); provided, however,
that (1) all dispositions made pursuant to this Section 5.02(e)(iii) shall be
made (x) for cash or Equity Interests in a Joint Venture and (y) in each case
for fair value, and (2) the aggregate amount of the proceeds of all dispositions
made during any Fiscal Year pursuant to this clause (iii) shall not exceed the
amount that is equal to 10% of the total assets of the Borrower and its
Consolidated Subsidiaries (determined in accordance with GAAP, at the time of,
but immediately prior to giving effect to, each such disposition, using the
total assets amount reflected on the Borrower’s Consolidated balance sheet
contained in the financial statements then most recently delivered pursuant to
Section 5.03(b), and with respect to non-cash proceeds consisting of Equity
Interests in Joint Ventures, the amount of such proceeds shall be the fair value
of such Equity Interests, as reasonably determined by the Borrower (provided,
that if requested by the Administrative Agent, the Borrower shall provide
reasonably detailed written substantiation for such valuation)) (the disposition
limitation set forth in this clause (2) being the “Annual Disposition Limit”);
(iv) sales, transfers and other dispositions of
assets among Loan Parties;
(v) sales of assets acquired after the Closing
Date that do not constitute Collateral under the Loan Documents; it being
understood that for the purposes of sales of assets permitted by this
clause (v), the Subject Property related to such assets may be sold in
connection therewith;
(vi) the winding up or dissolution of any
Subsidiary so long as (A) all assets of such Subsidiary are transferred to the
Borrower or another Subsidiary (other than any Excluded Subsidiary) prior to, or
simultaneously with, such winding up or dissolution and (B) if such Subsidiary
is a Guarantor, all assets of such Subsidiary are transferred to the Borrower or
another Guarantor;
(vii) sales of accounts receivable pursuant to a
Permitted Supplier Receivables Sale Program; and
(viii) sales, transfers and other dispositions of assets
of, or Equity Interests in, Excluded Subsidiaries.
(f) Investments in Other Persons. Make or
hold, or permit any of its Subsidiaries to make or hold, any Investment in any
Person, except:
(i) Investments by (x) the Borrower in
Subsidiary Guarantors, (y) Subsidiary Guarantors in the Borrower and other
Subsidiary Guarantors, and (z) the Borrower or Subsidiary Guarantors in new
Subsidiaries, provided, that such Subsidiaries become Subsidiary Guarantors
hereunder;
92
(ii) loans and advances to employees in the
ordinary course of the business of the Borrower and its Subsidiaries as
presently conducted in an aggregate principal amount not to exceed $500,000 at
any time outstanding;
(iii) Investments by the Borrower and its
Subsidiaries in Cash Equivalents;
(iv) Investments existing on the date hereof and
described on Schedule 4.01(v) hereto;
(v) Investments by the Borrower in Hedge
Agreements permitted under Section 5.02(b)(i)(A);
(vi) Investments consisting of intercompany Debt
permitted under Section 5.02(b)(i)(B) or 5.02(b)(ii);
(vii) so long as no Event of Default has occurred and
is continuing or would occur after giving effect thereto, other Investments
consisting of acquisitions or formations of all or substantially all of the
Equity Interests or assets of another Person; provided that with respect to any
Investments made under this clause (vii): (A) if such Investment is in the
Equity Interests of such Person, either (1) such Person shall become a
Subsidiary Guarantor hereunder in accordance with Section 5.01(j) or (2) either
(x) such acquisition or formation is financed with the proceeds of Debt secured
by (and only by) the accounts receivables, inventory and related documents and
general intangibles of the Subsidiary so acquired and its respective
Subsidiaries, which Debt is not recourse to (including by way of guaranty) the
Borrower and its other Subsidiaries or (y) the Borrower otherwise elects in
accordance with Section 5.01(j) that such newly-acquired Subsidiary shall be an
Excluded Subsidiary; (B) immediately before and after giving effect thereto, no
Default shall have occurred and be continuing or would result therefrom; (C) any
company or business acquired or invested in pursuant to this clause (vii) shall
be in the same or related line of business as the business of the Borrower or
any of its Subsidiaries; (D) immediately after giving effect to the acquisition
of a company or business pursuant to this clause (vii), the Borrower shall be in
compliance with the covenants contained in Section 5.04, calculated on a Pro
Forma Basis, based on the financial statements most recently delivered to the
Lender Parties pursuant to Section 5.03, as evidenced by a certificate of the
Chief Financial Officer of the Borrower delivered to the Lender Parties
demonstrating such compliance; and (E) within 30 days after the acquisition of a
company or business pursuant to this clause (vii) the Borrower shall provide
revised forecasts of the type referred to in Section 5.03(e) giving pro forma
effect to such acquisition;
(viii) Investments in Mesabi Nugget, provided, that, both
before and after giving effect to any such Investment the Borrower is in
Forma Basis, based on
93
the financial statements most recently delivered to the Lender Parties pursuant
to Section 5.03;
(ix) Other Investments in the form of contributions
of Equity Interests or other assets to a Joint Venture, to the extent made as a
disposition of assets permitted under Section 5.02(e)(iii); provided, that, both
Lender Parties pursuant to Section 5.03.
(x) Other Investments at any time in the
aggregate not to exceed $300,000,000;
(xi) Other Investments in an amount not to exceed,
when taken together with Restricted Payments made pursuant to clause (x) of
Section 5.02(g)(iii), the Available Basket Amount; and
(xii) Other Investments under non-qualified deferred
compensation plans up to a maximum total invested amount of $25 million;
provided, that, notwithstanding the restrictions set forth in this
Section 5.02(f), the Borrower may make Investments so long as the Total Net
Leverage Ratio, calculated on a Pro Forma Basis, is less than 3.50:1.00.
(g) Restricted Payments. Declare or pay any
dividends, purchase, redeem, retire, defease or otherwise acquire for value any
of its Equity Interests now or hereafter outstanding, return any capital to its
stockholders, partners or members (or the equivalent Persons thereof) as such,
make any distribution of assets, Equity Interests, obligations or securities to
its stockholders, partners or members (or the equivalent Persons thereof) as
such, or permit any of its Subsidiaries to do any of the foregoing, or permit
any of its Subsidiaries to purchase, redeem, retire, defease or otherwise
acquire for value any Equity Interests in the Borrower or to issue or sell any
Equity Interests or accept any capital contributions (collectively, “Restricted
Payments”), except that, so long as no Default shall have occurred and be
continuing at the time of any action described in clause (i) through (iv) below
or would result therefrom:
(i) the Borrower may (A) declare and pay
dividends and distributions payable only in common stock of the Borrower, (B)
purchase, redeem, retire, defease or otherwise acquire shares of its capital
stock with the proceeds received contemporaneously from the issue of new shares
of its capital stock with equal or inferior voting powers, designations,
preferences and rights and (C) purchase, redeem, retire or defease any Debt that
is convertible into Equity Interests;
(ii) any Subsidiary of the Borrower may
(A) declare and pay cash dividends to the Borrower, (B) declare and pay cash
dividends to any other Loan Party of which it is a Subsidiary and (C) accept
capital contributions from its parent to the extent permitted under
Section 5.01(f)(i);
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(iii) the Borrower may make payments restricted by
this Section 5.02(g) so long as (x) immediately after giving effect to such
payment, the Total Net Leverage Ratio, calculated on a Pro Forma Basis, is no
higher than 3.50:1.00 or (y) during any fiscal quarter of the Borrower that the
Total Net Leverage Ratio exceeds 3.50:1.00, the aggregate amount of such
dividends or distributions made at any time when the Total Net Leverage Ratio
exceeded 3.50:1.00 does not exceed, when taken together with Investments that at
such time have been made pursuant to Section 5.02(f)(xi), the Available Basket
Amount at such time; and
(iv) so long as no Default has occurred and is
continuing or would result therefrom, the Borrower may make payments of
contractual dividends on convertible equity securities.
(h) Amendments of Constitutive Documents.
Amend, or permit any of its Subsidiaries to amend, its certificate of
incorporation or bylaws or other constitutive documents in any respect which
could be materially adverse to the interest of the Lender Parties.
(i) Accounting Changes. Make or permit any
change in (i) accounting policies or reporting practices, except as required or
permitted by GAAP, or (ii) Fiscal Year.
(j) Amendment, Etc., of Related Documents.
Cancel or terminate any Related Document (except in connection with the
prepayment of any Debt permitted to be prepaid hereunder) or consent to or
accept any cancellation or termination thereof, amend, modify or change in any
manner any term or condition of any Related Document or give any consent, waiver
or approval thereunder, waive any default under or any breach of any term or
condition of any Related Document, agree in any manner to any other amendment,
modification or change of any term or condition of any Related Document or take
any other action in connection with any Related Document that would impair the
value of the interest or rights of any Loan Party thereunder or that would
impair the rights or interests of any Agent or any Lender Party, or permit any
of its Subsidiaries to do any of the foregoing.
(k) Negative Pledge. Enter into or suffer to
exist, or permit any of its Subsidiaries to enter into or suffer to exist, any
agreement prohibiting or conditioning the creation or assumption of any Lien
upon any of its property or assets except (i) in favor of the Secured Parties or
(ii) in connection with (A) any Surviving Debt and (B) any Debt permitted by
Section 5.02(b)(i)(C), Section 5.02(b)(ii)(B) and Section 5.02(b)(iii)(B).
(l) Partnerships, Etc. Become a general
partner in any general or limited partnership or Joint Venture, or permit any of
its Subsidiaries to do so, other than any Subsidiary the sole assets of which
consist of its interest in such partnership or Joint Venture.
(m) [Reserved].
95
(n) Payment Restrictions Affecting
Subsidiaries. Directly or indirectly, enter into or suffer to exist, or permit
any of its Subsidiaries to enter into or suffer to exist, any agreement or
arrangement limiting the ability of any of its Subsidiaries to declare or pay
dividends or other distributions in respect of its Equity Interests or repay or
prepay any Debt owed to, make loans or advances to, or otherwise transfer assets
to or invest in, the Borrower or any Subsidiary of the Borrower (whether through
a covenant restricting dividends, loans, asset transfers or investments, a
financial covenant or otherwise), except (i) the Loan Documents and (ii) any
(o) Sanctions; Anti-Money Laundering;
International Trade Law Compliance.
(i) Become, or permit any Covered Entity to
become, a Sanctioned Person; or
(ii) Either in its own right, or through any
third party, (A) have any of its assets (or permit any Covered Entity to have
any of its assets) in a Sanctioned Country or in the possession, custody or
control of a Sanctioned Person in violation of any Anti-Terrorism Law, (B) do
business in or with (or permit any Covered Entity to do business in or with), or
derive (or permit any Covered Entity to derive) any of its income from
investments in or transactions with, any Sanctioned Country or Sanctioned Person
in violation of any Anti-Terrorism Law, (C) engage in (or permit any Covered
Entity to engage in) any dealings or transactions prohibited by any
Anti-Terrorism Law; or (D) use the Advances to fund, directly or through any
Covered Entity, any operations in, finance any investments or activities in, or,
make any payments to, a Sanctioned Country or Sanctioned Person, or in violation
of any Anti-Terrorism Law; or
(iii) Repay or prepay the Obligations with funds
derived from any unlawful activity.
Section 5.03. Reporting Requirements. So
Lender Party shall have any Commitment hereunder, the Borrower will furnish to
the Agents and the Lender Parties:
(a) Default Notice. As soon as possible and in
any event within two days after the occurrence of each Default or any event,
development or occurrence reasonably likely to have a Material Adverse Effect
continuing on the date of such statement, a statement of the chief financial
officer of the Borrower setting forth details of such Default and the action
that the Borrower has taken and proposes to take with respect thereto.
(b) Annual Financials. As soon as available and
in any event within 90 days after the end of each Fiscal Year, a copy of the
annual audit report for such year for the Borrower and its Subsidiaries,
including therein a Consolidated balance sheet of the Borrower and its
Subsidiaries as of the end of such Fiscal Year and a Consolidated statement of
income and a Consolidated statement of cash flows of the Borrower and its
96
Subsidiaries for such Fiscal Year, in each case accompanied by an opinion
acceptable to the Required Lenders of Ernst & Young LLP or other independent
public accountants of recognized standing acceptable to the Required Lenders
together with (i) a certificate of a Financial Officer of the Borrower stating
that no Default has occurred and is continuing or, if a default has occurred and
is continuing, a statement as to the nature thereof and the action that the
Borrower has taken and proposes to take with respect thereto and (ii) a
certificate in substantially the form of Exhibit H hereto demonstrating the
computations used by the Borrower in determining compliance with the covenants
contained in Section 5.04; provided that in the event of any change in GAAP used
in the preparation of such financial statements, the Borrower shall also
provide, if necessary for the determination of compliance with Section 5.04, a
statement of reconciliation conforming such financial statements to GAAP.
(c) Quarterly Financials. As soon as available
and in any event within 45 days after the end of each of the first three
quarters of each Fiscal Year, a Consolidated balance sheet of the Borrower and
its Subsidiaries as of the end of such quarter and a Consolidated statement of
Subsidiaries for the period commencing at the end of the previous fiscal quarter
and ending with the end of such fiscal quarter and a Consolidated statement of
Subsidiaries for the period commencing at the end of the previous Fiscal Year
and ending with the end of such quarter, setting forth in each case in
comparative form the corresponding figures for the corresponding date or period
of the preceding Fiscal Year, all in reasonable detail and duly certified
(subject to normal year-end audit adjustments) by a Financial Officer of the
Borrower as having been prepared in accordance with GAAP, together with (i) a
certificate of said officer stating that no Default has occurred and is
continuing or, if a Default has occurred and is continuing, a statement as to
the nature thereof and the action that the Borrower has taken and proposes to
take with respect thereto, and (ii) a certificate in substantially the form of
Exhibit H hereto demonstrating the computations used by the Borrower in
determining compliance with the covenants contained in Section 5.04, provided
that in the event of any change in GAAP used in the preparation of such
financial statements, the Borrower shall also provide, if necessary for the
determination of compliance with Section 5.04, a statement of reconciliation
conforming such financial statements to GAAP.
(e) Annual Budget. As soon as available and in
any event no later than 45 days after the end of each Fiscal Year, an annual
budget prepared by management of the Borrower, in form satisfactory to the Joint
Lead Arrangers, of balance sheets, income statements and cash flow statements on
an annual basis for the Fiscal Year following such then-ended Fiscal Year and
for each Fiscal Year thereafter until the Termination Date. Such budget shall
set forth a statement of the principal assumptions reflected therein.
(f) Litigation. Promptly after the
commencement thereof, notice of all actions, suits, investigations, litigation
and proceedings in which the amount involved is
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in excess of $50,000,000 before any court or governmental department,
affecting any Loan Party or any of its Subsidiaries of the type described in
Section 4.01(f), and promptly after the occurrence thereof, notice of any
material adverse change in the status or the financial effect on any Loan Party
or any of its Subsidiaries of the Disclosed Litigation from that described on
(g) [Reserved].
(h) Creditor Reports. (i) Promptly after the
furnishing thereof, copies of any statement or report furnished by the Borrower
to any holder of Senior Notes, and (ii) promptly after the furnishing thereof,
copies of any default notice furnished to any holder of Debt securities in the
aggregate outstanding in excess of $50,000,000 of any Loan Party or of any of
its Subsidiaries pursuant to the terms of any indenture, loan or credit or
similar agreement and not otherwise required to be furnished to the Lender
Parties pursuant to any other clause of this Section 5.03.
(i) Agreement Notices. Promptly upon
receipt thereof, copies of all notices, requests and other documents received by
any Loan Party or any of its Subsidiaries under or pursuant to any Related
Document or instrument, indenture, loan or credit or similar agreement regarding
or related to any breach or default by any party thereto or any other event that
could materially impair the value of the interests or the rights of any Loan
Party or otherwise have a Material Adverse Effect and copies of any amendment,
modification or waiver of any provision of any Related Document or instrument,
indenture, loan or credit or similar agreement and, from time to time upon
request by the Paying Agent, such information and reports regarding the Related
Documents and such instruments, indentures and loan and credit and similar
agreements as the Paying Agent may reasonably request.
(j) Revenue Agent Reports. Within 10 days
after receipt, copies of all Revenue Agent Reports (Internal Revenue Service
Form 886), or other written proposals of the Internal Revenue Service, that
propose, determine or otherwise set forth positive adjustments to the Federal
income tax liability of the affiliated group (within the meaning of
Section 1504(a)(1) of the Internal Revenue Code) of which the Borrower is a
member aggregating $50,000,000 or more.
(k) ERISA. ERISA Events and ERISA Reports.
(A) Promptly and in any event within 10 days after any Loan Party or any ERISA
Affiliate knows or has reason to know that any ERISA Event has occurred, a
statement of the Chief Financial Officer of the Borrower describing such ERISA
Event and the action, if any, that such Loan Party or such ERISA Affiliate has
taken and proposes to take with respect thereto and (B) on the date any records,
documents or other information must be furnished to the PBGC with respect to any
Plan pursuant to Section 4010 of ERISA, a copy of such records, documents and
information.
(i) Plan Terminations. Promptly and in any
event within two Business Days after receipt thereof by any Loan Party or any
ERISA Affiliate, copies of
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each notice from the PBGC stating its intention to terminate any Plan or to have
a trustee appointed to administer any Plan.
(ii) [Reserved].
(iii) Multiemployer Plan Notices. Promptly and in
any event within ten Business Days after receipt thereof by any Loan Party or
any ERISA Affiliate from the sponsor of a Multiemployer Plan, copies of each
notice concerning (A) the imposition of Withdrawal Liability by any such
Multiemployer Plan, (B) the reorganization or termination, within the meaning of
Title IV of ERISA, of any such Multiemployer Plan or (C) the amount of liability
incurred, or that may be incurred, by such Loan Party or any ERISA Affiliate in
connection with any event described in clause (A) or (B).
(l) Environmental Conditions. Promptly
after the assertion or occurrence thereof, notice of any Environmental Action
against or of any noncompliance by any Loan Party or any of its Subsidiaries
with any Environmental Law or Environmental Permit that could reasonably be
(m) Insurance. As soon as available and in any
event within 30 days after the end of each Fiscal Year, a report summarizing the
insurance coverage (specifying type, amount and carrier) in effect for each Loan
Party and its Subsidiaries and containing such additional information as any
Agent, or any Lender Party through the Paying Agent, may reasonably specify.
(n) Other Information. Such other information
respecting the business, condition (financial or otherwise), operations,
performance, properties or prospects of any Loan Party or any of its
Subsidiaries as any Agent or the Joint Lead Arrangers, or any Lender Party
through the Paying Agent, may from time to time reasonably request.
Section 5.04. Financial Covenants. So
(a) Total Net Leverage Ratio. Maintain,
beginning with the period of four fiscal quarters ending December 31, 2014 and
at all times thereafter, determined on a Pro Forma Basis, a Total Net Leverage
Ratio of not more than 5.00:1.00. or, during any Collateral Suspension Period, a
Total Net Leverage Ratio of no more than 4.00:1.00, provided, however, that once
the Borrower has received (and for so long as it maintains) (i) a corporate
credit rating of at least BBB- from S&P and (ii) a corporate family credit
rating of at least Baa3 from Moody’s (in each case, with no negative outlook or
negative watch), then in lieu of a Total Net Leverage Ratio required hereunder,
the Borrower shall instead maintain a Debt-Cap Ratio of no more than 0.60:1.00.
(b) Interest Coverage Ratio. Maintain,
at all times thereafter, determined on a Pro Forma Basis, an Interest Coverage
Ratio of no less than 2.50:1.00.
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ARTICLE VI
EVENTS OF DEFAULT
Section 6.01. Events of Default. If any
of the following events (“Events of Default”) shall occur and be continuing:
(a) (i) the Borrower shall fail to pay any
principal of any Advance when the same shall become due and payable or (ii) the
Borrower shall fail to pay any interest on any Advance, or any Loan Party shall
fail to make any other payment under any Loan Document, in each case under this
clause (ii) within two Business Days after the same becomes due and payable; or
(b) any representation or warranty made by any
Loan Party (or any of its officers) under or in connection with any Loan
Document shall prove to have been incorrect in any material respect when made;
or
(c) the Borrower shall fail to perform or
observe any term, covenant or agreement contained in Section 2.03(e), 2.14,
5.01(e), (f), (i), (j), (l), (n) or (p), 5.02, 5.03 or 5.04; provided that the
Borrower shall have a cure period of three Business Days for any failure to
perform or observe the covenants contained in Section 5.03; or
(d) any Loan Party shall fail to perform or
observe any other term, covenant or agreement contained in any Loan Document on
its part to be performed or observed if such failure shall remain unremedied for
10 days after the earlier of the date on which (i) a Responsible Officer becomes
aware of such failure or (ii) written notice thereof shall have been given to
the Borrower by any Agent or any Lender Party; or
(e) any Loan Party, any of its Subsidiaries or
any Excluded Subsidiary to the extent its Obligations are guaranteed by a Loan
Party shall fail to pay any principal of, premium or interest on or any other
amount payable in respect of any Debt of such Loan Party, such Subsidiary or
such Excluded Subsidiary (as the case may be) that is outstanding in a principal
amount (or, in the case of any Hedge Agreement, an Agreement Value) of at least
$50,000,000 either individually or in the aggregate (but excluding Debt
outstanding hereunder), when the same becomes due and payable (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise), and
such failure shall continue after the applicable grace period, if any, specified
in the agreement or instrument relating to such Debt; or any other event shall
occur or condition shall exist under any agreement or instrument relating to any
such Debt and shall continue after the applicable grace period, if any,
specified in such agreement or instrument, if the effect of such event or
condition is to accelerate, or to permit the acceleration of, the maturity of
such Debt or otherwise to cause, or to permit the holder thereof to cause, such
Debt to mature; or any such Debt shall be declared to be due and payable or
required to be prepaid or redeemed (other than by a regularly scheduled required
prepayment or redemption), purchased or defeased, or an offer to prepay, redeem,
purchase or defease such Debt shall be required to be made, in each case prior
to the stated maturity thereof; or
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(f) any Loan Party or any of its Material
Subsidiaries shall generally not pay its debts as such debts become due, or
shall admit in writing its inability to pay its debts generally, or shall make a
general assignment for the benefit of creditors; or any proceeding shall be
instituted by or against any Loan Party or any of its Material Subsidiaries
seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief, or
composition of it or its debts under any law relating to bankruptcy, insolvency
or reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee or other similar official for
it or for any substantial part of its property and, in the case of any such
proceeding instituted against it (but not instituted by it) that is being
diligently contested by it in good faith, either such proceeding shall remain
undismissed or unstayed for a period of 30 days or any of the actions sought in
such proceeding (including, without limitation, the entry of an order for relief
against, or the appointment of a receiver, trustee, custodian or other similar
official for, it or any substantial part of its property) shall occur; or any
Loan Party or any of its Material Subsidiaries shall take any corporate action
to authorize any of the actions set forth above in this subsection (f); or
(g) any judgments or orders, either
individually or in the aggregate, for the payment of money in excess of
$50,000,000 shall be rendered against any Loan Party or any of its Subsidiaries
and shall remain unpaid 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 10 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
(h) any non-monetary judgment or order shall be
rendered against any Loan Party or any of its Subsidiaries that could be
reasonably likely to have a Material Adverse Effect, and there shall be any
effect; or
(i) any provision of any Loan Document after
delivery thereof pursuant to Section 3.01 or 5.01(j) shall for any reason cease
to be valid and binding on or enforceable against any Loan Party party to it, or
any such Loan Party shall so state in writing; or
(j) any Collateral Document or financing
statement after delivery thereof pursuant to Section 3.01 or 5.01(j) shall for
any reason (other than pursuant to the terms thereof) cease to create a valid
and perfected first priority lien on and security interest in the Collateral
purported to be covered thereby; or
(k) a Change of Control shall occur; or
(l) any ERISA Event shall have occurred with
respect to a Plan and the sum (determined as of the date of occurrence of such
ERISA Event) of the Insufficiency of such Plan and the Insufficiency of any and
all other Plans with respect to which an ERISA Event shall have occurred and
then exist (or the liability of the Loan Parties and the ERISA Affiliates
related to such ERISA Event) exceeds $20,000,000; or
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(m) any Loan Party or any ERISA Affiliate shall have
been notified by the sponsor of a Multiemployer Plan that it has incurred
Withdrawal Liability to such Multiemployer Plan in an amount that, when
aggregated with all other amounts required to be paid to Multiemployer Plans by
the Loan Parties and the ERISA Affiliates as Withdrawal Liability (determined as
of the date of such notification), exceeds $20,000,000 or requires payments
exceeding $5,000,000 per annum; or
(n) any Loan Party or any ERISA Affiliate shall
have been notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization or is being terminated, within the
meaning of Title IV of ERISA, and as a result of such reorganization or
termination the aggregate annual contributions of the Loan Parties and the ERISA
Affiliates to all Multiemployer Plans that are then in reorganization or being
terminated have been or will be increased over the amounts contributed to such
Multiemployer Plans for the plan years of such Multiemployer Plans immediately
preceding the plan year in which such reorganization or termination occurs by an
amount exceeding $20,000,000; or
(o) any representation or warranty contained in
Section 4.01(z) is or becomes false or misleading at any time;
then, and in any such event, the Paying Agent (i) shall at the request, or may
with the consent, of the Required Lenders, by notice to the Borrower, declare
the Commitments of each Lender Party and the obligation of each Lender Party to
make Advances (other than Letter of Credit Advances by an Issuing Bank or a
Revolving Credit Lender pursuant to Section 2.03(c) and Swing Line Advances by a
Revolving Credit Lender pursuant to Section 2.02(b)) and of the Issuing Banks to
issue Letters of Credit to be terminated, whereupon the same shall forthwith
terminate, and (ii) shall at the request, or may with the consent, of the
Required Lenders, (A) by notice to the Borrower, declare the Notes, all interest
thereon and all other amounts payable under this Agreement and the other Loan
Documents to be forthwith due and payable, whereupon the Notes, all such
interest and all such amounts shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by the Borrower, (B) by notice to each party
required under the terms of any agreement in support of which a Standby Letter
of Credit is issued, request that all Obligations under such agreement be
declared to be due and payable and (C) by notice to any Issuing Bank, direct
such Issuing Bank to deliver a Default Termination Notice to the beneficiary of
each Standby Letter of Credit issued by it, and such Issuing Bank shall deliver
such Default Termination Notices; provided, however, that in the event of an
actual or deemed entry of an order for relief with respect to the Borrower under
the Federal Bankruptcy Code, (x) the Commitments of each Lender Party and the
obligation of each Lender Party to make Advances (other than Letter of Credit
Advances by an Issuing Bank or a Revolving Credit Lender pursuant to
Section 2.03(c) and Swing Line Advances by a Revolving Credit Lender pursuant to
Section 2.02(b)) and of the Issuing Banks to issue Letters of Credit shall
automatically be terminated and (y) the Notes, all such interest and all such
amounts shall automatically become and be due and payable, without presentment,
demand, protest or any notice of any kind, all of which are hereby expressly
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Section 6.02. Actions in Respect of the
Letters of Credit upon Default. If any Event of Default shall have occurred and
be continuing, the Paying Agent may, or shall at the request of the Required
Lenders, irrespective of whether it is taking any of the actions described in
Section 6.01 or otherwise, make demand upon the Borrower to, and forthwith upon
such demand the Borrower will, pay to the Collateral Agent on behalf of the
Lender Parties in same day funds at the Collateral Agent’s office designated in
such demand, for deposit in the L/C Cash Collateral Account, an amount equal to
the aggregate Available Amount of all Letters of Credit then outstanding. If at
any time the Paying Agent or the Collateral Agent determines that any funds held
in the L/C Cash Collateral Account are subject to any right or claim of any
Person other than the Agents and the Lender Parties or that the total amount of
such funds is less than the aggregate Available Amount of all Letters of Credit,
the Borrower will, forthwith upon demand by the Paying Agent or the Collateral
Agent, pay to the Collateral Agent, as additional funds to be deposited and held
in the L/C Cash Collateral Account, an amount equal to the excess of (a) such
aggregate Available Amount over (b) the total amount of funds, if any, then held
in the L/C Cash Collateral Account that the Paying Agent or the Collateral
Agent, as the case may be, determines to be free and clear of any such right and
claim. Upon the drawing of any Letter of Credit for which funds are on deposit
in the L/C Cash Collateral Account (including following the Termination Date),
such funds shall be applied to reimburse the Issuing Banks or Revolving Credit
Lenders, as applicable, to the extent permitted by applicable law.
ARTICLE VII
Section 7.01. Authorization and Action.
Each Lender Party (in its capacities as a Lender, the Swing Line Bank (if
applicable), an Issuing Bank (if applicable) and on behalf of itself and its
Affiliates as potential Hedge Banks) hereby appoints and authorizes the Joint
Lead Arrangers and each Agent to take such action as agent on its behalf and to
exercise such powers and discretion under this Agreement and the other Loan
Documents as are delegated to the Joint Lead Arrangers and such Agent by the
terms hereof and thereof, together with such powers and discretion as are
reasonably incidental thereto. As to any matters not expressly provided for by
the Loan Documents (including, without limitation, enforcement or collection of
the Notes), no Agent nor the Joint Lead Arrangers shall be required to exercise
any discretion or take any action, but shall be required to act or to refrain
from acting (and shall be fully protected in so acting or refraining from
acting) upon the instructions of the Required Lenders, and such instructions
shall be binding upon all Lender Parties and all holders of Notes; provided,
however, that no Agent nor the Joint Lead Arrangers shall be required to take
any action that exposes such Agent nor the Joint Lead Arrangers to personal
liability or that is contrary to this Agreement or applicable law. Each Agent
agrees to give to each Lender Party prompt notice of each notice given to it by
the Borrower pursuant to the terms of this Agreement. Except as may otherwise
be agreed in writing, each of the Lenders agrees that the Administrative Agent
has no obligation to ascertain the identity of the Loan Parties or any
authorized signatories of the Loan Parties on behalf of any Lender, or to
confirm the completeness or accuracy of any information it obtains from the Loan
Parties or any such authorized signatory in doing so.
Section 7.02. Reliance, Etc. Neither the
Joint Lead Arrangers nor any Agent nor any of their respective directors,
officers, agents or employees shall be liable for any action
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taken or omitted to be taken by it or them under or in connection with the Loan
Documents, except for its or their own gross negligence or willful misconduct.
Without limitation of the generality of the foregoing, the Joint Lead Arrangers
and each Agent: (a) may treat the payee of any Note as the holder thereof
until, in the case of the Paying Agent, the Paying Agent receives and accepts an
Assignment and Assumption entered into by the Lender that is the payee of such
Note, as assignor, and an Eligible Assignee, as assignee, or, in the case of any
other Agent or the Joint Lead Arrangers, such Agent or the Joint Lead Arrangers
has received notice from the Paying Agent that it has received and accepted such
Assignment and Assumption, in each case as provided in Section 8.07; (b) may
consult with legal counsel (including counsel for any Loan Party), independent
public accountants and other experts selected by it and shall not be liable for
any action taken or omitted to be taken in good faith by it in accordance with
the advice of such counsel, accountants or experts; (c) makes no warranty or
representation to any Lender Party and shall not be responsible to any Lender
Party for any statements, warranties or representations (whether written or
oral) made in or in connection with the Loan Documents; (d) shall not have any
the terms, covenants or conditions of any Loan Document on the part of any Loan
Party or to inspect the property (including the books and records) of any Loan
Party; (e) shall not be responsible to any Lender Party for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of, or the
perfection or priority of any lien or security interest created or purported to
be created under or in connection with, any Loan Document or any other
instrument or document furnished pursuant thereto; and (f) shall incur no
liability under or in respect of any Loan Document by acting upon any notice,
consent, certificate or other instrument or writing (which may be by telegram or
facsimile) believed by it to be genuine and signed or sent by the proper party
or parties.
Section 7.03. Bank of America, PNC Bank,
Wells Fargo Bank, National Association and Affiliates. With respect to its
Commitments, the Advances made by it and the Notes issued to it, each of Bank of
America, PNC Bank and Wells Fargo Bank, National Association shall have the same
rights and powers under the Loan Documents as any other Lender Party and may
exercise the same as though it were not an Agent; and the term “Lender Party” or
“Lender Parties” shall, unless otherwise expressly indicated, include Bank of
America, PNC Bank and Wells Fargo Bank, National Association in their respective
individual capacities. Bank of America, PNC Bank and Wells Fargo Bank, National
Association and their respective affiliates may accept deposits from, lend
money to, act as trustee under indentures of, accept investment banking
engagements from and generally engage in any kind of business with, any Loan
Party, any of its Subsidiaries and any Person that may do business with or own
securities of any Loan Party or any such Subsidiary, all as if Bank of America,
PNC Bank and Wells Fargo Bank, National Association were not Agents and without
any duty to account therefor to the Lender Parties.
Section 7.04. Lender Party Credit
Decision. Each Lender Party acknowledges that it has, independently and without
reliance upon any Agent, the Joint Lead Arrangers or any other Lender Party and
based on the financial statements referred to in Section 4.01 and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender Party also
acknowledges that it will, independently and without reliance upon any Agent,
the Joint Lead Arrangers or any other Lender Party and based on such documents
and information as it shall deem appropriate at the
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under this Agreement.
Section 7.05. Indemnification.
(a) Each Lender Party severally agrees to
indemnify each Lead Arranger and each Agent (to the extent not promptly
reimbursed by the Borrower) from and against such Lender Party’s ratable share
(determined as provided below) of any and all liabilities, obligations, losses,
of any kind or nature whatsoever that may be imposed on, incurred by, or
asserted against such Agent in any way relating to or arising out of the Loan
Documents or any action taken or omitted by such Agent under the Loan Documents
(collectively, the “Indemnified Costs”); provided, however, that no Lender Party
shall be liable for any portion of such liabilities, obligations, losses,
resulting from such Agent’s or such Lead Arranger’s gross negligence or willful
misconduct as found in a final, non-appealable judgment by a court of competent
jurisdiction with respect to such Agent or the Joint Lead Arrangers, as the case
may be. Without limitation of the foregoing, each Lender Party agrees to
reimburse the Joint Lead Arrangers and each Agent promptly upon demand for its
ratable share of any costs and expenses (including, without limitation, fees and
expenses of counsel) payable by the Borrower under Section 8.04, to the extent
that such Lead Arranger or such Agent is not promptly reimbursed for such costs
and expenses by the Borrower. In the case of any investigation, litigation or
proceeding giving rise to any Indemnified Costs, this Section 7.05 applies
whether any such investigation, litigation or proceeding is brought by any
Lender Party or any other Person.
(b) Each Lender Party severally agrees to
indemnify each Issuing Bank (to the extent not promptly reimbursed by the
Borrower) from and against such Lender Party’s ratable share (determined as
provided below) of any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever that may be imposed on, incurred by, or asserted
against such Issuing Bank in any way relating to or arising out of the Loan
Documents or any action taken or omitted by such Issuing Bank under the Loan
Documents; provided, however, that no Lender Party shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from such Issuing
Bank’s gross negligence or willful misconduct as found in a final,
non-appealable judgment by a court of competent jurisdiction. Without
limitation of the foregoing, each Lender Party agrees to reimburse such Issuing
Bank promptly upon demand for its ratable share of any costs and expenses
(including, without limitation, fees and expenses of counsel) payable by the
Borrower under Section 8.04, to the extent that such Issuing Bank is not
promptly reimbursed for such costs and expenses by the Borrower.
(c) For purposes of this Section 7.05, the
Lender Parties’ respective ratable shares of any amount shall be determined, at
any time, according to the sum of (i) the aggregate principal amount of the
Advances outstanding at such time and owing to the respective Lender Parties,
(ii) their respective Pro Rata Shares of the aggregate Available Amount of all
Letters of Credit outstanding at such time and (iii) their respective Unused
Revolving Credit Commitments at such time; provided that the aggregate principal
amount of Swing Line Advances owing to the
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Swing Line Bank and of Letter of Credit Advances owing to such Issuing Bank
shall be considered to be owed to the Revolving Credit Lenders ratably in
accordance with their respective Revolving Credit Commitments. The failure of
any Lender Party to reimburse any Agent or any Issuing Bank, as the case may be,
promptly upon demand for its ratable share of any amount required to be paid by
the Lender Parties to such Agent or such Issuing Bank, as the case may be, as
provided herein shall not relieve any other Lender Party of its obligation
hereunder to reimburse such Agent or such Issuing Bank, as the case may be, for
its ratable share of such amount, but no Lender Party shall be responsible for
the failure of any other Lender Party to reimburse such Agent or such Issuing
Bank, as the case may be, for such other Lender Party’s ratable share of such
amount. Without prejudice to the survival of any other agreement of any Lender
Party hereunder, the agreement and obligations of each Lender Party contained in
this Section 7.05 shall survive the payment in full of principal, interest and
all other amounts payable hereunder and under the other Loan Documents.
Section 7.06. Successor Agents. Any
Agent may resign at any time by giving written notice thereof to the Lender
Parties and the Borrower and may be removed at any time with or without cause by
the Required Lenders. Upon any such resignation or removal, the Required
Lenders shall have the right to appoint a successor Agent. If no successor
Agent shall have been so appointed by the Required Lenders, and shall have
accepted such appointment, within 30 days after the retiring Agent’s giving of
notice of resignation or the Required Lenders’ removal of the retiring Agent,
then the retiring Agent may, on behalf of the Lender Parties, appoint a
successor Agent, which shall be a commercial bank organized under the laws of
the United States or of any State thereof and having a combined capital and
surplus of at least $250,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent and, in the case of a successor Collateral
Agent, upon the execution and filing or recording of such financing statements,
or amendments thereto, and such other instruments or notices, as may be
necessary or desirable, or as the Required Lenders may request, in order to
continue the perfection of the Liens granted or purported to be granted by the
Collateral Documents, such successor Agent shall succeed to and become vested
with all the rights, powers, discretion, privileges and duties of the retiring
Agent (other than any rights to indemnity payments owed to the retiring or
removed Agent), and the retiring Agent shall be discharged from its duties and
obligations under the Loan Documents. If within 45 days after written notice is
given of the retiring Agent’s resignation or removal under this Section 7.06 no
successor Agent shall have been appointed and shall have accepted such
appointment, then on such 45th day (a) the retiring Agent’s resignation or
removal shall become effective, (b) the retiring Agent shall thereupon be
discharged from its duties and obligations under the Loan Documents (except in
the case of any collateral security held by any Agent on behalf of the Secured
Parties under any of the Loan Documents, the retiring Agent shall continue to
hold such collateral security until such time as a successor Agent is appointed)
and (c) the Required Lenders shall thereafter perform all duties of the retiring
Agent under the Loan Documents, and except for any indemnity payments owed to
the retiring or removed Agent, all payments, communications and determinations
provided to be made by, to or through the Agent shall instead be made by or to
each Lender and Issuing Bank directly, until such time, if any, as the Required
Lenders appoint a successor Agent as provided above. After any retiring Agent’s
resignation or removal hereunder as Agent shall have become effective, the
provisions of this Article VII shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement.
Notwithstanding the
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foregoing, in no event shall any Defaulting Lender be permitted to become a
successor Agent or successor Collateral Agent.
Section 7.07. The Joint Lead Arrangers,
the Syndication Agents and the Documentation Agents. It is understood and
agreed by all parties hereto that neither the Joint Lead Arrangers, nor any
Syndication Agent, nor any Documentation Agent shall have any duties or
responsibilities under this Agreement (except, as to the Joint Lead Arrangers,
for certain approval rights expressly provided for herein), and shall have no
liability for any actions taken or not taken in connection with this Agreement
or the other Transaction Documents.
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Amendments, Etc. No
amendment or waiver of any provision of this Agreement or the Notes or any other
Loan Document, nor consent to any departure by any Loan Party therefrom, shall
in any event be effective unless the same shall be in writing and signed (or, in
the case of the Collateral Documents, consented to) by the Required Lenders, and
for the specific purpose for which given; provided, however, that (a) no
amendment, waiver or consent shall, unless in writing and signed by all of the
Lenders, do any of the following at any time: (i) decrease the percentage of
(x) the Commitments, (y) the aggregate unpaid principal amount of the Advances
or (z) the aggregate Available Amount of outstanding Letters of Credit that, in
each case, shall be required for the Lenders or any of them to take any action
hereunder, (ii) reduce or limit the obligations of any Guarantor under Section 1
of the Guaranty issued by it or, except in connection with a permitted asset
sale, release such Guarantor or otherwise limit such Guarantor’s liability with
respect to the Obligations owing to the Agents and the Lender Parties, in each
case if such reduction, release or limitation is in respect of all or
substantially all of the value of the Guaranties, (iii) release all or
substantially all of the Collateral in any transaction or series of related
transactions (other than a release of Collateral that is permitted under
Section 8.12(a) during a Collateral Suspension Period), (iv) amend Section 2.13,
Section 8.12(a), Section 8.12(c) or this Section 8.01, or any other provision of
this Agreement that expressly provides that the consent of all Lenders, or all
affected Lenders, is required, or (v) amend the definition of “Required Lenders”
or “Pro Rata Share” (provided, that additional extensions of credit made
pursuant to Section 2.17 shall be included in the determination of “Required
Lenders” or “Pro Rata Share” on substantially the same basis as the Term
Commitments, the Term Advances, the Revolving Credit Commitments and the
Revolving Credit Advances are included on the Closing Date); and (b) no
amendment, waiver or consent shall, unless in writing and signed by each Lender
if such Lender is directly affected by such amendment, waiver or consent,
(i) increase the Commitments of such Lender, (ii) reduce the principal of, or
interest on, the Notes held by such Lender or any fees or other amounts payable
hereunder to such Lender, (iii) postpone any date fixed for any scheduled
payment of principal of, or interest on, the Notes held by such Lender or any
fees or other amounts payable hereunder to such Lender, (iv) change the order of
application of any prepayment set forth in Section 2.06 in any manner that
materially affects such Lender, (v) amend Section 1.05 or the definition of
“Alternative Currency”, or (vi) (A) alter the ratable treatment of Obligations
arising under any Secured Hedge Agreement or any Secured Cash Management
Agreement, and Obligations
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arising under any of the other Loan Documents, (B) amend the definition of “Loan
Documents” to remove from, or alter the status therein of, Secured Hedge
Agreements or Secured Cash Management Agreements or (C) amend the definition of
“Secured Hedge Agreement” or “Secured Cash Management Agreement”, in each case
in a manner that adversely effects such Lender or adversely effects an Affiliate
of such Lender which Affiliate is a party to a Secured Hedge Agreement or a
Secured Cash Management Agreement; provided further that no amendment, waiver or
consent shall, unless in writing and signed by the Swing Line Bank or an Issuing
Bank, as the case may be, in addition to the Lenders required above to take such
action, affect the rights or obligations of the Swing Line Bank or of such
Issuing Bank, as the case may be, under this Agreement; and provided further
that no amendment, waiver or consent shall, unless in writing and signed by an
Agent in addition to the Lenders required above to take such action, affect the
rights or duties of such Agent under this Agreement or the other Loan
Documents. Notwithstanding anything to the contrary herein, no Defaulting
consent hereunder (and any amendment, waiver or consent of all Lenders or each
affected Lender may be effected with the consent of the applicable Lenders other
than Defaulting Lenders), except that (x) the Commitment of any Defaulting
Lender may not be increased or extended without the consent of such Defaulting
Lender more adversely than other affected Lenders shall require the consent of
such Defaulting Lender.
Section 8.02. Notices, Etc.
(a) All notices and other communications
provided for hereunder shall be in writing (which shall include any electronic
transmission by facsimile (except in the case of the Borrower) or in “.pdf,”
“.tiff” or other customary format) and mailed, sent by electronic mail (to the
extent agreed pursuant to clause (b) below) faxed (except in the case of the
Borrower) or delivered, if to the Borrower, at its address at 7575 West
Jefferson Blvd., Fort Wayne, Indiana 46804, Attention: Richard A. Poinsatte
(260-969-3560); if to any Initial Lender Party, at its Domestic Lending Office
specified opposite its name on Schedule I hereto; if to any other Lender Party,
at its Domestic Lending Office specified in the Assignment and Assumption
pursuant to which it became a Lender Party; if to the Collateral Agent, at its
address at PNC Bank, Three PNC Plaza, 225 Fifth Avenue, Pittsburgh, Pennsylvania
15222, Attention: David B. Gookin or James O’Brien (facsimile 412-762-6484);
and if to the Paying Agent, at its address at PNC Firstside Center, 500 First
Avenue, P7-PFSC-04-I, Pittsburgh, Pennsylvania 15219, Attention: Kimberly Kelly
(facsimile 412-762-2905) and with respect to notices and/or deliveries pursuant
to Section 5.03; or, as to the Borrower or the Paying Agent, at such other
address as shall be designated by such party in a written notice to the other
parties and, as to each other party, at such other address as shall be
designated by such party in a written notice to the Borrower and the Paying
Agent. All such notices and other communications shall, when mailed, sent by
electronic mail or faxed (provided, however, that no notice or other
communication shall be provided to the Borrower by facsimile), be effective when
deposited in the mails or transmitted in “.pdf,” “.tiff” or other customary
format or by facsimile, respectively, except that notices and communications to
any Agent pursuant to Article II, III or VII shall not be effective until
received by such Agent. Delivery by facsimile or “.pdf” of an executed
counterpart of any amendment or waiver of any provision of this Agreement or the
Notes or of any Exhibit hereto to be executed and delivered hereunder shall be
effective as delivery of an original executed
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counterpart thereof; provided, however, that no such communication shall be
delivered to the Borrower by facsimile.
Lender Parties hereunder may be delivered or furnished by electronic
communications pursuant to procedures approved by the Paying Agent; provided
that the foregoing shall not apply to notices pursuant to Article II unless
otherwise specifically agreed by the Paying Agent and the applicable Lender.
The Paying Agent or the Borrower 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.
(c) (i) The Borrower and each Loan Party
agrees that the Administrative Agent may, but shall not be obligated to, make
the Communications (as defined below) available to the Issuing Banks and the
other Lenders by posting the Communications on the Platform.
(ii) The Platform is provided “as is” and “as
available.” The Agent Parties (as defined below) do not warrant the adequacy of
the Platform and expressly disclaim liability for errors or omissions in the
Communications. No warranty of any kind, express, implied or statutory,
including, without limitation, any warranty of merchantability, fitness for a
particular purpose, non-infringement of third-party rights or freedom from
viruses or other code defects, is made by any Agent Party in connection with the
Communications or the Platform. In no event shall the Administrative Agent or
any of its Affiliates (collectively, the “Agent Parties”) have any liability to
the Borrower or the other Loan Parties, any Lender or any other Person or entity
for damages of any kind, including, without limitation, direct or indirect,
special, incidental or consequential damages, losses or expenses (whether in
tort, contract or otherwise) arising out of the Borrower’s, any Loan Party’s or
the Administrative Agent’s transmission of communications through the Platform.
“Communications” means, collectively, any notice, demand, communication,
information, document or other material provided by or on behalf of the
Borrower, any Loan Party pursuant to any Loan Document or the transactions
contemplated therein which is distributed to the Administrative Agent, any
Lender or any Issuing Bank by means of electronic communications pursuant to
this section, including through the Platform.
Section 8.03. No Waiver; Remedies. No
failure on the part of any Lender Party or any Agent to exercise, and no delay
in exercising, any right hereunder or under any Note or any other Loan Document
shall operate as a waiver thereof; nor shall any single or partial exercise of
any such right preclude any other or further exercise thereof or the exercise of
any other right. The remedies provided in the Loan Documents are cumulative and
not exclusive of any remedies provided by law.
Section 8.04. Costs and Expenses;
Indemnification.
(a) The Borrower agrees to pay on demand (i) all
costs and expenses of the Joint Lead Arrangers and except as otherwise provided
in this Agreement, also each Agent, in connection with the preparation,
execution, delivery, administration, modification and amendment of the Loan
Documents (including, without limitation, (A) all due diligence,
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collateral review, syndication, transportation, computer, duplication,
appraisal, audit, insurance, consultant, search, filing and recording fees and
expenses and (B) the reasonable fees and expenses of counsel for the Joint Lead
Arrangers and each Agent with respect thereto, including the reasonable fees and
expenses of Shearman & Sterling LLP with respect to advising the Joint Lead
Arrangers or such Agent as to its rights and responsibilities, or the
perfection, protection or preservation of rights or interests, under the Loan
Documents, with respect to negotiations with any Loan Party or with other
creditors of any Loan Party or any of its Subsidiaries arising out of any
Default or any events or circumstances that may give rise to a Default and with
respect to presenting claims in or otherwise participating in or monitoring any
bankruptcy, insolvency or other similar proceeding involving creditors’ rights
generally and any proceeding ancillary thereto, it being understood and agreed
that with respect to the payment of legal fees and expenses, unless and until
the circumstances set forth in clause (ii) below shall occur, the Borrower shall
only be responsible for the fees and expenses of Shearman & Sterling LLP and any
local counsel selected by it in connection with any and all of the foregoing),
and (ii) all costs and expenses of each of the Joint Lead Arrangers, each Agent
and each Lender Party in connection with the enforcement of and/or the
protection of its rights under the Loan Documents and Advances made and Letters
of Credit issued hereunder, whether in any action, suit or litigation, or any
bankruptcy, insolvency or other similar proceeding affecting creditors’ rights
generally, or any workout, restructuring or negotiations in respect of the Loan
Documents, such Advances or such Letters of Credit (including, without
limitation, the reasonable fees and expenses of counsel for each of the Joint
Lead Arrangers, the Administrative Agent and each Lender Party with respect
thereto).
(b) The Borrower agrees to indemnify, defend and
save and hold harmless each of Bank of America, MLPFS, PNC Bank, PNC Capital
Markets, Wells Fargo Bank, and Wells Fargo Securities, each Lender Party and
each of their respective Affiliates and their respective partners, officers,
directors, employees, agents and advisors (each, an “Indemnified Party”) from
and against, and shall pay on demand, any and all claims, damages, settlement
costs, losses, liabilities and expenses (including, without limitation,
reasonable fees and expenses of counsel (including the allocated cost of
internal counsel)) that may be incurred by or asserted or awarded against any
Indemnified Party, in each case arising out of or in connection with or by
reason of (including, without limitation, in connection with any actual or
prospective claim, investigation, litigation or proceeding or preparation of a
defense in connection therewith) (i) the Facilities, the actual or proposed use
of the proceeds of the Advances or the Letters of Credit, the Transaction
Documents, the performance by the parties hereto of their respective obligations
hereunder or thereunder or any of the transactions contemplated thereby or
(ii) the actual or alleged presence or release of Hazardous Materials on any
property owned or operated by any Loan Party or any of its Subsidiaries or any
Environmental Action relating in any way to any Loan Party or any of its
Subsidiaries, except to the extent such claim, damage, loss, liability or
expense is found in a final, non-appealable judgment by a court of competent
jurisdiction to have resulted from such Indemnified Party’s gross negligence or
willful misconduct. In the case of an investigation, litigation or other
proceeding to which the indemnity in this Section 8.04(b) applies, such
indemnity shall be effective whether or not such investigation, litigation or
proceeding is brought by any Loan Party, its directors, shareholders or
creditors or an Indemnified Party, whether or not any Indemnified Party is
otherwise a party thereto and whether or not the Transaction is consummated, IN
COMPARATIVE,
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CONTRIBUTORY OR SOLE NEGLIGENCE OF THE INDEMNIFIED PARTY. The Borrower also
agrees not to assert, and hereby waives, any claim against any Lead Arranger,
Agent, any Lender Party or any of their Affiliates, or any of their respective
partners, officers, directors, employees, agents and advisors, on any theory of
liability, for special, indirect, consequential or punitive damages arising out
of or otherwise relating to the Facilities, the actual or proposed use of the
proceeds of the Advances or the Letters of Credit, the Transaction Documents or
any of the transactions contemplated by the Transaction Documents. No
Indemnified Party shall be liable for any damages arising from the use by
unintended recipients of any information or other materials distributed by it
transactions contemplated hereby or thereby.
(c) If any payment of principal of, or
Conversion of, any Eurodollar Rate Advance is made by the Borrower to or for the
account of a Lender Party other than on the last day of the Interest Period for
such Advance, as a result of a payment or Conversion pursuant to Section 2.06,
2.09(b)(i), 2.10(d) or 8.15, acceleration of the maturity of the Notes pursuant
to Section 6.01 or for any other reason, or by an Eligible Assignee to a Lender
Party other than on the last day of the Interest Period for such Advance upon an
assignment of rights and obligations under this Agreement pursuant to
Section 8.07 as a result of a demand by the Borrower pursuant to
Section 8.07(a), or if the Borrower fails to make any payment or prepayment of
an Advance for which a notice of prepayment has been given or that is otherwise
required to be made, whether pursuant to Section 2.04, 2.06 or 6.01 or
otherwise, the Borrower shall, upon demand by such Lender Party (with a copy of
such demand to the Paying Agent), pay to the Paying Agent for the account of
such Lender Party any amounts required to compensate such Lender Party for any
additional losses, costs or expenses that it may incur as a result of such
payment or Conversion or such failure to pay or prepay, as the case may be,
including, without limitation, any loss (including loss of anticipated profits),
cost or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by any Lender Party to fund or maintain such
Advance.
(d) If any Loan Party fails to pay when due any
costs, expenses or other amounts payable by it under any Loan Document,
including, without limitation, fees and expenses of counsel and indemnities,
such amount may be paid on behalf of such Loan Party by the Paying Agent or any
Lender Party, in its sole discretion.
(e) Without prejudice to the survival of any
other agreement of any Loan Party hereunder or under any other Loan Document,
the agreements and obligations of the Borrower contained in Sections 2.10 and
2.12 and this Section 8.04 shall survive the payment in full of principal,
interest and all other amounts payable hereunder and under any of the other Loan
Documents.
Section 8.05. Right of Set-off. Upon
(a) the occurrence and during the continuance of any Event of Default and
(b) the making of the request or the granting of the consent specified by
Section 6.01 to authorize the Paying Agent to declare the Notes due and payable
pursuant to the provisions of Section 6.01, each Agent and each Lender Party and
each of their respective Affiliates is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set off and otherwise
apply any and all deposits (general or special,
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any time owing by such Agent, such Lender Party or such Affiliate to or for the
credit or the account of the Borrower against any and all of the Obligations of
the Borrower now or hereafter existing under the Loan Documents, irrespective of
whether such Agent or such Lender Party shall have made any demand under this
Agreement or such Note or Notes and although such Obligations may be unmatured;
provided, that in the event that any Defaulting Lender shall exercise any such
right of set off, (x) all amounts so set off shall be paid over immediately to
the Paying Agent for further application in accordance with the provisions of
Section 2.15 and, pending such payment, shall be segregated by such Defaulting
Lender from its other funds and deemed held in trust for the benefit of the
Paying Agent and the Lenders, and (y) the Defaulting Lender shall provide
promptly to the Paying Agent a statement describing in reasonable detail the
Obligations owing to such Defaulting Lender as to which it exercised such right
of setoff. Each Agent and each Lender Party agrees promptly to notify the
Borrower after any such set-off and application; provided, further, that the
application. The rights of each Agent and each Lender Party and their
respective Affiliates under this Section are in addition to other rights and
remedies (including, without limitation, other rights of set-off) that such
Agent, such Lender Party and their respective Affiliates may have.
Section 8.06. Binding Effect. This
Agreement shall become effective when it shall have been executed by the
Borrower and each Agent and the Paying Agent shall have been notified by each
Initial Lender Party that such Initial Lender Party has executed it and
thereafter shall be binding upon and inure to the benefit of the Borrower, each
Agent and each Lender Party and their respective successors and assigns, except
that the Borrower shall not have the right to assign its rights hereunder or any
interest herein without the prior written consent of the Lender Parties.
Section 8.07. Assignments and
Participations.
(a) Each Lender may, and (following a demand by
such Lender pursuant to Section 2.10 or 2.12) upon at least five Business Days’
notice to such Lender and the Paying Agent, will assign to one or more Eligible
Assignees all or a portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitment or
Commitments, the Advances owing to it and the Note or Notes held by it);
provided, however, that (i) each such assignment shall be of a uniform, and not
a varying, percentage of all rights and obligations under and in respect of one
or more Facilities, (ii) except in the case of an assignment to a Person that,
immediately prior to such assignment, was a Lender, an Affiliate of any Lender
or an Approved Fund of any Lender or an assignment of all of a Lender’s rights
and obligations under this Agreement, the aggregate amount of the Commitments
being assigned to such Eligible Assignee pursuant to such assignment (determined
as of the date of the Assignment and Assumption with respect to such assignment)
shall in no event be less than $1,000,000 (or such lesser amount as shall be
approved by the Paying Agent and, so long as no Default shall have occurred and
be continuing at the time of effectiveness of such assignment, the Borrower),
(iii) each such assignment shall be to an Eligible Assignee, and (iv) the
parties to each such assignment shall execute and deliver to the Paying Agent,
for its acceptance (other than as to assignments to then existing Lenders and/or
their Affiliates) and recording in the Register, an Assignment and Assumption,
together with any Note or Notes subject to such assignment and
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together with a processing and recordation fee in the amount of $3,500;
provided, however, that the processing and recordation fee set forth in
sub-clause (iv) above shall not be payable (A) with respect to an assignment by
any Lender Party to an Affiliate or an Approved Fund of such Lender Party, or
(B) with respect to an assignment (x) which is both by and to an existing Lender
Party or (y) with a stated effective date occurring prior to the 90th day after
the Closing Date hereof.
(b) Upon such execution, delivery, acceptance
and recording, from and after the effective date specified in such Assignment
and Assumption, (i) the assignee thereunder shall be a party hereto and, to the
to such Assignment and Assumption, have the rights and obligations of a Lender
or an Issuing Bank, as the case may be, hereunder and (ii) the Lender or an
Issuing Bank assignor thereunder shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment and
Assumption, relinquish its rights (other than its rights under Sections 2.10,
2.12 and 8.04 to the extent any claim thereunder relates to an event arising
prior to such assignment) and be released from its obligations under this
remaining portion of an assigning Lender’s or an Issuing Bank’s rights and
obligations under this Agreement, such Lender or such Issuing Bank shall cease
to be a party hereto).
(c) By executing and delivering an Assignment
and Assumption, each Lender Party assignor thereunder and each assignee
thereunder confirm to and agree with each other and the other parties thereto
and hereto as follows: (i) other than as provided in such Assignment and
Assumption, such assigning Lender Party makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with any Loan Document or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of, or the perfection or priority of any lien or security interest created or
purported to be created under or in connection with, any Loan Document or any
other instrument or document furnished pursuant thereto; (ii) such assigning
Lender Party makes no representation or warranty and assumes no responsibility
with respect to the financial condition of any Loan Party or the performance or
observance by any Loan Party of any of its obligations under any Loan Document
or any other instrument or document furnished pursuant thereto; (iii) such
copies of the financial statements referred to in Section 4.01 and such other
analysis and decision to enter into such Assignment and Assumption; (iv) such
assignee will, independently and without reliance upon any Agent, such assigning
Lender Party or any other Lender Party and based on such documents and
credit decisions in taking or not taking action under this Agreement; (v) such
assignee confirms that it is an Eligible Assignee; (vi) such assignee appoints
and authorizes each Agent to take such action as agent on its behalf and to
exercise such powers and discretion under the Loan Documents as are delegated to
such Agent by the terms hereof and thereof, together with such powers and
discretion as are reasonably incidental thereto; and (vii) such assignee agrees
by the terms of this Agreement are required to be performed by it as a Lender or
an Issuing Bank, as the case may be.
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(d) The Paying Agent shall maintain at its
address referred to in Section 8.02 a copy of each Assignment and Assumption
delivered to and accepted by it and a register for the recordation of the names
and addresses of the Lender Parties and the Commitment under each Facility of,
and principal amount of the Advances owing under each Facility to, each Lender
Party from time to time (the “Register”). In addition, the Paying Agent shall
maintain on the Register information regarding the designation, and revocation
of designation, of any Lender as a Defaulting Lender. The entries in the
Register shall be conclusive and binding for all purposes, absent manifest
error, and the Borrower, the Agents and the Lender Parties may treat each Person
whose name is recorded in the Register as a Lender Party hereunder for all
the Borrower or any Agent or any Lender Party at any reasonable time and from
(e) Upon its receipt of an Assignment and
Assumption executed by an assigning Lender Party and an assignee, together with
any Note or Notes subject to such assignment, the Paying Agent shall, if such
Assignment and Assumption has been completed and is in substantially the form of
Exhibit C hereto, (i) accept such Assignment and Assumption, (ii) record the
information contained therein in the Register and (iii) give prompt notice
thereof to the Borrower and each other Agent. In the case of any assignment by
a Lender, within five Business Days after its receipt of such notice, the
Borrower, at its own expense, shall execute and deliver to the Paying Agent in
exchange for the surrendered Note or Notes a new Note to the order of such
Eligible Assignee in an amount equal to the Commitment assumed by it under each
Facility pursuant to such Assignment and Assumption and, if any assigning Lender
has retained a Commitment hereunder under such Facility, a new Note to the order
of such assigning Lender in an amount equal to the Commitment retained by it
hereunder. Such new Note or Notes shall be in an aggregate principal amount
equal to the aggregate principal amount of such surrendered Note or Notes, shall
otherwise be in substantially the form of Exhibit A hereto.
(f) Each Issuing Bank may assign to an
Eligible Assignee all or a portion of its rights and obligations under the
undrawn portion of its Letter of Credit Commitment at any time; provided,
however, that each such assignment shall be to an Eligible Assignee and the
for its acceptance and recording in the Register, an Assignment and Assumption.
(g) Each Lender Party may sell participations
to one or more Persons (other than a natural person, a Defaulting Lender or any
Loan Party or any of Affiliates thereof) in or to all or a portion of its rights
and obligations under this Agreement (including, without limitation, all or a
portion of its Commitments, the Advances owing to it and the Note or Notes (if
any) held by it); provided, however, that (i) such Lender Party’s obligations
under this Agreement (including, without limitation, its Commitments) shall
remain unchanged, (ii) such Lender Party shall remain solely responsible to the
other parties hereto for the performance of such obligations, (iii) such Lender
Party shall remain the holder of any such Note for all purposes of this
Agreement, (iv) the Borrower, the Agents and the other Lender Parties shall
continue to deal solely and directly with such Lender Party in connection with
such Lender Party’s rights and obligations under this Agreement and (v) no
participant under any such participation shall have any right to approve any
amendment or waiver of any provision of any Loan Document, or any consent to any
departure by any Loan Party therefrom, except to the extent that such amendment,
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waiver or consent would reduce the principal of, or interest on, the Notes or
any fees or other amounts payable hereunder, in each case to the extent subject
to such participation, postpone any date fixed for any payment of principal of,
or interest on, the Notes or any fees or other amounts payable hereunder, in
each case to the extent subject to such participation, or release all or
substantially all of the Collateral.
(h) Any Lender Party may, in connection with any
assignment or participation or proposed assignment or participation pursuant to
this Section 8.07, disclose to the assignee or participant or proposed assignee
or participant any information relating to the Borrower furnished to such Lender
Party by or on behalf of the Borrower; provided, however, that, prior to any
such disclosure, the assignee or participant or proposed assignee or participant
shall agree to preserve the confidentiality of any Confidential Information
received by it from such Lender Party.
(i) Notwithstanding any other provision set
forth in this Agreement, any Lender Party may at any time create a security
interest in all or any portion of its rights under this Agreement (including,
without limitation, the Advances owing to it and the Note or Notes held by it)
in favor of any Federal Reserve Bank in accordance with Regulation A of the
Board of Governors of the Federal Reserve System.
(j) No such assignment shall be made (A) to
the Borrower or any of the Borrower’s Affiliates or Subsidiaries, or (B) to any
Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming a
Lender hereunder, would constitute any of the foregoing Persons described in
this clause (B), or (C) to a natural person.
(k) In connection with any assignment of rights
and obligations of any Defaulting Lender hereunder, no such assignment shall be
effective unless and until, in addition to the other conditions thereto set
forth herein, the parties to the assignment shall make such additional payments
to the Paying Agent in an aggregate amount sufficient, upon distribution thereof
as appropriate (which may be outright payment, purchases by the assignee of
participations or subparticipations, or other compensating actions, including
funding, with the consent of the Borrower and the Paying Agent, the applicable
pro rata share of Advances previously requested but not funded by the Defaulting
Lender, to each of which the applicable assignee and assignor hereby irrevocably
consent), to (x) pay and satisfy in full all payment liabilities then owed by
such Defaulting Lender to the Paying Agent or any Lender hereunder (and interest
accrued thereon) and (y) acquire (and fund as appropriate) its full pro rata
share of all Advances and purchases of Letters of Credit Advances and Swing Line
Advances in accordance with its Pro Rata Share. Notwithstanding the foregoing,
in the event that any assignment of rights and obligations of any Defaulting
Lender hereunder shall become effective under applicable law without compliance
with the provisions of this paragraph, then the assignee of such interest shall
be deemed to be a Defaulting Lender for all purposes of this Agreement until
such compliance occurs.
Section 8.08. Replacement of Lenders. If
any Lender (a) requests compensation under Section 2.10, or if the Borrower is
Authority for the account of any Lender pursuant to Section 2.12, or if any
Lender is a Defaulting Lender, then the Borrower may, at its sole expense
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and effort, upon notice to such Lender and the Administrative Agent, require
such Lender to assign and delegate, without recourse (in accordance with and
subject to the restrictions contained in, and consents required by,
Section 8.07), all of its interests, rights (other than its existing rights to
payments pursuant to Section 2.10 of Section 2.12) and obligations under this
Agreement and the related Loan Documents to an Eligible Assignee that shall
assume such obligations (which Eligible Assignee may be another Lender, if a
Lender accepts such assignment), or (b) has failed to consent to a proposed
amendment, waiver, discharge or termination which pursuant to the terms of
Section 8.01 requires the consent of all of the Lenders affected and with
respect to which the Required Lenders shall have granted their consent (such
Lender, a “Non-Consenting Lender”), then the Borrower shall have the right
(unless such Non-Consenting Lender grants such consent) at its sole expense and
effort to replace such Non-Consenting Lender by deeming such Non-Consenting
Lender to have assigned its Loans and its Commitments hereunder to one or more
Eligible Assignees; in each case, provided that:
(i) the Borrower shall have paid to the
Administrative Agent the assignment fee specified in Section 8.07(a);
(ii) such Lender shall have received payment of
an amount equal to 100% of the outstanding principal of its Advances, accrued
interest thereon, accrued fees and all other amounts payable to it hereunder and
under the other Loan Documents (including any amounts under Section 3.05) from
the assignee (to the extent of such outstanding principal and accrued interest
and fees) or the Borrower (in the case of all other amounts);
(iii) in the case of any such assignment resulting
from a claim for compensation under Section 2.10 or payments required to be made
pursuant to Section 2.12 (A) in the event that as of any date, more than one
Lender shall have an outstanding request for any such compensation, the Borrower
shall not require an assignment by any one Lender requesting such compensation
at such time without also requiring an assignment by all such Lenders, and
(B) such assignment will result in a reduction in such compensation or payments
thereafter;
(iv) in the case of any assignment resulting from a
Lender becoming a Non-Consenting Lender, any such assignee shall consent, at the
time of such assignment, to the matters in respect of which such Non-Consenting
Lender failed to consent; and
(v) such assignment does not conflict with
applicable laws.
cease to apply.
Section 8.09. Execution in Counterparts.
This Agreement may be executed in any number of counterparts and by different
and the same agreement. Delivery of an executed counterpart of a signature page
116
to this Agreement by “.pdf” shall be effective as delivery of an original
Section 8.10. No Liability of the Issuing
Banks. The Borrower assumes all risks of the acts or omissions of any
beneficiary or transferee of any Letter of Credit with respect to its use of
such Letter of Credit. Neither the Agents, the Lenders nor any Issuing Bank nor
any of their respective officers or directors shall be liable or responsible
for: (a) the use that may be made of any Letter of Credit or any acts or
omissions of any beneficiary or transferee in connection therewith; (b) the
validity, sufficiency or genuineness of documents, or of any endorsement
thereon, even if such documents should prove to be in any or all respects
invalid, insufficient, fraudulent or forged; (c) payment by such Issuing Bank
against presentation of documents that do not comply with the terms of a Letter
of Credit, including failure of any documents to bear any reference or adequate
reference to the Letter of Credit; (d) any error, omission, interruption, loss
or delay in transmission or delivery of any draft, notice or other communication
under or relating to any Letter of Credit (including any document required to
make a drawing thereunder), or any error in interpretation of technical terms
therein; or (e) any other circumstances whatsoever in making or failing to make
payment under any Letter of Credit, except that the Borrower shall have a claim
against such Issuing Bank, and such Issuing Bank shall be liable to the
Borrower, to the extent of any direct, but not consequential, damages suffered
by the Borrower that the Borrower proves were caused by (i) such Issuing Bank’s
willful misconduct or gross negligence as determined in a final, non-appealable
judgment by a court of competent jurisdiction in determining whether documents
presented under any Letter of Credit comply with the terms of the Letter of
Credit or (ii) such Issuing Bank’s willful failure to make lawful payment under
a Letter of Credit after the presentation to it of a draft and certificates
strictly complying with the terms and conditions of the Letter of Credit. In
furtherance of the foregoing and without limiting the generality thereof, the
face to be in substantial compliance with the terms of a Letter of Credit, such
Issuing Bank may, in its sole discretion, either accept and make payment upon
such documents without responsibility for further investigation, regardless of
any notice or information to the contrary, or refuse to accept and make payment
upon such documents if such documents are not in strict compliance with the
terms of such Letter of Credit.
Section 8.11. Confidentiality. Each
Agent and each Lender Party shall hold all information supplied by the Borrower
or any of its Subsidiaries that is marked confidential (the “Confidential
Information”) confidential in accordance with its customary practices for
handling confidential information, provided that, in any event, disclosure may
be made without the consent of the Borrower, (a) to such Agent’s or such Lender
Party’s Affiliates and their officers, directors, employees, agents and advisors
and to actual or prospective Eligible Assignees and participants, and then only
on a confidential basis, (b) as required by any law, rule or regulation or
judicial process, (c) as requested or required by any state, Federal or foreign
authority or examiner regulating such Lender Party or any of its Affiliates,
(d) to any rating agency when required by it, provided that, prior to any such
disclosure, such rating agency shall undertake to preserve the confidentiality
of any Confidential Information relating to the Loan Parties received by it from
such Lender Party, (e) on a confidential basis to swap counterparties in
connection with hedging transactions entered into by a Lender Party with respect
to a Loan Party or any of obligations of a Loan Party and (f) as may be
reasonably necessary in connection
117
with the enforcement of the rights and remedies of the Lender Parties under the
Loan Documents.
Section 8.12. Release of Collateral.
(a) Notwithstanding any other provision herein
or in any other Loan Document, the Collateral Agent is hereby authorized and
shall release the Collateral from the Liens granted under the Collateral
Documents securing the obligations under this Agreement on a Business Day
specified by the Borrower (the “Optional Release Date”), upon the satisfaction
of the following conditions precedent (the “Optional Release Conditions”).
(i) the Borrower shall have given notice to
the Administrative Agent at least 10 Business Days prior to the Optional Release
Date, specifying the proposed Optional Release Date;
(ii) the Collateral Ratings Condition has been
satisfied as of the date of such notice, has remained satisfied for an
uninterrupted period of at least 30 consecutive days, and remains satisfied as
of the Optional Release Date;
(iii) no Default or Event of Default shall have
occurred and be continuing as of the date of such notice or as of the Optional
Release Date;
(iv) the Borrower shall be in compliance with the
covenants set forth in Section 5.04, calculated on a Pro Forma Basis, giving
effect to the Collateral Suspension Period; and
(v) on the Optional Release Date, the
Administrative Agent shall have received (A) a certificate, dated the Optional
Release Date and executed on behalf of the Borrower by a Financial Officer
thereof, confirming the satisfaction of the Optional Release Conditions set
forth in clauses (i) through (iv) above and (B) such other evidence and
calculations as the Administrative Agent may reasonably require confirming the
satisfaction of the Optional Release Conditions set forth above.
If the conditions set forth above are satisfied on the Optional Release Date,
then (i) on and after the Optional Release Date, the Collateral Agent shall
execute and deliver all such instruments, releases, financing statement
amendments or other agreements, and take all such further actions, at the
request and expense of the Borrower, as shall be necessary to effectuate the
release of the Liens granted under the Collateral Documents and (ii) as of the
Optional Release Date all representations and warranties and covenants contained
in this Agreement, the Security Agreement and any other Collateral Document
related to the grant or perfection of Liens on the Collateral shall be deemed to
be of no force or effect. Any such release shall be without recourse to, or
representation or warranty by, the Collateral Agent and shall not require the
consent of any Lender.
If any Collateral Re-Pledge Date shall occur, then the Collateral Suspension
Period shall immediately terminate and all Collateral and the Collateral
Documents, and all Liens and security interests granted or purported to be
granted therein, shall be automatically reinstated on the same terms as of the
applicable Collateral Reinstatement Date (as defined below), and the
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Loan Parties shall take all actions and execute and deliver all notices and
documents to satisfy Section 5.01(j), including the delivery of new pledge
agreements, UCC-1 financing statements, possessory collateral, and stock
certificates accompanied by stock powers, allonges or other applicable transfer
documents, in each case, reasonably requested by the Administrative Agent as may
be necessary to create and perfect the liens of the Collateral Agent in such
Collateral, all in form and substance reasonably satisfactory to the
Administrative Agent, within 30 days of such Collateral Re-Pledge Date (or such
longer period as the Administrative Agent may agree in its sole discretion,
without any requirement for Lender consent) (the first date on which a new
pledge agreement is required to be delivered pursuant to the foregoing, the
“Collateral Reinstatement Date”).
(b) Without limiting the provisions of
Section 8.04, the Borrower shall reimburse the Collateral Agent for all costs
and expenses, including attorneys’ fees and disbursements, incurred by it in
connection with any action contemplated by this Section.
(c) The Lenders hereby irrevocably agree that
the Liens granted to the Collateral Agent by the Loan Parties on any Collateral
shall be automatically released (i) upon the sale or other disposition of such
Collateral (including as part of or in connection with any other sale or other
disposition permitted hereunder) to any Person other than another Loan Party, to
the extent such sale or other disposition is made in compliance with the terms
of this Agreement (and the Collateral Agent may rely conclusively on a
certificate to that effect provided to it by any Loan Party upon its reasonable
request without further inquiry), (ii) if the release of such Lien is approved,
authorized or ratified in writing by the Required Lenders (or such other
percentage of the Lenders whose consent may be required in accordance with
Section 8.01), (iii) to the extent the property constituting such Collateral is
owned by any Loan Party, upon the release of such Loan Party from its
obligations under the Guaranty in accordance with the Loan Documents, (iv) with
respect to any Obligations of the Borrower or its Subsidiaries, upon the sale or
other disposition of such Collateral (including as part of or in connection with
any other sale or other disposition permitted hereunder) to any Excluded
Subsidiary, to the extent such sale or other disposition is made in compliance
with the terms of this Agreement and the other Loan Documents (and the
Collateral Agent may rely conclusively on a certificate to that effect provided
to it by any Loan Party upon its reasonable request without further inquiry),
and (v) as required to effect any sale or other disposition of Collateral in
connection with any exercise of remedies of the Collateral Agent pursuant to the
Collateral Documents. Any such release shall not in any manner discharge,
affect, or impair the Obligations or any Liens (other than those being released)
upon (or obligations (other than those being released) of the Loan Parties in
respect of) all interests retained by the Loan Parties, including the proceeds
of any sale, all of which shall continue to constitute part of the Collateral
except to the extent otherwise released in accordance with the provisions of the
Loan Documents. Additionally, the Lenders hereby irrevocably agree that any
Subsidiary that is a Loan Party shall be released from the Guaranties upon
consummation of any permitted transaction resulting in such Subsidiary becoming
an Excluded Subsidiary. The Lenders hereby authorize the Administrative Agent
and the Collateral Agent to, and the Administrative Agent and the Collateral
Agent shall upon request of any Loan Party, execute and deliver any instruments,
documents, and agreements necessary or desirable to evidence and confirm the
release of any Loan Party or Collateral pursuant to the foregoing provisions of
this paragraph, all without the further consent or joinder of any Lender.
119
Section 8.13. Jurisdiction, Etc.
(a) Each of the parties hereto hereby
irrevocably and unconditionally submits, for itself and its property, to the
Agreement or any of the other Loan Documents to which it is a party, or for
such action or proceeding may be heard and determined in any such New York State
court or, to the fullest extent permitted by law, in such Federal court. The
Borrower hereby agrees that service of process in any such action or proceeding
brought in any such New York state court or in such federal court may be made
upon CT Corporation System or other nationally recognized process agent (the
“Process Agent”) to be designated by the Borrower from time to time by written
notice to the Administrative Agent and the Borrower hereby irrevocably appoints
such Process Agent its authorized agent to accept such service of process, and
agrees that the failure of such Process Agent to give any notice of any such
service shall not impair or affect the validity of such service or of any
judgment rendered in any action or proceeding based thereon. The Borrower
hereby further irrevocably consents to the service of process in any action or
proceeding in such courts by the mailing thereof by any parties hereto by
registered or certified mail, postage prepaid, to the Borrower at its address
specified pursuant to Section 8.02. Each of the parties hereto agrees that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that any
party may otherwise have to bring any action or proceeding relating to this
Agreement or any of the other Loan Documents in the courts of any jurisdiction.
(b) Each of the parties hereto irrevocably and
so, any objection that it may now or hereafter have to the laying of venue of
any of the other Loan Documents to which it is a party in any New York State or
Federal court. Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
Section 8.14. Governing Law. Each Loan
Document (other than the Letters of Credit, to the extent specified below and
except as otherwise expressly set forth in a Loan Document) will each be deemed
to be a contract made under and governed by the laws of the State of New York
(including for such purpose Sections 5-1407 and 5-1402 of the General
Obligations Law of the State of New York). Each Letter of Credit shall be
governed by, and construed in accordance with, the laws or rules designated in
such Letter of Credit or the related Letter of Credit Agreement, or if no laws
or rules are designated, the International Standby Practices (ISP98 —
International Chamber of Commerce Publication Number 590 (the “ISP Rules”)) and,
as to matters not governed by the ISP Rules, the internal laws of the State of
New York. The Loan Documents constitute the entire understanding among the
parties hereto with respect to the subject matter thereof and supersede any
prior agreements, written or oral, with respect thereto.
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Section 8.15. Reallocation and Assignment
of Existing Facilities. The credit extensions and commitments made by the
Existing Lenders and outstanding pursuant to the Existing Credit Agreement and
not refinanced in connection with the Refinancing, shall be assigned without
recourse and re-allocated among the Lenders so that, and credit extensions and
commitments shall be made by the Lenders pursuant to this Agreement so that,
from and after the Closing Date, the respective commitments and credit
extensions of the Lenders shall be in accordance with Schedule I. Credit
extensions made by Existing Lenders and not so assigned shall, effective as of
the Closing Date, be evidenced and governed by this Agreement and the Loan
Documents.
Section 8.16. Effect of this Agreement.
This Agreement amends and restates the Existing Credit Agreement in its entirety
and is entitled to the benefit of all existing Loan Documents. Any reference in
any other Loan Document to the “Credit Agreement,” “thereunder,” “therein,”
“thereof” or words of like import referring to the Existing Credit Agreement
shall mean and refer to this Agreement. Any reference in any other Loan
Document to the “Obligations” or any similar term including or referencing
obligations under the Existing Credit Agreement shall include and reference the
Obligations as defined in this Agreement. All Obligations under the Existing
Credit Agreement and the other Loan Documents shall continue to be outstanding
except as expressly modified by this Agreement and shall be governed in all
respects by this Agreement and the other Loan Documents, it being agreed and
understood by the parties hereto that this Agreement does not constitute a
novation, satisfaction, payment or reborrowing of any Obligation under the
Existing Credit Agreement or any other Loan Document except as expressly
modified by this Agreement, nor, except as expressly provided herein, does it
operate as a waiver of any right, power or remedy of any Lender under any Loan
Document. The security interests granted pursuant to any Loan Documents shall,
as modified hereby, continue in full force and effect, and are hereby affirmed,
with respect to this Agreement and the Obligations as defined herein. In the
event of a conflict between the terms and provisions of this Agreement and the
terms and provisions of any other Loan Document, the terms and provisions of
this Agreement shall govern.
Section 8.17. No Advisory or Fiduciary
Responsibility. In connection with all aspects of each transaction contemplated
hereby (including in connection with any amendment, waiver or other modification
hereof or of any other Loan Document), the Borrower acknowledges and agrees
that: (i) (A) the arranging and other services regarding this Agreement
severally provided by the Administrative Agent, the Joint Lead Arrangers and the
Lenders are arm’s-length commercial transactions between the Borrower and its
Affiliates, on the one hand, and the Administrative Agent, the Joint Lead
Arrangers and the Lenders (severally), on the other hand, (B) the Borrower has
consulted its own legal, accounting, regulatory and tax advisors to the extent
it has deemed appropriate, and (C) the Borrower is capable of evaluating, and
Agent, the Joint Lead Arrangers and the Lenders each is and has been acting
solely as a principal and, except as expressly agreed in writing by the relevant
fiduciary for the Borrower or any of its Affiliates, or any other Person and
(B) neither the Administrative Agent, nor the Joint Lead Arrangers nor any
Lender has any obligation to the Borrower or any of its Affiliates with respect
to the transactions contemplated hereby except those obligations expressly set
121
Administrative Agent, the Joint Lead Arrangers and the Lenders and their
respective Affiliates may be engaged in a broad range of transactions that
involve interests that differ from those of the Borrower and its Affiliates, and
neither the Administrative Agent nor the Joint Lead Arrangers nor any Lender has
any obligation to disclose any of such interests to the Borrower or its
Affiliates. To the fullest extent permitted by law, the Borrower hereby waives
and releases any claims that it may have against any of the Administrative
Agent, the Joint Lead Arrangers or any Lender with respect to any breach or
transaction contemplated hereby.
Section 8.18. Patriot Act Notice. Each
Lender hereby notifies each Loan Party that, pursuant to the requirements of the
Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism Act of 2001, Pub. L. 107-56 (the “Patriot
each Loan Party, which information includes names and addresses and other
information that will allow it to identify each Loan Party in accordance with
the Patriot Act.
Section 8.19. Amendment of the Security
Agreement.
(a) The Administrative Agent, the Collateral
Agent, the Borrower and each Initial Lender party hereto on the Closing Date
(constituting the Required Lenders as of such date), in accordance with the
provisions of Section 8.01 hereof and Section 22 of the Security Agreement,
hereby consent to the amendment of the Security Agreement to delete the struck
text (indicated textually in the same manner as the following example: ), and
to add the double-underlined text (indicated textually in the same manner as the
following example: double-underlined text), in each case as set forth in the
pages of the Security Agreement attached as Schedule 8.19 hereto.
(b) Effective as of the Closing Date, Schedules
I and IV to the Security Agreement are hereby replaced in their entirety with
the corresponding-numbered schedules set forth in Annex I attached to this
Agreement (provided, that such schedules may be further revised or replaced from
time to time after the Closing Date in accordance with the terms of the Security
Agreement).
Section 8.20. Waiver of Jury Trial. EACH
OF THE BORROWER, THE AGENTS AND THE LENDER PARTIES IRREVOCABLY WAIVES ALL RIGHT
TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE LOAN
DOCUMENTS, THE ADVANCES, THE LETTERS OF CREDIT OR THE ACTIONS OF ANY AGENT OR
ANY LENDER PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT
THEREOF.
122
IN WITNESS WHEREOF, the parties hereto have caused this Second Amended and
Restated Credit Agreement to be executed by their respective officers thereunto
duly authorized, as of the date first above written.
STEEL DYNAMICS, INC.,
as Borrower
By
/s/ Theresa E. Wagler
Name: Theresa E. Wagler
Title: Chief Financial Officer, Executive Vice President and Secretary
[SDI — SECOND A&R CREDIT AGREEMENT — SIGNATURE PAGE]
as Administrative Agent, Collateral Agent, an Initial Issuing Bank, Swing Line
Bank and a Lender
By
/s/ James P. O’Brien
Name: James P. O’Brien
as a Lender and an Initial Issuing Bank
By
/s/ David McCauley
Name: David McCauley
as a Lender
By
/s/ Rosalie C. Hawley
Name: Rosalie C. Hawley
Title: Vice President
as a Lender
By
/s/ Brendan Korb
Name: Brendan Korb
Title: Vice President
SUNTRUST BANK,
as a Lender
By
/s/ Baerbel Freudenthaler
Name: Baerbel Freudenthaler
Title: Managing Director
as a Lender
By
/s/ Stephen A. Maenhout
Name: Stephen A. Maenhout
MORGAN STANLEY BANK, N.A.,
as a Lender
By
/s/ Michael King
Name: Michael King
Title: Authorized Signatory
as a Lender
By
/s/ Marcus M. Tarkington
Name: Marcus M. Tarkington
Title: Director
By
/s/ Michael Shannon
Name: Michael Shannon
Title: Vice President
BMO HARRIS BANK, N.A.,
as a Lender
By
/s/ Jason Deegan
Name: Jason Deegan
Title: Vice President
FIFTH THIRD BANK,
as a Lender
By
/s/ Mike Gifford
Name: Mike Gifford
Title: V.P.
as a Lender
By
/s/ Steven Dixon
Name: Steven Dixon
Title: Vice President
COMPASS BANK,
as a Lender
By
/s/ Raj Nambiar
Name: Raj Nambiar
Title: Vice President
GOLDMAN SACHS BANK USA,
as a Lender
By
/s/ Rebecca Kratz
Name: Rebecca Kratz
Title: Authorized Signatory
THE NORTHERN TRUST COMPANY,
as a Lender
By
/s/ Michael Fornal
Name: Michael Fornal
Title: Vice President
E. SUN COMMERCIAL BANK, LTD., LOS ANGELES BRANCH,
as a Lender
By
/s/ Edward Chen
Name: Edward Chen
Title: Senior VP & General Manager
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Title: Made A Bad Joke
Answer #1: That isn't a crime. |
Exhibit 32.2 Broadcast International, Inc. & Subsidiaries Certification Of Chief Financial Officer Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act Of 2002 In connection with the quarterly report of Broadcast International, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2013, as filed with the Securities and Exchange Commission on the date hereof, James E. Solomon, Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: The Form 10-Q 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 Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: August 13, 2013 /s/ James E. Solomon James E. Solomon Chief Financial Officer
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Name: 92/181/EEC: Council Decision of 2 March 1992 concerning the conclusion of a Cooperation Agreement between the European Economic Community and COST third States on five concerted action projects in the field of biotechnology (Specific research and technological development programme ' Bridge' )
Type: Decision
Subject Matter: cooperation policy; research and intellectual property; international affairs
Date Published: 1992-03-31
Avis juridique important|31992D018192/181/EEC: Council Decision of 2 March 1992 concerning the conclusion of a Cooperation Agreement between the European Economic Community and COST third States on five concerted action projects in the field of biotechnology (Specific research and technological development programme ' Bridge' ) Official Journal L 085 , 31/03/1992 P. 0031COUNCIL DECISION of 2 March 1992 concerning the conclusion of a Cooperation Agreement between the European Economic Community and COST third States on five concerted action projects in the field of biotechnology (Specific research and technological development programme 'Bridge') (92/181/EEC)THE COUNCIL OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Economic Community, and in particular Article 130q (2) thereof, Having regard to the proposal from the Commission(1) , In cooperation with the European Parliament(2) , Having regard to the opinion of the Economic and Social Committee(3) , Whereas, by Decision 89/621/EEC(4) , the Council adopted a specific research and technological development programme in the field of biotechnology (1990 to 1994) ('Bridge'); whereas Article 8 of the said Decision authorizes the Commission to negotiate agreements, inter alia, with third countries participating in European cooperation in the field of Scientific and Technical Research (COST) and those European countries having concluded framework agreements in scientific and technical cooperation with the Community, HAS DECIDED AS FOLLOWS: Article 1 The Cooperation Agreement between the European Community and COST third States on five concerted action projects in the field of biotechnology (Specific research and technological development programme Bridge) is hereby approved on behalf of the European Economic Community. The text of the Agreement is attached to this Decision. Article 2 The President of the Council is hereby authorized to designate the persons empowered to sign the Agreement in order to bind the Community. Done at Brussels, 2 March 1992. For the Council The President Joao PINHEIRO (1) OJ No C 224, 29. 8. 1991, p. 16. (2) OJ No C 326, 16. 12. 1991, p. 65, and Decision of 12 February 1992 (not yet published in the Official Journal). (3) OJ No C 40, 17. 2. 1992, p. 22. (4) OJ No L 360, 9. 12. 1989, p. 32. |
EXHIBIT 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION -OXLEY ACT OF 2002 In connection with the Quarterly Report on Form 10-Q of Domain Extremes, Inc. (the “Company”) for the quarter ended June 30, 2010, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Stephen Tang, Treasurer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that based on my knowledge: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: August 13, 2010 /s/ Stephen Tang Stephen Tang Treasurer (Principal Financial and Accounting Officer) A signed original of this written statement required by Section 906 has been provided to Domain Extremes, Inc. and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
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CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We consent to the references to our firm in the Post-Effective Amendment to the Registration Statement on Form N-1A of the Otter Creek Long/Short Opportunity Fund, a series of Professionally Managed Portfolios. /s/ TAIT, WELLER & BAKER LLP Philadelphia, Pennsylvania December 24, 2013
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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 In connection with this Annual Report on Form 10-K of Guar Global Ltd. (the “Company”) for the fiscal year ended July 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company. Date: November5, 2013 /s/ Michael C. Shores Michael C. Shores, Chief Executive Officer and Chairman of the Board (Principal Executive Officer)
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Title: (Michigan) My good friend who owns a house with me needs to talk to a lawyer to discuss the financial consequences of marrying or not marrying his pregnant girlfriend who is on public assistance.
Question:My former housemate and good friend has gotten his girlfriend pregnant. They have not known each other for very long and I have a low opinion of her. (for various reasons that are not important here.) She is living with him and they are going to keep the baby. She has insurance through medicare and claims that when she tells her caseworker she's pregnant they will drop her health insurance so they have to get married so she can get on his health insurance. (this doesn't sound right to me.) I understand that he will be responsible for child support and for the child's insurance. I also believe the state will want to recover some of the costs of her birth. We haven't been able to find a lawyer we can pay to explain how that process works though. He is worried that if he doesn't marry her he will be responsible for birth costs at non insurance levels. eg. She has a complicated birth ($100,000 before insurance.) MI state (medicare?) insurance covers??? Does the state came after him for a percentage of the full $100,000 or the portion not covered by insurance? Does anyone know a resource for finding out how this works?
Answer #1: Sounds like she s on Medicaid, not Medicare (unless she is disabled). Your friend should contact his state's Medicaid Department and find out what is covered as far as complicated births. I think that many people get ON Medicaid for maternity coverage. IANAL, but I've never heard of Medicaid kicking somebody off for being pregnant. Your friend's girlfriend may be misinformed (or something).Answer #2: Not a lawyer, but Michigan resident, and former medicaid recipient... I was on medicaid with my first and second (10+ years ago), and wasn't married to their father until our second was 9 months old....
They do not cut medicaid benefits because of pregnancy, and as long as they are together/living together at the time of birth the state does not come after the father for the cost of delivery... My oldest was preemie and I had an emergency c-section... We did receive and itemized list for the cost of everything, but it was all covered by medicaid (and then my now ex-husband's insurance that my son was added to at birth).
Your friend should not rush into marriage with someone he barely knows just because she's pregnant. Is he even sure it's his kid? In Michigan, if you are married when a child is born, you are automatically listed as the father, and will be on the hook for child support (even if the child isn't biologically yours) should you ever split... My dad (I'm not biologically his) got screwed that way.Answer #3: Call the Michigan Bar Association, or rather have your friend do it, explain to the person you speak to what his circumstances are and ask for some attorneys in your area who do consults/work on a sliding scale etc.. 1-517-346-6300 |
Exhibit 10.35
FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) dated as of December
31, 2014, is entered into by and among CIRCOR INTERNATIONAL, INC., a Delaware
corporation (the “Borrower”), certain Subsidiaries of the Borrower who are
listed on the signature pages hereof (the “Subsidiary Guarantors”), the several
banks and financial institutions party hereto (the “Consenting Lenders”), and
SUNTRUST BANK, in its capacity as Administrative Agent (in such capacity, the
WHEREAS, the Borrower, the Subsidiary Guarantors, the lenders from time to time
party thereto (the “Lenders”), and the Administrative Agent entered into that
certain Credit Agreement dated as of July 31, 2014 (the “Credit Agreement”);
WHEREAS, the Borrower has requested that the Lenders and the Administrative
Agent amend the Credit Agreement on and subject to the terms and conditions set
forth herein; and
WHEREAS, the Credit Parties, the Lenders and the Administrative Agent desire to
enter into this Amendment on the terms, conditions and other provisions set
forth herein.
NOW, THEREFORE, for and in consideration of good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by the parties hereto,
the Consenting Lenders, the Administrative Agent, the Borrower and the other
Credit Parties hereby agree as follows:
Section 1. Specific Amendments to Credit Agreement. The parties hereto agree
that the Credit Agreement is amended as follows:
(a)The Credit Agreement is hereby amended by deleting the definition of
“Immaterial Subsidiary Testing Date” in Section 1.01 thereof and substituting in
lieu thereof the following:
“Immaterial Subsidiary Testing Date” means the last day of each fiscal quarter
of the Borrower.
(b) The Credit Agreement is hereby further amended by deleting clause (k) in
Section 6.01 thereof and substituting in lieu thereof the following:
(k) Immaterial Subsidiaries. At the time of the delivery of the financial
statements provided for in subpart (a) above, a certificate signed by the Chief
Financial Officer or Corporate Controller of the Borrower setting forth a list
of Immaterial Subsidiaries (which certificate shall include
calculations demonstrating that such Subsidiaries comply with the definition of
“Immaterial Subsidiary” in Section 1.01).
(c) The Credit Agreement is hereby further amended by adding the following
new Section 7.13 to the end of Article VII:
Section 7.13 Immaterial Subsidiaries. The Borrower will not permit, as of any
Immaterial Subsidiary Testing Date: (i) the aggregate Tangible Assets of all
Immaterial Subsidiaries on such date to exceed 10% of the Total Tangible Assets
on such date and (ii) that portion of Consolidated EBITDA attributable solely to
Immaterial Subsidiaries for the period of four consecutive fiscal quarters most
recently ended prior to such date to exceed 10% of Consolidated EBITDA for the
Borrower and its Subsidiaries for such period.
Section 2. Conditions Precedent. This Amendment shall be effective on the date
of the receipt by the Administrative Agent of a counterpart of this Amendment
duly executed by each of the Credit Parties, the Administrative Agent, and the
Required Lenders. Notwithstanding the date of execution of this Amendment by the
parties hereto, the parties hereto intend that this Amendment shall be effective
on and as of December 31, 2014.
Section 3. Representations. Each of the Credit Parties represents and warrants
to the Administrative Agent and the Lenders that:
(a) Organizational Power; Authorization. Each Credit Party has the corporate
or other organizational power and authority to execute, deliver and carry out
the terms and provisions of this Amendment. Each Credit Party has duly executed
and delivered this Amendment and this Amendment constitutes the legal, valid and
binding agreement and obligation of such Credit Party enforceable in accordance
with its terms, except to the extent that the enforceability thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws generally affecting creditors’ rights and by equitable
principles (regardless of whether enforcement is sought in equity or at law).
(b) Governmental Approvals; No Violation. No order, consent, approval,
license, authorization, or validation of, or filing, recording or registration
with, or exemption by, any Governmental Authority is required to authorize or is
required as a condition to (i) the execution, delivery and performance by any
Credit Party of this Amendment or any of its obligations hereunder, or (ii) the
legality, validity, binding effect or enforceability of this Amendment. Neither
the execution, delivery and performance by any Credit Party of this Amendment
nor compliance with the terms and provisions hereof (i) will contravene any
provision of any law, statute, rule, regulation, order, writ, injunction or
decree of any Governmental Authority applicable to such Credit Party, (ii) will
conflict with or result in any breach of, any of the terms, covenants,
conditions or provisions of, or constitute a default under, or result in the
creation or imposition of (or the obligation to create or impose) any Lien upon
any of the property or assets of such Credit Party pursuant to the terms of any
promissory note, bond, debenture, indenture, mortgage, deed of trust, credit or
loan agreement, or any other Material Agreement, or (iii) will violate any
provision of the Organizational Documents of such Credit Party.
(c) No Default. No Default or Event of Default has occurred and is
continuing as of the date hereof, nor will any Default or Event of Default exist
immediately after giving effect to this Amendment.
Section 4. Reaffirmation of Representations by Credit Parties. Each Credit Party
hereby reaffirms that all representations and warranties of the Credit Parties
contained in the Loan Documents are true and correct in all material respects
(except that if any such representation or warranty contains any materiality
qualifier, such representation or warranty is true and correct in all respects)
with the same effect as though such representations and warranties had been made
on and as of the date hereof, except to the extent that such representations and
warranties expressly relate to an earlier specified date, in which case such
representations and warranties shall have been true and correct in all material
respects (except that if any such representation or warranty contains any
materiality qualifier, such representation or warranty shall be true and correct
in all respects) as of the date when made.
Section 5. Reaffirmation. Each of the Credit Parties hereby reaffirms its
continuing obligations to the Administrative Agent and the Lenders under the
Loan Documents to which it is a party and agrees that the transactions
contemplated by this Amendment shall not in any way affect the validity and
enforceability of the Loan Documents, or reduce, impair or discharge the
obligations of the Credit Parties a party thereto.
Section 6. Certain References. After the effectiveness of this Amendment, each
reference to the Credit Agreement in any of the Loan Documents shall be deemed
to be a reference to the Credit Agreement as amended by this Amendment.
Section 7. Expenses. The Borrower shall reimburse the Administrative Agent upon
demand for all out-of-pocket costs and expenses (including reasonable attorneys’
fees) incurred by the Administrative Agent in connection with the preparation,
negotiation and execution of this Amendment and the other agreements and
documents executed and delivered in connection herewith.
Section 8. Benefits. This Amendment shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns.
Section 9. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
Section 10. Effect.
(a) Except as expressly herein amended, the terms and conditions of the
Credit Agreement and the other Loan Documents remain unchanged and continue to
be in full force and effect. The amendments contained herein shall be deemed to
have prospective application only, unless otherwise specifically stated herein.
The Credit Agreement is hereby ratified and confirmed in all respects.
(b) Nothing contained herein shall be deemed to constitute a waiver of
compliance with any term or condition contained in the Credit Agreement or any
of the other Loan Documents, or constitute a course of conduct or dealing among
the parties. The Administrative Agent and the Lenders reserve all rights,
privileges and remedies under the Loan Documents.
(c) This Amendment constitutes the entire agreement and understanding among
the parties hereto with respect to the subject matter hereof and supersedes any
and all prior agreements and understandings, oral or written, relating to the
subject matter hereof. This Amendment shall for all purposes be deemed to be a
“Loan Document” under the Credit Agreement and entitled to the benefits thereof.
Section 11. Release. In consideration of the amendments contained herein, each
Credit Party hereby waives and releases each of the Lenders and the
Administrative Agent from any and all claims and defenses with respect to the
Credit Agreement and the other Loan Documents.
Section 12. Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall be deemed to be an original and shall be
binding upon all parties, their successors and assigns. The exchange of copies
of this Amendment and of signature pages by facsimile or .pdf via email
transmission shall constitute effective execution and delivery of this Agreement
as to the parties.
Section 13. Definitions. All capitalized terms not otherwise defined herein are
used herein with the respective definitions given them in the Credit Agreement.
[Signatures on following pages]
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC FORM 8-K CURRENT REPORT Pursuant to Section13 or 15(d) of the Securities Exchange Act of Date of Report (Date of earliest event reported):November 19, 2008 ONCOTHYREON INC. (Exact name of registrant as specified in its charter) Delaware 001-33882 26-0868560 (State or other jurisdiction of (Commission File Number) (IRS Employer incorporation) Identification No.) 2601 Fourth Avenue, Suite 500 Seattle, Washington 98121 (Address of principal executive offices, including zip code) (206) 801-2100 (Registrant’s telephone number, including area code) (Former name or former address, if changed since 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 Rule425 under the Securities Act (17 CFR 230.425) o Soliciting material pursuant to Rule14a-12 under the Exchange Act (17 CFR 240.14a-12) o Pre-commencement communications pursuant to Rule14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) o Pre-commencement communications pursuant to Rule13e-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. (b)On November 19, 2008, D. Lynn Kirkpatrick, PhD tendered her resignation as the Chief Scientific Officer of Oncothyreon Inc. in order to pursue other interests.Dr. Kirkpatrick’s resignation will be effective on December 31, 2008. 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. ONCOTHYREON INC. By: /s/ Robert L. Kirkman, M.D. Robert L. Kirkman, M.D. Chief Executive Officer and President Date:November
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Dangerous substances and preparations (dichloromethane) (debate)
The next item is the report by Carl Schlyter, on behalf of the Committee on the Environment, Public Health and Food Safety, on the proposal for a decision of the European Parliament and of the Council amending Council Directive 76/769/EEC as regards restrictions on the marketing and use of certain dangerous substances and preparations (Dichloromethane) - C6-0068/2008 -.
Madam President, I actually wish that the French Presidency were here tonight, as I have to say that the cooperation that we had was extraordinarily good. Without its commitment and its willingness to find ways forward we would never have been able to reach an agreement. During the process, there was always a blocking minority on some issue or other. It is thus thanks to very good collaboration with the French Presidency that this legislation is now being realised, which is a very good thing.
What we are discussing is dichloromethane (DCM), a paint stripper. It is also an industrial chemical that is actually used a lot in the pharmaceutical industry. In its industrial application, however, it is entirely possible to protect workers and the environment when using this chemical. It is predominantly when it is sold to consumers that there are problems. DCM is a noxious chemical in that it is carcinogenic, has a narcotic effect and has harmful effects on health. It is easy to be affected by it. By the time you smell DCM, you have already exceeded the safety limit by a factor of three, which makes it extremely difficult to protect yourself against. A proper protective set-up consists of very high-spec gloves that have to be changed every three hours. You have to have equipment that usually costs around EUR 2 700 with an independent ventilation system.
The fact that this chemical is used today is very much dependent on the fact that it is used illegally. This meant that it was also important to restrict and prohibit use by professional users. It is often the self-employed and companies consisting of just a few staff who are out there cleaning up graffiti or stripping paint. The protective equipment is very often left at home or just not available at all. Banning this chemical is therefore, to a very large extent, a worker-protection issue. We know that, in those countries where it is used - which means 24 of the 27 Member States at present - DCM is hardly ever used properly in accordance with national and European legislation. I think it will suffice to quote the German Chemical Industry Association's own text, which states that even if there is good ventilation, paints are stripped in restricted areas, the paint residues removed are collected and the DCM pots closed immediately, the exposure limit is still exceeded on a regular basis. That is why self-contained breathing equipment is needed.
I think that it is very positive that the Commission put forward a proposal and that we have now reached a compromise that will, in practice, also prohibit professional use, with countries having the ability to obtain national derogations. However, those who obtain such derogations must guarantee that those who work with this chemical have suitable protective equipment, adequate training and awareness of the alternatives and they must be able to justify why they are unable to make use of these alternatives. It is, in fact, the case that there are functional alternatives available in all the areas in which dichloromethane is currently used. We are talking about the 5% that is used in the dangerous way, which is to say for paint stripping. The other 95% of the volume of DCM used is used within industry. It is a good thing that we are tightening up the protection of workers and the environment there, too.
All in all, I am, in fact, very satisfied with the agreement. It will improve people's ability to strip paint safely without being exposed to dangerous, carcinogenic chemicals. My fellow Members of this House have helped to make it possible to achieve this agreement so quickly, and I thank you all for that and for all the shadow rapporteurs and myself being able to reach agreement with the Council. This bodes well. This was, in fact, the last chance before REACH to ban chemicals in the old-fashioned way. It was therefore a type of grand finale for the old style of chemicals policy and it was certainly a good finale for us to reach agreement so efficiently.
In respect of DCM, there are those who argue that the alternatives may possibly be at least as dangerous, if not more so, but the assessments by the Commission and others have clearly shown that the alternatives are significantly less dangerous. We are now creating a market for the alternatives. The reality is that those companies that are currently grumbling will, in many cases, also manufacture the alternatives, while there are also smaller companies that manufacture alternatives. It is a good thing that they will now get the chance to exploit their competitive advantage of greater environmental protection in the internal market. We are heading for a safer future, and I thank everyone who has been involved in the process.
Madam President, ladies and gentlemen, I would like to begin by thanking the rapporteur, Mr Schlyter, for his hard work on this proposal. We have now come to a good compromise with the Council, which can be accepted after the first reading.
It is question here of restricting the marketing of dichloromethane and its use in paint stripping products, in order to reduce the risks identified in several major studies carried out on behalf of the Commission. There is no doubt that dichloromethane is hazardous to human health because it is highly volatile. This volatility causes highly concentrated vapours to form in the ambient air which can easily be inhaled by users of paint strippers and which then have a direct toxic effect on the central nervous system.
In poor working or operating conditions, this has led to or contributed to fatal accidents in several Member States. The majority of accidents and fatalities have taken place in a commercial and professional environment, in particular as a result of inadequate ventilation and failure to use personal protective equipment. However, consumers have also been involved in accidents, although the number of accidents reported in this case is much smaller.
The Commission's proposal is intended to reduce as far as possible and as far as technically feasible the risks involved in the use of this hazardous chemical. In the version amended by Parliament and the Council, the sale of paint strippers containing dichloromethane to consumers will be banned completely. There should also be a ban on consumers using this substance, because they do not generally have the necessary personal protective equipment and cannot be trained or supervised to ensure that they use the substance safely.
The marketing and use of dichloromethane by professionals will be subject to a general ban. However, as some Member States believe that it is essential for professionals to continue using this substance in future, these Member States will be given the option of permitting its use under specific strict conditions. These Member States must impose specific rules and regulations for authorising professionals which fit into their existing national systems. Professional users will only be granted authorisation after they have completed a training course. The training course must, among other things, provide information about the risks of dichloromethane and the availability of alternative substances. Employers and self-employed people should preferably replace dichloromethane with other substances or procedures, taking into account the relevant workplace safety legislation.
The use of paint strippers containing dichloromethane will continue to be permitted on commercial premises, provided that all the necessary measures have been taken to keep the exposure of the people working there to a minimum. For example, it is essential to ensure that there is adequate ventilation in order to remain as far as possible within workplace limits. Measures to minimise evaporation from containers of paint stripper must also be put in place. In addition, protective respiratory equipment must be worn when the workplace limits are exceeded.
Mr Schlyter recommends that you support the compromise text negotiated with the Council. I also believe that this compromise represents a good balance. I am therefore in a position to give my full support to the compromise on behalf of the Commission.
Madam President, first of all I would like to thank the rapporteur and reiterate that we have worked very well together to reach this compromise, which has the support of the Group of the European People's Party (Christian Democrats) and European Democrats. Attention must be drawn to the fact that this is a highly toxic product and that viable and safe alternative solutions do exist. Indeed, we cannot deny the hazards - as you mentioned, Mr Verheugen - associated with the use of dichloromethane, particularly if the conditions do not guarantee user safety. Often dichloromethane is used by individuals carrying out restoration work in their own homes. They find it to be an excellent and effective product, but do not realise that by using it in an enclosed space they risk losing consciousness very quickly, and that there is even a risk of death if due care is not taken.
Contrary to the extreme position of a total ban, as first proposed by the rapporteur, the compromise we have reached now leaves Member States the option of providing an exception for professional and industrial use, but under clearly defined conditions. This is a valid compromise and it is important to recognise that dichloromethane is responsible for many accidents. I regret, moreover, that we have very little information on the accidents at work that have happened. I would also point out that an impact assessment was performed before the Commission's work began and that its findings shaped the text. We must nonetheless ensure that very specific information is available to those individuals who may still be tempted to use this product, even though it is the Member States that are now responsible for drawing up clear rules and enforcing the general marketing ban on this product that is hazardous to health.
on behalf of the ALDE Group. - Madam President, I would like to congratulate the rapporteur Carl Schlyter, and the shadow rapporteurs, on the very thorough and professional work that they have done on this dossier. It is a rare pleasure for me these days to be able to participate in debates arising from committee work and particularly at this time of day, or should I say at this time of night.
I have not had the privilege to participate in the debates in committee other than on one occasion when I wished to ensure that my colleagues understood the importance of voting to support the rapporteur's proposals. But this is an important issue, indeed an issue of life or death, and one that for me is doubly important because I have a particular constituency interest in it.
Dichloromethanes, as we have heard, are substances with a uniquely hazardous profile. They are so volatile that inhalation, even just the casual smell of them, is above all recognised health limits. They are carcinogenic and they cause neurotic effects with nerve damage. Under normal temperatures their use causes them to evaporate to dangerous levels. To work safely with dichloromethanes one needs an air-proof suit at a cost of about EUR 2 000, and to protect one's skin, gloves at a cost of EUR 25 or EUR 30, which need to be replaced every two or three hours.
Of course nobody does this, even if they know of the harmful nature of the substance. There is no effective way to ensure the safe use of dichloromethanes for the public. And, because they are so toxic, the rapporteur and the committee wanted to ban them, even for professional use, in order to prevent fatalities. Over the last eight years the Commission has on record some 18 fatalities from the use of these products and some 56 non-fatal injuries. I am sure that in reality there have been more. But there has been an industrial lobby which has created a blocking minority in Council, and for that reason the rapporteur and the committee reluctantly agreed to allow the Member States a derogation for professional use.
However, we have achieved not only strict protection for workers using them professionally, but also a commitment to control and inspection by the Member States. A complete ban on these products already exists in Sweden, Denmark and Germany, and I hope no Member State will ask for such a derogation. Industrial use is a different matter. These products can be used safely industrially in the right conditions.
Some Members have argued that they should be allowed to be used for the protection of cultural heritage, for the removal of paint from old monuments without damaging. But experts have suggested this would not be a good idea, and therefore my group will not be supporting any amendments tabled in that direction.
I mentioned that I have a constituency interest in this. I have been in correspondence with Commissioner Verheugen for seven years now on this issue. Why? Because I have in my constituency a company called Eco Solutions, which has developed a perfectly safe alternative to dichloromethanes. It is a water-based alternative. It has the same effect even if the process takes a little longer. I am sorry to say that the only Member State lobbying hard for the retention of dichloromethane use was the United Kingdom, which also produces in industrial quantities many such substances.
It took me four years' work with Commissioner Verheugen to get the Commission's expert committee even to look at the existence of this safer water-based alternative, and it has taken three years to get that water-based alternative recognised as an effective and useable technology. But I am pleased to say that, as with all the best stories, this one has a happy ending. Dichloromethanes will come off the market for non-industrial use. My constituents will become richer with their new technology, and everybody will live happily ever after thanks to the excellent work of Carl Schlyter and his colleagues on the Committee on the Environment, Public Health and Food Safety.
Madam President, dichloromethane or DCM is a dangerous chemical that can cause cancer, eye damage and acute damage to organs such as the heart, liver and kidneys. DCM is used in the manufacture of pharmaceuticals and as a paint stripper and degreaser, amongst other uses. Some Member States, such as Sweden, Denmark and Austria, have already introduced a ban on DCM.
It is a great thing that the issue of DCM is now on the agenda. It is even better that this agreement will mean a total ban on DCM when it comes to ordinary consumers. For this, I can but give high praise to our rapporteur, Mr Schlyter. Well done, Carl!
Unfortunately, workers in the pharmaceutical industry and those working on cleaning up walls and façades will continue to run the risk of suffering the effects of dichloromethane. This agreement will not, I am sad to say, mean a total ban on the professional use of DCM. This is a serious failing, and one that I hold the Commission entirely responsible for. This derogation, however, has been framed in such a way that what I hope is the small number of Member States that want to use DCM must guarantee that their workers do not suffer as a result. The burden of proof is thus on those countries that want to engage in the limited use of DCM, which must prove that the substance will be used in the safest possible manner and guarantee the protection of workers. In the end, this is quite acceptable.
By and large, this is a good agreement. I would like to urge the Commission to draw inspiration from this decision. Yes, we can! Let us now go further. I urge the Commission, please, is it not possible for you to give us an indication that, in the future, there will be more bans on hazardous substances such as carcinogenic azo dyes, bisphenol A and the flame retardant deca-BDE? If the EU cannot do this, why can you not permit individual Member States to go further and introduce their own bans? You, in the Commission, even go so far as to force the Member States to lift restrictions that they sometimes already have. My own country, Sweden, for example, was forced to allow azo dyes after joining the EU in 1995. Following threats from the Commission about legal action in the European Court of Justice, Sweden has now begun to permit deca-BDE. That is unacceptable and, more than anything, it is not environmentally friendly. That is not the way to conduct a progressive programme of environmental legislation. Commission, Commissioner Verheugen, please do convince me otherwise! Prove that environmental considerations take priority over the demands of the market in more cases than this single example.
on behalf of the IND/DEM Group. - Madam President, dichloromethane, which is available on the market and is authorised for common use in the shape of various commercial products, is also widely used in the chemical industry, as well as the textile and pharmaceutical industries. Dichloromethane is easily absorbed by the human body, it is highly toxic and carcinogenic, and is responsible for many cases of poisoning, including fatal accidents. In Poland alone, the number of people exposed to this chemical agent in the workplace is estimated to stand at several thousand. While industrial use of the chemical can be effectively controlled, the use of dichloromethane by individual consumers, or even by professional companies, is inevitably associated with a risk to human health and life, not only due to the fact that there is no way of implementing proper controls, but also due to the high cost of implementing protective measures.
All warnings and measures to regulate the use of dichloromethane have proved to be ineffective, in view of the high toxicity and the volatility of this chemical compound, which is why it is necessary to completely withdraw dichloromethane from widespread consumer use. Economic factors should not be used as a reason for maintaining this poison in common use. We must also avoid using the interests of industries which manufacture products containing DCM as an argument to support restricted consumer use of dichloromethane. As far as the common usage of this compound is concerned, the cost to society far outweighs any material benefits.
Madam President, I agree with the very last phrase that the Commissioner used, that we can welcome this compromise and, on that basis, I congratulate the rapporteur and the shadow rapporteurs on bringing this together.
It has been a hard road to get to this. Originally the Commission came forward with a proposal to ban this substance for individual use - not for professional use - and the rapporteur brought forward these proposals to extend this to professional use. And so we listened to the evidence of our constituents, as Graham Watson has done. He has talked about industrial lobbies. He has also referred to an industrial lobby in his constituency, which successfully persuaded him of the alternative. We know that 90% of paint strippers use DCM, so we had to look at the balance of this.
None of us wants to go over the top in our descriptions of the dangers. Sometimes when I was listening this evening to the hazards of this substance, I wondered why we are satisfied that industrial workers should be subjected to it but not allow professionals to use the substance, within the rules and under strict guidance; and all the clothing that Graham Watson is going to issue to people in the future - these white suits, or whatever they are, a space-age parliamentary benefit - will be coming.
I think that this, among many other substances, poses a high risk. It is potentially hazardous. There is evidence that there have been accidents and people have been hurt. It is probably right that we take stronger action than has been taken in the past. That is why I accept and genuinely welcome the compromise that is being sought. It leaves the door open to Member States that wish to, and believe it is right to, continue under the tight rules that have been laid down to allow professionals - and only professionals - to use this in addition to industrial use.
But, Commissioner, you now have a responsibility to go back and do the research on the alternatives. Look at the alternatives that are available: NMP has been available for 11 years, but only now is found to be reprotoxic; there are flammable solvents that can cause glue-sniffing problems; there are date-rape drug substances that are seen as safe alternatives; there is DBE, about which not much is known; and there are the more basic blowlamps and sanding methods that can be used, although dust and other problems arise there. So let us now go back and thoroughly investigate the alternatives so that we really can be sure that we are providing a safer alternative for our constituents. If we find that some of the alternatives are no less dangerous, then I am sure the Commissioner or his successors will be back to tell us so and to bring forward a proposal - and if they do not I am sure Carl Schlyter will.
(CS) Madam President, dichloromethane has narcotic effects causing damage to the central nervous system and loss of consciousness, as well as cardiotoxic effects. If it is misused there is a direct risk of death and this factor has implications for terrorism. I therefore support a ban on its use by ordinary consumers and strict restrictions on professional use. As alternative and possibly less toxic bleaching substances exist, then in my opinion it is unnecessary to permit exceptions. However, the proposal we will vote on tomorrow will allow Member States to apply to the Commission for exceptions in justifiable cases, although under very strict conditions. I would like to know how the Commission or anyone else will assess the validity of applications for exceptions and how they will monitor compliance with the restrictions.
Madam President, ladies and gentlemen, I would like to start by saying a few words to Mr Watson. You have played an important role in bringing about this proposal. At the time when you told me in person about the problem which you had had for several years with the Commission, I realised that there were alternatives to this substance and I am sure you will agree that from then on things moved very quickly. I personally instructed my Directorate-General to present the proposal because it was clear to me as a result of my dealings with you that there were alternatives. I have stated on another occasion in this Parliament, and I would ask Mr Holm in particular to listen to this, that although I am the Commissioner with responsibility for enterprise and industry, I do not believe that an industrial product which is hazardous should remain on the market simply so that it can be used to earn money. I am of the opinion that, when there is an alternative which can replace a hazardous industrial product, it should be replaced. This is the principle which I have adhered to when we discussed and adopted REACH in this Parliament. All the substances which you referred to, Mr Holm, are now governed by REACH.
Dichloromethane would normally also be covered under the terms of REACH, but because the health risks are so evident and because there have been so many cases, we have given priority to this substance. It is possible that we will have to act in the same way in the case of other substances if the health risks are equally obvious and if we cannot wait until the very comprehensive and demanding REACH procedure has been completed.
I would also like to make it clear, Mr Holm, that I would also have voted in favour of a more far-reaching compromise. If Parliament had been able to agree with the Council on banning the commercial use of dichloromethane, I would have voted in favour this evening. Please do not hold the Commission responsible for the fact that there are several Member States who did not want to take this further for reasons which I am not familiar with. This is the reason why the Commission presented its proposal in the way that it did, because we wanted to produce a proposal which had a chance of being accepted and this is now what has happened.
My last remark concerns the comments made by Mr Bowis in relation to the toxic effects of the alternatives. With chemicals it is always a question of weighing up the degree of risk involved. Our thorough and comprehensive studies have shown that none of the alternative substances currently on sale have the properties of dichloromethane which are so dangerous, in other words the direct toxic effect on the central nervous system. This occurs only with dichloromethane and not with the other substances.
We are aware of very few accidents involving the alternative substances. This also applies to countries where the use of dichloromethane has already been banned, such as Denmark, Austria and Sweden. If the situation should change, the Commission will, of course, investigate and, if necessary, propose measures governing other substances.
Finally, I would like to comment on the remarks made by Mr Holm, which I temporarily forgot, concerning the question of whether the Commission will force Member States to abolish progressive environmental or health regulations, because they conflict with internal market regulations. The Commission will not do this. Current legislation states explicitly that Member States have the right to enact national regulations which differ from those of the internal market if they believe that this is necessary for health or environmental reasons.
As I am responsible for monitoring the notification of these differing regulations, I can tell you that the Commission acts on the basis of a clear and unambiguous principle in this case. We take the healthcare-related and environmental arguments of the Member States seriously. If they enact different regulations for these reasons, we do not force them to revoke their environmental and health regulations. If you have any information from recent years to back up your accusation, I would like to find out more specific details, so that I can refute your claim. The case that you mentioned dates back to 1995, which means that I had nothing to do with it.
Madam President, I would like to come back on what Mr Watson said. He, too, has played his part. Though you are not a member of our committee, you have still had an impact on our committee and helped us to reach a compromise. Of course, the staff who have helped me to reach this agreement have also played an important role.
I can only reiterate what Commissioner Verheugen said. The Commission has been clear throughout the process, at least with me, that if the Council and Parliament had reached a more far-reaching compromise involving a total ban, the Commission would have accepted it. There has been no lack of clarity between the Commission and me in relation to this issue.
I would just like to illustrate this chemical to you all. If I were to open a single one-kilo pot here and now, spread it over the benches and paint it out, we would, in fact, somewhat exceed the safe limit throughout this exceedingly large chamber. That is how very toxic this particular chemical is.
I can only conclude this debate by appealing to the Commission to ensure, now, that those Member States which apply for a derogation for professional use have that derogation revoked if these new, stricter rules are regularly broken. We know, everybody knows, and all the studies show that, if dichloromethane is used correctly in such a way that the health of the workers involved is protected, this substance is both uneconomical and unecological. If DCM is allowed to behave according to proper market conditions, which is to say if the legislation is complied with, its own uncompetitiveness will very quickly mean that DCM will be completely abandoned to be replaced by the alternatives. I will take this opportunity to appeal to the Commission to ensure that the regulations are complied with. If this is done, DCM will phase itself out sufficiently quickly.
The vote will take place tomorrow.
With today's decision, the European Parliament is significantly restricting the use of the paint stripper known as dichloromethane. As the shadow rapporteur for the Socialist Group in the European Parliament, I welcome the decision, into which we have put a lot of work. In recent years there have been many fatalities as a consequence of dichloromethane use. This extremely volatile substance is damaging to the nervous system, and for the same reason is also carcinogenic. The victims were primarily individual users, those decorating their own homes and house decorators, since in industrial use certain safety regulations are observed. The concentrations measured in certain European industrial plants were so high that - in case of prolonged exposure - they would cause cancer in 10% of the workers.
According to the compromise text that has now been adopted, dichloromethane can in future be used as a paint stripper only in industry and under strict safety regulations. Consumers and professionals will have to strip unwanted paint using one of the many equally effective but non-harmful alternative chemicals or, for instance, by pyrolitic/thermal stripping.
The most important point is that this carcinogenic substance should not be permitted to be used in enclosed public areas such as shopping centres and underpasses, since the vapour produced by volatile substances is heavier than air, and therefore measurements have shown that it sinks downwards and endangers children in particular. In making its decision, our political group took ample account of the opinion of the trade unions concerned, since in the case of industrial use, our main concern is the health of the workers.
Madam President, as we know, many dangerous chemical substances are authorised for general use, in spite of the dangerous ingredients they contain. One of these substances is dichloromethane (DCM), which is generally used for manufacturing pharmaceuticals, solvents and other products.
It is a substance that is particularly harmful to human health, as it is classified as a carcinogen. It damages the nervous system and causes serious damage to internal organs, which can directly lead to death.
In view of their higher respiratory rate, children are more susceptible to dichloromethane poisoning, as are people with cardiovascular diseases. It also alarming that there have been deaths linked to dichloromethane poisoning.
In view of the fact that we know that there are products on the market which could provide an alternative to products containing dichloromethane, as well as the fact that certain Member States have banned the use of this substance, introducing a total ban on its usage seems essential.
A further argument in favour of banning DCM should be the fact that, as experts have pointed out, we cannot ensure that consumers will use DCM safely.
The Commission's proposal to introduce training on the use of products containing DCM for professional purposes will cost approximately EUR 1.9 billion in its first year of implementation.
Withdrawing DCM from general circulation therefore seems to be the most sensible and responsible solution. |
U.S. 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, 2010 EAGLE FORD OIL & GAS CORP. (Exact Name of Small Business Issuer as Specified in its Charter) NEVADA (State or other Jurisdiction as Specified in Charter) 000-51656 75-2990007 (Commission file number) (I.R.S. Employer Identification No.) 3315 Marquart St. Suite 206 Houston, Texas 77027 (Address of Principal Executive Offices) 713-771-5500 (Issuer's telephone number) 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)) SECTION 5 –CORPORATE GOVERNANCE AND MANAGEMENT ITEM 5.02 DEPARTURE OF DIRECTORS OF OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS. ELECTION OF DIRECTORS On August 16, 2010, the Board of Directors of the Company adopted the following resolutions, effective as of August 17, 2010. Samuel M. Skipper resigns as the Chairman of the Board And the following appointments are made: Richard H. Adams, Chairman of the Board Samuel M. Skipper, Vice Chairman of the Board Imran Maniar, Director There are no arrangements or understandings between Mr. Adams, Mr. Skipper and Mr. Maniar and any other person pursuant to which he was selected as Chairman of the Board, Vice Chairman of the Board and Director, respectively. There are no family relationships between Mr. Skipper, Mr. Adams or Mr. Maniar or any director or other executive officer of the Company. The Company is not aware of any transaction in which Mr. Adams, Mr. Skipper or Mr. Maniar has an interest requiring disclosure under Item 404(a) of Regulation S-K. SIGNATURES In accordance with 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. EAGLE FORD ENERGY OIL & GAS CORP. Date: August 20,2010 By: /s/Richard H. Adams Name: Richard H. Adams Title: Chairman of the Board
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2014 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 001-34815 Oxford Resource Partners, LP (Exact name of registrant as specified in its charter) Delaware 77-0695453 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 41 South High Street, Suite3450, Columbus, Ohio 43215 (Address of Principal Executive Offices, Including Zip Code) (614)643-0337 (Registrant’s Telephone Number, Including Area Code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
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Exhibit 10.1
CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT AS INDICATED BY [REDACTED] AND SEPARATELY FILED WITH THE
COMMISSION.
Dated 16 April 2015
CARFIN FINANCE INTERNATIONAL LIMITED
as the Issuer and FCT Noteholder
CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK
as Arranger and Transaction Agent
DEUTSCHE TRUSTEE COMPANY LIMITED
as Issuer Security Trustee
as FleetCo Security Agent
CERTAIN ENTITIES NAMED HEREIN
as Opcos, Servicers and Lessees
CERTAIN ENTITIES NAMED HEREIN
as FleetCos
AVIS BUDGET CAR RENTAL, LLC
as the Parent
AVIS FINANCE COMPANY LIMITED
as Finco, the Subordinated Lender and the Italian VAT Lender
AVIS BUDGET EMEA LIMITED
as Avis Europe
CERTAIN ENTITIES NAMED HEREIN
as the Account Banks
DEUTSCHE BANK AG, LONDON BRANCH
as Issuer Cash Manager, Dutch FleetCo Spanish Account Bank Operator, Dutch
FleetCo German Account Bank Operator, Dutch FleetCo Dutch Account Bank Operator,
French FleetCo Account Bank Operator, and FleetCo Back-up Cash Manager
as French Intermediary Bank and FCT Servicer
CACEIS BANK FRANCE
as FCT Custodian
FCT CARFIN
represented by
EUROTITRISATION
as the FCT Management Company
CERTAIN ENTITIES NAMED HEREIN
as the Senior Noteholders
and
CERTAIN OTHER ENTITIES NAMED HEREIN
SIXTH MASTER AMENDMENT AND RESTATEMENT DEED
LOGO [g911732g31d91.jpg]
Ref: L-235254
Linklaters LLP
Table of Contents
Contents Page 1
Definitions and Interpretation
3 2
Amendment and Restatement of the Original Master Definitions Agreement
3 3
Amendments to the Original Framework Agreement
4 4
Amendment Date
5 5
Transaction Agent
5 6
Issuer Security Trustee and FleetCo Security Agent
5 7
Senior Noteholders Consent
5 8
Transaction Documents
6 9
Confirmation of Guarantees
6 10
Illegality
6 11
Rights and Remedies
6 12
Counterparts
6 13
Incorporation of Common Terms
7 14
Third Party Rights
7 15
Governing Law and Jurisdiction
7
Schedule 1: The Parties
8
Schedule 2 Amended and Restated Master Definitions Agreement
11
Execution Page
133
i
This Amendment and Restatement Deed is made on 16 April 2015 between:
(1) CARFIN FINANCE INTERNATIONAL LIMITED, a private limited company incorporated
under the laws of Ireland with registered number 463656 and having its
registered office at 1 Grant’s Row, Lower Mount Street, Dublin 2, Ireland (the
“Issuer” and the “FCT Noteholder”);
(2) CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK (“Transaction Agent” and
“Arranger”);
(3) DEUTSCHE TRUSTEE COMPANY LIMITED (the “Issuer Security Trustee”, acting for
itself and on behalf of the Issuer Secured Creditors);
(4) CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK (the “FleetCo Security Agent”,
acting for itself and on behalf of the FleetCo Secured Creditors);
(5) THE OPCOS, the SERVICERS and LESSEES listed in part 1 of Schedule 1 (The
Parties) hereto including AVIS BUDGET ITALIA S.P.A. (as “VAT Sharing Italian
Opco”, in its capacity as Italian Opco (as defined therein) under the VAT
Sharing Agreement and the Italian Income Tax Consolidation Agreement);
(6) THE FLEETCOS listed in part 2 of Schedule 1 (The Parties) hereto;
(7) AVIS BUDGET CAR RENTAL, LLC (the “Parent”);
(8) AVIS FINANCE COMPANY LIMITED (“Finco”, the “Subordinated Lender”, the
“Central Servicer” and the “Italian VAT Lender”);
(9) AVIS BUDGET EMEA LIMITED (“Avis Europe”, together with the Opcos, the
Servicers, the Lessees, the Parent and Finco, the “Avis Obligors”);
(10) THE ACCOUNT BANKS listed in part 3 of Schedule 1 (The Parties) hereto;
(11) DEUTSCHE BANK AG, LONDON BRANCH (the “Dutch FleetCo Spanish Account Bank
Operator”, the “Dutch FleetCo German Account Bank Operator”, the “Dutch FleetCo
Dutch Account Bank Operator”, the “French FleetCo Account Bank Operator” the
“Issuer Cash Manager”, the “FleetCo Dutch Back-up Cash Manager”, the “FleetCo
French Back-up Cash Manager”, the “FleetCo German Back-up Cash Manager”, the
“FleetCo Italian Back-up Cash Manager” and the “FleetCo Spanish Back-up Cash
Manager”);
(12) THE SENIOR NOTEHOLDERS listed in part 4 of Schedule 1 (The Parties) hereto
(the “Senior Noteholders”);
(13) STRUCTURED FINANCE MANAGEMENT (IRELAND) LIMITED (the “Issuer Corporate
Services Provider” and the “FleetCo Holdings Corporate Services Provider”);
(14) CARFIN FINANCE HOLDINGS LIMITED, a private limited company incorporated
under the laws of Ireland with registered number 463657 and having its
(“FleetCo Holdings”);
(15) INTERTRUST (NETHERLANDS) B.V. and VISTRA B.V. (the “Dutch FleetCo Corporate
Services Providers”, together with the Issuer Corporate Services Provider and
the FleetCo Holdings Corporate Services Provider, the “Corporate Services
Providers”);
(16) CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK (“French Intermediary Bank”
and “FCT Servicer”);
2
(17) FCT CARFIN (the “FCT”) represented by EUROTITRISATION (the “FCT Management
Company”);
(18) CACEIS BANK FRANCE (the “FCT Custodian”);
(19) THE BANK OF NOVA SCOTIA and CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK
(the “Issuer Hedge Counterparties”);
(20) CACEIS CORPORATE TRUST (the “FCT Registrar”); and
(21) DEUTSCHE BANK LUXEMBOURG S.A., a public limited liability company
incorporated under the laws of Luxembourg, registered with the Register of
Commerce and Companies in Luxembourg under number B 9164, whose registered
office is at 2, Boulevard Konrad Adenauer, L-1115 Luxembourg (the “Registrar”),
each of the above a “Party” and together the “Parties” to this Deed.
WHEREAS
(A) Certain of the Parties hereto entered into a Master Definitions Agreement
dated 5 March 2013 as amended by an amendment letter dated 19 March 2013 and a
second amendment agreement dated 15 April 2013 and as amended and restated by a
third amendment agreement dated 21 May 2014 and as amended by a fourth master
amendment and restatement deed dated 15 December 2014 and a fifth master
amendment deed dated 17 December 2014 (the “Original Master Definitions
Agreement”).
(B) Certain of the Parties hereto entered into a Framework Agreement dated
5 March 2013, as amended by an amendment letter dated 19 March 2013 and a second
amendment agreement dated 15 April 2013 and as amended and restated by a third
amendment and restatement deed dated 15 December 2014 (the “Original Framework
Agreement”).
(C) The Parties have agreed to amend and restate the Original Master Definitions
Agreement and amend the Original Framework Agreement on the terms and conditions
set out below.
1 Definitions and Interpretation
1.1 Unless otherwise defined herein or the context otherwise requires, terms
defined in the Original Master Definitions Agreement (as amended or amended and
restated from time to time) have the same meaning in this Deed. Subject to
Clause 1.2 below, the provisions of clause 2 (Principles of Interpretation and
Construction) of the Original Master Definitions Agreement (as amended or
amended and restated from time to time) shall apply herein as if set out in full
herein and as if references therein to a “Relevant Agreement” were to this Deed.
In addition, “Amendment Date” means 20 April 2015.
1.2 A reference to a “Clause” is a reference to a clause of this Deed.
2 Amendment and Restatement of the Original Master Definitions Agreement
2.1 The Original Master Definitions Agreement is amended and restated in the
form set out in Schedule 2 (Amended and Restated Master Definitions Agreement)
(the “Amended and Restated Master Definitions Agreement”) and the rights and
obligations of the parties (excluding such rights and obligations accrued prior
to the Amendment Date) to the Original Master Definitions Agreement shall be
governed by the Amended and Restated Master Definitions Agreement.
3
3 Amendments to the Original Framework Agreement
3.1 The Original Framework Agreement shall be amended as follows:
3.1.1 by deleting paragraph (ii)(B) of clause 4.2.27 (Liquidation Agent) in
its entirety and replacing it with the following:
“(B) in respect of the Vehicle Fleet of French FleetCo in France, on or prior
to the 120th day falling after 20 April 2015, a copy of a liquidation plan in
form and substance satisfactory to the Transaction Agent; and”
3.1.2 by inserting a new clause 12.2(xvii) as follows:
“(xvi) to the disclosure by any Conduit Senior Noteholder (or any
administrative agent on its behalf) to any collateral trustee appointed by such
Conduit Senior Noteholder to comply with Rule 3a-7 under the Investment Company
Act of 1940 (as amended), provided such collateral trustee is informed of the
confidential nature of such information.”
3.1.3 by inserting a new clause 12A as follows:
“12A Collateral Trustee
Notwithstanding any provision herein to the contrary, any Conduit Senior
Noteholder may at any time pledge or grant a security interest in all or any
portion of its rights under the Transaction Documents to which it is a party and
the Senior Notes to a collateral trustee in order to comply with Rule 3a-7 under
the Investment Company Act of 1940 (as amended), without notice to or consent of
the Issuer or any other Party hereto; provided that no such pledge or grant of a
security interest shall release a Conduit Senior Noteholder from any of its
obligations hereunder, or substitute any such pledgee or grantee for such
Conduit Senior Noteholder as a Party hereto.”
3.1.4 by deleting paragraph (i) of clause 15.5.1 (Intra-Month Central Servicer
Report) in its entirety and replacing it with the following:
“(i) a drawdown of the FleetCo Advance, in each case, for a drawdown on a
Business Day other than on a Settlement Date if:
(a) the aggregate of all such drawdowns of FleetCo Advances under the same
FleetCo Facility Agreement on the same date is in an amount greater than the
outstanding FleetCo Advance(s) under the same FleetCo Facility Agreement that
are repaid on the same date, with the difference between such drawdown(s) of
FleetCo Advance(s) and the outstanding FleetCo Advance(s) under the same FleetCo
Facility Agreement that are being repaid on the same date being the “FleetCo
Advance Additional Amount”; and
(b) the aggregate of FleetCo Advance Additional Amounts in relation to each
FleetCo Facility Agreement (if any) since the date of the latest Intra-Month
Central Servicer Report is greater than or equal to €40,000,000; or”
4
3.1.5 by inserting a new clause 15.7 as follows:
“15.7 Annual Supplemental Agreement Reports
The Central Servicer shall procure that a Supplemental Agreement Report is
provided to the Transaction Agent:
(a) on or prior to 30 June 2015 in respect of Supplemental Agreements which
are in force and effect and entered into on or prior to the date on which such
Supplemental Agreement Report is delivered; and
(b) thereafter, on or prior to 1 May of each year in respect of Supplemental
Agreements entered into since the preceding Supplemental Agreement Report.”
4 Amendment Date
The Parties hereby agree that the amendments set out in Clause 2 (Amendment and
Restatement of the Original Master Definitions Agreement) and Clause 3
(Amendments to the Original Framework Agreement) shall be effective as of the
Amendment Date. Notwithstanding anything to the contrary contained herein, if
for any reason this Deed fails to be effective on the Amendment Date, this Deed
shall terminate and the rights and obligations of the parties to the Transaction
Documents shall be fully preserved as they existed prior to the date hereof.
5 Transaction Agent
5.1 In accordance with clause 13.4 (Consents, Directions, Instructions,
Amendments, Waivers and Modification of Transaction Documents by the Transaction
Agent) of the Framework Agreement, each Senior Noteholder hereby instructs and
directs the Transaction Agent to consent to all the amendments required to be
agreed by such Senior Noteholder as set out herein.
5.2 The Transaction Agent hereby consents to all amendments referred to herein.
6 Issuer Security Trustee and FleetCo Security Agent
6.1 In accordance with clause 24.3.1 (Consents, Directions, Instructions,
Amendments, Waivers and Modifications of Transaction Documents by the Issuer
Security Trustee) of the Framework Agreement, the Transaction Agent, by the
execution of this Deed, hereby instructs and directs the Issuer Security Trustee
to enter into this Deed and all other relevant documents to be entered into in
connection herewith and to consent to all the amendments required to be agreed
by the Issuer Security Trustee as set out herein.
6.2 In accordance with clause 14.2 (Instructions to FleetCo Security Agent) of
the Framework Agreement, the Transaction Agent, by the execution of this Deed,
hereby instructs and directs the FleetCo Security Agent to enter into this Deed
and all other relevant documents to be entered into in connection herewith and
to consent to all the amendments required to be agreed by the FleetCo Security
Agent as set out herein.
7 Senior Noteholders Consent
Each of the Senior Noteholders hereby consents to the amendments contemplated by
and set out in this Deed, the Senior Noteholder Commitment Increase Request
Notice (as defined in the Issuer Note Issuance Facility Agreement) and Senior
Noteholder Fee Letters dated on or about the date stated at the beginning of
this Deed.
5
8 Transaction Documents
8.1 Save as expressly amended by this Deed, the Original Master Definitions
Agreement, the Original Framework Agreement and the other Transaction Documents
shall otherwise remain unamended and in full force and effect in accordance with
the terms thereof.
8.2 By their acceptance of the terms of this Deed, each of the Issuer, the
FleetCos and the Avis Obligors confirms that its obligations under the
Transaction Documents to which it is a party will remain in full force and
effect.
8.3 The FleetCo Security Agent and the Transaction Agent hereby designate this
Deed as a FleetCo Transaction Document.
8.4 The Transaction Agent hereby designates this Deed as an Issuer Transaction
Document.
9 Confirmation of Guarantees
9.1 Avis Budget EMEA Limited as the guarantor under the Avis Europe Payment
Guarantee hereby (i) expressly confirms that its obligations under the Avis
Europe Payment Guarantee remain in full force and effect notwithstanding the
amendments to the Transaction Documents as set out in this Deed and
(ii) acknowledges that it is not released from its obligations under the Avis
Europe Payment Guarantee.
9.2 Finco as the guarantor under the Finco Payment Guarantee hereby
(i) expressly confirms that its obligations under the Finco Payment Guarantee
remain in full force and effect notwithstanding the amendments to the
Transaction Documents as set out in this Deed and (ii) acknowledges that it is
not released from its obligations under the Finco Payment Guarantee.
10 Illegality
If, at any time, any provision hereof is or becomes illegal, invalid or
unenforceable in any respect under the law of any jurisdiction, neither the
legality, validity or enforceability of the remaining provisions hereof nor the
legality, validity or enforceability of such provision under the law of any
other jurisdiction shall in any way be affected or impaired thereby.
11 Rights and Remedies
No failure by the Issuer Secured Creditors or the FleetCo Secured Creditors to
exercise, or any delay by the Issuer Secured Creditors or the FleetCo Secured
Creditors in exercising, any right or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right or remedy prevent
any further or other exercise thereof or the exercise of any other right or
remedy. The rights and remedies provided herein are cumulative and not exclusive
of any rights or remedies provided by law or under any Transaction Document.
12 Counterparts
This Deed may be executed in any number of counterparts, and this has the same
effect as if the signatures on the counterparts were on a single copy of this
Deed.
6
13 Incorporation of Common Terms
The Common Terms shall be incorporated by reference into this Deed. If there is
any conflict between the Common Terms as incorporated by reference into this
Deed and the other provisions of this Deed, the provisions of the incorporated
Common Terms shall prevail.
14 Third Party Rights
No person shall have any right under the Contracts (Rights of Third Parties) Act
1999 to enforce any term of this Deed.
15 Governing Law and Jurisdiction
This Deed and all non-contractual obligations arising out of or in connection
with it shall be governed by, and shall be construed in accordance with, English
law. Each of the parties hereto hereby submits to the jurisdiction of the courts
of England and Wales.
In Witness whereof this Deed has been delivered on the date stated at the
beginning of this Deed.
7
Part 1 Opcos, Servicers and Lessees
Opcos
Name of Opcos
Registration number (or equivalent, if any)
Avis Budget Autovermietung GmbH & Co. KG (the “German Opco”) HRA 3033 Avis
Budget Italia S.p.A. (the “Italian Opco”) 00421940586 Avis Alquile un Coche
S.A. (the “Spanish Opco”) A28152767 Avis Budget Autoverhuur B.V. (the “Dutch
Opco”) 33129079 Avis Location de Voitures SAS (the “French Opco”) 652 023
961 RCS Nanterre
Servicers (excluding the Central Servicer)
Name of Servicers
Avis Alquile un Coche S.A. (the “Spanish Servicer”) in respect of Dutch
FleetCo’s fleet in Spain A28152767 In respect of Italian FleetCo: Avis Budget
Italia S.p.A. (the “Italian Servicer”) 00421940586 In respect of French
FleetCo: Avis Location de Voitures SAS (the “French Servicer”) 652 023 961 RCS
Nanterre
Central Servicer
Name of Central Servicer Registration number (or equivalent, if any) Avis
Finance Company Limited (the “Central Servicer”) 02123807
Lessees
Name of Lessees
Avis Budget Autovermietung GmbH & Co. KG (as lessee under the Master German
Fleet Lease Agreement) HRA 3033 Avis Budget Italia S.p.A. (as lessee under the
Italian Master Lease Agreement) 00421940586 Avis Alquile un Coche S.A. (as
lessee under the Spanish Master Lease Agreement) A28152767
8
Name of Lessees
Avis Budget Autoverhuur B.V. (as lessee under the Master Dutch Fleet Lease
Agreement) 33129079 Avis Location de Voitures SAS (as lessee under the French
Master Lease Agreement) 652 023 961 RCS Nanterre
Part 2 FleetCos
Name of FleetCos
Jurisdiction of Incorporation and legal form
FinCar Fleet B.V., a private company with limited liability (besloten
vennootschap met beperkte aansprakelijkheid) (the “Dutch FleetCo”) 55227732
FinCar Fleet B.V., Sucursal en España, the Spanish branch of FINCAR FLEET B.V.
(a private company with limited liability (besloten vennootschap met beperkte
aansprakelijkheid) incorporated under the laws of Netherlands) with registered
address at Avenida Manoteras, nº 32, 28050 Madrid, Spain and Spanish fiscal
identification number W0037096E and registered at the Mercantile Registry in
Madrid under volume 28809, page 190, section 8th and sheet M-518708 (the “Dutch
FleetCo, Spanish Branch”) W0037096E Avis Budget Italia S.p.A. Fleet Co.
S.A.p.A., a partnership limited by shares (the “Italian FleetCo”) 097550851009
AB FleetCo a simplified limited stock company (société par actions simplifiée)
(the “French FleetCo”) 799 383 997 R.C.S. Beauvais
Part 3 Account Banks
Name of Account Bank
Deutsche Bank AG, London branch (the “Issuer Account Bank”) HRB 30 000, branch
number BR00005 Deutsche Bank S.A.E. (the “Dutch FleetCo Spanish Account Bank”)
A-08000614 Deutsche Bank AG, London branch (the “Dutch FleetCo Spanish Account
Bank Operator”) HRB 30 000, branch number BR00005
9
Name of Account Bank
Deutsche Bank S.P.A (the “Italian FleetCo Account Bank”) 01340740156 Deutsche
Bank AG (the “Dutch FleetCo German Account Bank”) HRB 30 000 Deutsche Bank AG,
London branch (the “Dutch FleetCo German Account Bank Operator”) HRB 30 000,
branch number BR00005 Deutsche Bank AG, Amsterdam Branch (the “Dutch FleetCo
Dutch Account Bank”) HRB 30 000, branch number 33304583 Deutsche Bank AG,
London Branch (the “Dutch FleetCo Dutch Account Bank Operator”) HRB 30 000,
branch number BR00005 Deutsche Bank AG, Paris Branch (the “French FleetCo
Account Bank”) HRB 30 000, branch number 310327481 Deutsche Bank AG, London
Branch (the “French FleetCo Account Bank Operator”) HRB 30 000, branch number
BR00005
Part 4 Senior Noteholders
Names of Senior Noteholders
Blue Finn S.a.r.l., Luxembourg, Küsnacht Branch CH-020.9.003.783-3 Crédit
Agricole Corporate and Investment Bank 304187701 Deutsche Bank AG, London
Branch HRB 30 000, branch number BR00005 Natixis 542044524 Scotiabank Europe
plc 00817692 Elektra Purchase No. 34 Limited 548807 Jupiter Securitization
Company LLC 223771 JPMorgan Chase Bank, N.A. 2118141
10
Schedule 2
Amended and Restated Master Definitions Agreement
11
EXECUTED VERSION
CARFIN FINANCE INTERNATIONAL LIMITED
as the Issuer and the FCT Noteholder
DEUTSCHE TRUSTEE COMPANY LIMITED
as Issuer Security Trustee
as FleetCo Security Agent
CERTAIN ENTITIES NAMED HEREIN
CERTAIN ENTITIES NAMED HEREIN
as FleetCos
as the Parent
AVIS FINANCE COMPANY LIMITED
as Finco, the Subordinated Lender, the Central Servicer, the Dutch VAT Lender
and the Italian VAT Lender
AVIS BUDGET EMEA LIMITED
as Avis Europe
CERTAIN ENTITIES NAMED HEREIN
as the Account Banks
as the Issuer Cash Manager, Dutch FleetCo German Account Bank Operator, Dutch
FleetCo Spanish Account Bank Operator, Dutch FleetCo Dutch Account Bank
Operator, French FleetCo Account Bank Operator and FleetCo Back-up Cash Manager
CACEIS BANK FRANCE
as FCT Custodian
FCT CARFIN
represented by
EUROTITRISATION
CERTAIN ENTITIES NAMED HEREIN
as the Senior Noteholders
and
MASTER DEFINITIONS AGREEMENT
Linklaters LLP
Table of Contents
Contents Page 1
Definitions and Interpretation
3 2
Principles of Interpretation and Construction
122 3
Incorporation of Common Terms and Clause 24 of the Framework Agreement
126 4
Governing Law and Jurisdiction
127 5
Enforcement
127
Schedule 1 The Parties
128
i
This Agreement is dated 5 March 2013 as amended pursuant to an amendment letter
dated 19 March 2013 and a second amendment agreement dated 15 April 2013 and as
amended and restated pursuant to a third master amendment and restatement deed
dated 21 May 2014 and as amended pursuant to a fourth master amendment and
restatement deed dated 15 December 2014 and a fifth master amendment deed dated
17 December 2014 and as amended and restated pursuant to a sixth amendment and
restatement deed dated 16 April 2015 and made between:
(2) CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK (the “Transaction Agent” and
the “Arranger”);
(5) THE OPCOS, the SERVICERS and LESSEES listed in Part 1 of Schedule 1 (The
Parties) including AVIS BUDGET ITALIA S.P.A. (as “VAT Sharing Italian Opco”, in
its capacity as Italian Opco (as defined therein) under the VAT Sharing
Agreement and the Italian Income Tax Consolidation Agreement);
(6) THE FLEETCOS listed in Part 2 of Schedule 1 (The Parties);
“Central Servicer”, the “Dutch VAT Lender” and the “Italian VAT Lender”);
(10) THE ACCOUNT BANKS listed in Part 3 of Schedule 1 (The Parties);
(11) DEUTSCHE BANK AG, LONDON BRANCH (the “Issuer Cash Manager”, the “Dutch
FleetCo Spanish Account Bank Operator”, the “Dutch FleetCo German Account Bank
Operator”, the “Dutch FleetCo Dutch Account Bank Operator”, the “French FleetCo
Account Bank Operator” and, the “FleetCo Back-up Cash Manager”);
(12) THE SENIOR NOTEHOLDERS listed in Part 4 of Schedule 1 (The Parties) (the
“Senior Noteholders”);
(14) INTERTRUST (NETHERLANDS) B.V. and VISTRA B.V. (the “Dutch FleetCo Corporate
Providers”);
(15) FISERV AUTOMOTIVE SOLUTIONS, INC., a company duly incorporated under the
laws of Delaware with registered number 2403201 (the “Liquidation Agent”);
1
(16) CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK (the “French Intermediary
Bank” and the “FCT Servicer”);
(17) CACEIS BANK FRANCE, the “FCT Custodian”);
(18) FCT CARFIN (the “FCT”) represented by EUROTITRISATION (the “FCT Management
Company”);
(19) DEUTSCHE BANK AG, a company incorporated under the laws of Germany (the
“Initial Issuer Hedge Counterparty”) and CREDIT AGRICOLE CORPORATE AND
INVESTMENT BANK (the “Acceding Issuer Hedge Counterparty” and, together with the
Initial Issuer Hedge Counterparty, the “Issuer Hedge Counterparties”);
(20) CARFIN FINANCE HOLDINGS LIMITED (the “FleetCo Holdings”); and
each of the above a “Party” and together the “Parties” to this Agreement.
It is agreed that the parties hereto have agreed to incorporate into certain of
the Transaction Documents to which they are a party the definitions and
principles of construction and interpretation contained herein.
Amendment and Restatement
The parties hereto have agreed to amend and restate the terms of the master
definitions agreement dated 5 March 2013 between, inter alios, the Issuer and
the Transaction Agent (as amended pursuant to an amendment letter dated 19 March
2013 and a second amendment agreement dated 15 April 2013 and as amended and
restated pursuant to a third master amendment and restatement deed dated 21 May
2014 and amended pursuant to a fourth master amendment and restatement deed
dated 15 December 2014 and a fifth master amendment deed dated 17 December 2014,
the “Original MDA”) as set out herein with effect, subject to clause 2.3.1 of
the Framework Agreement, from the date hereof (the “Amendment Date”). As at the
Amendment Date, any future rights or obligations (excluding such rights and
obligations accrued prior to the Amendment Date) of a party under the Original
MDA shall be extinguished and shall instead be governed by this Agreement.
Notwithstanding anything to the contrary contained herein, if for any reason
this Agreement fails to be effective on the Amendment Date, this Agreement shall
terminate and be replaced by the Original MDA as existed immediately prior to
the date hereof and the rights and obligations of the parties to the Transaction
Documents shall be fully preserved as they existed immediately prior to the date
hereof.
2
1 Definitions and Interpretation
Each of the parties hereto agrees that in any agreement, deed or other document
expressly stating that terms defined herein shall have the same meanings therein
(except where otherwise defined therein):
“2009 Act” means the Land and Conveyancing Law Reform Act 2009 of Ireland.
“ABCP” means asset backed commercial paper having a maturity of less than or
equal to one year from the date of issue.
“ABCP Market” means the market for ABCP.
“ABCP Market Disruption” means, in respect of any issuer of ABCP or the ABCP
Market generally, a circumstance in which market conditions prevent the issuance
of ABCP.
“ABG” means Avis Budget Group, Inc.
“Acceding Issuer Hedge Counterparty” any Issuer Hedge Counterparty which accedes
to the Framework Agreement pursuant to clause 11 (Additional Issuer Secured
Creditors and Accession of Liquidation Agent) of the Framework Agreement.
“Acceding Senior Noteholder” means, subject to and in accordance with clause
21.4 (Transfers by Senior Noteholders; Accession of further Senior Noteholders)
of the Issuer Note Issuance Facility Agreement, a Conduit or a Financial
Institution which enters into a relevant Senior Noteholder Accession Deed.
“Acceding Subordinated Lender” means any Subordinated Lender which accedes to
the Framework Agreement pursuant to clause 11 (Additional Issuer Secured
“Acceleration Notice” means: (i) a notice delivered by the Issuer Security
Trustee pursuant to the Framework Agreement by which the Issuer Security Trustee
declares that all Issuer Secured Liabilities shall be accelerated; or (ii) a
notice delivered by the FleetCo Security Agent pursuant to the Framework
Agreement by which the FleetCo Security Agent declares that all FleetCo Secured
Liabilities shall be accelerated which, for the avoidance of doubt, may be
delivered simultaneously with or after the delivery of an Enforcement Notice.
“Acceptable Bank” means:
(i)
(a) to the extent that the Senior Notes are rated by one or more Rating
Agencies, a bank or financial institution approved by the Transaction Agent
which has a rating for its long-term unsecured, unsubordinated, unguaranteed
debt obligations from at least two Rating Agencies of “Baa2” by Moody’s or “BBB”
by S&P or “BBB” by Fitch or “BBB” by DBRS, provided that each of Deutsche Bank
S.A.E. and Deutsche Bank SpA, to the extent that either of them is or will
become an Account Bank, will qualify as an Acceptable Bank in accordance with
the Transaction Documents for so long as (i) Deutsche Bank AG has a rating for
its long-term unsecured, unsubordinated, unguaranteed debt obligations from at
least two Rating Agencies of “Baa2” by Moody’s or “BBB” by S&P or “BBB” by Fitch
or “BBB” by DBRS; (ii) each of Deutsche Bank S.A.E. and Deutsche Bank SpA
continues to be owned (directly and indirectly) by Deutsche Bank AG; and
(iii) the words “Deutsche Bank” are contained in its legal name, and, in any
case, only until such date when the relevant Rating Agency which may have
attributed the rating to the Senior Notes notifies the Issuer that either of
Deutsche Bank S.A.E. and Deutsche Bank SpA no longer qualifies as an Acceptable
Bank; or
3
(b) any Deutsche Bank entity or other bank or financial institution nominated
by the Parent or Finco and approved by (i) the Transaction Agent and (ii) (if
the Senior Notes are rated by one or more Rating Agencies) the relevant Rating
Agency,
provided that, if (x) Deutsche Bank AG does not have the required ratings
pursuant to paragraph (i)(a) above or (y) the relevant Rating Agency will not
provide an approval of the relevant Deutsche Bank entity or other such bank or
financial institution pursuant to paragraph (i)(b), a certificate from the
Central Servicer confirming that, in its reasonable opinion, the Rating Agencies
will not take adverse rating action in respect of the Senior Notes would be
sufficient; and
(ii) a bank or financial institution which is a bank or financial institution
authorised to accept deposits in (in relation to the Spanish Account Bank
Agreement) Spain, (in relation to the German Account Bank Agreement) Germany,
(in relation to the Italian Account Bank Agreement) Italy, (in relation to the
Dutch Account Bank Agreement) The Netherlands, (in relation to the French
Account Bank Agreement) France and (in relation to the Issuer Account Bank
Agreement and in respect of the Issuer Accounts) the United Kingdom or Ireland.
“Accession Deed” means each deed of accession substantially in the relevant form
set out in schedule 6 (Forms of Accession Deed) to the Framework Agreement.
“Account Bank Agreement” means, as applicable, the Issuer Account Bank
Agreement, the German Account Bank Agreement, the Italian Account Bank
Agreement, the Spanish Account Bank Agreement, the Dutch Account Bank Agreement
or the French Account Bank Agreement.
“Additional Accounts” means any additional account is opened in accordance with
the relevant Account Bank Agreement and the Framework Agreement.
“Advance Proportion Limit” means the following limits:
(i) the FleetCo Spanish Advances Proportion shall not exceed [REDACTED] per
cent.;
(ii) the FleetCo Italian Advances Proportion shall not exceed [REDACTED] per
cent.; and
(iii) the aggregate of the FleetCo Spanish Advances Proportion and the FleetCo
Italian Advances Proportion shall not exceed [REDACTED] per cent, excluding from
this calculation any Excess Advance Proportion Amount calculated in (i) and
(ii) above.
“Affiliate” means, in relation to any person, a Subsidiary of that person or a
Holding Company of that person or any other Subsidiary of that Holding Company.
“Aggregate Redesignation Amount” means, in respect of a Master Lease Agreement,
the sum of all Redesignation Amounts under such Master Lease Agreement.
“Applicable Accounting Principles” means GAAP.
“Applicable EURIBOR” means: (i) in respect of a Senior Advance from the Senior
Noteholder Group in respect of Jupiter Securitization Company LLC as a Senior
Noteholder, three month EURIBOR for each day during such Interest Period, and
(ii) in respect of (x) a Senior Advance with a Senior Advance Interest Period or
(y) a Subordinated Advance or a VAT Loan Advance with an Interest Period:
4
(i) if the Interest Period End Date falls on or before:
A. the seventh day; or
B. if such seventh day is not a Business Day:
(x) the Business Day immediately following such seventh day; or
(y) if the day in (x) above would otherwise be in the next calendar month, the
Business Day immediately preceding such seventh day,
in each case, following, as applicable, the Senior Advance Drawdown Date of such
Senior Advance or the drawdown date of such Subordinated Advance or such VAT
Loan Advance, one-week EURIBOR;
(ii) if the Interest Period End Date does not fall within paragraph (i) above
but does fall on or before:
A. the fourteenth day; or
B. if such fourteenth day is not a Business Day:
(x) the Business Day immediately following such fourteenth day; or
Business Day immediately preceding such fourteenth day,
Loan Advance, two-week EURIBOR;
(iii) if the Interest Period End Date does not fall within paragraphs (i) and
(ii) above but does fall on or before:
A. the twenty-first day; or
B. if such twenty-first day is not a Business Day:
(x) the Business Day immediately following such twenty-first day; or
Business Day immediately preceding such twenty-first day,
Senior Advance or the drawdown date of such Subordinated Advance or VAT Loan
Advance, three-week EURIBOR;
(iv) if the Interest Period End Date does not fall within paragraphs (i),
(ii) and (iii) above but does fall on or before:
A. the corresponding calendar day of the month immediately following, as
applicable, the Senior Advance Drawdown Date of such Senior Advance or the
drawdown date of such Subordinated Advance or VAT Loan Advance; or
B. if such calendar day is not a Business Day:
(x) the Business Day immediately following such calendar day; or
(y)
Business Day immediately preceding such calendar day,
5
one-month EURIBOR; and
(v) if the Interest Period End Date does not fall within paragraphs (i), (ii),
(iii) and (iv) above but does fall after:
(y) if the day in (x) would otherwise be in the next calendar month, the
two-month EURIBOR,
provided that, for the purposes of this definition, “Interest Period End Date”
means, in respect of a Senior Advance Interest Period or the interest period
relating to a Subordinated Advance or a VAT Loan Advance, the last day of such
relevant interest period.
“Appointee” means any attorney, manager, agent, delegate, nominee, custodian or
other person appointed pursuant to the provisions of the relevant Transaction
Document.
“Arranger” means Crédit Agricole Corporate and Investment Bank.
“Asset Enhancement Amount” means the higher of:
(i) an amount equal to the sum of the product, with respect to each Credit
Enhancement Asset of each Country, of:
(a) the Asset Enhancement Value of such Credit Enhancement Asset on the
relevant Calculation Date or the relevant Intra-Month Cut-Off Date (as the case
may be); and
(b) the rate provided in the Credit Enhancement Matrix applicable to such
Credit Enhancement Asset; and
(ii) [REDACTED] per cent. of the Combined Eligible Country Asset Value.
“Asset Enhancement Value” means, in respect of each Credit Enhancement Asset:
(i) if such Credit Enhancement Asset is a Vehicle, the Net Book Value of such
Vehicle on the relevant Calculation Date or the relevant Intra-Month Cut-Off
Date (as applicable); and
(ii) if such Credit Enhancement Asset is Credit Enhancement Investment Grade
Receivables, Credit Enhancement Non-Investment Grade Receivables or VAT
Receivables net of the VAT Payables Amount, the Eligible Receivables Amount of
such Credit Enhancement Asset on the relevant Calculation Date or the relevant
Intra-Month Cut-Off Date.
“Assets in Progress Amount” means the aggregate amount of the Capitalised Costs
of all Vehicles which have been purchased by and delivered to the relevant
FleetCo and for which no registration has been effected.
“At Risk Asset” means (i) each Non-Programme Vehicle and (ii) each Non-Eligible
Programme Vehicle.
“Auditors” means an internationally recognised reputable firm of independent
auditors and accountants which are licensed and qualified to practise in the
jurisdiction of incorporation and/or the permanent establishment of the relevant
FleetCo or the Issuer and which are appointed by the relevant FleetCo or the
Issuer (as applicable) as its auditors.
6
“Authorisation” means an authorisation, consent, approval, resolution, licence,
exemption, filing, notarisation or registration from or with any Governmental
Authority or regulatory authority having jurisdiction.
“Authorised Signatory” means, in relation to any party, any person who is duly
authorised and in respect of whom a certificate has been provided signed by a
director or another duly authorised person of such party setting out the name
and signature of such person and confirming such person’s authority to act.
“Available Commitment” means the Total Senior Noteholder Commitments under the
Issuer Note Issuance Facility Agreement less the sum of all outstanding Senior
Advances.
“Available LC Commitment Amount” means the aggregate of the available commitment
amount under each Issuer Letter of Credit.
“Avis” or “Avis Group” means Avis Budget Group, Inc. and its subsidiaries.
“Avis Europe” means Avis Budget EMEA Limited.
“Avis Europe Change of Control” means Avis ceasing to (x) own directly or
indirectly at least 100 per cent. of the share capital of Avis Europe, (y) have
the right or ability to cast at least 100 per cent. of the votes capable of
being cast in shareholders’ general meetings of Avis Europe or (z) have the
right or ability to appoint or remove all directors (or equivalent officers) of
the board of directors (or equivalent body) of Avis Europe or to give directions
with respect to the operating and financial policies of Avis Europe with which
the directors or other equivalent officers of Avis Europe are obliged to comply.
“Avis Europe Compliance Certificate” means the compliance certificate
substantially in the form set out in part 4 (Form of Avis Europe Compliance
Certificate) of schedule 7 to the Framework Agreement signed by Avis Europe and
delivered by Avis Europe.
“Avis Europe Event of Default” means any of the following:
(a) the occurrence of an Opco Change of Control, provided that, if (1) any
cessation described in the Opco Change of Control is in relation to the share
capital of, the shareholders’ general meetings of or the board of directors of
(as applicable) Spanish Opco, Italian Opco or French Opco and (2) the Spain
Repayment Option, the Italy Repayment Option or the France Repayment Option is
exercised within 30 days of such cessation, there shall not be any Avis Europe
Event of Default;
(b) the occurrence of an Avis Europe Change of Control, provided that, for the
avoidance of doubt, if all outstanding Senior Advances as of the date of such
occurrence (and all accrued but unpaid interest thereon) and all other amounts
due to the Senior Noteholders and the other Issuer Secured Creditors (save for
the Subordinated Lender) are repaid in full by the Issuer on or before such
date, there shall not be an “Avis Europe Event of Default” under this paragraph
(b);
(c) the occurrence of a Parent Change of Control;
(d) the occurrence and continuation of an “event of default” under the Credit
Agreement or Replacement Credit Agreement, that is not waived pursuant to the
terms of such Credit Agreement or Replacement Credit Agreement;
7
(e) any Event of Default under paragraph (d) of the definition of “Event of
Default” occurs where the Relevant Person is Avis Europe, its successor or
replacement; and
(f) failure by Avis Europe or its successor or replacement to comply with any of
its payment obligations under the Avis Europe Payment Guarantee.
“Avis Europe Group” means Avis Europe and each Subsidiary of Avis Europe from
time to time and any joint venture company which is a member of Avis Europe’s
consolidated group for accounting purposes.
“Avis Europe Payment Guarantee” means the guarantee and indemnity from Avis
Europe in respect of the payment obligations of the Issuer under the Transaction
Documents to which the Issuer Security Trustee is a party (save for the Issuer
Subordinated Facility Agreement).
“Avis Obligor” means each Opco, each Servicer, each Lessee, the Parent, Finco
and Avis Europe.
“Base Rent” means, in relation to any Vehicle which is leased to a Lessee under
a Master Lease Agreement on any day during the Related Month or, as the case may
be, Related Months where such Related Months occur prior to a Lease Payment Date
following the Lease Determination Date in respect of any Lease Payment Date, the
sum of the Depreciation Charges that have accrued with respect to each such
Vehicle during the Related Month or, as the case may be, Related Months, as
adjusted in accordance with the terms of such Master Lease Agreement.
“Borrower Vehicle Fleet NBV” means, in respect of a Calculation Date or (if
applicable) an Intra-Month Cut-Off Date:
(a) the Net Book Value of the Vehicle Fleet of a FleetCo in each Country (save
that, for the purposes of this definition, in calculating such Net Book Value,
the Depreciation Percentage in respect of At Risk Assets shall not be less than
[REDACTED] per cent.) as determined on such Calculation Date or such Intra-Month
Cut-Off Date, as the case may be; and
(b) plus the Assets in Progress Amount for such FleetCo.
“Breach of Duty” means in relation to any person, a wilful default (dol), fraud
(fraude), illegal dealing, negligence or material breach of any agreement or
breach of trust by such person.
“Break Costs” means the amount (if any) by which:
(a) the interest which a Senior Noteholder should have received for the period
from the date of receipt of all or any part of its participation in a Senior
Advance or Unpaid Sum to the last day of the current Senior Advance Interest
Period in respect of that Senior Advance or Unpaid Sum, had the principal amount
or Unpaid Sum received been paid on the last day of that Senior Advance Interest
Period;
exceeds:
(b) the amount which that Senior Noteholder would be able to obtain by placing
an amount equal to the principal amount or Unpaid Sum received by it on deposit
with a leading bank in the Relevant Interbank Market for a period starting on
the Business Day following receipt or recovery and ending on the last day of the
current Senior Advance Interest Period.
“Business Day” means a day which is a TARGET Day and a day (other than a
Saturday or Sunday) on which banks are open for general business in (i) London,
(ii) Paris, (iii) New York, (iv)
8
Munich, (v) Dublin and, in relation to any date for payment or purchase of Euro
or calculation of an amount payable in Euro by:
(a) Spanish Opco or Dutch FleetCo in connection with the Vehicle Fleet in Spain,
Madrid;
(b) German Opco or Dutch FleetCo in connection with the Vehicle Fleet in
Germany, Frankfurt;
(c) Dutch Opco or Dutch FleetCo in connection with the Vehicle Fleet in The
Netherlands, Amsterdam;
(d) Italian Opco or Italian FleetCo, Milan; and
(e) French Opco or French FleetCo, Paris.
“Business Day Convention” means that if any due date specified in a Transaction
Document for performing a certain task is not a Business Day, such task shall be
performed on the next immediately following Business Day, unless such Business
Day falls in the next calendar month, in which case such task shall be performed
on the immediately preceding Business Day.
“Buy-Back Minimum Principles” means:
(i) in respect of Vehicles in Spain, Italy and France, all the provisions that
are specified as imperative provisions in the Negotiation Guidelines and the
following non-imperative provisions (as specified in the Negotiation
Guidelines), being: (a) paragraph 6 (Repurchase Obligations unconditional) and
(b) paragraph 7 (Termination);
(ii) in respect of Vehicles in Germany, all the provisions that are specified in
part A and part B of schedule 3 to the Master German Fleet Purchase Agreement;
and
(iii) in respect of Vehicles in The Netherlands, all the provisions that are
specified in schedule 2 to the Master Dutch Fleet Purchase Agreement.
“CACEIS Corporate Trust” means Caceis Corporate Trust, a société anonyme
incorporated under the laws of France, whose head office is at 1/3 Place
Valhubert 75013 Paris and whose main establishment is at 14 rue Rouget de Lisle
92130 Issy-les-Moulineaux, registered with the Trade and Companies Register of
Paris (Registre du Commerce et des Sociétés de Paris) under number 439 430 976,
and licensed in France as a financial services provider (prestataire de services
d’investissement) by the Autorité de Contrôle Prudentiel et de Résolution.
“CACIB” means Crédit Agricole Corporate and Investment Bank.
“Calculation Date” means the last day of each calendar month.
“Calculation Period” means the period beginning on the first day of each
calendar month and ending on:
(i) the last day of such calendar month; and
(ii) (in respect of a Senior Advance Drawdown Date or an Original FleetCo
Advance Drawdown Date that does not fall on a Settlement Date) the Intra-Month
Cut-Off Date.
“Capitalised Cost” means, with respect to each Vehicle that is purchased by a
FleetCo (or in respect of Germany, by German Opco and sold to Dutch FleetCo
pursuant to the Master German Fleet Purchase Agreement and, in respect of The
Netherlands, by Dutch Opco and sold to Dutch FleetCo pursuant to the Master
Dutch Fleet Purchase Agreement) and that is accounted for by:
(i) in respect of Vehicles in Italy, Italian FleetCo;
(ii) in respect of Vehicles in Germany, German Opco;
9
(iii) in respect of Vehicles in Spain, Spanish Opco;
(iv) in respect of Vehicles in The Netherlands, Dutch Opco; and
(v) in respect of Vehicles in France, French FleetCo,
the price paid or to be paid (in each case, excluding any part thereof which
represents VAT) for such Vehicle to the Vehicle Dealer, Vehicle Manufacturer or
other person selling such Vehicle, (after deduction of any discounts) but
excluding any Charge Costs (except that delivery and other registration charges
shall be included to the extent that any have been capitalised).
“Casualty” means, in relation to a Vehicle, that (a) such Vehicle is destroyed
or otherwise rendered permanently unfit or unavailable for use or (b) such
Vehicle is lost, stolen or seized and is not recovered within 2 months
thereafter.
“Casualty Payment” means the Termination Value of a Vehicle which suffers a
Casualty or becomes a Non-Eligible Vehicle, in each case, as of the date such
Vehicle became a Casualty or a Non-Eligible Vehicle.
“Central Servicer” means Avis Finance Company Limited.
“Central Servicer Event of Default” means an Event of Default in respect of the
Central Servicer.
“Central Servicing Agreement” means the agreement between, among others, the
Central Servicer, each Opco, the Italian Servicer, the French Servicer, the
Spanish Servicer and each FleetCo pursuant to which the Central Servicer
provides, among other things, transaction management services, reporting
services and cash management services to the relevant transaction party.
“Centre of Main Interests” has the meaning given to it in Article 3(1) of
Council Regulation (EC) No. 1346/2000 of 29 May 2000 on Insolvency Proceedings.
“Chairman Letter of Undertakings” means the letter of undertakings in relation
to French FleetCo executed by SFM France S.A.S. acting as chairman (président)
of French FleetCo.
“Charge Costs” means, with respect to each Vehicle purchased by a FleetCo or, in
respect of Germany, by German Opco and sold to Dutch FleetCo pursuant to the
Master German Fleet Purchase Agreement or, in respect of The Netherlands, by
Dutch Opco and sold to Dutch FleetCo pursuant to the Master Dutch Fleet Purchase
Agreement, all amounts invoiced in relation to the purchase of such Vehicle
(excluding VAT), but including, in particular, delivery charges, taxes, titling
fees, costs of registration, preparation, first petrol and accessories (to the
extent they are not accounted for as Capitalised Costs).
“Charge Costs Component” shall have the meaning assigned to it in clause 4.3 of
the Master German Fleet Purchase Agreement.
“Close-Out Netting” means:
(a) in respect of an Issuer Hedging Agreement based on a 1992 ISDA Master
Agreement, any step involved in determining the amount payable in respect of an
Early Termination Date (as defined in the 1992 ISDA Master Agreement) under
section 6(e) of the 1992 ISDA Master Agreement before the application of any
subsequent Set-off (as defined in the 1992 ISDA Master Agreement);
(b) in respect of an Issuer Hedging Agreement based on a 2002 ISDA Master
Agreement, any step involved in determining an Early Termination Amount (as
defined in the 2002 ISDA Master Agreement) under section 6(e) of the 2002 ISDA
Master Agreement; and
10
(c) in respect of an Issuer Hedging Agreement not based on an ISDA Master
Agreement, any step involved on a termination of the hedging transactions under
that Issuer Hedging Agreement pursuant to any provision of that Issuer Hedging
Agreement which has a similar effect to either provision referenced in paragraph
(a) and paragraph (b) above.
“Code” means the US Internal Revenue Code of 1986.
“Combined Eligible Country Asset Value” means:
(i) the aggregate of:
(a) the Country Asset Value of Dutch FleetCo, Spanish Branch in Spain;
(b) the Country Asset Value of Dutch FleetCo in Germany;
(c) the Country Asset Value of Dutch FleetCo in The Netherlands;
(d) the Country Asset Value of Italian FleetCo; and
(e) the Country Asset Value of French FleetCo,
less
(ii) the aggregate of, without double counting:
(a) the Extraordinary Depreciation Amount;
(b) the Disposition Adjustment;
(c) the Excess Concentration Amount; and
(d) the aggregate of:
(x) the Net Book Value of all Non-Eligible Vehicles of Dutch FleetCo in Spain,
Germany and The Netherlands, Italian FleetCo in Italy and French FleetCo in
France; and
(y) the amount of the Non-Eligible Receivables of Dutch FleetCo in Spain,
France,
provided that, following the occurrence of a Dutch Opco Event of Default and in
the absence of a Dutch FleetCo Event of Default: (1) the Country Asset Value of
Dutch FleetCo in The Netherlands shall be deemed to be zero; and (2) Dutch
FleetCo in The Netherlands and Dutch FleetCo’s Vehicle Fleet in the Netherlands
shall not be taken into account when determining the aggregate of the amounts in
items (ii)(a) to (ii)(d) above.
“Commercial Terms” means, in relation to the negotiation and renewal of a
Vehicle Dealer Buy-Back Agreement, a Vehicle Manufacturer Buy-Back Agreement, a
Vehicle Dealer Purchase Agreement and/or a Vehicle Manufacturer Buy-Back
Agreement:
(a) the purchase price for Vehicles;
(b) the volume of Vehicles to be purchased;
(c) the Vehicle types, model and mix and options;
(d) the Vehicle drop points and return locations within the Relevant
Jurisdictions;
(e) any Credit Terms Given; and
11
(f) any related commercial terms, provided that the application of such
commercial terms do not breach the Negotiation Guidelines.
“Common Terms” means clauses 12 (Confidentiality), 12A (Collateral Trustee), 19
(Notices), 21 (Calculations and Certificates), 22 (Partial Invalidity), 23
(Remedies and Waivers), 25 (Counterparts) and 27 (Non-Petition and Limited
Recourse) (but, (i) in the case of Transaction Documents which are not expressed
to be governed by English law, excluding clause 27.2.2(i)(b) (Insufficient
Recoveries); (ii) in the case of Transaction Documents which are expressed to be
governed by French law, excluding clause 25 (Counterparts); and (iii) in the
case of Transaction Documents to which Senior Noteholders are not party,
excluding clause 12A (Collateral Trustee)) of the Framework Agreement and, in
the case of Transaction Documents which are expressed to be governed by German
law, clause 27 (Non-Petition and Limited Recourse) shall be construed such as to
not exclude, as a matter of substance, any claims resulting from gross
negligence (große Fahrlässigkeit) or wilful misconduct (vorsätzliches
Fehlverhalten).
“Computer Readable Form” means a form in which information or data may be stored
and/or accessed by a computer, including, but not limited to, tangible storage
media such as floppy disks or CD-ROMs, or information or data which is made
available by direct computer access, or any other appropriate electronic
information storage form, format or medium as determined by the relevant
Servicer or the Issuer Cash Manager, the FleetCo Back-up Cash Manager, as the
case may be.
“Concentration Limit” means the following limit:
(a) the percentage of the Eligible Vehicles in all Countries which are At Risk
Assets not exceeding [REDACTED] per cent.,
provided that:
(i) the percentage of Eligible Vehicles in all Countries which are purchased
from [REDACTED] not exceeding:
(a)
(x) if the Vehicle Manufacturer Group Rating Entity of [REDACTED] has a
Relevant DBRS Rating of “A(L)” or above by DBRS; or
(y) if the Vehicle Manufacturer Group Rating Entity of [REDACTED] does not
have a Relevant DBRS Rating, a DBRS Equivalent Rating of “A(L)” or above,
[REDACTED] per cent.; or
(b)
Relevant DBRS Rating of below “A(L)” by DBRS; or
have a Relevant DBRS Rating, a DBRS Equivalent Rating of below “A(L)”,
[REDACTED] per cent.;
[REDACTED]
12
provided further that:
A. the percentage of Eligible Vehicles in all Countries that are sub-leased to
Affiliates of the Avis Europe Group, licencees or sub-licensees not exceeding
[REDACTED] per cent. (such Vehicles, the “Relevant Vehicles”); and
B. the percentage of Eligible Vehicles in all Countries that are Relevant
Vehicles and sub-leased to Affiliates of the Avis Europe Group located in a
jurisdiction other than the Relevant Jurisdiction of the Lessee not exceeding
[REDACTED] per cent., provided further that such other jurisdiction is France,
Germany, Italy, Spain, Austria, Belgium, The Netherlands or Luxembourg;
C. the percentage of Eligible Vehicles in all Countries that are Service
Vehicles not exceeding [REDACTED] per cent.; and
D. the percentage of Eligible Vehicles in all Countries that are Light Duty
Trucks not exceeding [REDACTED] per cent.,
and, for the purposes of this definition, the “percentage of Eligible Vehicles
in all Countries” shall be the percentage of the aggregate Borrower Vehicle
Fleet NBV of Eligible Vehicles in the Vehicle Fleet in all Countries and “Light
Duty Trucks” shall, for the avoidance of doubt, exclude Vans.
“Conduit” means a special purpose entity whose activities are wholly or
principally the issuance of commercial paper or other debt securities (of any
type) and the purchase of debt securities or other assets.
“Conduit Senior Noteholder” means each Senior Noteholder which is a Conduit.
“Confidential Information” means all information relating to any Avis Obligor or
any of the Issuer Transaction Documents and FleetCo Transaction Documents of
which an Issuer Secured Creditor or a FleetCo Secured Creditor becomes aware in
its capacity as, or for the purpose of becoming, an Issuer Secured Creditor or a
FleetCo Secured Creditor (as applicable) or which is received by an Issuer
Secured Creditor or a FleetCo Secured Creditor (as applicable) in relation to,
or for the purpose of becoming an Issuer Secured Creditor or a FleetCo Secured
Creditor (as applicable) under, the Transaction Documents to which it is a party
from either:
(a) any Avis Obligor or any of its advisers; or
(b) another Issuer Secured Creditor or FleetCo Secured Creditor, if the
information was obtained by that Secured Creditor or indirectly from any Avis
Obligor,
in whatever form, and includes information given orally and any document,
electronic file or any other way of representing or recording information which
contains or is derived or copied from such information but excludes information
that:
(i) is or becomes public information other than as a direct or indirect result
of any breach by that Issuer Secured Creditor or FleetCo Secured Creditor of
clause 12 (Confidentiality) of the Framework Agreement;
(ii) is identified in writing at the time of delivery as non-confidential by any
Avis Obligor or any of its advisers; or
(iii)
is known by that Issuer Secured Creditor or FleetCo Secured Creditor before the
date the information is disclosed to it in accordance with paragraph (a) or
(b) above or is lawfully obtained by that Issuer Secured Creditor or FleetCo
Secured Creditor (as the case may be) after that date, from a source which is,
as far as that Issuer Secured Creditor or
13
FleetCo Secured Creditor (as the case may be) is aware, unconnected with the
Avis Obligors and which, in either case, as far as that Issuer Secured Creditor
or FleetCo Secured Creditor (as the case may be) is aware, has not been obtained
in breach of, and is not otherwise subject to, any obligation of
confidentiality.
“Confidentiality Undertaking” means a confidentiality undertaking substantially
in a recommended form of the LMA or in any other form agreed between Finco and
the Transaction Agent.
“Contractual Currency” means, in relation to any payment obligation arising
under any transaction, Euro and, in relation to clause 19 (Remuneration and
Indemnification of the Issuer Security Trustee) of the Issuer Deed of Charge,
Euros or such other currency as may be agreed between the Issuer and the Issuer
Security Trustee from time to time.
“Corporate Services Providers” means the corporate services entities that
provide corporate administration services to any of the Issuer, FleetCo
Holdings, Dutch FleetCo and French FleetCo.
“Corresponding DBRS Rating” means, for each Equivalent Rating Agency Rating for
any Person, the DBRS rating designation corresponding to the row in which such
Equivalent Rating Agency Rating appears in the table set forth below:
Moody’s
S&P
Fitch
DBRS
Aaa
AAA AAA AAA
Aa1
AA+ AA+ AA(H)
Aa2
AA AA AA
Aa3
AA- AA- AA(L)
A1
A+ A+ A(H)
A2
A A A
A3
A- A- A(L)
Baa1
BBB+ BBB+ BBB(H)
Baa2
BBB BBB BBB
Baa3
BBB- BBB- BBB(L)
Ba1
BB+ BB+ BB(H)
Ba2
BB BB BB
Ba3
BB- BB- BB(L)
B1
B+ B+ B-High
B2
B B B
B3
B- B- B(L)
Caa1
CCC+ CCC CCC(H)
Caa2
CCC CC CCC
Caa3
CCC- C CCC(L)
Ca
CC CC(H)
14
Moody’s
S&P
Fitch
DBRS
C
CC CC(L) C(H) C C(L)
“Countries” means Spain, Germany, Italy, The Netherlands and France.
“Country” means:
(a) Spain (in respect of Dutch FleetCo’s Vehicle Fleet purchased in Spain);
(b) Germany (in respect of Dutch FleetCo’s Vehicle Fleet purchased from German
Opco);
(c) The Netherlands (in respect of Dutch FleetCo’s Vehicle Fleet purchased from
Dutch Opco);
(d) Italy (in respect of Italian FleetCo); and
(e) France (in respect of French FleetCo).
“Country Asset Value” means, as at any Calculation Date or (if applicable) the
relevant Intra-Month Cut-Off Date, in relation to any Country, the aggregate of
the following items (without double counting):
(a) the Borrower Vehicle Fleet NBV of the Vehicle Fleet delivered to the
relevant FleetCo in such Country;
(b) the amount of the Vehicle Manufacturer Receivables and Vehicle Dealer
Receivables payable to the relevant FleetCo in such Country;
(c) FleetCo Excess Cash Amount in such Country; and
(d) in respect of Spain and France, the VAT Receivables payable to Dutch
FleetCo, Spanish Branch and French FleetCo, respectively,
minus
(a) the Fleet Payables Amount of the relevant FleetCo in such Country;
(b) the amount of the Invoices to be Received in such Country; and
(c) in respect of Spain and France, the VAT Payables Amount of Dutch FleetCo,
Spanish Branch and French FleetCo, respectively.
“Country Asset Value Test” shall be satisfied if the aggregate of the
outstanding FleetCo Advances made to a FleetCo in a Country is less than or
equal to the Country Asset Value of such FleetCo.
“Country Repayment Option” means the mechanism under which a member of the Avis
Europe Group may provide funding to Dutch FleetCo, Spanish Branch to prepay in
full its obligations under the FleetCo Spanish Facility Agreement or purchase
the Issuer’s rights under the FleetCo Italian Facility Agreement or the VFN
Funding Agreement, as applicable, being the Spain Repayment Option, the Italy
Repayment Option and the France Repayment Option, respectively, and as more
particularly set out in clause 6 (Country Repayment Option) of the Framework
Agreement.
15
“Credit Agreement” means the second amended and restated credit agreement dated
2 August 2013, among Avis Budget Holdings, LLC, as borrower, the Parent, as
borrower, the subsidiary borrowers referred to therein, the several lenders
referred to therein, JPMorgan Chase Bank N.A., as administrative agent, Deutsche
Bank Securities Inc., as syndication agent, each of Citicorp USA, Inc., Bank of
America, N.A., Barclays Bank PLC, Credit Agricole Corporate & Investment Bank
and The Royal Bank of Scotland plc as co-documentation agents as may be amended,
restated, modified, supplemented or waived from time to time in accordance with
its terms.
“Credit Enhancement Asset” means the Investment Grade Programme Vehicles,
Investment Grade Non-Programme Vehicles, Non-Investment Grade Programme
Vehicles, Non-Investment Grade Non-Programme Vehicles, the Credit Enhancement
Investment Grade Receivables, the Credit Enhancement Non-Investment Grade
Receivables and (in respect of Spain and France) the VAT Receivables net of the
VAT Payables Amount.
“Credit Enhancement Matrix” means the following matrix:
[REDACTED]
16
“Credit Enhancement Investment Grade Receivables” means Investment Grade Vehicle
Manufacturer Receivables net of payables for each Vehicle Manufacturer to the
extent set-off is permitted under the relevant Vehicle Manufacturer Agreements
and/or Vehicle Manufacturer Guarantees.
“Credit Enhancement Non-Investment Grade Receivables” means Non-Investment Grade
Vehicle Manufacturer Receivables (for which a FleetCo holds enforceable title)
net of payables for each Vehicle Manufacturer to the extent set-off is permitted
under the relevant Vehicle Manufacturer Agreements and/or Vehicle Manufacturer
Guarantees.
“Credit Enhancement Required Amount” means, without limitation, the sum of:
(a) the Asset Enhancement Amount; and
(b) the Issuer Reserve Required Amount.
“Credit Terms Given” means the terms agreed by the Vehicle Manufacturers and
Dealers with the FleetCos under the Vehicle Dealer Buy-Back Agreements, Vehicle
Manufacturer Buy-Back Agreements, Vehicle Dealer Purchase Agreements and/or the
Vehicle Manufacturer Purchase Agreements.
“CRR” means Regulation (EU) No 575/2013 of the European Parliament and of the
Council, as amended from time to time and including any guidance or any
technical standards published in relation thereto”.
“Currency Hedge Agreement” means a currency swap or exchange agreement, currency
exchange option or any other similar agreement, however denominated, entered
into on behalf of a Conduit Senior Noteholder for hedging purposes, as any of
the foregoing may be amended, restated, supplemented or otherwise modified, from
time to time.
“Currency Hedging Breakage Costs” means, solely with respect to the applicable
Conduit Senior Noteholder, for any Settlement Date, an amount (which may be
negative) equal to:
(i) the aggregate amount of any amounts paid or payable by or on behalf of the
applicable Conduit Senior Noteholder to a counterparty to a Currency Hedge
Agreement in connection with the close out of any Currency Hedge Agreement on
any date other than its settlement date, which settlement date shall be a
Settlement Date,
less
(ii) the aggregate amount of any amounts paid or payable to or for the account
of the applicable Conduit Senior Noteholder by a counterparty to a Currency
Hedge Agreement in connection with the close out of any Currency Hedge Agreement
on any date other than its settlement date,
provided that:
(a) if on any Settlement Date, the applicable Conduit Senior Noteholder’s
Currency Hedging Breakage Costs are a negative number, then, on such Settlement
Date, the aggregate amount that would otherwise have been payable by the Issuer
to the applicable Conduit Senior Noteholder on such Settlement Date pursuant to
the applicable priority of payment, shall be reduced until either the aggregate
amount owed to the applicable Conduit Senior Noteholder or the Currency Hedging
Breakage Costs have been reduced to zero, and
(b)
when there are remaining Currency Hedging Breakage Costs following such
reduction in (a) above of the aggregate amounts otherwise owed to the applicable
Conduit Senior
17
Noteholder, an amount equal to such remaining Currency Hedging Breakage Costs
(expressed as a positive number) shall be paid by or on behalf of the applicable
Conduit Senior Noteholder to the Issuer on such Settlement Date;
“DBRS” means DBRS Ratings Limited and includes any successors thereto.
“DBRS Equivalent Rating” means, with respect to any date and any Person with
respect to whom DBRS does not maintain a public Relevant DBRS Rating as of such
date:
(a) if such Person has an Equivalent Rating Agency Rating from three of the
Equivalent Rating Agencies as of such date, then the median of the Corresponding
DBRS Ratings for such Person as of such date;
(b) if such Person has Equivalent Rating Agency Ratings from only two of the
Equivalent Rating Agencies as of such date, then the lower Corresponding DBRS
Rating for such Person as of such date; and
(c) if such Person has an Equivalent Rating Agency Rating from only one of the
Equivalent Rating Agencies as of such date, then the Corresponding DBRS Rating
for such Person as of such date.
“Deemed FleetCo Advance Drawdown Date” means the first Business Day after the
relevant Original FleetCo Advance Drawdown Date specified in the relevant
FleetCo Advance Drawdown Notice, if the relevant Original FleetCo Advance
Drawdown Date is not a Business Day (in respect of Dutch FleetCo) in Spain or
Germany or The Netherlands or (in respect of Italian FleetCo) in Italy or (in
respect of French FleetCo) in France.
“Default” means a Potential Event of Default or an Event of Default.
“Default Interest” means [REDACTED] per cent. per annum over the Interest Rate.
“Delegate” means any delegate, agent, attorney or co-trustee appointed by the
Issuer Security Trustee or the FleetCo Security Agent (as the case may be).
“Depreciation Charge” means, with respect to each Vehicle, the product of
(a) the Depreciation Percentage applicable to the month ending on the
Calculation Date at issue and (b) the applicable Capitalised Costs.
“Depreciation Percentage” means, with respect to each Vehicle:
(a) which is a Programme Vehicle, the monthly depreciation percentage set forth
in the applicable Vehicle Manufacturer Buy-Back Agreement or Vehicle Dealer
Buy-Back Agreement (if any) in respect of such Vehicle or, in the absence of
such a depreciation percentage in such Vehicle Manufacturer Buy-Back Agreement
or Vehicle Dealer Buy-Back Agreement, a monthly depreciation percentage
calculated in accordance with GAAP consistently applied, taking into account the
estimated holding period and the Vehicle Manufacturer Repurchase Price of such
Vehicle; and
(b) which is a Non-Programme Vehicle, a monthly depreciation percentage
calculated in accordance with GAAP consistently applied,
provided that, with respect to the foregoing determinations, such determinations
shall be made no less frequently than on each Calculation Date falling in March,
June, September and December of each year and on each additional date as may be
required by GAAP.
“Disposal Proceeds” means the proceeds of sale of any Non-Programme Vehicle (net
of any costs (if any) incurred) in relation to the relevant sale or any
Programme Vehicle where such sale is other than under the terms of a Vehicle
Dealer Buy-Back Agreement or a Vehicle Manufacturer Buy-Back Agreement.
18
“Disposition Adjustment” means, in relation to any calendar month, the aggregate
of:
(a) the product of:
(i) the Disposition Adjustment Percentage in Spain; and
(ii) the Net Book Value of At Risk Assets of Dutch FleetCo in Spain;
(b) the product of:
(i) the Disposition Adjustment Percentage in Germany; and
(ii) the Net Book Value of At Risk Assets of Dutch FleetCo in Germany;
(c) the product of:
(i) the Disposition Adjustment Percentage in The Netherlands; and
(ii) the Net Book Value of At Risk Assets of Dutch FleetCo in The Netherlands;
(d) the product of:
(i) the Disposition Adjustment Percentage in Italy; and
(ii) the Net Book Value of At Risk Assets of Italian FleetCo in Italy; and
(e) the product of:
(i) the Disposition Adjustment Percentage in France; and
(ii) the Net Book Value of At Risk Assets of French FleetCo in France.
“Disposition Adjustment Percentage” means, in relation to Dutch FleetCo in
Spain, Dutch FleetCo in Germany, Dutch FleetCo in The Netherlands, Italian
FleetCo in Italy or French FleetCo in France (as applicable), the highest, for
any calendar month within the preceding 12 calendar months, of a percentage
equal to 100 per cent. minus the Measurement Month Average relating to Dutch
FleetCo in Spain, Dutch FleetCo in Germany, Dutch FleetCo in The Netherlands,
Italian FleetCo in Italy or French FleetCo in France (as applicable) for the
immediately preceding Measurement Month relating to Dutch FleetCo in Spain,
Dutch FleetCo in Germany, Dutch FleetCo in The Netherlands, Italian FleetCo in
Italy or French FleetCo in France (as applicable) as of the Calculation Date
within such calendar month. For the avoidance of doubt, in relation to Dutch
FleetCo in The Netherlands or French FleetCo in France (as applicable), the
Disposition Adjustment Percentage shall be calculated with respect to the first
Measurement Month following the Dutch Accession Date or the Initial French
Funding Date (as applicable).
“Dispute” means a dispute arising out of or in connection with the relevant
Transaction Document (including a dispute regarding the existence, validity or
termination of such Transaction Document, any non-contractual obligations
arising out of or in connection with such Transaction Document or the
consequences of its nullity).
“Dutch Accession Date” means 21 May 2014.
“Dutch Account Bank Agreement” means the agreement dated on or about 21 May 2014
pursuant to which Dutch FleetCo appoints the Dutch FleetCo Dutch Account Bank.
“Dutch Account Mandate” has the meaning given to it in clause 4.1 of the Dutch
Account Bank Agreement.
19
“Dutch Bank Account” means the bank account maintained by Dutch FleetCo with ABN
AMRO N.V. in The Netherlands with account number 440355842.
“Dutch Bank Account Priority of Payments” means the priority of payments set out
in clause 4.3.46 (Dutch Bank Account) of the Framework Agreement.
“Dutch FleetCo” means Fincar Fleet B.V., a private company with limited
liability (besloten vennootschap met beperkte aansprakelijkheid) incorporated
under the laws of The Netherlands, having its registered office at
Rapenburgerstraat 177B, 1011 VM Amsterdam, The Netherlands and registered with
the Dutch Trade Register (Handelsregister) of the chamber of commerce (Kamer van
Koophandel) under the number 5522 7732.
“Dutch FleetCo Account Bank Operators” means the Dutch FleetCo Spanish Account
Bank Operator, the Dutch FleetCo German Account Bank Operator and the Dutch
FleetCo Dutch Account Bank Operator and each a “Dutch FleetCo Account Bank
Operator”.
“Dutch FleetCo Corporate Services Providers” means Intertrust (Netherlands) B.V.
and Vistra B.V., each appointed as the corporate services provider to Dutch
FleetCo under the respective Dutch Corporate Services Agreement.
“Dutch FleetCo Deed of Charge” means the English law deed of charge dated on or
about the Dutch Accession Date pursuant to which, among other things, Dutch
FleetCo assigns, pledges and otherwise creates security over all its rights and
interests in and to each of the English Transaction Documents in respect of its
Vehicle Fleet in The Netherlands to which it is a party in favour of the FleetCo
Security Agent.
“Dutch FleetCo Deed of Charge Secured Property” has the meaning given to it in
the Dutch FleetCo Deed of Charge.
“Dutch FleetCo Dutch Account Bank” means Deutsche Bank AG, Amsterdam Branch or
its successor or replacement appointed under the Dutch Account Bank Agreement.
“Dutch FleetCo Dutch Account Bank Operator” means Deutsche Bank AG, London
Branch.
“Dutch FleetCo Dutch Bank Account Pledge” means the Dutch law deed of pledge of
bank accounts dated on or about the Dutch Accession Date and granted by Dutch
FleetCo in favour of the FleetCo Security Agent.
“Dutch FleetCo Dutch Bank Accounts” means:
(i) the Dutch FleetCo Dutch Transaction Account;
(ii) the Dutch FleetCo Dutch Reserve Account (if any); and
(iii) any Additional Accounts opened and maintained in accordance with the Dutch
Account Bank Agreement.
“Dutch FleetCo Dutch Deed of Pledge of Receivables” means the Dutch law deed of
pledge of receivables dated on or about the Dutch Accession Date granted by
Dutch FleetCo in favour of the FleetCo Security Agent.
“Dutch FleetCo Dutch Expenses” means the fees, costs, charges and expenses to
which Dutch FleetCo is liable to the Dutch FleetCo Corporate Services Providers
in The Netherlands and all fees, costs, charges and expenses to which Dutch
FleetCo is liable in relation to its premises, equipment rental, telephone line,
registration fees, tax returns and other corporate administration services, in
each case, in The Netherlands.
20
“Dutch FleetCo Dutch Opco Event of Default Priority of Payments” means the
priority of payments in part 8 (Dutch FleetCo Dutch Opco Event of Default
Priority of Payments) of schedule 3 (Priorities of Payments) to the Framework
Agreement.
“Dutch FleetCo Dutch Post-Enforcement Priority of Payments” means the priority
of payments in part D (Dutch FleetCo Dutch Post-Enforcement Priority of
Payments) of part 6 (FleetCo Post-Enforcement Priority of Payments) of schedule
3 (Priorities of Payments) to the Framework Agreement.
“Dutch FleetCo Dutch Pre-Enforcement Priority of Payments” means the priority of
payments in part D (Dutch FleetCo Dutch Pre-Enforcement Priority of Payments) of
part 5 (FleetCo Pre-Enforcement Priority of Payments) of schedule 3 (Priorities
of Payments) to the Framework Agreement.
“Dutch FleetCo Dutch Reserve Account” means the EUR denominated reserve account
in The Netherlands in the name of Dutch FleetCo and any sub-accounts thereof
which may be opened and maintained with the Dutch FleetCo Dutch Account Bank
“Dutch FleetCo Dutch Right of Pledge” means the Dutch law non-possessory right
of pledge (bezitloos pandrecht) relating to the Vehicles owned by Dutch FleetCo
dated on or about the Dutch Accession Date granted by Dutch FleetCo in favour of
the FleetCo Security Agent.
“Dutch FleetCo Dutch Secured Property” means the assets from time to time
secured by the Dutch FleetCo Dutch Security Documents.
“Dutch FleetCo Dutch Security Documents” means (taking account of the fact that
certain documents will only be entered into and/or be effective after the Dutch
Accession Date):
(i) (subject to Clause 2.1(xxxvi) hereof) the Dutch FleetCo Share Pledge;
(ii) (subject to Clauses 2.1(xxxiv) and (xxxv) hereof) the Dutch FleetCo Deed of
Charge;
(iii) the Dutch FleetCo Dutch Deed of Pledge of Receivables;
(iv) the Dutch FleetCo Dutch Bank Account Pledge; and
(v) the Dutch FleetCo Dutch Right of Pledge.
“Dutch FleetCo Dutch Transaction Account” means the EUR denominated bank account
held and administered by Dutch FleetCo Dutch Account Bank in the name of Dutch
FleetCo with the account number (IBAN: NL65DEUT0265198674).
“Dutch FleetCo German Account Bank” means Deutsche Bank AG or its successor or
replacement appointed under the German Account Bank Agreement.
“Dutch FleetCo German Account Bank Operator” means Deutsche Bank AG, London
Branch.
“Dutch FleetCo German Bank Accounts” means:
(i) the Dutch FleetCo German Transaction Account;
(ii) the VAT Component and Charge Costs Component Trust Account; and
(iii) the Dutch FleetCo German Reserve Account.
“Dutch FleetCo German Post-Enforcement Priority of Payments” means the priority
of payments in part B (Dutch FleetCo German Post-Enforcement Priority of
21
“Dutch FleetCo German Pre-Enforcement Priority of Payments” means the priority
of payments in part B (Dutch FleetCo German Pre-Enforcement Priority of
Payments) of part 5 (FleetCo Pre-Enforcement Priority of Payments) of schedule 3
(Priorities of Payments) to the Framework Agreement.
“Dutch FleetCo German Reserve Account” means the EUR denominated reserve account
in Germany in the name of Dutch FleetCo and any sub-accounts thereof opened and
maintained with the Dutch FleetCo German Account Bank and with account number
100-9644667-01.
“Dutch FleetCo German Secured Property” means the assets from time to time
secured by the FleetCo German Security Documents, the Dutch Receivables Pledge,
the Dutch FleetCo German VAT Pledge, (to the extent of the Dutch FleetCo Level
German Advances Proportion) the Dutch FleetCo Share Pledge and the German
FleetCo Deed of Charge.
“Dutch FleetCo German Transaction Account” means the EUR denominated bank
account held and administered by Dutch FleetCo German Account Bank in the name
of Dutch FleetCo with the account number 100-9644667-00.
“Dutch FleetCo German VAT Pledge” means the Dutch law pledge between, among
others, German Opco and Dutch FleetCo, in respect of the VAT Amount and the
Third Party Purchase Price VAT Amount.
“Dutch FleetCo Level Dutch Advances Proportion” means, on any date on which such
calculation is required, the ratio of:
(a) the aggregate outstanding FleetCo Dutch Advances under the FleetCo Dutch
Facility Agreement;
to
(i) the aggregate outstanding FleetCo Spanish Advances under the FleetCo
Spanish Facility Agreement;
(ii) the aggregate outstanding FleetCo German Advances under the FleetCo
German Facility Agreement; and
(iii) the aggregate outstanding FleetCo Dutch Advances under the FleetCo Dutch
Facility Agreement,
such ratio expressed as a percentage.
“Dutch FleetCo Level German Advances Proportion” means, on any date on which
such calculation is required, the ratio of:
(a) the aggregate outstanding FleetCo German Advances under the FleetCo German
Facility Agreement;
to
Spanish Facility Agreement;
22
Facility Agreement,
“Dutch FleetCo Level Spanish Advances Proportion” means, on any date on which
(a) the aggregate outstanding FleetCo Spanish Advances under the FleetCo Spanish
Facility Agreement;
to
(i) the aggregate outstanding FleetCo German Advances under the FleetCo German
Facility Agreement;
(ii) the aggregate outstanding FleetCo Spanish Advances under the FleetCo
Spanish Facility Agreement; and
Facility Agreement,
“Dutch FleetCo Management Documents” means:
(i) the management agreement entered into by Dutch FleetCo with J.J. van Ginkel,
B.W. de Sonnaville and Vistra B.V. and dated 22 June 2012 and amended and
restated on 5 March 2013 in respect of the provision of corporate administration
services of Dutch FleetCo by Vistra B.V.;
(ii) the management agreement entered into by Dutch FleetCo with demand P.D.
Haverkamp and M. Hut and Intertrust (Netherlands) B.V. and dated 22 June 2012 as
amended and restated on the Dutch Accession Date in respect of the provision of
corporate administration services of Dutch FleetCo by Intertrust (Netherlands)
B.V. and as most recently amended on 21 January 2015 in respect fo the
replacement of M. Hut with M. Posthumus;
(iii) the letter of undertaking entered into, amongst others, by Vistra B.V.
dated 22 June 2012 and most recently amended and restated on the Dutch Accession
Date ; and
(iv) the letter of undertaking entered into, amongst others, by Intertrust
(Netherlands) B.V. dated 22 June 2012 as amended and restated on the Dutch
Accession Date and as most recently amended on 21 January 2015 in respect fo the
replacement of M. Hut with M. Posthumus.
“Dutch FleetCo Premises Lease Agreement” means the lease agreement dated 22 June
2012 between Pinnacle Offices B.V. and Dutch FleetCo.
“Dutch FleetCo Secured Creditors” means the Dutch FleetCo Dutch Account Bank,
the Dutch FleetCo Dutch Account Bank Operator, the FleetCo Dutch Back-up Cash
Manager and, with respect to obligations incurred by Dutch FleetCo acting with
respect to its Vehicle Fleet in The Netherlands, the Central Servicer, the
Liquidation Agent, the FleetCo Security Agent (including any Receiver or
Appointee thereof) and the Issuer.
23
“Dutch FleetCo Share Pledge” means the deed of the pledge of shares by the
shareholders of Dutch FleetCo over all the shares of Dutch FleetCo dated 5 March
2013, as amended on or about the Dutch Accession Date.
“Dutch FleetCo Spanish Account Bank” means Deutsche Bank S.A.E. or its successor
or replacement appointed under the Spanish Account Bank Agreement.
“Dutch FleetCo Spanish Account Bank Operator” means Deutsche Bank AG., London
Branch or its successor or replacement appointed under the Spanish Account Bank
Agreement.
“Dutch FleetCo Spanish Bank Accounts” means:
(i) the Dutch FleetCo Spanish Transaction Account; and
(ii) the Dutch FleetCo Spanish Reserve Account (if any).
“Dutch FleetCo, Spanish Branch” means the Spanish branch of Dutch FleetCo with
company registration number M-518708, with company domicile at Avenida Manoteras
32, 28050 Madrid and tax identification number W0037096E.
“Dutch FleetCo Spanish Post-Enforcement Priority of Payments” means the priority
of payments in part A (Dutch FleetCo Spanish Post-Enforcement Priority of
“Dutch FleetCo Spanish Pre-Enforcement Priority of Payments” means the priority
of payments in part A (Dutch FleetCo Spanish Pre-Enforcement Priority of
“Dutch FleetCo Spanish Reserve Account” means the reserve account in Spain in
the name of Dutch FleetCo, Spanish Branch and which may, from time to time, be
opened and maintained with the Dutch FleetCo Spanish Account Bank.
“Dutch FleetCo Spanish Secured Property” means the assets from time to time
secured by the FleetCo Spanish Security Documents, the Spanish FleetCo Deed of
Charge and, to the extent of the Dutch FleetCo Level Spanish Advances
Proportion, the Dutch FleetCo Share Pledge.
“Dutch FleetCo Spanish Transaction Account” means the bank account in Spain in
the name of Dutch FleetCo, Spanish Branch with the account number 0019 0030 68
4010240146 (IBAN: ES1800190030684010240146).
“Dutch GAAP” means the whole body of Dutch authoritative accounting literature,
including the Dutch Civil Code (Burgerlijk Wetboek) and the Dutch Accounting
Standards published by the Dutch Accounting Standards Board (Raad voor de
Jaarverslaggeving).
“Dutch Initial Purchase Price” means, in relation to a Vehicle in The
Netherlands, the purchase price or other consideration payable by Dutch Opco to
the Vehicle Manufacturer or Vehicle Dealer for the purchase by Dutch Opco of
such Vehicle as provided in the relevant Vehicle Manufacturer Agreement and
Vehicle Dealer Agreement, plus VAT and Charge Costs.
“Dutch Onward Purchase Price” means, in respect of any Vehicle in The
Netherlands, the purchase price as specified in the Purchase Offer and Lease
Request payable by Dutch FleetCo to Dutch Opco which (i) for a Vehicle other
than a Dutch Opco Existing Fleet Vehicle shall be equal to the Dutch Initial
Purchase Price payable by Dutch Opco with regard to such vehicles (which price,
for these purposes, includes VAT charged by Dutch Opco to Dutch FleetCo) and (if
24
necessary) calculated by way of breakdown of the aggregate price for each type
of vehicle subject to the respective Purchase Offer and Lease Request or
(ii) for a Dutch Opco Existing Fleet Vehicle shall be equal to the Net Book
Value on the Dutch Accession Date for such Dutch Opco Existing Fleet Vehicle
plus VAT.
“Dutch Opco” means Avis Budget Autoverhuur B.V.
“Dutch Opco Existing Fleet Vehicle” means each Eligible Vehicle (i) in respect
of which Dutch Opco has paid the Initial Purchase Price in full to the relevant
Vehicle Manufacturer or Vehicle Dealer prior to the date of the Master Dutch
Fleet Purchase Agreement and (ii) which Dutch Opco owns prior to the date of the
Master Dutch Fleet Purchase Agreement.
“Dutch Opco Event of Default” means an Event of Default in respect of Dutch Opco
as the Relevant Person.
“Dutch Parallel Debt” has the meaning given to it in clause 16.2 (Parallel Debt)
of the Framework Agreement.
“Dutch Receivables Pledge” means the receivables pledge dated 5 March 2013
entered into by, among others, Dutch FleetCo and the FleetCo Security Agent.
“Dutch Transaction Documents” means:
(i) the FleetCo Dutch Security Documents;
(ii) (subject to clause 2.1(xxxvi) hereof) the Dutch FleetCo Management
Documents;
(iii) the Master German Fleet Purchase Agreement (to the extent expressed to be
governed by Dutch law);
(iv) the Master German Fleet Lease Agreement; and
(v) any other Transaction Document expressed to be governed by Dutch law,
relating to Dutch FleetCo’s Vehicle Fleet in Germany and approved by the FleetCo
Security Agent and the Transaction Agent and designated by them as a Dutch
Transaction Document which, for the avoidance of doubt shall not include any
Dutch Transaction Dutch Documents.
“Dutch Transaction Dutch Documents” means (taking account of the fact that
Accession Date):
(i) the Dutch FleetCo Dutch Security Documents;
Documents;
(iii) the Dutch Account Bank Agreement;
(iv) the Dutch Account Mandate;
(v) the Master Dutch Fleet Purchase Agreement;
(vi) the Master Dutch Fleet Lease Agreement; and
(vii) any other Transaction Document expressed to be governed by Dutch law,
relating to Dutch FleetCo’s Vehicle Fleet in The Netherlands and approved by the
FleetCo Security Agent and the Transaction Agent and designated by them as a
Dutch Transaction Dutch Document, which, for the avoidance of doubt, shall not
include any Dutch Transaction Documents.
“Dutch VAT Lender” means Avis Finance Company Limited.
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“Dutch VAT Loan Agreement” means the Dutch VAT Loan Agreement dated on or about
the Dutch Accession Date and entered into between the Dutch VAT Loan Borrower
and the Dutch VAT Lender.
“Dutch VAT Loan Borrower” means Dutch FleetCo.
“Dutch VAT Refund” has the meaning given to it in the Dutch VAT Loan Agreement.
“Dutch VAT Refund Ledger” means the ledger on which Dutch VAT Refunds recovered
by Dutch FleetCo from the Dutch Tax Authorities are recorded.
“Dutch Vehicle Certificates” means, in respect of Vehicles in The Netherlands in
relation to which an Individual Purchase and Lease Agreement has been concluded,
the registration documents regarding such vehicles and certificates of
conformity, including, but not limited to, the ownership codes
(tenaamstellingscode) and the vehicle registration cards.
“Dutch Vehicle Documents” means, in respect of Vehicles in The Netherlands, the
keys and spare keys to the Vehicles, the Dutch Vehicle Certificates and the
certificates of conformity.
“Early Termination Payment” means, in the event that a FleetCo turns back any
Programme Vehicle to a Vehicle Manufacturer or Vehicle Dealer, as applicable,
under a Vehicle Dealer Buy-Back Agreement or Vehicle Manufacturer Buy-Back
Agreement before the end of the relevant Programme Minimum Term (where
applicable), an amount equal to the excess, if any, of (a) the Termination Value
of such Programme Vehicle (as of the Turn-back Date) over (b) the sum of the
Vehicle Manufacturer Repurchase Price received (or receivable) with respect to
such Programme Vehicle and any Programme Vehicle Special Default Payments
payable by the Lessee in respect of such Programme Vehicle.
“Effective Date” has the meaning given to it in the English law termination deed
dated on or about the Signing Date in respect of the termination of the IFF.
“Eligible Issuer Hedge Counterparty” means a Person satisfactory to the Parent
and the Transaction Agent and:
(i) if the outstanding Senior Notes are rated and continue to be rated by any
Rating Agency:
(a) having (at the time of entry into of the relevant Issuer Hedging
Agreement) a long-term senior unsecured debt, deposit, claims paying or credit
(as the case may be) rating required by such Rating Agency; and
(b) complying with hedge counterparty rating agency criteria commensurate with
a Senior Notes rating (from a Rating Agency rating the Senior Notes) of at least
“A” from Standard & Poor’s, Fitch or DBRS and/or at least “A2” from Moody’s or
such other rating as would not have an adverse impact on the rating of the
Senior Notes; or
(ii) if the outstanding Senior Notes are not rated by a Rating Agency, complying
with hedge counterparty rating agency criteria commensurate with a Senior Notes
rating of at least “A” from Standard & Poor’s, Fitch or DBRS and/or at least
“A2” from Moody’s.
“Eligible Issuer LC Provider” means a person:
(i) satisfactory to the Parent and the Transaction Agent;
(ii)
having a long-term senior unsecured debt, deposit, claims paying or credit (as
the case may be) rating from at least two Rating Agencies of at least “A” from
Standard & Poor’s, Fitch or DBRS and/or at least “A1” from Moody’s and a
short-term senior unsecured debt,
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deposit, claims paying or credit (as the case may be) rating from at least two
Rating Agencies of at least “A-1” from Standard & Poor’s, at least “F1” from
Fitch, at least “P-1” from Moody’s or at least “R-1(mid)” from DBRS; and
(iii) that is a commercial bank having total assets in excess of €500,000,000.
“Eligible Receivables” means, at any time and in relation to Dutch FleetCo in
FleetCo in Italy or French FleetCo in France (as applicable):
(i) its Vehicle Manufacturer Receivables of Dutch FleetCo in Spain, Dutch
FleetCo in Germany, Dutch FleetCo in The Netherlands, Italian FleetCo in Italy
or French FleetCo in France (as applicable) (other than its Excluded Vehicle
Manufacturer Receivables) in respect of Investment Grade Vehicle Manufacturers;
(ii) its (A) Vehicle Dealer Receivables in Germany, France or The Netherlands or
(B) its Vehicle Manufacturer Receivables in Germany, The Netherlands or France
(other than its Excluded Vehicle Manufacturer Receivables) in respect of
Non-Investment Grade Vehicle Manufacturers, in each case, to the extent that
Dutch FleetCo has the benefit of retention of title provisions relating to the
relevant Vehicles at the relevant time; or
(iii) its VAT Receivables in Spain and France,
provided that such receivables listed in paragraphs (i) and (ii) above:
(i) are not more than 90 days overdue and are evidenced by invoices in
electronic or paper form;
(ii) if owed by a legal entity or by an individual that is organised or resident
in a country other than a European Union member country or the country in which
such FleetCo or its Related Opco (as the case may be) is organised, the
Transaction Agent has been provided with legal opinions satisfactory to it
(acting reasonably) confirming that, subject to customary reservations and
assumptions, such receivables are enforceable against the entity or individual
that owes them;
(iii) are not owed by a sovereign debtor to the extent that the nature of such
debtor materially and adversely prejudices the ability to obtain an effective
legal assignment of such receivables;
(iv) are not owed by a debtor known by any FleetCo, any Opco or Finco to be
subject to bankruptcy or insolvency proceedings; and
(v) can be freely and validly transferred (subject to any limitation or third
party consent provided in the underlying contracts) (or are the subject of a
security interest granted under the relevant Security Document in any
jurisdiction).
“Eligible Receivables Amount” means, in relation to Dutch FleetCo in Spain,
Italy or French FleetCo in France (as applicable), the aggregate amount of its
Eligible Receivables in Spain, Germany, The Netherlands, Italy or France,
respectively.
“Eligible Vehicle” means a Vehicle (which includes, for the avoidance of doubt,
a Service Vehicle) in Spain, Germany, The Netherlands, Italy or France (as
applicable):
(a) that is subject to a Vehicle Manufacturer Purchase Agreement or Vehicle
Dealer Purchase Agreement;
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(b) that either: (i) benefits from the buy-back commitment of a Vehicle Dealer
or a Vehicle Manufacturer pursuant to a Vehicle Dealer Buy-Back Agreement or a
Vehicle Manufacturer Buy-Back Agreement, respectively; or (ii) if it does not
benefit, or no longer benefits, from such buy-back commitment, is classified or
reclassified as a Non-Programme Vehicle in accordance with the terms of the
relevant Master Lease Agreement;
(c) the certificate of title and/or registration (as applicable and if required)
for which is in the name of a FleetCo; and
(d) that is owned by (in respect of a Vehicle in Spain, Germany or The
Netherlands) Dutch FleetCo or (in respect of a Vehicle in Italy) Italian FleetCo
or (in respect of a Vehicle in France) French FleetCo, free and clear of all
liens (other than a retention of title in favour of the corresponding Vehicle
Manufacturer or Vehicle Dealer (as applicable) and other than pursuant to the
relevant FleetCo Security Document);
provided that:
(i) such vehicle is no more than (A) thirty-six (36) months old in the case of
Vehicles other than Vans, Light Trucks or Service Vehicles or (B) sixty
(60) months old in the case of Vans, Service Vehicles and Light Trucks, in each
case, after the date of registration with the relevant authorities of such
Vehicle; and
(ii) Vehicles purchased by German Opco from Vehicle Manufacturers under Vehicle
Buy Back Agreements which oblige German Opco to resell the relevant Vehicles to
the relevant Vehicle Manufacturers shall not be Eligible Vehicles unless binding
tax rulings have been obtained by German Opco and Dutch FleetCo from the
relevant German Tax Authorities satisfactory to the Transaction Agent.
“encumbrance” means a Security Interest.
“Enforcement Action” means:
(a) in relation to any Liabilities of the Issuer and/or a FleetCo (as
applicable):
(i) (in respect of the Issuer) the acceleration of any Liabilities of the
Issuer or the making of any declaration that any Liabilities of the Issuer are
prematurely due and payable (other than as a result of it becoming unlawful for
a Senior Noteholder to perform its obligations under, or of any voluntary or
mandatory prepayment arising under, the Issuer Transaction Documents) and (in
respect of a FleetCo) the acceleration of any Liabilities of such FleetCo or the
making of any declaration that any Liabilities of such FleetCo are prematurely
due and payable (other than as a result of it becoming unlawful for the Issuer
to perform its obligations under, or of any voluntary or mandatory prepayment
arising under, the relevant FleetCo Transaction Documents);
(ii) the making of any declaration that any Liabilities are payable on demand;
(iii) the making of a demand in relation to a Liability that is payable on
demand;
(iv) the making of any demand against any of the Parent, Finco or Avis Europe
in relation to the Parent Performance Guarantee, the Finco Payment Guarantee or
the Avis Europe Payment Guarantee, respectively;
(v) save to the extent permitted in accordance with clause 6 (Country
Repayment Option) of the Framework Agreement, the exercise of any right to
require any of the Avis Obligors, FleetCos or the Issuer to acquire any
Liability (including exercising any put or call option against any such person
for the redemption or purchase of any Liability);
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(vi) the exercise of any right of set-off, account combination or payment
netting against any of the Avis Obligors, FleetCos or the Issuer in respect of
any Liabilities other than the exercise of any such right:
A. as Close-Out Netting by an Issuer Hedge Counterparty;
B. as Payment Netting by an Issuer Hedge Counterparty; or
C. which is otherwise expressly permitted under the Issuer Transaction
Documents or FleetCo Transaction Documents to the extent that the exercise of
that right gives effect to a payment that is permitted under the Framework
Agreement; and
(vii) the suing for, commencing of or joining of any legal or arbitration
proceedings against any of the Avis Obligors, FleetCos or the Issuer (as
applicable) to recover any Liabilities;
(b) the premature termination or close-out of any hedging transaction under any
Issuer Hedging Agreement save as permitted under such Issuer Hedging Agreement;
(c) the taking of any steps to enforce or require the enforcement of any Issuer
Security by the Issuer Security Trustee (including the crystallisation of any
floating charge forming part of the Issuer Security) or FleetCo Security by the
FleetCo Security Agent (including the crystallisation of any floating charge
forming part of the FleetCo Security);
(d) the entering into of any composition, compromise, assignment or arrangement
with any of the Avis Obligors, FleetCos or the Issuer (as applicable) which owes
any Liabilities, or has given any Security, guarantee or indemnity or other
assurance against loss in respect of the Liabilities; or
(e) the petitioning, applying or voting for, or the taking of any steps
(including the appointment of any liquidator, receiver, administrator, examiner
or similar officer) in relation to, the winding up, dissolution, administration
or reorganisation of any of FleetCos or the Issuer (as applicable) which owes
any Liabilities, or has given any Security, guarantee, indemnity or other
assurance against loss in respect of any of the Liabilities, or any of such
person’s assets or any suspension of payments or moratorium of any indebtedness
of such person, or any analogous procedure or step in any jurisdiction,
except that the following shall not constitute Enforcement Action:
(i) the taking of any action falling within paragraph (a)(vii) or (e) above
which is necessary (but only to the extent necessary) to preserve the validity,
existence or priority of claims in respect of Liabilities, including the
registration of such claims before any court or governmental authority and the
bringing, supporting or joining of proceedings to prevent any loss of the right
to bring, support or join proceedings by reason of applicable limitation
periods;
(ii) an Issuer Secured Creditor or a FleetCo Secured Creditor bringing legal
proceedings against any person solely for the purpose of:
A. obtaining injunctive relief (or any analogous remedy outside England and
Wales) to restrain any actual or putative breach of any Transaction Document to
which it is party;
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B. obtaining specific performance (other than specific performance of an
obligation to make a payment) with no claim for damages; or
C. requesting judicial interpretation of any provision of any Transaction
Document to which it is party with no claim for damages; or
(iii) the taking of the action in paragraph (a)(iii) or paragraph (a)(iv)
prior to the delivery of an Enforcement Notice.
“Enforcement Notice” means:
(a) in respect of an Issuer Event of Default, the Issuer Enforcement Notice; and
(b) in respect of a FleetCo Event of Default, the FleetCo Enforcement Notice.
“English Transaction Documents” means (taking account of the fact that certain
documents will only be entered into and/or be effective after the date hereof):
(i) the Framework Agreement;
(ii) this Agreement;
(iii) the Funds Flow Agreement;
(iv) the Tax Deed of Covenant;
(v) the Issuer Note Issuance Facility Agreement;
(vi) the Issuer Subordinated Facility Agreement;
(vii) the Issuer Cash Management Agreement;
(viii) the Issuer Account Bank Agreement;
(ix) the Issuer Hedging Agreements;
(x) the FleetCo Spanish Facility Agreement;
(xi) the FleetCo German Facility Agreement;
(xii) the FleetCo Dutch Facility Agreement;
(xiii) the Central Servicing Agreement;
(xiv) the FleetCo Back-up Cash Management Agreement;
(xv) the Avis Europe Payment Guarantee;
(xvi) the Finco Payment Guarantee;
(xvii) the Parent Performance Guarantee;
(xviii) the Issuer Security Documents;
(xix) each FleetCo Deed of Charge;
(xx) the Liquidation Agency Agreement;
(xxi) the Issuer Security Power of Attorney;
(xxii) the Issuer Spain TRO Declaration of Trust;
(xxiii) the Fee Letters;
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(xxiv) the Lessor Power of Attorney;
(xxv) each FleetCo Security Power of Attorney;
(xxvi) the Issuer Security Power of Attorney;
(xxvii) the VFN Funding Agreement; and
(xxviii) any other Transaction Documents expressed to be governed by English law
and approved by the Transaction Agent.
“Equivalent Rating Agency” means each of Fitch, Moody’s and S&P.
“Equivalent Rating Agency Rating” means, with respect to any Equivalent Rating
Agency and any Person as of any date of determination, the Relevant Rating by
such Equivalent Rating Agency with respect to such Person as of such date.
“Estimated Lease Expiration Date” has the meaning given to it in paragraph 5,
part 2, annex 1 to schedule 1 of the Master German Fleet Purchase Agreement.
“Estimated Lease Term” means, in relation to any relevant Vehicle leased under
the Master German Fleet Lease Agreement, the period from (and including) the
relevant Lease Commencement Date to (and including) the Estimated Lease
Expiration Date.
“Estimated Sales Price” means, in respect of a Non-Programme Vehicle in Germany,
the expected Net Book Value of such a Vehicle as calculated on the Estimated
Lease Expiration Date or, in the event that the Lease Expiration Date of such
Vehicle falls prior to the Estimated Lease Expiration Date, the Net Book Value
of such Vehicle on the Lease Expiration Date.
“EU Insolvency Regulation” means Council Regulation (EC) No. 1346/2000 of 29 May
2000.
“EURIBOR” means, in relation to any Senior Advance:
(a) the applicable Screen Rate; or
(b) (if no Screen Rate is available for the Senior Advance Interest Period of
that Senior Advance Loan) the Reference Bank Rate,
as of 10:00 a.m. (Paris time) on the Interest Determination Date. If any such
applicable Screen Rate or Reference Bank Rate is below zero, EURIBOR will be
deemed to be zero.
“Euro”, “euro”, “€” and “EUR” each means the lawful currency of the member
states of the European Union that adopt the single currency in accordance with
the Treaty of Lisbon amending the Treaty on European Union and the Treaty
establishing the European Community (signed at Lisbon on 13 December 2007).
“Euro Equivalent” means, in relation to an amount denominated or expressed in
any currency other than Euro, the equivalent thereof in Euro calculated at the
Transaction Agent’s spot rate of exchange as at the relevant date of
determination.
“Event of Default” means, in relation to any Relevant Person, the occurrence of
(a) the Relevant Person fails to make any payment payable by it under any
Transaction Document when due in the currency and in the manner specified in the
relevant Transaction Document except:
31
(i) technical failure:
(a) in the case of Dutch FleetCo, Spanish Branch, Spanish Opco, Italian Opco,
French Opco, Italian FleetCo, French FleetCo and the FCT, where such failure is
due to technical reasons and such default is remedied by Spanish Opco, Italian
Opco, French Opco, French FleetCo, the FCT or Italian FleetCo (as applicable) or
(in respect of Spanish Opco) the Spain Repayment Option, (in respect of Italian
Opco or Italian FleetCo) the Italy Repayment Option or, (in respect of French
Opco, French FleetCo or the FCT) the France Repayment Option is, in each case,
exercised within 5 Business Days of the occurrence of such failure; and
(b) in the case of the Central Servicer, German Opco, Dutch Opco, Dutch
FleetCo or the Issuer, where such failure is due to technical reasons and such
default is remedied by the Central Servicer, German Opco, Dutch Opco, Dutch
FleetCo or the Issuer (as applicable) within 5 Business Days of the occurrence
of such failure;
(ii) voluntary non-payment: in the case of Italian Opco, Spanish Opco, Dutch
Opco, French Opco, French FleetCo, the FCT and Italian FleetCo, where such
failure has occurred while a Voluntary Insolvency Event is continuing in respect
of such Opco or such FleetCo and such default is remedied within 2 Business Days
or (in respect of Spanish Opco) the Spain Repayment Option or (in respect of
Italian Opco or Italian FleetCo) the Italy Repayment Option or (in respect of
French Opco, French FleetCo or the FCT) the France Repayment Option is, in each
case, exercised within 2 Business Days of such failure;
(iii) involuntary non-payment: in the case of Italian Opco, Spanish Opco,
Dutch Opco, French Opco, French FleetCo or the FCT and Italian FleetCo, where
such failure has occurred while an Involuntary Insolvency Event is continuing in
respect of such Opco or Italian FleetCo and such default is remedied within 10
Business Days or (in respect of Spanish Opco) the Spain Repayment Option or (in
respect of Italian Opco or Italian FleetCo) the Italy Repayment Option or (in
respect of French Opco, French FleetCo or the FCT) the France Repayment Option
is, in each case, exercised within 10 Business Days of such failure;
(iv) other non-payment:
(a) in the case of any Relevant Person, where such default is remedied within
5 Business Days;
A.
in the case of Dutch FleetCo, where such failure relates to payment of interest
payable by it under a FleetCo Advance under (I) the FleetCo Spanish Facility
Agreement and such default is remedied within 5 Business Days, provided that
such non-payment results directly from a non-payment under this paragraph
(iv) by Spanish Opco or the Central Servicer to Dutch FleetCo; (II) the FleetCo
German Facility Agreement and such default is remedied within 5 Business Days,
provided that such non-payment results directly from a non-payment under this
paragraph (iv) by German Opco or the Central Servicer to Dutch FleetCo; (III)
the FleetCo Dutch Facility
32
(iv) by Dutch Opco or the Central Servicer to Dutch FleetCo;
B. in the case of Italian FleetCo, where such failure relates to payment of
interest payable by it under a FleetCo Advance under the FleetCo Italian
Facility Agreement and such default is remedied or the Italy Repayment Option is
exercised, in each case, within 5 Business Days, provided that such non-payment
results directly from a non-payment under this paragraph (iv) by Italian Opco to
Italian FleetCo;
C. in the case of French FleetCo, where such failure relates to payment of
interest payable by it under a FleetCo Advance under the FleetCo French Facility
(iv) by French Opco to French FleetCo;
D. in the case of the FCT, where such failure relates to payment of interest
payable by it under a VFN Advance under the VFN Funding Agreement and such
default is remedied within 5 Business Days, provided that such non-payment
results directly from a non-payment under this paragraph (iv) by French FleetCo
to the FCT; or
E. in the case of the Issuer where such failure relates to payment of interest
payable under a Senior Advance and such default is remedied within 5 Business
Days, provided that such non-payment results directly from a non-payment under
this paragraph (iv) by Italian FleetCo, the FCT or Dutch FleetCo (as applicable)
to the Issuer; or
(c) principal payments:
F. in the case of Dutch FleetCo, where such failure relates to payment (on any
day other than the Final Maturity Date) of principal payable by it under a
FleetCo Advance under the FleetCo Spanish Facility Agreement, the FleetCo German
Facility Agreement or the FleetCo Dutch Facility Agreement, and, for the
avoidance of doubt, a failure to pay such principal on the Final Maturity Date
shall be an “Event of Default”;
G. in the case of Italian FleetCo, where such failure relates to payment (on
any day other than the Final Maturity Date) of principal payable by it under a
FleetCo Advance under the FleetCo Italian Facility Agreement and, for the
H. in the case of French FleetCo, where such failure relates to payment (on
FleetCo Advance under the FleetCo French Facility Agreement and, for the
33
I. in the case of the FCT, where such failure relates to payment (on any day
other than the Final Maturity Date) of principal payable by it under a VFN
Advance under the VFN Funding Agreement and, for the avoidance of doubt, a
failure to pay such principal on the Final Maturity Date shall be an “Event of
Default”; or
J. in the case of the Issuer, where such failure relates to payment (on any
day other than the Final Maturity Date) of principal payable under a Senior
Advance and, for the avoidance of doubt, a failure to pay such principal on the
Final Maturity Date shall be an “Event of Default”;
(b) any representation or warranty made by the Relevant Person pursuant to any
Transaction Document or in any notice or other document, certificate or
statement delivered by it pursuant hereto or in connection herewith is or proves
to have been incorrect or misleading in any material respect when made and:
(i) in the case of Spanish Opco, Italian Opco, Italian FleetCo, French Opco,
French FleetCo and the FCT, such breach is not remedied within 20 Business Days
French FleetCo, French Opco and the FCT) the France Repayment Option is, in each
case, not exercised within 20 Business Days; and
(ii) in the case of the Issuer, Dutch FleetCo, Central Servicer, Dutch Opco
and German Opco, such breach is not remedied within 20 Business Days, provided
that such breach of representation or warranty is capable of being remedied;
(c) the Relevant Person fails duly to perform or comply with any of its material
obligations under any of the Transaction Documents to which it is a party (other
than those referred to in paragraphs (a) and (b) above and paragraph (h) and
paragraph (i) below) and:
French FleetCo and the FCT, such failure to perform or comply is not remedied
within 20 Business Days or (in respect of Spanish Opco) the Spain Repayment
Option or (in respect of Italian Opco or Italian FleetCo) the Italy Repayment
Option or (in respect of French Opco, French FleetCo or the FCT) the France
Repayment Option is, in each case, not exercised within 20 Business Days; and
(ii) in the case of the Issuer, Dutch FleetCo, the Central Servicer, Dutch
Opco and German Opco, such failure to perform or comply is not remedied within
20 Business Days, provided that such failure is capable of being remedied;
(d) an Insolvency Event occurs in respect of the Relevant Person (except the
FCT) and, in the case of Italian Opco, Spanish Opco, French Opco and Dutch Opco,
Italian FleetCo, French FleetCo and Dutch FleetCo, such Insolvency Event is
continuing and (in respect of Spanish Opco) the Spain Repayment Option and (in
respect of Italian Opco or Italian FleetCo) the Italy Repayment Option and (in
(as applicable) has, in each case, not been exercised within 10 Business Days
from the occurrence thereof;
(e)
at any time: (1) it is or becomes unlawful or contrary to law or regulation in
any applicable jurisdiction for the Relevant Person to perform or comply with
any or all of its obligations under the Relevant Transaction Documents; (2) any
of the obligations of the Relevant
34
Person under the Relevant Transaction Documents are not or cease to be legal,
valid and binding; or (3) any of the terms of the Relevant Transaction Documents
or any part thereof are not or cease to be in full force and effect or
enforceable in accordance with its terms or any party to such Transaction
Documents shall so assert in writing;
(f) the Security purported to be granted to the Issuer Security Trustee or
FleetCo Security Agent under the Security Documents is not binding on or
enforceable against the Issuer or the relevant FleetCo or effective to create
the Security with the priority intended to be created by it except if:
(i) in the case of Security purported to be granted by Dutch FleetCo and where
the relevant Security Document is expressed to be governed by Spanish law, such
Default is remedied or the Spain Repayment Option is exercised, in each case,
within 10 Business Days of the date of occurrence of such Default;
(ii) in the case of Security purported to be granted by Italian FleetCo and
where the relevant Security Document is expressed to be governed by Italian law,
such Default is remedied or the Italy Repayment Option is exercised, in each
case, within 10 Business Days of the date of occurrence of such Default; and
(iii) in the case of security purported to be granted by French FleetCo and
where the relevant Security Document is expressed to be governed by French law,
such Default is remedied or the France Repayment Option is exercised in each
case, within 10 Business Days from the date of occurrence or such Default;
(g) any event or circumstance occurs which would have a Material Adverse Effect
on:
(i) Dutch FleetCo;
(ii) French FleetCo;
(iii) the FCT, except if such event or circumstance is remedied within 10
Business Days of its occurrence or the France Repayment Option is exercised
within 10 Business Days from the date of its occurrence;
(iv) Italian FleetCo, except if such event or circumstance is remedied within
10 Business Days of its occurrence or the Italy Repayment Option is exercised
within 10 Business Days from the date of its occurrence; and
(v) the Issuer;
(h) breach of the Issuer Borrowing Base Test and the Country Asset Value Test:
(i) a breach of the Country Asset Value Test in respect of Spain and such
breach continues for a period of at least 5 Business Days or the Spain Repayment
Option is not exercised within 5 Business Days from the date of such breach;
(ii) in the case of Dutch FleetCo, a breach of the Country Asset Value Test in
respect of Germany or The Netherlands and such breach continues for a period of
at least 5 Business Days from the date of such breach;
(iii) in the case of French FleetCo, a breach of the Country Asset Value Test
in respect of France and such breach continues for a period of at least 5
Business Days or the France Repayment Option is not exercised within 5 Business
Days from the date of such breach;
35
(iv) in the case of Italian FleetCo, a breach of the Country Asset Value Test
in respect of Italy and such breach continues for a period of at least 5
Business Days or the Italy Repayment Option is not exercised within 5 Business
Days from the date of such breach; and
(v) in the case of the Issuer, a breach of the Issuer Borrowing Base Test and
such breach continues for a period of at least 5 Business Days from the date of
such breach; and
(i) the amount of the Issuer Reserves is less than the Issuer Reserve Required
Amount and such shortfall continues for a period of at least 3 Business Days.
“Excess Advance Proportion Amount” means, on a Reporting Date or Intra-Month
Reporting Date on which such amount is calculated, an amount equal to the sum
of:
(i) an amount the higher of:
(a) the aggregate amount of all outstanding FleetCo Advances made under the
FleetCo Spanish Facility Agreement less the product of:
(x) the aggregate amount of all outstanding FleetCo Advances made under the
FleetCo German Facility Agreement, the FleetCo Italian Facility Agreement, the
FleetCo Spanish Facility Agreement, the FleetCo Dutch Facility Agreement and the
FleetCo French Facility Agreement; and
(y) the maximum percentage provided for in paragraph (i) of the definition of
“Advance Proportion Limit”, or
(b) zero;
(ii) an amount the higher of:
FleetCo Italian Facility Agreement less the product of:
(y) the maximum percentage provided for in paragraph (ii) of the definition of
(iii) an amount the higher of:
FleetCo Italian Facility Agreement and the FleetCo Spanish Facility Agreement
less the product of:
(y) the maximum percentage provided for in paragraph (iii) of the definition
of “Advance Proportion Limit”, or
36
(b) zero,
provided that, for the purposes of calculating Excess Advance Proportion Amount
on the relevant Reporting Date or Intra-Month Reporting Date, the aggregate
amount of all outstanding FleetCo Advances shall include the aggregate of the
FleetCo Advance amounts set out in all FleetCo Advance Drawdown Notices
delivered on the Information Date or the Intra-Month Information Date
immediately following such Reporting Date or Intra-Month Reporting Date.
“Excess Concentration Amount” means, on any date, and in respect of all limits
included in the definition of “Concentration Limit” (without double counting),
the aggregate of all the Relevant Excess Concentration Amounts on such date.
“Excess Damage Charges” means, in relation to a Programme Vehicle, the amount
charged or deducted from the Vehicle Manufacturer Repurchase Price by the
relevant Vehicle Manufacturer or Vehicle Dealer, where applicable, in accordance
with the relevant Vehicle Manufacturer Buy-Back Agreement or the Vehicle Dealer
Buy-Back Agreement (as applicable) due to (a) damage over a prescribed limit,
(b) if applicable, damage not subject to a prescribed limit (c) missing
equipment, and (d) any other penalty that may be imposed by the relevant Vehicle
Manufacturer or Vehicle Dealer pursuant to the relevant Vehicle Manufacturer
Buy-Back Agreement and/or Vehicle Dealer Buy-Back Agreement in each case at the
time that such Vehicle is turned back to such Vehicle Manufacturer or Vehicle
Dealer, as applicable, or such person’s agent for repurchase or auction pursuant
to the relevant Vehicle Manufacturer Buy-Back Agreement and/or Vehicle Dealer
Buy-Back Agreement.
“Excess Mileage Charges” means, in relation to a Programme Vehicle, an amount
which may be charged by the relevant Vehicle Manufacturer or Vehicle Dealer or
deducted from the Vehicle Manufacturer Repurchase Price in accordance with the
relevant Vehicle Manufacturer Buy-Back Agreement or the Vehicle Dealer Buy-Back
Agreement (as applicable) by reason of the recorded mileage of such Vehicle
exceeding a prescribed limit at the time that such Vehicle is turned back to the
Vehicle Manufacturer or Vehicle Dealer.
“Excess Payment” has the meaning given to it in clause 14 (Fees, Traffic
Penalties and Fines) of the Master German Fleet Lease Agreement, clause 15
(Fees, Traffic Penalties and Fines) of the Master Dutch Fleet Lease Agreement,
clause 16 (Fees, Traffic Penalties and Fines) of the Italian Master Lease
Agreement and clause 17 (Fees, Traffic Penalties and Fines) of each of the
Spanish Master Lease Agreement and the French Master Lease Agreement.
“Excess Swap Collateral” means an amount equal to the value of the collateral
(or the applicable part of any collateral) provided by any Issuer Hedge
Counterparty to the Issuer in respect of the relevant Issuer Hedge
Counterparty’s obligations to transfer collateral to the Issuer under the
relevant Issuer Hedging Agreement, which is in excess of that Issuer Hedge
Counterparty’s liability to the Issuer under the relevant Issuer Hedging
Agreement as at the date of termination of the transaction under the relevant
Issuer Hedging Agreement, or which the relevant Issuer Hedging Counterparty is
otherwise entitled to have returned to it under the terms of the relevant Issuer
Hedging Agreement.
“Excluded Payments” means, in relation to a Programme Vehicle or a Non-Programme
Vehicle, any amounts paid into the relevant FleetCo Bank Account:
(a) which constitutes any rebates (if any) and any bonus (if any) for the
purchase of such Vehicle, provided that neither such rebates nor bonus
constitute the Capitalised Cost of any Vehicle or constitute any no-return bonus
if such amount is taken into account for the purposes of clause 30.1 of the
Master Dutch Fleet Lease Agreement and of the Italian Master Lease Agreement and
of clause 31.1 of each of the French Master Lease Agreement and the Spanish
Master Lease Agreement;
37
(b) in reimbursement for repair work performed on such Vehicle by the Lessee (at
its own cost), where such work is covered by warranty;
(c) in relation to insurance proceeds paid in respect of a Vehicle which has
been purchased by Opco from FleetCo (including, without limitation, a Casualty);
(d) in respect of a Vehicle which is owned by Opco;
(e) in error to FleetCo to which FleetCo is not contractually entitled;
(f) in respect of a Dutch VAT Refund;
(g) to Spanish Opco in reimbursement of the Tax on Motor Vehicle (as defined in
the Spanish Servicing Agreement) and in relation to Tax on Certain Means of
Transport (TMT), in each case, re-invoiced by Dutch FleetCo, Spanish Branch to
the relevant Vehicle Manufacturer and paid by the relevant Vehicle Manufacturer
to Dutch FleetCo, Spanish Branch (provided that Spanish Opco has paid such Tax
on Motor Vehicle or, as the case may be, such Tax on Certain Means of Transport
to the relevant Tax authorities); and
(h) in relation to (x) any VAT Amount, (y) any Third Party Purchase Price VAT
Amount and (z) the positive difference between amount of Vehicle Manufacturer
Repurchase Price (excluding VAT) and the Net Book Value with respect to the
Vehicles for which the Vehicle Manufacturer Repurchase Price is paid pursuant to
clause 6.3 and/or clause 6.5 of the Master German Fleet Purchase Agreement.
“Excluded Vehicle Manufacturer Receivables” means, at any time and in relation
to Dutch FleetCo in Spain, Dutch FleetCo in Germany, Dutch FleetCo in The
Netherlands, Italian FleetCo in Italy or French FleetCo in France, any Vehicle
Manufacturer Receivables in respect of which a Vehicle Manufacturer Event of
Default has occurred.
“Execution or Distress Event” means any execution, expropriation, attachment,
sequestration or distress is levied against or affects, or an encumbrancer takes
possession of, the whole or any part of the property, undertaking or assets of
any person, the aggregate value of which property, undertaking or assets of all
such person and the same is not discharged within 10 Business Days of such
execution, expropriation, attachment, sequestration, levy or taking of
possession.
“Existing Senior Noteholder” has the meaning given to it in clause 21.4
(Transfers by Senior Noteholders; Accession of further Senior Noteholders) of
the Issuer Note Issuance Facility Agreement.
“Expected Maturity Date” means six months after the Scheduled Amortisation
Commencement Date.
“Extraordinary Depreciation Amount” means, with respect to all Vehicles in a
given Vehicle Fleet:
(i) which have been damaged (other than as a result of ordinary wear and tear),
any additional extraordinary depreciation related to such damage;
(ii) which have been stolen or which have not been returned by the relevant
customers, any provision or any additional extraordinary depreciation related to
such Vehicles; and
(iii) in respect of any Vehicle, any provision or any additional extraordinary
depreciation reflecting the expected loss or decrease in the Net Book Value of
such Vehicles.
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“Facility” means, as the context requires, each of the Issuer Note Issuance
Facility Agreement, the Issuer Subordinated Facility Agreement, the FleetCo
German Facility Agreement, the FleetCo Dutch Facility Agreement, the FleetCo
Italian Facility Agreement, the FleetCo French Facility Agreement and/or the
FleetCo Spanish Facility Agreement.
“FATCA” means:
(a) sections 1471 to 1474 of the Code or any associated regulations or other
official guidance;
(b) any treaty, law, regulation or other official guidance enacted in any other
jurisdiction, or relating to an intergovernmental agreement between the US and
any other jurisdiction, which (in either case) facilitates the implementation of
paragraph (a) above; or
(c) any agreement pursuant to the implementation of paragraph (a) or (b) above
with the US Internal Revenue Service, the US government or any governmental or
taxation authority in any other jurisdiction.
“FATCA Application Date” means:
(a) in relation to a “withholdable payment” described in section 1473(1)(A)(i)
of the Code (which relates to payments of interest and certain other payments
from sources within the US), 1 January 2014;
(b) in relation to a “withholdable payment” described in section 1473(1)(A)(ii)
of the Code (which relates to “gross proceeds” from the disposition of property
of a type that can produce interest from sources within the US), 1 January 2017;
or
(c) in relation to a “passthru payment” described in section 1471(d)(7) of the
Code not falling within paragraph (a) or (b) above, 1 January 2017,
or, in each case, such other date from which such payment may become subject to
a deduction or withholding required by FATCA as a result of any change in FATCA
after the Signing Date.
“FATCA Deduction” means a deduction or withholding from a payment under a
Transaction Document required by FATCA.
“FATCA Exempt Party” means a Party that is entitled to receive payments free
from any FATCA Deduction.
“FATCA FFI” means a foreign financial institution as defined in section
1471(d)(4) of the Code which, if any Issuer Secured Creditor or FleetCo Secured
Creditor is not a FATCA Exempt Party, could be required to make a FATCA
Deduction.
“FCT” means FCT CarFin, a fonds commun de titrisation jointly established by the
FCT Management Company and the FCT Custodian on the FCT Establishment Date and
governed by Articles L. 214-167 to L. 214-186 and Articles R. 214-217 to R.
214-235 of the French Code monétaire et financier and the FCT Regulations.
“FCT Account” means the segregated EUR denominated bank account opened on behalf
of the FCT with the FCT Custodian, the details of which are set out in clause
24.1 of the FCT Regulations.
“FCT Available Funds” means an amount calculated on each Issuer Determination
Date, without double counting:
(a) all amounts standing to the credit of the FCT Account (excluding the amounts
which are proceeds of any VFN Advance made to the FCT); and
39
(b) all amounts received by the FCT, including from French FleetCo under the
FleetCo French Facility Agreement.
“FCT Custodian” means CACEIS Bank France acting as custodian for the FCT and as
account bank for the FCT.
“FCT Establishment Date” means the date on which the FCT is established, such
date falling on the Initial French Funding Date.
“FCT Event of Default” means any of the events set out in schedule 4 part 4 to
the Framework Agreement.
“FCT Management Company” means Eurotitrisation, a société anonyme incorporated
under the laws of France under registration number 352 458 368 RCS Bobigny,
having its registered office at 41, rue Delizy 93500, Pantin, France, duly
authorised by the Autorité des Marchés Financiers for the management of
securitisation funds, and any successor or replacement thereof.
“FCT Minimum Required Re-Selling Price” means the purchase price payable to the
FCT by any acquirer of the FleetCo French Loan Receivables and the FleetCo
French Related Security under clause 6 of the FCT Transfer and Servicing
Agreement which provides the FCT with sufficient funds, together with the FCT’s
temporarily available cash (if any), to pay all amounts due in respect of
principal, interest and other amounts due to the FCT Noteholder and the FCT
Residual Unitholder and repay all sums due by the FCT under the Issuer
Transaction Documents, if any.
“FCT Noteholder” means the registered holder of the Variable Funding Note as
recorded in the FCT Register.
“FCT Offer to Sell” means the offer issued by the FCT Management Company, acting
on behalf of the FCT, in accordance with clause 6 of the FCT Transfer and
Servicing Agreement to the relevant potential purchaser in respect of the
purchase of any FleetCo French Loan Receivables from the FCT.
“FCT Payment Date” means each FleetCo Advance Repayment Date and each Settlement
Date.
“FCT Priority of Payments” means the priority of payments in part 7 (FCT
Agreement.
“FCT Refinancing Fee” means a refinancing fee of an amount equal to the
aggregate amount of all fees, costs and expenses specified in clause 25 (FCT
Fees) of the FCT Regulations (net of the aggregate amount of any taxes) due and
payable by the French FleetCo (in its capacity as French FleetCo) to the French
Intermediary Bank in accordance with the relevant provisions of the FleetCo
French Facility Agreement in order to refinance all the relevant fees, costs and
expenses payable to the FCT Management Company, the FCT Custodian, the FCT
Servicer, the FCT Statutory Auditor and the FCT Registrar in accordance with the
FCT Regulations and the FCT Transfer and Servicing Agreement.
“FCT Register” means the register held by the FCT Registrar in relation to the
Variable Funding Notes and the FCT Residual Units issued by the FCT, pursuant to
and in accordance with the VFN Funding Agreement and the FCT Regulations.
“FCT Registrar” means CACEIS Corporate Trust.
“FCT Registrar Agreement” means the agreement entered into on 21 May 2014
between the FCT Registrar, the FCT Custodian and the FCT Management Company
(acting on behalf of the FCT), as amended, varied or supplemented from time to
time.
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“FCT Regulations” means the regulations governing the FCT entered into on 21 May
2014 between the FCT Management Company and the FCT Custodian in accordance with
Articles L.214-167 to L.214-189 and Articles R.214-217 to R.214-232-I of the
French Code monétaire et financier as amended and supplemented from time to
time.
“FCT Residual Unitholder” means the holder of the FCT Residual Units from time
to time which will be CA CIB on the FCT Establishment Date.
“FCT Residual Units” mean the two residual units issued by the FCT on or before
the FCT Initial Transfer Date which will be subscribed by CACIB.
“FCT Residual Units Purchase Option” means the call option granted by the FCT
Residual Unitholder to Finco under paragraph 2 of the FCT Residual Units
Subscription Form.
“FCT Residual Units Subscription Form” means the subscription form attached as
schedule 1 to the FCT Regulations.
“FCT Servicer” means CA CIB and any successor or replacement thereof.
“FCT Statutory Auditor” has the meaning given to it in the FCT Regulations.
“FCT Transaction Documents” means:
(a) the FCT Regulations;
(b) the FCT Transfer and Servicing Agreement; and
(c) the FCT Registrar Agreement.
“FCT Transfer and Servicing Agreement” means the transfer and servicing
agreement entered into on or about the French Accession Date between, inter
alios, French FleetCo, the FCT (represented by the Management Company), the FCT
Custodian the French Intermediary Bank and the FCT Servicer.
“FCT Transfer Date” means the date falling on the Initial French Funding Date.
“FCT Transfer Deed” means the transfer deed (acte de cession de créances) in the
form of Schedule 1 to the FCT Transfer and Servicing Agreement, to be delivered
on the FCT Transfer Date by the French Intermediary Bank to the FCT Management
Company, acting in the name and on behalf of the FCT in accordance with the
relevant provisions of the FCT Transfer and Servicing Agreement.
“FCT Transfer Price” means, in relation to the FCT Transfer and Servicing
Agreement and the FCT Regulations, the transfer price in respect of the FleetCo
French Loan Receivables to be acquired by the FCT from the French Intermediary
Bank on the FCT Transfer Date to be calculated and paid by way of instalments in
accordance with the provisions of the FCT Transfer and Servicing Agreement.
“Fee Letters” means the Transaction Agent Fee Letter, the Senior Noteholder Fee
Letters and any other document designated by the Transaction Agent as a “Fee
Letter”.
“Final Maturity Date” means 20 months after the Expected Maturity Date.
“Financial Indebtedness” means (without double counting) any indebtedness in
relation to or arising under or in connection with:
(a) any money borrowed (including any overdraft);
41
(b) any amount raised pursuant to any note purchase facility or the issue of
debenture, bond, note or loan stock or any similar instrument;
(c) any amount raised by acceptance under any acceptance credit facility or any
dematerialised equivalent;
(d) any receivable sold or discounted (other than any receivables to the extent
they are sold on a non-recourse basis);
(e) the purchase price of any asset or service to the extent payable by the
Issuer or a FleetCo, (as applicable) after the time of sale or delivery to such
person, where the deferred payment is arranged as a method of raising finance
(other than, in respect of a FleetCo or the Issuer, any deferred payment or
grace period granted by a Vehicle Manufacturer or Vehicle Dealer in relation to
the acquisition of the Vehicles);
(f) the sale price of any asset or service to the extent paid to the Issuer, a
FleetCo, (as applicable) before the time of sale or delivery by the Issuer, a
FleetCo, (as applicable) liable to effect that sale or delivery, where the
advance payment is primarily arranged as a method of raising finance;
(g) any lease, hire purchase agreement, credit sale or conditional sale
agreement in each case which would be treated as financial liabilities in
accordance with Applicable Accounting Principles;
(h) any derivative transaction entered into in connection with protection
against or benefit from fluctuation in any currency, rate or price (and, when
calculating the value of any derivative transaction, only the marked to market
value shall be taken into account);
(i) shares which are expressed to be redeemable;
(j) any amount raised under any other transaction (including any forward sale or
purchase agreement) having the commercial effect of a borrowing;
(k) any counter-indemnity obligation in respect of a guarantee, indemnity, bond,
standby or documentary letter of credit or any other instrument issued by a bank
or financial institution; and
(l) the amount of any liability in respect of any guarantee or indemnity for any
of the items referred to in paragraphs (a) to (k) above.
“Financial Institution” means a bank or credit institution whose activities
include purchasing debt securities or other financial assets and lending monies,
and includes each Initial Financial Institution Senior Noteholder (excluding,
for the avoidance of doubt, any Conduits).
“Finco” means Avis Finance Company Limited.
“Finco Compliance Certificate” means the compliance certificate substantially in
the form set out in part 3 (Form of Finco Compliance Certificate) of schedule 7
to the Framework Agreement signed by Finco and delivered by Finco.
“Finco Guarantor Event of Default” means any of the following:
(a) the occurrence of an Opco Change of Control, provided that if (1) any
(as applicable) Spanish Opco or Italian Opco or French Opco and (2) the Spain
Repayment Option (in respect of Spanish Opco) or the Italy Repayment Option (in
respect of Italian Opco) or the France Repayment Option (in respect of French
Opco) is exercised within 30 days of such cessation, there shall not be any
Finco Guarantor Event of Default;
42
date, there shall not be a “Finco Guarantor Event of Default” under this
paragraph (b);
Agreement or Replacement Credit Agreement that is not waived pursuant to the
Default” occurs where the Relevant Person is Finco, its successor or
replacement; and
(f) failure by Finco or its successor or replacement to comply with any of its
payment obligations under the Finco Payment Guarantee.
“Finco Payment Guarantee” means the irrevocable guarantee and indemnity from
Finco in favour of the FleetCo Security Agent (for and on behalf of itself and
the other FleetCo Secured Creditors) in respect of: (i) the payment obligations
of each Opco under the Transaction Documents to which such Opco is a party and
(ii) the payment obligations of each FleetCo under the Transaction Documents to
which such FleetCo is a party.
“Fitch” means Fitch Rating Ltd. or any successor to its European rating
business.
“FleetCo” means each of Dutch FleetCo, French FleetCo and Italian FleetCo, as
applicable and together, the “FleetCos”.
“FleetCo Account Bank” means, as applicable, the Italian FleetCo Account Bank,
the French FleetCo Account Bank, the Dutch FleetCo German Account Bank, the
Dutch FleetCo Dutch Account Bank or the Dutch FleetCo Spanish Account Bank.
“FleetCo Account Bank Agreement” means, as applicable, the Spanish Account Bank
Agreement, the Dutch Account Bank Agreement, the German Account Bank Agreement,
the French Account Bank Agreement or the Italian Account Bank Agreement.
“FleetCo Account Bank Termination Event” means an Italian FleetCo Account Bank
Termination Event, a French FleetCo Account Bank Termination Event, a Dutch
FleetCo German Account Bank Termination Event, a Dutch FleetCo Spanish Account
Bank Termination Event, a Dutch FleetCo Dutch Account Bank Termination Event or
any of them.
“FleetCo Advance” means a FleetCo German Advance, a FleetCo Italian Advance, a
FleetCo French Advance, a FleetCo Dutch Advance and a FleetCo Spanish Advance
(or any of them).
“FleetCo Advance Drawdown Date” means the Original FleetCo Advance Drawdown Date
or the Deemed FleetCo Advance Drawdown Date (as the case may be).
“FleetCo Advance Drawdown Notice” means a drawdown notice delivered by or on
behalf of the relevant FleetCo to the Issuer or, in respect of French FleetCo,
to the French Intermediary Bank, pursuant to which the relevant FleetCo
irrevocably requests one or more funding of FleetCo Advances under the relevant
FleetCo Facility Agreement and substantially in the form set out in the
Framework Agreement.
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“FleetCo Advance Interest Amount” has the meaning given to it in clause 4.1
(Payment of Interest) of the FleetCo German Facility Agreement, the FleetCo
Italian Facility Agreement, the FleetCo Dutch Facility Agreement, the FleetCo
French Facility Agreement and the FleetCo Spanish Facility Agreement (as
applicable).
“FleetCo Advance Interest Period” means, in respect of a FleetCo Advance:
(i) the first (and, if applicable, only) period commencing from (and including)
the FleetCo Advance Drawdown Date of such FleetCo Advance up to the earlier of
(a) the relevant FleetCo Advance Repayment Date or (b) the date falling on (but
excluding) the next Settlement Date; and
(ii) any subsequent period commencing from (and including) such Settlement Date
in paragraph (i)(b) above to (but excluding) the relevant FleetCo Advance
Repayment Date.
“FleetCo Advance Repayment Date” means, in respect of a FleetCo Advance, the
date of repayment of such advance.
“FleetCo Advances Proportion” means the FleetCo German Advances Proportion, the
FleetCo Dutch Advances Proportion, the FleetCo French Advances Proportion, the
FleetCo Italian Advances Proportion, the FleetCo Spanish Advances Proportion,
the Dutch FleetCo Level German Advances Proportion, the Dutch FleetCo Level
Dutch Advances Proportion and the Dutch FleetCo Level Spanish Advances
Proportion, as applicable.
“FleetCo Available Funds” means an amount calculated on each FleetCo
Determination Date in respect of each Country, the aggregate of, in each case
without double counting:
(a) the rental income received from the relevant Opco under the Master Lease
Agreement(s) to which it is a party;
(b)
(i) (in respect of the Vehicle Fleet in Spain, Italy, France and The
Netherlands) sale proceeds received from Vehicle Manufacturers and/or Vehicle
Dealers (in the case of Programme Vehicles) as well as Vehicle Dealers and other
third parties (in the case of Non-Programme Vehicles) in relation to the
vehicles which Dutch FleetCo, Spanish Branch, Italian FleetCo, French FleetCo or
Dutch FleetCo (as applicable) sells along with any non-return bonus paid to the
relevant FleetCo and included in the purchase price consideration referred to in
clause 30.1 of the Master Dutch Fleet Lease Agreement and the Italian Master
Lease Agreement and clause 31.1 of the Spanish Master Lease Agreement and the
French Master Lease Agreement; and
(ii) (in respect of the Vehicle Fleet in Germany) sale proceeds received from
Vehicle Manufacturers and/or Vehicle Dealers (in the case of Programme Vehicles)
as well as Vehicle Dealers and other third parties (in the case of Non-Programme
Vehicles) in relation to the vehicles which German Opco sells, excluding (x) the
VAT Amount, (y) the Third Party Purchase Price VAT Amount and (z) the positive
difference between amount of Vehicle Manufacturer Repurchase Price (excluding
VAT) or the Third Party Purchase Price (excluding VAT) and the Net Book Value
with respect to the Vehicles for which the Vehicle Manufacturer Repurchase Price
or the Third Party Purchase Price (excluding VAT) is paid pursuant to clause 6.3
and/or clause 6.5 of the Master German Fleet Purchase Agreement;
44
(c) in relation to:
(i) Dutch FleetCo, Spanish Branch receipts of VAT Receivables;
(ii) Italian FleetCo, any amount of VAT received by it (or to which it is
entitled under the Italian VAT Sharing Agreement) which is not used by Italian
FleetCo to (A) repay a VAT Loan Advance pursuant to clause 8.1.2(i) of the VAT
Loan Agreement or (B) pay Italian Opco pursuant to clause 6(b) of the Italian
VAT Sharing Agreement; and
(iii) French FleetCo receipts of VAT Receivables; and
(d) other cash standing to the credit of (in respect of Germany) the Dutch
FleetCo German Transaction Account, (in respect of Spain) the Dutch FleetCo
Spanish Transaction Account, (in respect of The Netherlands) the Dutch FleetCo
Dutch Transaction Account, (in respect of France) the French FleetCo Transaction
Account and (in respect of Italy) the Italian FleetCo Transaction Account and
the Italian Dedicated Financing Account, in each case, from time to time,
excluding:
(i) the proceeds of any FleetCo Advance made to the relevant FleetCo under the
relevant FleetCo Facility Agreement;
(ii) an amount equal to the Excluded Payments in any such bank account); and
(iii) excluding the amounts in the provisioned items ledger of the relevant
FleetCo in each Country,
provided that:
A. prior to the occurrence of a Rapid Amortisation Event, funds standing to the
credit of the relevant FleetCo Reserve Account would not form part of the
FleetCo Available Funds; and
B. the proceeds set out in (b)(i) above and the moneys standing to the credit of
the Italian Dedicated Financing Account shall be used exclusively by Italian
FleetCo (i) in or towards payment of interest and/or repayment of principal due
in respect of the FleetCo Italian Facility Agreement in accordance with items
(h) and (i) of the Italian FleetCo Pre-Enforcement Priority of Payments and
items (g) and (h) of the Italian FleetCo Post-Enforcement Priority of Payments,
and (ii) in respect of payments to be made or provided for under item (e) of the
Italian FleetCo Pre-Enforcement Priority of Payments and item (d) of the Italian
FleetCo Post-Enforcement Priority of Payments in accordance with clause 6.1.5 of
the FleetCo Italian Facility Agreement.
“FleetCo Back-up Cash Management Agreement” means the back-up cash management
agreement between, among others, the FleetCos and each FleetCo Back-up Cash
Manager.
“FleetCo Back-up Cash Management Services” has the meaning given to it in clause
2.4.1 of the FleetCo Back-up Cash Management Agreement.
“FleetCo Back-up Cash Manager” means the FleetCo Spanish Back-up Cash Manager,
the FleetCo German Back-up Cash Manager, the FleetCo Dutch Back-up Cash Manager,
the FleetCo French Back-up Cash Manager and the FleetCo Italian Back-up Cash
Manager (as applicable).
“FleetCo Back-up Cash Manager Commencement Notice” means a commencement notice
under the FleetCo Back-up Cash Management Agreement upon whose service the
signing authority of the relevant FleetCo Back-up Cash Manager over the Dutch
FleetCo Spanish Bank
45
Accounts, the Italian Bank Accounts, the Dutch FleetCo German Bank Accounts, the
Dutch FleetCo Dutch Bank Accounts and the French Bank Accounts (as applicable)
shall become operative and upon receipt of which by the relevant FleetCo Back-up
Cash Manager, such FleetCo Back-up Cash Manager shall become responsible for the
services described in clause 2.4 (Scope of Services) of the FleetCo Back-up Cash
Management Agreement.
“FleetCo Back-up Cash Manager Termination Event” means any of the termination
events set out under clause 7.2 (Termination) of the FleetCo Back-up Cash
Management Agreement.
“FleetCo Bank Accounts” means the Dutch FleetCo Spanish Bank Accounts, the
Italian Bank Accounts, the French Bank Accounts, the Dutch FleetCo German Bank
Accounts, the Dutch FleetCo Dutch Bank Accounts and the Dutch Bank Account.
“FleetCo Cash Management and Lease Report” means the cash management report and
lease report in respect of each Country provided by the relevant Servicer to the
Transaction Agent on each Reporting Date, substantially in the form set out in
part 2 (Form of FleetCo Cash Management and Lease Report) of schedule 8 (Forms
of Cash Management Reports) to the Framework Agreement and, if amended, in form
and substance satisfactory to the Transaction Agent.
“FleetCo Compliance Certificate” means, in respect of a FleetCo, the compliance
certificate substantially in the form set out in part 2 (Form of FleetCo
Compliance Certificate) of schedule 7 (Forms of Compliance Certificates) to the
Framework Agreement.
“FleetCo Deed of Charge” means:
(i) the Spanish FleetCo Deed of Charge;
(ii) the German FleetCo Deed of Charge;
(iii) the Italian FleetCo Deed of Charge;
(iv) the Dutch FleetCo Deed of Charge; or
(v) the French FleetCo Deed of Charge (as applicable).
“FleetCo Determination Date” means the date falling 5 Business Days before a
Settlement Date.
“FleetCo Dutch Advance” means each advance made by the Issuer to Dutch FleetCo
under the FleetCo Dutch Facility Agreement.
“FleetCo Dutch Advances Proportion” means, on any date on which such calculation
is required, the ratio of:
Facility Agreement;
to
Spanish Facility Agreement;
German Facility Agreement;
Facility Agreement;
46
(iv) the aggregate outstanding FleetCo French Advances under the FleetCo
French Facility Agreement; and
(v) the aggregate outstanding FleetCo Italian Advances under the FleetCo
Italian Facility Agreement,
“FleetCo Dutch Back-up Cash Manager” means Deutsche Bank AG, London Branch and
any successor or replacement thereof appointed under the FleetCo Back-up Cash
Management Agreement.
“FleetCo Dutch Facility Agreement” means a facility agreement between Dutch
FleetCo and the Issuer, the proceeds of which Dutch FleetCo will use to, among
other things, purchase vehicles to comprise its Dutch fleet from manufacturers
and dealers.
“FleetCo Dutch Secured Liabilities” means, in respect of Dutch FleetCo, all
present and future moneys, debts and liabilities due, owing or incurred by Dutch
FleetCo to the Dutch FleetCo Secured Creditors in any manner whatsoever,
including on any current or other account or otherwise, including under or in
connection with any:
(i) Dutch Transaction Dutch Document to which Dutch FleetCo is a party; and
(ii) (subject to clause 2.1 (xxxiv) and (xxxvi) hereof) English Transaction
Document to which Dutch FleetCo is a party,
(in each case, whether alone or jointly, or jointly and severally, with any
other person, whether actually or contingently and whether as principal, surety
or otherwise).
“FleetCo Dutch Security Documents” means (taking account of the fact that
hereof):
(i) (subject to clause 2.1(xxxvi) hereof) the Dutch FleetCo Share Pledge;
(ii) the Dutch Receivables Pledge; and
(iii) the Dutch FleetCo German VAT Pledge.
“FleetCo Enforcement Notice” means a notice delivered by the FleetCo Security
Agent to the relevant FleetCo notifying the relevant FleetCo that it will
enforce the security created under the FleetCo Security Documents and/or take
any other kind of Enforcement Action.
“FleetCo Event of Default” means any event of default as set out in part 2
(FleetCo Events of Default) of schedule 4 (Events of Default) to the Framework
Agreement.
“FleetCo Excess Cash Amount” means, in relation to a FleetCo in a Country, the
amount equal to the amount standing to the credit of any account of any FleetCo,
excluding:
(a) in respect of Italian FleetCo, the amount of all:
(i) the VAT Loan Advances made to Italian FleetCo; and
(ii) the VAT payments received by Italian FleetCo from the sale or disposal of
Vehicles by Italian FleetCo and the VAT payments received by Italian FleetCo
from the lease of Vehicles by Italian FleetCo to Italian Opco which Italian
FleetCo is required to pay to Italian Opco pursuant to clause 6(b) of the
Italian VAT Sharing Agreement;
(b) in respect of Dutch FleetCo in relation to its Vehicle Fleet in The
Netherlands, the amount of all:
47
(i) the VAT Loan Advances made to Dutch FleetCo;
(ii) the VAT payments received by Dutch FleetCo from the sale or disposal of
Vehicles by Dutch FleetCo and the VAT payments received by Dutch FleetCo from
the lease of Vehicles by Dutch FleetCo to Dutch Opco; and
(iii) the Dutch VAT Refunds;
(c) in respect of Dutch FleetCo in relation to its Vehicle Fleet in Germany, the
amounts received by Dutch FleetCo from the Vehicle Manufacturers and Vehicle
Dealers representing:
(i) the positive difference between amount of the Vehicle Manufacturer
(ii) the VAT Amount; and
(iii) the Third Party Purchase Price VAT Amount;
(d) the amounts standing to the credit of the VAT Component and Charge Costs
Component Trust Account;
(e) the amount standing to the credit of:
(i) each FleetCo Reserve Account (if any) in such Country;
(ii) (in respect of Dutch FleetCo in Germany), its provisioned items ledger
and its Excluded Payments Ledger;
(iii) (in respect of Dutch FleetCo in The Netherlands), its provisioned items
ledger and its Excluded Payments Ledger;
(iv) (in respect of Dutch FleetCo in Spain), its provisioned items ledger and
its Excluded Payments Ledger;
(v) (in respect of French FleetCo in France), its provisioned items ledger and
its Excluded Payments Ledger; and
(vi) (in respect of Italian FleetCo in Italy), its provisioned items ledger
and its Excluded Payments Ledger.
“FleetCo Expected Maturity Date” means the Expected Maturity Date.
“FleetCo Facility Agreements” means each of the FleetCo German Facility
Agreement, the FleetCo Italian Facility Agreement, the FleetCo Dutch Facility
Agreement, the FleetCo French Facility Agreement and the FleetCo Spanish
Facility Agreement.
“FleetCo French Advance” means each advance made by the French Intermediary Bank
to French FleetCo under the FleetCo French Facility Agreement.
“FleetCo French Advance Receivables” means each and any receivable of the French
Intermediary Bank towards the French FleetCo (whether existing (créances née),
future (créances futures) or conditional (créances conditionnelles) in respect
of the FleetCo French Advance(s) drawn down, or to be drawn down, by the French
FleetCo under the FleetCo French Facility Agreement, subject to, and in
accordance with, the relevant terms of the FleetCo French Facility Agreement,
including any and all interest accrued thereon.
48
“FleetCo French Advances Proportion” means, on any date on which such
(a) the aggregate outstanding FleetCo French Advances under the FleetCo French
Facility Agreement;
to
(i) the aggregate outstanding FleetCo Italian Advances under the FleetCo
Italian Facility Agreement;
Spanish Facility Agreement;
Facility Agreement;
(v) the aggregate outstanding FleetCo German Advances under the FleetCo German
Facility Agreement,
“FleetCo French Back-up Cash Manager” means Deutsche Bank AG, London Branch or
its replacement or successor as appointed under the FleetCo Back-up Cash
Management Agreement.
“FleetCo French Facility Agreement” means a facility agreement between French
FleetCo and the French Intermediary Bank, the proceeds of which French FleetCo
will use to, among other things, purchase vehicles to comprise its French fleet.
“FleetCo French Facility Security” means the FleetCo French Related Security
granted by French FleetCo in favour of the French Intermediary Bank as a
security for the timely payment of any amount due under the FleetCo French
Facility Agreement.
“FleetCo French Fee and Indemnity Receivables” means each and any receivable of
the French Intermediary Bank towards the French FleetCo, whether existing
(créances née), future (créances futures) or conditional (créances
conditionnelles) which has arisen or will arise from the FleetCo French Facility
Agreement and which does not characterise as a FleetCo French Advance
Receivable. For the avoidance of doubt, any such receivable shall consist in
particular of: (i) any taxes provided for in clause 7 (Tax Gross-up), clause 8
(Tax); (ii) any indemnities (including currency indemnities) provided for in
clause 11 (Borrower’s Indemnities) in each case of the FleetCo French Facility
Agreement; and (iii) any indemnities, taxes, costs and increased payments
provided for in clause 10 (Fees, Costs and Expenses) of the FleetCo French
Facility Agreement.
“FleetCo French Loan Receivables” means together the FleetCo French Advance
Receivables and the FleetCo French Fee and Indemnity Receivables.
“FleetCo French Related Security” means, in respect to the French Transaction
Documents and English Transaction Documents to which the French FleetCo is a
party, any security granted or to be granted from time to time by the French
FleetCo in favour of the French FleetCo Secured Creditors pursuant to the
relevant terms of the FleetCo French Security Documents.
49
“FleetCo French Secured Liabilities” means, in respect of French FleetCo, all
French FleetCo to the French FleetCo Secured Creditors on any current or other
account or otherwise in any manner whatsoever, including under or in connection
with any:
(i) French Transaction Document to which French FleetCo is a party; and
(ii) English Transaction Document to which French FleetCo is a party,
in each case, whether alone or jointly, or jointly and severally, with any other
person, whether actually or contingently and whether as principal, surety or
otherwise.
“FleetCo French Security Documents” means (taking account of the fact that
hereof):
(i) the French Vehicle Pledge Agreement;
(ii) the French Third Party Holding Agreement;
(iii) the French Receivables Security Assignment Agreement;
(iv) the French Business Charge Agreement;
(v) the French Bank Account Pledge Agreement;
(vi) the French Share Pledge Agreement (French Opco); and
(vii) the French Share Pledge Agreement (Golden Shareholder).
“FleetCo German Advance” means each advance made by the Issuer to Dutch FleetCo
under the FleetCo German Facility Agreement.
“FleetCo German Advances Proportion” means, on any date on which such
Facility Agreement;
to
Spanish Facility Agreement;
German Facility Agreement;
Facility Agreement;
Italian Facility Agreement,
50
“FleetCo German Back-up Cash Manager” means Deutsche Bank AG, London Branch and
Management Agreement.
“FleetCo German Facility Agreement” means a facility agreement between Dutch
other things, purchase vehicles to comprise its German fleet from German Opco.
“FleetCo German Secured Liabilities” means, in respect of Dutch FleetCo, all
FleetCo to the German FleetCo Secured Creditors in any manner whatsoever,
connection with any:
(i) German Transaction Document to which Dutch FleetCo is a party;
(ii) (subject to clauses 2.1(xxxiv) and (xxxv) hereof) English Transaction
Document to which Dutch FleetCo is a party; and
(iii) Dutch Transaction Document to which Dutch FleetCo is a party,
or otherwise).
“FleetCo German Security Documents” means (taking account of the fact that
hereof):
(i) the German Account Pledge Agreement;
(ii) the German Receivables Assignment Agreement; and
(iii) the German Security Transfer Agreement.
“FleetCo Holdings” means CarFin Finance Holdings Limited, a private limited
company incorporated in Ireland with registered number 463657 and having its
registered office at 1 Grant’s Row, Lower Mount Street, Dublin 2, Ireland.
“FleetCo Holdings Corporate Services Provider” means Structured Finance
Management (Ireland) Limited or any successor or replacement thereof appointed
under the Issuer and FleetCo Holdings Corporate Services Agreement.
“FleetCo Individual Advance Proportion” means, on any date on which such
calculation is required and in respect of a FleetCo Advance, the ratio of:
(a) the total principal amount made available under such FleetCo Advance on its
FleetCo Advance Drawdown Date; to
(b) the aggregate of the principal amount made available under all outstanding
FleetCo Advances that have the same FleetCo Advance Drawdown Date and the same
FleetCo Advance Repayment Date as such FleetCo Advance,
“FleetCo Italian Advance” means each advance made by the Issuer to Italian
FleetCo under the FleetCo Italian Facility Agreement.
“FleetCo Italian Advances Proportion” means, on any date on which such
51
(a) the aggregate outstanding FleetCo Italian Advances under the FleetCo Italian
Facility Agreement;
to
Italian Facility Agreement;
Spanish Facility Agreement;
Facility Agreement;
Facility Agreement,
“FleetCo Italian Back-up Cash Manager” means Deutsche Bank AG, London Branch or
Management Agreement.
“FleetCo Italian Facility Agreement” means a facility agreement between Italian
FleetCo and the Issuer, the proceeds of which Italian FleetCo will use to, among
other things, purchase vehicles to comprise its Italian fleet.
“FleetCo Italian Facility Agreement Purchase Option” means the option granted by
the Issuer to Finco under clause 15.4 (Option) of the FleetCo Italian Facility
Agreement.
“FleetCo Italian Secured Liabilities” means, in respect of Italian FleetCo, all
Italian FleetCo to the Italian FleetCo Secured Creditors on any current or other
with any:
(i) Italian Transaction Document to which Italian FleetCo is a party; and
(ii) English Transaction Document to which Italian FleetCo is a party,
otherwise. For the purposes of “FleetCo Italian Secured Liabilities”, each of
the Italian FleetCo Secured Creditors acknowledges that all present and future
moneys, debts and liabilities due, owing or incurred by Italian FleetCo under or
in connection with the FleetCo Italian Facility Agreement shall be limited to
95 per cent. of the total aggregate amount of the FleetCo Advances made
available under the FleetCo Italian Facility Agreement.
“FleetCo Italian Security Documents” means (taking account of the fact that
hereof):
(i) the Italian FleetCo Share Pledge; and
(ii) the Italian FleetCo Security Deed.
52
“FleetCo Payment Date” means the Issuer Payment Date, save that if Senior
Advances are to be repaid by the Issuer using proceeds received by the Issuer
from FleetCo Advances, the FleetCo Payment Date in respect of such repayment of
FleetCo Advances shall be one Business Day before the Issuer Payment Date, if
such FleetCo Payment Date is not a Business Day in Spain, Germany, The
Netherlands, France or Italy (as applicable to the relevant FleetCo Facility
Agreement).
“FleetCo Post-Enforcement Priorities of Payments” means the Dutch FleetCo German
Post-Enforcement Priority of Payments, the Dutch FleetCo Spanish
Post-Enforcement Priority of Payments, the Dutch FleetCo Dutch Post-Enforcement
Priorities of Payments, the French FleetCo Post-Enforcement Priority of Payments
and the Italian FleetCo Post-Enforcement Priority of Payments.
“FleetCo Pre-Enforcement Priorities of Payments” means the Dutch FleetCo German
Pre-Enforcement Priority of Payments, the Dutch FleetCo Dutch Pre-Enforcement
Priority of Payments, the Dutch FleetCo Spanish Pre-Enforcement Priority of
Payments, the French FleetCo Pre-Enforcement Priority of Payments and the
Italian FleetCo Pre-Enforcement Priority of Payments (as applicable).
“FleetCo Priority of Payments” means the FleetCo Pre-Enforcement Priorities of
Payments and the FleetCo Post-Enforcement Priorities of Payments.
“FleetCo Profit Margin” means, in respect of a FleetCo in each Country on a
Lease Determination Date, [REDACTED] or such other amount in respect of such
Lease Determination Date as may be agreed from time to time between (i) such
FleetCo in such Country, (ii) its Related Opco as representing an arm’s length
profit for the activities undertaken by such FleetCo in such Country, and
(iii) if such FleetCo Profit Margin exceeds [REDACTED], the Transaction Agent.
“FleetCo Repeating Representations” means, in respect of each FleetCo, the
representations and warranties of such FleetCo set out in the Framework
Agreement, save for the representations and the warranties in the following
clauses in the Framework Agreement:
(i) clause 3.3.3 (Independent Director);
(ii) clause 3.3.4 (Centre of Main Interests and no establishment);
(iii) clause 3.3.5 (Taxes);
(iv) clause 3.3.6 (No Subsidiaries, Employees or Premises);
(v) clauses 3.3.11(i)(a) and 3.3.11(iii)(a) (Financial Statements);
(vi) clause 3.3.18 (Consents);
(vii) clause 3.3.23 (Execution);
(viii) clause 3.3.27(ii) (FleetCo Security);
(ix) clause 3.3.28 (Compliance with Relevant Transaction Documents);
(x) clause 3.3.31 (Filings);
(xi) clause 3.3.32 (Consents);
(xii) clause 3.3.34 (Taxes – Transaction Documents);
(xiii) clause 3.3.39 (Compliance with Country Asset Value Test);
(xiv) clause 3.3.40 (Negotiation Guidelines and Vehicle Purchasing Agreement);
53
(xv) clauses 3.3.41(i) and (ii) (Spain specific representations and warranties);
(xvi) clause 3.3.43(i) (The Netherlands specific representations and
warranties).
“FleetCo Reserve Account” means, as applicable:
(i) the Dutch FleetCo German Reserve Account (if any);
(ii) the Dutch FleetCo Spanish Reserve Account (if any);
(iii) the Dutch FleetCo Dutch Reserve Account (if any);
(iv) the French FleetCo Reserve Account (if any); and
(v) the Italian FleetCo Reserve Account (if any).
“FleetCo Secured Creditors” means:
(i) the Spanish FleetCo Secured Creditors;
(ii) the German FleetCo Secured Creditors;
(iii) the Dutch FleetCo Secured Creditors;
(iv) the French FleetCo Secured Creditors; and
(v) the Italian FleetCo Secured Creditors.
“FleetCo Secured Liabilities” means:
(i) the FleetCo Spanish Secured Liabilities;
(ii) the FleetCo German Secured Liabilities;
(iii) the FleetCo Dutch Secured Liabilities;
(iv) the FleetCo French Secured Liabilities; and
(v) the FleetCo Italian Secured Liabilities.
“FleetCo Secured Property” means the assets from time to time subject, or
expressed to be subject, to the FleetCo Security or any part of those assets.
“FleetCo Security” means all or any of the Security Interests created or
expressed to be created from time to time constituted by or pursuant to, or
evidenced by, the FleetCo Security Documents.
“FleetCo Security Agent” means Crédit Agricole Corporate and Investment Bank or
the replacement or successor entity appointed as security agent and/or trustee
on behalf of itself and the FleetCo Secured Creditors.
“FleetCo Security Documents” means (taking account of the fact that certain
(ii) the FleetCo German Security Documents;
(iii) the FleetCo French Security Documents;
(iv) the FleetCo Italian Security Documents;
(v) the FleetCo Spanish Security Documents;
(vi) the Dutch FleetCo Dutch Security Documents
54
(vii) each FleetCo Security Power of Attorney;
(viii) each FleetCo Deed of Charge;
(ix) the Lessor Power of Attorney; and
(x) any other document designated by the FleetCo Security Agent as a FleetCo
Security Document.
“FleetCo Security Powers of Attorney” means: (i) the power of attorney granted
by Dutch FleetCo to the FleetCo Security Agent pursuant to clause 15 (Power of
Attorney) of the German FleetCo Deed of Charge and substantially in the form set
out in schedule 1 (Form of FleetCo Security Power of Attorney) to the German
FleetCo Deed of Charge; (ii) the power of attorney granted by Dutch FleetCo to
the FleetCo Security Agent pursuant to clause 15 (Power of Attorney) of the
Dutch FleetCo Deed of Charge and substantially in the form set out in schedule 1
(Form of FleetCo Security Power of Attorney) to the Dutch FleetCo Deed of
Charge; (iii) the power of attorney granted by Dutch FleetCo, Spanish Branch to
Spanish FleetCo Deed of Charge and substantially in the form set out in schedule
1 (Form of FleetCo Security Power of Attorney) to the Spanish FleetCo Deed of
Charge; (iv) the power of attorney granted by French FleetCo to the FleetCo
Security Agent pursuant to clause 15 (Power of Attorney) of the French FleetCo
Deed of Charge and substantially in the form set out in schedule 1 (Form of
FleetCo Security Power of Attorney) to the French FleetCo Deed of Charge; and
(v) the power of attorney granted by Italian FleetCo to the FleetCo Security
Agent pursuant to clause 15 (Power of Attorney) of the Italian FleetCo Deed of
Charge and substantially in the form set out in schedule 1 (Form of FleetCo
Security Power of Attorney) to the Italian FleetCo Deed of Charge.
“FleetCo Servicers” means the Spanish Servicer, the Italian Servicer, the French
Servicer and the Central Servicer.
“FleetCo Spanish Advance” means each advance made by the Issuer to Dutch
FleetCo, Spanish Branch under the FleetCo Spanish Facility Agreement.
“FleetCo Spanish Advances Proportion” means, on any date on which such
Facility Agreement;
to
Facility Agreement;
Spanish Facility Agreement;
Facility Agreement;
Italian Facility Agreement,
55
“FleetCo Spanish Back-up Cash Manager” means Deutsche Bank, London Branch and
any replacement or successor thereof appointed under the FleetCo Back-up Cash
Management Agreement.
“FleetCo Spanish Facility Agreement” means a facility agreement between Dutch
FleetCo and the Issuer, the proceeds of which will be used, among other things,
to purchase vehicles to comprise its Spanish fleet from manufacturers and
dealers.
“FleetCo Spanish Secured Liabilities” means, in respect of Dutch FleetCo,
Spanish Branch, all present and future moneys, debts and liabilities due, owing
or incurred by Dutch FleetCo, Spanish Branch to the Spanish FleetCo Secured
Creditors in any manner whatsoever, including on any current or other account or
otherwise, including under or in connection with any:
(i) Spanish Transaction Document to which Dutch FleetCo, Spanish Branch is a
party; and
(ii) English Transaction Document to which Dutch FleetCo, Spanish Branch is a
party,
otherwise.
“FleetCo Spanish Security Documents” means (taking account of the fact that
hereof):
(i) the Public Deed of Pledge over Vehicles;
(ii) the Third Party Holding Agreement;
(iii) the VAT receivables pledge in respect of Dutch FleetCo’s activities in
Spain;
(iv) the pledge in respect of credit right under the Spanish Master Lease
Agreement;
(v) the pledge in respect of Spanish law governed receivables under the Vehicle
Manufacturer Buy-Back Agreements and Vehicle Dealer Buy-Back Agreements to which
Dutch FleetCo is a party;
(vi) the pledge over the bank accounts of Dutch FleetCo in Spain; and
(vii) the irrevocable power of attorney granted by Dutch FleetCo, Spanish Branch
to the FleetCo Security Agent.
“FleetCo Total Borrowed Amount” means, in respect of a FleetCo on a Lease
Determination Date, the aggregate principal amount outstanding on the last day
of the Related Month under the relevant FleetCo Facility Agreement.
“FleetCo Transaction Documents” means, in respect of a FleetCo, the following
documents to which such FleetCo is a party (taking account of the fact that
hereof):
(i) the Funds Flow Agreement;
(ii) the Framework Agreement;
(iii) the Master Definitions Agreement;
(v) the FleetCo Spanish Facility Agreement (in respect of Dutch FleetCo);
56
(vi) the FleetCo German Facility Agreement (in respect of Dutch FleetCo);
(vii) the FleetCo Dutch Facility Agreement (in respect of Dutch FleetCo);
(viii) the FleetCo French Facility Agreement (in respect of French FleetCo);
(ix) the FleetCo Italian Facility Agreement (in respect of Italian FleetCo);
(x) the FleetCo Back-up Cash Management Agreement;
(xi) the Liquidation Agency Agreement;
(xii) the Central Servicing Agreement;
(xiii) the Parent Performance Guarantee;
(xiv) the Finco Payment Guarantee;
(xv) the Operating Documents;
(xvi) the FleetCo Security Documents;
(xvii) the Dutch FleetCo Management Documents;
(xviii) the Spain TRO Power of Attorney; and
(xix) all documents approved by the FleetCo Security Agent and the Transaction
Agent and entered into by such FleetCo related to or in connection with the
documents above.
“Fleet Payables Amount” means, in relation to any Country, an amount equal to
the aggregate amount of any amounts due by the relevant FleetCo in such Country
to Vehicle Manufacturers and/or Vehicle Dealers (excluding any amount in respect
of VAT related thereto) and remaining outstanding at the relevant Calculation
Date or (as applicable) each Intra-Month Cut-Off Date.
“Fleet Plan” means, in respect of each Country, the projected Vehicle Fleet
purchase and Borrower Vehicle Fleet NBV in the immediately following financial
year of the relevant FleetCo.
“Fleet Report” means the data report (in Computer Readable Form) provided on a
Vehicle-by-Vehicle basis, containing data relating to the FleetCo’s various
Vehicles in the form as set out in part A and part B of schedule 9 (Form of
Fleet Report) to the Framework Agreement and, if amended, in form and substance
satisfactory to the Transaction Agent.
“Floating Charge” means:
(i) the floating charge created by clause 3.4 (Floating Charge) of the Issuer
Deed of Charge;
(ii) the floating charge created by clause 3.3 (Floating Charge) of the Spanish
FleetCo Deed of Charge;
(iii) the floating charge created by clause 3.3 (Floating Charge) of the German
(iv) the floating charge created by clause 3.3 (Floating Charge) of the Dutch
(v) the floating charge created by clause 3.3 (Floating Charge) of the French
FleetCo Deed of Charge; and
(vi) the floating charge created by clause 3.3 (Floating Charge) of the Italian
57
“Force Majeure Event” means an event beyond the reasonable control of the person
affected including strike, lock-out, labour dispute, act of God, war, riot,
civil commotion, malicious damage, accident, breakdown of plant or machinery,
computer software, hardware or system failure, fire, flood and/or storm and
other circumstances affecting the supply of goods or services.
“Framework Agreement” means the agreement setting out the common terms
applicable to the transaction dated 5 March 2013 as amended, restated, modified,
supplemented or waived from time to time and entered into by, among others, the
FleetCos, the Issuer, the FleetCo Security Agent, the Issuer Security Trustee
and the Transaction Agent.
“France Repayment Option” means, in respect of a TRO Default, the Country
Repayment Option applicable to Finco, as more particularly set out in clause 6
(Country Repayment Option) of the Framework Agreement.
“French Accession Date” means 21 May 2014.
“French Account Bank Agreement” means the agreement to appoint the French
FleetCo Account Bank.
“French Account Mandate” has the meaning given to it in clause 4.1.1 of the
French Account Bank Agreement.
“French Bank Account Pledge Agreement” means the French law bank account pledge
agreement (nantissement de comptes bancaires) between French FleetCo as pledger
and the French FleetCo Secured Creditors as pledgees.
“French Bank Accounts” means:
(i) the French FleetCo Transaction Account;
(ii) the French FleetCo Reserve Account (if any); and
“French Business Charge Agreement” means the business charge (nantissement de
fonds de commerce) between French FleetCo as chargor and the French FleetCo
Secured Creditors as beneficiaries.
“French FleetCo” means AB FleetCo which, among other things, holds title to or
holds possession of the Vehicle Fleet in France.
“French FleetCo Account Bank” means the entity appointed as account bank under
the French Account Bank Agreement.
“French FleetCo Account Bank Operator” means Deutsche Bank AG, London Branch.
“French FleetCo Deed of Charge” means the English law deed of charge pursuant to
which, among other things, French FleetCo assigns, pledges and otherwise creates
security over all its rights and interests in and to each of the English
Transaction Documents to which it is a party in favour of the FleetCo Security
Agent.
“French FleetCo Post-Enforcement Priority of Payments” means the priority of
payments in part E (French FleetCo Post-Enforcement Priority of Payments) of
part 6 (FleetCo Post-Enforcement Priority of Payments) of schedule 3 (Priorities
58
“French FleetCo Pre-Enforcement Priority of Payments” means the priority of
payments in part E (French FleetCo Pre-Enforcement Priority of Payments) of part
5 (FleetCo Pre-Enforcement Priority of Payments) of schedule 3 (Priorities of
Payments) to the Framework Agreement.
“French FleetCo Reserve Account” means the reserve account in France in the name
of French FleetCo and which may, from time to time, be opened and maintained
with the French FleetCo Account Bank.
“French FleetCo Secured Creditors” means (i) the French Intermediary Bank and,
upon assignment of the FleetCo French Advances to the FCT pursuant to clause
14.3 of the FleetCo French Facility Agreement, the FCT and (ii) the French
FleetCo Account Bank, the French FleetCo Account Bank Operator, the FleetCo
French Back-up Cash Manager, the French Servicer, the Central Servicer and the
FleetCo Security Agent (including any Receiver or Appointee thereof).
“French FleetCo Secured Property” means the assets from time to time secured by
the FleetCo French Security Documents.
“French FleetCo Share Pledge” means the pledge of all the shares in French
FleetCo.
“French FleetCo Transaction Account” means the bank account in France in the
name of French FleetCo with account number 10511633000.
“French GAAP” means the accounting principles established pursuant to the French
Code de commerce and the Plan Comptable Général, both as amended and
“French Intermediary Bank” means Crédit Agricole Corporate and Investment Bank.
“French Master Lease Agreement” means, the master lease agreement dated on or
about the date hereof entered into by, amongst others, French FleetCo and French
Opco.
“French Opco” means Avis Location de Voitures SAS.
“French Opco Event of Default” means an Event of Default in respect of French
Opco as the Relevant Person.
“French Receivables Security Assignment Agreement” means the French receivables
security assignment agreement (cession de créances professionnelles “Dailly” à
titre de garantie) between French FleetCo as assignor and the French
Intermediary Bank and the FCT as assignees.
“French Servicer” means French Opco which is to provide transaction management
services to French FleetCo.
“French Servicing Agreement” means the servicing and cash management agreement
between, among others, French FleetCo and French Opco in respect of French
FleetCo’s operations in France.
“French Share Pledge Agreement (French Opco)” means the French share pledge
agreement (nantissement de comptes-titres) pursuant to which French Opco grants
security over its shares in French FleetCo in favour of the French FleetCo
Secured Creditors.
“French Share Pledge Agreement (Golden Shareholder)” means the French share
pledge agreement (nantissement de comptes-titres) pursuant to which the Golden
Shareholder grants security over its shares in French FleetCo in favour of the
French FleetCo Secured Creditors.
“French Third Party Holder” means means French Opco in its capacity as third
party holder under the French Third Party Holding Agreement.
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“French Third Party Holding Agreement” means the French third party holding
agreement (convention d’entiercement) pursuant to which French Opco will act as
third party holder of French FleetCo’s pledged Vehicles on behalf of the French
FleetCo Secured Creditors.
“French Transaction Documents” means (taking account of the fact that certain
(i) the FleetCo French Facility Agreement;
(ii) the French Account Bank Agreement;
(iii) the French Account Mandate;
(iv) the French Master Lease Agreement;
(v) the French Servicing Agreement;
(vi) the FleetCo French Security Documents;
(vii) the FCT Transaction Documents;
(viii) the Golden Share Put and Call Option Agreement; and
(ix) any other Transaction Documents expressed to be governed by French law and
designated as a “French Transaction Document” by the Transaction Agent and
French FleetCo.
“French Vehicle Documents” means, in respect of Vehicles in France, the keys and
spare keys to the Vehicles, the property certificate and the registration and
technical documents regarding the Vehicles.
“French Vehicle Pledge Agreement” means the French vehicle pledge agreement
(gage avec dépossession sur véhicules automobiles) between French FleetCo as
pledger and the French FleetCo Secured Creditors as pledgees.
“FSMA” means Financial Services and Markets Act 2000.
“Funds Flow Agreement” means the funds flow agreement dated 20 March 2013
between, among others, the Issuer, the Issuer Cash Manager and the FleetCos in
respect of the cash flow on or about the Initial Funding Date.
“Further Senior Notes” has the meaning given to it in clause 4.1 (Issue of
Further Senior Notes) of the Issuer Note Issuance Facility Agreement.
“GAAP” means:
(i) in relation to any Opco (other than German Opco), Finco, Avis Europe or the
Issuer, generally accepted accounting principles, standards and practices in the
jurisdiction of incorporation of that entity;
(ii) in relation to Italian FleetCo, Italian GAAP;
(iii) in relation to Dutch FleetCo, Spanish Branch, Spanish GAAP;
(iv) in relation to Dutch FleetCo’s Vehicle Fleet in Germany, German GAAP;
(v) in relation to Dutch FleetCo’s Vehicle Fleet in The Netherlands, Dutch GAAP;
(vi) in relation to French FleetCo, French GAAP; and
(vii) in relation to German Opco, German GAAP.
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“German Account Bank Agreement” means the agreement pursuant to which Dutch
FleetCo appoints the Dutch FleetCo German Account Bank.
“German Account Mandate” has the meaning given to it in clause 4.1.1 of the
German Account Bank Agreement.
“German Account Pledge Agreement” means the German law governed agreement
between, among others, Dutch FleetCo and the FleetCo Security Agent in respect
of the German law pledge (Pfandrecht) in respect of the Dutch FleetCo German
Bank Accounts.
“German Base Rent” means, in relation to all Vehicles which are leased to a
Lessee under the Master German Fleet Lease Agreement on any day during the
Related Month or, as the case may be, Related Months where such Related Months
occur prior to a Lease Payment Date following the Lease Determination Date in
respect of any Lease Payment Date, the sum of the Depreciation Charges that have
accrued with respect to each such Vehicle during the Related Month or, as the
case may be, Related Months, as determined in accordance with the terms of such
Master German Fleet Lease Agreement.
“German Custodian” means DAD Deutscher Auto Dienst GmBH.
“German Custody Agreement” means the German law governed custody agreement in
respect of the custody of the German Vehicle Certificates and evidence in
relation to the Vehicle Fleet in Germany of Dutch FleetCo and entered into
between German Opco, Dutch FleetCo, the FleetCo Security Agent and the German
Custodian.
“German FleetCo Deed of Charge” means the English law deed of charge pursuant to
which, among other things, Dutch FleetCo assigns, pledges and otherwise creates
Agent.
“German FleetCo Secured Creditors” means the Dutch FleetCo German Account Bank,
the Dutch FleetCo German Account Bank Operator, the FleetCo German Back-up Cash
Manager, and, with respect to obligations incurred by Dutch FleetCo acting with
respect to its Vehicle Fleet purchased from German OpCo, the Central Servicer,
the Liquidation Agent, the FleetCo Security Agent (including any Receiver or
“German GAAP” means the accounting principles established pursuant to the German
Commercial Code (Handelsgesetzbuch).
“German Opco” means Avis Budget Autovermietung GmbH & Co. KG.
“German Opco Event of Default” means an Event of Default in respect of German
“German Opco Existing Fleet Vehicle” means each Eligible Vehicle (i) in respect
of which German Opco has paid the Initial Purchase Price in full to the relevant
Vehicle Manufacturer or Vehicle Dealer prior to the date of the Master German
Fleet Purchase Agreement and (ii) which German Opco owns prior to the date of
“German Parallel Debt” has the meaning given to it in clause 16 (Parallel Debt)
“German Receivables Assignment Agreement” means the German law governed
agreement between, among others, Dutch FleetCo and the FleetCo Security Agent in
respect of the security assignment (Sicherungsabtretung) in respect of German
law governed receivables.
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“German Security Transfer Agreement” means the German law governed agreement
of the transfer of title for security purposes (Sicherungsübereignung) of the
German Vehicle Fleet.
“German Transaction Documents” means (taking account of the fact that certain
(i) the FleetCo German Security Documents;
(ii) the German Custody Agreement;
(iii) the German Trust Agreement;
(iv) the German Account Bank Agreement;
(v) the Master German Fleet Purchase Agreement (to the extent governed by German
law); and
(vi) any other Transaction Document approved by the FleetCo Security Agent and
the Transaction Agent and expressed to be governed by German law.
“German Trust Agreement” means the German law governed agreement between, among
others, German Opco and Dutch FleetCo, in respect of the VAT Component and the
Charge Costs Component in respect of Vehicles purchased in Germany and VAT
Component and Charge Costs Component Account.
“German Vehicle Certificates” means, in respect of Vehicles in Germany in
the registration documents regarding such vehicles (Zulassungsbescheinigung Teil
II (formerly known as Fahrzeugbriefe)) and certificates of conformity
(EU-Konformitätserklärungen).
“German Vehicle Documents” means, in respect of Vehicles in Germany, the keys
and spare keys to the Vehicles, the German Vehicle Certificates and the
certificates of conformity (EU-Konformitätserklärungen).
“Golden Share Funding Agreement Purchase Option” means the call option granted
by FleetCo Holdings to French Opco under clause 3 (Call Option) or the put
option granted by French Opco to the FleetCo Holdings under clause 4 (Put
Option) as appropriate of the Golden Share Put and Call Option Agreement.
“Golden Share Put and Call Option Agreement” means the put and call option
agreement entered into between FleetCo Holdings and French Opco.
“Golden Shareholder” means FleetCo Holdings.
“Golden Shareholder Letter of Undertakings” means the undertakings letter in
relation to French FleetCo entered into by the Golden Shareholder.
“Governmental Authority” means any entity, governmental, semi-governmental,
administrative, fiscal, judicial or quasi-judicial body, department, commission,
authority, tribunal or agency, exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.
“Holding Company” means, in relation to a company or corporation, any other
company or corporation in respect of which it is a Subsidiary.
“Immediately Following Settlement Date” means, in respect of any day, the next
Settlement Date falling after such day.
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“Imperative Principles” means those principles indicated as being “Imperative”
in, as applicable, schedule 2 to the Italian Servicing Agreement, schedule 6 to
the French Master Lease Agreement and schedule 2 to the Spanish Servicing
Agreement.
“Increased Cost” means, without double counting:
(a) a reduction in the rate of return from the Issuer Note Issuance Facility
Agreement or on a Senior Noteholder’s (or an Affiliate’s) overall capital or
from the VFN Funding Agreement or on an FCT Noteholder’s (or an Affiliates)
overall capital (as applicable);
(b) an additional or increased cost; or
(c) a reduction of any amount due and payable under any Issuer Transaction
Document or any FCT Transaction Document (as applicable),
which is incurred or suffered by a Senior Noteholder or FCT Noteholder (as
applicable) or any of their Affiliates to the extent that it is attributable to
that Senior Noteholder or FCT Noteholder (as applicable) having entered into the
relevant Senior Noteholder Fee Letter or pursuant to the VFN Funding Agreement
or funding or performing its obligations under any Issuer Transaction Document
or FCT Transaction Document (as applicable).
“Independent Director” means a duly appointed member of the board of directors
of the Issuer who has not been, at the time of such appointment, or at any time
in the preceding five years prior to such appointment (i) a direct or indirect
legal or beneficial owner of the shares of the Issuer or any member of the Avis
Group (ii) a director or employee of any member of the Avis Group (other than
FleetCos) or the creditors of the Issuer (other than the Corporate Services
Providers).
“Individual Purchase and Lease Agreement” has the meaning given to such term in
relation to the Vehicle Fleet in Germany under clause 3.4 of the Master German
Fleet Purchase Agreement or in relation to the Vehicle Fleet in The Netherlands
under clause 3.4 of the Master Dutch Fleet Purchase Agreement (as applicable).
“Individual Repurchase and Lease Termination Agreement” has the meaning given to
such term in relation to the Vehicle Fleet in Germany under clause 5.6 of the
Master German Fleet Purchase Agreement.
“Information Date” means the date falling 4 Business Days before a Settlement
Date.
“INIFA” or “Issuer Note Issuance Facility Agreement” means the Issuer Note
Issuance Facility Agreement to be entered into between, among others, the
Issuer, the Issuer Security Trustee and the Senior Noteholders pursuant to which
the Senior Noteholders makes advances to the Issuer.
“Initial Commitment” means, in relation to an Initial Senior Noteholder, the
amount set out in the relevant Senior Noteholder Fee Letter.
“Initial Conduit Senior Noteholder” means any Conduit Senior Noteholder which is
a party to the Issuer Note Issuance Facility Agreement and which is a Senior
Noteholder on the Initial Funding Date.
“Initial Funding Date” means 20 March 2013.
“Initial Dutch Funding Date” means the date of the first FleetCo Advance under
the FleetCo Dutch Facility Agreement.
“Initial French Funding Date” means the date of the first FleetCo Advance under
the FleetCo French Facility Agreement.
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“Initial VFN Funding Date” means the date of the first VFN Advance under the VFN
Funding Agreement.
“Initial Principal Amount” means, in respect of a Senior Note, the initial
principal amount attributable to such Senior Note upon issue and which is to be
set out in the Register and, in respect of a Variable Funding Note, the initial
principal amount attributable to such Variable Funding Note upon issue which is
to be set out in the FCT Register.
“Initial Purchase Price” means, in relation to a Vehicle in Germany, the
purchase price or other consideration payable by German Opco to the Vehicle
Manufacturer or Vehicle Dealer for the purchase by German Opco of such Vehicle
or, in relation to The Netherlands, the purchase price or other consideration
payable by Dutch Opco to the Vehicle Manufacturer or Vehicle Dealer for the
purchase by Dutch Opco of such Vehicle, as provided in the relevant Vehicle
Manufacturer Agreement and Vehicle Dealer Agreement, excluding VAT and Charge
Costs, and the “Initial Purchase Price” shall, for the avoidance of doubt, be
equal to its Capitalised Cost.
“Initial Senior Noteholders” means the Senior Noteholders who are parties to the
Issuer Note Issuance Facility Agreement dated the Signing Date.
“In-Service Date” means (i) in relation to a Programme Vehicle, the date on
which depreciation commences with regard to such Vehicle in accordance with the
terms of the relevant Vehicle Dealer Buy-Back Agreement or Vehicle Manufacturer
Buy-Back Agreement and (ii) in relation to a Non-Programme Vehicle, the date on
which such Vehicle is first available to be placed in service under the terms of
the relevant Master Lease Agreement.
“Insolvency Event” means any the following events occurring in respect of a
Relevant Person:
(a) such Relevant Person is Insolvent; or
(b) such Relevant Person is subject to Insolvency Proceedings.
“Insolvency Official” means, in relation to a Relevant Person, a liquidator,
provisional liquidator, administrator, examiner, administrative receiver,
receiver or manager, compulsory or interim manager, nominee, supervisor,
trustee, conservator, guardian or other similar officer (including (i) under
German law, any Insolvenzverwalter, vorläufigen Insolvenzverwalter, Sachwalter
or vorläufigen Sachwalter (ii) under Italian law, any curatore fallimentare,
commissario straordinario, commissario giudiziale, liquidatore giudiziale or
commissario liquidatore, (iii) under Spanish law, any administrador concursal,
auxiliar delegado, administrador judicial or liquidador), under French law, any
mandataire ad hoc, conciliateur, mandataire judiciaire, administrateur
judiciaire, or mandataire liquidateur and (iv) under Dutch law, any curator or
bewindvoerder).
“Insolvency Proceedings” means the following events in respect of a Relevant
Person:
(a) (if such Relevant Person is Dutch FleetCo, Italian FleetCo, French FleetCo
or the Issuer) reorganisation (by way of voluntary arrangement, scheme of
arrangement or otherwise under any law relating to bankruptcy, insolvency,
reorganisation, winding up or composition or adjustment of debts) of such
Relevant Person; or
(b) any corporate action, legal proceedings or other procedure or steps is taken
in relation to:
(i)
(x) (in respect of Dutch FleetCo, Italian FleetCo, French FleetCo or the Issuer)
bankruptcy, insolvency or relief of debtors, seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it bankrupt or insolvent,
or seeking reorganisation (by way of voluntary arrangement, scheme of
arrangement or otherwise), arrangement, adjustment, winding-up, liquidation,
dissolution,
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suspension of payments, moratorium of any indebtedness, emergency regulations,
composition, compromise, legal de-merger, declaration or other relief with
respect to it or its debts, and (y) (in respect of any other person) emergency
regulations, composition, compromise, legal de-merger, declaration or other
relief with respect to it or its debts, in each case, under any law relating to
bankruptcy, insolvency, reorganisation, winding up or composition or adjustment
of debts;
(ii) (if such Relevant Person is Dutch FleetCo, Italian FleetCo, French
FleetCo or the Issuer) a composition, compromise, assignment or arrangement with
any creditor of such Relevant Person, in each case under any law relating to
of debts;
(iii) (if such Relevant Person is Dutch FleetCo, Italian FleetCo, French
FleetCo or the Issuer) any expropriation, attachment, sequestration, distress or
execution affecting any asset or assets of such Relevant Person; or
(iv) (if such Relevant Person is Dutch FleetCo, Italian FleetCo, French
FleetCo or the Issuer) enforcement of any security over any assets of such
Relevant Person; or
(c) such Relevant Person resolves, or a meeting of such Relevant Person is
convened for the purpose of considering any resolution, and (in respect of the
Opcos and Finco only) such resolution is passed, for (or to petition or
otherwise make application for) its winding-up, its examinership, its judicial
administration, a moratorium of any of its indebtedness or to otherwise dissolve
itself, or gives notice of its intention to do so or is otherwise wound up or
dissolved; or
(d) any entity or person presents an application or petition (or the equivalent
in any relevant jurisdiction) to a court for the winding-up, examinership (if
applicable) or for the judicial administration or for the bankruptcy of such
Relevant Person or a moratorium of any of its indebtedness or for any other
relief under the relevant bankruptcy or insolvency law and this application or
petition is not withdrawn by the applicant or otherwise set aside or rejected by
the court or otherwise stayed (e.g. by way of deposits with a court or debt
rescheduling or restructuring arrangements) within 10 (ten) days if the Relevant
Person is Italian FleetCo, French FleetCo, Dutch FleetCo or the Issuer or, in
respect of other Relevant Persons, within 60 (sixty) days; or
(e) such Relevant Person takes any steps to obtain protection (including a
moratorium) or is granted protection (including a moratorium) from its creditors
in general under any law relating to bankruptcy, insolvency, reorganisation,
winding up or composition or adjustment of debts; or
(f) an order is made for such Relevant Person to be wound up, liquidated, put
into provisional liquidation, put into administration, examinership (if
applicable) or dissolved (following a proceeding under applicable bankruptcy
laws) or for a moratorium of any of such Relevant Person’s indebtedness or for
any procedure which is analogous or has a similar effect to such an order; or
(g) any Insolvency Official is appointed (whether or not under a court order) in
respect of such Relevant Person (or any substantial part of the assets of such
person, if applicable) or the directors of such Relevant Person request such
appointment of the foregoing; or
(h) any other insolvency proceedings are commenced against such Relevant Person,
namely (as appropriate):
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(i) in respect of any entity who is resident in Germany or who has its centre
of main interests (as such term is used in Article 3(1) of the EU Insolvency
Regulation) in Germany:
(A) the competent insolvency court (Insolvenzgericht) orders:
(1) interim measures of protection in accordance with Section 21 Para. 1
Sentence 1 and Para. 2 of the German Insolvency Code (Insolvenzordnung; in
particular appoints a preliminary insolvency administrator (vorläufiger
Insolvenzverwalter) in accordance with Section 21 Para. 1 Nos. 1 and 2 and
Section 22 of the German Insolvency Code); or
(2) the opening of main insolvency proceedings pursuant to Section 27 of the
German Insolvency Code (Eröffnungsbeschluss); or
(3) the dismissal of the petition to open insolvency proceedings due to the
insufficient estate pursuant to Section 26 of the German Insolvency Code
(Abweisung des Antrages auf Eröffnung des Insolvenzverfahrens mangels Masse); or
(B) a petition for the opening of insolvency proceedings (Insolvenztrag) is
filed and this petition is not withdrawn by the petitioner or otherwise set
aside or rejected by the court or otherwise stayed (e.g. by way of deposits with
a court, or debt rescheduling or restructuring arrangements) within 60 (sixty)
days; or
(ii) in respect of any entity who is resident in Italy or who has its centre
Regulation) in Italy, “fallimento”, “concordato preventivo”, “liquidazione
coatta amministrativa” as set out under the Italian Bankruptcy Act, “accordo di
ristrutturazione dei debiti” under article 182-bis of the Italian Bankruptcy
Act, “piano di risanamento attestato” under article 67, paragraph 3, letter d)
of the Italian Bankruptcy Act, “amministrazione straordinaria delle grandi
imprese in stato di insolvenza” as set out under either Legislative Decree
8 July 1999, No. 270 or Law Decree 23 December 2003, No. 347 as converted, with
amendments, into Law 18 February 2004, No. 39; or
(iii) in respect of any entity who is resident in Spain or who has its centre
Regulation) in Spain, “concurso voluntario” or “concurso necesario”, as set out
under Law 22/2003, of 9 July;
(iv) in respect of any entity who is resident in The Netherlands or who has
its centre of main interests (as such term is used in Article 3(1) of the EU
Insolvency Regulation) in The Netherlands, “ontbinding” or the competent
insolvency court orders “faillissement”, “surseance van betaling” or
“noodregeling”; or
(v) in respect of any entity who is resident in France or who has its centre
Regulation) in France, “mandat ad hoc”, “procédure de conciliation”, “procédure
de sauvegarde”, “procédure de redressement judiciaire”, “procédure de
liquidation judiciaire” as set out under “LIVRE VI” of the French Code de
commerce.
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(i) there occurs, in relation to such Relevant Person, in any jurisdiction to
which it or any of its assets are subject, any event which has an effect
equivalent or substantially similar to any of those mentioned in paragraphs
(a) to (h) (inclusive) above, or any furtherance of, or acquiescence in, any of
the acts above by such Relevant Person.
“Insolvent” means any of the following events occurring in respect of any
entity:
(a) such Relevant Person is or is deemed or declared for the purposes of any law
to be unable to pay its debts as they fall due or to be insolvent, including,
without limitation:
(i) in respect of any person who is resident in Germany or who has its centre
Regulation) in Germany, the legal representative of such person is required to
file for the opening of insolvency proceedings pursuant to Section 15a of the
German Insolvency Code (Insolvenzordnung);
Regulation) in Italy, any entity who is in “stato di insolvenza” for the purpose
of article 5 of Royal Decree 16 March 1942, n. 267 (the “Italian Bankruptcy
Act”), article 3 of Legislative Decree 8 July 1999, No. 270 or article 4 of Law
Decree 23 December 2003, No. 347 as converted, with amendments, into Law
18 February 2004, No. 39, or in “stato di crisi” for the purpose of article 160
of the Italian Bankruptcy Act;
(iii) in respect of any entity who is resident in France or who has its centre
Regulation) in France, such person is in a position of suspension of payments
(cessation des paiements) within the meaning of L.631-1 of the French Code de
commerce;
(iv) in respect of any entity who is resident in Spain or who has its centre
Regulation) in Spain, such person is unable to regularly satisfy its obligations
as they fall due within the meaning of Article 2.2 of Law 22/2003, of 9 July; or
(v) in respect of any entity who is resident in The Netherlands or who has its
Insolvency Regulation) in The Netherlands:
(A) such person is unable to satisfy its obligations as they fall due within
the meaning of Article 1 of the Dutch Insolvency Act (Faillissementswet);
(B) such person expects to be unable to satisfy its obligations as they fall
due within the meaning of Article 214 of the Dutch Insolvency Act
(Faillissementswet); or
(C) the interests of the joint creditors of such person require a special
provision (bijzondere voorziening) within the meaning of paragraph 2 of Article
3:160 of the Dutch Financial Supervision Act (Wet op het financieel toezicht);
(b) such Relevant Person admits in writing its inability to pay its debts as
they fall due or otherwise states it is insolvent;
(c) such Relevant Person suspends payment of its debts to creditors generally or
announces its intention to do so;
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(d) in respect of the Issuer or any other Relevant Person incorporated in
Ireland or which has its Centre of Main Interest in Ireland, such Relevant
Person is unable to pay its debts within the meaning of Section 214 of the
Companies Act 1963 (as amended by Section 123 of the Companies Act 1990) or
Section 2(3) of the Companies (Amendment) Act 1990 or otherwise is declared for
the purposes of any law to be unable to pay its debts as they fall due or
insolvent or such person admits its inability to pay its debts as they fall due;
or
(e) in respect of Finco, Avis Europe or any other Relevant Person incorporated
in England or Wales or which has its Centre of Main Interest in the United
Kingdom, such Relevant Person is or becomes unable to pay its debts within the
meaning of Section 123 of the Insolvency Act or otherwise is deemed or declared
for the purposes of any law to be, unable to pay its debts as they fall due or
insolvent or such person admits its inability to pay its debts as they fall due.
“Insurance Policies” has the meaning given to it in clause 23.5.1(b) of the
Spanish Master Lease Agreement, clause 22.5.1(b) of the Italian Master Lease
Agreement, clause 22.5 of the Master Dutch Fleet Lease Agreement, clause 23.5 of
the French Master Lease Agreement and clause 20.4.1(b) of the Master German
Fleet Lease Agreement (as applicable).
“Intellectual Property Rights” means any patent, trade mark, service mark,
registered design, trade name or copyright or any licence to use any of the
same.
“Interest Determination Date” means the date falling 2 TARGET Days prior to the
relevant Settlement Date.
“Interest Period” means the FleetCo Advance Interest Period, the VFN Advance
Interest Period or the Senior Advance Interest Period, as applicable.
“Interest Rate” means, in respect of a Senior Advance, the per annum rate of
interest expressed as a percentage for such Senior Advance for the relevant
Interest Period equal to the aggregate of:
(a) Mandatory Cost, if any; and
(b) the aggregate of:
(i) the Senior Advance Margin; and
(ii) the Subscriber’s Cost of Funds.
“Interim Fleet Financing Facility Agreement” or “IFF” means the €350,000,000
senior facility agreement dated 20 October 2011 (as amended and restated on
5 December 2011 and as further amended from time to time) between, among others,
the Parent, the Company, the Original Borrowers, the Original Guarantors, the
Senior Agent and the Security Agent (each as named and defined therein).
“Intra-Month Central Servicer Report” means the intra-month report substantially
in the form set out in the Framework Agreement to be delivered by the Central
Servicer to, among others, the Transaction Agent pursuant to clause 15
(Provision of Information and Reports) of the Framework Agreement and, if
amended, amended with the prior consent of the Transaction Agent and the Central
Servicer and in form and substance satisfactory to the Transaction Agent.
“Intra-Month Cut-Off Date” means, in respect of a proposed Senior Advance
Drawdown Date or an Original FleetCo Advance Drawdown Date that does not fall on
a Settlement Date, the date falling 2 Business Days before the Intra-Month
Reporting Date relevant to such Senior Advance Drawdown Date or such Original
FleetCo Advance Drawdown Date (as the case may be).
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“Intra-Month Information Date” means, in respect of a proposed Senior Advance
Drawdown Date that does not fall on a Settlement Date, the date falling 3
Business Days before such proposed Senior Advance Drawdown Date.
“Intra-Month Interest Determination Date” means, in respect of a proposed Senior
Advance Drawdown Date or an Original FleetCo Advance Drawdown Date that does not
fall on a Settlement Date, the date falling 2 Business Days prior to such
proposed Senior Advance Drawdown Date.
“Intra-Month Reporting Date” means, in respect of a proposed Senior Advance
a Settlement Date, the date falling 4 Business Days before such proposed Senior
Advance Drawdown Date.
“Investment Grade Non-Programme Vehicles” means Non-Programme Vehicles purchased
by the relevant FleetCo for each Country from Investment Grade Vehicle
Manufacturers or, in the case of Germany and the Netherlands, by the relevant
Opco from Investment Grade Vehicle Manufacturers and sold to Dutch FleetCo,
provided that:
(i) Vehicles whose Borrower Vehicle Fleet NBV exceed the Borrower Vehicle Fleet
NBV of all Eligible Vehicles that comply with the Concentration Limits shall not
be Vehicles for the purposes of “Investment Grade Non-Programme Vehicles”; and
(ii) any such excess in Borrower Vehicle Fleet NBV is or has been allocated on a
pro rata basis to the Borrower Vehicle Fleet NBV of Programme Vehicles and the
Borrower Vehicle Fleet NBV of Non-Programme Vehicles in each Country.
“Investment Grade Programme Vehicles” means Programme Vehicles purchased by the
relevant FleetCo for each Country from Investment Grade Vehicle Manufacturers or
Vehicle Dealers or, in the case of Germany and the Netherlands, by the relevant
Opco from Investment Grade Vehicle Manufacturers or Vehicle Dealers and sold to
Dutch FleetCo, provided that:
be Vehicles for the purposes of “Investment Grade Programme Vehicles”;
Borrower Vehicle Fleet NBV of Non-Programme Vehicles in each Country; and
(iii) where the Programme Vehicle is purchased from a Vehicle Dealer, such
Programme Vehicle is subject to a Vehicle Manufacturer Guarantee from an
Investment Grade Vehicle Manufacturer.
“Investment Grade Vehicle Manufacturer” means any Vehicle Manufacturer which is
a member of a Vehicle Manufacturer Group, the Vehicle Manufacturer Group Rating
Entity of which is rated:
(i) if the related Vehicle Manufacturer Group Rating Entity has a Relevant DBRS
Rating, at least “BBB(L)” by DBRS; or
(ii) if the related Vehicle Manufacturer Group Rating Entity does not have a
Relevant DBRS Rating, a DBRS Equivalent Rating of at least “BBB(L)”.
“Investment Grade Vehicle Manufacturer Receivables” means, at any time and in
relation to any Country, Vehicle Manufacturer Receivables:
(i) owed by any Investment Grade Vehicle Manufacturer to the relevant FleetCo in
such Country; and
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(ii) which relate to Vehicles to which such FleetCo holds title.
“Investor Report” means the report to be delivered by the Transaction Agent to
the Senior Noteholders on each monthly Information Date substantially in the
form set out in schedule 11 (Form of Investor Report) to the Framework Agreement
and, if amended, in form and substance satisfactory to the Transaction Agent.
“Invoices to be Received” means the aggregate amount of all Capitalised Costs
related to each Vehicle Fleet accounted for by (in respect of the Vehicle Fleet
in Italy) Italian FleetCo, (in respect of the Vehicle Fleet in Germany) German
Opco, (in respect of the Vehicle Fleet in France) French FleetCo, (in respect of
the Vehicle Fleet in The Netherlands) Dutch Opco and (in respect of the Vehicle
Fleet in Spain) Spanish Opco but for which the corresponding invoice has not yet
been received from the relevant Vehicle Manufacturers and/or Vehicle Dealers.
“Involuntary Insolvency Event” means:
(i) the occurrence of any event under the definition of “Insolvency Proceedings”
in respect of Italian Opco, Italian FleetCo, French Opco, French FleetCo, Dutch
Opco and Spanish Opco which is not defined as a “Voluntary Insolvency Event” as
per the definition of such term; or
(ii) Italian Opco, Italian FleetCo, French Opco, French FleetCo, Dutch Opco or
Spanish Opco is or becomes Insolvent otherwise than as per paragraph (b) or
paragraph (c) of the definition of “Insolvent”.
“Irrecoverable VAT” means the VAT which neither the Issuer, the Subordinated
Lender nor the VAT group of which the Subordinated Lender is a member can obtain
a credit for or a repayment of.
“ISFA” means Issuer Subordinated Facility Agreement.
“Issuer” means CarFin Finance International Limited, a private limited company
incorporated in Ireland, with registered number 463656 and having its registered
“Issuer Account Bank” means Deutsche Bank AG, London Branch as appointed under
the Issuer Account Bank Agreement.
“Issuer Account Bank Agreement” means the agreement between the Issuer and the
Issuer Account Bank.
“Issuer Account Mandate” means the Issuer Transaction Account Mandate, the
Issuer Spain TRO Collection Account Mandate, the Issuer Hedge Collateral Account
Mandate or the Issuer Reserve Account Mandate (as applicable).
“Issuer Accounts” means the Issuer Transaction Account, the Issuer Reserve
Account, the Issuer Spain TRO Collection Account and the Issuer Hedge Collateral
Account.
“Issuer and FleetCo Holdings Corporate Services Agreement” means the agreement
dated 5 March 2013 as amended, restated, modified, supplemented or waived from
time to time between the Issuer, FleetCo Holdings and the Issuer Security
Trustee pursuant to which Structured Finance Management (Ireland) Limited is
appointed as the Issuer Corporate Services Provider and the FleetCo Holdings
Corporate Services Provider.
“Issuer Available Funds” means an amount calculated on each Issuer Determination
70
(a) all amounts standing to the credit of the Issuer Transaction Account
(excluding the amounts which are proceeds of any Senior Advance made to the
Issuer and the proceeds of any Issuer Subordinated Advance made to the Issuer
pursuant to clause 4.2.1(a) of the Issuer Subordinated Facility Agreement);
(b) the proceeds of all Subordinated Advances made to the Issuer pursuant to
clause 4.2.1(c), 4.2.1(e), 4.2.1(f) and/or clause 4.2.1(g) of the Issuer
Subordinated Facility Agreement;
(c) all amounts received by the Issuer, including from Dutch FleetCo, FCT and
Italian FleetCo, under the FleetCo German Facility Agreement, the FleetCo Dutch
Facility Agreement, the FleetCo Spanish Facility Agreement (save for such
amounts received by the Issuer following the exercise by the Subordinated Lender
of the Spain Repayment Option (which shall be used solely to repay the relevant
Subordinated Advances made under the Issuer Subordinated Facility Agreement)),
the VFN Funding Agreement and the FleetCo Italian Facility Agreement;
(d) all amounts received by the Issuer from any Issuer Hedge Counterparty (if
any); and
(e) to the extent that such amounts in (a) to (d) above are insufficient to pay
all amounts due and payable by the Issuer on the immediately following
Settlement Date in the aggregate of the amounts standing to the credit of the
Issuer Reserve Account and the proceeds of any amount drawn under the relevant
Issuer Letter of Credit.
“Issuer Available Reserve Account Amount” means, as of any date of
determination, the amount on deposit in the Issuer Reserve Account (after giving
effect to any deposits thereto and withdrawals and releases therefrom on such
date).
“Issuer Borrowing Base Test” shall, in respect of any day, be satisfied if the
Senior Note Principal Amount Outstanding is less than or equal to the Senior
Notes Maximum Amount on such day.
“Issuer Cash Management Agreement” means the agreement between, among others,
the Issuer, the Issuer Cash Manager, the Central Servicer, the Issuer Account
Bank and the Issuer Security Trustee, pursuant to which the Issuer appoints the
Issuer Cash Manager to perform certain cash management functions.
“Issuer Cash Management Report” means the cash management report to be prepared
by the Issuer Cash Manager under the Issuer Cash Management Agreement
substantially in the form set out in schedule 8 (Forms of Cash Management
“Issuer Cash Management Services” has the meaning given to it in clause 3.1 of
the Issuer Cash Management Agreement.
“Issuer Cash Manager” means Deutsche Bank AG, London Branch and any replacement
or successor thereof appointed under the Issuer Cash Management Agreement.
“Issuer Cash Manager Termination Event” means any of the termination events set
out in clause 11.5 of the Issuer Cash Management Agreement.
“Issuer Compliance Certificate” means the compliance certificate substantially
in the form set out in part 1 (Form of Issuer Compliance Certificate) of
schedule 7 to the Framework Agreement.
“Issuer Corporate Services Provider” means Structured Finance Management
(Ireland) Limited.
“Issuer Debt” means any Senior Issuer Debt or Subordinated Debt.
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“Issuer Deed of Charge” means the English law deed of charge pursuant to which
the Issuer will, in respect of the Issuer Secured Liabilities, assign, pledge
and otherwise create a security interest over all of its rights and interests in
favour of the Issuer Security Trustee (for and on behalf of itself and the other
Issuer Secured Creditors).
“Issuer Determination Date” means the date falling 5 Business Days before a
Settlement Date.
“Issuer Domestic Account” means the account established by the Issuer for the
purposes of, inter alia, holding the proceeds of the issued share capital of the
Issuer and the Issuer Profit Amount.
“Issuer Enforcement Event” means the occurrence of a Rapid Amortisation Event.
“Issuer Enforcement Notice” has the meaning given to it in clause 8.1
(Notification of Enforcement) of the Issuer Deed of Charge.
“Issuer Event of Default” means an event of default as set out in part 1 (Issuer
Events of Default) of schedule 4 (Events of Default) to the Framework Agreement.
“Issuer Excess Cash Amount” means, on any date, an amount equal to:
(i) the aggregate of
(a) the Issuer Reserves on such date; and
(b) the aggregate of all cash standing to the credit of the Issuer Transaction
Account on such date,
less
(ii) the Issuer Reserve Required Amount on the date such calculation is
required.
“Issuer Hedge Collateral Account” means the account held at the Issuer Account
Bank as opened from time to time, together with such additional or replacement
swap collateral securities custody account or bank account at the Issuer Account
Bank and/or other banks as may for the time being be in place with the prior
consent of the Issuer Security Trustee and designated as such for the purposes
of holding collateral posted by any Issuer Hedge Counterparty pursuant to the
relevant Issuer Hedging Agreement.
“Issuer Hedge Collateral Account Mandate” means the issuer account mandate in
substantially the form of schedule 4 to the Issuer Account Bank Agreement
entered into by the Issuer with respect to the Issuer Hedge Collateral Account.
“Issuer Hedge Counterparty” means each hedge counterparty to an Issuer Hedging
Agreement which accedes from time to time to the Framework Agreement and the
Issuer Deed of Charge.
“Issuer Hedging Documents” means the ISDA Master Agreement, the Schedule, the
Credit Support Annex and the relevant Confirmation(s).
“Issuer Hedging Agreement” means a hedging agreement, consisting of the ISDA
Master Agreement, the Schedule, the Credit Support Annex and the relevant
Confirmation(s), that:
(a) may be entered into from time to time by the Issuer in respect of a Treasury
Transaction to hedge projected exposures to interest rates, foreign exchange and
inflation risks under the Senior Notes;
(b) contains the provisions required by the Rating Agencies which are engaged
from time to time to rate the outstanding Senior Notes; and
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(c) is in a form satisfactory to the Transaction Agent.
“Issuer Hedging Debt” means all present and future moneys, debts and liabilities
due, owing or incurred from time to time by the Issuer to any Issuer Hedge
Counterparty under or in connection with any Issuer Transaction Document, in
person, whether actually or contingently, and whether as principal, surety or
otherwise.
“Issuer Intercreditor Terms” means the Issuer intercreditor terms set out in
schedule 16 (Issuer Intercreditor Terms) to the Framework Agreement, relating to
the rights and obligations among the Issuer Secured Creditors.
“Issuer Ledgers” means the ledgers maintained by the Issuer Cash Manager for the
purposes of the management of the Issuer’s funds and timely compliance with the
Issuer’s payment obligations pursuant to schedule 1 (Issuer Cash Management
Services) of the Issuer Cash Management Agreement.
“Issuer LC Covered Amount” means, as applicable:
(i) the aggregate of all the amounts payable by the Issuer under paragraphs
(a) to (e) of the Issuer Revolving Period Priority of Payments;
(ii) the aggregate of all the amounts payable by the Issuer under paragraphs
(a) to (e) of the Issuer Scheduled Amortisation Period Priority of Payments;
(iii) the aggregate of all the amounts payable by the Issuer under paragraphs
(a) to (e) of the Issuer Rapid Amortisation Period (Pre-Enforcement) Priority of
Payments; and
(iv) the aggregate of all the amounts payable by the Issuer under paragraphs
(a) to (d) of the Issuer Rapid Amortisation Period (Post-Enforcement) Priority
of Payments.
“Issuer Letter of Credit” means an irrevocable letter of credit issued by an
Eligible Issuer LC Provider in favour of the Issuer Security Trustee (for itself
and on behalf of the benefit of the Senior Noteholders) substantially in the
form set out in schedule 13 (Form of Issuer Letter of Credit) to the Framework
Agreement and, if amended, in form and substance satisfactory to the Transaction
Agent.
“Issuer Listing Documents” means all the documents entered into by the Issuer in
connection with the listing and maintenance of listing of the Senior Notes on
the Channel Islands Stock Exchange.
“Issuer Note Issuance Facility Agreement” means the note issuance facility
agreement between, among others, the Senior Noteholders, the Transaction Agent,
the Issuer Cash Manager, and the Issuer Security Trustee.
“Issuer Payment Date” means each Senior Advance Repayment Date, each Issuer
Subordinated Advance Repayment Date and each Settlement Date.
“Issuer Priority of Payments” means the Issuer Revolving Period
(Pre-Enforcement) Priority of Payments, the Issuer Rapid Amortisation Period
(Pre-Enforcement) Priority of Payments, the Issuer Scheduled Amortisation Period
Priority of Payments and the Issuer Rapid Amortisation Period (Post-Enforcement)
Priority of Payments.
“Issuer Profit Amount” means the payment on each anniversary of the Initial
Funding Date of €1,000 per annum to the Issuer as a fee for entering into the
Transaction Documents to which it is a party.
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“Issuer Proposed Repayment Schedule” means, in respect of a Senior Advance, the
proposed Senior Advance Repayment Date of such Senior Advance set out in a
Senior Advance Drawdown Notice.
“Issuer Rapid Amortisation Period (Post-Enforcement) Priority of Payments” means
the priority of payments set out in part 4 (Issuer Rapid Amortisation Period
(Post-Enforcement) Priority of Payments) of schedule 3 (Priorities of Payments)
to the Framework Agreement.
“Issuer Rapid Amortisation Period (Pre-Enforcement) Priority of Payments” means
“Issuer Repeating Representations” means the representations and warranties of
the Issuer set out in the Framework Agreement save for the representations and
warranties set out in the following clauses in the Framework Agreement:
(i) clause 3.1.1 (Compliance with Issuer Borrowing Base Test);
(ii) clause 3.1.5 (Centre of Main Interests);
(iii) clause 3.1.6 (No Establishment);
(iv) clause 3.1.8 (No Subsidiaries, Employees or Premises);
(v) clause 3.1.9 (Capitalisation);
(vi) clause 3.1.10 (Ownership);
(vii) clause 3.1.11 (No Distributions);
(viii) clause 3.1.12 (Financial Statements);
(ix) clause 3.1.19 (Consents);
(x) clause 3.1.24 (Execution);
(xi) clause 3.1.27 (Beneficial Owner);
(xii) clause 3.1.28 (Issuer Security);
(xiii) clause 3.1.29 (Compliance with Issuer Transaction Documents);
(xiv) clause 3.1.32 (Filings);
(xv) clause 3.1.33 (Consents); and
(xvi) clause 3.1.35 (Taxes – Senior Notes and Transaction Documents).
“Issuer Required Gross-Up Amount” means the amount of Issuer Subordinated
Advances drawn by the Issuer under clause 4.2.2 of the Issuer Subordinated
Facility Agreement in an amount equal to the gross-up amount due and payable by
the Issuer under the Issuer Note Issuance Facility Agreement.
“Issuer Reserve Account” means an account of the Issuer opened with the Issuer
Account Bank to which amounts are required to be credited comprising the Issuer
Reserves.
“Issuer Reserve Account Mandate” means the issuer account mandate in
substantially the form of schedule 2 to the Issuer Account Bank Agreement
entered into by the Issuer with respect to the Issuer Reserve Account.
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“Issuer Reserve Required Amount” means, on any date on which such calculation is
required, the aggregate of:
[REDACTED]
“Issuer Reserves” means, on any date, the Available LC Commitment Amount and the
Issuer Available Reserve Account Amount, in each case, on such date.
“Issuer Revolving Period Priority of Payments” means the priority of payments
set out in part 1 (Issuer Revolving Period Priority of Payments) of schedule 3
“Issuer Scheduled Amortisation Period Priority of Payments” means the priority
of payments set out in part 2 (Issuer Scheduled Amortisation Priority of
Payments) of schedule 3 (Priorities of Payments) to the Framework Agreement.
“Issuer Secured Creditors” means the Senior Noteholders, the Issuer Security
Trustee, the Subordinated Lender, the Issuer Account Bank, the Issuer Corporate
Services Provider, the FleetCo Holdings Corporate Services Provider, the Issuer
Cash Manager, the Issuer Hedge Counterparties (if any), the Transaction Agent,
the Registrar and the Central Servicer.
“Issuer Secured Liabilities” means all present and future moneys, debts and
liabilities due, owing or incurred by the Issuer to the Issuer Secured Creditors
in any manner whatsoever, including on any current or other account or otherwise
including under or in connection with any Issuer Transaction Document (in each
case, whether alone or jointly, or jointly and severally, with any other person,
whether actually or contingently and whether as principal, surety or otherwise).
“Issuer Secured Property” means the assets from time to time subject, or
expressed to be subject, to the Issuer Security or any part of those assets.
“Issuer Security” means all or any of the Security Interests created or
evidenced by, the Issuer Security Documents.
“Issuer Security Documents” means the Issuer Deed of Charge, the Issuer Security
Power of Attorney and the Lessor Power of Attorney.
“Issuer Security Power of Attorney” means the power of attorney granted by the
Issuer to the Issuer Security Trustee pursuant to clause 15 (Power of Attorney)
of the Issuer Deed of Charge and substantially in the form set out in schedule 1
(Form of Issuer Security Power of Attorney) to the Issuer Deed of Charge.
“Issuer Security Trustee” means Deutsche Trustee Company Limited or the
replacement or successor thereof appointed as the security trustee acting on
behalf of the Issuer Secured Creditors under the Issuer Deed of Charge.
“Issuer Share Trustee” means TMF Management (Ireland) Limited in its capacity as
share trustee for CarFin Finance International Trust (Charitable Trust 1), an
Irish charitable trust.
“Issuer Spain TRO Collection Account” means the account in the name of the
Issuer to be opened and maintained by the Issuer Account Bank under the Issuer
Account Bank Agreement in respect of repayment of the FleetCo Advances under the
FleetCo Spanish Facility Agreement following, among other things, the exercise
of the Spain Repayment Option by the Subordinated Lender in accordance with
clause 6.2.1 (Spain) of the Framework Agreement and with the account number
28379301 (IBAN: GB65DEUT40508128379301).
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“Issuer Spain TRO Collection Account Mandate” means the issuer account mandate
in substantially the form of schedule 3 to the Issuer Account Bank Agreement
entered into by the Issuer with respect to the Issuer Spain TRO Collection
Account.
“Issuer Spain TRO Declaration of Trust” means the declaration of trust by the
Issuer over the amounts standing to the credit of the Issuer Spain TRO
Collection Account following the receipt of the TRO Proceeds Confirmation by the
Issuer (or the Issuer Cash Manager on its behalf) to the Transaction Agent, the
Central Servicer and Finco in respect of the Spain Total Repayment Option.
“Issuer Subordinated Advance” means the principal amount made available to the
Issuer on each Issuer Payment Date under the ISFA.
“Issuer Subordinated Advance Drawdown Date” means the date of funding of each
Issuer Subordinated Advance by the Subordinated Lender pursuant to the relevant
Issuer Subordinated Advance Drawdown Notice.
“Issuer Subordinated Advance Repayment Date” means any repayment date of an
Issuer Subordinated Advance as set out in the Issuer Subordinated Facility
Agreement.
“Issuer Subordinated Facility Agreement” or “ISFA” means the facility agreement
time to time between, amongst others, the Issuer and the Subordinated Lender, in
respect of the making of subordinated advances by the Subordinated Lender to the
Issuer.
“Issuer Transaction Account” means a EUR denominated account opened by the
Issuer with the Issuer Account Bank with the account number 28379300 (IBAN:
GB92DEUT40508128379300).
“Issuer Transaction Account Mandate” means the issuer account mandate in
substantially the form of schedule 1 to the Issuer Account Bank Agreement
entered into by the Issuer with respect to the Issuer Transaction Account.
“Issuer Transaction Documents” means the following documents to which the Issuer
is a party (taking account of the fact that certain documents will only be
(i) the Funds Flow Agreement (from and including the date on which the Issuer
enters into such agreement);
(iv) the Issuer Note Issuance Facility Agreement;
(v) the Issuer Subordinated Facility Agreement;
(vi) the Issuer Cash Management Agreement;
(vii) the Issuer Account Bank Agreement;
(viii) the Issuer and FleetCo Holdings Corporate Services Agreement;
(ix) the Issuer Hedging Agreements (from and including the date on which the
Issuer enters into any such agreement);
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(xiii) the VFN Funding Agreement;
(xiv) the FleetCo Italian Facility Agreement;
(xv) the Central Servicing Agreement;
(xvi) the Issuer Security Documents;
(xvii) the Issuer Spain TRO Declaration of Trust;
(xviii) the FleetCo Security Documents;
(xix) the Issuer Security Power of Attorney;
(xx) the Fee Letters;
(xxi) the Tax Deed of Covenant; and
(xxii) all documents approved by the Transaction Agent to which the Issuer is a
party in connection with or related to any of the above documents.
“Italian Account Bank Agreement” means the agreement to appoint the Italian
FleetCo Account Bank.
“Italian Account Mandate” has the meaning given to it in clause 4.1 of the
Italian Account Bank Agreement.
“Italian Bank Accounts” means:
(i) the Italian Transaction Account;
(ii) the Italian FleetCo Reserve Account (if any);
(iii) the Italian Dedicating Financing Account; and
(iv) any Additional Accounts opened and maintained in accordance with the
“Italian Dedicated Financing Account” means the bank account in Italy in the
name of Italian FleetCo with account number IBAN: IT23B0310401600000000826065
SWIFT CODE: DEUTITMMMIL in respect of the deposit of the sale proceeds received
from Vehicle Manufacturers and/or Vehicle Dealers (in the case of Programme
Vehicles) as well as Vehicle Dealers and other third parties (in the case of
Non-Programme Vehicles) in relation to the Vehicles from time to time sold by
Italian FleetCo.
“Italian FleetCo” means Avis Budget Italia S.p.A. Fleet Co. S.A.p.A., a
partnership limited by shares incorporated in Italy which, among other things,
holds title to or holds possession of the Vehicle Fleet in Italy.
“Italian FleetCo Account Bank” means the entity appointed as account bank under
the Italian Account Bank Agreement.
“Italian FleetCo Deed of Charge” means the English law deed of charge pursuant
to which, among other things, Italian FleetCo assigns, pledges and otherwise
creates a security over all its rights and interests in and to each of the
English Transaction Documents to which it is a party, in favour of the FleetCo
Security Agent.
“Italian FleetCo Post-Enforcement Priority of Payments” means the priority of
payments in part C (Italian FleetCo Post-Enforcement Priority of Payments) of
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“Italian FleetCo Pre-Enforcement Priority of Payments” means the priority of
payments in part C (Italian FleetCo Pre-Enforcement Priority of Payments) of
“Italian FleetCo Reserve Account” means the reserve account in Italy in the name
of Italian FleetCo and which may, from time to time be opened and maintained
with the Italian Account Bank.
“Italian FleetCo Secured Creditors” means the Issuer, the Italian Account Bank,
the FleetCo Italian Back-up Cash Manager, the Italian Servicer and the Central
Servicer, the Italian VAT Lender and the FleetCo Security Agent (including any
Receiver or Appointee thereof).
“Italian FleetCo Secured Property” means the assets from time to time secured by
the FleetCo Italian Security Documents and the Italian FleetCo Deed of Charge.
“Italian FleetCo Security Deed” means the security deed dated 5 March 2013
between, among others, Italian FleetCo, Italian Opco and the FleetCo Security
Agent in respect of, among other things, (i) an assignment of receivables by way
of security and (ii) a pledge over the Italian Bank Accounts.
“Italian FleetCo Share Pledge” means the pledge of all the shares in Italian
FleetCo.
“Italian FleetCo Shareholders Agreement” means the shareholders agreement
between Italian Opco and FleetCo Holdings.
“Italian FleetCo Shareholders Call Option” means the call option granted by
FleetCo Holdings under the Italian FleetCo Shareholders Agreement pursuant to
which Italian Opco may, on or after the exercise by Finco of the Italy Repayment
Option, exercise an option to purchase FleetCo Holdings’ shareholding in Italian
FleetCo.
“Italian Income Tax Consolidation Agreement” means the agreement dated 16 June
2012 between, among others, Italian FleetCo and Italian Opco in relation to,
among other things, the consolidation of corporate income tax of Italian FleetCo
between the parties to such agreement.
“Italian Mandate Agreement” means the agreement pursuant to which Italian
FleetCo grants a mandate to Italian Opco in respect of Italian FleetCo’s Vehicle
Fleet in Italy.
“Italian Master Lease Agreement” means, the master lease agreement dated 7 March
2013 entered into by, amongst others, Italian FleetCo and Italian Opco.
“Italian Opco” means Avis Budget Italia S.p.A.
“Italian Opco Event of Default” means an Event of Default in respect of Italian
“Italian Servicer” means Italian Opco which is to provide transaction management
services to Italian FleetCo.
“Italian Servicing Agreement” means the servicing and cash management agreement
between, among others, Italian FleetCo and Italian Opco in respect of Italian
FleetCo’s operations in Italy.
“Italian Transaction Account” means the bank account in Italy in the name of
Italian FleetCo with account number IBAN: IT15H0310401600000000825477 SWIFT
CODE: DEUTITMM.
“Italian Transaction Documents” means (taking account of the fact that certain
(i) the FleetCo Italian Facility Agreement;
78
(ii) the Italian Account Bank Agreement;
(iii) the Italian Account Mandate;
(iv) the Italian Master Lease Agreement;
(v) the Italian Servicing Agreement
(vi) the Italian Mandate Agreement;
(vii) the Italian FleetCo Shareholders Agreement;
(viii) the Italian FleetCo Share Pledge;
(ix) the Italian FleetCo Security Deed; and
(x) any other Transaction Documents expressed to be governed by Italian law and
designated as an “Italian Transaction Document” by the Transaction Agent and
Italian FleetCo.
“Italian VAT Lender” means Avis Finance Company Limited in its capacity as the
Lender under the VAT Loan Agreement.
“Italian VAT Loan Agreement” means the Italian VAT Loan Agreement dated 5 March
2013 and entered into between Italian FleetCo and the Italian VAT Lender.
“Italian VAT Sharing Agreement” means the agreement dated 18 May 2012 between,
among others, Italian FleetCo and Italian Opco in relation to the Italian VAT
sharing arrangement between the parties to such agreement.
“Italian Vehicle Documents” means, in respect of Vehicles in Italy, the keys and
spare keys to the Vehicles, the property certificates (certificato di proprietà)
and the registration and technical documents regarding the Vehicles (carta di
circolazione and manuale dell’utente).
“Italy Repayment Option” means, in respect of a TRO Default, the Country
Repayment Option applicable to Italian Opco and Italian FleetCo, as more
Agreement.
“Labour and Social Security Laws” means any regulation governing labour-related
matters and relating to employer’s obligations, also including, for the
avoidance of doubt, (i) paying contributions for social security and mandatory
insurance for industrial accidents and occupational diseases and fulfilling
health and safety obligations and (ii) paying salary allowances and all other
amounts due to the employees, including that portion of TFR (trattamento di fine
rapporto) that accrues while performing the Services.
“Labour Claim” means any claim (save for claims brought in bad faith or on
frivolous grounds) or litigation or social security or insurance deficiency
assessment asserted against (i.e., brought, initiated or otherwise notified to)
the Servicer and/or any of its Sub-contractors and/or any subcontractor and/or
partner of any of its Sub-contractors in connection with the application of
Labour and Social Security Laws, to the extent that any such claims may create
liability for the Italian FleetCo.
“Labour Payments” means any and all payments due by the Servicer and/or any of
its Sub-contractors and/or any subcontractor and/or partner of any of its
Sub-contractors in application of Labour and Social Security Laws, to the extent
that failure to pay any such amounts may create liability for the Italian
FleetCo.
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“Law” means:
(a) any constitution, decree, judgment, legislation, order, ordinance,
regulation, statute, treaty or other legislative measure in any Relevant
Jurisdiction; and
(b) any present or future directive, regulation, practice, concession or
requirement which has the force of law and which is issued by any governmental
body, agency or department or any central bank or other fiscal, monetary,
regulatory, self-regulatory or other authority or agency.
“Lease Commencement Date” means, with respect to a Vehicle, the date on which
the Vehicle Manufacturer or Dealer delivers the Vehicle to the Lessor (or the
Servicer or the Lessee on the Lessor’s behalf for the purposes of the Lessee
leasing such Vehicle from the Lessor under and in accordance with the relevant
Master Lease Agreement).
“Lease Determination Date” means the day falling 2 Business Days prior to each
Lease Payment Date provided that if such date is not a Business Day, the
immediately preceding Business Day.
“Lease Expiration Date” means, in relation to a Vehicle the subject of a lease
between the relevant Lessor and Lessee pursuant to the relevant Master Lease
Agreement, the earliest to occur of:
(a) if such Vehicle is a Programme Vehicle returned under a Vehicle Manufacturer
Programme, the Turn-back Date for such Vehicle;
(b) if such Vehicle is sold to a third party (including to another FleetCo or an
Opco) (other than pursuant to a Vehicle Manufacturer Programme), the date on
which the possession of such Vehicle is transferred from the Lessee or the
Lessor to such person;
(c) if such Vehicle becomes a Casualty or a Non-Eligible Vehicle, the date funds
in the amount of the Casualty Payment thereof are deposited in the relevant
FleetCo Bank Account by the Lessee;
(d) if such Vehicle has been purchased on credit terms with a retention of title
provision in the Vehicle Manufacturer Agreement or Vehicle Dealer Agreement and
the purchase price has not been paid to the relevant Vehicle Manufacturer or
Dealer, the date on which the Vehicle Manufacturer or Vehicle Dealer, as the
case may be, has repossessed such Vehicle;
(e) in relation to any Vehicle subject to a lease between a Lessor and a Lessee
under the Italian Master Lease Agreement, the French Master Lease Agreement, the
Spanish Master Lease Agreement and/or the Master Dutch Fleet Lease Agreement,
the Master Lease End Date;
(f) any other date for the termination of a lease in the relevant Master Lease
Agreement; and
(g) the Estimated Lease Expiration Date in relation to the Master German Fleet
Lease Agreement, subject to any lease extension in accordance with the Master
German Fleet Lease Agreement.
“Lease Payment Date” means the day falling 3 Business Days prior to a Settlement
Date.
“Lease Reports” means the reports to be provided by the relevant Lessee (as
defined in and in accordance with the relevant Master Lease Agreement).
“Lease Term” means, in relation to any relevant Vehicle, the period from (and
including) the relevant Lease Commencement Date to (and including) the relevant
Lease Expiration Date.
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“Ledger” has the meaning given to it in part C (Cash Management, records and
information reporting) of schedule 1 to the relevant Servicing Agreement.
“Lessee” means each lessee under the Spanish Master Lease Agreement, the Italian
Master Lease Agreement, the Master Dutch Fleet Lease Agreement, the French
Master Lease Agreement and the Master German Fleet Lease Agreement,
respectively.
“Lessor” means each relevant FleetCo.
“Lessor Power of Attorney” means the lessor power of attorney in the form set
out in schedule 1 (Form of Lessor Power of Attorney) to the Liquidation Agency
Agreement.
“Liabilities” means any loss, damage, cost, charge, claim, demand, expense,
judgment, action, proceedings or other liability whatsoever (including, without
limitation, in respect of taxes, duties, levies, imposts and other charges) and
legal fees on a full indemnity basis.
“Light Truck” means a motor vehicle having at least four wheels, used for the
carriage of goods (which includes, as the case may be, semitrailer) and having a
maximum weight not exceeding 3.5 metric tons.
“Liquidation Agency Agreement” means the agreement between, among others, the
FleetCo Security Agent, the Liquidation Agent and the FleetCos, pursuant to
which the Liquidation Agent is appointed to provide liquidation agency services
to the relevant FleetCo as owner of (or the entity in possession of) the
relevant vehicle fleet.
“Liquidation Agent” means FISERV Automotive Solutions, Inc and any successor or
replacement appointed under the Liquidation Agency Agreement and which has
acceded to the Framework Agreement and each FleetCo German Security Document and
the German FleetCo Deed of Charge in accordance with clause 11.4 (Acceding
Liquidation Agent) of the Framework Agreement.
“Liquidation Agent Service Commencement Notice” means the notice delivered to
the Liquidation Agent under the Liquidation Agency Agreement pursuant to which
the Liquidation Agent may exercise certain rights in respect of the Vehicle
Fleet.
“Liquidity Facility Arrangement” means a liquidity facility, liquidity asset
purchase facility or similar arrangement between a Conduit Senior Noteholder and
a liquidity provider pursuant to which such Liquidity Provider agrees that from
time to time it shall make available funds to the Conduit Senior Noteholder for
the purpose of the Conduit Senior Noteholder subscribing for and funding the
Senior Notes in accordance with the terms of the relevant Issuer Note Issuance
Facility Agreement in respect of any period.
“Liquidity Provider” means a bank or financial institution which has entered
into a Liquidity Facility Arrangement with a Conduit Senior Noteholder.
“Listing Sponsor” means Carey Olsen Corporate Finance Limited.
“LMA” means the Loan Market Association.
“LOC Pro Rata Share” means, with respect to any Issuer LC Provider as of any
date, the fraction (expressed as a percentage) obtained by dividing:
(i) the available amount under such Issuer LC Provider’s Issuer Letter of Credit
as of such date by
(ii) an amount equal to the aggregate available amount under all Issuer Letters
of Credit as of such date,
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provided that only for purposes of calculating the LOC Pro Rata Share with
respect to any Issuer LC Provider as of any date, if such Issuer LC Provider has
not complied with its obligation to pay the Issuer the amount of any draw under
its Issuer Letter of Credit made prior to such date, the available amount under
such Issuer LC Provider’s Issuer Letter of Credit as of such date shall be
treated as reduced (for calculation purposes only) by the amount of such unpaid
demand and shall not be reinstated for purposes of such calculation unless and
until the date as of which such Issuer LC Provider has paid such amount to the
Issuer and been reimbursed by the Lessee for such amount (provided that the
foregoing calculation shall not in any manner reduce the undersigned’s actual
liability in respect of any failure to pay any demand under its Issuer Letter of
Credit).
“LPA” means the Law of Property Act 1925.
“Majority Senior Noteholders” means at least 2 Senior Noteholders whose
proportion of the total of all the Senior Note Principal Amount Outstanding
together aggregates more than 66 2/3 per cent.
“Mandatory Cost” means the percentage rate per annum calculated by the
Transaction Agent in accordance with schedule 4 (Mandatory Cost) to the Issuer
Note Issuance Facility Agreement.
“Margin Based Profit Amount” means, in respect of Dutch FleetCo in Spain, Dutch
FleetCo in Germany, Dutch FleetCo in The Netherlands, French FleetCo in France
or Italian FleetCo in Italy (as applicable) and a Lease Determination Date, the
product of:
(a) the FleetCo Total Borrowed Amount in respect of such Lease Determination
Date;
(b) the FleetCo Profit Margin in respect of such Lease Determination Date; and
(c) the actual number of days in the Related Month divided by 360.
“Master Definitions Agreement” means this Agreement.
“Master Dutch Fleet Lease Agreement” means the master lease agreement dated on
or about the Dutch Accession Date entered into by, amongst others, Dutch FleetCo
and Dutch Opco.
“Master Dutch Fleet Purchase Agreement” means the master purchase agreement
dated on or about the Dutch Accession Date between, amongst others, Dutch
FleetCo and Dutch Opco.
“Master German Fleet Lease Agreement” means the master lease agreement dated
5 March 2013 as amended, restated, modified, supplemented or waived from time to
time between, amongst others, Dutch FleetCo and German Opco.
“Master German Fleet Purchase Agreement” means the master purchase agreement
time to time between, amongst others, Dutch FleetCo and German Opco.
“Master Lease Agreement” means the Master German Fleet Lease Agreement, the
Italian Master Lease Agreement, the Master Dutch Fleet Lease Agreement, the
French Master Lease Agreement or the Spanish Master Lease Agreement (as
applicable).
“Master Lease End Date” means, in relation to a Master Lease Agreement, the
earliest to occur of:
(a) any Master Lease Scheduled Expiry Date with respect to the Italian Master
Lease Agreement, the French Master Lease Agreement and the Spanish Master Lease
Agreement, provided that no Master Lease End Date will occur if a Master Lease
Extension/Renewal Agreement has been executed within 5 Business Days after the
Master Lease Scheduled Expiry Date;
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(b) the date on which the termination of the relevant Master Lease Agreement
takes effect following the occurrence of a Master Lease Termination Event; and
(c) in respect of France, Italy and Spain, the date on which the 60 days’ notice
given by the relevant FleetCo expires following exercise of the FleetCo’s rights
in accordance with relevant provision of the related Master Lease Agreement
which (in the case of Italian FleetCo) is clause 27.1.1 of the Italian Master
Lease Agreement, (in the case of French FleetCo) is clause 28.1.1 of the French
Master Lease Agreement and (in the case of Dutch FleetCo, Spanish Branch) is
clause 28.1.1 of the Spanish Master Lease Agreement.
“Master Lease Extension Agreement” means, in relation to:
(a) the Spanish Master Lease Agreement, an agreement executed by Dutch FleetCo
and Spanish Opco which provides that the Master Lease Scheduled Expiry Date in
respect of the Spanish Master Lease Agreement will be extended for a further
period of 3 months from the date of such agreement;
(b) the Italian Master Lease Agreement, an agreement executed by Italian FleetCo
and Italian Opco which provides that the Master Lease Scheduled Expiry Date in
respect of the Italian Master Lease Agreement will be renewed for a further
(c) the French Master Lease Agreement, an agreement executed by French FleetCo
and French Opco which provides that the Master Lease Scheduled Expiry Date in
respect of the French Master Lease Agreement will be renewed for a further
period of 3 months from the date of such agreement; and
(d) the Master German Fleet Lease Agreement, an agreement executed by Dutch
FleetCo and German Opco which provides that the Master Lease Scheduled Expiry
Date in respect of the Master German Fleet Lease Agreement will be extended
subject to the Lease Expiration Date falling no later than 20 months from the
Lease Commencement Date.
“Master Lease Extension/Renewal Agreement” means, in relation to the Italian
Master Lease Agreement, the French Master Lease Agreement and the Spanish Master
Lease Agreement, the Master Lease Extension Agreement.
“Master Lease Payment Default” means, in respect of any Master Lease Agreement,
the occurrence of a default in the payment of any Rent or other amount payable
by the relevant Lessee under the relevant Master Lease Agreement for a period of
four (4) Business Days (whether or not formally demanded).
“Master Lease Scheduled Expiry Date” means, in relation to the Italian Master
Agreement, the date falling 3 calendar months after:
(a) the Lease Commencement Date; or
(b) the date on which the most recent Master Lease Extension/Renewal Agreement
became effective.
“Master Lease Termination Event” means, in respect of the Lessee under (i) the
Spanish Master Lease Agreement, (ii) the Italian Master Lease Agreement,
(iii) the Master Dutch Fleet Lease Agreement, (iv) the French Master Lease
Agreement, (v) the Master German Fleet Lease Agreement (as applicable) (for the
purposes of this definition, the “Relevant Lessee”), the occurrence of any of
the following:
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(i) (in respect of the Spanish Master Lease Agreement, French Master Lease
Agreement and the Italian Master Lease Agreement):
(a) a Spanish Opco Event of Default, a French Opco Event of Default or an
Italian Opco Event of Default (as applicable) (other than an Insolvency Event of
the Relevant Lessee); or
(b) the expiry of 60 days following the delivery of the notice by the relevant
FleetCo to the Transaction Agent, the Issuer and the Relevant Lessee, notifying
the Transaction Agent, the Issuer and the Relevant Lessee of the exercise of the
FleetCo’s rights to terminate the relevant Master Lease Agreement in accordance
with relevant provision of such Master Lease Agreement; and
(ii) (in respect of the Master German Fleet Lease Agreement and the Master Dutch
Fleet Lease Agreement) a German Opco Event of Default or a Dutch Opco Event of
Default.
“Master Lease Termination Notice” has the meaning given to it in clause 28.2
(Termination by Notification) of the Spanish Master Lease Agreement, clause 27.2
(Termination by Notification) of the Italian Master Lease Agreement, clause 27.2
of the Master Dutch Fleet Lease Agreement, clause 28.2 of the French Master
Lease Agreement and clause 25.2.7 of the Master German Fleet Lease Agreement.
“Material Adverse Effect” means, in respect of each of Dutch FleetCo, Italian
FleetCo, French FleetCo and the Issuer and as the context specifies, a material
adverse effect on the business, operations, assets or financial condition of
such party which has resulted in, or will result in, an inability of such party
to perform and comply with its obligations under any Transaction Document to
which it is a party.
“Measurement Month” means, with respect to any date and any Country,
collectively, each of the three periods most closely preceding such date, each
of which periods shall consist of one calendar month or the smallest number of
consecutive calendar months, in which:
(a) at least 250 Eligible Vehicles owned by Dutch FleetCo in Spain, Dutch
or Italian FleetCo in Italy (as applicable) which were At Risk Assets were sold
at auction or otherwise; or
(b) at least one twelfth of the aggregate Net Book Value of such Eligible
Vehicles owned by Dutch FleetCo in Spain, Dutch FleetCo in Germany, Dutch
FleetCo in The Netherlands, French FleetCo in France or Italian FleetCo in Italy
(as applicable) as of the last day of each such period was sold at auction or
otherwise,
provided, however, that no calendar month included in any Measurement Month
shall be included in any other Measurement Month.
“Measurement Month Average” means the lesser of:
(a) with respect to any Measurement Month and any Country, the percentage
equivalent of a fraction, the numerator of which is the aggregate amount of the
VAT-exclusive amount of the proceeds of sale of all Eligible Vehicles owned by
Netherlands, French FleetCo in France or Italian FleetCo in Italy (as
applicable) which were At Risk Assets sold at auction or otherwise during such
Measurement Month and the denominator of which is the aggregate Net Book Value
of such Eligible Vehicles on the dates of their respective sales; and
(b) 100 per cent.
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“Minimum Drawing Amount” means Euro 2,500,000.
“Monthly Accounting Reference Period” means each calendar month.
“Monthly Central Servicer Report” means the monthly report substantially in the
form set out in the Framework Agreement to be delivered by the Central Servicer
to, among others, the Transaction Agent pursuant to clause 15 (Provisions of
Information and Reports) of the Framework Agreement and, if amended, amended
with the prior consent of the Transaction Agent and the Central Servicer and in
form and substance satisfactory to the Transaction Agent.
“Monthly Input VAT Ledger” has the meaning given to it in the schedule 1 to each
of the relevant Servicing Agreements.
“Monthly Output VAT Ledger” has the meaning given to it in the schedule 1 to
each of the relevant Servicing Agreements.
“Monthly Risk Vehicle Loss” means the amount by which the aggregate Net Book
Value of the At Risk Vehicles sold in the immediately preceding calendar month
exceeds the aggregate sale proceeds of such At Risk Vehicles.
“Monthly Risk Vehicle Profit” means the amount by which the aggregate sale
proceeds realised on the At Risk Vehicles in the immediately preceding calendar
month and received by the relevant FleetCo exceeds the aggregate Net Book Value
of such At Risk Vehicles.
“Monthly Target Corporate Profit Amount” means an amount calculated on a Lease
Determination Date being the greater of (i) the Margin Based Profit Amount in
respect of such Lease Determination Date and (ii) Euro [REDACTED] in respect of
such Lease Determination Date.
“Moody’s” means Moody’s Investors Services Limited or any successor to its
rating business.
“Motor Third Party Liability Cover” means the insurance cover which is a
Requirement of Law, and, even if not so required by law, insurance protecting
against liability in respect of bodily injury or death caused to third parties.
“Motor Third Party Property Damage Liability Cover” means the insurance
protecting against loss or damage to property belonging to third parties.
“Negotiation Guidelines” means the criteria required in respect of the terms of
the Vehicle Purchasing Agreements entered into by the FleetCos in respect of the
Vehicle Fleet in Spain, France and Italy, as set out in schedule 2 to the
Spanish Servicing Agreement, schedule 6 to the French Master Lease Agreement and
schedule 2 to the Italian Servicing Agreement (as applicable).
“Net Book Value” means, on any date with respect to each Vehicle, such Vehicle’s
Capitalised Cost, minus the aggregate Depreciation Charges accrued from the date
of registration of such Vehicle to such date.
“New Senior Noteholder” has the meaning given to it in clause 5.1 (Increase in
Senior Noteholder Commitments) of the Issuer Note Issuance Facility Agreement.
“Non-Eligible Assets” means (i) Non-Eligible Vehicles and (ii) Non-Eligible
Receivables.
“Non-Eligible Programme Vehicle” means each Programme Vehicle which is the
subject of a Vehicle Manufacturer Programme with a Vehicle Manufacturer in
respect of which a Vehicle Manufacturer Event of Default has occurred.
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“Non-Eligible Receivables” means, in respect of Dutch FleetCo in Spain, Dutch
or Italian FleetCo in Italy, its Vehicle Manufacturer Receivables and Vehicle
Dealer Receivables that do not constitute Eligible Receivables.
“Non-Eligible Vehicles” means Vehicles delivered to a FleetCo that are not
Eligible Vehicles.
“Non-Imperative Principles” means those principles indicated as “Non-Imperative”
in, as applicable, schedule 2 of the Italian Servicing Agreement, schedule 6 of
the French Master Lease Agreement and schedule 2 of the Spanish Servicing
Agreement.
“Non-Investment Grade Non-Programme Vehicles” means Non-Programme Vehicles
purchased by the relevant FleetCo for each Country from Non-Investment Grade
Vehicle Manufacturers or, in the case of Germany and the Netherlands, by the
relevant Opco from Non-Investment Grade Vehicle Manufacturers and sold to Dutch
FleetCo, provided that:
(a) Vehicles whose Borrower Vehicle Fleet NBV exceed the Borrower Vehicle Fleet
be Vehicles for the purposes of “Non-Investment Grade Non-Programme Vehicles”;
and
(b) any such excess in Borrower Vehicle Fleet NBV is or has been allocated on a
“Non-Investment Grade Programme Vehicles” means, for each Country:
(a) Programme Vehicles purchased by the relevant FleetCo from Non-Investment
Grade Vehicle Manufacturers or Vehicle Dealers for each Country or, in the case
of Germany and the Netherlands, by the relevant Opco from Non-Investment Grade
Vehicle Manufacturers or Vehicle Dealers and sold to Dutch FleetCo, provided
that:
Fleet NBV of all Eligible Vehicles that comply with the Concentration Limits
shall not be Vehicles for the purposes of “Non-Investment Grade Programme
Vehicles”; and
a pro rata basis to the Borrower Vehicle Fleet NBV of Programme Vehicles and the
(b) Vehicle Manufacturer Receivables held by French FleetCo or Dutch FleetCo in
Germany and The Netherlands in respect of any Non-Investment Grade Vehicle
Manufacturers pursuant to Vehicle Manufacturer Buy-Back Agreements which provide
for a valid and enforceable retention of title provision to the benefit of the
relevant FleetCo; and
(c) Vehicle Dealer Receivables held by French FleetCo or Dutch FleetCo in
Germany and The Netherlands in respect of any Vehicle Dealer pursuant to Vehicle
Dealer Buy-Back Agreements which provide for a valid and enforceable retention
of title provision to the benefit of the relevant FleetCo.
“Non-Investment Grade Vehicle Manufacturer” means any Vehicle Manufacturer which
is not an Investment Grade Vehicle Manufacturer.
“Non-Investment Grade Vehicle Manufacturer Receivables (for which a FleetCo
holds enforceable title)” means, at any time and in relation to any Country,
Vehicle Manufacturer Receivables owed by any Non-Investment Grade Vehicle
Manufacturer to the relevant FleetCo in such Country pursuant to Vehicle
Manufacturer Buy-Back Agreements or Vehicle Dealer Buy-Back Agreements which
provide for a valid and enforceable retention of title provision to the benefit
of the relevant FleetCo.
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“Non-Programme Vehicle” means each Eligible Vehicle which is not a Programme
Vehicle.
“Non-Utilisation Fee” means, in respect of each Senior Noteholder Available
Commitment of a Senior Noteholder, the fee payable by the Issuer in accordance
with the relevant Senior Noteholder Fee Letter.
“Note Certificate” means a Restricted Senior Note Certificate or an Unrestricted
Senior Note Certificate.
“Notice” means any notice delivered under or in connection with any Transaction
Document.
“Notional Commitment” means:
(i) in respect of a Senior Noteholder Group, the commitment amount from time to
time as set out in the relevant Senior Noteholder Fee Letter in respect of such
Senior Noteholder Group; and
(ii) in respect of a Senior Noteholder that does not form part of a Senior
Noteholder Group, the commitment amount from time to time as set out in the
relevant Senior Noteholder Fee Letter in respect of such Senior Noteholder.
“Ongoing Issuer Fee” means the aggregate of all amounts due and payable by the
Issuer pursuant to:
(i) in respect of the Issuer Revolving Period Priority of Payments:
(a) paragraph (a) (in respect of amounts payable to the Issuer Security
Trustee);
(b) paragraph (b) (in respect of amounts payable to the Transaction Agent, the
Registrar, the Issuer Account Bank and the Issuer Cash Manager);
(c) paragraph (c) (in respect of Tax payments);
(d) paragraph (d) (in respect of amounts payable to the FleetCo Holdings
Corporate Services Provider, the Issuer Corporate Services Providers, the Issuer
Share Trustee, the Issuer Profit Amount, the Issuer’s independent accountants,
auditors, legal advisers and Tax advisers, the Channel Islands Stock Exchange,
the Listing Sponsor, the relevant Rating Agencies and the Central Servicer);
(e) paragraph (e)(ii) (in respect of commitment fees);
(f) paragraph (e)(iii) (in respect of amounts payable to the Issuer Hedge
Counterparties);
(g) paragraph (h) (in respect of other amounts payable to the Issuer Hedge
Counterparties);
(h) paragraph (i) (in respect of indemnity payments for Currency Hedging
Breakage Costs payable to the applicable Conduit Senior Noteholder);
(i) paragraph (j) (in respect of amounts of interest payable in respect of any
Issuer Subordinated Advances other than those drawn for the purpose set out in
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(j) paragraph (k) (in respect of amounts of principal payable in respect of
any Issuer Subordinated Advances other than those drawn for the purpose set out
in clause 4.2.1(a) of the Issuer Subordinated Facility Agreement);
(k) paragraph (l) (in respect of amounts payable to the other Issuer Secured
Creditors); and
(l) paragraph (m) (in respect of amounts payable to any other parties);
(ii) in respect of the Issuer Scheduled Amortisation Period Priority of
Payments:
Trustee);
Profit Amount, the Issuer’s independent accountants, auditors, legal advisers
and Tax advisers, the Channel Islands Stock Exchange, the Listing Sponsor, the
relevant Rating Agencies and the Central Servicer);
Counterparties);
Counterparties);
(j) paragraph (j) (in respect of amounts of principal payable in respect of
(k) paragraph (k) (in respect of amounts payable to the other Issuer Secured
Creditors); and
(l) paragraph (l) (in respect of amounts payable to any other parties);
(iii) in respect of the Issuer Rapid Amortisation Period (Pre-Enforcement)
Priority of Payments:
Trustee);
(d)
paragraph (d) (in respect of amounts payable to the Issuer Corporate Services
Provider, the FleetCo Holdings Corporate Services Provider, the Issuer Profit
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Amount, the Issuer’s independent accountants, auditors, legal advisers and Tax
advisers, the Channel Islands Stock Exchange, the Listing Sponsor, the relevant
Rating Agencies and the Central Servicer);
Counterparties);
(g) paragraph (g) (in respect of other amounts payable to the Issuer Hedge
Counterparties);
(h) paragraph (h) (in respect of indemnity payments for Currency Hedging
(i) paragraph (i) (in respect of amounts of interest payable in respect of any
(j) paragraph (i) (in respect of amounts of principal payable in respect of
(k) paragraph (j) (in respect of amounts payable to the other Issuer Secured
Creditors); and
(l) paragraph (k) (in respect of amounts payable to any other parties);
(iv) in respect of the Issuer Rapid Amortisation (Post-Enforcement) Priority of
Payments:
Trustee);
(c) paragraph (c) (in respect of Tax payments and amounts payable to the
Issuer Corporate Services Provider, the FleetCo Holdings Corporate Services
Provider, the Issuer’s independent accountants, auditors, legal advisers and Tax
advisers, the Channel Islands Stock Exchange and the relevant Rating Agencies);
(d) paragraph (d)(ii) (in respect of commitment fees);
(e) paragraph (d)(iii) (in respect of amounts payable to the Issuer Hedge
Counterparties);
(f) paragraph (g) (in respect of other amounts payable to the Issuer Hedge
Counterparties);
(g) paragraph (h) (in respect of indemnity payments for Currency Hedging
(h) paragraph (i) (in respect of amounts of interest payable in respect of any
clause 4.2.1(a) of the Issuer Subordinated Facility);
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(j) paragraph (j) (in respect of amounts payable to the other Issuer Secured
Creditors);
(k) paragraph (k) (in respect of amounts payable in respect of the Issuer
Profit Amount); and
“Onward Purchase Price” means, in respect of any Vehicle in Germany, the
purchase price as specified in the Purchase Offer and Lease Request payable by
Dutch FleetCo to German Opco which (i) for a Vehicle (other than a German Opco
Existing Fleet Vehicle) shall be equal to the Initial Purchase Price payable by
German Opco with regard to such vehicles and (if necessary) calculated by way of
break-down of the aggregate price for each type of vehicle subject to the
respective Purchase Offer and Lease Request or (ii) for a German Opco Existing
Fleet Vehicle, shall be equal to the Net Book Value on the Initial Funding Date
for such German Opco Existing Fleet Vehicle, in each case excluding any VAT and
Charge Costs.
“Opco” means Spanish Opco, Italian Opco, Dutch Opco, French Opco or German Opco
(as the case may be).
“Opco Change of Control” means the Avis Europe Group ceasing to (x) own directly
or indirectly at least 100 per cent. of the share capital of Finco, Avis Europe
or any Opco, (y) have the right or ability to cast at least 100 per cent. of the
votes capable of being cast in shareholders’ general meetings of Finco, Avis
Europe or any Opco or (z) have the right or ability to appoint or remove all
directors (or equivalent officers) of the board of directors (or equivalent
body) of Finco, Avis Europe or any Opco or to give directions with respect to
the operating and financial policies of any Opco with which the directors or
other equivalent officers of Finco, Avis Europe or such Opco (as applicable) are
obliged to comply.
“Opco Event of Default” means an event of default as set out in part 3 (Opco
“Opco Repurchase Price” means, in respect of any Vehicle in Germany, the
repurchase price payable by German Opco to Dutch FleetCo which (i) for a
Programme Vehicle shall be equal to the Vehicle Manufacturer Repurchase Price,
less any VAT and (ii) for Non-Programme Vehicles, the Estimated Sales Price in
respect of that Vehicle, less any VAT.
“Operating Documents” means (taking account of the fact that certain documents
(i) the Italian Master Lease Agreement;
(ii) the Spanish Master Lease Agreement;
(iii) the French Master Lease Agreement;
(iv) the Master German Fleet Lease Agreement;
(v) the Master German Fleet Purchase Agreement;
(vi) the Master Dutch Fleet Lease Agreement;
(vii) the Master Dutch Fleet Purchase Agreement;
(viii) the German Trust Agreement;
(ix) the Italian Servicing Agreement;
(x) the Italian Mandate Agreement;
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(xi) the VAT Loan Agreement;
(xii) the Italian VAT Sharing Agreement;
(xiii) the Italian Income Tax Consolidation Agreement;
(xiv) the Italian FleetCo Shareholders Agreement;
(xv) the Spanish Servicing Agreement;
(xvi) the Spanish Account Bank Agreement;
(xvii) the German Account Bank Agreement;
(xviii) the Dutch Account Bank Agreement;
(xix) the French Account Bank Agreement;
(xx) the French Servicing Agreement;
(xxi) the German Custody Agreement;
(xxii) the Italian Account Bank Agreement;
(xxiii) the FleetCo Back-up Cash Management Agreement;
(xxiv) the Liquidation Agency Agreement;
(xxv) the Central Servicing Agreement;
(xxvi) the Finco Payment Guarantee;
(xxvii) the Avis Europe Payment Guarantee;
(xxviii) the Parent Performance Guarantee; and
(xxix) any other documents to which Dutch FleetCo, French FleetCo and/or Italian
FleetCo is a party, approved by the FleetCo Security Agent and the Transaction
Agent and are in respect of the servicing and/or leasing of the Vehicle Fleet in
each Country.
“Original Financial Statements” means:
(a) in relation to Avis Europe, its audited financial statements for its
financial year ended 31 December 2011 and (if prepared) its unaudited
consolidated management accounts for the financial quarter ended 31 December
2012;
(b) in relation to each of Finco, Italian FleetCo and Spanish Opco, its audited
financial statements for its financial year ended 31 December 2011;
(c) in relation to the German Opco, the consolidated financial statements of
AVIS Autovermietung Beteiligungsgesellschaft mbH Oberursel for its financial
year ended 31 December 2011;
(d) in relation to the Italian Opco, its audited financial statements for its
financial year ended 31 December 2011;
(e) in relation to the French Opco, its audited financial statements for its
financial year ended 31 December 2012; and
(f) in relation to the Dutch Opco, its audited financial statements for its
financial year ended 31 December 2012.
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“Original FleetCo Advance Drawdown Date” means, in respect of a FleetCo Advance,
the date of FleetCo Advance drawdown as specified in the relevant FleetCo
Advance Drawdown Notice.
“Original Scheduled Amortisation Commencement Date” means 20 April 2017.
“outstanding” means, in relation to the Senior Notes or a FleetCo Advance or a
VFN Advance (as applicable), all Senior Notes or FleetCo Advances or VFN
Advances (as applicable) other than:
(a) those which have been redeemed in accordance with the Issuer Note Issuance
Facility Agreement or VFN Funding Agreement or repaid in accordance with the
relevant FleetCo Facility Agreement (as applicable);
(b) those in respect of which the date for redemption or repayment (as
applicable) in accordance with the provisions of the Issuer Note Issuance
Facility Agreement, VFN Funding Agreement or the relevant FleetCo Facility
Agreement (as applicable) has occurred and for which the redemption moneys or
repayment moneys (including, in each case, all interest accrued thereon to the
date for such redemption or repayment (as applicable)) have been duly paid to
the Issuer, the FleetCo Security Agent, the Issuer Cash Manager, the Transaction
Agent (as applicable) and (following the occurrence of an Issuer Enforcement
Event) the Issuer Security Trustee in the manner provided for in the Issuer Note
Issuance Facility Agreement, VFN Funding Agreement or the relevant FleetCo
Facility Agreement (as applicable) and remain available for payment in
accordance with the Issuer Note Issuance Facility Agreement, VFN Funding
Agreement or the relevant FleetCo Facility Agreement (as applicable);
(c) those which have been purchased and surrendered for cancellation as provided
in the Issuer Note Issuance Facility Agreement, VFN Funding Agreement or the
relevant FleetCo Facility Agreement (as applicable) and notice of the
cancellation of which has been given to the Issuer, the Issuer Security Trustee,
the FleetCo Security Agent, the Issuer Cash Manager and/or the Transaction Agent
(as applicable);
(d) those which have become void under the Issuer Note Issuance Facility
Agreement, VFN Funding Agreement or and the relevant FleetCo Facility Agreement
(as applicable); and
provided that for each of the following purposes in respect of the Issuer Note
Issuance Facility Agreement:
(i) the right in respect of any direction or request by the relevant Senior
Noteholders;
(ii) the determination of how many and which Senior Notes are for the time being
outstanding for the purposes of clause 24 (Consents, Amendments, Waivers and
Modifications) of the Framework Agreement, any discretion, power or authority,
whether contained in the Framework Agreement or provided by law, which the
Transaction Agent or the Issuer Security Trustee is required to exercise in or
by reference to the interests of the relevant Senior Noteholders; and
(iii) the determination by the Issuer Security Trustee or the Transaction Agent
whether any event, circumstance, matter or thing is, in its opinion, materially
prejudicial to the interests of the relevant Senior Noteholders (to the extent
that the Issuer Security Trustee or the Transaction Agent (as applicable) is
required to make such determination in accordance with the Transaction
Documents),
those Senior Notes which are for the time being held by or on behalf of or for
the benefit of the Issuer or any member of the Avis Group or any Affiliate of
the Avis Group shall (unless and until ceasing to be so held) be deemed not to
remain outstanding.
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“Parallel Debt” means the German Parallel Debt, Dutch Parallel Debt or the
Spanish Parallel Debt, as applicable.
“Parent” means Avis Budget Car Rental, LLC.
“Parent Change of Control” means (a) ABG shall at any time cease to own or
control, directly or indirectly, greater than 50 per cent. of the Voting Stock
of the Parent or (b) any of the Opcos is no longer indirectly wholly-owned by
the Parent.
“Parent Event of Bankruptcy” shall be deemed to have occurred with respect to
the Parent if:
(a) a case or other proceeding shall be commenced, without the application or
consent of the Parent, in any court, seeking the liquidation, reorganisation,
debt arrangement, dissolution, winding up, or composition or readjustment of
debts of the Parent, the appointment of a trustee, receiver, custodian,
liquidator, assignee, sequestrator or the like for the Parent or all or any
substantial part of its assets, or any similar action with respect to the Parent
under any law relating to bankruptcy, insolvency, reorganisation, winding up or
composition or adjustment of debts, and such case or proceeding shall continue
undismissed, or unstayed and in effect, for a period of 60 consecutive days; or
an order for relief in respect of the Parent shall be entered in an involuntary
case under the federal bankruptcy laws or other similar laws now or hereafter in
effect; or
(b) the Parent shall commence a voluntary case or other proceeding under any
applicable bankruptcy, insolvency, reorganisation, debt arrangement, dissolution
or other similar law now or hereafter in effect, or shall consent to the
appointment of or taking possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator (or other similar official) for the Parent or
for any substantial part of its property, or shall make any general assignment
for the benefit of creditors; or
(c) the board of directors or other similar governing body of the Parent shall
vote to implement any of the actions set forth in paragraph (b) above.
“Parent Event of Default” means any of the following:
cessation described in Opco Change of Control is in relation to the share
(as applicable) Spanish Opco or Italian Opco or French Opco (as applicable) and
(2) the Spain Repayment Option (in respect of Spanish Opco) or the Italy
Repayment Option (in respect of Italian Opco) or the France Repayment Option (in
respect of French Opco) is exercised within 30 days of such cessation, there
shall not be any Parent Event of Default;
(b) the occurrence of a Parent Change of Control;
(c) the occurrence and continuation of an “event of default” under the Credit
(d) any Parent Event of Bankruptcy occurs; and
(e) failure by the Parent or its successor or replacement to comply with any of
its obligations under the Parent Performance Guarantee.
“Parent Performance Guarantee” means the irrevocable guarantee and indemnity
from the Parent in favour of the relevant FleetCo in respect of the obligations
(other than payment obligations) of each Opco under the Transaction Documents to
which such Opco is a party.
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“Participating Member State” means any member state of the European Union that
adopts or has adopted, and, in each case, continues to adopt, the euro as its
lawful currency in accordance with legislation of the European Union relating to
Economic and Monetary Union.
“Party” means, when used in an agreement, deed or other document, a party to
that agreement, deed or other document.
“Passenger Car” means a motor vehicle having at least four wheels, used for the
carriage of passengers and comprising no more than seven seats, including the
driver’s seat.
“Payment” means, in respect of any Liabilities (or any other liabilities or
obligations), a payment, prepayment, repayment, redemption, defeasance or
discharge of those Liabilities (or other liabilities or obligations).
“Payment Confirmation Date” means, in respect of all outstanding Senior Advances
and all outstanding Subordinated Advances, the date falling 5 Business Days
prior to the relevant Settlement Date.
“Payment Netting” means:
(a) in respect of an Issuer Hedging Agreement based on an ISDA Master Agreement,
netting under section 2(c) of the relevant ISDA Master Agreement; and
(b) in respect of an Issuer Hedging Agreement not based on an ISDA Master
Agreement, netting pursuant to any provision of that Hedging Agreement or a
Hedging Ancillary Document which has a similar effect to the provision
referenced in paragraph (a) above.
“Permitted Investments” means:
(i) EUR-denominated money market funds which have a long-term rating of “AAAmmf”
by Fitch, if rated by Moody’s, “Aaa” and “MR1+” by Moody’s, if rated by S&P,
“AAA” by S&P, and, if rated by DBRS, “AAA” by DBRS; or
(ii) any other instruments or securities, provided that, to the extent the
outstanding Senior Notes are rated, the Rating Agencies have confirmed in
writing that the investment in such instruments or securities will not adversely
affect any ratings with respect to any Senior Notes,
in each case, in respect of which the Issuer Cash Manager has been instructed to
invest in and in respect of which it is able to invest in.
“Permitted Subordinated Debt Payments” means the payments, receipts and set-offs
permitted by paragraph 5.3 (Permitted Subordinated Debt Payments) of the Issuer
Intercreditor Terms as long as they are so permitted.
“Person” means any individual, company, corporation, unincorporated association
or body (including a partnership, trust, joint venture or consortium),
government, state, agency, organisation or other entity whether or not having
separate legal personality.
“Potential Event of Default” means any event which (with the expiry of a grace
period, the giving of notice or the making of any determination under the
relevant Transaction Documents or any combination of any of the foregoing) could
“Potential Master Lease Termination Event” means any event which, but for the
passage of time or the giving of notice or any combination thereof, would
constitute a Master Lease Termination Event.
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“Potential Servicer Termination Event” means any event which but for the passage
of time or the giving of notice or any combination thereof would constitute a
Servicer Termination Event.
“Privacy Code” means Italian Legislative Decree number 196 of 30 June 2003, as
amended and supplemented from time to time.
“Proceedings” means any legal action or proceedings relating to a Dispute.
“Programme Maximum Term” means, where applicable in relation to a Programme
Vehicle, the maximum holding period (if any) specified under the relevant
Vehicle Manufacturer Buy-Back Agreement or the relevant Vehicle Dealer Buy-Back
Agreement after the expiry of which such Programme Vehicle would cease to be
eligible for repurchase or sale at auction by the relevant Vehicle Manufacturer
or Vehicle Dealer, as applicable (as such maximum holding period shall be
notified on an annual basis by the relevant Servicer to the relevant FleetCo).
“Programme Minimum Term” means, where applicable in relation to a Programme
Vehicle, the minimum holding period (if any) specified under the relevant
Agreement in order for such Programme Vehicle to be eligible for repurchase or
sale at auction by the relevant Vehicle Manufacturer or Vehicle Dealer, as
applicable.
“Programme Vehicle” means each Eligible Vehicle which is the subject of:
(i) a Vehicle Manufacturer Buy-Back Agreement which contains all the Buy-Back
Minimum Principles; or
(ii) a Vehicle Dealer Buy-Back Agreement which contains all the Buy-Back Minimum
Principles (with references to the Vehicle Manufacturer replaced by the Vehicle
Dealer as the context requires).
“Programme Vehicle Special Default Payments” means the amount of any Excess
Damage Charges and/or Excess Mileage Charges applicable to a Programme Vehicle
calculated by the relevant Servicer as of:
(a) the Lease Determination Date immediately following the receipt by the
relevant FleetCo of the Vehicle Manufacturer Repurchase Price, in each case, in
relation to any Programme Vehicle (or, if earlier, by the Business Day on which
FleetCo is liable for any Programme Vehicle Special Default Payment to a Vehicle
Manufacturer or Vehicle Dealer); or
(b) the Lease Determination Date immediately following the date by which the
Vehicle Manufacturer Repurchase Price, in each case of such Programme Vehicle
turned back to a Vehicle Manufacturer or Vehicle Dealer, would have been paid by
the Vehicle Manufacturer or Vehicle Dealer to the relevant FleetCo but for the
occurrence of an event or circumstance which, if not remedied within the
relevant grace period, would become a Vehicle Manufacturer Event of Default.
“Public Deed of Pledge over Vehicles” means the vehicle pledge dated 5 March
2013 in respect of the Spanish Vehicle fleet and entered into by Dutch FleetCo,
Spanish Branch, the Issuer and Spanish Opco.
“Purchase and Lease Confirmation” has the meaning given to it in clause 3.3 of
the Master German Fleet Purchase Agreement or clause 3.3 of the Master Dutch
Fleet Purchase Agreement, as applicable.
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“Purchase Offer and Lease Request” has the meaning given to it in clause 3.1 of
the Master German Fleet Purchase Agreement or clause 3.1 of the Master Dutch
“Qualifying Senior Noteholder” means, with respect to any relevant Senior Note,
any person which is:
(a) resident for the purposes of tax corresponding to Irish corporation tax in a
jurisdiction (other than Ireland) that would not result in any Taxes being
required to be withheld or deducted by the Issuer in relation to the relevant
Senior Note as a result of such person holding such Senior Note and does not
receive payments under the relevant Senior Note in connection with a trade or
business which is carried on in Ireland by it through a branch or agency; or
(b) a qualifying company within the meaning of Section 110 of the Taxes
Consolidation Act 1997 of Ireland.
“Quoted Eurobond WHT Form” means a form, substantially in the form of Schedule 9
to the INIFA, provided by a Senior Noteholder in accordance with the INIFA.
“Rapid Amortisation Commencement Date” means the date of the service of a Rapid
Amortisation Notice by the Transaction Agent to the Issuer and the Issuer
Security Trustee.
“Rapid Amortisation Event” means the occurrence of any of the following:
(i) an Issuer Event of Default;
(ii) a FleetCo Event of Default;
(iii) a Spanish Opco Event of Default;
(iv) an Italian Opco Event of Default;
(v) a Central Servicer Event of Default;
(vi) a German Opco Event of Default;
(vii) a French Opco Event of Default;
(viii) a Subordinated Lender Event of Default;
(ix) a Finco Guarantor Event of Default;
(x) an Avis Europe Event of Default;
(xi) a Parent Event of Default;
(xii) the non-payment in full of all outstanding Senior Advances by the Issuer
under the Issuer Note Issuance Facility Agreement at their Expected Maturity
Date;
(xiii) the termination of:
(a) any Spanish Transaction Document other than in accordance with its terms
and the Spain Repayment Option is not exercised within 10 Business Days from the
date of such termination;
(b) any Italian Transaction Document other than in accordance with its terms
and the Italy Repayment Option is not exercised within 10 Business Days from the
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(c) any French Transaction Document and/or the VFN Funding Agreement, in each
case, other than in accordance with its terms and the France Repayment Option is
not exercised within 10 Business Days from the date of such termination; or
(d) any Transaction Document other than in accordance with its terms (other
than in the case of (a), (b) or (c) above);
(xiv) a Servicer Termination Event; and
(xv) the termination of the appointment of the Liquidation Agent if no
replacement Liquidation Agent satisfactory to the Transaction Agent has been
appointed within 60 days of such termination.
“Rapid Amortisation Notice” means the notice to be delivered by the Transaction
Agent to the Issuer and the Issuer Security Trustee following the occurrence of
a Rapid Amortisation Event.
“Rapid Amortisation Period” means the period starting from and including the
Rapid Amortisation Commencement Date.
“Rating Agencies” means Standard & Poor’s, Moody’s, Fitch, DBRS and any other
internationally recognised rating agency approved by the Transaction Agent and
“Rating Agency” means any one of them.
“Rating Agency Affirmation” means, for so long as any Senior Notes are rated by
one or more Rating Agency, with respect to any specified action, determination
or appointment, receipt by the Issuer (and sent to the Issuer Security Trustee
and the Transaction Agent) of written confirmation (or such other method of
confirmation which may be agreed from time to time with the relevant Rating
Agency) from the relevant Rating Agency that such specified action,
determination or appointment will not result in the reduction, or withdrawal, of
the ratings then assigned to the Senior Notes.
“Receiver” means a receiver and manager or other receiver (and may be a person
or persons) appointed in respect of the Issuer Secured Property or FleetCo
Secured Property (as the case may be) and shall, if allowed by law, include an
administrative receiver.
“Recoveries” means the Senior Recoveries or the Subordinated Recoveries.
“Redesignation Amounts” means, in relation to a Vehicle following its
redesignation in accordance with clause 22 of the Master German Fleet Lease
Agreement, clause 24 of the Italian Master Lease Agreement, clause 25 of the
French Master Lease Agreement, clause 24 of the Master Dutch Fleet Lease
Agreement or clause 25 of the Spanish Master Lease Agreement, an amount (which
may positive or negative) equal to:
(a) the Net Book Value of each Vehicle immediately prior to redesignation;
minus
(b) the Net Book Value of such Vehicle immediately following redesignation.
“Reference Bank Rate” means the arithmetic mean of the rates (rounded upwards to
four decimal places) as supplied to the Transaction Agent at its request by the
Reference Banks as the rate at which the relevant Reference Bank could borrow
funds in the European interbank market, in the relevant currency and for the
relevant period, were it to do so by asking for and then accepting interbank
offers for deposits in reasonable market size in that currency and for that
period.
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“Reference Banks” means Crédit Agricole Corporate and Investment Bank and the
Senior Noteholders that are financial institutions or such other banks as may be
appointed by the Transaction Agent in consultation with the Central Servicer.
“Register” means the register maintained by the Registrar outside the United
Kingdom in respect of the Senior Notes in accordance with the Issuer Note
Issuance Facility Agreement and substantially in the form set out in schedule 8
(Form of the Register) thereto.
“Registered FCT Holder” has the meaning given to it in clause 2.3 (Entries in
FCT Register conclusive) of the VFN Funding Agreement.
“Registered Holder” has the meaning given to it in clause 2.3 (Entries in
Register conclusive) of the Issuer Note Issuance Facility Agreement.
“Registrar” means, in respect of the Issuer, in relation to the Senior Notes,
Deutsche Bank Luxembourg S.A. and/or, if applicable, any successor registrar in
relation to such Senior Notes.
“Regulatory Direction” means, in relation to any person, a direction or
requirement of any Governmental Authority with whose directions or requirements
such person is accustomed to comply.
“Rejected Vehicle” means a Vehicle rejected by the Lessee under clause 28 of the
Italian Master Lease Agreement, clause 29 of the French Master Lease Agreement,
clause 28 of the Master Dutch Fleet Lease Agreement or clause 29 of the Spanish
Master Lease Agreement.
“Rejected Vehicle Schedule” means a schedule substantially in the form set out
in schedule 3 (Rejected Vehicle Schedule) to the Spanish Servicing Agreement and
Italian Servicing Agreement.
“Related Month” means, when used (a) with respect to any FleetCo Payment Date,
Lease Payment Date (including for the purpose of the definition of “Variable
Rent”) or Lease Determination Date, the most recently ended calendar month; and
(b) with respect to any other date, the calendar month in which such date
occurs.
“Related Opco” means:
(i) in relation to Dutch FleetCo, German Opco, Dutch Opco or Spanish Opco (as
applicable) to which Dutch FleetCo leases Vehicles under the Master German Fleet
Lease Agreement, Master Dutch Fleet Lease Agreement or the Spanish Master Lease
Agreement, respectively;
(ii) in relation to Italian FleetCo, Italian Opco; and
(iii) in relation to French FleetCo, French Opco.
“Relevant Conduit CP Rate” means, in respect of an Interest Period and a Conduit
Senior Noteholder:
(i) the weighted average funding cost of the commercial paper issued by such
Conduit Senior Noteholder in order to finance, or contribute to the financing
of, its subscription of the Senior Notes during the relevant Interest Period, as
notified by such Conduit Senior Noteholder to the Transaction Agent on the
relevant Interest Determination Date (or Intra-Month Interest Determination
Date, as the case may be), including any dealer or paying agent fees;
(ii) in the event that such commercial paper is denominated in any currency
other than euros, all costs, fees and expenses incurred by such Conduit Senior
Noteholder in order to hedge its exposure to such currency; and
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(iii) any interest amounts payable by such Conduit Senior Noteholders in
relation to any drawings on the relevant swing line or liquidity facility
agreement which can be fairly allocated to the Senior Notes.
“Relevant DBRS Rating” means, with respect to any Person as of any date of
determination: (a) if such Person has both a long term issuer rating by DBRS and
a senior unsecured rating by DBRS as of such date, then the higher of such two
ratings as of such date; and (b) if such Person has only one of a long term
issuer rating by DBRS and a senior unsecured rating by DBRS as of such date,
then such rating of such Person as of such date; provided that, if such Person
does not have any of such ratings as of such date, then there shall be no
Relevant DBRS Rating with respect to such Person as of such date.
“Relevant Excess Concentration Amount” means, on any date, in respect of the
limit set out in the definition of “Concentration Limit” an amount equal to, in
each case, without double counting:
A. the aggregate of the Borrower Vehicle Fleet NBV of all Eligible Vehicles in
all the Countries which fall within the category of Vehicles described in such
limit,
less
B. the multiple of: (x) the Borrower Vehicle Fleet NBV of all Eligible Vehicles
in all Countries; and (y) the maximum percentage provided in the definition of
Concentration Limit for such limit,
or zero if such amount is negative,
provided that any such excess is allocated on a pro rata basis to (A) the
Borrower Vehicle Fleet NBV of Eligible Vehicles used for the purposes of
calculating such limit in each Country and (B) to the Borrower Vehicle Fleet NBV
of Programme Vehicles and the Borrower Vehicle Fleet NBV of Non-Programme
Vehicles.
“Relevant Fitch Rating” means, with respect to any Person, (a) if such Person
has both a senior unsecured rating by Fitch and a long term issuer default
rating by Fitch as of such date, then the higher of such two ratings as of such
date and (b) if such Person has only one of a senior unsecured rating by Fitch
and a long term issuer default rating by Fitch as of such date, then such rating
of such Person as of such date; provided that, if such Person does not have any
of such ratings as of such date, then there shall be no Relevant Fitch Rating
with respect to such Person as of such date.
“Relevant Interbank Market” means the European interbank market.
“Relevant Jurisdiction” means, in relation to an Avis Obligor, a FleetCo or the
Issuer, its jurisdiction of incorporation and (in respect of Dutch FleetCo)
Spain and/or Germany (as applicable).
“Relevant Liabilities” means:
(i) the Liabilities owed to the Issuer Secured Creditor ranking (in accordance
with the Issuer Intercreditor Terms) pari passu with or in priority to that
Issuer Secured Creditor; and
(ii) all present and future liabilities and obligations, actual and contingent,
of the Issuer to the Issuer Security Trustee.
“Relevant Moody’s Rating” means, with respect to any Person as of any date of
determination, the highest of: (a) if such Person has a long term rating by
Moody’s as of such date, then such rating as of such date; (b) if such Person
has a senior unsecured rating by Moody’s as of such
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date, then such rating as of such date; and (c) if such Person has a long term
corporate family rating by Moody’s as of such date, then such rating as of such
date; provided that, if such Person does not have any of such ratings as of such
date, then there shall be no Relevant Moody’s Rating with respect to such Person
as of such date.
“Relevant Person” means Spanish Opco (in its capacity as the relevant Lessee and
relevant Servicer), Italian Opco (in its capacity as the relevant Lessee and
relevant Servicer), the Central Servicer, German Opco (in its capacity as the
relevant Lessee), Dutch Opco (in its capacity as the relevant Lessee), French
Opco (in its capacity as the relevant Lessee and relevant Servicer), French
FleetCo, Dutch FleetCo, Italian FleetCo, the Issuer or the FCT (as applicable).
“Relevant Rating” means, with respect to any Equivalent Rating Agency and any
Person as of any date of determination, (a) with respect to Moody’s, the
Relevant Moody’s Rating with respect to such Person as of such date, (b) with
respect to Fitch, the Relevant Fitch Rating with respect to such Person as of
such date and (c) with respect to S&P, the Relevant S&P Rating with respect to
such Person as of such date.
“Relevant S&P Rating” means, with respect to any Person as of any date of
determination, the long term local issuer rating by S&P of such Person as of
such date; provided that, if such Person does not have a long term local issuer
rating by S&P as of such date, then there shall be no Relevant S&P Rating with
respect to such Person as of such date.
“Relevant Senior Noteholder Commitment” means, in respect of:
(i) a Senior Noteholder that forms part of a Senior Noteholder Group, its pro
rata share of the Notional Commitment of its Senior Noteholder Group; and
(ii) a Senior Noteholder that is not part of a Senior Noteholder Group, its
Notional Commitment as set out in the relevant Senior Noteholder Fee Letter.
“Relevant Senior Noteholder Percentage” means, in respect of any Senior
Noteholder, the percentage determined by (i) dividing its Relevant Senior
Noteholder Commitment at such time by the aggregate of the Total Senior
Noteholder Commitments of all Senior Noteholders at such time and
(ii) multiplying the product thereof by one hundred (100).
“Relevant Third Party” means the Issuer Account Bank, any FleetCo Account Bank,
the Dutch FleetCo Spanish Account Bank Operator, the Dutch FleetCo German
Account Bank Operator, the Dutch FleetCo Dutch Account Bank Operator, the French
FleetCo Account Bank Operator, the Issuer Cash Manager, the FleetCo Back-up Cash
Managers, the Issuer Corporate Services Provider, the FleetCo Holdings Corporate
Services Provider, any Dutch FleetCo Corporate Services Providers, the
Registrar, the Transaction Agent and (for the purposes of clause 27.1.3
(Non-petition Against the Conduit Senior Noteholders) of the Framework Agreement
only) any Conduit Senior Noteholder.
“Relevant Transaction Documents” means:
(i) in respect of the Issuer, the Transaction Documents to which the Issuer is a
party; and
(ii) in respect of any other person, the Transaction Documents to which such
person is a party.
“Remaining Senior Noteholder” has the meaning given to it in clause 5.1.5
(Increase in Senior Noteholder Commitments) of the relevant Issuer Note Issuance
Facility Agreement.
“Rent” means, in relation to a FleetCo, the aggregate Base Rent (or, in the case
of Germany, German Base Rent) plus the aggregate Variable Rent payable to it by
the relevant Lessee under the relevant Master Lease Agreement.
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“Replacement Credit Agreement” means any credit agreement or similar facility
entered into by Avis Budget Holdings, LLC, the Parent and/or any affiliate of
either entity, that refinances or replaces the Credit Agreement, as such
replacement credit agreement may be amended, restated, modified, supplemented or
waived from time to time in accordance with its terms.
“Replacement Senior Noteholder” has the meaning given to such term in clause
21.5 (Replacement Senior Noteholder) of the Issuer Note Issuance Facility
Agreement and is a Conduit or a Financial Institution which enters into a
relevant Senior Noteholder Accession Deed.
“Reporting Date” means the date falling 5 Business Days before a Settlement
Date.
“Representative” means any delegate, agent, manager, administrator, nominee,
attorney, trustee or custodian.
“Repurchase Offer and Lease Termination Notice” has the meaning given to such
term under clause 5.1 of the Master German Fleet Purchase Agreement.
“Requirement of Law” in respect of any person means:
(a) any law, treaty, rule, requirement or regulation;
(b) a notice by or an order of any court having jurisdiction;
(c) a mandatory requirement of any regulatory authority having jurisdiction; or
(d) a determination of an arbitrator or Governmental Authority,
in each case applicable to or binding upon that person or to which that person
is subject or with which it is customary for it to comply.
“Reservations” means:
(a) the principle that equitable remedies may be granted or refused at the
discretion of a court and the limitation of enforcement by laws relating to
insolvency, reorganisation and other laws generally affecting the rights of
creditors;
(b) the required perfection of any Security Interest;
(c) similar principles, rights and defences under the laws of any Relevant
Jurisdiction; and
(d) any other matters which are set out as qualifications or reservations as to
matters of law in the legal opinions, each in the form satisfactory to the
Transaction Agent, the FleetCo Security Agent and the Issuer Security Trustee
and delivered to the Transaction Agent, the FleetCo Security Agent and the
Issuer Security Trustee pursuant to the Transaction Documents.
“Restricted Senior Note” means the Senior Notes issued in the form set out in
schedule 3A (Restricted Senior Note Certificate) to the Issuer Note Issuance
Facility Agreement.
“Restricted Senior Note Certificate” means the note certificate set out in
Facility Agreement.
“Revolving Period” means, subject to the terms of the Issuer Note Issuance
Facility Agreement, the period when Senior Advances will be available, being a
period commencing on the Initial Funding Date and ending on the earliest to
occur of:
(i) the Scheduled Amortisation Commencement Date; and
(ii) the Rapid Amortisation Commencement Date.
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“S&P” means Standard & Poor’s Ratings Services (a division of The McGraw-Hill
Companies, Inc.) or any successor to its rating business.
“Scheduled Amortisation” has the meaning given to it in clause 5 (Scheduled
Amortisation) of the Framework Agreement.
“Scheduled Amortisation Commencement Date” means the Original Scheduled
Amortisation Commencement Date or, if extended in accordance with clause 5.1
(Extension of Revolving Period) of the Framework Agreement, such later date as
agreed in writing between the Central Servicer and the Transaction Agent.
“Scheduled Amortisation Period” means the period starting from the Scheduled
Amortisation Commencement Date and ending on the earliest to occur of:
(i) the date on which principal, interest and all other amounts due relating to
all outstanding Senior Advances have been irrevocably and unconditionally
repaid/paid in full; and
(ii) the Rapid Amortisation Commencement Date; and
(iii) the Expected Maturity Date.
“Screen Rate” means the percentage rate per annum determined by the Banking
Federation of the European Union for the relevant period displayed on the
appropriate page of the Reuters screen. If the agreed page is replaced or
service ceases to be available, the Transaction Agent may specify another page
or service displaying the appropriate rate after consultation with the Central
Servicer and the Senior Noteholders.
“Security” means all or any of the Security Interests created or expressed to be
created from time to time constituted by or pursuant to, or evidenced by, the
Security Documents.
“Security Document” means each of the Issuer Security Documents, the FleetCo
Security Documents and any other document designated a Security Document by the
Issuer Security Trustee or the FleetCo Security Agent.
“Security Interest” means:
(a) a mortgage, charge, pledge, lien, assignation in security, encumbrance or
other security interest securing any obligation of any person;
(b) any arrangement under which money or claims to, or the benefit of, a bank or
other account may be applied, set-off or made subject to a combination of
accounts so as to effect payment of sums owed or payable to any person; or
(c) any other type of preferential arrangement (including title transfer and
retention arrangements) having a similar effect.
“Senior Advance” means each advance made available to the Issuer under the
Issuer Note Issuance Facility Agreement.
“Senior Advance Drawdown Date” means the date of funding of each Senior Advance
by the Senior Noteholders pursuant to the relevant Senior Advance Drawdown
Notice.
“Senior Advance Drawdown Notice” means a notice substantially in the relevant
form set out in the Framework Agreement pursuant to which the Issuer irrevocably
requests one or more funding of Senior Advance(s) under the Issuer Note Issuance
Facility Agreement.
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“Senior Advance Interest Period” means, in respect of a Senior Advance:
the Senior Advance Drawdown Date of such Senior Advance up to the earlier of
in paragraph (i)(b) above to (but excluding) the relevant Senior Advance
Repayment Date,
provided that, for the purposes of this definition, the Senior Advance Drawdown
Date and the Senior Advance Repayment Date are subject to the Business Day
Convention.
“Senior Advance Margin” has the meaning given to such term in each Senior
Noteholder Fee Letter.
“Senior Advance Repayment” means in relation to a repayment of an amount of
principal of the relevant Senior Note, a payment of principal made by the Issuer
to the relevant Senior Noteholder on the Senior Advance Repayment Date of such
Senior Advance.
“Senior Advance Repayment Date” means, in respect of a Senior Advance, the
repayment date of such advance.
“Senior Issuer Debt” means the Senior Noteholder Debt and the Issuer Hedging
Debt.
“Senior Issuer Discharge Date” means the time when the Transaction Agent
(following confirmation in writing by each of the Issuer Secured Creditors in
respect of the Senior Issuer Debt (if any) owed to it) notifies the Issuer, the
Issuer Security Trustee and the Issuer Secured Creditors in writing that it is
satisfied that all Senior Issuer Debt has been fully and irrevocably paid or
discharged and all commitments of the Issuer Secured Creditors in respect of the
Senior Issuer Debt have expired or been cancelled.
“Senior Issuer Finance Parties” means the Senior Noteholders and the Issuer
Hedge Counterparties.
“Senior Issuer Transaction Documents” means the Issuer Note Issuance Facility
Agreement and the Issuer Hedging Agreements.
“Senior Note Principal Amount Outstanding” means, on any date in respect of a
Senior Note, the current principal amount outstanding of such Senior Note as
reflected on the Register on such date.
“Senior Noteholder” means each holder of any Senior Notes, including the Initial
Senior Noteholders and any Senior Noteholder which accedes to the Issuer Note
Issuance Facility Agreement, the Framework Agreement and the Issuer Deed of
Charge as specified in the Register from time to time.
“Senior Noteholder Accession Deed” means an accession agreement substantially in
the form of part 2 (Form of Senior Noteholder Accession Deed) of schedule 6
(Forms of Accession Deed) of the Framework Agreement.
“Senior Noteholder Available Commitment” means, at any relevant time with
respect to a Senior Noteholder, its Senior Noteholder Commitment less the Senior
Noteholder Principal Amount Outstanding under the relevant Senior Notes
subscribed by it.
“Senior Noteholder Commitment” means, in respect of each Senior Noteholder, the
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“Senior Noteholder Commitment Increase Request Amount” has the meaning given to
it in clause 5.1.3 (Increase in Senior Noteholder Commitments) of the Issuer
“Senior Noteholder Debt” means all present and future moneys, debts and
liabilities due, owing or incurred from time to time by the Issuer to any Senior
Noteholder under or in connection with any Issuer Transaction Document (in each
whether actually or contingently, and whether as principal, surety or
otherwise).
“Senior Noteholder Decisions” has the meaning given to it in schedule 5
(Amendments and Waiver Consent Requirements) to the Framework Agreement.
“Senior Noteholder Group” has the meaning given to it in clause 21.6 (Senior
Noteholder Groups) of the Issuer Note Issuance Facility Agreement.
“Senior Noteholder Fee Letter” means, in respect of each Senior Noteholder, a
letter, the form of which is set out in schedule 2 to the Issuer Note Issuance
Facility Agreement.
“Senior Noteholder Minimum Drawing Amount” means, with respect to each Senior
Noteholder, Euro 100,000.
“Senior Notes” means the senior variable funding notes issued from time to time
pursuant to the Issuer Note Issuance Facility Agreement.
“Senior Notes Maximum Amount” means an amount equal to:
(a) the aggregate of:
(i) the Combined Eligible Country Asset Value; and
(ii) the Issuer Reserves;
less
(i) the Credit Enhancement Required Amount; and
(ii) the Excess Advance Proportion Amount.
“Senior Recoveries” means the aggregate of all moneys and other assets received
or recovered (whether by way of payment, repayment, prepayment, distribution,
redemption, purchase or defeasance, in cash or in kind, or the exercise of any
set-off or otherwise) from time to time by any Senior Noteholders or Issuer
Hedge Counterparties under or in connection with any Senior Issuer Debt.
“Servicer” means the Spanish Servicer, the French Servicer, the Italian Servicer
or the Central Servicer (as applicable), together with any successor or
replacement appointed in accordance with the relevant Servicing Agreement or
Central Servicing Agreement (as applicable).
“Servicer Fee” means, in relation to a FleetCo, the fee payable to the relevant
Servicer pursuant to clause 10 of the Italian Servicing Agreement, clause 12 of
the Spanish Servicing Agreement, clause 10 of the French Servicing Agreement and
clause 10 of the Central Servicing Agreement.
“Servicer Records” means the original and/or any copies of all relevant
documents and records, in whatever form or medium, including all computer tapes,
files and discs, relating to the Services, including, without limitation,
Insurance Policies and an up-to-date list of all Sub-contractors retained by the
relevant Servicer specifying their role and their contact details, which list
shall include all custodians of Vehicle Documents, transporters of Vehicles,
repairers of Vehicles and providers of parking space.
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“Servicer Termination Date” means, in respect of a Servicer, the date on which
the Servicer’s appointment is terminated in accordance with the terms of the
relevant Servicing Agreement.
“Servicer Termination Event” has, in respect of the Spanish Servicer, the
Italian Servicer, the French Servicer or the Central Servicer, the meaning given
to it in clause 15.1.2 of the Spanish Servicing Agreement, clause 13.1.2 of the
Italian Servicing Agreement, clause 13.1.2 of the French Servicing Agreement and
clause 13.1 of the Central Servicing Agreement respectively.
“Servicer Termination Notice” means the notice served by the FleetCo Security
Agent to the Spanish Servicer, the Italian Servicer, French Servicer or the
Central Servicer (as applicable) pursuant to clause 15.1 (Termination by
notification) of the Spanish Servicing Agreement and clause 13.1 of the Italian
Servicing Agreement and French Servicing Agreement.
“Services” means, in respect of a Servicer, the services to be provided by the
Servicer set out in schedule 1 (Services) of the relevant Servicing Agreement to
which such Servicer is a party and any other service obligations under the
Relevant Transaction Documents and, in relation to the services provided by
Italian Opco to Italian FleetCo, the services set out in the Italian Mandate
Agreement.
“Service Vehicles” means any Vehicle which is not intended to be rented to a
customer of Opco as part of its daily rental business, including, without
limitation, any Vehicle which is used by an Opco for transportation of either
its customers or vehicles, provided that, for the avoidance of doubt, Vehicles
used by the employees of any Avis Europe Group member shall not be Service
Vehicles.
“Servicing Agreement” means the Spanish Servicing Agreement, the Italian
Servicing Agreement, the French Servicing Agreement or the Central Servicing
Agreement (as applicable).
“Servicing Transfer Event” means:
(a) in Italy, France and Spain, the fulfilment of each of the following
conditions: (i) the occurrence of a Servicer Termination Event in respect of the
Italian Servicer, French Servicer or the Spanish Servicer (as applicable);
(ii) the FleetCo Security Agent determines to serve a notice to terminate the
relevant Master Lease Agreement to the relevant Opco; and (iii) the FleetCo
Security Agent determines to serve a Servicer Termination Notice to the relevant
Opco; and
(b) in Germany and The Netherlands, the fulfilment of each of the following
Central Servicer; (ii) the FleetCo Security Agent determines to serve a notice
to terminate the relevant Master Lease Agreement to the relevant Opco; and
(iii) the FleetCo Security Agent determines to serve a Servicer Termination
Notice to the Central Servicer.
“Settlement Date” means, in respect of each Calculation Period that ends on the
last day of the relevant calendar month, the date falling on the 20th of the
calendar month immediately following the end of such Calculation Period, and, if
such date is not a Business Day, the next Business Day and, for the avoidance of
doubt, the first Settlement Date shall be in April 2013.
“Signing Date” means 5 March 2013.
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“Spain Repayment Option” means, in respect of a TRO Default, the Country
Repayment Option applicable to Spanish Opco and Dutch FleetCo, Spanish Branch,
as more particularly set out in clause 6 (Country Repayment Option) of the
Framework Agreement.
“Spain TRO Power of Attorney” means the power of attorney dated 5 March 2013 and
granted by the Issuer to the attorneys specified therein in respect of the
disposal of the Vehicle Fleet in Spain following the exercise of the Spain
Repayment Option.
“Spanish Account Bank Agreement” means the account bank agreement between, among
others, Dutch FleetCo and the Dutch FleetCo Spanish Account Bank.
“Spanish Account Mandate” has the meaning given to it in clause 4.1 of the
Spanish Account Bank Agreement.
“Spanish Civil Procedural Law” means Law 1/2000 of 7 January (Ley de
Enjuiciamiento Civil);
“Spanish FleetCo Deed of Charge” means the English law deed of charge pursuant
to which, among other things, Dutch FleetCo, Spanish Branch assigns, pledges and
otherwise creates a security over all its rights and interests in and to each of
the English Transaction Documents to which it is a party, in favour of the
FleetCo Security Agent.
“Spanish FleetCo Secured Creditors” means the Issuer, the Dutch FleetCo Spanish
Account Bank, the Dutch FleetCo Spanish Account Bank Operator, the FleetCo
Spanish Back-up Cash Manager, the Central Servicer, the Spanish Servicer and the
“Spanish Master Lease Agreement” means, the master lease agreement dated 5 March
2013 entered into by, amongst others, Dutch FleetCo and Spanish Opco.
“Spanish Obligor” means Spanish Opco and Dutch FleetCo, acting through its
Spanish branch.
“Spanish Opco” means Avis Alquile un Coche S.A.
“Spanish Opco Event of Default” means an Event of Default in respect of Spanish
“Spanish Parallel Debt” has the meaning given to it in clause 16.2 (Parallel
Debt) of the Framework Agreement.
“Spanish Public Document” means a documento público, being an escritura pública,
póliza or efecto intervenido por fedatario public.
“Spanish Servicer” means Spanish Opco.
“Spanish Servicing Agreement” means the servicing and cash management agreement
dated 5 March 2013 between, among others, Dutch FleetCo, Spanish Branch and
Spanish Opco in respect of Dutch FleetCo, Spanish Branch’s operations in Spain.
“Spanish Transaction Document” means any Transaction Document expressed to be
governed by Spanish law.
“Spanish Vehicle Documents” means, in respect of Vehicles in Spain, the keys and
spare keys to the Vehicles and the registration and technical documents
regarding the Vehicles (Permiso de Circulación and Tarjeta de Características
Técnicas).
“Specified Business Day” means a day (other than Saturday or Sunday) on which
banks are generally open for business in London, New York, Paris, Frankfurt am
Main, Madrid, Amsterdam and Milan.
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“Specified Office” means, in relation to a Registrar, any office notified in
accordance with the relevant Issuer Note Issuance Facility Agreement or with the
VFN Funding Agreement.
“Standard & Poor’s” or “S&P” means Standard & Poor’s Rating Services, a division
of Standard & Poor’s Credit Markets Service Europe Limited or any successor to
its European rating business.
“Sub-contractor” means any sub-contractor, sub-agent, delegate or representative
appointed in accordance with clause 4 of the Italian Servicing Agreement, clause
5 of the Spanish Servicing Agreement, clause 5 of the French Servicing Agreement
or clause 5 of the Central Servicing Agreement.
“Subordinated Advance Drawdown Notice” means a notice substantially in the
relevant form set out in the Framework Agreement pursuant to which the Issuer
irrevocably requests one or more funding of Issuer Subordinated Advances under
the Issuer Subordinated Facility Agreement.
“Subordinated Debt” means all present and future moneys, debts and liabilities
due, owing or incurred from time to time by the Issuer to the Subordinated
Lender (in each case, whether alone or jointly, or jointly and severally, with
any other person, whether actually or contingently, and whether as principal,
surety or otherwise).
“Subordinated Lender” means Avis Finance Company Limited, a private limited
company incorporated in England and Wales, as lender to the Issuer under the
Issuer Subordinated Facility Agreement.
“Subordinated Lender Event of Default” means any of the following:
(a) Avis Europe ceasing to own the entire share capital of any Opco or Finco,
provided that, if there is a change of control of Italian Opco, Spanish Opco or
French Opco, such cessation of control is not remedied within 30 days of such
cessation of control or (in respect of Spanish Opco) the Spain Repayment Option,
(in respect of Italian Opco) the Italy Repayment Option or (in respect of French
Opco) the France Repayment Option is not exercised within 30 days of such
cessation of control;
the Subordinated Lender) are repaid in full by the Issuer on such date, there
shall not be a “Subordinated Lender Event of Default” under this paragraph (b);
(e) the Subordinated Lender’s material net economic interest (within the meaning
of Article 405 of the CRR) is less than, on an ongoing basis, 5 per cent. or
such other figure as shall from time to time be specified in or by reference to
Article 405 of the CRR); and
(f) any Event of Default under paragraph (d), paragraph (h) or paragraph (i) of
the definition of “Event of Default”.
“Subordinated Recoveries” means the aggregate of all moneys and other assets
received or recovered (whether by way of payment, repayment, prepayment,
distribution, redemption, purchase or defeasance, in cash or in kind, or the
exercise of any set-off or otherwise) from time to time by any Subordinated
Lender under or in connection with any Subordinated Debt.
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“Subscriber’s Cost of Funds” means, in respect of an Interest Period:
(i) in relation to a Senior Noteholder which is a Financial Institution:
(a) prior to the service of an Issuer Enforcement Notice, the Applicable
EURIBOR; and
(b) following the service of an Issuer Enforcement Notice to the Issuer, the
sum of (x) the Applicable EURIBOR and (y) [REDACTED] per cent. per annum; and
(ii) in relation to a Conduit Senior Noteholder:
(a) through the ABCP Market, (x) the Relevant Conduit CP Rate for such Conduit
Senior Noteholder (other than Jupiter Securitization Company LLC or another
member of the Senior Noteholder Group in respect of Jupiter Securitization
Company LLC) during such Interest Period, and (y) for the Senior Noteholder
Group in respect of Jupiter Securitization Company LLC as a Senior Noteholder,
the Applicable EURIBOR during such Interest Period;
(b) the weighted average rate of interest applicable to the relevant Conduit
Senior Noteholder for issuing commercial paper during the relevant Interest
Period to fund the purchase and holding of the Senior Notes (including, for the
avoidance of doubt, dealers’ commissions and hedging costs associated with the
issue of the relevant commercial paper), provided that if the rate of interest
applicable to a Conduit Senior Noteholder is a discount rate, the Subscriber’s
Cost of Funds shall be calculated by converting such discount rate to an
interest-bearing equivalent rate per annum; and
(c) to the extent that such Conduit Senior Noteholder or a member of the
Senior Noteholder Group in respect of Jupiter Securitization Company LLC funds
its subscription, purchase and/or holding of the Senior Note held by it during
such Interest Period through drawings under a Liquidity Facility Arrangement:
(x) following an ABCP Market Disruption, the product of:
A. the sum of (x) the Applicable EURIBOR and (y) [REDACTED] per cent. per
annum; and
B. the percentage of the Senior Notes affected by the ABCP Market Disruption,
provided that, in the six months prior to the date on which the ABCP Market
Disruption first occurred, such Conduit Senior Noteholder had issued ABCP to
finance the Senior Notes held by it;
(y) for any reason other than those stated in paragraphs (c)(x) and (c)(z) of
this definition, the product of:
A. the Applicable EURIBOR or such rate; and
B. the percentage of the Senior Notes held by it that is funded by such
drawing; and
(z) following the service of an Issuer Enforcement Notice to the Issuer, the
sum of (x) the Applicable EURIBOR and (y) [REDACTED] per cent. per annum or such
rate as the parties to the Issuer Note Issuance Facility Agreement may agree
between them based on an agreed benchmark.
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“Subsidiary” means, in relation to any company, corporation or legal entity (a
“holding company”), any company, corporation or legal entity:
(a) which is controlled, directly or indirectly, by the holding company;
(b) more than half the issued share capital of which is beneficially owned,
directly or indirectly, by the holding company; or
(c) which is a subsidiary of another subsidiary of the holding company,
and, for these purposes, a company, corporation or legal entity shall be treated
as being controlled by another if that other company, corporation or legal
entity is able to direct its affairs and/or to control the composition of its
board of directors or equivalent body.
“Substitute Issuer Cash Manager” means any entity which is appointed to perform
the Issuer Cash Management Services in place of the Issuer Cash Manager pursuant
to clause 11.3 (Substitute Issuer Cash Manager) or clause 11.4 (Condition to
Resignation or Termination) of the Issuer Cash Management Agreement and which
satisfies the conditions set out in clause 11.6 (Conditions to Appointment of
Substitute Issuer Cash Manager) of the Issuer Cash Management Agreement.
“Supplemental Agreement” means each supplemental agreement entered into between
the relevant FleetCo and the relevant Vehicle Manufacturers and/or Vehicle
Dealers, or in the case of Vehicle purchased in Germany, each vehicle purchase
addendum entered into between the German Opco and the relevant Vehicle
Manufacturers and/or Vehicle Dealers, which, in each case, supplements and
replaces certain terms of the Vehicle Purchase Agreements.
“Supplemental Agreement Report” means a report in a form agreed between the
Transaction Agent and the Central Servicer which sets out:
(a) in respect of Vehicles purchased in Spain, Italy and France, the inclusion
in the relevant Supplemental Agreement of provisions the same or substantially
the same as 4 (Volume Targets and Rebates), clause 7 (Repurchase Obligations
unconditional), clauses 8.1.1 and 8.1.3 (Termination), clause 9 (Set-Off),
clause 10.2 (Transfer to the Supplier) and clause 12.2 (Assignment by the
Supplier) as such clauses are contained Schedule 2 to the relevant Servicing
Agreement or, in the case of France, schedule 6 to the French Master Lease
Agreement.
(b) in respect of Vehicles purchased in Germany and The Netherlands, the
inclusion of set-off provisions in the relevant Supplemental Agreement and in
the case of The Netherlands, retention of title provisions in the relevant
Supplemental Agreement.
“TARGET2” means the Trans-European Automated Real-Time Gross Settlement Express
Transfer payment system which utilises a single shared platform and which was
launched on 19 November 2007.
payments in Euro.
“Tax” and “tax” means any tax, levy, impost, duty, assessment or other charge or
withholdings of a similar nature (including any penalty or interest payable in
connection with any failure to pay or any delay in paying the same).
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“Tax Authority” means any government, state or municipality or any local, state,
federal or other authority, body or official anywhere in the world exercising a
fiscal, revenue, customs or excise function.
“Tax Credit” means a credit against, relief or remission for, or repayment of
any Tax.
“Tax Deduction” means a deduction or withholding for or on account of Tax other
than a FATCA Deduction.
“Tax Deed of Covenant” means the tax deed of covenant dated 5 March 2013 as
amended, restated, modified, supplemented or waived from time to time between,
among others, the FleetCos, the Opcos, the FleetCo Security Agent, the Issuer
and the Issuer Security Trustee, pursuant to which the FleetCos, the Opcos and
the Issuer represent, warrant and undertake in respect of certain tax matters.
“Tax on Certain Means of Transport” means the Spanish tax imposed on the
registration of certain means of transport as regulated in Law 38/1992, dated
28 December 1992, on special taxes of Spain.
“Tax Payment” means either the increase in any payment made by the Issuer to a
Senior Noteholder or by a FleetCo to the Issuer or by French FleetCo to the FCT
under the relevant tax gross-up provisions in the relevant Issuer Transaction
Documents or FleetCo Transaction Documents (as applicable) or any amount payable
under any tax indemnity provisions under the relevant Issuer Transaction
Documents or FleetCo Transaction Documents (as applicable).
“Termination Value” means, in relation to a Vehicle and at any time, an amount
equal to the Net Book Value of such Vehicle at such time.
“Third Party Holder” means Spanish Opco in its capacity as third party holder
under the Third Party Holding Agreement.
“Third Party Holding Agreement” means the holding agreement dated on or about
hereof in respect of the Spanish Vehicle fleet in respect of the Public Deed of
Pledge and entered into between Spanish Opco, Dutch FleetCo, Spanish Branch and
the Issuer.
“Third Party Insolvency Event” means, in respect of a Relevant Third Party, the
occurrence of any of the following under any applicable law:
(a) any corporate action, legal proceedings or other procedure or step is taken
or threatened in relation to:
(i) bankruptcy, insolvency, or relief of debtors, seeking to have an order for
relief entered with respect to it, or seeking to adjudicate it bankrupt
(including, without limitation, with respect to any Relevant Third Party which
is subject to insolvency proceedings in Italy, any liquidazione, procedura
concorsuale (fallimento, concordato preventivo, liquidazione coatta
amministrativa, amministrazione straordinaria or ristrutturazione industriale
delle grandi imprese in stato di insolvenza), cessione dei beni ai creditori or
any other similar proceedings)), adjustment, winding-up, examinership,
liquidation, dissolution, emergency regulations, legal de-merger, declaration or
other relief with respect to it or its debts; or
(ii) any expropriation, attachment, sequestration, distress or execution
affecting any asset or assets of such Relevant Third Party; or
(iii) any analogous procedure or step is taken or threatened in any
jurisdiction;
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(b) the furtherance of, or acquiescence in, any of the acts in paragraph
(a) above by such Relevant Third Party;
(c) the value of the assets of such Relevant Third Party is less than the amount
of its liabilities, taking into account its contingent and prospective
liabilities;
(d) such Relevant Third Party is or becomes unable to pay its debts as they fall
due or insolvent or such Relevant Third Party admits its inability to pay its
debts as they fall due; and
(e) with respect to any Relevant Third Party which is subject to insolvency
proceedings in Germany:
(i) such Relevant Third Party is unable or admits inability to pay its debts
as they fall due, suspends making payments on any of its debts or, by reason of
actual or anticipated financial difficulties, commences negotiations with one or
more of its creditors with a view to rescheduling any of its indebtedness and/or
is unable to pay its debts as they fall due (zahlungsunfähig) within the meaning
of section 17 of the German Insolvency Code (Insolvenzordnung);
(ii) such Relevant Third Party is overindebted (überschuldet) within the
meaning of section 19 of the German Insolvency Code (Insolvenzordnung); and/or
(iii) a moratorium is declared in respect of any indebtedness of such Relevant
Third Party.
“Third Party Insolvency Proceeding” means any corporate action, legal
proceedings or other procedure or step is taken in relation to:
(a) the suspension of payments, a moratorium of any indebtedness, winding-up,
examinership, dissolution, administration or reorganisation (by way of voluntary
arrangement, scheme of arrangement or otherwise) of any Relevant Third Party;
(b) a composition, compromise, assignment or arrangement with any creditor of
any Relevant Third Party;
(c) the appointment of a liquidator, receiver, examiner, administrative
receiver, administrator, compulsory manager or other similar officer in respect
of any Relevant Third Party or any of its assets (including, without limitation,
with respect to any Relevant Third Party which is subject to insolvency
proceedings in Italy, a curatore, commissario giudiziale, commissario
straordinario, commissario liquidatore or any other Relevant Third Party
performing the same function) in respect of it or in respect of any of its
assets;
(d) enforcement of any Security over any assets of any Relevant Third Party;
proceedings in Germany:
(i) a petition for insolvency proceedings in respect of its assets
(Eröffnungsantrag) has been filed or any event has occurred which constitutes a
cause for the initiation of insolvency proceedings (Eröffnungsantrag) as set out
in sections 17 et seq. of the German Insolvency Code (Insolvenzordnung); or
(ii) any action has been taken pursuant to section 21 of the German Insolvency
Code (Insolvenzordnung) by a competent court;
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(f) with respect to any Relevant Third Party which is subject to insolvency
proceedings in France, any “mandat ad hoc”, “procédure de conciliation”,
“procédure de sauvegarde”, “procédure de redressement judiciaire”, “procédure de
commerce;
(g) with respect to any Relevant Third Party which is subject to insolvency
proceedings in The Netherlands, any faillissement, surseance van betaling,
noodregeling and ontbinding and the appointment of a curator or bewindvoerder;
(h) with respect to any Relevant Third Party which is subject to insolvency
proceedings in Italy, any bankruptcy proceedings (faillimento) or any other
insolvency proceedings (procedura concorsuale) provided under Italian Royal
Decree 16 March 1942, No. 267, including any arrangement with creditors prior to
bankruptcy (accordo di ristrutturazione di debiti and/or piano di risanamento
attestato and/or concordato preventive and/or transazione fiscale),
or any analogous procedure or step is taken in respect of the Relevant Third
Party in any jurisdiction.
In respect of a Relevant Third Party in Spain, a reference in this definition
to:
(a) a “suspension of payments” includes any concurso;
(b) a “liquidator” includes a liquidador;
(c) an “administrative receiver” includes an administrador judicial; and
(d) any “other procedure or step” includes solicitud de inicio de procedimento
de concurso, auto de declaración de concurso, convenio judicial o extrajudicial
con acreedores and transacción judicial o extrajudicial.
“Third Party Purchase Price” means the amount paid by a Vehicle Manufacturer,
Vehicle Dealer or any other third party purchaser on the sale of a Non-Programme
Vehicle by German Opco or Dutch FleetCo (as applicable) in respect of the
Vehicle Fleet in The Netherlands only to that person, plus VAT.
“Third Party Purchase Price VAT Amount” shall have the meaning as ascribed to
such term in clause 6.6 of the Master German Fleet Purchase Agreement.
“Total Senior Noteholder Commitments” means €500 million on the Initial Funding
Date as increased or decreased pursuant to clause 5 (Increase in and
Intra-Senior Noteholder Group Transfer of Senior Noteholder Commitments) of the
“Transaction Agent” means Crédit Agricole Corporate and Investment Bank.
“Transaction Agent Fee Letter” means the fee letter between the Initial Senior
Noteholders and CACIB in respect of CACIB’s appointment as the Transaction Agent
and the FleetCo Security Agent.
“Transaction Documents” means the Issuer Transaction Documents, the FleetCo
Transaction Documents and the Avis Europe Payment Guarantee.
“Transaction Party” means any Party to any Transaction Document.
“Treasury Transaction” means any currency or interest rate purchase, cap or
collar agreement, forward rate agreement, interest rate agreement, index linked
agreement, interest rate or currency or future or option contract, foreign
exchange or currency purchase or sale agreement, interest rate swap, currency
swap, basis rate swap or combined similar agreement or any derivative
transaction protecting against or benefiting from fluctuations in any rate,
index or price.
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“TRO Defaults” means the Potential Events of Default in relation to which the
Italy Repayment Option, Spain Repayment Option and/or France Repayment Option
are available.
“TRO Proceeds Confirmation” means the confirmation by the Issuer (or the Issuer
Cash Manager on its behalf) to the Central Servicer, Finco and the Transaction
Agent that the Issuer has received:
(i) in respect of a Spain Repayment Option, the amounts set out in clause
6.2.1(ii) (Spain) of the Framework Agreement;
(ii) in respect of an Italy Repayment Option, the amounts set out in clause
6.2.2(ii) (Italy) of the Framework Agreement; and
(iii) in respect of a France Repayment Option, the amounts set out in clause
6.2.3(ii) (France) of the Framework Agreement.
“Turn-back Date” means, in relation to a Programme Vehicle, the date on which
such Programme Vehicle is returned to and accepted by the relevant Vehicle
Manufacturer or Vehicle Dealer pursuant to the terms of the relevant Vehicle
Dealer Buy-Back Agreement or Vehicle Manufacturer Buy-Back Agreement.
“UNCITRAL Regulations” means the Cross-Border Insolvency Regulations 2006,
SI2006/1030.
“Unpaid Sum” means any sum due and payable by the Issuer under any Transaction
Document but unpaid.
“Unrestricted Senior Note” means the Senior Notes issued in the form set out in
schedule 3 (Unrestricted Senior Note Certificate) to the Issuer Note Issuance
Facility Agreement.
“Unrestricted Senior Note Certificate” means the note certificate set out in
Facility Agreement.
“US Tax Obligor” means:
(a) an Avis Obligor, a FleetCo or the Issuer that is resident for tax purposes
in the United States of America; or
(b) an Avis Obligor, a FleetCo or the Issuer some or all of whose payments under
the Transaction Documents are from sources within the United States for US
federal income tax purposes.
“Value Added Tax Group” means a VAT group permitted under Article 11 of Council
Directive 2006/112/EC.
“Van” means a covered boxlike motor vehicle, having at least four wheels and
typically having a rear door and/ or sliding doors on the side panels, used for
the carriage of people.
“Variable Funding Notes” means the variable funding note issued by the FCT on
the Initial French Funding Date pursuant to the VFN Funding Agreement.
“Variable Rent” means, in respect of all Vehicles leased to the Lessee under the
relevant Master Lease Agreement on any date during a Calculation Period, on any
Lease Payment Date, or any other date on which accrued rent is due and payable
(such date being, for the purpose of this definition only, a Lease Payment
Date):
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(i) the sum of all amounts payable by the relevant FleetCo under the applicable
FleetCo Priority of Payments (in each case excluding any part thereof which
represents VAT and excluding further (x) principal due and payable in respect of
the relevant FleetCo Facility Agreement or the VAT Loan Agreement, (y) any
amounts which are payable by the relevant FleetCo but for which such FleetCo has
been indemnified by, or has otherwise received amounts from, the Lessee pursuant
to the relevant Master Lease Agreement or Servicing Agreement and (z) item
(e)(i) of the relevant FleetCo Pre-Enforcement Priority of Payments and item
(d) of the relevant FleetCo Post-Enforcement Priority of Payments);
plus (in respect of Vehicles in Spain, France, The Netherlands and Italy only)
(ii) any Monthly Risk Vehicle Loss;
minus (in respect of Vehicles in Spain, France, The Netherlands and Italy only)
(iii) any Monthly Risk Vehicle Profit.
“VAT” means:
(a) any tax imposed in compliance with the council directive of 28 November 2006
on the common system of value added tax (EC Directive 2006/112); and
(b) any other tax of a similar nature, whether imposed in a member state of the
European Union in substitution for, or levied in addition to, such tax referred
to in paragraph (a) above or elsewhere.
“VAT Amount” shall have the meaning as ascribed to such term in clause 6.4 of
“VAT Component” shall have the meaning assigned to it in clause 4.3 of the
“VAT Component and Charge Costs Component Trust Account” means the account with
account number 100-9644667-05 in the name of Dutch FleetCo into which the
VAT Component and the Charge Costs Component are paid by German Opco pursuant to
the terms of the German Trust Agreement.
“VAT Loan Advance” means the principal amount of each advance made or to be made
under the VAT Loan Agreement.
“VAT Loan Advance Drawdown Notice” means a duly completed notice substantially
in the form set out in schedule 1 (VAT Loan Utilisation Request) to the VAT Loan
Agreement.
“VAT Loan Agreement” means (i) in respect of Italian FleetCo, the Italian VAT
Loan Agreement and (ii) in respect of Dutch FleetCo in relation to its Vehicle
Fleet in The Netherlands only, the Dutch VAT Loan Agreement.
“VAT Loan Borrower” means Italian FleetCo and/or Dutch FleetCo in relation to
its Vehicle Fleet in The Netherlands only, respectively.
“VAT Loan Facility” means the facility made available to the VAT Loan Borrower
by the Italian VAT Lender.
“VAT Payables” means, at any time and in relation to Dutch FleetCo, Spanish
Branch and French FleetCo, the aggregate of all VAT payments owed by it to the
Spanish Tax Authority or French Tax Authority, respectively at such time.
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“VAT Payables Amount” means, in relation to Dutch FleetCo, Spanish Branch and
French FleetCo, the aggregate amount of its VAT Payables in Spain and France,
respectively.
“VAT Receivables” means in relation to Dutch FleetCo, Spanish Branch and French
FleetCo, the aggregate of all VAT repayments owed by the Spanish Tax Authority
to Dutch FleetCo, Spanish Branch and the French Tax Authority to French FleetCo,
respectively, in respect of which evidence satisfactory to the Transaction Agent
(acting reasonably) has been received that such VAT repayment is owed to Dutch
FleetCo, Spanish Branch or French FleetCo, as applicable, but excluding any VAT
repayment in respect of which security in form and substance acceptable to the
FleetCo Security Agent and the Transaction Agent has not been provided to the
Transaction Agent and the FleetCo Security Agent in accordance with the Security
Documents.
“Vehicle” means any Passenger Car, Van or Light Truck.
“Vehicle Dealer” means, in relation to any Vehicle, the dealership (being an
entity which is in the business of buying and selling cars and which is not a
member of any Vehicle Manufacturer Group) which sells or buys such Vehicle to or
from the relevant FleetCo (or, in the case of Germany, German Opco and, in the
case of The Netherlands, Dutch Opco).
“Vehicle Dealer Agreements” means Vehicle Dealer Buy-Back Agreements and Vehicle
Dealer Purchase Agreements.
“Vehicle Dealer Buy-Back Agreement” means, in relation to any FleetCo (or, in
the case of Germany, German Opco and, in the case of The Netherlands, Dutch
Opco), any agreement providing for a buy-back commitment by such Vehicle Dealer
of Vehicles purchased by such FleetCo (or, in the case of Germany, German Opco
and, in the case of The Netherlands, Dutch Opco and subsequently sold to Dutch
FleetCo).
“Vehicle Dealer Purchase Agreement” means:
(i) (in respect of Dutch FleetCo, Spanish Branch, French FleetCo and Italian
FleetCo) any purchase agreement between such FleetCo and a Vehicle Dealer
entered into prior to the date hereof with respect to any Vehicle;
(ii) (in respect of Dutch FleetCo, Spanish Branch, French FleetCo and Italian
entered into on or after the date hereof with respect to any Vehicle in Spain,
France, The Netherlands or Italy, provided that such agreement is consistent
with the Vehicle Dealer Purchase Agreement existing on the Signing Date with
such Vehicle Dealer (if any) taking into consideration any change in the
relevant Vehicle Dealer’s policy or, in the absence of such Vehicle Dealer
Purchase Agreement, is in form and substance satisfactory to the Transaction
Agent (acting reasonably) and is consistent with other Vehicle Dealer Purchase
Agreements of such FleetCo;
(iii) in respect of Dutch FleetCo only and in respect of any Vehicle in Germany,
any purchase agreement between German Opco and a Vehicle Dealer entered into on
or after the date hereof with respect to any Vehicle in Germany, provided that
such agreement is consistent with the Vehicle Dealer Purchase Agreement existing
on the Signing Date with such Vehicle Dealer (if any) taking into consideration
any change in the relevant Vehicle Dealer’s policy or, in the absence of such
Vehicle Dealer Purchase Agreement, is in form and substance satisfactory to the
Transaction Agent (acting reasonably) and is consistent with other Vehicle
Dealer Purchase Agreements of German Opco; and
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(iv) in respect of Dutch FleetCo only and in respect of any Vehicle in The
Netherlands, any purchase agreement between Dutch Opco, Dutch FleetCo and a
Vehicle Dealer entered into on or after the date hereof with respect to any
Vehicle in The Netherlands, provided that such agreement is consistent with the
Vehicle Dealer Purchase Agreement existing on the Signing Date with such Vehicle
Dealer (if any) taking into consideration any change in the relevant Vehicle
Dealer’s policy or, in the absence of such Vehicle Dealer Purchase Agreement, is
in form and substance satisfactory to the Transaction Agent (acting reasonably)
and is consistent with other Vehicle Dealer Purchase Agreements of Dutch Opco).
“Vehicle Dealer Receivables” means, at any time and in relation to any FleetCo
(or, in the case of Germany, German Opco), the aggregate of the unpaid portion
of all amounts (excluding amounts in respect of VAT) owed by any Vehicle Dealer
to such FleetCo (or, in the case of Germany, German Opco) at such time pursuant
to the disposition by such FleetCo (or, in the case of Germany, German Opco) of
any Vehicle under any Vehicle Dealer Buy-Back Agreement.
“Vehicle Documents” means the German Vehicle Documents, the Italian Vehicle
Documents, the French Vehicle Documents, the Dutch Vehicle Documents and the
Spanish Vehicle Documents.
“Vehicle Fleet” means, at any Calculation Date or (if relevant) the Intra-Month
Cut-Off Date and in relation to any Country, all Vehicles that have been
delivered to, or to the order of, the relevant FleetCo and that are legally
owned by such FleetCo free and clear of all liens (other than a retention of
title in favour of the corresponding Vehicle Manufacturer or Vehicle Dealer (as
applicable)).
“Vehicle Manufacturer” means, in relation to any Vehicle:
(a) any member of a Vehicle Manufacturer Group who is party to a Vehicle
Manufacturer Purchase Agreement in respect of such Vehicle with (i) in respect
of Spain, France, The Netherlands and Italy, any relevant FleetCo and (ii) in
respect of Germany and The Netherlands, German Opco and Dutch Opco respectively;
or
(b) a vehicle manufacturer who is not a member of a Vehicle Manufacturer Group
and who is party to a Vehicle Manufacturer Purchase Agreement in respect of such
Vehicle with (i) in respect of Spain, France, The Netherlands and Italy, any
relevant FleetCo and (ii) in respect of Germany and The Netherlands, German Opco
and Dutch Opco respectively.
“Vehicle Manufacturer Agreements” means Vehicle Manufacturer Buy-Back Agreements
and Vehicle Manufacturer Purchase Agreements.
“Vehicle Manufacturer Buy-Back Agreement” means, in relation to any FleetCo, any
agreement between such FleetCo (or, in respect of Vehicles in Germany, German
Opco and, in respect of Vehicles in The Netherlands, Dutch Opco) and a Vehicle
Manufacturer and providing for a buy-back commitment by such Vehicle
Manufacturer in favour of or for the benefit of such FleetCo (or, in respect of
Vehicles in Germany, German Opco).
“Vehicle Manufacturer Event of Default” means, with respect to any Vehicle
Manufacturer, either of the following circumstances:
(i) the relevant Vehicle Manufacturer has failed to pay when due pursuant to the
terms of the relevant Vehicle Manufacturer Programmes and:
(a) such failure continues unremedied for a period of 30 calendar days or
more, the Euro Equivalent of €30,000,000 at such time;
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(b) such amounts are not being contested in good faith by such Vehicle
Manufacturer as evidenced in writing questioning the accuracy of amounts paid or
payable with respect to certain Vehicles subject to Vehicle Manufacturer
Programmes entered into by such Vehicle Manufacturer, (but excluding amounts
arising pursuant to a general repudiation by such Vehicle Manufacturer of all of
its obligations under all of its Vehicle Manufacturer Programmes with such
FleetCo); and
(c) such FleetCo has not established an adequate reserve (as determined by
such FleetCo, acting reasonably) in respect of such amounts; or
(ii) any of the Vehicle Manufacturer Insolvency Events, Vehicle Manufacturer
Insolvency Proceedings or Execution or Distress Events occurs in respect of such
Vehicle Manufacturer and/or the Vehicle Manufacturer Group Head Entity of the
Vehicle Manufacturer Group of which such Vehicle Manufacturer is a member.
“Vehicle Manufacturer Group” means each vehicle manufacturer group identified as
such in schedule 17 (Vehicle Manufacturer Group Table) to the Framework
Agreement as such schedule may be amended from time to time as provided for
therein, it being provided that each such Vehicle Manufacturer Group shall
include (a) the relevant Vehicle Manufacturer Group Head Entity set out in the
relevant column in the above-mentioned table opposite that group, (b) the
relevant Vehicle Manufacturer Group Rating Entity set out in the relevant column
in the above-mentioned table opposite that Vehicle Manufacturer Group (if any)
and (c) any Subsidiary of such Vehicle Manufacturer Group Head Entity (and each
such entity shall be a “member” of such Vehicle Manufacturer Group).
“Vehicle Manufacturer Group Head Entity” has the meaning ascribed to it in the
table set out in schedule 17 (Vehicle Manufacturer Group Table) to the Framework
therein with respect to the relevant Vehicle Manufacturer Group.
“Vehicle Manufacturer Group Rating Entity” has the meaning ascribed to it in the
“Vehicle Manufacturer Guarantee” means, in relation to any Vehicle Dealer and
any Vehicle Dealer Buy-Back Agreement, any guarantee granted by a Vehicle
Manufacturer benefiting any FleetCo (or, in the case of Germany, German Opco
and, in the case of The Netherlands, Dutch FleetCo and Dutch Opco) with respect
to the obligations of such Vehicle Dealer under such Vehicle Dealer Buy-Back
Agreement, which guarantee, if entered into after the date hereof, shall be in
form and substance satisfactory to the Transaction Agent (acting reasonably).
“Vehicle Manufacturer Insolvency Event” means, in relation to any Vehicle
Manufacturer, the occurrence of any of the following under any applicable law:
(i) bankruptcy, insolvency or relief of debtors, seeking to have an order for
insolvent (including, without limitation, with respect to any Vehicle
Manufacturer which is subject to insolvency proceedings in Italy, any
liquidazione, procedura concorsuale (fallimento, concordato preventivo,
liquidazione coatta amministrativa, amministrazione straordinaria or
ristrutturazione industriale delle grandi imprese in
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stato di insolvenza), cessione dei beni ai creditori or any other similar
proceedings)), adjustment, winding-up, examinership, liquidation, dissolution,
emergency regulations, legal de-merger, declaration or other relief with respect
to it or its debts; or
affecting any asset or assets of such Vehicle Manufacturer; or
(iii) enforcement of any Security Interests over any assets of such Vehicle
Manufacturer,
or any analogous procedure or step is taken or threatened in any jurisdiction;
(a) above by such Vehicle Manufacturer;
(c) the value of the assets of such Vehicle Manufacturer is less than the amount
liabilities;
(d) such Vehicle Manufacturer is or becomes unable to pay its debts as they fall
due or insolvent or such Vehicle Manufacturer admits its inability to pay its
(e) with respect to any Vehicle Manufacturer which is subject to insolvency
proceedings in Germany:
(i) such Vehicle Manufacturer is unable or admits inability to pay its debts
(ii) such Vehicle Manufacturer is overindebted (überschuldet) within the
(iii) a moratorium is declared in respect of any indebtedness of such Vehicle
Manufacturer.
“Vehicle Manufacturer Insolvency Proceeding” means any corporate action, legal
arrangement, scheme of arrangement or otherwise) of any Vehicle Manufacturer;
any Vehicle Manufacturer;
of any Vehicle Manufacturer or any of its assets (including, without limitation,
with respect to any Vehicle Manufacturer which is subject to insolvency
straordinario, commissario liquidatore or any other Vehicle Manufacturer
performing the same function);
(d) enforcement of any Security over any assets of any Vehicle Manufacturer;
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proceedings in Germany:
(f) with respect to any Vehicle Manufacturer which is subject to insolvency
commerce;
(g) with respect to any Vehicle Manufacturer which is subject to insolvency
(h) with respect to any Vehicle Manufacturer which is subject to insolvency
or any analogous procedure or step is taken in respect of the Vehicle
Manufacturer in any jurisdiction.
In respect of a Vehicle Manufacturer in Spain, a reference in this definition
to:
“Vehicle Manufacturer Programme” means, in relation to any FleetCo and any
Vehicle Manufacturer, any Vehicle Manufacturer Buy-Back Agreement to which such
Vehicle Manufacturer and such FleetCo (or, in the case of Germany, German Opco
and, in the case of The Netherlands, Dutch FleetCo and Dutch Opco) are parties
and any Vehicle Manufacturer Guarantee from which such FleetCo (or, in the case
of Germany, German Opco and, in the case of The Netherlands, Dutch FleetCo and
Dutch Opco) benefits.
“Vehicle Manufacturer Purchase Agreement” means, in relation to any FleetCo:
(a) any purchase agreement between such FleetCo and a Vehicle Manufacturer
entered into prior to the date hereof with respect to any Vehicle; and
(b)
any purchase agreement between such FleetCo and a Vehicle Manufacturer entered
into on or after the date hereof with respect to any Vehicle, provided that such
agreement is consistent with the Vehicle Manufacturer Purchase Agreement and
Vehicle Manufacturer
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Buy-Back Agreement existing on the Signing Date with such Vehicle Manufacturer
Manufacturer’s policy or, in the absence of such Vehicle Manufacturer Purchase
Agreement, is in form and substance satisfactory to the Transaction Agent
(acting reasonably) and is consistent with other Vehicle Manufacturer Purchase
Agreements of such FleetCo.
“Vehicle Manufacturer Receivables” means, at any time and in relation to any
Country, the aggregate of all amounts (excluding amounts in respect of VAT and
volume bonuses) owed by any Vehicle Manufacturer in such Country to the relevant
FleetCo) in respect of the Vehicle Fleet in such Country at such time pursuant
to the disposition by such FleetCo) of any Vehicle under any Vehicle
Manufacturer Buy-Back Agreement and to any Vehicle Manufacturer Guarantee.
“Vehicle Manufacturer Repurchase Price” means, in relation to a Vehicle, the
purchase price or other consideration payable by the relevant Vehicle
Manufacturer or Vehicle Dealer to (in respect of Vehicles in Italy, France, The
Netherlands or Spain) the relevant FleetCo or (in respect of Vehicles in
Germany) German Opco (or a person determined by German Opco) for the repurchase
by the Vehicle Manufacturer or Vehicle Dealer of such Vehicle, as provided for
in the relevant Vehicle Manufacturer Agreement or Vehicle Dealer Agreement, plus
VAT.
“Vehicle Purchasing Agreement” means an agreement pursuant to which a FleetCo,
Dutch Opco or German Opco purchases Vehicles from a Vehicle Manufacturer or
Vehicle Dealer.
“Vehicle Ratio” means, in respect of a Vehicle on a Lease Determination Date,
the Net Book Value of such Vehicle on the Calculation Date immediately preceding
such Lease Determination Date divided by the Borrower Vehicle Fleet NBV in
relation to such FleetCo on such Calculation Date.
“Vehicle Request Notice” means the vehicle request notice in the form of
schedule 2 (Form of Vehicle Request Notice) to the relevant Master Lease
Agreement.
“Vehicle Schedule” means, in relation to the Spanish Master Lease Agreement, an
Individual Vehicle Schedule or a Global Vehicle Schedule, in relation to the
French Master Lease Agreement, a vehicle schedule substantially in the form of
schedule 3 to the French Master Lease Agreement and, in relation to the Italian
Master Lease Agreement, a vehicle schedule substantially in the form of schedule
3 to the Italian Master Lease Agreement.
“VFN Advance” means each advance made available to the FCT under the VFN Funding
Agreement and by which the VFN Principal Amount Outstanding is increased.
“VFN Advance Drawdown Date” means the date of funding of each VFN Advance by the
Issuer pursuant to the relevant VFN Advance Drawdown Notice.
“VFN Advance Drawdown Notice” means a notice substantially in the relevant form
set out in the Framework Agreement pursuant to which the FCT irrevocably
requests one or more funding of VFN Advance(s) under the VFN Funding Agreement.
“VFN Final Repayment Date” has the meaning ascribed to such terms in clause
7.1.1 of the VFN Funding Agreement.
“VFN Funding Agreement” means the VFN funding agreement entered into between the
Issuer and the FCT.
“VFN Funding Agreement Purchase Option” has the meaning given to it in clause
6.2.3(vii) of the Framework Agreement.
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“VFN Note Certificate” means the note certificate set out in Schedule 1 to the
VFN Funding Agreement.
“VFN Principal Amount Outstanding” means, on any date in respect of the Variable
Funding Note, the current principal amount outstanding of such Variable Funding
Note as reflected on the FCT Register on such date.
“VFN Repayment” means a payment of principal under the VFN Funding Agreement
made by the FCT to the Issuer on the VFN Repayment Date and by which the VFN
Principal Amount Outstanding is decreased.
“Voluntary Insolvency Event” means:
(i) the occurrence of an event referred to in paragraph (c) or paragraph
(e) under the definition of “Insolvency Proceedings” in respect of Italian Opco,
Italian FleetCo, Dutch Opco, French Opco, French FleetCo or Spanish Opco,
provided that:
(a) the reference to a meeting of such person in paragraph (c) shall mean a
meeting convened by the directors of Italian Opco, Italian FleetCo, Dutch Opco,
French Opco, French FleetCo or Spanish Opco; and
(b) the reference to protection granted (including any moratorium) from its
creditors under paragraph (e) shall mean protection granted by or at the request
of Italian Opco, Italian FleetCo, Dutch Opco, French Opco, French FleetCo or
Spanish Opco or any of their directors;
(ii) (A) the occurrence of an event referred to in paragraph (b)(i)(y) under the
definition of “Insolvency Proceedings” in respect of Italian Opco, Dutch Opco,
French Opco and Spanish Opco or (B) the occurrence of an event referred to in
paragraph (b)(i)(x) or paragraph (b)(ii) under the definition of “Insolvency
Proceedings” in respect of Italian FleetCo or French FleetCo, provided, in each
case, that the reference to a corporate action, legal proceedings or other
procedure or step of such person in the relevant sub-paragraph (b) of the
definition of “Insolvency Proceedings” shall mean a corporate action, legal
proceedings or other procedure or step taken by or at the request of Italian
(as applicable) or any of their directors;
(iii) the occurrence of an event in respect of Italian Opco, Italian FleetCo,
Dutch Opco, French Opco, French FleetCo or Spanish Opco referred to in paragraph
(i) of the definition of “Insolvency Proceedings” which has an effect equivalent
or substantially similar to any of those mentioned in paragraph (b)(i)(y),
paragraph (b)(i)(x), paragraph (b)(ii), paragraph (c) or paragraph (e) of the
definition of “Insolvency Proceedings”, as applicable, in each case where such
event occurs at the request of or on the application by the directors of Italian
Opco, Italian FleetCo, Dutch Opco, French Opco, French FleetCo or Spanish Opco;
(iv) the occurrence of an event referred to in paragraph (g) of the definition
of “Insolvency Proceedings” in respect of Italian Opco, Italian FleetCo, Dutch
Opco, French Opco, French FleetCo or Spanish Opco where the Insolvency Official
referred to therein is appointed at the request of, or the application to
appoint the Insolvency Officer referred to therein has been made by, the
directors of Italian Opco, Italian FleetCo, Dutch Opco, French Opco, French
FleetCo or Spanish Opco; or
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(v) Italian Opco, Italian FleetCo, Dutch Opco, French Opco, French FleetCo or
Spanish Opco is or becomes Insolvent as per paragraph (b) or paragraph (c) of
the definition of “Insolvent”.
“Voting Stock” means, with respect to any person, the common stocks or
membership interests of such person and any other security of, or ownership
interest in, such person having ordinary voting power to elect a majority of the
board of directors or a majority of the managers (or other persons serving
similar functions) of such person.
“Weighted Average Exposure Rate” means, in respect of all the outstanding
Treasury Transactions entered into by the Issuer, the weighted average of:
(i) in the case of an interest rate Treasury Transaction, the fixed rate (per
annum) payable by the Issuer to the Issuer Hedge Counterparties as scheduled
payments in accordance with the relevant Issuer Hedging Agreement; and
(ii) in the case of an interest rate cap Treasury Transaction, the interest rate
cap rate (per annum) set out in the relevant Issuer Hedging Agreement,
pro rata to the Notional Amount (as defined in the relevant Confirmations (as
defined in the relevant Issuer Hedging Agreement)) of such Treasury Transaction.
2 Principles of Interpretation and Construction
expressly stating that it shall be construed and interpreted in accordance with
the provisions of this Clause 2 (Principles of Interpretation and Construction)
(a “Relevant Document”):
2.1 references to:
(i) such Relevant Document:
(a) are to such Relevant Document (as from time to time amended, varied,
supplemented, modified, suspended, assigned or novated, in each case, however
fundamental and in accordance with such Relevant Document) and any other
document executed in accordance with such Relevant Document (as from time to
time so amended, varied, supplemented, modified, suspended, assigned or novated,
in each case, however fundamental) and expressed to be supplemental to such
Relevant Document; and
(b) include its Schedules and references to paragraphs, clauses, Recitals, or
Schedules are (unless specified otherwise) references to such provisions of such
Relevant Document;
(ii) any other agreement, deed, instrument, licence, code or other document,
or to a provision contained in any of these, shall be construed, at the
particular time, as a reference to it as it may then have been amended, varied,
fundamental and, in respect of the FleetCo Facility Agreements, the VFN Funding
Agreement and the Issuer Note Issuance Facility Agreement, shall include all
amendments, variations, supplements, modifications, suspensions, assignments or
novations providing for further FleetCo Advances or Senior Advances (as
applicable);
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(iii) any party to any Transaction Document include its successors in title,
permitted assigns and permitted transferees;
(iv) “Senior Notes” are to the Senior Notes for the time being outstanding and
include any replacement Senior Notes issued pursuant to the Issuer Note Issuance
Facility Agreement;
(v) fees, costs, charges or expenses include any value added, turnover or
similar tax charged in respect thereof;
(vi) an action, remedy or method of judicial proceedings for the enforcement
of creditors’ rights include references to the action, remedy or method of
judicial proceedings in jurisdictions other than England as shall most nearly
approximate thereto;
(vii) a statute or statutory provision include that statute or provision as
from time to time modified, re-enacted or consolidated;
(viii) a “judgment” include any order, injunction, determination, award or
other judicial or arbitral measure in any jurisdiction;
(ix) a “person” include any company, partnership or unincorporated association
(whether or not having separate legal personality);
(x) a “company” include any company, corporation or body corporate, wherever
incorporated;
(xi) “assets” include present and future properties, revenues and rights of
every description;
(xii) “indebtedness” include any obligation (whether incurred as principal or
as surety) for the payment or repayment of money, whether present or future,
actual or contingent;
(xiii) a “regulation” include any regulation, rule, official directive,
request or guideline (whether or not having the force of law) of any
governmental, intergovernmental or supranational body, agency, department or
regulatory, self-regulatory or other authority or organisation;
(xiv) “the service of an Issuer Enforcement Notice” mean the giving of an
Issuer Enforcement Notice to the Issuer in accordance with clause 8.1
(Notification of Enforcement) of the Issuer Deed of Charge;
(xv) “the service of an FleetCo Enforcement Notice” mean the giving of a
FleetCo Enforcement Notice to the relevant FleetCo in accordance with clause 8.1
(Notification of Enforcement) of the relevant FleetCo Deed of Charge;
(xvi) “the FleetCo in a/each/the relevant/such Country” shall mean, in the
context of Dutch FleetCo, either Dutch FleetCo’s Vehicle Fleet in Germany, Dutch
FleetCo’s Vehicle Fleet in The Netherlands or Dutch FleetCo, Spanish Branch’s
Vehicle Fleet in Spain, as applicable;
(xvii)
“Dutch FleetCo” shall, in the context of Dutch FleetCo’s activities in relation
to the Spanish Vehicle Fleet, mean Dutch FleetCo, Spanish Branch and, in all
other contexts, Dutch FleetCo acting through its headquarters in The
Netherlands, provided further that, for the avoidance of doubt, a reference to
Dutch FleetCo in
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the Transaction Documents shall always be a reference to the Dutch FleetCo in
relation to its Vehicle Fleet in Spain, Germany or The Netherlands and provided
further that a reference to Dutch FleetCo’s Vehicle Fleet in the Netherlands
shall mean the Vehicle Fleet Dutch FleetCo has purchased from Dutch Opco, a
reference to Dutch FleetCo’s Vehicle Fleet in Germany shall mean the Vehicle
Fleet Dutch FleetCo has purchased from German Opco and a reference to Dutch
FleetCo, Spanish Branch’s Vehicle Fleet in Spain shall mean the Vehicle Fleet
owned by Dutch FleetCo, Spanish Branch, as the context may require, unless
expressly specified otherwise;
(xviii) in respect of a Country Repayment Option, a Spain Repayment Option, an
Italy Repayment Option or a France Repayment Option, “exercise”, “exercises” or
“exercised” shall mean the delivery of the TRO Proceeds Confirmation by the
Central Servicer and Finco in accordance with clause 6 (Country Repayment
Option) of the Framework Agreement;
(xix) an “Act” of parliament or any other governmental authority is a
reference to such act as amended superseded, supplemented or replaced from time
to time;
(xx) an “amendment” includes a supplement, novation, restatement or
re-enactment and “amended” will be construed accordingly;
(xxi) an “approval” shall be construed as a reference to any approval,
consent, authorisation, exemption, permit, licence, registration, filing or
enrolment by or with any competent authority;
(xxii) an “authorisation” includes an authorisation, consent, approval,
resolution, licence, exemption, filing, registration or notarisation;
(xxiii) a “currency” is a reference to the lawful currency for the time being
of the relevant country;
(xxiv) “disposal” means a sale, transfer, grant, lease or other disposal,
whether voluntary or involuntary, and “dispose” will be construed accordingly;
(xxv) any reference in the Transaction Documents to an action being
“contemplated by”, “contemplated under” or similar references in a Transaction
Document shall, for the avoidance of doubt, not include an action which is
expressly prohibited in such Transaction Document;
(xxvi) “set-off” shall include analogous rights in other relevant
jurisdictions;
(xxvii) “repay”, “redeem” and “pay” shall each include both of the others and
cognate expressions shall be construed accordingly;
(xxviii) a “successor” of any party shall be construed so as to include an
assignee or successor in title of such party and any person who under the laws
of the jurisdiction of incorporation or domicile of such party has assumed the
rights and obligations of such party under any Transaction Document or to which,
under such laws, such rights and obligations have been transferred;
(xxix) all references to the “Irish Companies Act 1963-2012”, “Companies Act
1963 of Ireland” and “Irish Companies (Amendment) Act 1990” are to such
legislation, each as may be modified, re-enacted, consolidated or superseded;
and
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(xxx) “acting reasonably” or similar references means, in relation to the
FleetCo Security Agent or the Transaction Agent (a) acting on the instructions
of any of the Senior Noteholders pursuant to and in accordance with clause 13.4
(Consents, Directions, Instructions, Amendments, Waivers and Modifications of
Transaction Documents by the Transaction Agent) of the Framework Agreement and
clause 14.2 (Instructions to FleetCo Security Agent) of the Framework Agreement
or (b) acting in a reasonable manner;
(xxxi) “consent or approval not to be unreasonably withheld” or similar
references mean, in relation to the FleetCo Security Agent or the Transaction
Agent, that, in determining whether to give such consent or approval, the
FleetCo Security Agent or the Transaction Agent (as applicable) shall have
regard to the time necessary to seek and act upon the instructions of the Senior
Noteholders pursuant to and in accordance with clause 13.4 (Consents,
Directions, Instructions, Amendments, Waivers and Modifications of Transaction
Documents by the Transaction Agent) of the Framework Agreement and clause 14.2
(Instructions to FleetCo Security Agent) of the Framework Agreement;
(xxxii) “may reasonably direct”, “may reasonably request” or “may reasonably
require” or similar references means, in relation to the FleetCo Security Agent
or the Transaction Agent, such directions or requests acting on the instructions
clause 14.2 (Instructions to FleetCo Security Agent) of the Framework Agreement;
(xxxiii) the ratings of Vehicle Manufacturers in “Non-Investment Grade Vehicle
Manufacturer Receivables (for which a FleetCo holds enforceable title)”,
“Non-Investment Grade Vehicle Manufacturer”, “Investment Grade Vehicle
Manufacturer”, “Investment Grade Vehicle Manufacturer Receivables”, “Investment
Grade Programme Vehicles”, “Investment Grade Non-Programme Vehicles”,
“Non-Investment Grade Programme Vehicles”, “Non-Investment Grade Non-Programme
Vehicles” or any other ratings of Vehicle Manufacturers referred to in such
definition or the definitions of “Credit Enhancement Matrix”, “Concentration
Limit” or related definitions shall mean, in respect of any date, such rating of
the relevant Vehicle Manufacturer on the immediately preceding Calculation Date
or the immediately preceding Intra-Month Cut-off Date, as applicable;
(xxxiv)
the English Transaction Documents shall, in the context of (i) the Dutch FleetCo
Deed of Charge, exclude the FleetCo Spanish Facility Agreement, the FleetCo
FleetCo Deed of Charge and the FleetCo Security Powers of Attorney granted under
the Spanish FleetCo Deed of Charge and the German FleetCo Deed of Charge;
(ii) the German FleetCo Deed of Charge, exclude the FleetCo Spanish Facility
Agreement, the FleetCo Dutch Facility Agreement, the Spanish FleetCo Deed of
Charge, the Dutch FleetCo Deed of Charge and the FleetCo Security Powers of
Attorney granted under the Spanish FleetCo Deed of Charge and the Dutch FleetCo
Deed of Charge; and (iii) the Spanish FleetCo Deed of Charge, exclude the
FleetCo Dutch Facility Agreement, the FleetCo German Facility
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Agreement, the Dutch FleetCo Deed of Charge, the German FleetCo Deed of Charge
and the FleetCo Security Powers of Attorney granted under the Dutch FleetCo Deed
of Charge and the German FleetCo Deed of Charge;
(xxxv) items (i) (Framework Agreement), (ii) (Master Definitions Agreement),
(iii) (Funds Flow Agreement), (iv) (Tax Deed of Covenant), (xiii) (Central
Servicing Agreement), (xiv) (FleetCo Back-up Cash Management Agreement),
(xvi) (Finco Payment Guarantee), (xvii) (Parent Performance Guarantee),
(xx) (Liquidation Agency Agreement) and (xxiv) (Lessor Power of Attorney) of the
English Transaction Documents shall: (x) in the definition of Dutch FleetCo Deed
of Charge and in the context of enforcement of the Dutch FleetCo Dutch Secured
Property (as applicable) be construed as references to such items to the extent
of the Dutch FleetCo Level Dutch Advances Proportion only; (y) in the definition
of Spanish FleetCo Deed of Charge and in the context of enforcement of the Dutch
FleetCo Spanish Secured Property (as applicable), be construed as references to
such items to the extent of the Dutch FleetCo Level Spanish Advances Proportion
only; and (z) in the definition of German FleetCo Deed of Charge and in the
context of enforcement of the Dutch FleetCo German Secured Property (as
applicable), be construed as references to such items to the extent of the Dutch
FleetCo Level German Advances Proportion only; and
(xxxvi) the proceeds of enforcement of any security over the Dutch FleetCo
Share Pledge and the Dutch FleetCo Management Documents shall be construed as
being to the extent of the Dutch FleetCo Level Dutch Advances Proportion, Dutch
FleetCo Level Spanish Advances Proportion or the Dutch FleetCo Level German
Advances Proportion, as appropriate.
2.2 use of the singular shall include the plural and vice versa;
2.3 headings are for ease of reference only and shall be ignored in interpreting
such Relevant Document;
2.4 all notices to be given by any Party and all other communications and
documentation which are in any way relevant to such Relevant Document or the
performance or termination of such Relevant Document shall be in the English
language;
2.5 any statement qualified by reference to a party’s state of knowledge, belief
or awareness shall be deemed to include an additional statement that, before
making it, the relevant party has made such enquiry as it would be reasonable to
expect it to have made;
2.6 the words “include” and “including” are to be construed without limitation;
2.7 time shall be of the essence of such Relevant Document; and
2.8 a Default (other than an Event of Default) is “continuing” if it has not
been remedied or waived and an Event of Default is “continuing” if it has not
been waived.
3 Incorporation of Common Terms and Clause 24 of the Framework Agreement
This Agreement shall have expressly and specifically incorporated into it the
Common Terms and clause 24 (Consents, Amendments, Waivers and Modifications) of
the Framework Agreement as though they were set out in full in this Agreement.
If there is any conflict between this Agreement and the incorporated Common
Terms or clause 24 (Consents, Amendments, Waivers and Modifications) of the
Framework Agreement, such incorporated Common Terms and clause 24 (Consents,
Amendments, Waivers and Modifications) of the Framework Agreement shall prevail.
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4 Governing Law and Jurisdiction
4.1 This Agreement and any non-contractual obligations arising out of it or in
connection with it shall be governed by English law.
4.2 The courts of England are to have jurisdiction to settle any disputes which
may arise out of or in connection with this Agreement and accordingly any legal
action or proceedings arising out of or in connection with this Agreement may be
brought in such courts. The parties irrevocably submit to the jurisdiction of
such courts and waive any objection to Proceedings in such courts whether on the
ground of venue or on the ground that the Proceedings have been brought in an
inconvenient forum. These submissions are for the benefit of the Issuer Security
Trustee, the FleetCo Security Agent and the Transaction Agent and shall not
limit the right of the Issuer Security Trustee, the FleetCo Security Agent or
the Transaction Agent to take Proceedings in any other court of competent
jurisdiction nor shall the taking of Proceedings in any one or more
jurisdictions preclude the taking of Proceedings in any other jurisdiction
(whether concurrently or not).
5 Enforcement
5.1 The courts of England have exclusive jurisdiction to settle any dispute
arising out of or in connection with this Agreement (including a dispute
relating to the existence, validity or termination of this Agreement or any
non-contractual obligation arising out of or in connection with this Agreement).
5.2 The Parties agree that the courts of England are the most appropriate and
convenient courts to settle Disputes and accordingly no such Party will argue to
the contrary.
5.3 This Clause 5 (Enforcement) is for the benefit of the Issuer Secured
Creditors and the FleetCo Secured Creditors only. As a result, no Issuer Secured
Creditor and no FleetCo Secured Creditor shall be prevented from taking
proceedings relating to a Dispute in any other courts with jurisdiction. To the
extent allowed by law, such Parties may take concurrent proceedings in any
number of jurisdictions.
127
Schedule 1
The Parties
Part 1
Opcos, Servicers and Lessees
Opcos
Name of Opcos
Opco”) 33129079 in The Netherlands Avis Location de Voitures SAS (the “French
Opco”) 652 023 961 RCS Nanterre
Name of Servicers
RCS Nanterre
Lessees
Name of Lessees
the Italian Master Lease Agreement) 00421940586 Avis Alquile un Coche S.A.
(as lessee under the Spanish Master Lease Agreement) A28152767 Avis Budget
Autoverhuur B.V. (as lessee under the Master Dutch Fleet Lease Agreement)
33129079 in The Netherlands Avis Location de Voitures SAS (as lessee under the
French Master Lease Agreement) 652 023 961 RCS Nanterre
128
Central Servicer
Name
Avis Finance Company Ltd 02123807
Part 2
FleetCos
Name of FleetCos Jurisdiction of incorporation and legal form
Fincar Fleet B.V., Sucursal en España, the Spanish branch of FINCAR FLEET B.V.
097550851009 AB FleetCo a simplified limited stock company (société par actions
simplifiée) (the “French FleetCo”) 799 383 997 R.C.S. Beauvais
129
Part 3
The Account Banks
Name of Account Bank
Deutsche Bank AG, London Branch (the “Issuer Account Bank”) HRB 30 000,
branch number BR00005 Deutsche Bank S.A.E. (the “Dutch FleetCo Spanish Account
Bank”) A-08000614 Deutsche Bank AG, London Branch (the “Dutch FleetCo Spanish
Account Bank Operator”) HRB 30 000, branch number BR00005 Deutsche Bank
S.P.A. (the “Italian FleetCo Account Bank”) 01340740156 Deutsche Bank AG (the
“Dutch FleetCo German Account Bank”) HRB 30 000 Deutsche Bank AG, London
Branch (the “Dutch FleetCo German Account Bank Operator”) HRB 30 000, branch
number BR00005 Deutsche Bank AG, Amsterdam Branch (the “Dutch FleetCo Dutch
Account Bank”) HRB 30 000, branch number 33304583 Deutsche Bank AG, London
Branch (the “Dutch FleetCo Dutch Account Bank Operator”) HRB 30 000, branch
number BR00005 Deutsche Bank AG, Paris Branch (the “French FleetCo Account
Bank”) HRB 30 000, branch number 310327481 Deutsche Bank AG, London Branch
BR00005
130
Part 4
The Senior Noteholders
Names of Senior Noteholders
131
This Agreement has been entered into on the date stated at the beginning.
132
Execution Page
Issuer SIGNED by a duly authorised attorney of CARFIN FINANCE INTERNATIONAL
LIMITED By:
Name: Title: FleetCo Holdings SIGNED by a duly authorised attorney of CARFIN
FINANCE HOLDINGS LIMITED By:
Name: Title: Transaction Agent and Arranger CREDIT AGRICOLE CORPORATE AND
INVESTMENT BANK By:
Name: Title:
133
Issuer Security Trustee DEUTSCHE TRUSTEE COMPANY LIMITED By:
Name: Title: By:
Name: Title: FleetCo Security Agent CREDIT AGRICOLE CORPORATE AND INVESTMENT
BANK By:
Name: Title:
134
The Opcos AVIS BUDGET AUTOVERMIETUNG GMBH & CO. KG (as German Opco) By:
Name: Title: AVIS BUDGET ITALIA S.P.A. (as Italian Opco) By:
Name: Title: AVIS ALQUILE UN COCHE S.A.
(as Spanish Opco) By:
Name: Title: AVIS BUDGET AUTOVERHUUR B.V.
(as Dutch Opco) By:
Name: Title: AVIS LOCATION DE VOITURES SAS
(as French Opco) By:
Name: Title:
135
The Lessees AVIS BUDGET AUTOVERMIETUNG GMBH & CO. KG (as Lessee) By:
Name: Title: AVIS BUDGET ITALIA S.P.A. (as Lessee) By:
(as Lessee) By:
Name: Title:
136
The Servicers AVIS ALQUILE UN COCHE S.A.
(as Spanish Servicer) By:
Name: Title:
AVIS FINANCE COMPANY LIMITED (as Central Servicer)
By:
By:
Name:
Name:
Director
Director/Secretary AVIS BUDGET ITALIA S.P.A.
(as Italian Servicer) By:
(as French Servicer) By:
Name: Title:
137
The FleetCos FINCAR FLEET B.V. (as Dutch FleetCo) By:
Name: Title: Managing Director/Proxyholder A By:
Name: Title: Managing Director/Proxyholder B FINCAR FLEET B.V., SUCURSAL EN
ESPAÑA
(as Dutch FleetCo, Spanish Branch) By:
Name: Beatriz Diez Arranz Title: Dutch FleetCo, Spanish Branch representative
AVIS BUDGET ITALIA S.P.A. FLEET CO. S.A.P.A.
(as Italian FleetCo) By:
Name: Title: AB FLEETCO (as French FleetCo)
By:
Name: Title:
138
Parent AVIS BUDGET CAR RENTAL, LLC By:
Name: Title: Finco, Italian VAT Lender and Subordinated Lender AVIS FINANCE
COMPANY LIMITED By:
By:
Name: Name: Director Director/Secretary VAT Sharing Italian Opco AVIS BUDGET
ITALIA S.P.A. By:
Name: Title: Avis Europe AVIS BUDGET EMEA LIMITED By:
Name: Title:
139
The Account Banks DEUTSCHE BANK AG, LONDON BRANCH
(as Issuer Account Bank) By:
Name: Title: DEUTSCHE BANK S.A.E.
(as Dutch FleetCo Spanish Account Bank) By:
Name: Title: DEUTSCHE BANK AG, LONDON BRANCH
(as Dutch FleetCo Spanish Account Bank Operator) By:
Name: Title:
140
DEUTSCHE BANK AG
(as Dutch FleetCo German Account Bank) By:
Name: Title: DEUTSCHE BANK S.P.A.
(as Italian FleetCo Account Bank) By:
(as Dutch FleetCo German Account Bank Operator) By:
Name: Title:
141
DEUTSCHE BANK AG, AMSTERDAM BRANCH
(as Dutch FleetCo Dutch Account Bank) By:
(as Dutch FleetCo Dutch Account Bank Operator) By:
Name: Title:
142
DEUTSCHE BANK AG, PARIS BRANCH
(as French FleetCo Account Bank) By:
(as French FleetCo Account Bank Operator) By:
Name: Title:
143
Issuer Cash Manager DEUTSCHE BANK AG, LONDON BRANCH By:
Name: Title:
144
The FleetCo Back-up Cash Managers DEUTSCHE BANK AG, LONDON BRANCH
(as FleetCo German Back-up Cash Manager) By:
(as FleetCo Italian Back-up Cash Manager) By:
(as FleetCo Spanish Back-up Cash Manager) By:
Name: Title:
145
(as FleetCo Dutch Back-up Cash Manager) By:
(as FleetCo French Back-up Cash Manager) By:
Name: Title:
146
The Senior Noteholders For and on behalf of BLUE FINN S.A.R.L., LUXEMBOURG,
KÜSNACHT BRANCH
(as a Senior Noteholder) By:
Authorised Signatory: CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK (as a Senior
Noteholder) By:
Name: Title: NATIXIS (as a Senior Noteholder) By:
Name: Title:
147
SCOTIABANK EUROPE PLC
Name: Title: French Intermediary Bank CREDIT AGRICOLE CORPORATE AND INVESTMENT
BANK By:
Name: Title:
148
The Corporate Services Providers
INTERTRUST (NETHERLANDS) B.V.
(as a Dutch FleetCo Corporate Services Provider)
By:
Name: Title: VISTRA B.V. (as a Dutch FleetCo Corporate Services Provider) By:
Name: Title:
STRUCTURED FINANCE MANAGEMENT (IRELAND) LIMITED
(as Issuer Corporate Services Provider and FleetCo Holdings Corporate Services
Provider)
By:
Name: Title:
149
Registrar DEUTSCHE BANK LUXEMBOURG S.A. By:
Name: Title:
150
The FCT FCT CARFIN Represented by Eurotitrisation as FCT Management Company By:
Name: Title: FCT Custodian CACEIS BANK FRANCE By:
Name: Title: FCT Servicer CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK By:
Name: Title:
151
The Liquidation Agent FISERV AUTOMOTIVE SOLUTIONS, INC. By:
Name: Title: The Hedge Counterparties DEUTSCHE BANK AG By:
Name: Title: CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK By:
Name: Title:
152
Execution Page
Issuer and FCT Noteholder
SIGNED AND DELIVERED AS A DEED
for and on behalf of
CARFIN FINANCE INTERNATIONAL LIMITED
by its lawfully appointed attorney: /s/ Karen McCrave
Name: KAREN MCCRAVE Title: ATTORNEY AT FACT
in the presence of /s/ Patsy O’Sullivan Name: PATSY O’SULLIVAN Address: 1
GRANT’S ROW, LOWER MOUNT STREET, DUBLIN 2, IRELAND Occupation ANALYST
12
Transaction Agent and Arranger EXECUTED AS A DEED on behalf of CREDIT AGRICOLE
CORPORATE AND INVESTMENT BANK By:
/s/ Edith Lusson
Name: EDITH LUSSON Title: MANAGING DIRECTOR
in the presence of /s/ Cécile Roulier Name: CÉCILE ROULIER Address: 9 QUAI PAUL
DOUMER, 92920 PARIS Occupation BANKER
13
Issuer Security Trustee The common seal of
DEUTSCHE TRUSTEE COMPANY LIMITED
was affixed to this DEED in the presence of:
/s/ Nick Rogivue Name: NICK ROGIVUE Associate Director:
/s/ Leigh Cobb Name: LEIGH COBB Associate Director:
14
FleetCo Security Agent EXECUTED AS A DEED on behalf of CREDIT AGRICOLE CORPORATE
AND INVESTMENT BANK By:
15
The Opcos EXECUTED AS A DEED on behalf of
AVIS BUDGET AUTOVERMIETUNG GMBH & CO. KG
(as German Opco) By:
/s/ Martin Gruber
Name: MARTIN GRUBER Title: MANAGING DIRECTOR
in the presence of /s/ Inge König Name: INGE KÖNIG Address: MUEHLWEG 10, 61479
GLASHUETTEN, GERMANY Occupation ASSISTANT TO MANAGING DIRECTOR
16
The Opcos EXECUTED AS A DEED on behalf of AVIS BUDGET ITALIA S.P.A. (as Italian
Opco) By:
/s/ Gianluca Testa
Name: GIANLUCA TESTA Title: MANAGING DIRECTOR
in the presence of /s/ Cristina Alonso Name: CRISTINA ALONSO Address: AUDA.
MANOTERAS, 32.28050, MADRID Occupation LAWYER
17
The Opcos EXECUTED AS A DEED on behalf of AVIS BUDGET ITALIA S.P.A. (as VAT
Sharing Italian Opco) By:
18
The Opcos EXECUTED AS A DEED on behalf of AVIS ALQUILE UN COCHE S.A.
19
AVIS BUDGET AUTOVERHUUR B.V.
(as Dutch Opco)
By:
/s/ Laurent Sculier
Name: LAURENT SCULIER Title: FLEET & REMARKETING DIRECTOR
in the presence of /s/ Sarah Coens Name: SARAH COENS Address: 1 RUE DU GAL,
LECLERC, 92800, PUTEAUX Occupation LEGAL MANAGER
20
The Opcos EXECUTED AS A DEED on behalf of AVIS LOCATION DE VOITURES SAS
/s/ Renato De Lussu
Name: RENATO DE LUSSU Title: CFO
in the presence of /s/ Sarah Coens Name: SARAH COENS Address: 1 RUE DU GÉNÉRAL,
21
The Servicers EXECUTED AS A DEED on behalf of AVIS ALQUILE UN COCHE S.A.
22
The Servicers EXECUTED AS A DEED on behalf of AVIS FINANCE COMPANY LIMITED (as
Central Servicer) By: /s/ Joanna Spiers By: /s/ Gail Jones Name: JOANNA SPIERS
Name: GAIL JONES Director Director/Secretary
23
The Servicers EXECUTED AS A DEED on behalf of
AVIS BUDGET ITALIA S.P.A.
(as Italian Servicer)
By:
24
AVIS LOCATION DE VOITURES SAS
(as French Servicer)
By:
25
The Lessees EXECUTED AS A DEED on behalf of AVIS BUDGET AUTOVERMIETUNG GMBH &
CO. KG (as German Lessee) By:
26
The Lessees EXECUTED AS A DEED on behalf of
(as Italian Lessee)
By:
MANOTERAS, 32 28050, MADRID Occupation LAWYER
27
AVIS ALQUILE UN COCHE S.A.
(as Spanish Lessee)
By:
28
The Lessees EXECUTED AS A DEED on behalf of AVIS BUDGET AUTOVERHUUR B.V.
(as Dutch Lessee) By:
29
The Lessees EXECUTED AS A DEED on behalf of AVIS LOCATION DE VOITURES SAS
(as French Lessee) By:
30
FleetCo Holdings SIGNED AND DELIVERED AS A DEED for and on behalf of CARFIN
FINANCE HOLDINGS LIMITED by its lawfully appointed attorney: /s/ Karen McCrave
31
The FleetCos EXECUTED AS A DEED on behalf of FINCAR FLEET B.V. (as Dutch
FleetCo) By:
/s/ P.D. Haverkamp-Idema
Name: P.D. HAVERKAMP-IDEMA Title: Managing Director / Proxyholder A By:
/s/ B.W. De Sonnaville
Name: B.W. DE SONNAVILLE Title: Managing Director / Proxyholder B
32
The FleetCos EXECUTED AS A DEED on behalf of FINCAR FLEET B.V., SUCURSAL EN
ESPAÑA (as Dutch FleetCo, Spanish Branch) By:
/s/ Beatriz Diez Arranz
Name: BEATRIZ DIEZ ARRANZ Title: Dutch FleetCo, Spanish Branch
representative
33
The FleetCos EXECUTED AS A DEED on behalf of
34
The FleetCos EXECUTED AS A DEED on behalf of AB FLEETCO (as French FleetCo) By:
/s/ Frédéric LeGuide
Name: FRÉDÉRIC LEGUIDE Title: REPRESENTATIVE OF MAS FRANCE
in the presence of /s/ Josefina Parisi Name: JOSEFINA PARISI Address: 21 RUE
CLÉMENT MAROT, 75008,
PARIS, FRANCE Occupation MANAGER – MAS FRANCE
35
Parent EXECUTED AS A DEED on behalf of AVIS BUDGET CAR RENTAL, LLC By:
/s/ Rochelle Tarlowe
Name: ROCHELLE TARLOWE Title: VICE PRESIDENT AND TREASURER
in the presence of /s/ Erik Johnson Name: ERIK JOHNSON Address: 6 SYLVAN WAY,
PARSIPPANY, NJ 07054 Occupation CORPORATE COUNSEL
36
Finco, Italian VAT Lender, Dutch VAT Lender and the Subordinated Lender EXECUTED
AS A DEED on behalf of AVIS FINANCE COMPANY LIMITED By: /s/ Joanna Spiers By:
/s/ Gail Jones Name: JOANNA SPIERS Name: GAIL JONES Director Director/Secretary
37
EXECUTED AS A DEED on behalf of Avis Europe AVIS BUDGET EMEA LIMITED By:
/s/ Martyn Smith
Name: MARTYN SMITH Title: DIRECTOR
38
The Account Banks
(as Issuer Account Bank)
EXECUTED AS A DEED By: /s/ Nick Rogivue Name: NICK ROGIVUE Title: VICE PRESIDENT
By: /s/ Leigh Cobb Name: LEIGH COBB Title: VICE PRESIDENT
39
EXECUTED AS A DEED on behalf of DEUTSCHE BANK S.A.E. (as Dutch FleetCo Spanish
Account Bank) By:
/s/ Thomas Steimann
Name: THOMAS STEIMANN Title: DIRECTOR By:
/s/ Javier DiGirolamo
Name: JAVIER DIGIROLAMO Title: VICE PRESIDENT
40
(as Dutch FleetCo Spanish Account Bank Operator)
EXECUTED AS A DEED By:
/s/ Nick Rogivue
Name: NICK ROGIVUE Title: VICE PRESIDENT By:
/s/ Leigh Cobb
Name: LEIGH COBB Title: VICE PRESIDENT
41
EXECUTED AS A DEED on behalf of DEUTSCHE BANK S.P.A. (as Italian FleetCo Account
Bank) By:
/s/ Solidea B. Maccioni
Name: SOLIDEA B. MACCIONI Title: VP By:
/s/ Emanuela Di Felice
Name: EMANUELA DI FELICE Title: AVP
42
EXECUTED AS A DEED on behalf of DEUTSCHE BANK AG (as Dutch FleetCo German
/s/ Vivien Wichmann
Name: VIVIEN WICHMANN Title: VICE PRESIDENT By:
/s/ Bernd Birck
Name: BERND BIRCK Title: VICE PRESIDENT
43
(as Dutch FleetCo German Account Bank Operator)
44
EXECUTED AS A DEED on behalf of DEUTSCHE BANK AG, AMSTERDAM BRANCH (as Dutch
FleetCo Dutch Account Bank) By:
/s/ Jan Roos
Name: JAN ROOS Title: VP By:
/s/ Jeroen Blok
Name: JEROEN BLOK Title: DIRECTOR
45
(as Dutch FleetCo Dutch Account Bank Operator) EXECUTED AS A DEED By:
46
(as French FleetCo Account Bank Operator) EXECUTED AS A DEED By:
47
EXECUTED AS A DEED on behalf of DEUTSCHE BANK AG, PARIS BRANCH
/s/ Xavier Connen
Name: XAVIER CONNEN Title: AUTHORISED SIGNATORY By:
/s/ Catherine Bonnouvrier
Name: CATHERINE BONNOUVRIER Title: VP
48
Issuer Cash Manager DEUTSCHE BANK AG, LONDON BRANCH EXECUTED AS A DEED By:
49
The FleetCo Back-up Cash Managers
(as FleetCo German Back-up Cash Manager)
50
(as FleetCo Italian Back-up Cash Manager)
51
(as FleetCo Spanish Back-up Cash Manager)
52
(as FleetCo Dutch Back-up Cash Manager)
53
(as FleetCo French Back-up Cash Manager)
54
The Senior Noteholder EXECUTED AS A DEED on behalf of CREDIT AGRICOLE CORPORATE
AND INVESTMENT BANK By: /s/ Edith Lusson Name: EDITH LUSSON Title: MANAGING
DIRECTOR
DOUMER, 92920, PARIS Occupation BANKER
55
The Senior Noteholder EXECUTED AS A DEED on behalf of DEUTSCHE BANK AG, LONDON
BRANCH By: /s/ Patrick Connors Name: PATRICK CONNORS Title: MANAGING DIRECTOR
By: /s/ Frederic De Benoist Name: FREDERIC DE BENOIST Title: DIRECTOR
56
The Senior Noteholder EXECUTED AS A DEED on behalf of NATIXIS By: /s/
Jean-Baptiste Thiery Name: JEAN-BAPTISTE THIERY Title: R.D.
in the presence of /s/ Thomas Pons Name: THOMAS PONS Address: 47 QUAI
D’AUSTERLITZ, 75013, PARIS Occupation EXECUTIVE DIRECTOR/BANKER?
57
The Senior Noteholder EXECUTED AS A DEED on behalf of SCOTIABANK EUROPE PLC By:
/s/ William Swords Name: WILLIAM SWORDS Title: MANAGING DIRECTOR By: /s/ John
O’Connor Name: JOHN O’CONNOR Title: HEAD OF CREDIT RISK CONTROL
58
The Senior Noteholder EXECUTED AS A DEED on behalf of
BLUE FINN S.A.R.L., LUXEMBOURG, KÜSNACHT BRANCH By: /s/ Paul K.C. Spiering Name:
PAUL K.C. SPIERING Title: BRANCH MANAGER
in the presence of /s/ Richard Norton Name: RICHARD NORTON Address: 2 KING
EDWARD STREET, EC1A 1HQ Occupation FINANCE
59
The Senior Noteholder
ELEKTRA PURCHASE NO. 34 LIMITED Acting by its duly authorised Attorney By: /s/
Brian Buckley Name: BRIAN BUCKLEY Title: DIRECTOR
in the presence of /s/ Abbie O’Connor Name: ABBIE O’CONNOR Address: 17 THE
CRESCENT, INSE BAY, LAYTOWN, CO. MEATH Occupation TRAINEE ADMINISTRATOR
60
The Senior Noteholder EXECUTED AS A DEED on behalf of JUPITER SECURITIZATION
COMPANY LLC By JPMorgan Chase Bank N.A., its attorney-in-fact By: /s/ Corina
Mills Name: CORINA MILLS Title: EXECUTIVE DIRECTOR By: /s/ Alan P. English Name:
ALAN P. ENGLISH Title: EXECUTIVE DIRECTOR
61
The Senior Noteholder EXECUTED AS A DEED on behalf of JPMORGAN CHASE BANK, N.A.
By: /s/ Corina Mills Name: CORINA MILLS Title: EXECUTIVE DIRECTOR By: /s/ Alan
P. English Name: ALAN P. ENGLISH Title: EXECUTIVE DIRECTOR
62
French Intermediary Bank EXECUTED AS A DEED on behalf of CREDIT AGRICOLE
63
The Corporate Services Providers EXECUTED AS A DEED on behalf of INTERTRUST
(NETHERLANDS) B.V. (as a Dutch FleetCo Corporate Services Provider) By:
By:
/s/ Edwin Van Ankeren
Name: P.D. HAVERKAMP-IDEMA Name: EDWIN VAN ANKEREN Title: PROXYHOLDER Title:
PROXY HOLDER
64
EXECUTED AS A DEED on behalf of VISTRA B.V. (as a Dutch FleetCo Corporate
Services Provider) By:
By:
/s/ J. J. Van Ginkel
Name: B.W. DE SONNAVILLE Name: J. J VAN GINKEL Title: PROXY HOLDER Title:
DIRECTOR
65
PRESENT when the COMMON SEAL of
Provider)
was affixed hereto and this DEED was delivered
/s/ Jonathan Hanly
Name: JONATHAN HANLY Director
/s/ Siobhán Hallissey
Name: SIOBHÁN HALLISSEY Director / Company Secretary
.
66
Registrar EXECUTED AS A DEED on behalf of DEUTSCHE BANK LUXEMBOURG S.A. By: /s/
Nick Rogivue Name: NICK ROGIVUE Title: ATTORNEY By:
Name: LEIGH COBB Title: ATTORNEY
67
FCT Servicer EXECUTED AS A DEED on behalf of CREDIT AGRICOLE CORPORATE AND
INVESTMENT BANK By:
68
FCT CARFIN Represented by Eurotitrisation EXECUTED AS A DEED on behalf of
EUROTITRISATION By:
/s/ Jean-March Leger
Name: JEAN-MARCH LEGER Title: DIRECTEUR GÉNÉRAL
in the presence of /s/ Cécile Fossati Name: CÉCILE FOSSATI Address: 41 RUE
DELIZY, 93500, PANTIN, FRANCE Occupation LEGAL DEPARTMENT
69
FCT Custodian EXECUTED AS A DEED on behalf of CACEIS BANK FRANCE By:
/s/ Carine Echelard
Name: CARINE ECHELARD Title: CHIEF EXECUTIVE OFFICER
in the presence of /s/ Philippe Bourgues Name: PHILIPPE BOURGUES Address:
CACEIS INVESTOR SERVICES, 1-3 PLACE VALHUBERT, 75206, PARIS, CEDEX 13, FRANCE
Occupation DEPUTY CEO
70
FCT Registrar EXECUTED AS A DEED on behalf of CACEIS CORPORATE TRUST By:
/s/ Lionel Barthelemy
Name: LIONEL BARTHELEMY Title: DIRECTEUR GÉNÉRAL DÉLÉGUÉ
in the presence of /s/ Julie Huguet Lepers Name: JULIE HUGUET LEPERS Address:
CACEIS CORPORATE TRUST, 1-3 PLACE VALHUBERT, 75013, PARIS Occupation
RESPONSABLE JURIDIQUE
71
The Issuer Hedge Counterparty EXECUTED as a deed on behalf of THE BANK OF NOVA
SCOTIA By:
/s/ Chris Kulima
Name: CHRIS KULIMA Title: DIRECTOR
in the presence of /s/ Nikhil Varki Name: NIKHIL VARKI Address: 250 VESEY
ST, NEW YORK, NY 10281 Occupation DIRECTOR
72
The Issuer Hedge Counterparty EXECUTED as a deed on behalf of CREDIT AGRICOLE
/s/ Rachel Tresser
Name: RACHEL TRESSER Title: MANAGING DIRECTOR
in the presence of /s/ Schlomo Schiff Name: SCHLOMO SCHIFF Address: 1301 6TH
AVE, NEW YORK, NY, USA Occupation BANKER
By:
/s/ Christine Cremel
Name: CHRISTINE CREMEL Title: MANAGING DIRECTOR
73 |
Integrated Management Information, Inc. 10-Q EXHIBIT 32.1 Certification of Periodic Financial Report Pursuant to 18 U.S.C. Section 1350 For purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, John Saunders the Chief Executive Officer of Integrated Management Information, Inc. (the “Company”), hereby certifies that, to his knowledge: (i) the Quarterly Report on Form 10-Q of the Company for the quarterly period ended June 30, 2011, as filed with the Securities and Exchange Commission on the date hereof (the “Report”) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: August 11, 2011 /s/ John Saunders John Saunders, Chief Executive Officer
|
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-Q QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED MANAGEMENT INVESTMENT COMPANY Investment Company Act file number 811-09891 Dreyfus Opportunity Funds (Exact name of Registrant as specified in charter) c/o The Dreyfus Corporation 200 Park Avenue New York, New York 10166 (Address of principal executive offices) (Zip code) Bennett A. MacDougall, Esq. 200 Park Avenue New York, New York 10 166 (Name and address of agent for service) Registrant's telephone number, including area code: (212) 922-6000 Date of fiscal year end: 9/30 Date of reporting period: 12/31/15 The following N-Q relates only to the Registrant's series listed below and does not affect the other series of the Registrant, which has a different fiscal year end and, therefore, different N-Q reporting requirements. A separate N-Q Form will be filed for those series, as appropriate. -Dreyfus Natural Resources Fund FORM N-Q Item 1. Schedule of Investments. STATEMENT OF INVESTMENTS Dreyfus Natural Resources Fund December 31, 2015 (Unaudited) Common Stocks95.5% Shares Value ($) Aerospace & Defense1.4% Safran 29,380 Airlines1.8% Ryanair Holdings, ADR 29,655 Chemicals4.9% Albemarle 63,476 3,555,291 Dow Chemical 67,417 3,470,627 Energy Services6.6% Basic Energy Services 389,067 a,b 1,042,700 Halliburton 83,309 2,835,838 Schlumberger 41,831 2,917,712 Superior Energy Services 190,545 2,566,641 Food Products4.1% Archer-Daniels-Midland 112,679 4,133,066 Wilmar International 790,300 1,627,917 Forest Products & Other4.0% Owens Corning 68,599 3,226,211 Vulcan Materials 25,645 2,435,506 Industrials1.1% Alfa, Cl. A 813,900 Integrated Energy19.5% Galp Energia 472,622 5,478,614 Occidental Petroleum 114,421 7,736,004 Phillips 66 63,417 5,187,511 Saras 1,788,119 b 3,425,487 Valero Energy 82,492 5,833,009 Metals & Mining13.5% Alcoa 527,106 a 5,202,536 Boliden 178,780 2,964,273 Nucor 134,335 5,413,701 Rio Tinto 171,444 5,531,460 Oil & Gas Exploration & Production8.1% Cabot Oil & Gas 145,980 2,582,386 EOG Resources 50,825 3,597,902 Royal Dutch Shell, Cl. A 238,399 5,356,024 Oil & Gas Refining & Marketing2.1% Anadarko Petroleum 61,500 Oil - E&P3.1% Petrofac 157,552 1,845,978 Pioneer Natural Resources 20,756 2,602,387 Precious Metals & Minerals6.3% Franco-Nevada 65,452 2,994,227 Newcrest Mining 365,135 b 3,451,640 Newmont Mining 139,802 2,515,038 Seed & Fertilizer14.8% CF Industries Holdings 119,710 4,885,365 K+S 111,541 2,900,062 Monsanto 54,482 5,367,567 Mosaic 117,011 3,228,333 OCI 51,627 b 1,270,985 Potash Corp of Saskatchewan 198,593 3,399,912 Specialty Chemicals4.2% LANXESS 65,983 3,037,965 LyondellBasell Industries, Cl. A 33,833 2,940,088 Total Common Stocks (cost $159,838,025) Other Investment2.8% Registered Investment Company; Dreyfus Institutional Preferred Plus Money Market Fund (cost $4,017,454) 4,017,454 c Investment of Cash Collateral for Securities Loaned.7% Registered Investment Company; Dreyfus Institutional Cash Advantage Fund (cost $1,013,402) 1,013,402 c Total Investments (cost $164,868,881) % Cash and Receivables (Net) % Net Assets % ADR - American Depository Receipts a Security, or portion thereof, on loan. At December 31, 2015, the value of the fund's securities on loan was $2,158,228 and the value of the collateral held by the fund was $2,218,325, consisting of cash collateral of $1,013,402 and U.S. Government & Agency securities valued at $1,204,923. b Non-income producing security. c Investment in affiliated money market mutual fund. At December 31, 2015, net unrealized depreciation on investments was $24,102,486 of which $2,944,895 related to appreciated investment securities and $27,047,381 related to depreciated investment securities. At December 31, 2015, the cost of investments for federal income tax purposes was substantially the same as the cost for financial reporting purposes. Portfolio Summary (Unaudited) † Value (%) Integrated Energy 19.5 Seed & Fertilizer 14.8 Metals & Mining 13.5 Oil & Gas Exploration & Production 8.1 Energy Services 6.6 Precious Metals & Minerals 6.3 Chemicals 4.9 Specialty Chemicals 4.2 Food Products 4.1 Forest Products & Other 4.0 Money Market Investments 3.5 Oil - E&P 3.1 Oil & Gas Refining & Marketing 2.1 Airlines 1.8 Aerospace & Defense 1.4 Industrials 1.1 † Based on net assets. The following is a summary of the inputs used as of December 31, 2015 in valuing the fund's investments: Level 3 - Level 2 - Other Significant Level 1 - Unadjusted Significant Unobservable Assets ($) Quoted Prices Observable Inputs Inputs Total Investments in Securities: Equity Securities - Domestic Common Stocks† 86,263,089 - - Equity Securities - Foreign Common Stocks† 5,963,883 43,508,567 †† - Mutual Funds 5,030,856 - - †See Statement of Investments for additional detailed categorizations. †† Securities classified within Level 2 at period end as the values were determined pursuant to the fund's fair valuation procedures. See note above for additional information. The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) is the exclusive reference of authoritative U.S. generally accepted accounting principles (“GAAP”) recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under authority of federal laws are also sources of authoritative GAAP for SEC registrants. The fund's financial statements are prepared in accordance with GAAP, which may require the use of management estimates and assumptions. Actual results could differ from those estimates. The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e. the exit price). GAAP establishes a fair value hierarchy that prioritizes the inputs of valuation techniques used to measure fair value. This hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Additionally, GAAP provides guidance on determining whether the volume and activity in a market has decreased significantly and whether such a decrease in activity results in transactions that are not orderly. GAAP requires enhanced disclosures around valuation inputs and techniques used during annual and interim periods. Various inputs are used in determining the value of the fund’s investments relating to fair value measurements. These inputs are summarized in the three broad levels listed below: Level 1—unadjusted quoted prices in active markets for identical investments. Level 2—other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.). Level 3—significant unobservable inputs (including the fund’s own assumptions in determining the fair value of investments). The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. Valuation techniques used to value the fund’s investments are as follows: Investments in securities are valued at the last sales price on the securities exchange or national securities market on which such securities are primarily traded. Securities listed on the National Market System for which market quotations are available are valued at the official closing price or, if there is no official closing price that day, at the last sales price. Securities not listed on an exchange or the national securities market, or securities for which there were no transactions, are valued at the average of the most recent bid and asked prices, except for open short positions, where the asked price is used for valuation purposes. Bid price is used when no asked price is available. Registered investment companies that are not traded on an exchange are valued at their net asset value. All preceding securities are categorized as Level 1 of the fair value hierarchy. Fair valuing of securities may be determined with the assistance of a pricing service using calculations based on indices of domestic securities and other appropriate indicators, such as prices of relevant ADRs and futures contracts. Utilizing these techniques may result in transfers between Level 1 and Level 2 of the fair value hierarchy. When market quotations or official closing prices are not readily available, or are determined not to reflect accurately fair value, such as when the value of a security has been significantly affected by events after the close of the exchange or market on which the security is principally traded (for example, a foreign exchange or market), but before the fund calculates its net asset value, the fund may value these investments at fair value as determined in accordance with the procedures approved by the fund's Board. Certain factors may be considered when fair valuing investments such as: fundamental analytical data, the nature and duration of restrictions on disposition, an evaluation of the forces that influence the market in which the securities are purchased and sold, and public trading in similar securities of the issuer or comparable issuers. These securities are either categorized within Level 2 or 3 depending on the relevant inputs used. For restricted securities where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 of the fair value hierarchy. Pursuant to a securities lending agreement with The Bank of New York Mellon, the fund may lend securities to qualified institutions. It is the fund’s policy that, at origination, all loans are secured by collateral of at least 102% of the value of U.S. securities loaned and 105% of the value of foreign securities loaned. Collateral equivalent to at least 100% of the market value of securities on loan is maintained at all times. Collateral is either in the form of cash, which can be invested in certain money market mutual funds managed by the Manager or U.S. Government and Agency securities. The fund is entitled to receive all dividends, interest and distributions on securities loaned, in addition to income earned as a result of the lending transaction. Should a borrower fail to return the securities in a timely manner, The Bank of New York Mellon is required to replace the securities for the benefit of the fund and credit the fund with the market value of the unreturned securities and is subrogated to the fund’s rights against the borrower and the collateral. Additional investment related disclosures are hereby incorporated by reference to the annual and semi-annual reports previously filed with the Securities and Exchange Commission on Form N-CSR. Item 2. Controls and Procedures. (a) The Registrant's principal executive and principal financial officers have concluded, based on their evaluation of the Registrant's disclosure controls and procedures as of a date within 90 days of the filing date of this report, that the Registrant's disclosure controls and procedures are reasonably designed to ensure that information required to be disclosed by the Registrant on Form N-Q is recorded, processed, summarized and reported within the required time periods and that information required to be disclosed by the Registrant in the reports that it files or submits on Form N-Q is accumulated and communicated to the Registrant's management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. (b) There were no changes to the Registrant's internal control over financial reporting that occurred during the Registrant's most recently ended fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Registrant's internal control over financial reporting. Item 3. Exhibits. (a) Certifications of principal executive and principal financial officers as required by Rule 30a-2(a) under the Investment Company Act of 1940. FORM N-Q SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. Dreyfus Opportunity Funds By: /s/ Bradley J.
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Copy Number: For the Exclusive Use of: Agreement of Limited Partnership of MA Managed Futures Fund, LP A Delaware Limited Partnership Minimum Initial Subscription (Class A & Class C Units): $5,000 Minimum Initial Subscription (Class I Units): $1,000,000 Minimum Additional Subscription (Class A, Class C, & Class I Units): $1,000 General Partner: MA Capital Management, LLC 4oulevard, Suite 600 Palm Beach Gardens, FL 33410 August 2013 Agreement Of Limited Partnership Of MA Managed Futures Fund, LP This Agreement of Limited Partnership (the “Agreement”) is entered into as of the Initial Dealing Day, by and among (i) MA Capital Management, LLC, a Florida limited liability company, as general partner (the “General Partner”), (ii) those persons who were admitted as limited partners on the Initial Dealing Day (the “Initial Limited Partners”), and (iv) all other persons and entities that hereafter become partners in accordance with this Agreement. Except where the context otherwise requires, capitalized terms used herein have the meanings given in Article 15. Agreement NOW, THEREFORE, in consideration of the mutual promises made herein, the parties agree as follows: ARTICLE 1. GENERAL PROVISIONS 1.1 Formation. The General Partner formed MA Managed Futures Fund, LP (the “Fund”) on October 26, 2011 as a limited partnership pursuant to the Delaware Revised Uniform Limited Partnership Act, as amended (the “Act”), and the parties hereby ratify and adopt all acts of the General Partner involved in such formation. 1.2 Filing of Certificates. The General Partner has prepared, filed, recorded, and published all such certificates and other documents as may be necessary or appropriate to comply with the requirements for the organization and operation of a limited partnership under the Act as in effect from time to time. 1.3 Name. The name of the Fund will be “MA Managed Futures Fund, LP,” or such other name as the General Partner from time to time may determine. Prompt notice of any change to the name will be given to the Limited Partners. 1.4 Principal Office. The Fund’s principal office will be located at 4oulevard, Suite 600, Palm Beach Gardens, FL 33410, or such other place as the General Partner from time to time may determine. Prompt Notice of any change in the location of the principal office will be given to the Limited Partners. The Fund will at all times maintain an office, which need not be a place of business, in the State of Delaware. 1.5 Agent. The Fund will continuously maintain within the State of Delaware an agent for service of process on the Fund. The initial registered agent for the Fund is Agents and Corporations, Inc., located at 1201 Orange Street, Suite 600, Wilmington, DE 19801. 1.6 Purposes. The Fund is organized for the purposes of acquiring, holding, selling, exchanging, trading in, and otherwise investing in and disposing of, directly or indirectly, various investment assets, including futures, investment vehicles investing in futures, and other investment assets as described in detail in the Fund’s Prospectus, as well as any other lawful transactions as the General Partner may determine from time to time. 1.7 Term. The term of the Fund commenced upon the limited partnership filing with the office of the Delaware Secretary of State and will continue until terminated, as set forth in Article 13. ARTICLE 2. UNITS OF LIMITED PARTNERSHIP; CAPITAL CONTRIBUTIONS, ADMISSION OF NEW PARTNERS 2.1 Units of Limited Partnership. 2.1.1 Classes and Series of Units. The beneficial interest in the Fund shall be divided into 50,000 Units. The General Partner may, from time to time, authorize the designation of the Units into one or more Classes as provided in Section 2.1.2 below, and within each Class may designate Units into any number of Series. All Units issued hereunder shall be fully paid and nonassessable. The General Partner in its discretion may, from time to time, without vote of the Limited Partners, issue Units, in addition to the then issued and outstanding Units, to such party or parties at the then current net asset value of such Units in connection with the business of the Fund. In connection with any issuance of Units, the General Partner may issue fractional Units. The General Partner may from time to time divide or combine the Units into a greater or lesser number without thereby changing the proportionate beneficial interests in a particular Class or Series. Contributions to a Class or Series of the Fund may be accepted for, and Units of such Series shall be redeemed as, whole Units or integral multiples thereof. 2.1.2 Establishment of Classes and Series. The Fund shall consist of one or more separate and distinct Classes and Series. The General Partner hereby establishes and designates the following Classes: Class A, Class C, and Class I (each, a “Class”). Additionally, the General Partner hereby establishes and designates the following Series of Class C: Series I, Series II, Series III, and Series IV. The General Partner, in addition to being the general partner of the Fund, shall be the general partner associated with each Class and Series designated and established hereunder. Any additional Classes and Series designated hereunder shall be established by the adoption of a resolution by the General Partner and shall be effective upon the date stated therein (or, if no such date is stated, upon the date of such adoption). The Units of each Class and Series shall have the relative rights and preferences provided for herein and such rights as may be designated by the General Partner. The General Partner shall cause separate and distinct records for each Class and Series to be maintained. Each Unit shall represent a proportional beneficial interest in the net assets of the Fund. 2.1.3 Assignment of Class C Units by Series. The Units of Class C will be assigned by Series in the following manner: Series I to Limited Partners subscribing for less than $100,000; Series II to Limited Partners subscribing for less than $500,000 but at least $100,000; Series III to Limited Partners subscribing for less than $1,000,000 but at least $500,000; Series IV to Limited Partners subscribing for at least $1,000,000. To the extent that additional capital contributions or withdrawals by a Limited Partner would make such Limited Partner eligible for Units of another Class C Series, all of the Class C Units held by such Partner will be exchanged for Units of the new Series at the current net asset values of the Units of the respective Class C Series. 2.2 Capital Contributions. 2.2.1 In General. The minimum initial investment in the Fund for Class A and Class C Units is $5,000, the minimum initial investment in the Fund for Class I Units is $1,000,000, and the minimum additional investment for Class A, Class C, and Class I Units is $1,000, each subject to waiver or reduction in the sole discretion of the General Partner. All contributions of capital to the Fund will be in the form of cash and/or cash equivalents; provided that the General Partner may, in its sole discretion, consent to contributions in kind. In kind contributions will be valued in the General Partner’s discretion, but in no event higher than the value determined in accordance with Section 3.1 as of the end of the contribution date. The General Partner may, in its sole discretion: (i) change or waive the minimum Capital Contribution requirements from time to time; (ii) otherwise modify the Fund’s policies regarding Capital Contributions; and (iii) grant exceptions to any such policies and to the procedures and requirements for admission of Limited Partners and acceptance of Capital Contributions set forth below. 2.2.2 General Partner. As of the Initial Dealing Day, the General Partner and its officers, employees, and Affiliates may make an Initial Capital Contribution to the Fund in cash or in kind as set forth in the Fund’s books and records. 2.2.3 Limited Partners’ Initial Capital Contributions. Each person admitted as a Limited Partner on any Dealing Day will contribute on, or prior to, such Dealing Day the amount of Capital Contribution set forth on such Partner’s Subscription Application, and such Capital Contribution will be deemed made on such Dealing Day and will be reflected in the books and records of the Fund. Limited Partners must complete and execute the Fund’s Subscription Agreement, which must be received by the General Partner or the Fund’s administrator prior to Dealing Day. All investors must also make arrangements with the General Partner or the Fund’s administrator for the transmission of their Capital Contributions or in-kind Contributions for receipt by the General Partner or administrator prior to Dealing Day. 2.2.4 Additional Capital Contributions. No Limited Partner will be required and, except as provided in Section 13.4, the General Partner will not be required to make any Capital Contribution beyond such Partner’s Initial Capital Contribution. However, subject to the terms, conditions, and limitations herein, any Partner may voluntarily make additional Capital Contributions on the first Business Day of each calendar month. To make an additional Capital Contribution, Limited Partners must complete the Fund’s Additional Subscription Form, which must be received by the General Partner or the Fund’s administrator prior to Dealing Day. All investors must also make arrangements with the General Partner or the Fund’s administrator for the transmission of their Capital Contributions or in-kind Contributions for receipt by the General Partner or administrator prior to Dealing Day. 2.2.5 Early or Late Tender of Funds. The General Partner will cause funds tendered as Capital Contributions before the applicable Dealing Day to be recorded as prepaid capital contributions. If a contributing Partner does not make the cash or other property to be contributed available to the Fund prior to the due date of such contribution, but makes such cash or property available to the Fund within a reasonable period (in the General Partner’s sole discretion) following such due date, the Fund may, in the General Partner’s sole discretion, nonetheless accept such cash or property as a Capital Contribution as of the applicable due date. 2.3 Admission of Limited Partners. Limited Partners may be admitted to the Fund as of the first Business Day of each calendar month or as of any other time, determined at the discretion of the General Partner. Such admission will not require the consent of existing Limited Partners. Each Limited Partner must, as a condition of admission to the Fund, execute and deliver such documents as the General Partner may require evidencing such Partner’s qualifications and intent to be bound by all of the terms and conditions of this Agreement. 2.4 Special Charges. If the General Partner consents to a Limited Partner’s in-kind contributions to the Fund, the Fund may, in the General Partner’s discretion, assess a special charge against such Limited Partner equal to the actual costs incurred by the Fund in connection with accepting such in-kind contributions, including the costs of liquidating such in-kind contributions or otherwise adjusting the Fund’s portfolio to accommodate such in-kind contributions. Such special charge will be assessed as of the Dealing Day on which the in-kind contributions are made. 2.5 Class A Front-End Sales Load. Limited Partners purchasing Class A Units will pay a one-time front-end sales load at the time of each subscription equal to the following schedule: for total subscriptions less than $50,000: five percent (5.0%) of such subscription; for total subscriptions less than $100,000 but at least $50,000: four percent (4.0%) of such subscription; for total subscriptions less than $250,000 but at least $100,000: three percent (3.0%) of such subscription; for total subscriptions less than $500,000 but at least $250,000: two and one half percent (2.5%)of such subscription; for total subscriptions less than $750,000 but at least $500,000: two percent (2.0%) of such subscription; for total subscriptions less than $1,000,000 but at least $750,000: one and one half percent (1.5%) of such subscription; for total subscriptions of at least $1,000,000: no front-end sales load. The front-end sales load will reduce the number of units purchased by Class A Limited Partners. 2.6 No Interest. No Partner will be entitled to earn interest on his or her Capital Contribution or on his or her Units. ARTICLE 3. VALUE OF FUND ASSETS 3.1 Valuation of Assets. In determining the value of all assets of the Fund as of a particular date (a “Valuation Date”), the following methods will be used. If any of the price or quotation-related information referred to in this Section 3.1 is not available for a Valuation Date, the applicable information for the most recent preceding date will be used. 3.1.1 Futures Listed on an Exchange. Any futures contract that is listed on a recognized exchange will be valued at its last sale price on the Valuation Date, as recorded by the composite tape system, or, if the asset is not included in such system, at its last sale price on the Valuation Date on the principal exchange on which the asset is traded, as recorded by that exchange, or if no sale was reported on the Valuation Date through the composite quotation system or such exchange, at the mean of the highest closing “bid” price and the lowest closing “asked” price on the Valuation Date as recorded by the composite tape system or such principal exchange, as the case may be; 3.1.2 Discretion to Deviate from Market Price. Notwithstanding the foregoing, if any assets constitute a block that, in the judgment of the General Partner, could not be liquidated in a reasonable time without depressing the market for such assets unreasonably (or, in the case of a short position, could not be purchased without driving the market price up unreasonably), or are otherwise subject to significant restrictions on sale, such assets will be valued in the General Partner’s discretion, but at a unit value not in excess of the quoted market price (or in the case of a short position with a liability reflecting a unit value not less than the quoted market price) for other assets of the same class, as determined above; 3.1.3 Investments in Investment Vehicles. All investments in investment vehicles operated by independent third party investment managers will be valued in accordance with the valuations provided by such managers or their authorized representative. In most cases, such valuations will only be available to the Fund at the end of each calendar month, fiscal quarter, and fiscal year; 3.1.4 Other Assets. All other assets will be assigned a value determined in good faith by the General Partner. The General Partner may determine, in its sole discretion, to cause the Fund to engage an independent person to value any other assets that are not subject to valuation pursuant to Sections 3.1.1 through 3.1.3 above, and may, but will not be required to, establish procedures for some or all Limited Partners to approve or be afforded the opportunity to terminate the services of or replace any such person. Any such valuations will be at the Fund’s expense. 3.2 Determinations Conclusive. The value of each asset of the Fund and the Net Asset Value of the Fund determined pursuant to this Article 3 will be conclusive and binding on all of the Partners and all parties claiming through or under them absent bad faith or manifest error on the part of the General Partner. ARTICLE 4. ACCOUNTS AND ALLOCATIONS 4.1 Opening Capital Accounts. A Capital Account will be established as to each Unit on the books of the Fund as of the date on which the Units is first issued to a Limited Partner with an initial balance equal to such Unit’s initial net asset value, to be subsequently adjusted pursuant to Section 4.3 and 4.4. 4.2 Tentative Share of Gains or Losses. General Gain or Loss. For each Period, the Units’ percentage shares of Gains or Losses for purposes of tentative allocations to Capital Accounts pursuant to Section 4.4.2(a) will equal their respective Partnership Percentages at the beginning of such Period. 4.3 Special Allocations. 4.3.1 Annual Sales Fee. Class C Units will pay an annual sales fee, payable monthly in advance, equal to the following schedule: Series I: one and one half percent (1.5%) of the Net Asset Value of its Capital Account; Series II: one percent (1.0%) of the Net Asset Value of its Capital Account; Series III: one half percent (0.5%) of the Net Asset Value of its Capital Account; Series IV: no annual sales fee. The annual sales fee will be charged monthly in advance and will be charged each year in perpetuity. 4.3.2 Management Fee. The Management Fee as to each Unit pursuant to Section 6.2 will be specially allocated to and assessed against that Unit. 4.3.3 Incentive Allocation. The Incentive Allocation as to each Unit pursuant to Section 4.5 will be specially allocated to and assessed against that Unit. 4.3.4 Withdrawal Costs. If the Fund’s assets are liquidated or segregated in a separate account to effectuate any withdrawal pursuant to Article 5 (other than a mandatory withdrawal), the Fund’s cost of selling or transferring such assets, in the sole discretion of the General Partner, may be specially allocated at the Effective Time of such withdrawal to the Units to which such withdrawal is charged, except to the extent the General Partner determines, in its sole discretion, to waive such special allocation in whole or in part. 4.3.5 Reserves. The amount of any reserve described in Section 4.10, or any increase or decrease therein, may, in the General Partner’s sole discretion, be specially allocated to those Units held by Partners at the time (as determined by the General Partner in its sole discretion) of the event giving rise to the contingent liability for which the reserve was established, in proportion to their respective Partnership Percentages, at the beginning of the Period during which such event occurred. 4.3.6 Other Special Costs. Any expenditures payable by the Fund, to the extent determined by the General Partner to have been paid or withheld on behalf of, or by reason of particular circumstances applicable to, fewer than all of the Units, may, in the General Partner’s discretion, be charged only to those Units on whose behalf such payments are made or whose particular circumstances gave rise to such payments. 4.4 Capital Account Adjustments. The following adjustments will be made to each Unit’s Capital Account: 4.4.1 As of the beginning of each Period, such Capital Account will be decreased by the amount of any special charge assessed against such Unit as of the beginning of such Period pursuant to Section 2.3. 4.4.2 As of the end of each Period, such Capital Account will be: (a) tentatively decreased for such Unit’s share of Losses or increased for such Unit’s share of Gains for such Period, in each case determined in accordance with Section 4.2; (b) decreased by the amount of any dividends or distributions on such Unit during such Period; and (c) decreased by any amount specially allocated to that Unit during such Period pursuant to Section 4.3 and any amounts reallocated to such Unit pursuant to Section 4.8. 4.4.3 Incentive Allocation Time Adjustments. If the end of any Period is an Incentive Allocation Time as to the Fund, then, after the adjustments pursuant to Section 4.4.2, that Unit’s Capital Account will be decreased by the amount of the Incentive Allocation, if any, as to that Unit as of such Incentive Allocation Time. 4.5 Incentive Allocation. 4.5.1 Timing and Applicability. As of each Incentive Allocation Time, the Incentive Allocation will be determined as to the Fund and each Unit therein. 4.5.2 Amount of Incentive Allocation. At any Incentive Allocation Time when the Fund has experienced new appreciation, the Incentive Allocation will be equal to the product of i) the Incentive Allocation Rate (as described in the next sentence) for the Fund; and (ii) the amount, if any, of the new appreciation. The Incentive Allocation Rate is ten percent (10%). “New Appreciation” shall be the total increase, if any, in the Net Asset Value of the Fund from the end of the last period for which an Incentive Allocation was earned (the “High Water Mark”). For purposes of determining New Appreciation, the total increase, if any, in Net Asset Value of the Fund, including realized and unrealized gains and losses, above the High Water Mark shall be determined without regard to (i) increases in Net Asset Value due to capital contributions (inclusive of subscription proceeds) and (ii) decreases in Net Asset Value due to withdrawals, distributions, or the Incentive Allocation itself. If Units are withdrawn when there is a loss carryforward for Incentive Allocation calculation purposes (that is, the current level of cumulative New Appreciation is below the High Water Mark), such loss carryforward shall be reduced in proportion to the proportion of the total outstanding Units withdrawn. 4.5.3 Interpretation and Amendment; Restorative Allocations. The parties acknowledge and agree that the General Partner may, in its discretion, without the consent of the Partners, amend any provision of this Article 4 or take such other action to delay Incentive Allocation Times as to particular Units or to waive or delay the effectiveness of any Incentive Allocation, in each case to the extent necessary or appropriate to conform the Incentive Allocation to any applicable requirements of federal or state law. 4.6 Distributive Share for Tax Purposes. Items of Fund gain or loss recognized for income tax purposes will be allocated among the Units in accordance with the methods set forth in Section 1.704-3(e)(3) of the regulations promulgated under Section 704(c) of the Code. All other items of income, deduction, gain, loss, or credit that are recognized for income tax purposes will be allocated among the Units in accordance with their respective Partnership Percentages as of the beginning of the Period to which such items are attributable. Notwithstanding the foregoing, the General Partner will specially allocate items of gain (or loss) to Units withdrawn during any fiscal year in a manner designed to ensure that each withdrawn Unit is allocated gain (or loss) in an amount equal to the difference between that Unit’s Capital Account balance at the time of the withdrawal and the tax basis for the Unit at that time; provided, however, that the General Partner may, without the consent of any Partner, (i) alter the allocation of any item of taxable income, gain, loss, deduction, or credit in any specific instance where the General Partner, in its sole discretion, determines such alteration to be necessary or appropriate to avoid a materially inequitable result and/or (ii) adopt such other method of allocating tax items as the General Partner determines is necessary or appropriate in order to be consistent with the spirit and intent of the regulations under Sections 704(b) and 704(c) of the Code. 4.7 Dividends and Distributions. The Fund does not anticipate paying dividends or making irregular distributions of capital appreciations to the Partners. The amount and timing of any dividends and distributions (other than pursuant to withdrawals) will be in the sole discretion of the General Partner and any such dividends and distributions will be apportioned among the Units and charged to their respective Capital Accounts in accordance with their respective Partnership Percentages. 4.8 Special Allocations to Units of Persons Who Are No Longer Partners. If the application of Section 4.3.5 or Section 4.3.6 would result in any amount being allocated to a Unit owned by a person who is no longer a Partner, such person will be obligated to pay such amount to the Fund, upon demand by the General Partner, in cash, with interest from the date on which the General Partner determines that such charge is required, at a floating rate determined by the General Partner equal to the “reference rate” published from time to time by a bank selected in the General Partner’s sole discretion, provided that (i) in no event will a former Partner be obligated to make a payment exceeding the amount of such former Partner’s Unit’s Capital Account balance as of the end of the Period during which the event giving rise to the charge occurred (as determined by the General Partner in its sole discretion); (ii) no such demand will be made more than four (4) years after such former Partner ceased to be a Partner; and (iii) the General Partner may, by agreement with a Limited Partner, on behalf of the Fund, waive the right to recover such amounts from such Limited Partner. To the extent that the Fund fails to collect, in full, any amount from a former Partner that would have been allocated pursuant to Section 4.3.5 or Section 4.3.6, whether due to the expiration of the applicable limitation period or for any other reason whatsoever, the amount of the deficiency will be reallocated to the Capital Accounts of those Units owned by persons who were Partners as of the time the event giving rise to the charge occurred, in proportion to their Units’ respective Partnership Percentages at the beginning of the Period during which such event occurred. 4.9 Tax Withholding. To the extent the Fund is required by law to withhold or make tax payments on behalf of or with respect to any Partner (“Tax Advances”), the General Partner may cause the Fund to withhold such amounts and make such tax payments as required. All Tax Advances made on behalf of a Partner will, at the option of the General Partner, (i) be promptly paid to the Fund by the Partner on whose behalf such Tax Advances were made or (ii) reduce any current withdrawal being made by such Partner (or, if no such withdrawal is being made by such Partner, be treated as a distribution to such Partner as of the last day of the Period which includes the date the Tax Advance was remitted by the Fund to the taxing authorities). Whenever the General Partner selects option (i), from the date ten (10) days after the receipt by the Partner on whose behalf the Tax Advance was made of Notice of the Tax Advance, the Tax Advance will bear interest at the highest rate permitted by law until repaid. Whenever the General Partner selects option (ii), for all other purposes of this Agreement, the Partner on whose behalf the Tax Advance was made will be treated as having received the full amount of such withdrawal, unreduced by the amount of such Tax Advance. Each Partner hereby agrees to indemnify and hold harmless the Fund and the General Partner from and against any liability with respect to Tax Advances required on behalf of or with respect to such Partner. Each Partner hereby agrees to promptly give the General Partner or the Fund any true certification or affidavit that the General Partner may request in connection with this Section 4.9. 4.10 Reserves. Appropriate reserves may be created, accrued, and charged against Net Asset Value, as appropriate, for contingent liabilities (including contingent liabilities arising out of the Fund’s obligation to indemnify the General Partner and its members, employees, agents, and Affiliates and advance expenses pursuant to Section 8.1) as of the dates the General Partner becomes aware of any such contingent liabilities. Such reserves will be in such amounts as the General Partner in its discretion deems necessary or appropriate. The General Partner may increase or reduce any such reserve from time to time in its sole discretion. 4.11 Foreign Taxes. For all purposes of this Agreement (including the allocation of foreign tax credits for federal and state income tax purposes), amounts withheld directly from the Fund on account of foreign or other taxes will be treated as if amounts had been received by the Fund on the date of withholding and distributed to the Partners on whose behalf such withholding is deemed made in a manner consistent with the allocation of dividend income. In such event, the General Partner will make such other adjustments in appropriate accounts as are consistent with this treatment. ARTICLE 5. WITHDRAWALS OF UNITS 5.1 Voluntary Withdrawals. A Partner may withdraw their Units only in accordance with the following procedures and limitations and those set forth in Sections 4.4.2 and 5.4, unless the General Partner consents (which consent may be granted or withheld in its sole and absolute discretion) to a deviation from one or more of such procedures or limitations: (i) a Limited Partner may not make a withdrawal at any time other than the last day of a calendar month; and (ii) a Limited Partner must give written Notice to the General Partner at least thirty (30) days before the proposed Effective Time of a withdrawal. Any withdrawal request that would result in a Partner having in aggregate Units with a Net Asset Value of less than $1,000 will be treated as a withdrawal in full. 5.2 Mandatory Withdrawals. The General Partner may, in its discretion, cause a partial or a complete withdrawal of a Limited Partner’s Units by giving forty-eight (48) hours’ Notice to the Limited Partner, if the General Partner determines or has reason to believe that: (i) such Limited Partner has transferred or attempted to transfer any portion of its Units in violation of the provisions of Article 11; (ii) such Limited Partner’s continued ownership of its Units may cause the Fund to be in violation of, or require registration of any Units under, or subject the Fund or the General Partner to additional regulation under the securities laws of the United States or any other relevant jurisdiction or the rules of any self-regulatory organization; (iii) such Limited Partner’s continued ownership of its Units may be harmful or injurious to the business or reputation of the Fund or the General Partner, may result in the imposition of significant administrative or other burdens on the Fund or the General Partner, or may subject the Fund or any Partner to the risk of adverse tax or other fiscal consequences (including adverse consequences under ERISA); (iv) any of the representations and warranties made by such Limited Partner in connection with the acquisition of its Units were not true when made or have ceased to be true; or (v) it is otherwise in the best interests of the Fund, as determined in the sole discretion of the General Partner, to cause such a withdrawal. In particular, if a Limited Partner is or becomes a corporation, partnership, limited liability company, trust, or other entity whose beneficial ownership of its Units may be deemed to be beneficial ownership by the holders of outstanding securities of such Partner (a “Multiple-Owner Limited Partner”) under paragraph (1)(A) of Section 3(c) of the Investment Company Act of 1940, as amended (the “ICA”) at any time the Fund is relying on paragraph (1) of Section 3(c) of the ICA for exclusion from the definition of “investment company,” the General Partner may, in its sole discretion, cause a partial withdrawal of such Multiple-Owner Limited Partner’s Units to the extent necessary to cause such Multiple-Owner Limited Partner’s beneficial ownership of its Units to be beneficial ownership by one person, within the meaning of such paragraph, or may cause the complete withdrawal of such Multiple-Owner Limited Partner from the Fund. Similarly, if a Limited Partner becomes an “employee benefit plan investor” within the meaning of applicable rules and regulations under ERISA (an “ERISA Limited Partner”), the General Partner may in its sole discretion cause a complete or partial withdrawal of such Limited Partner’s Units to the extent necessary to prevent the Fund’s assets from being considered “plan assets” within the meaning of ERISA. In the exercise of its discretion, the General Partner may cause the partial or complete withdrawal of the Units of a Multiple-Owner Limited Partner regardless of whether or not such Limited Partner was a Multiple-Owner Limited Partner or an ERISA Limited Partner at the time such Limited Partner became a Limited Partner or made any particular Capital Contribution and may cause such partial or complete withdrawal as to some Multiple-Owner Limited Partners or ERISA Limited Partner and not others. A complete withdrawal of a Limited Partner’s Units mandated by the General Partner pursuant to this Section will be treated as a termination of the Limited Partner’s participation in the Fund. 5.3 Death, Dissolution, Bankruptcy, or Legal Incapacity of a Partner. In the event of the death, dissolution, bankruptcy, or legal incapacity of a Partner, the estate or legal representative of such Partner will succeed to the Partner’s right or duty to share in the gains or losses of their Units and to receive distributions from the Fund. The estate or representative may, in the sole discretion of the General Partner, be paid as of the end of the fiscal year during which the Partner died, became bankrupt, or became legally incapacitated, the value of such Partner’s Units as of the end of such year in liquidation. Alternatively, the General Partner may, in its sole discretion, admit the estate or representative to the Fund as a Limited Partner. Notwithstanding any of the foregoing, the General Partner may, in its sole discretion, cause a partial or complete withdrawal of such Partner’s Units for any of the reasons enumerated in Section 5.2, after giving forty-eight (48) hours’ Notice. 5.4 Conditions and Payment Procedures. 5.4.1 Limitations. (a) The General Partner may, in its discretion, suspend or restrict the right of any Partner to make a partial or complete withdrawal, the calculation of the Net Asset Value of the Fund’s assets, and the payment of any withdrawal proceeds at any time when: (i) such withdrawal would result in a violation by the Fund of the securities laws of the United States or any other relevant jurisdiction or the rules of any self-regulatory organization applicable to the Fund; (ii) any organized interdealer market on which a significant portion of the Fund’s assets are regularly traded or quoted is closed (other than for holidays) or trading thereon has been suspended or restricted; (iii) disposal of the assets of the Fund or other transactions involving the sale, transfer, or delivery of funds in the ordinary course of the business of the Fund are not reasonably practicable without being detrimental to the interests of withdrawing or remaining Limited Partners; (iv) there exists any state of affairs which, in the opinion of the General Partner, constitutes an emergency as a result of which liquidation by the Fund of its investment positions is not reasonably practicable or would be seriously prejudicial to the Fund and its Partners; (v) there exists any breakdown in the means of communication normally employed in determining the price or value of a significant portion of the Fund’s investments, or of current prices on any exchange, market, or clearing organization, or if for any other reason, the prices or value of a significant portion of the Fund’s investments cannot reasonably be promptly and accurately ascertained; (vi) trading in a significant portion of investments owned by the Fund is halted on any exchange, market, or clearing organization or any other act or event occurs which would make it difficult or impossible to adequately value the assets of the Fund, or, in the General Partner’s opinion, it is not reasonably practicable to value a significant portion of the Fund’s investments; (vii) the transfer of funds involved in the realization or acquisition of a significant portion of investments cannot, in the judgment of the General Partner, be effected at normal rates of exchange; (viii) it is not reasonably practicable to make an accurate and timely determination of the Net Asset Value of the Fund’s investments; (ix) any withdrawal would cause a termination of the Fund within the meaning of Section 708 of the Code; (x) any event has occurred which calls for the termination of the Fund; (xi) none of the requests for withdrawals that have been made may be lawfully satisfied by the Fund in US dollars; or (xii) the General Partner determines in consultation with its tax advisors that the withdrawal could result in the Fund being treated as a publicly traded partnership within the meaning of Section 7704 of the Code. (b) Any such suspension shall take effect at such time as the General Partner shall declare, but not later than the close of business on the next Business Day following the declaration and thereafter there shall be no determination of the Net Asset Value until the General Partner shall declare the suspension to be at an end, except that the suspension shall terminate in any event on the first Business Day on which: (i) the condition giving rise to the suspension shall have ceased to exist; and (ii) no other condition under which any suspension is authorized under this Partnership Agreement shall exist. Each declaration by the General Partner suspending the determination of Net Asset Value shall be consistent with such official rules and regulations (if any) relating to the subject matter thereof as shall have been promulgated by any authority having jurisdiction over the Fund as shall be in effect at the time. To the extent not inconsistent with such official rules and regulations as mentioned above, the determination of the General Partner shall be conclusive. Whenever the General Partner shall declare a suspension or reinstatement of the determination of the Net Asset Value, the General Partner shall notify Limited Partners within a maximum period of seven (7) days after the suspension or reinstatement. Following any reinstatement, the General Partner may allow any withdrawing Partners to rescind their withdrawal Notice to the extent of any portion thereof for which withdrawal proceeds have not yet been remitted or the General Partner may, in its discretion, complete any withdrawals. 5.4.2 Effective Time. Except as otherwise provided below, the Effective Time of any withdrawal will be: (i) if proper Notice of such withdrawal is received by the General Partner within the period specified in Section 5.1 or Section 5.3, the final Business Day of the calendar month of the withdrawal; (ii) if proper Notice of such withdrawal is not received by the General Partner within the period specified in Section 5.1 or Section 5.3 (unless the General Partner in its sole discretion specifies an earlier date) the final Business Day of the next succeeding calendar month, and; (iii) if proper Notice of such withdrawal is received by the General Partner within the period specified in Section 5.3, the final Business Day of the fiscal year of the withdrawal. The General Partner may, in its sole discretion, cause the Fund to honor withdrawal requests received after the dates specified in Section 5.1, but the General Partner will not be obligated to do so and may decline to do so in its sole discretion. In considering whether to do so, the General Partner will take into account the impact such withdrawal could have on the Fund’s status as other than a publicly traded partnership within the meaning of Section 7704 of the Code. The Effective Time of any mandatory withdrawal pursuant to Section 5.2 will be (i) the end of the second (2nd) day following the day on which the Notice of such withdrawal is given, (ii) such later time as the General Partner may specify in such Notice, (iii) as to any Limited Partner who has died, become bankrupt, insolvent or incompetent, as of the end of the Period in which such Limited Partner died, became insolvent or incompetent, or entered bankruptcy proceedings, regardless of whether the end of such Period is earlier than the date on which the Notice of such withdrawal is given, or (iv) as to a Multiple-Owner Limited Partner, the time as of which such Limited Partner became a Multiple-Owner Limited Partner, any time as of which the General Partner determines that such Multiple-Owner Limited Partner’s ownership of its Units could cause the Fund not to be excluded from the definition of an “investment company” under Section 3(c)(1) of the ICA, or such other time as the General Partner may determine, in its discretion, which time may be earlier than the date on which the Notice of such withdrawal is given. 5.4.3 Time of Payment; Partner Status. Payment of the full withdrawal amount will generally be paid within thirty (30) days of the Effective Time of a withdrawal. The Fund will pay any remaining balance or require the repayment of any overpayments, without interest, within thirty (30) days after the later of: (i) the completion of the fiscal year, or (ii) the annual audit, if any, in which a withdrawal is made. Notwithstanding that payment on account of withdrawals may be made after the Effective Time of such withdrawal, any Partner as to whom a complete withdrawal is effected pursuant to any provision of this Article 5 will not be considered a Partner for any purpose after the Effective Time of such withdrawal. 5.4.4 Manner of Payment. The Fund shall make payments in cash. Actual costs arising out of the liquidation or transfer of Units necessary to effect any such withdrawal will be specially allocated to the withdrawn Units in accordance with Section 4.3.4. If all or any portion of any payment is made in investment assets, the General Partner will give instructions to transfer such assets to the transfer agent for such assets on or before the due date of such payment, and such assets will be valued in accordance with Section 3.1 as of the date on which the General Partner issues such instructions. The General Partner will have discretion to manage the Fund’s assets after receipt of a Limited Partner’s withdrawal request in a manner intended to result in cash being available for distribution to such Limited Partner in connection with such withdrawal, but the General Partner will not be obligated to liquidate Fund assets if the General Partner, in its sole discretion, determines not to do so, either because such liquidation might, in the General Partner’s judgment, be detrimental to the Units of the remaining Partners or for other reasons. The General Partner will have the discretion to segregate a portion of any assets of the Fund valued in accordance with Section 3.1 as of the Effective Time of any withdrawal equal to the amount payable to the withdrawing Partner with respect to such withdrawal. In the event the General Partner exercises its discretion to segregate Fund assets under this Section, the General Partner will also have the discretion to sell such assets for the account of such Limited Partner, in which event such Limited Partner will be entitled to the net proceeds of such sale (after payment of all expenses), which may be more or less than the amount payable to such Limited Partner as of the Effective Time of the related withdrawal, provided, however, that such Limited Partner will have the right, upon written demand, to receive a distribution of the segregated assets. Any Incentive Allocation due upon the withdrawal will be adjusted so that it is based on the Gains (if any) realized by such Limited Partner after the sale of such segregated assets. ARTICLE 6. EXPENSES; MANAGEMENT FEE 6.1 Expenses. The General Partner is responsible for and pays or causes to be paid its overhead expenses, including the following: office rent; furniture and fixtures; stationery; secretarial/internal administrative services; salaries; entertainment expenses; employee insurance; payroll taxes, and; its fixed expenses (telephones, general purpose office equipment, etc.). All other expenses are paid by the Fund and include: the Fund’s legal, compliance, administrator, audit, and accounting expenses (including third-party accounting services); printing and mailing expenses; government filing fees and taxes; tax preparation expenses; reporting expenses; custodial expenses; expenses incurred in the buying, selling, and holding of futures, options, and other investments (including, without limitation, markups and markdowns and interest expense); taxes; insurance; investment expenses (such as brokerage commissions, clearing and settlement charges, bank service fees, interest expenses, borrowing charges, etc.); costs and expenses of utilizing credit facilities; organizational costs; Initial Offering Costs as well as ongoing offering expenses, and; extraordinary expenses (including litigation and indemnification). Notwithstanding the foregoing, The General Partner will assume liability for the Fund’s operating expenses in excess of 1.00% of the average month-end net assets per year of the Fund. The Fund’s Initial Offering Costs will be amortized over the first twelve (12) months of the Fund’s operations. 6.2 Management Fee. Each Unit is obligated to pay the General Partner, as of the first Business Day of each calendar month, a Management Fee equal to the product of (i) the Management Fee Rate (as defined in this subsection), multiplied by (ii) such Unit’s Capital Account balance as of the first Business Day of such calendar month, after taking into consideration the adjustments called for in Section 4.4. For each Unit the monthly Management Fee will be one twelfth of one percent (1/12 of 1.0%) (approximately 1.0% on an annualized basis, assuming no Gains or Losses). The Management Fee for any calendar month will be calculated pro rata in the case of any Unit issued on a date other than the first Business Day of a calendar month. In the event that a Unit is withdrawn during a calendar month, the Management Fee will be reimbursed pro rata. The General Partner may waive, reduce, or defer the payment of all or any portion of the Management Fee as to any Unit. ARTICLE 7. RIGHTS AND OBLIGATIONS OF THE GENERAL PARTNER 7.1 General Authority and Power. Except as otherwise provided in this Agreement, the General Partner will have exclusive management and control of the business of the Fund. In addition to the rights, powers, and authority granted elsewhere in this Agreement and by law, the General Partner will have the right, power, and authority to obligate and bind the Fund and, on behalf of and in the name of the Fund, to take any investment action of any kind and to do anything it deems necessary or advisable in pursuit of the Fund’s purposes, including, without limitation, the following: 7.1.1 To purchase, hold, sell, lend, borrow, or otherwise deal in those investment assets described in the Prospectus and to exercise all rights, powers, privileges, and other incidents of ownership with respect thereto; and to delegate the authority to engage in such activities as to some or all of the Fund’s assets to one or more investment managers; 7.1.2 To borrow funds on behalf of the Fund and to pledge and hypothecate assets of the Fund for such loans; 7.1.3 To open, maintain, conduct, and close accounts, including accounts with banks or other custodians for Fund assets, each as selected by the General Partner, and to draw checks or other orders for the payment of money by the Fund; 7.1.4 To transact business through broker-dealers, banks, and other persons (including Affiliates of the General Partner) selected by the General Partner; 7.1.5 To employ from time to time, at the expense of the Fund, persons required for the Fund’s business, including managers of managed futures accounts or other managers to manage any asset of the Fund, accountants, attorneys, investment advisers, financial consultants, and others, regardless of whether such persons also may be employed by the General Partner or its Affiliates; to enter into and exercise on behalf of the Fund, agreements and contracts with such persons on such terms and for such compensation as the General Partner determines to be reasonable; and to give receipts, releases, indemnities, and discharges with respect to all of the foregoing and any matter incident thereto as the General Partner may deem advisable or appropriate; 7.1.6 To engage in any transaction with the General Partner’s Affiliates; 7.1.7 To purchase, from or through others, contracts of liability, casualty, and other insurance which the General Partner deems advisable, appropriate, or convenient for the protection of the investment assets acquired by the Fund for any purpose convenient or beneficial to the Fund, including insurance policies insuring the General Partner and/or the Fund against liabilities that may arise out of the General Partner’s management of the Fund; 7.1.8 To make all tax elections required or permitted to be made by the Fund, including elections under Section 754 of the Code; 7.1.9 To file, conduct and defend legal proceedings of any form, including proceedings against Partners, and to compromise and settle any such proceedings, or any claims against any person, including claims against Partners, on whatever terms deemed appropriate by the General Partner; 7.1.10 To admit Limited Partners or additional or successor General Partners to the Fund and to remove Limited Partners; 7.1.11 To effect on behalf of the Fund any “agency cross transaction” (as contemplated in Rule 206(3)-2 under the Investment Advisers Act) through the General Partner or any Affiliate of the General Partner that is registered as a broker or dealer; provided that the authority granted in this subsection may be revoked at any time by the General Partner or by vote or consent of a Majority in Interest of the Limited Partners; 7.1.12 To waive or reduce, in whole or in part, any notice period, minimum amount requirement, or other limitation or restriction imposed on capital contributions or withdrawals of capital; waive, reduce or, by agreement with any Limited Partner, otherwise vary any fee or special allocation to the General Partner, and/or any requirement imposed on that Limited Partner by this Agreement. The General Partner will have such right, power, and authority regardless of whether such notice period, minimum amount, limitation, restriction, fee, or special allocation, or the waiver or reduction thereof, operates for the benefit of the Fund, the General Partner, or fewer than all the Limited Partners; 7.1.13 To enter into and terminate, on behalf of the Fund, investment management agreements or, in the case of a managed futures fund, limited partnership agreements or their equivalent with one or more investment managers pursuant to which such investment manager will act as an investment manager for the Fund, or a managed futures fund in which the Fund invests, and have discretion to invest the Fund’s assets, provided that such agreements may not compensate such investment managers with a management fee exceeding two percent (2.0%) of actual (as opposed to notional) net assets per annum or a performance-based fee exceeding twenty percent (20%), and that any performance-based fee must be subject to a loss carryforward provision, and provided further that such investment management agreements or limited partnership agreements must limit the use of notional funding in the trading or investment program to two hundred percent (200%); 7.1.14 To amend this Agreement in accordance with Section 10.2; and 7.1.15 To engage in any kind of activity, and to perform and carry out contracts of any kind necessary to, in connection with, or incidental to the accomplishment of the purposes of the Fund. 7.2 Exceptions. Notwithstanding anything to the contrary herein, (a) no act in contravention of this Agreement may be legally done without the consent of the General Partner and a Majority in Interest of the Limited Partners, and (b) the General Partner may not effect any transaction that constitutes an “assignment” of this Agreement in contravention of requirements under applicable law (such as the Investment Advisers Act of 1940, as amended, if applicable), requiring consents of advisory clients, unless and to the extent all consents required by such law have been obtained. For purposes of clause (b) of the preceding sentence, if any consent of the Limited Partners to such an “assignment” is deemed to be required, such consent will be considered given if Consent of a Majority in Interest of the Limited Partners is obtained in accordance with the procedures specified in this Agreement. 7.3 Right of Others to Rely on Authority of General Partner. The execution and delivery of any contract or instrument described in Section 7.1, or the taking of any action described in Section 7.1, by the General Partner will be sufficient to bind the Fund, and will not require the consent of any other Partner. 7.4 Time and Services. The General Partner and its principals, members, and employees will devote such time and services to the Fund as the General Partner deems necessary for the efficient conduct of the Fund’s business, but they will not be required to devote full time to the performance of such duties. Each Partner acknowledges that such outside activities on the part of the General Partner do not give rise to an obligation to account to any other Partner or to the Fund for any profits or other benefits derived therefrom, and that neither any Partner nor the Fund will have or be entitled to any interest in any such activity, business, or investment. 7.5 Investment Opportunities. None of the Partners or their Affiliates will have any obligation to the Fund or to any of the other Partners to make any particular investment opportunity available to the Fund or to any of the other Partners. Partners and their Affiliates may engage in whatever activities they choose (including trading for their own accounts or for the accounts of persons other than the Fund or the other Partners), regardless of whether the same are competitive with the Fund or otherwise, without having or incurring any obligation to offer any interest in such activities to the Fund or any Partners. 7.6 Multiple General Partners. If at any time the Fund has two or more general partners, the authority to act on behalf of the Fund and the Management Fee and Incentive Allocation will be allocated among such general partners in such manner as such general partners will determine among themselves. ARTICLE 8. EXCULPATION, INDEMNIFICATION AND LIABILITY OF GENERAL PARTNER 8.1 Exculpation and Indemnification. 8.1.1 Exculpation. Neither the General Partner, nor any member, employee, agent, or other Affiliate of the General Partner, nor any board or body with respect to the General Partner or the Fund (each, an “Indemnitee”) will be liable to the Fund or to any Partner for any act or omission performed or omitted by such Indemnitee in connection with this Agreement or the Fund’s business or affairs (including but not limited to any act or omission by any Indemnitee in connection with any activity of the character permitted in Section 7.1 and Section 7.5, regardless of whether such activity may be considered to have given rise to or involved conflicts between the interests of such Indemnitee and those of the Fund or the other Partners), and no such act or omission will in and of itself constitute a breach of any duty owed by any Indemnitee to the Fund or any Limited Partner hereunder or under the Act, provided such act or omission did not constitute a willful violation of law. To the extent that, at law or in equity, an Indemnitee has duties (including fiduciary duties) and liabilities relating thereto to the Fund or to a Partner, such Indemnitee acting under this Agreement will not be liable to the Fund or to any Partner for its good faith reliance on the provisions of this Agreement. Such provisions, to the extent they restrict or limit the duties or liabilities of an Indemnitee otherwise existing at law or in equity, are agreed by the Partners to modify such other duties and liabilities of such Indemnitee. For purposes of this Section 8.1.1, “Indemnitee” does not include other investment entities managed by the General Partner that may be considered to be Affiliates of the General Partner solely because they are managed by the General Partner. 8.1.2 Indemnification. To the maximum extent permitted by applicable law, each Indemnitee who was or is made a party to, or is threatened to be made a party to, or is involved in any threatened, pending or contemplated action, suit, or proceeding, whether civil, criminal, administrative, arbitrative, or investigative (a “Proceeding”) or any appeal in such a Proceeding, by reason of such Indemnitee’s management of the affairs of the Fund, participation in such management, or rendering of advice or consultation with respect thereto, or that relate to, the Fund, its business, or its affairs, will be indemnified and held harmless by the Fund, to the extent of the Fund’s assets, from and against any and all losses, claims, damages, liabilities (joint and/or several), expenses (including legal fees and expenses), judgments, fines, settlements, and other amounts (“Losses”) that relate to such Proceeding, except to the extent such Losses arise from actions or failures to act that are finally adjudicated by a court of competent jurisdiction to have constituted a willful violation of law by such Indemnitee. A person or entity will be entitled to the indemnification prescribed in the preceding sentence whether or not such person or entity continues or continued to be a General Partner or an employee, member, partner, agent, or Affiliate of a General Partner at the time any Proceeding commences or a Loss is suffered, paid or incurred. 8.1.3 Advance Payment. Separate and apart from its obligation to indemnify an Indemnitee pursuant to Section 8.1.2, the Fund will pay the expenses each Indemnitee incurs (or reimburse such Indemnitee for such expenses), in defending or responding to a Proceeding (including bringing and pursuing counterclaims and cross-claims), as incurred, without any determination as to the Indemnitee’s ultimate entitlement to indemnification, upon the Indemnitee’s request, regardless of whether or not the Proceeding has been disposed of, provided (a) the Indemnitee agrees in writing to repay such expenses to the extent they were incurred defending or responding to claims or allegations for which he or she or it is specifically and finally found by a court of competent jurisdiction not to be entitled to indemnification under Section 8.1.2, and (b) in such written agreement the Indemnitee states that the Proceeding relates to (i) such Indemnitee’s management of the affairs of the Fund, (ii) such Indemnitee’s participation in such management, (iii) such Indemnitee’s rendering of advice or consultation with respect thereto, (iv) the Fund, or (v) the Fund’s business or affairs. 8.1.4 Limits on Indemnification. Securities laws impose liabilities on investment advisers and others under certain circumstances and, notwithstanding anything in this section to the contrary, nothing in this Agreement will be deemed to waive or limit any right the Fund or any Partner may have under any of those laws. 8.2 Reliance on Agents. The General Partner may execute any power granted, or perform any duty imposed by, this Agreement either directly or through agents, including its Affiliates. The General Partner may consult with counsel, accountants, appraisers, management consultants, investment bankers, and other consultants selected by the General Partner. An opinion by any consultant on a matter that the General Partner believes to be within such consultant’s professional or expert competence will be full and complete protection for any action taken or omitted by the General Partner in good faith based on the opinion. The General Partner will not be responsible for the misconduct, negligence, acts, or omissions of any consultant or of any agent or employee of the Fund, or any of the General Partner’s Affiliates, except that the General Partner must use due care in selecting such persons. 8.3 Acknowledgment of Fiduciary Duty under ERISA as to Plan Assets. The General Partner will accept capital contributions from individual retirement accounts, Keogh plans, and other entities that are subject to the prohibited transaction provisions of Section 4975 of the U.S. Internal Revenue Code of 1986, as amended, or retirement plans or entities whose assets are subject to Title I of the Employee Retirement Income Security Act of 1974, as amended. To the extent and at such times as any assets of the Fund are deemed to be “plan assets” within the meaning of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), of any Limited Partner that is an employee benefit plan governed by ERISA, the General Partner would be, and hereby acknowledges that it would be considered to be, a fiduciary within the meaning of Section 3(21) of ERISA as to that Limited Partner. In such an event, or if any partner, employee, agent or Affiliate of the General Partner, is ever held to be a fiduciary of any Limited Partner, then, in accordance with Sections 405(b)(1), 405(c)(2) and 405(d) of ERISA, the fiduciary responsibilities of that person will be limited to the person’s duties in administering the business of the Fund, and the person will not be responsible for any other duties to such Limited Partner, specifically including evaluating the initial or continued appropriateness of this investment in the Fund under Section 404(a)(1) of ERISA. ARTICLE 9. LIABILITY AND RIGHTS OF LIMITED PARTNERS 9.1 Limited Liability. No Limited Partner will be liable for the debts, liabilities, contracts, or other obligations of the Fund, except as may be required by applicable law, including the return of distributions pursuant to Section 17-607 of the Act. 9.2 No Participation in Management. No Limited Partner may, in the capacity of a Limited Partner, take part in the management of the business of the Fund or transact any business for the Fund, nor will any Limited Partner have the power to sign for or bind the Fund in their capacity as a Limited Partner. All management responsibility and authority to act on behalf of the Fund is vested in the General Partner as provided in Section 7.1. The rights of Limited Partners to consent to specified actions are set forth in Article 10 and are limited to the rights so specified. The Limited Partners may, however, at the General Partner’s request, consult with and advise the General Partner as to the business of the Fund. 9.3 Limitations. No Limited Partner will have the right or power to: (a) bring an action for partition against the Fund; (b) cause the termination or dissolution of the Fund, except as set forth in this Agreement; or (c) demand or receive any specific property in return of such Partner’s Capital Contributions. Except as expressly provided in this Agreement, no Limited Partner will have priority over any other Limited Partner either for the return of capital, for allocations of Gains or Losses (or any items thereof), or for distributions. ARTICLE 10. PARTNERS’ CONSENTS; AMENDMENT OF AGREEMENT 10.1 Consent and Voting Rights of Limited Partners. The actions listed in this Article 10 and specifically identified elsewhere in this Agreement as requiring the Consent, written or otherwise, of one or more Limited Partners constitute the only Fund matters upon which Limited Partners will have a right to consent or vote in their capacities as Limited Partners, notwithstanding any provision of the Act. In particular, and without limiting the foregoing, notwithstanding anything else in this Agreement or in the Act to the contrary, Limited Partners will have no right to cause or to Consent or vote on (i) the removal of any General Partner, whether directly, by way of amendment to this Agreement, or otherwise; or (ii) except as expressly provided in Section 7.2 or Section 10.1.2, the admission or appointment of any additional or successor General Partner. 10.1.1 Actions Requiring the Consent of the General Partner and a Majority in Interest of the Limited Partners. The Consent of the General Partner (or, if there is more than one general partner, a Majority in Interest of all general partners) and of a Majority in Interest of the Limited Partners will be required for the following actions: (a) amendments to this Agreement, but only to the extent provided in, and subject to, the provisions of, Section 10.2; (b) actions specified in Section 7.2 as requiring the Consent of a Majority in Interest of the Limited Partners; and (c) actions relating to a merger of the Fund and any other business entity(ies), but only to the extent such approval is required by the Act and cannot be waived by agreement among the Partners. To the extent any such requirement may be waived or modified by agreement among partners, the Partners intend to effect such a waiver and modification and to permit such a merger or other business combination upon the Consent of the General Partner without the consent of any other Partner. 10.1.2 Continuation of Fund under Certain Circumstances. The Consent of a Majority in Interest of the Limited Partners will be required to admit a successor general partner and continue the business of the Fund after any general partner ceases to be a general partner if, at the time of such cessation, there is no remaining or surviving general partner (including a successor general partner admitted to the Fund pursuant to other provisions of this Agreement). 10.2 Amendment. This Agreement may be amended only upon the Consent of the General Partner and the Consent of a Majority in Interest of the Limited Partners, provided that the General Partner may amend this Agreement from time to time, without the consent, approval, authorization, or other action of any Limited Partner, if, in the opinion of the General Partner, the amendment does not have a material adverse effect on the Limited Partners generally; and provided further that no amendment may be adopted without the unanimous Consent of the Partners to the extent it would (a) change the Fund to a general partnership or change the limited liability of the Limited Partners under the Act, or (b) terminate the Fund’s status as a partnership for federal income tax purposes. The General Partner will promptly furnish to each Limited Partner a copy of any amendment to this Agreement adopted by the General Partner pursuant to Section 10.1. 10.3 Actions by Written Consent; Consent by Silence. All actions, votes or consents required or permitted to be taken by the Partners will be taken by the written consent of Partners holding in aggregate not less than the minimum Partnership Percentages specified herein as to the particular action, vote, or consent. Notwithstanding the foregoing, for purposes of obtaining any such consent as to any matter proposed by the General Partner, the General Partner may, in the notice seeking Consent of Partners, require a response within a specified period (which will not be less than fifteen days) and failure to respond within that period will constitute a vote and Consent to approve the proposed action. Except as otherwise expressly provided in the proposal for such action, any such action will be effective immediately after the required signatures have been obtained or, if applicable, the expiration of the period within which responses were required, if such requirement was imposed and there were insufficient votes cast against such action to prevent such action from becoming effective. 10.4 Record Dates. So the Fund may determine which Partners are, and in what proportion the Partners are, entitled to consent, receive any distribution, or exercise any rights, the General Partner may fix in advance a record date that is not more than sixty days before the date on which the first written consent is given and not more than sixty (60) days before any other action is to be taken. If no record date is so fixed, the record date will be the day on which the first written consent is given or the action is taken. ARTICLE 11. TRANSFERS OF FUND UNITS 11.1 Restrictions. A Limited Partner may transfer or assign their Units in the Fund upon thirty (30) days’ prior written notice to the General Partner. No such assignee may become a substituted Limited Partner except with the consent of the General Partner, which may be withheld in those situations described in Section 11.3, below. 11.2 Effect of Violation. Any purported Transfer in violation of this Article 11 will be null and void and will not bind or be recognized by the Fund. 11.3 Admission of Substituted Limited Partners. No Transferee of a Limited Partner’s Units will be admitted to the Fund as a substitute Limited Partner without the consent of the General Partner; provided, however, that the General Partner may withhold such consent only to prevent or minimize adverse legal or tax consequences to the Fund. 11.4 Rights of Transferee. Until and unless a Transferee of a Limited Partner’s Units is admitted to the Fund as a substitute Limited Partner pursuant to Section 11.3, the rights of such Transferee will be limited to such Transferee’s Units’ share of all allocations of Gains and Losses (and any items thereof) and all distributions, if any. 11.5 Effective Date of Transfer. Any Transfer of a Limited Partner’s Units made in compliance with this Article 11 will be effective as of the close of business on the day on which all required documentation has been received and accepted by the General Partner if such day is the first day of a fiscal quarter and, if not, on the first day of the next succeeding fiscal quarter. 11.6 Allocations between Transferor and Transferee. In the case of any Transfer, the Transferee will succeed to the Capital Accounts of the Units of the Transferor. For purposes of allocating items pursuant to Article 4, Gains and Losses (and any items thereof) allocable in respect of Units will be prorated between the Transferor and the Transferee on the basis of the number of days in the Period that each was the holder of Units without regard to the performance of the Fund’s assets during the periods before and after the effective date of the Transfer, unless the Transferor and the Transferee agree to an allocation based on the performance of the Fund’s assets as of the effective date of the transfer (or any other method permissible under the Code) and agree to reimburse the Fund for the cost of making and reporting any such allocation. 11.7 Transfer of General Partner’s Interest. Except as otherwise provided in Section 7.2, the General Partner may Transfer all or any part of its Units without the Consent of any other Partner. In addition, and without limiting the foregoing, the General Partner may, from time to time, transfer its Units to one or more other persons. ARTICLE 12. BOOKS AND RECORDS; ACCOUNTING; TAX ELECTIONS 12.1 Books and Records. Books and records of the Fund will be maintained at the principal office of the Fund or at such other office of the Fund as may be designated by the General Partner, and will be available for examination by any Partner or such Partner’s duly authorized representatives at any reasonable time. The Fund will maintain the following books and records: 12.1.1 A current list of the full name and last known business or residence address of each Partner, together with the Capital Contributions and Units of each such Partner, together with the Partnership Percentage of such Partner’s Units; 12.1.2 A copy of the Certificate of Limited Partnership and all amendments thereto filed pursuant to Section 1.2, together with executed copies of any powers of attorney pursuant to which any such certificate has been executed; 12.1.3 Copies of the Fund’s federal, state and local income tax or information returns and reports, if any, for the six most recent taxable years; and 12.1.4 Copies of this Agreement and all amendments hereto. 12.2 Inspection of Records. 12.2.1 Each Limited Partner has the right, on reasonable request and subject to such reasonable standards as the General Partner may from time to time establish (including standards for determining whether the purpose for such request is reasonably related to the Limited Partner’s interest as a Limited Partner), to obtain from the General Partner for purposes reasonably related to the Limited Partner’s interest as a Limited Partner, the information set forth above in Section 12.1 as well as information regarding the status of the business and financial condition of the Fund (generally consisting of the Fund’s financial statements) and such other information regarding the affairs of the Fund as is just and reasonable in light of the purpose related to the Limited Partner’s interest as a Limited Partner for which such information is sought. The General Partner may, however, keep confidential from any Limited Partner any information the disclosure of which the General Partner in good faith believes could be harmful to the business of the Fund or is otherwise not in the best interests of the Fund, or that the Fund is required by law or agreement with a third party to keep confidential. Regardless of anything to the contrary in this Agreement or in the Act, Limited Partners will not be entitled to inspect or receive copies of the following: (a) internal memoranda of any general partner, whether relating to Fund matters or any other matters; (b) correspondence and memoranda of advice from attorneys or accountants for the Fund or the General Partner; or (c) trade secrets of the Fund or the General Partner, investor information, financial statements of Limited Partners, or similar materials, documents, and correspondence. 12.3 Reports. 12.3.1 The Fund will send to each Partner, as soon as practicable after the end of each calendar year, the information necessary for the Partner to complete such Partner’s federal and state income tax or information returns (“Tax Information”). The General Partner may obtain extensions of the date on which the Fund’s income tax returns are due and will notify Limited Partners of such extension as soon as practicable after determining that it is appropriate for the Fund to obtain such extension. In such event, the Fund will provide the Limited Partners with the Tax Information at a reasonable time before the expiration of the term of such extension. 12.3.2 The General Partner will cause an annual financial report to be sent to each Partner as soon as practicable after the close of each fiscal year. The General Partner shall prepare the report aforementioned on an accrual basis in accordance with GAAP, and shall be empowered to make any changes of accounting method that it shall deem advisable. Additionally, the General Partner or the Fund’s administrator will provide unaudited account statements to each Limited Partner at least monthly. 12.4 Limited Rights of Access and Inspection. Notwithstanding anything in this Agreement or in the Act to the contrary, no Limited Partner is entitled to receive or to inspect any records or information other than those expressly set forth in this Article 12. 12.5 Tax Returns and Elections. The Fund’s tax or fiscal year will be the calendar year. The Fund’s accountants will be instructed to prepare and file all required income tax returns for the Fund. The General Partner will make any tax election necessary for completion of the Fund’s tax return. In the event of a distribution of property made in the manner provided in Section 734 of the Code, or in the event of a transfer of any Units permitted by this Agreement made in the manner provided in Section 743 of the Code, the General Partner, on behalf of the Fund, may file an election under Section 754 of the Code in accordance with the procedures set forth in the applicable Regulations promulgated thereunder. 12.6 Tax Matters Partner. The General Partner will be the Tax Matters Partner for purposes of Sections 6221 et seq. of the Code, and will have all the authority granted by the Code to the Tax Matters Partner, including the authority, without the Consent of any other Partner, to do all of the following: 12.6.1 Enter into a settlement agreement with the Internal Revenue Service that purports to bind the other Partners; 12.6.2 File a petition as contemplated in Section 6226(a) or Section 6228 of the Code; 12.6.3 Intervene in any action as contemplated in Section 6226(b)(5) of the Code; 12.6.4 File any request contemplated in Section 6227(b) of the Code; or 12.6.5 Enter into an agreement extending the period of limitations as contemplated in Section 6229(b)(1)(B) of the Code. 12.7 Fund Assets. The assets of the Fund will be deposited in such financial institutions as the General Partner determines, and withdrawals will be made only in the regular course of Fund business on such signature or signatures as the General Partner determines, and subject to such procedures to which the General Partner may agree on behalf of the Fund with the custodian(s) of the Fund’s assets. No funds of the General Partner will in any way be commingled with such Fund assets. ARTICLE 13. DISSOLUTION 13.1 Events of Dissolution. The Fund will be dissolved and its affairs will be wound up upon the earlier to occur of the following times or events: 13.1.1 The election of the General Partner to dissolve the Fund upon giving thirty (30) days’ notice; 13.1.2 The cessation of the sole remaining General Partner’s status as General Partner, including by (i) the occurrence of an Event of Bankruptcy with respect to such Partner, (ii) if such Partner is an individual, such individual’s death or adjudicated incompetence, or (iii) if such Partner is a corporation, partnership, limited liability company, or other entity, the dissolution of such corporation, partnership, limited liability company or other entity, provided that no such cessation will cause the Fund’s dissolution if the Limited Partners appoint a successor general partner and elect to continue the Fund’s business as contemplated in Section 10.1.2; 13.1.3 Any other event that applicable law specifies must operate as an event causing the dissolution of a limited partnership notwithstanding any provision to the contrary in this Agreement. 13.2 Winding Up. Upon dissolution of the Fund, the General Partner will take full account of the Fund’s liabilities and assets and the Fund’s property will be liquidated as promptly as is consistent with obtaining the fair value thereof. The proceeds from the liquidation of the Fund’s property will be applied and distributed in the following order: 13.2.1 First, to the payment and discharge of all of the Fund’s debts and liabilities (other than those to the Partners), including the establishment of any necessary reserves; 13.2.2 Second, to the payment of any debts and liabilities to the Partners; 13.2.3 The balance, if any, to each Partner having a positive balance in his or her Units’ Capital Accounts (after giving effect to all contributions, distributions, and allocations for all Periods, including the Period during which such dissolution occurs) in the proportion that the positive balance in such Units’ Capital Account bears to the sum of all Capital Accounts having positive balances. To the extent reasonable, each asset distributed in kind will be distributed proportionately among the Partners. 13.3 Timing of Liquidation Distributions. Distributions in liquidation will be made by the end of the taxable fiscal year in which the liquidation occurs or, if later, within ninety (90) days of the liquidating event and will otherwise comply with Section 1.704-1(b) of the regulations promulgated under Section 704 of the Code. 13.4 Restoration of Deficit Capital Account Balances. If upon liquidation of the Fund, any general partner has a deficit balance in its Units’ Capital Accounts (after taking into account all Capital Account adjustments for the Fund’s taxable fiscal year in which the liquidation occurs), such General Partner will contribute cash or securities to the Fund by the end of such taxable fiscal year (or, if later, within ninety (90) days after the date of such liquidation) in an amount equal to such deficit Capital Account balances. If any Limited Partner has a deficit balance in such Partner’s Units’ Capital Accounts (after taking into account all Capital Account adjustments for the Fund’s taxable fiscal year in which the liquidation occurs), such Limited Partner will have no obligation to make any contribution to the capital of the Fund with respect to such deficit, and such deficit will not be considered a debt owed to the Fund or to any other person for any purpose whatsoever. 13.5 Authority to Wind Up. The General Partner may, from time to time, cause the Fund to enter into (and modify and terminate), agreements with such person(s) as the General Partner may from time to time select, authorizing such person(s) (a “Liquidating Agent”) to wind up the Fund’s affairs in the event that the Fund is subsequently dissolved by reason of the General Partner’s cessation as a general partner as provided in Section 13.1.2; provided that the total compensation the Fund may become obligated to pay to such Liquidating Agent(s) during such winding up period will not exceed 0.375% per month (1.5% per annum) of the Net Asset Value of the Fund, assessed as of the first day of each such month. If no such agreement has been entered into, or is in effect, as of the time of any such dissolution, then the person designated by court decree or by a Majority in Interest of the Limited Partners will wind up the affairs of the Fund and will be entitled to compensation as approved by the court or by the Consent of a Majority in Interest of the Limited Partners. ARTICLE 14. MISCELLANEOUS PROVISIONS 14.1 Representations and Warranties of Limited Partners. Each Limited Partner represents and warrants to the Fund and each General Partner that: 14.1.1 The information provided and the representations, warranties, acknowledgements, and agreements made and given in the Subscription Applications relating to such Limited Partner’s offer to purchase Units are true and correct and constitute a part of this Agreement as if fully set forth herein; and 14.1.2 Such Limited Partner is aware that, because allocations pursuant to Section 4.6 have the effect of allocating to the Partners tax benefits and tax burdens, the timing of particular allocations and the character (e.g., capital gain or loss versus ordinary income or loss; short-term capital gain or loss versus long term capital gain or loss) of items allocated will have a direct financial impact on such Partner and such Partner’s after-tax economic return. 14.2 Representations and Warranties of Private Investment Companies. Each Limited Partner that is an entity that would be an “investment company” under the ICA but for an exclusion under either Section 3(c)(1) or Section 3(c)(7) of the ICA has advised the General Partner of the number of persons that constitute “beneficial owners of such Limited Partner’s outstanding securities (other than short-term paper)” within the meaning of clause (A) of subsection 3(c)(1) of the ICA, and will advise the General Partner promptly upon any change in that number. 14.3 Appointment of the General Partner as Attorney-in-Fact. 14.3.1 Each Limited Partner, including each substituted Limited Partner, by the execution of this Agreement, irrevocably constitutes and appoints the General Partner its true and lawful attorney-in-fact with full power and authority in its name, place, and stead to execute, acknowledge, deliver, swear to, file, and record at the appropriate public offices such documents as may be necessary or appropriate to carry out the provisions of this Agreement, including but not limited to: (a) all certificates and other instruments, and any amendment thereof, that the General Partner deems appropriate in order to form, qualify, or continue the Fund as a limited partnership (or a partnership in which the Limited Partners will have limited liability comparable to that provided by the Act) in the jurisdiction in which the Fund may conduct business or in which such formation, qualification, or continuation is, in the discretion of the General Partner, necessary to protect the limited liability of the Limited Partner; (b) all amendments to this Agreement adopted in accordance with the terms hereof and all instruments which the General Partner deems appropriate to reflect a change or modification of the Fund in accordance with the terms of this Agreement; (c) all conveyances and other instruments the General Partner deems appropriate to reflect the dissolution and termination of the Fund; and (d) with respect to each Partner, any and all documents necessary to convey such Partner’s Units in the Fund to any Transferee thereof and thereby to withdraw such Partner from the Fund and admit any substitute Partner to the Fund. 14.3.2 The appointment by all Partners of the General Partner as attorney-in-fact will be deemed to create a power coupled with an interest, in recognition of the fact that the Partners under this Agreement will be relying upon the power of the General Partner to act as contemplated by this Agreement in any filing and other action by the General Partner on behalf of the Fund, and will survive any Event of Bankruptcy, death, adjudication of incompetence, or dissolution of any person giving such power, and the Transfer of all or any part of the Units of such person; provided, however, that in the event of a Transfer, the foregoing power of attorney will survive such Transfer only until such time as the Transferee will have been admitted to the Fund as a substituted Partner and all required documents and instruments will have been duly executed, filed, and recorded to effect such substitution. 14.4 Counterparts. This Agreement may be executed in several counterparts, and as executed will constitute one agreement, binding on all of the parties hereto. 14.5 Successors and Assigns. Except as otherwise provided herein, the terms and provisions of this Agreement will be binding upon and will inure to the benefit of the successors and assigns of the parties hereto. 14.6 Notices. All Notices required or permitted under this Agreement will be given to the Partner entitled thereto by personal service or by mail to the address maintained by the Fund for such person. Any Notice sent by certified or registered mail to the address so maintained will be deemed received within three days after mailing. 14.7 Benefits. Except as expressly provided herein, this Agreement is entered into for the sole and exclusive benefit of the parties hereto and will not be interpreted in such a manner as to give rise to or create any rights or benefits of or for any person not a party hereto. 14.8 Severability. If any covenant, condition, term or provision of this Agreement is illegal or if the application thereof to any person is judicially determined to be invalid or unenforceable to any extent, then the remainder of this Agreement, or the application of such covenant, condition, term or provision to persons or in circumstances other than those held invalid or enforceable, will not be affected thereby, and each covenant, term, condition and provision of this Agreement will be valid and enforceable to the fullest extent permitted by law. 14.9 Complete Agreement. This Agreement together with the Subscription Applications and any supplemental Subscription Applications executed and delivered by Limited Partners in connection with their Capital Contributions, constitute the complete agreement among the parties concerning the subject matter hereof. 14.10 Governing Law. This Agreement will be governed by and interpreted under the laws of the State of Delaware applicable to contracts entered into and performed entirely within the State of Delaware; provided that United States Federal law, including the Federal Arbitration Act, will apply to Section 14.12. 14.11 Gender, Number, and Headings. As used in this Agreement, the masculine gender will include the feminine and neuter, and vice versa, as the context so requires; and the singular number will include the plural, and vice versa, as the context so requires. As used in this Agreement, Article and Section headings are for the convenience of reference only and will not be used to modify, interpret, limit, expand or construe the terms of this Agreement. 14.12 Arbitration. Except for actions to determine whether Losses (as that term is defined in Section 8.1.2) for which the General Partner or any of its members, employees, agents, or Affiliates seeks indemnification under Section 8.1.2 arose out of actions or failures to act that constituted a willful violation of law by the purported Indemnitee and for which such indemnification therefore is not available, any controversy between or among any of the Partners or between any Partner and the Fund involving the Fund, this Agreement, or any subscription by any Limited Partner for Units in the Fund will be submitted to arbitration on the request of any party to any such controversy in the county, state, and/or country in which the General Partner maintains its principal office at the time the request for such arbitration is made or, if there is more than one General Partner, the county, state, and/or country in which the general partners with a majority in interest of the general partner interests maintain their principal offices at such time; (save where the American Arbitration Association (“AAA”) is not applicable in the General Partners principal place of business, then any dispute arising out of or in connection with this Agreement shall be referred to an arbitrator in accordance with the arbitration laws of that applicable jurisdiction.) The arbitration will comply with and be governed by the provisions of the commercial arbitration rules of the AAA and no party to any such controversy will be entitled to any punitive damages; (save where the AAA is not applicable in the General Partners principal place of business, then any dispute arising out of or in connection with this Agreement shall be referred to an arbitrator in accordance with the arbitration laws of that applicable jurisdiction). Notwithstanding such rules, no arbitration proceeding brought against the Fund or the General Partner will be consolidated with any other arbitration proceeding brought against the Fund or the General Partner without the Fund’s and the General Partner’s consent. Judgment may be entered upon any award granted in any such arbitration in any court of competent jurisdiction in the county, state and/or country in which the General Partner maintains its principal office at the time the award is rendered (or, if there is more than one General Partner, the county, state and/or country in which the general partners with a majority in interest of the general partner interests maintain their principal offices at such time). By signing this Agreement, each Partner agrees to waive their right to seek remedies in court, including any right to a jury trial; provided, however, that nothing in this paragraph will constitute a waiver of any right a party to this Agreement may have to choose a judicial forum to the extent such a waiver would violate applicable law. 14.13 Covenant to Sign Documents. Each Partner will execute, with acknowledgement or affidavit if required, all documents and writings reasonably necessary or expedient in the creation of the Fund and the achievement of its purpose, including certifications in accordance with the requirements of Code Section 1446 regarding withholding taxes on foreign persons. 14.14 No Waiver. A Partner’s failure to insist on the strict performance of any covenant or duty required by this Agreement, or to pursue any remedy under this Agreement, will not constitute a waiver of the breach or the remedy. 14.15 Group Ownership of Units. Units may be held jointly by husband and wife as community property, or by husband and wife or by unrelated persons as joint tenants or tenants in common, as shown on the signature page of the applicable Subscription Application or in the Fund’s books and records. In any multiple ownership case, the Fund and each General Partner will be entitled to consider any Notice, vote, check, or similar document signed by any one of the persons in the ownership group to bind all persons in the group. ARTICLE 15. DEFINITIONS The following terms used in this Agreement will have the meanings set forth below, unless the context otherwise requires: 15.1 Act. The Delaware Revised Uniform Limited Partnership Act, as amended. 15.2 Affiliate. As to a specified person, (a) any person who directly or indirectly owns, controls, or holds with power to vote, 10% or more of any class of equity securities of such specified person; (b) any person 10% or more of whose outstanding voting securities are directly or indirectly owned, controlled, or held with power to vote, by such specified person; (c) any person who, directly or indirectly, controls, is controlled by, or is under common control with such specified person; or (d) any officer, director, or general partner of, or any person who serves in a similar capacity as to, such specified person, or of which such specified person is an executive officer, director or general partner, or as to which such specified person serves in a similar capacity. 15.3 Agreement. This Agreement of Limited Partnership, as it may be amended from time to time. 15.4 Business Day. Any non-weekend day that is not a legal holiday in the United States. 15.5 Capital Account. The account established for each Unit as provided in Section 4.1, including such adjustments as may from time to time be made to such account in accordance with the provisions of this Agreement. 15.6 Capital Contribution. As to any Partner any amount contributed to, or for the benefit of, the Fund by such Partner pursuant to Section 2.2. 15.7 Code. The Internal Revenue Code of 1986, as amended (or any corresponding provision of succeeding law). 15.8 Consent. Either (a) the written consent of Partners (including given by silence as provided in Section 10.3) required or permitted to be given pursuant to this Agreement or applicable law, or (b) the act of granting any such written consent, as the context may require. Except as expressly provided otherwise in this Agreement, “Consent of the Limited Partners” refers to the Consent of a Majority in Interest of the Limited Partners. 15.9 Dealing Day. The Initial Dealing Day or the day on which any Capital Contribution is deemed made pursuant to Section 2.2. 15.10 Effective Time. The date on which withdrawals are deemed effective pursuant to Section 5.4.2. 15.11 Event of Bankruptcy. As to any person, (a) the entry of a decree or order for relief by a court having jurisdiction as to such person in an involuntary case under the federal bankruptcy laws, as now or hereafter constituted, or any other applicable federal or state bankruptcy or insolvency law, or the appointment of a receiver, assignee, or trustee of such person or for any substantial part of such person’s property, or the issuance of an order for the winding-up or liquidation of such person’s affairs and the continuance of any such decree or order unstated and in effect for a period of 90 consecutive days, or (b) the commencement by such person of a voluntary proceeding seeking any decree, order or appointment referred to in clause (a) or the consent by such person to any such decree, order or appointment. 15.12 Fund. MA Managed Futures Fund, LP, a Delaware limited partnership. 15.13 GAAP. United States Generally Accepted Accounting Principles. 15.14 Gains and Losses. For any Period, the gains (Gains) or losses (Losses) determined in accordance with GAAP. 15.15 General Partner. MA Capital Management, LLC, a Florida limited liability company, and any person who is admitted to the Fund as an additional or substitute or successor general partner in accordance with this Agreement. 15.16 ICA. The Investment Company Act of 1940, as amended. 15.17 Incentive Allocation. For any Period ending on an Incentive Allocation Time, the amount determined in accordance with Section 4.5, resulting in negative adjustments to each Unit’s Capital Account pursuant to Section 4.4.3. 15.18 Incentive Allocation Rate. For the Fund as of each Incentive Allocation Time the amounts specified in Section 4.5.2. 15.19 Incentive Allocation Time. For the Fund, (i) the final day of each fiscal quarter; (ii) the Effective Time of any voluntary or mandatory withdrawal by or as to a Unit; and (iii) the date of dissolution and/or termination of the Fund under Article 13. 15.20 Initial Capital Contribution. As to any Partner, the amount of such Partner’s first Capital Contribution to the Fund. 15.21 Initial Dealing Day. The date on which the Initial Limited Partners are admitted to the Fund. 15.22 Initial Limited Partners. The first Limited Partners who are admitted to the Fund. 15.23 Limited Partner. Each person who is admitted to the Fund as a limited partner in accordance with the terms of this Agreement at all times prior to the complete withdrawal of such person as a limited partner in the Fund. 15.24 Management Fee. The monthly fee described in Section 6.2 and resulting in negative adjustments to each Unit’s Capital Account pursuant to Section 4.3.3. 15.25 Majority in Interest of the Limited Partners. That number of Limited Partners whose Units represent more than 50% of the aggregate Partnership Percentages of all Units. 15.26 Mark-to-Market Event. The end of any of the following days: the day immediately preceding any Dealing Day; the final day of each calendar month; the final day of each fiscal quarter, the final day of each fiscal year; the day on which the Effective Time of any withdrawal by a Partner under Article 5 occurs; and the date of dissolution and/or termination of the Fund under Article 13. 15.27 Multiple-Owner Limited Partner. A Limited Partner described in Section 5.2. 15.28 Net Asset Value. As of any measurement time, the value of the Fund’s assets determined in accordance with Section 3.1, less the amount of the Fund’s liabilities, all calculated in accordance with GAAP, as determined by the General Partner. In determining Net Asset Value, no value will be placed on the Fund’s office records, statistical data, goodwill or name, or on any similar intangible asset not normally reflected on the Fund’s accounting records. Net Asset Value does not include any assets that have been delivered to the Fund for contribution to the capital of the Fund prior to the effective date of the contribution. Similarly, Net Asset Value will include all amounts deemed by the General Partner to have been contributed as of the applicable due date pursuant to Section 2.2.5, regardless of when actually received by the Fund. 15.29 Notification or Notice. A writing containing the information required by this Agreement to be communicated to any person, sent or delivered in accordance with Section 14.6; provided, however, that any communication containing such information sent to such Person and actually received by such Person will constitute Notification or Notice for all purposes of this Agreement. 15.30 Initial Offering Costs. All expenses incurred in connection with the offer and sale of the Fund’s Units, including fees for legal, accounting, investment banking, and consulting services. 15.31 Partner. The General Partner or any Limited Partner. 15.32 Partnership Percentage. For each Unit the proportion, expressed as a percentage, that the amount of such Unit’s Capital Account balance bears as of the beginning of any Period to the total of all Units’ Capital Account balances as of the beginning of such Period (after giving effect to the adjustments provided in Section 4.4.1). 15.33 Period. (i) as to the first Period, the interval beginning on the effective date of this Agreement and ending on the next succeeding Mark-to-Market Event, and (ii) as to each succeeding Period, each interval beginning immediately after a Mark-to-Market Event and ending at the time of the next succeeding Mark-to-Market Event. 15.34 Person. An individual, corporation, partnership, limited liability company, association, joint-stock company, trust, unincorporated organization, or a government or political subdivision thereof. 15.35 Prospectus. The Fund’s Prospectus and Disclosure Document. 15.36 Securities Act. The Securities Act of 1933, as amended. 15.37 Subscription Application. Each form of agreement by which any Limited Partner agrees to subscribe for and purchase Units, including any questionnaire used by the Fund or the General Partner to elicit information from that Limited Partner in connection with that subscription and purchase, as such agreement and any such questionnaire may be amended or supplemented from time to time. 15.38 Tax Matters Partner. The General Partner in the capacity described in Section 12.6. 15.39 Transfer of Units. A sale, assignment, exchange, transfer, or pledge or other encumbrance of Units. 15.40 Transferee. The recipient of a Transfer of Units, including a pledgee or holder of a security interest in Units. 15.41 Transferor. A Limited Partner who Transfers Units pursuant to Article 11. 15.42 Units. A unit of beneficial interest in the Fund, divided into Classes and Series, including the right of the owner of such Unit to any and all benefits to which a Partner may be entitled as provided in this Agreement. IN WITNESS WHEREOF, this Agreement is executed by and has become effective (i) as to the General Partner and the Initial Limited Partners, as of the Initial Dealing Day and (ii) as to the other Limited Partners, as of the date their subscriptions for Units are accepted by the General Partner, as reflected in the applicable Subscription Applications. GENERAL PARTNER: LIMITED PARTNER: MA Capital Management, LLC a Florida Limited Liability Company Signature Signature Name: Monty Agarwal Title: Managing Partner Print Name
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Exhibit 10.22.3
THIRD AMENDMENT, dated as of December 31, 2008 (“Third Amendment”), to the
Second Amended and Restated Sale and Servicing Agreement dated as of May 8, 2008
(as amended, restated or otherwise modified, the “Agreement”), by and among
CapitalSource Real Estate Loan LLC, 2007-A, as the seller (the “Seller”), CSE
Mortgage LLC, as the originator (the “Originator”), and as the servicer (the
"Servicer”), each of the Issuers from time to time party thereto (collectively,
the “Issuers”), each of the Liquidity Banks from time to time party thereto
(collectively, the “Liquidity Banks”), Citicorp North America, Inc., as the
administrative agent for the Issuers and Liquidity Banks thereunder (the
“Administrative Agent”); and Wells Fargo Bank, National Association, not in its
individual capacity but as the backup servicer (the “Backup Servicer”), and not
in its individual capacity but as the collateral custodian (the “Collateral
Custodian”). Terms not otherwise defined in this Third Amendment shall have the
meanings set forth in the Agreement.
The parties hereto desire to amend the Agreement as set forth below.
Accordingly, for good and valuable consideration, the receipt of which is
Section 1. Termination of the Class B Facility. Effective as of the
Effective Date (as defined below), the Class B Commitment is hereby terminated.
The parties hereto agree and acknowledge that (i) the Class B facility provided
for in the Agreement is no longer in effect, (ii) the amount of the Class B
Advances Outstanding, Class B Availability and the Class B Facility Amount is,
in each case, zero, (iii) no amounts are due or outstanding under or in
connection with the Class B Variable Funding Certificate and (iv) the Class B
Variable Funding Certificate is void and is no longer in effect.
Section 2. Eligibility of Certain Loans. (a) If on or after the Effective
Date a default or event of default (however defined or described) occurs under
or in connection with any indebtedness owing to CapitalSource Inc. or any of its
subsidiaries by any Person listed as a “Borrower” on Schedule A attached hereto
(as updated in accordance with this Section 2, “Schedule A”), including under or
in connection with any of the Loans listed next to such Borrower’s name on
Schedule A, then each of the Loans listed next to such Borrower’s name on
Schedule A shall immediately cease to be Eligible Assets and shall immediately
cease to be included in the Borrowing Base (i) with respect to a default or
event of default that is not the result of a payment default, for so long as
such default or event of default is continuing (after giving effect to any cure
of such default or event of default, but regardless of whether any waiver of
such default or event of default has been granted) or (ii) with respect to a
default or event of default that is the result of a payment default, until such
time as the applicable Loan has become a performing Loan and maintained such
status for a period of 12 consecutive months. The Seller shall deliver to the
Administrative Agent on or before January 9, 2009, an updated Schedule A, in
form and substance reasonably satisfactory to the Administrative Agent, which
shall list (x) as a “Borrower” each Person with indebtedness owing to
CapitalSource Inc. or any of its subsidiaries to the extent that any of the
indebtedness owing to CapitalSource Inc. or any of its subsidiaries by such
Person constitutes an Asset under the Agreement and with respect to which a
“Loan” is outstanding as contemplated by clause (y) hereof and (y) as a “Loan”
all other indebtedness owing to CapitalSource Inc. or any of its subsidiaries by
each such Borrower, if
any. The Seller’s failure to deliver such updated Schedule A to the
Administrative Agent on or before January 9, 2009 shall constitute a Termination
Event.
(b) The Seller may, (x) subject to the conditions set forth in Section 2.18
of the Agreement, replace any Loan listed on Schedule A that is no longer an
Eligible Asset with a Substitute Asset; provided, that no such Loan that is
replaced with a Substitute Asset shall be included in the calculation of the
percentages set forth in Sections 2.18(h) or 2.18(i) of the Agreement or (y)
subject to the conditions set forth in Section 2.19 of the Agreement, repurchase
any Loan listed on Schedule A that is no longer an Eligible Asset as if such
Loan was a Delinquent Asset.
Section 3. Representations and Warranties of the Seller and the Servicer.
Each of the Seller and the Servicer, jointly and severally, hereby
represents and warrants as of the date hereof as follows (which representations
and warranties shall survive the execution and delivery of this Third
Amendment):
(a) The representations and warranties of each of the Seller and the
Servicer set forth in the Agreement are true and correct on and as of such date,
after giving effect to this Third Amendment, as though made on and as of such
date;
(b) Following the effectiveness of this Third Amendment, no event has
occurred and is continuing which constitutes a Termination Event or Unmatured
Termination Event;
(c) Each of the Seller and the Servicer is in compliance with each of its
covenants and agreements set forth in the Transaction Documents; and
(d) This Third Amendment has been duly executed and delivered by the Seller
and the Servicer and constitutes the legal, valid and binding obligation of the
Seller and Servicer, and is enforceable in accordance with its terms subject
(x) as to enforcement of remedies, to applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting the enforcement of
creditors’ rights generally, from time to time in effect, and (y) to general
principles of equity.
Section 4. Effective Date; Continued Effectiveness; Governing Law;
Counterparts.
(a) This Third Amendment shall become effective as of the time and date
(the “Effective Date”) when the Administrative Agent shall have received a
counterpart of this Third Amendment, duly executed and delivered on behalf of
each of the parties hereto.
(b) Nothing herein shall be deemed to be a waiver of any covenant, or
agreement contained in, or any Termination Event or Unmatured Termination Event
under the Agreement and each of the parties hereto agrees that all other
covenants and agreements and other provisions contained in the Agreement and the
other Transaction Documents as modified by this Third Amendment shall remain in
full force and effect from and after the date of this Third Amendment.
2
(c) THIS THIRD AMENDMENT, AND THE AGREEMENT AS AMENDED BY THE THIRD
AMENDMENT, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW PROVISIONS
THE STATE OF NEW YORK).
(d) This Third Amendment may be executed in any number of counterparts and
by different parties hereto in separate counterparts (including by facsimile or
by electronic mail in portable document format (pdf)), each of which when so
executed shall be deemed to be an original and all of which when taken together
shall constitute one and the same agreement.
[Remainder of Page Intentionally Left Blank.]
3
IN WITNESS WHEREOF, the parties have caused this Third Amendment to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
THE SELLER: CAPITALSOURCE REAL ESTATE LOAN
LLC, 2007-A
By: /S/ JEFFREY A. LIPSON Name: Jeffrey A. Lipson
Title: Vice President & Treasurer
THE ORIGINATOR, SERVICER AND CLASS B PURCHASER: CSE MORTGAGE LLC
ISSUERS: CRC FUNDING, LLC,
in its capacity as an Issuer
By: Citicorp North America, Inc., as Attorney-in-Fact
By: /S/ GERALD KEEFE Name: Gerald Keefe
Title: Vice President
CAFCO, LLC,
Title: Vice President
CIESCO, LLC,
Title: Vice President
LIQUIDITY BANK: CITIBANK, N.A.,
in its capacity as a Liquidity Bank
By: /S/ GERALD KEEFE Name: Gerald Keefe Title: Vice
President
THE ADMINISTRATIVE AGENT: CITICORP NORTH AMERICA, INC.
President
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Exhibit 10.1
[g124411kii001.jpg]
Lone Pine Resources
Annual Incentive Plan
2012
Lone Pine Resources 2012 Annual Incentive Plan
Summary
Plan Objectives
The Annual Incentive Plan (the “Plan”) has been designed to meet the following
objectives:
· Provide an incentive framework that is performance-driven and
focused on objectives that are critical to the success of Lone Pine Resources
· Offer competitive cash compensation opportunities to
employees; and
· Reward outstanding achievement.
Basic Plan Concept
The Plan provides annual incentive awards, which will be determined primarily on
the basis of the Company’s consolidated results on selected financial and
operating performance measures as well as departmental objectives. Individual
performance will also be considered in determining the participant award
payout. The Company shall have the flexibility to adjust individual awards to
reflect individual or team performance.
Performance Measures and Weighting
Each year the Company will establish the target levels for each financial and
operating measure and its appropriate weighting, subject to the confirmation of
the Compensation Committee of the Board of Directors (the “Committee”). These
financial and operating measures and their weighting will be reviewed (and
modified, if appropriate) in light of changing Company priorities and strategic
objectives.
The Company will also establish departmental performance objectives, the
achievement of which will be determined by the President and Chief Executive
Officer (the “CEO”) at year end, subject to the confirmation of the Committee.
The performance measures and their relative weightings are:
Performance Measure
Weighting
WI Production
25
%
WI Cash Cost
15
%
Bankable Value PV10
25
%
Department Performance Objectives
25
%
Discretionary Achievement Factor
10
%
1
Plan Administration
The Plan will be administered by the Committee and the CEO (with the exception
of his own position). Certain elements of the Plan administration will be
delegated to the Company’s senior Human Resources representative. The Chief
Financial Officer will verify the performance calculation for the financial and
operating measures in consultation with the Vice President, Engineering and
Exploitation, who shall be responsible for overseeing the estimation of the
Company’s oil and gas reserves by the Company’s external reserves evaluator.
Actual performance goals, standards, award determinations and modifications to
the Plan design must be approved by the Committee.
Once the total bonus pool has been established, the CEO shall have the
discretion to distribute bonus monies within departments or to move monies from
one group to another, and to allocate incentive monies to individuals, based on
the CEO’s assessment (with input from the Executive team) as to individual or
group performance.
Performance Targets
Targets for the total Plan will be set consistent with the following:
Performance Level
% of Total Award
Below Threshold
0
Threshold
50
Target
100
Above Target
150
Outstanding
Maximum of 200%
Targets shall be adjusted for material changes made during the year to the
Company’s market guidance and business plan.
The maximum award under the Annual Incentive Plan will be limited to 200% of
target.
Participants
The CEO shall determine which employees are participants in the Plan. If a
participant’s employment with the Company terminates for any reason prior to
payment, no bonus award will be paid.
The target award percentages for the CEO and other officers of the Company are
established by the Committee. Any changes to target award percentages for
Company officers are subject to the approval of the Committee. The CEO is
authorized to apply discretion to the target award percentages for non-officer
Plan participants. All awards to officers under the Plan are subject to approval
of the Committee.
Plan participants who change positions and/or have their individual target
incentive levels changed during the Plan year will have their award prorated
accordingly. All awards paid will be
2
rounded to the nearest $100. All dollar amounts stated in the Plan are stated in
Canadian dollars.
Incentive compensation awards will be calculated based upon the participant’s
base salary in effect at the end of the Plan year or earned salary during the
Plan year if the participant was a new hire during the year.
Plan Effective Date
Plan effective date will be January 1, 2012.
3
Lone Pine Resources Annual Incentive Plan
Operating Measure: Production
Objective
Measure Working Interest (WI) Production compared to the WI Production Guidance
range issued by the Company.
Definition
Working Interest Production excludes the impact of royalty and other burdens,
thus eliminating the impact of changes in commodity price that influence
Canadian royalty calculations.
The performance metric is to exclude the impact of Acquisitions and/or
Divestitures with associated production.
Targets
Measured against the Company’s Production Guidance as follows:
Level
Performance
% of Total Award
Below “Low” Guidance Value
Below Threshold
0
Meet “Low” Guidance Value
Threshold
50
Mid-point of Guidance Range
Target
100
Meet “High” Guidance Value
Above Target
150
Exceed “High” Guidance Value
Outstanding
Maximum of 200%
4
Financial Measure: Cash Cost
Objective
Measure a key component of the Working Interest (WI) Production Expense compared
to the WI Production Expense Guidance range issued by the Company.
Definition
The sum of direct operating expense and expensed workovers and transportation
expense for the Company divided by total WI Production for the Company measured
in Mcfe. This calculation will exclude ad valorem taxes, production taxes and
total expensed G&A.
Targets
Measured against the Cash Cost component (see Definition above) of the
Production Expense Guidance:
Level
Performance
% of Total Award
Outstanding
Maximum of 200%
Above Target
150
Target
100
Threshold
50
Below Threshold
0
5
Financial Measure: Bankable Value PV10
Objective
Measure the creation of value (PV 10%) through the addition of Proved Developed
Producing (PDP) reserves. The goal of this target is to reward participants for
creating incremental Company value, while not rewarding for increases in
commodity price.
Definition
The Bankable Value PV10 measures the increase in value associated with the
growth in Proved Developed Producing reserves from one year to the next.
The measurement will be before tax and will be determined using a constant price
scenario. The impact of Divestitures with production will be excluded. The
impact of Acquisitions with production will be included. The baseline for the
calculation of Bankable Value PV10 will be the previous year-end PV 10 value for
the PDP reserves (Reference PV10) as determined by the reserve evaluator at a
constant price scenario defined by the Company.
The Bankable Value PV10 will be the percentage change in the Year End PV10 over
the Reference PV10.
Targets
Measured against the previous year end PDP reserve value:
Level
Performance
% of Total Award
<0% growth
Below Threshold
0%
0 - 5% growth
Threshold
50%
>5 - 10% growth
Target
100%
>10 - 15% growth
Above Target
150%
>15% growth
Outstanding
Maximum of 200%
6
Operating Measure: Department Performance Objectives
Objective
Measure the achievement of key objectives that are established annually for each
department.
Definition
Key objectives are established by the CEO, in consultation with the Executive
team, for each department. These departmental objectives will directly support
the achievement of Company goals. The objectives are department specific and are
well-defined and measurable.
Targets
Awards for participants will be based on the achievement of performance
objectives established for the department in which they work.
At year-end the achievement of performance objectives for each department will
be evaluated and assigned a completion percentage by the CEO over a range of 0
to 200%. This completion percentage will be multiplied by the 25% relative
weighting for the Department Performance Objectives.
7
Operating Measure: Discretionary Achievement
Definition
To recognize significant achievements that are not addressed elsewhere in the
Plan.
Target
During the Committee’s review of the overall performance of the Company at year
end it will consider any instances of significant value being added to the
Company and/or shareholders through the initiatives of management and employees
that were not specifically targeted in the Plan. The Committee, based on
recommendations from the CEO, will assign, at its discretion, a completion
percentage from 0% to 200% of the Discretionary Achievement performance factor
for such results. This completion percentage will be multiplied by the 10%
relative weighting for Discretionary Achievement.
8
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AMENDMENT NUMBER ONE
TO THE
TUPPERWARE BRANDS CORPORATION
2016 INCENTIVE PLAN
Dated May 24, 2017
WHEREAS, Tupperware Brands Corporation, a Delaware corporation (the
“Corporation”), maintains the Tupperware Brands Corporation 2016 Incentive Plan
(the “Plan”); and
WHEREAS, pursuant to Section 16.1 of the Plan, the Board of Directors of the
Corporation (the “Board”) has the authority to amend the Plan as it shall deem
advisable, subject to any requirement of stockholder approval required by
applicable law, rule or regulation; and
WHEREAS, upon the recommendation of the Compensation & Management Development
Committee of the Board, the Board deems it to be in the best interest of the
Corporation to amend the Plan to modify the definition of “Change of Control”.
NOW, THEREFORE, BE IT RESOLVED, that the Plan hereby is amended, effective May
24, 2017, to replace Section 2(g)(i) of the Plan with the following:
i. An acquisition by any Person of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 35 percent or more of either
(1) the then outstanding Shares (the “Outstanding Company Common Stock”) or
(2) 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”); excluding, however, the following:
(1) any acquisition directly from the Company, other than an acquisition by
virtue of the exercise of a conversion privilege unless the security being so
converted was itself acquired from the Company, (2) any acquisition by the
Company or (4) any acquisition by any Person pursuant to a transaction which
complies with clauses (1), (2) and (3) of subsection (iii) of this definition;
or
***
As amended by this Amendment, the Plan is in all respects ratified and
confirmed, and as so amended by this Amendment, the Plan shall be read, taken
and construed as one and the same instrument.
IN WITNESS WHEREOF, the Corporation has caused this instrument to be executed by
its duly authorized agent as of May 24, 2017.
TUPPERWARE BRANDS CORPORATION
By:
/s/ Karen M. Sheehan
Name:
Karen M. Sheehan
Title:
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Exhibit 32.1 Statement of Chief Executive Officer Furnished Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 The undersigned, Kim S. Price, is the President and Chief Executive Officer of Citizens South Banking Corporation (the “Company”). This statement is being furnished in connection with the filing by the Company of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 (the “Report”). By execution of this statement, I certify that to the best of my knowledge: A) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)) and B) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods covered by the Report. May 15, 2012 /s/ Kim S. Price Dated Kim S. Price President and Chief Executive Officer This statement is authorized to be attached as an exhibit to the Report so that this statement will accompany the Report at such time as the Report is filed with the Securities and Exchange Commission pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.It is not intended that this statement be deemed to be filed for purposes of the Securities Exchange Act of 1934, as amended. A signed original of this written statement required by Section 906 has been provided toCitizens South BankingCorporation and will be retained byCitizens South BankingCorporation and furnished to the Securities and Exchange Commission or its staff upon request.
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CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We hereby consent to the incorporation by reference in this Registration Statement on Form N-1A of our reports dated October 19, 2012, relating to the financial statements and financial highlights of Templeton Foreign Fund and Templeton World Fund which appear in the August 31, 2012 Annual Reports to Shareholders of Templeton Funds, which are also incorporated by reference into the Registration Statement. We also consent to the references to us under the headings "Financial Highlights" and "Independent Registered Public Accounting Firm" in such Registration Statement. /s/ PricewaterhouseCoopers LLP San
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Exhibit 32 Certification Pursuant To Rule 13a-14(b)/15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act Of 2002 In connection with the Quarterly Report of Astec Industries, Inc. (the "Company") on Form 10-Q for the period ended September 30, 2012 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, J. Don Brock and David C. Silvious certify, pursuant to Rule 13a-14(b)/15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act Of 2002, that: The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ J. Don Brock J. Don Brock Chief Executive Officer and Chairman of the Board (Principal Executive Officer) November 9, 2012 /s/ David C. Silvious Chief Financial Officer, Vice President and Treasurer Principal Financial Officer November 9, 2012
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 11-K ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2014 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]. For the transition period from to Commission File Number 001-33223 A. Full title of the plan and the address of the plan, if different from that of the issuer named below: Oritani Bank Employees Savings & Profit Sharing Plan and Trust B: Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: Oritani Financial Corp. 370 Pascack Road Township of Washington, New Jersey 07676 REQUIRED INFORMATION Oritani Bank Employees Savings & Profit Sharing Plan and Trust (the "Plan") is subject to the Employee Retirement Income Security Act of 1974 ("ERISA"). Therefore, in lieu of the requirements of Items 1-3 of Form 11-K, the following financial statements and schedules have been prepared in accordance with the financial reporting requirements of ERISA. The following financial statements, schedule and exhibits are filed as a part of this Annual Report on Form 11-K. Page Number (a) Financial Statements of the Plan Report of Independent Registered Public Accounting Firms 1 Statements of Net Assets Available for Plan Benefits as of December 31, 2014 and 2013 3 Statements of Changes in Net Assets Available for Plan Benefits for the Years Ended December 31, 2014 and 2013 4 Notes to Financial Statements 5 (b) Schedule Schedule H, Part IV - Line 4i - Schedule of Assets (Held at End of Year) as of December 31, 2014 15 (c) Index to Exhibits 16 (d) Signature 17 Report of Independent Registered Public Accounting Firm To the Plan Administrator Oritani Bank Employees Savings & Profit Sharing Plan and Trust We have audited the accompanying statement of net assets available for benefits of the Oritani Bank Employees Savings & Profit Sharing Plan and Trust (the Plan) as of December 31, 2014 and the related statement of changes in net assets available for benefits for the year then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2014 and the changes in net assets available for benefits for the year then ended, in conformity with accounting principles generally accepted in the United States of America. The supplemental information in the accompanying Schedule H, Part IV – Line 4i – Schedule of Assets (Held at End of Year) as of December 31, 2014 has been subjected to audit procedures performed in conjunction with the audit of the Oritani Bank Employees Savings & Profit Sharing Plan and Trust financial statements. The supplemental information is presented for the purpose of additional analysis and is not a required part of the financial statements but include supplemental information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental information is the responsibility of the Plan's management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable and performing procedures to test the completeness and accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental information in the accompanying schedule, we evaluated whether the supplemental information, including its form and content, is presented in conformity with the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our opinion, the supplemental information in the accompanying schedule is fairly stated in all material respects in relation to the financial statements as a whole. /s/ Demetrius Berkower LLC Wayne, New Jersey July 13, 2015 1 Report of Independent Registered Public Accounting Firm Plan Administrator Oritani Bank Employees Savings & Profit Sharing Plan: We have audited the accompanying statement of net assets available for benefits of the Oritani Bank Employees Savings & Profit Sharing Plan and Trust (the "Plan") as of December 31, 2013, and the related statement of changes in net assets available for benefits for the year then ended. These financial statement are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in allmaterialrespects, the net assets available for benefits of Oritani Bank Employees Savings & Profit Sharing Plan and Trust as of December 31, 2013, and the changes in net assets available for benefits for the year then ended, in conformity with U.S. generally accepted accounting principles. /s/ KPMG LLP Short Hills, New Jersey June 30, 2014 2 Oritani Bank Employees Savings & Profit Sharing Plan and Trust Statements of Net Assets Available for Benefits December 31, 2014 and 2013 Assets Investments, at fair value Cash and cash equivalents Interest in common collective trusts Oritani Financial Corp. Common stock Total Investments, at fair value Receivables: Employer Contribution Receivable Employee Contribution Receivable Notes Receivable From Participants Other receivables Total Receivables Total assets available for plan benefits Payables Acquisition payables Total Payables Net assets available for plan benefits Adjustment from fair value to contract value for interest in common collective trusts relating to fully benefit-responsive investment contracts Net assets available for plan benefits The Notes to Financial Statements are an integral part of these statements. 3 Oritani Bank Employees Savings & Profit Sharing Plan and Trust Statements of Changes in Net Assets Available for Benefits Year Ended December 31, 2014 and 2013 Additions Investment Income Net appreciation in fair value of investments Interest and dividend income Total investment income Contributions Employer Employee Total Contributions Total additions Deductions Distributions Administrative expenses Total deductions Net increase in net assets Net assets available for benefits, beginning of the year Net assets available for benefits, end of the year The Notes to Financial Statements are an integral part of this statement. 4 Oritani Bank Employees Savings & Profit Sharing Plan and Trust Notes to Financial Statements December 31, 2014 and 2013 1. Description of Plan The following description is provided for general information summary purposes. Participants of the Oritani Bank Employees Savings & Profit Sharing Plan and Trust (the "Plan") should refer to the Summary Plan document for more detailed and complete description of the plan provisions. General The Plan is a defined contribution employee savings and profit sharing plan covering all eligible employees of Oritani Bank (the "Bank"). The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"). Contributions Effective January 1, 2014, the Plan was amended to change the definition of Plan salary from total taxable compensation as reported on Form W2 to basic salary plus overtime and bonuses. Effective January 1, 2014, the Plan was amended to change the maximum amount a participant may contribute to the Plan from 50% of their compensation, as defined in the Plan, to 75% of their compensation, as defined in the Plan (subject to certain IRS limitations). As of and for the year ended December 31, 2014, the employer remitted to the third party administrator all participant contributions to the Plan in a timely manner. Effective August 1, 2011, the Plan was amended to change eligibility from one or more years of service to three months of service and completion of 250 hours. Effective August 1, 2011, the Plan was amended to allow all or a portion of a participant’s employee contribution to be designated as Roth elective deferrals. The Bank matches up to 50% of the participants before tax contributions, up to 6% of compensation upon completion of one year of service and 1,000 hours. Vesting Plan participants are 100% vested in the account balance attributable to their voluntary contributions, as well as employer matching contributions, including related earnings thereon. 5 Oritani Bank Employees Savings & Profit Sharing Plan and Trust Notes to Financial Statements December 31, 2014 and 2013 Investment Options A participant can elect to invest amounts credited to their account in any of the following investment funds: Reliance Trust Company Stable Value Fund, SSgA Target Retirement 2055 Securities Non-Lending Series Fund, SSgA Target Retirement 2050 Securities Non-Lending Series Fund, SSgA Target Retirement 2045 Securities Non-Lending Series Fund, SSgA Target Retirement 2040 Securities Non-Lending Series Fund, SSgA Target Retirement 2035 Securities Non-Lending Series Fund, SSgA Target Retirement 2030 Securities Non-Lending Series Fund, SSgA Target Retirement 2025 Securities Non-Lending Series Fund, SSgA Target Retirement 2020 Securities Non-Lending Series Fund, SSgA Target Retirement 2015 Securities Non-Lending Series Fund, SsgA Aggressive Strategic Balanced Securities LSF, SSgA Conservative Strategic Balanced Securities LSF, SSgA Russell Large Cap Growth Index Securities NLSF, SSgA Russell Large Cap Value Index Securities NLSF, SSgA Long US Treasury Index Securities NLSF, SSgA Moderate Strategic Balanced Securities LSF, SSgA Nasdaq 100 Index Securities NLSF, SSgA Daily EAFE Index Non-Lending Series Fund, SsgA S&P Flagship NLFS, SSgA S&P MidCap Index Securities NLSF, SSgA Russell Small Cap Index Securities NLSF, SSgA REIT Index Securities NLSF,SSgA Target Retirement Income Non-Lending Series, Collective Short Term Investment Fund, SSgA Bond Index Fund and Oritani Financial Corp. Stock . Administrative Expenses Trustee fees are paid by the Plan.Certain Plan expenses, such as recordkeeping, auditing, and legal fees, are paid directly by the Plan Sponsor.Expenses with respect to participant's accounts are charged to such accounts. Payment of Benefits Upon termination of employment, a participant may leave their account with the Plan and defer commencement of receipt of their vested balance until April 1 of the calendar year following the calendar year in which they attain age 70 1/2, except to the extent that their vested account balance as of the date of termination is less than $500; in which case interest in the Plan will be cashed out and payment forwarded to them. On termination of service due to death, the value of the entire account will be payable to the participant's beneficiary in the form of a lump sum payment, annual installments, or rollover to an individual retirement account or another qualified plan for a surviving spouse. For termination of service due to disability, a participant is entitled to the same withdrawal rights as if they had terminated their employment. Notes Receivable From Participants Eligible participants may borrow from $1,000 up to the lesser of (1) fifty percent (50%) of the value of the employee vested account or (2) $50,000 reduced by the largest outstanding loan balance during the past 12 months. The rate of interest for the term of the loan will be established as of the loan date, and is a reasonable rate of interest generally comparable to the rates of interest then in effect at a major banking institution (e.g., Barron's Prime Rate (base rate) plus 1%). Distributions During employment, a participant may make withdrawals of amounts applicable to employee and vested employer contributions, subject to certain restrictions, as defined under the Plan. Participants are entitled to withdraw funds, exempt from excise tax, upon attaining age 59 1/2 or for financial hardship before that age. Participants may qualify for financial hardship withdrawals if they have an immediate and substantial financial need, as defined by the Plan document. Participants are limited to one withdrawal in any calendar year. 6 Oritani Bank Employees Savings & Profit Sharing Plan and Trust Notes to Financial Statements December 31, 2014 and 2013 2. Summary of Significant Accounting Policies Basis of Accounting The accompanying financial statements are prepared using the accrual method of accounting. Notes Receivable From Participants Notes receivable from participants are measured at their unpaid principal balances plus any accrued but unpaid interest.Interest income is recorded on the accrual basis.Related fees are recorded as administrative expenses and are expensed when they are incurred.No allowance for credit losses has been recorded as of December 31, 2014 or 2013. Payment of Benefits Amounts paid to participants are recorded upon distribution. Use of Estimates The preparation of financial statements is in conformity withaccounting principlesgenerally accepted in the United States of America ("GAAP"). GAAP requires the plan administrator to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results may differ from those estimates. Investment Valuation and Income Recognition Investments in employer securities are recorded at fair value on the last business day of the year based on quoted prices from national stock exchanges. Investments in common/collective trusts, are valued at their respective net asset value. Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Fully Benefit-Responsive Investment Contracts are required to be reported at fair value. However, contract value is the relevant measurement attributable for that portion of the net assets available for benefits of a defined-contribution plan belonging to fully benefit-responsive investment contracts, because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the Plan. The Plan invests in investment contracts through a common collective trust (Reliance Trust Company Stable Value Fund). The Statement of Net Assets Available for Benefits presents the fair value of the investment in the common collective trust as well as the adjustment from fair value to contract for fully benefit-responsive investment contracts.The estimated fair value of the Plan’s interest in the Reliance Trust Company Stable Value Fund are primarily based on the following; Guaranteed Investment Contracts (GIC) are based on the discounted present value of future cash flows and the security-backed contract are based on the estimated fair value of the underlying securities and the estimated fair value of the wrapper contract. The estimated fair value of the wrapper contract provided by a security-backed contract issuer is the present value of the difference between the wrapper fee and the contracted wrapper fee. 7 Oritani Bank Employees Savings & Profit Sharing Plan and Trust Notes to Financial Statements December 31, 2014 and 2013 In March 2014, the Pentegra Defined Contribution Plan for Financial Institutions approved the replacement of the Invesco Stable Value Trust as stable value manager with the Reliance Trust Company Stable Value Fund, including the liquidation of the Invesco Stable Value Trust.The investment contracts held by Invesco Stable Value Trust were transferred to the Reliance Trust Company Stable Value Fund in March 2014.The Invesco Stable Value Fund was fully liquidated and terminated on March 26, 2014 and the Plan was able to withdraw its investment at a net asset value of approximately $12.90.The Plan replaced the Invesco Stable Value Fund with the Reliance Trust Company Stable Value Fund and the funds were reinvested in the Reliance Trust Company Stable Value Fund on March 26, 2014. Effective April 30, 2014, SSgA S&P 500 Growth Fund was eliminated and replaced with the SSgA Russell Large Cap Growth Index Securities Non-Lending Series Fund. Effective April 30, 2014, SSgA S&P Value Fund was eliminated and replaced with the SSgA Russell Large Cap Value Index Securities Non-Lending Series Fund. Risks and Uncertainties The Plan has various investment vehicles, directed by participants, common/collective trusts, and direct holdings in common stock of Oritani Financial Corp., the Parent Company of the Bank. These investments are subject to various risks such as interest rate, market and credit risks. Due to the level of risks associated with certain investments, it is at least reasonably possible that changes in the values of the investments will occur in the near term and that such changes could materially affect participants' account balances and the amounts reported in the Statements of Net Assets Available for Plan Benefits. The Oritani Financial Corp. common stock is subject to various risks including concentration risk since the fund invests primarily in the common stock of Oritani Financial Corp. and, therefore, the performance of the fund is impacted by the performance of Oritani Financial Corp. common stock. The market price of Oritani Financial Corp. common stock is dependent on a number of factors, including the financial condition and profitability of Oritani Financial Corp. and Oritani Bank. In addition, the market price for Oritani Financial Corp. common stock may be affected by general market conditions, market interest rates, the market for financial institutions, merger and takeover transactions, the presence of professional and other investors who purchase stock on speculation, as well as unforeseen events not necessarily within the control of management or the board of directors of Oritani Financial Corp. and Oritani Bank. Effects of New Accounting Pronouncements On May 1, 2015, the FASB issued Accounting Standards Update (ASU) No. 2015-07, Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent), which removes the requirement to categorize within the fair value hierarchy all investments for which the fair value is measured using the net asset value per share practical expedient.The ASU also removes the requirement to make certain disclosures for all investments that are eligible to be measured at fair value using the net asset value per share practical expedient.The ASU is effective for public business entities for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years.The effective date for all other entities is fiscal years beginning after December 15, 2016 and interim periods within those fiscal years.Early adoption is permitted for all entities.Management is currently evaluating the impact of adopting this new accounting standards update on the Plan's financial statements. 8 Oritani Bank Employees Savings & Profit Sharing Plan and Trust Notes to Financial Statements December 31, 2014 and 2013 3.Investments The following presents investments for the year ended December 31, 2014 and 2013 that represented 5% or more of the Plan's net assets: Oritani Financial Corp. Stock $ $ Reliance Trust Company Stable Value Fund $ - Invesco Stable Value Fund - SsgA S&P Flagship NLFS SSgA S&P MidCap Index Securities NLSF The Reliance Trust Company Stable Value Fund (the Fund or “RSVT”) invests in a representation of guaranteed investment contracts, bank investment contracts and/or wrapped portfolio of fixed income instruments.Collectively, these contracts are referred to as investment contracts. A traditional GIC is a group annuity contract that pays a specified rate of return for a specific period of time and guarantees a fixed return after any benefit-responsive payments are made to participants. The issuer of a traditional GIC takes a deposit from the Fund and purchases investments that are held in the issuer’s general account. The GIC issuer is contractually obligated to repay the principal and a specified interest rate that is guaranteed to the Fund.The Fund is subject to the general credit risk of the issuer.RSVT will attempt to assess the credit quality of the issuers, however, there is no guarantee as to the financial condition of an issuer. A bank investment contract is an investment contract issued by a bank, with features (other than annuity provisions) comparable to a GIC. A synthetic GIC is a wrap contract paired with an underlying investment or investments, usually a portfolio of high-quality, intermediate term fixed income securities.Events disqualifying an underlying investment as high-quality include, but are not limited to, bankruptcy of the security issuer or default or restricted liquidity of the security.The portfolio is owned by the Fund. The Fund purchases a wrapper contract from an insurance company or other financial services institution. RSVT will attempt to assess the credit quality of the issuers, however, there is no guarantee as to the financial condition of an issuer.The portfolio, coupled with the wrap contract, attempts to replicate the characteristics of a traditional GIC. The Fund one-year total return was 2.12% for 2014 and Invesco Stable Value Fund was 1.65% for 2013. The existence of certain conditions can limit the Fund’s ability to transact at contract value with the issuers of its investment contracts.Employer initiated events, if material, may affect the underlying economies of investment contracts.These events include plant closings, layoffs, plan termination, bankruptcy or reorganization, merger, early retirement incentive programs, tax disqualification of a trust or other events. The occurrence of one or more employer initiated events could limit the Fund’s ability to transact at contract value with plan participants. 9 Oritani Bank Employees Savings & Profit Sharing Plan and Trust Notes to Financial Statements December 31, 2014 and 2013 For the year ended December 31, 2014 and 2013, the Plan's investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated in value by $606,919 and $1,409,939, respectively. The net appreciation, by investment category, is as follows: Common stock $ ) $ Common/collective trusts $ For the year ended December 31, 2014 and 2013, investment and advisory expenses were $74,055 and $63,211, respectively. The expenses are paid by the Plan. 4.Fair Value Measurements ASC 820 Fair Value Measurements and Disclosures establishes a framework for measuring fair value under generally accepted accounting principles and enhances disclosures about fair value measurements. Fair value is defined under ASC 820 Fair Value Measurements and Disclosures as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following: Level 1 Quoted prices in active markets for identical assets or liabilities. Level 2 Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities In accordance with ASC 820 Fair Value Measurements and Disclosures, the following table represents the Plan’s fair value hierarchy for its financial assets (cash and cash equivalents) measured at fair value on a recurring basis as of December 31, 2014 and 2013: 10 Oritani Bank Employees Savings & Profit Sharing Plan and Trust Notes to Financial Statements December 31, 2014 and 2013 Fair Value Measurements at December 31, 2014 Total Level 1 Level 2 Level 3 Cash and Cash Equivalents - - Reliance Trust Company Stable Value Fund - - SSgA Target Retirement 2055 Securities Non-Lending Series Fund - - SSgA Target Retirement 2050 Securities Non-Lending Series Fund - - SSgA Target Retirement 2045 Securities Non-Lending Series Fund - - SSgA Target Retirement 2040 Securities Non-Lending Series Fund - - SSgA Target Retirement 2035 Securities Non-Lending Series Fund - - SSgA Target Retirement 2030 Securities Non-Lending Series Fund - - SSgA Target Retirement 2025 Securities Non-Lending Series Fund - - SSgA Target Retirement 2020 Securities Non-Lending Series Fund - - SSgA Target Retirement 2015 Securities Non-Lending Series Fund - - SsgA Aggressive Strategic Balanced Securities LSF - - SSgA Conservative Strategic Balanced Securities LSF - - SSgA Russell Large Cap Growth Index Securities NLSF - - SSgA Russell Large Cap Value Index Securities NLSF - - SSgA Long US Treasury Index Securities NLSF - - SSgA Moderate Strategic Balanced Securities LSF - - SSgA Nasdaq 100 Index Securities NLSF - - SSgA Daily EAFE Index Non-Lending Series Fund - - SsgA S&P Flagship NLFS - - SSgA S&P MidCap Index Securities NLSF - - SSgA Russell Small Cap Index Securities NLSF - - SSgA REIT Index Securities NLSF - - SSgA Target Retirement Income Non-Lending Series - - SSgA Bond Index Fund - - Oritani Financial Corp. Stock - - $ $- 11 Oritani Bank Employees Savings & Profit Sharing Plan and Trust Notes to Financial Statements December 31, 2014 and 2013 Fair Value Measurements at December 31, 2013 Total Level 1 Level 2 Level 3 Cash and Cash Equivalents - - Invesco Stable Value Fund - - SSgA Target Retirement 2055 Securities Non-Lending Series Fund - - SSgA Target Retirement 2050 Securities Non-Lending Series Fund - - SSgA Target Retirement 2045 Securities Non-Lending Series Fund - - SSgA Target Retirement 2040 Securities Non-Lending Series Fund - - SSgA Target Retirement 2035 Securities Non-Lending Series Fund - - SSgA Target Retirement 2030 Securities Non-Lending Series Fund - - SSgA Target Retirement 2025 Securities Non-Lending Series Fund - - SSgA Target Retirement 2020 Securities Non-Lending Series Fund - - SSgA Target Retirement 2015 Securities Non-Lending Series Fund - - SsgA Aggressive Strategic Balanced Securities LSF - - SSgA Conservative Strategic Balanced Securities LSF - - SsgA S&P 500 Growth Fund - - SSgA S&P Value Fund - - SSgA Long US Treasury Index Securities LSF - - SSgA Moderate Strategic Balanced Securities LSF - - SSgA Nasdaq 100 Index Securities LSF - - SSgA Daily EAFE Index Non-Lending Series Fund - - SsgA S&P Flagship NLFS - - SSgA S&P MidCap Index Securities LSF - - SSgA Russell Small Cap Index Securities NLSF - - SSgA REIT Index Securities LSF - - SSgA Passive Bond Index - - Oritani Financial Corp. Stock - - $ $- There were no transfers between Levels 1, 2 or 3 as of December 31, 2014 based on levels assigned to securities on December 31, 2013. 12 Oritani Bank Employees Savings & Profit Sharing Plan and Trust Notes to Financial Statements December 31, 2014 and 2013 5. Tax Status The Plan has received a determination letter from the Internal Revenue Service dated February 15, 2011, stating that the written form of the underlying prototype plan document is qualified under Section 401(b) of the Internal Revenue Code (the Code), that any employer adopting this form of the Plan will be considered to have a plan qualified under Section 401(a) of the Code. Therefore, the related trust is exempt from taxation. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification. The Plan administrator believes the Plan is being operated in compliance with the applicable requirements of the Code and, therefore, believes that the Plan is qualified and the related trust is tax-exempt. Accounting principles generally accepted in the United States of America require plan management to evaluate tax positions taken by the Plan and recognize a tax liability (or asset) if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the Internal Revenue Service. The plan administrator has analyzed the tax positions taken by the Plan, and has concluded that as of December 31, 2014, there are no uncertain positions taken or expected to be taken that would require recognition of a liability (or asset) or disclosure in the financial statements. The Plan is subject to routine audits by tax jurisdictions; however, there are currently no audits for any tax periods in progress. The plan administrator believes it is no longer subject to income tax examinations for years prior to 2011. 6. Plan Termination The Plan Sponsor has not expressed any intention to discontinue the Plan, however, it has the right under the Plan to terminate or discontinue employee contributions to the Plan subject to the provisions of ERISA. 7. Party-in-Interest Transactions The Plan has investments in common stock of Oritani Financial Corp.Accordingly, these transactions qualify as party-in-interest transactions.Certain administrative functions of the Plan are performed by officers or employees of the Plan Sponsor.No such officer or employee receives compensation from the Plan. 13 Oritani Bank Employees Savings & Profit Sharing Plan and Trust Notes to Financial Statements December 31, 2014 and 2013 8. Reconciliation to Form 5500 Differences between the financial statements and the Form 5500 relates to the Trustee reporting Plan activity on the cash basis (versus accrual basis) for Form 5500. The following is a reconciliation of net assets available for benefits and contributions as of December 31, 2014 and 2013: Net assets available for benefits as reported in the Statement of Net Assets Available for Benefits $ $ Adjustment from fair value to contract value for fully-responsive investment contracts Contributions receivable ) ) Net assets available for benefits as disclosed in Form 5500, Schedule H $ $ The following is a reconciliation of contributions and change in net assets per the financial statements for the year ended December 31, 2013 and 2012, to Form 5500: Contributions Change in Net Assets Contributions Change in Net Assets As disclosed in the financial statements $ Adjustment from fair value to contract value for fully-responsive investment contracts — — Contributions receivable-beginning of year Contributions receivable-end of year As disclosed in Form 5500, Schedule H $ 9. Subsequent Events The Bank has evaluated all subsequent transactions and events after the financial statement date through July 13, 2015, the date the financial statements were available to be issued. Based on this evaluation, the Plan has determined that no subsequent events occurred which would require disclosure in financial statements. 14 Oritani Bank Employees Savings & Profit Sharing Plan and Trust Schedule H, Part IV - Line 4i Schedule of Assets Held at End of Year ID# 22-1174955; Plan# 001 December 31, 2014 Description of Investment Including Maturity Date, Rate Identity of Issuer, Borrower of Interest, Collateral, *(a) Lessor or Similar Party Par, or Maturity Value Cost** Current Value Cash and Cash Equivalents Cash Collective Short Term Investment Fund shares SSgA Short Term Investment Fund shares Total Cash and Cash Equivalents Interest in Common/Collective Trusts * Reliance Trust Company Stable Value Fund units * SSgA Target Retirement 2055 Securities Non-Lending Series Fund units SSgA Target Retirement 2050 Securities Non-Lending Series Fund 43 units SSgA Target Retirement 2045 Securities Non-Lending Series Fund units SSgA Target Retirement 2040 Securities Non-Lending Series Fund units SSgA Target Retirement 2035 Securities Non-Lending Series Fund units SSgA Target Retirement 2030 Securities Non-Lending Series Fund units SSgA Target Retirement 2025 Securities Non-Lending Series Fund units SSgA Target Retirement 2020 Securities Non-Lending Series Fund 44 units SSgA Target Retirement 2015 Securities Non-Lending Series Fund units SsgA Aggressive Strategic Balanced Securities LSF units SSgA Conservative Strategic Balanced Securities LSF units SSgA Russell Large Cap Growth Index Securities NLSF units SSgA Russell Large Cap Value Index Securities NLSF units SSgA Long US Treasury Index Securities NLSF units SSgA Moderate Strategic Balanced Securities LSF units SSgA Nasdaq 100 Index Securities NLSF units SSgA Daily EAFE Index Non-Lending Series Fund units SsgA S&P Flagship NLFS units SSgA S&P MidCap Index Securities NLSF units SSgA Russell Small Cap Index Securities NLSF units SSgA REIT Index Securities NLSF units SSgA Target Retirement Income Non-Lending Series units SSgA Bond Index Fund units Total Interest in Common/Collective Trusts Investment in Employer Securities * Oritani Financial Corp. Stock shares *** Participant Loans * Party-in-interest ** Cost omitted for participant directed investments *** Interest is 4.25% and maturity date ranging from January 2015 to July 2028 See Report of Independent Registered Public Accounting Firm. 15 EXHIBIT INDEX Exhibit NumberExhibit 23.1Consent of Independent Registered Public Accounting Firm 23.2Consent of Independent Registered Public Accounting Firm 16 SIGNATURE The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. ORITANI BANK EMPLOYEES' SAVINGS & PROFIT SHARING PLAN Date: July 13, 2015 By: /s/ Kevin Lynch Kevin Lynch President and Chief Executive Officer Oritani Bank
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Exhibit 10.4
LOGO [g18545110_4covpg1.jpg]
JOHNSONDIVERSEY, INC.
PROFIT SHARING PLAN
Effective January 1, 2007
B-1
JOHNSONDIVERSEY, INC.
PROFIT SHARING PLAN
TABLE OF CONTENTS
Page
ARTICLE 1 ADOPTION OF PLAN AND PURPOSE
1.01
Adoption of Plan 1
1.02
Purpose of Plan 1 ARTICLE 2 DEFINITIONS
2.01
Definitions 1 ARTICLE 3 ADMINISTRATION OF THE PLAN
3.01
Administration of the Plan 4 ARTICLE 4 ELIGIBILITY AND
PARTICIPATION
4.01
Eligible Employees 4
4.02
Commencement of Participation 5
4.03
Termination of Participation 5
4.04
Reemployment 5
4.05
No Guaranteed Award 5
i
ARTICLE 5 AWARDS
5.01
General 5
5.02
Basis for Awards 5
5.03
Allocable Profit Sharing Pool 6
5.04
Allocation of Awards from Allocable Profit Sharing Pool 6
5.05
Payment of Awards 6 ARTICLE 6 MISCELLANEOUS
6.01
Amendment 7
6.02
Termination 7
6.03
Participants’ Consent 7
6.04
Effect on Other Plans 7
6.05
No Effect on Employment 7
6.06
Withholding of Taxes 7
6.07
Severability 8
6.08
Successors 8
6.09
Construction of Plan 8
6.10
Gender and Headings 8
6.11
Compliance with Code Section 409A 8
Exhibit A
Non-participating Subsidiaries
Exhibit B
Eligible Earnings
ii
JohnsonDiversey, Inc.
Profit Sharing Plan
ARTICLE 1
Adoption of Plan and Purpose
1.01 Adoption of Plan. Effective as of January 1, 2007, JohnsonDiversey, Inc., a
Wisconsin corporation, adopted this Profit Sharing Plan. Under this Plan, the
Participating Employers intend to make profit sharing awards to eligible
employees subject to the terms, conditions and restrictions set forth in the
Plan. This Plan supersedes all previous profit sharing plans, programs and
agreements of the Company for Eligible Employees.
1.02 Purpose of Plan. The purpose of the Plan is to enhance the ability of
Participating Employers to attract and retain employees who are expected to make
substantial contributions to the earnings and success of the Participating
Employers. This Plan provides a method whereby eligible employees may
participate in the performance of the Participating Employers, thereby giving
such persons an additional incentive to remain employed by the Participating
Employers and to work for and contribute to the growth and success of the
Participating Employers. The Plan is intended to meet all applicable
requirements of section 409A of the Internal Revenue Code of 1986, as amended,
(the “Code”) and applicable regulations as in effect from time to time.
ARTICLE 2
Definitions
2.01 Definitions.
(a) Actual Global EBITDA. The total of the Company’s and all Subsidiaries’
actual earnings before interest, taxes, depreciation and amortization, as
determined and, if deemed appropriate, adjusted by the Committee for a Plan
Year.
(b) Allocable Profit Sharing Pool. The total allocable amount of the Profit
Sharing Pool for a Plan Year determined pursuant to section 5.03 of the Plan.
(c) Award. The portion of the Allocable Profit Sharing Pool allocated to a
Participant for any Plan Year as granted under the Plan.
B-1
(d) Board of Directors. The Board of Directors of the Company.
(e) Budgeted Global EBITDA. The total of the Company’s and all Subsidiaries’
budgeted earnings before interest, taxes, depreciation and amortization, as
Year.
(f) Committee. The Compensation and Management Succession Committee of the Board
of Directors of the Company.
(g) Company. JohnsonDiversey, Inc., a Wisconsin corporation, and any successor
thereto. The Committee shall act on behalf of the Company for purposes of the
Plan.
(h) Disability. For purposes of this Plan, “Disability” means the inability to
perform the responsibilities of a Participant’s Employment due to physical or
mental incapacity in circumstances in which the Participant qualifies for
benefits under a Participating Employer’s long-term disability plan and has
qualified for such benefits for a continuous period of at least 26 weeks.
(i) Eligible Earnings. The base salary of a Participant from all Participating
Employers determined as of the last day of the Plan Year by the Committee using
the exchange rates applicable to the Company’s year-end balance sheet reporting.
The Committee, in its sole discretion, may determine what constitutes base
salary separately for Participants of any Participating Employer and shall
identify any such base salary differences on Exhibit B of the Plan. In
determining Eligible Earnings in the initial Plan Year in which an Employee
becomes an Award-Eligible Participant, the Committee shall include Eligible
Earnings for the entire Plan Year.
(j) Effective Date. The effective date of this Plan shall be January 1, 2007.
(k) Employee. Any common law employee of a Participating Employer, excluding any
individual who the Participating Employer classifies as an independent
contractor or temporary employee.
(l) Employment. Employment as an Employee with a Participating Employer. The
Committee may determine in specific instances whether or not a leave of absence
results in a termination of Employment under the Plan.
2
(m) Job Elimination. For reasons other than the Employee’s unsatisfactory
performance, the participating Employer’s total elimination of the Employee’s
position, after which the Employee is not offered ongoing Employment in a
comparable position, as determined by the Committee.
(m) Participant. An Employee who satisfies the participation requirements of
Article 4 of the Plan.
(n) Participating Employer. The Company and each Subsidiary, unless designated
by the Company on Exhibit A of the Plan as a non-participating employer for
purposes of the Plan.
(o) Plan. This Plan, the JohnsonDiversey, Inc. Profit Sharing Plan, as herein
set forth and as amended from time to time.
(p) Plan Year. The period beginning on the Effective Date and ending on
December 28, 2007, and each 12-consecutive month fiscal period thereafter ending
on the last Friday of December.
(q) Profit Sharing Pool. The total approved pool of profit sharing funds
determined for each Plan Year by the Committee.
(r) Retirement. Termination of Employment on or after attaining age 55 and
completing ten Years of Service.
(s) Subsidiary. Any entity, including, without limitation, a corporation or
partnership, wholly owned by the Company, including entities located outside the
United States.
(t) Year of Service. A 12-consecutive month period, beginning on the date an
Employee first performs an hour of service for a Participating Employer or
Subsidiary, during which an Employee is employed by the Participating Employer
or Subsidiary.
ARTICLE 3
Administration of the Plan
3.01 Administration of the Plan. The Plan shall be administered by the
Committee. In addition to the powers, rights and duties specifically granted to
the Committee elsewhere in this Plan, the Committee shall have the following
powers, rights and duties in administering the Plan:
(a) To determine (i) which Employees shall become Participants and receive
Awards; (ii) the time or times at which such Awards shall be granted; and
(iii) any other terms or conditions of an Award which are consistent with the
express provisions of the Plan.
3
(b) To adopt, amend or rescind any rules and regulations as necessary or
advisable for the operation of this Plan and to take such other actions as may
be required for the proper administration of this Plan.
(c) To construe and interpret the Plan and any agreements entered into pursuant
to the Plan.
(d) The Committee may delegate any of its powers, duties and rights set forth in
paragraphs (a), (b) and (c) above, to the Chairperson of the Board of Directors.
The Committee or the Chairperson of the Board of Directors may designate any
other individual or individuals to carry out ministerial duties hereunder.
(e) Each action taken and decision made by the Committee or its designees within
its authority shall be final, binding and conclusive on all Participants and
their legal representatives. The members and designees of the Committee may rely
upon any information, reports or opinions supplied to them by an officer of the
Company or by the Company’s counsel, independent public accountants or other
advisors, and shall be fully protected in relying upon any such information and
advice. If the Committee cannot act for any reason, the Board of Directors of
the Company shall act in its place.
ARTICLE 4
Eligibility and Participation
4.01 Eligible Employees. An Employee of a Participating Employer is eligible to
participate in the Plan if the Employee: (a) has been designated as eligible to
participate in the Plan by the Committee, (b) is not designated by a
Participating Employer as employed in Tiers 1 through 10, and (c) is not a
member of a collective bargaining unit unless participation in this Plan has
been agreed to through good faith bargaining with a Participating Employer.
Employees defined as “Tolling Employees” in the Asset and Equity Interest
Purchase Agreement dated May 1, 2006 to which the Company is a party, shall not
be eligible to participate in the Plan. An Employee who satisfies the
requirements of this section 4.01 shall be referred to as an “Eligible
Employee.”
4
4.02 Commencement of Participation. An Eligible Employee shall participate in
the Plan as of the later of the Effective Date, the date the Employee completes
one Year of Service, or the date the Employee satisfies the requirements to
become an Eligible Employee.
4.03 Termination of Participation. A Participant’s participation under the Plan
shall cease as of the earlier of the termination of the Participant’s
Employment, death, Disability, or the date the Participant is no longer an
Eligible Employee pursuant to section 4.01.
4.04 Reemployment. A Participant who terminates Employment and is then rehired
by a Participating Employer as an Eligible Employee pursuant to section 4.01
shall be immediately eligible to again participate in the Plan. If a former
Employee who was not a Participant at the time of the Employee’s termination of
employment is rehired as an Eligible Employee pursuant to section 4.01, the
rehired Employee’s service prior to the termination of Employment shall not be
recognized for purposes of the Employee’s completion of one Year of Service as
required for participation in the Plan pursuant to section 4.02.
4.05 No Guaranteed Award. Eligibility of a Participant in a given Plan Year is
not a guarantee that an Award will be made to that Participant for that Plan
Year.
ARTICLE 5
Awards
5.01 General. The Committee shall determine the Awards to be made to each
Participant and shall approve the terms and conditions of each Award.
5.02 Basis for Awards. Awards for a specific Plan Year shall be based on that
Plan Year’s Eligible Earnings of a Participant, Budgeted Global EBITDA, Actual
Global EBITDA and the Profit Sharing Pool.
5
5.03 Allocable Profit Sharing Pool. As of the last day of each Plan Year, and
unless and until changed by the Committee, the Allocable Profit Sharing Pool for
a Plan Year shall be equal to an amount determined in accordance with the
following chart:
Percent of
Actual Global EBITDA to
Budgeted Global EBITDA
Percent of Profit Sharing Pool
Paid in Awards
100% or more
100%
99%
95%
98%
90%
97%
85%
96%
80%
95%
75%
94%
70%
93%
65%
92%
60%
91%
55%
90%
50%
89%
45%
88%
40%
87%
35%
86%
30%
85%
25%
84% or less
0%
5.04 Allocation of Awards from Allocable Profit Sharing Pool. A Participant
shall be eligible for an Award from the Allocable Profit Sharing Pool for a Plan
Year in accordance with the following paragraphs (a) and (b):
(a) The Participant must be in active Employment as of the last day of the Plan
Year or terminate Employment after March 31 and prior to the last day of the
Plan Year due to Retirement, death, Disability or Job Elimination. For purposes
of this section 5.04, a Participant who satisfies this requirement shall be
referred to as an “Award-Eligible Participant.”
(b) An Award-Eligible Participant shall be eligible for an Award equal to the
amount determined by multiplying the Allocable Profit Sharing Pool by a fraction
the numerator of which is an Award-Eligible Participant’s Eligible Earnings for
the Plan Year and the denominator of which is the total Eligible Earnings of all
Award-Eligible Participants for the Plan Year.
5.05 Payment of Awards. Awards shall be paid to Award-Eligible Participants who
remain employed by a Participating Employer as of the actual payment date of the
Award or who terminated Employment prior to the actual payment date due to
Retirement, death, Disability or Job Elimination. Awards
6
shall be paid in a single cash lump sum as soon as administratively practicable
following the Plan Year relating to the Award, but in no event later than the
last day of the immediately following Plan Year.
ARTICLE 6
Miscellaneous
6.01 Amendment. The Board of Directors and the Committee shall each have the
right at any time, and from time to time, to amend in whole or in part any or
all of the provisions of the Plan. No such amendment, however, shall materially
and adversely affect the rights under the Plan of any Participant with respect
to Awards granted prior to such amendment without the approval of such
Participant. Any amendment that results in an acceleration of the time or form
of payment shall be invalid if such amendment violates Code section 409A.
6.02 Termination. The Plan shall continue in effect until terminated by
resolution of the Board of Directors or the Committee. All rights and
obligations under this Plan with respect to Awards granted on or prior to
termination of the Plan shall continue beyond such termination.
6.03 Participants’ Consent. Each Participant, by Participant’s acceptance of an
Award hereunder, shall be deemed to have agreed to be bound by all the terms and
conditions of this Plan as presently constituted and as may be amended from time
to time.
6.04 Effect on Other Plans. In no event shall any Award or any payments made
under this Plan be included in the compensation base for computing benefits
under any other benefit plan now maintained or hereafter established by a
Participating Employer, unless such Plan expressly provides otherwise.
6.05 No Effect on Employment. Neither the adoption of the Plan nor its operation
shall in any way affect the right and power of a Participating Employer to
dismiss or otherwise terminate the Employment or change the terms of Employment
or amount of compensation of any Employee at any time for any reason with or
without cause.
6.06 Withholding of Taxes. A Participating Employer shall have the power to
withhold, or require a Participant to remit to the Participating Employer, an
amount sufficient to satisfy any withholding or other tax due under the tax
withholding provisions of the Code, any state or local tax act or other
applicable law, including the laws of foreign jurisdictions, with respect to any
Award made under the Plan.
7
6.07 Severability. If any provision of this Plan shall be held illegal or
invalid for any reason, such invalidity or illegality shall not affect the
remaining provisions of the Plan, and the Plan shall be construed or enforced as
if the invalid provisions had never been set forth therein.
6.08 Successors. This Plan shall be binding upon and inure to the benefit of and
be enforceable by the respective successors and assigns of the Participating
Employer. The rights of a Participant under this Plan are personal to such
Participant and the Participant may not assign such rights or sell, transfer,
pledge or otherwise dispose of any rights of such Participant except in
accordance with the provisions of this Plan. All obligations of this Plan shall
be binding upon the heirs, representatives and estate of the Participant.
6.09 Construction of Plan. This Plan shall be construed according to the laws of
the State of Wisconsin and all provisions hereof shall be administered according
to, and its validity shall be determined under, the laws of such state without
regard to its conflicts of laws.
6.10 Gender and Headings. Wherever any words are used herein in the masculine
gender they shall be construed as though they were also used in the feminine
gender in all cases where they would so apply, and wherever any words are used
herein in the singular form they shall be construed as though they were also
used in the plural form in all cases where they would so apply. Headings of
numbered sections and numbered paragraphs of this Plan are inserted for
convenience of reference and are not part of this Plan and are not to be
considered in the construction hereof.
6.11 Compliance with Code Section 409A. This Plan is intended to comply with the
provisions of Internal Revenue Code section 409A and applicable guidance and its
provisions shall be interpreted in accordance with that intent. No provision of
this Plan shall be interpreted to permit the acceleration of the time of any
payment scheduled to be paid under the Plan in any manner which is impermissible
pursuant to Internal Revenue Code section 409A. A Participating Employer shall
not be liable nor responsible for any tax consequences which result from any
Participant’s participation in the Plan, except for any applicable obligations
under the law as to income tax withholding or payroll taxes.
8
EXHIBIT A
Non-participating Companies
JohnsonDiversey Mexico, S.A. de C.V.
JohnsonDiversey Brasil, Ltda.
JohnsonDiversey Venezuela, S.A.
JohnsonDiversey Centroamerica S.A.
A-1
FINAL 12/15/2010
EXHIBIT B
Eligible Earnings
B-1
Resolutions
Authorizing and Approving Specific Actions Involving
the JohnsonDiversey, Inc. Profit Sharing Plan
WHEREAS, Diversey, Inc. f/k/a JohnsonDiversey, Inc. (the “Company”) maintains
the JohnsonDiversey, Inc. Profit Sharing Plan (the “Plan”), a bonus plan for
eligible employees;
WHEREAS, Section 6.01 of the Plan permits the Compensation and Management
Succession Committee of the Board of Directors of the Company (the “Committee”)
to amend the Plan at any time and from time to time; and
WHEREAS, the Company wishes to amend the Plan to reflect current practices, to
reflect the change in the Company’s name from JohnsonDiversey, Inc. to Diversey,
Inc. and to change the name of the Plan to the Diversey, Inc. Profit Sharing
Plan.
NOW, THEREFORE, BE IT RESOLVED, that the Company adopts, authorizes and approves
Amendment No. 1 to the Plan in the form of Exhibit A attached to these
Resolutions and incorporated herein by reference, effective as of the date
specified in the Amendment;
FURTHER RESOLVED, that the name of the Plan shall be the Diversey, Inc. Profit
Sharing Plan;
FURTHER RESOLVED, that all references within the Plan to “JohnsonDiversey, Inc.”
shall be changed to “Diversey, Inc.”;
FURTHER RESOLVED, that the proper officers of the Company are authorized and
directed, in the name and on behalf of the Company, to take any and all actions
as may be deemed necessary or appropriate to effect the intent of the foregoing
Resolutions including, but not limited to, the execution of the Plan amendment
in the form of the attached Exhibit A, with such changes as, in the opinion of
the officer executing the amendment, may be necessary or appropriate. The
officer’s opinion shall be conclusively evidenced by such officer’s execution of
the amendment.
1
Exhibit A
JOHNSONDIVERSEY, INC. PROFIT SHARING PLAN
AMENDMENT NO. 1
The JohnsonDiversey, Inc. Profit Sharing Plan (the “Plan”) is amended effective
as of December 31, 2010 as follows:
1. All references to JohnsonDiversey, Inc., including the name of the Company,
as specified in the Sections 1.01 and as defined in Section 2.01(g), shall be
changed to Diversey, Inc.
2. Section 2.01(i) is amended in its entirety to provide as follows:
becomes an Award-Eligible Participant, the Committee shall pro rate the
Employee’s Eligible Earnings in the initial Plan Year based on the number of
full calendar months during the Plan Year during which the Employee is a
Participant.
3. The name of the Plan, as defined in Section 2.01(o) shall be changed to
Diversey, Inc. Profit Sharing Plan.
4. Section 4.02 of the Plan is amended in its entirety to provide as follows:
the Plan as of the later of the Effective Date or immediately upon being
employed in or promoted to a position classified by the Committee as an Eligible
Employee; provided, however, if employed in or promoted to such a position after
October 1 in any calendar year, the Eligible Employee shall participate in the
Plan as of the immediately following January 1.
A-1
5. Section 4.04 of the Plan is amended by deleting the second sentence thereof.
6. Section 5.04(a) of the Plan is amended in its entirety to provide as follows:
(a) The Participant must be in active Employment as of the January 1 immediately
following the last day of the Plan Year or terminate Employment after March 31
and prior to the January 1 immediately following the last day of the Plan Year
due to Retirement, death, Disability or Job Elimination. For purposes of this
Plan, a Participant who satisfies this requirement shall be referred to as an
“Award-Eligible Participant.”
7. Section 5.05 of the Plan is amended in its entirety to provide as follows:
5.05 Payment of Awards. Awards shall be paid only to Award-Eligible
Participants.
7. Exhibit A attached to the Plan is hereby amended by adding Diversey
Deutschland Management GmbH (“Diversey Germany”) and Diversey S.p.A. (“Diversey
Italy”) thereto.
The Company has caused this Amendment to be executed by a duly elected officer
this 15th day of December, 2010.
DIVERSEY, INC. By:
/s/ Scott D. Russell
Scott D. Russell Its:
Senior Vice President, General Counsel
A-2 |
Name: Commission Regulation (EC) No 912/2000 of 2 May 2000 amending representative prices and additional duties for the import of certain products in the sugar sector
Type: Regulation
Subject Matter: trade; EU finance; beverages and sugar; prices; foodstuff
Date Published: nan
nan |
Exhibit 10.63
IDAHO POWER COMPANY
EMPLOYEE SAVINGS PLAN
Amended and Restated as of January 1, 2010 (revised)
1
Table of Contents
Page
1.
DEFINITIONS
2
1.1
Administrator
2
1.2
Account
2
1.3
After-Tax Contribution
2
1.4
Alternate Payee
2
1.5
Beneficiary
2
1.6
Board of Directors
2
1.7
Code
2
1.8
Company
3
1.9
Company Stock
3
1.10
Compensation
3
1.10.1
Limitation on Compensation
3
1.11
Controlled Group
3
1.12
Controlled Group Member
4
1.13
Deferral Contribution
4
1.14
Direct Rollover
4
1.15
Disability
4
1.16
Distributee
4
1.17
Eligible Retirement Plan
4
1.18
Eligible Rollover Distribution
4
1.19
Employee
5
1.20
Employee Contributions
5
1.21
Employer
5
1.22
ERISA
5
1.23
Investment Funds
5
1.24
Long Term Disability Participant
5
1.25
Matching Contribution
6
1.26
Named Fiduciary
6
1.27
Participant
6
1.28
Plan
6
1.29
Plan Year
6
1.30
QDRO
6
1.31
Qualified Matching Contribution
6
1.32
Qualified Non-Elective Contribution
6
1.33
Qualified Plan
6
1.34
Rollover Contribution
7
1.35
Self-Directed Brokerage Fund
7
1.36
Spouse
7
1.37
Trust Agreement
7
1.38
Trust Fund
7
1.39
Trustee
7
1.40
Valuation Date
7
2.
PARTICIPATION
8
2.1
Eligibility to Participate
8
2.1.1
General
8
2.1.2
Matching Contributions
8
2.2
Commencement of Participation
8
2.3
Exclusions from Participation
8
2.3.1
Ineligible Employees
8
2.3.2
Participation after Exclusion
9
3.
CONTRIBUTIONS
10
3.1
Deferral Contributions
10
3.1.1
Amount of Deferral Contributions
10
3.1.2
Payments to Trustee
10
3.1.3
Changes in/Suspension of Contributions
10
3.1.4
Resumption of Contributions
10
3.1.5
Establishment of Procedures by Administrator
10
3.2
Excess Deferrals
11
3.2.1
Limit on Deferral Contributions
11
3.2.2
Distribution of Excess Deferrals
11
3.2.3
Preventing Excess Deferrals
11
3.2.4
Matching Contributions Attributable to Excess Deferrals
12
3.3
After-Tax and Roth Contributions
12
3.4
Matching Contributions
12
3.4.1
Amount of Matching Contributions
12
3.4.2
Time of Matching Contributions
12
3.5
Rollover Contributions
13
3.6
Actual Deferral Percentage Limitation on Deferral Contributions
13
3.7
Actual Contribution Percentage Limitation on Matching, After-Tax and Roth
Deferral Contributions
13
3.8
Military Service
13
4.
ALLOCATIONS TO PARTICIPANTS’ ACCOUNTS
14
4.1
Establishment of Accounts
14
4.2
Allocation of Contributions
14
4.2.1
Deferral Contributions
14
4.2.2
After-Tax Contributions
14
4.2.3
Roth Deferral Contributions
14
4.2.4
Matching Contributions
14
4.2.5
Rollover Contributions
14
4.2.6
Qualified Non-Elective Contributions and Qualified Matching Contributions
14
4.3
Limitation on Allocations
15
4.4
Allocation of Trust Fund Income and Loss
15
4.4.1
Accounting Records
15
4.4.2
Method of Allocation
15
4.4.3
Determination of Earnings and Losses On Forfeitures & Returned Contributions
16
5.
INVESTMENT OF CONTRIBUTIONS
17
5.1
Investment Funds
17
5.1.1
Company Stock Funds
17
5.1.2
Cash Dividends Paid on Company Stock
17
5.1.3
18
5.2
Investment Options
19
5.3
Change of Investment Option
19
5.4
Directions to Trustee
19
5.5
Valuation of Trust Fund
19
5.6
No Guarantee
20
5.7
Securities Laws Limitations
20
6.
VESTING
21
6.1
Fully Vested Interests
21
6.2
Forfeitures
21
7.
DISTRIBUTIONS
22
7.1
Distribution Events
22
7.1.1
Distribution Notice
22
7.1.2
Qualified Reservist Distribution
22
7.2
Form of Distributions (and Small Account Cash Out)
22
7.2.1
Right to Receive Company Stock
23
7.3
Distributions upon Termination of Employment
23
7.4
Distributions upon Death
23
7.4.1
If the Beneficiary is not the Participant’s Surviving Spouse and not a
Designated Beneficiary
23
7.4.2
If the Beneficiary is the Participant’s Surviving Spouse
23
7.4.3
If the Beneficiary is the Designated Beneficiary and not the Participant’s
Surviving Spouse
23
7.5
Timing of Distributions
24
7.5.1
Timing of Distributions upon Disability or Termination
24
7.5.2
Timing of Distributions to Beneficiaries
24
7.6
Reemployment of Participant
24
7.7
Valuation of Accounts
25
7.8
Hardship Distributions
25
7.8.1
Availability of Hardship Distributions
25
7.8.2
Immediate and Heavy Financial Need
25
7.8.3
Distributions Deemed Necessary
26
7.8.4
Method of Requesting/Form of Distribution
26
7.8.5
Amount and Timing of Distribution
26
7.9
Distributions After Age 59-1/2
27
7.10
Distributions From After-Tax Contribution Account
27
7.11
Direct Rollovers
27
7.11.1
Rollovers Permitted
27
7.11.2
Direct Rollover of Non-Spousal Distribution
27
7.11.3
Amount of Rollover
28
7.11.4
Waiver of Notice Period
28
7.12
Restrictions on Distributions
28
7.13
Unclaimed Distribution
28
7.14
Partial Withdrawals
28
7.15
Installment Distributions
29
7.16
HEART Act
29
7.16.1
Death Benefits
29
7.16.2
Differential Wage Payments
29
7.16.3
Severance From Employment
29
8.
SPECIAL RULES REGARDING ACQUISITIONS, DISPOSITIONS & TRANSFERS
30
8.1
Service Crediting
30
8.2
Transfer From Another Qualified Plan in Controlled Group
30
9.
ADMINISTRATION OF THE PLAN AND TRUST AGREEMENT
31
9.1
Administrator
31
9.2
Employees of the Administrator
31
9.3
Expenses and Compensation
31
9.4
General Powers and Duties of the Administrator
31
9.5
Specific Powers and Duties of the Administrator
31
9.6
Allocation of Fiduciary Responsibility
32
9.7
Notices, Statements and Reports
32
9.8
Claims Procedure
32
9.8.1
Filing Claim for Benefits
32
9.8.2
Notification by the Administrator
33
9.8.3
Review Procedure
33
9.8.4
Claims Must Be Timely
34
9.9
Service of Process
34
9.10
Corrections
34
9.11
Payment to Minors or Persons Under Legal Disability
34
9.12
Uniform Application of Rules and Policies
34
9.13
Funding Policy
34
9.14
The Trust Fund
35
10.
LIMITATIONS ON CONTRIBUTIONS AND ALLOCATIONS TO PARTICIPANTS’ ACCOUNTS
36
10.1
Priority over Other Contribution and Allocation Provisions
36
10.2
Definitions Used in this Article
36
10.2.1
Annual Addition.
36
10.2.2
Compensation
36
10.2.3
Defined Benefit Plan
36
10.2.4
Defined Contribution Plan
37
10.2.5
Eligible Employee and Eligible Highly Compensated Employee
37
10.2.6
Highly Compensated Employee
37
10.2.7
Includable Compensation
37
10.2.8
Limitation Year
37
10.2.9
Maximum Annual Addition
37
10.3
Excess Allocations
37
10.3.1
Correcting an Excess Annual Addition
37
10.3.2
Correcting a Multiple Plan Excess
38
10.4
Excess Deferral Contributions Under Code section 401(k)
38
10.4.1
Actual Deferral Percentage Test - Prior Year Testing Method
38
10.4.2
Aggregation and Disaggregation of Plans
38
10.4.3
Definition of Actual Deferral Percentage
39
10.4.4
Suspension of Deferral Contributions
39
10.4.5
Distribution of Excess Contributions
39
10.4.6
Qualified Non-Elective Contributions
40
10.5
Excess Matching Contributions Under Code Section 401(m)
40
10.5.1
Actual Contribution Percentage Test - Prior Year Testing Method
40
10.5.2
41
10.5.3
Definition of Actual Contribution Percentage
41
10.5.4
Treatment of Excess Aggregate Contributions
41
10.5.5
Order of Determinations
42
10.5.6
Qualified Matching Contribution
42
10.6
Gap Period Income on Distributed Excess Contributions and Excess Aggregate
Contributions
42
10.7
Plan Termination Distribution Availability
43
11.
PLAN LOANS
44
11.1
Authorization
44
11.2
Conditions and Limitations
44
11.2.1
Eligibility
44
11.2.2
Maximum Principal Amount
44
11.2.3
Minimum Principal Amount
44
11.2.4
Duration
45
11.2.5
Repayment Method
45
11.2.6
Timing of Repayment
45
11.2.7
Plan Accounting
45
11.2.8
Interest Rate
45
11.2.9
Security
46
11.3
Loan Default
46
11.4
Termination of Employment
46
11.5
Procedure for Applying for and Accepting Loans
46
11.6
Approval or Denial
47
11.7
Repayment in Full
47
11.8
Tax Reporting
47
11.9
Truth in Lending
47
12.
RESTRICTIONS ON DISTRIBUTIONS TO PARTICIPANTS AND BENEFICIARIES
48
12.1
Priority over Other Distribution Provisions
48
12.2
Restrictions on Distributions Prior to Severance from Employment
48
12.3
Restrictions on Commencement of Distributions
48
12.4
Restrictions on Delay of Distributions
48
12.4.1
Limitation to Assure Benefits Payable to Beneficiaries are Incidental
49
12.4.2
Restrictions Upon Death
49
12.4.3
Compliance with Regulations
50
12.4.4
Delayed Payments
50
12.4.5
5% Owners
50
12.5
Restrictions in Connection with QDRO
50
13.
TOP HEAVY PROVISIONS
51
13.1
Priority over Other Plan Provisions
51
13.2
51
13.2.1
“Defined Benefit Dollar Limitation”
51
13.2.2
“Defined Benefit Plan”
51
13.2.3
“Defined Contribution Dollar Limitation”
51
13.2.4
“Defined Contribution Plan”
51
13.2.5
“Determination Date”
51
13.2.6
“Determination Period”
51
13.2.7
“Includable Compensation”
52
13.2.8
“Key Employee”
52
13.2.9
“Minimum Allocation”
52
13.2.10
“Permissive Aggregation Group”
52
13.2.11
“Present Value”
52
13.2.12
“Required Aggregation Group”
52
13.2.13
“Top-Heavy Plan”
52
13.2.14
53
13.2.15
“Top-Heavy Valuation Date”
53
13.3
Minimum Allocation
54
13.3.1
Calculation of Minimum Allocation
54
13.3.2
Limitation on Minimum Allocation
54
13.3.3
Minimum Allocation When Participant is Covered by Another Qualified Plan
54
13.4
Modification of Aggregate Benefit Limit
55
13.4.1
Modification
55
13.4.2
Exception
55
14.
PARTICIPATING EMPLOYERS
56
14.1
Adoption Procedure
56
14.2
Single Plan Status; Maintenance of Assets and Records
56
14.3
Designation of Agent
56
14.4
Employee Transfers
56
14.5
Discontinuance of Participation
56
14.6
Administrator’s Authority
57
15.
AMENDMENT OF THE PLAN
58
15.1
Right of Company to Amend Plan
58
15.2
Amendment Procedure
58
15.3
Effect on Employers
58
16.
TERMINATION, PARTIAL TERMINATION AND COMPLETE DISCONTINUANCE OF CONTRIBUTIONS
59
16.1
Continuance of Plan
59
16.2
Disposition of the Trust Fund
59
16.3
Withdrawal by a Participating Employer
59
16.4
Procedure for Termination
59
17.
MISCELLANEOUS
60
17.1
Reversion Prohibited
60
17.1.1
General Rule
60
17.1.2
Disallowed Deductions
60
17.1.3
Mistaken Contributions
60
17.2
Merger, Consolidation or Transfer of Assets
60
17.3
Spendthrift Clause
60
17.4
Rights of Participants
61
17.5
Headings
61
17.6
Governing Law
61
-x-
IDAHO POWER COMPANY
EMPLOYEE SAVINGS PLAN
Amended and Restated as of January 1, 2010
Introduction
The Company originally adopted the Idaho Power Company Employee Savings Plan
(the “Plan”) on July 1, 1974, and the Plan has been amended and restated from
time to time thereafter. Effective October 9, 1994, the Idaho Power Company
Employee Stock Ownership Plan was merged with and into the Plan. This is an
amendment and restatement of the Plan as previously amended and restated
generally effective January 1, 2001, as amended by the First, Second and Third
Amendments. This restatement generally will be effective January 1, 2010, except
to the extent that certain provisions either are not required by law to be
effective until a later date, or are required by law to be effective at an
earlier date, and except as otherwise specifically indicated.
In connection with this amendment and restatement, the Company intends to
preserve all Code section 411(d)(6) protected benefits within the meaning of
Treasury Regulation § 1.411(d)-4 and this document should be interpreted
accordingly. The Plan is intended to qualify under Code Sections 401(a) and
401(k), and the Trust Agreement established pursuant to the Plan is an
employees’ trust intended to constitute a tax exempt organization under Code
section 501(a).
Prior to January 1, 1998, the Plan was designed to qualify as a profit sharing
plan for purposes of Sections 401(a), 402, 412 and 417 of the Code. Effective
January 1, 1998, the Plan was converted to a stock bonus plan under Code section
401(a) and an employee stock ownership plan within the meaning of Code section
4975(e)(7) (“ESOP”) that is designed to invest primarily in Company Stock.
Effective January 1, 2001, only the Company Stock Fund portion of the Plan will
constitute an ESOP, and the remainder of the Plan will be a non-ESOP stock bonus
plan. See Article 5 for more information regarding the Non-ESOP Company Stock
Fund and the ESOP Company Stock Fund. It is intended that the Plan will at all
times meet the stock distribution requirement of Code section 409(h)(1)(A) by
permitting Participants to direct the investment of their Accounts into Company
Stock prior to distribution. It is further intended that the Plan will at all
times meet the ESOP diversification requirements of Code section 401(a)(28)(B)
by permitting Participants to direct the investment of their entire Account into
investments other than Company Stock, thereby providing complete diversification
at all times.
1
1. DEFINITIONS
1.1 Administrator.
“Administrator” means the Company, or the Committee, if one is appointed
pursuant to Section 9.1.
1.2 Account.
“Account” means the records, including subaccounts, maintained by the
Administrator in the manner provided in Article 4 to determine the interest of
each Participant in the assets of the Plan and may refer to any or all of the
Participant’s Deferral Contribution Account, After-Tax-Account, Roth Deferral
Account, Matching Contribution Account, and Rollover Account, as applicable.
1.3 After-Tax Contribution.
“After-Tax Contribution” means a contribution described in Section 3.3.
1.4 Alternate Payee
“Alternate Payee” means any spouse, former spouse, child or other dependent of a
Participant who is recognized by a qualified domestic relations order as having
a right to receive all or a portion of the Account of a Participant under the
Plan.
1.5 Beneficiary.
“Beneficiary” means any person or persons designated in writing by the
Participant (which designation may be changed from time to time) to receive
benefits under the Plan payable upon the death of a Participant. If the
Participant is married, designation of a Beneficiary who is not the
Participant’s Spouse shall require spousal consent which is notarized. If no
such designation is in effect at the time of death of the Participant, or if no
person so designated shall survive the Participant, the Beneficiary shall be his
or her Spouse, or if the deceased Participant has no surviving Spouse, the
Participant’s estate.
1.6 Board of Directors.
“Board of Directors” or “Board” means the Board of Directors of the Company.
1.7 Code.
and, as appropriate, any predecessor provisions.
2
1.8 Company.
“Company” means Idaho Power Company, an Idaho corporation, and any successor
thereto.
1.9 Company Stock.
“Company Stock” means shares of common stock, par value $2.50 per share, of
IDACORP, Inc., which stock is publicly traded.
1.10 Compensation.
“Compensation” with respect to any Participant means the Base Pay of a
Participant, plus amounts under any Company approved annual incentive plan of
the Employer, paid during the Plan Year for services rendered to his or her
Employer. A Participant’s Compensation shall include Deferral Contributions
under this Plan and any deductions under Code section 125 or 129 and shall
include amounts that are not includable in an employee’s gross income by reason
of Code section 132(f).
“Base Pay” means for regular full-time employees, the salary established by the
wage schedule for each position plus any partial disability payments, less any
reductions for time not worked. For other employees, base pay means hours
worked times hourly rate. Payment for compensated time off is included in base
pay. Overtime, including restoration overtime, are not included in Base Pay.
Compensation will exclude amounts (including but not limited to severance or
separation pay or annual incentive compensation) paid after the Participant
terminates employment with the Controlled Group, or otherwise ceases to be
eligible to participate in the Plan; provided, however, that payments made in
the first month after termination relating to pre-termination wages or payoff of
unused vacation and/or sick leave will constitute Compensation.
1.10.1 Limitation on Compensation.
For purposes of determining benefits under the Plan, Compensation is limited to
$245,000, as indexed for the cost of living pursuant to Code Sections 401(a)(17)
and 415(d), per Plan Year.
1.11 Controlled Group.
“Controlled Group” means the Company and any and all other corporations, trades
and businesses, the employees of which, together with employees of the Company,
are required by Code section 414 (b), (c), (m) or (o) to be treated as if they
were employed by a single employer.
3
1.12 Controlled Group Member.
“Controlled Group Member” means each corporation or unincorporated trade or
business that is or was a member of the Controlled Group, but only during the
period when it is or was such a member.
1.13 Deferral Contribution.
“Deferral Contribution” means a contribution described in Section 3.1.
1.14 Direct Rollover.
“Direct Rollover” means a payment by the Plan to the Eligible Retirement Plan
specified by a Distributee.
1.15 Disability.
“Disability” (or “Disabled”) means a physical or mental condition of a
Participant that constitutes total and permanent disability for purposes of the
Company’s Long Term Disability Plan.
1.16 Distributee.
“Distributee” means an Employee; a former Employee; an Employee’s or former
Employee’s surviving Spouse; a non-spouse designated beneficiary; or an
Employee’s or former Employee’s Spouse or former spouse who is an Alternate
Payee under a QDRO.
1.17 Eligible Retirement Plan.
“Eligible Retirement Plan” means an individual retirement account described in
Code sections 408(a) or 408(b), a Roth IRA described in Code section 408A(b)
(effective January 1, 2008), an annuity plan described in Code sections 403(a)
or 403(b), a qualified trust described in Code section 401(a) and an eligible
plan under Code section 457(b) which is maintained by a state, political
subdivision of a state or any agency or instrumentality of a state or political
subdivision of a state and which agrees to separately account for amounts
transferred into such a plan from this Plan. This definition of Eligible
Retirement Plan shall also apply in the case of a distribution to a surviving
spouse, or to a spouse or former spouse who is the alternate payee under a QDRO,
or, effective January 1, 2010, to a non spouse beneficiary.
1.18 Eligible Rollover Distribution.
“Eligible Rollover Distribution” means any distribution of all or any portion of
the Account balance to the credit of the Distributee other than the following:
(i) any distribution that is one of a series of substantially equal periodic
payments (made not less frequently than annually) for the life (or life
expectancy) of the Distributee and the Distributee’s Beneficiary, or for a
specified period of 10 years or more; (ii) any
4
distribution to the extent such distribution is required under Code section
401(a)(9); and (iii) the portion of any distribution that is not includable in
gross income (determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities).
Notwithstanding the foregoing, effective January 1, 2007, a portion of a
distribution shall not fail to be an Eligible Rollover Distribution merely
because the portion consists of After-Tax Contributions or Roth Deferrals which
are not includable in gross income. However, such portion may be transferred
only to an individual retirement account or annuity described in Code sections
408(a) or (b), or to a qualified defined contribution plan described in Code
sections 401(a) or 403(a) that agrees to separately account for amounts so
transferred, including separately accounting for the portion of such
distribution which is includable in gross income and the portion of such
distribution which is not so includable.
1.19 Employee.
“Employee” means any person who is (i) employed by any Controlled Group Member
if their relationship is, for federal income tax purposes, that of employer and
employee.
1.20 Employee Contributions.
“Employee Contributions” means Deferral Contributions, After-Tax Contributions,
and Roth Deferrals.
1.21 Employer.
“Employer” or “Participating Employer” means the Company and any Controlled
Group Member or organizational unit thereof which meets the requirements of
Section 14.1 of the Plan. The Company will maintain a list of currently
participating Employers, along with the effective dates of their participation.
The Company may choose to satisfy the obligation of any Employer hereunder.
1.22 ERISA.
1.23 Investment Funds.
“Investment Funds” means the Funds described in Article 5.
1.24 Long Term Disability Participant.
“Long Term Disability Participant” means a Participant who qualifies for, and
receives benefits from, the Employer’s Long Term Disability Plan.
5
1.25 Matching Contribution.
“Matching Contribution” means a contribution described in Section 3.4.
1.26 Named Fiduciary.
“Named Fiduciary” means the Fiduciary Committee, which is appointed by the
Chairman of the Board of Directors and Chief Executive Officer.
1.27 Participant.
“Participant” means an Employee or former Employee who has met the applicable
eligibility requirements of Article 2 and who has not yet received a
distribution of the entire amount of his or her interest in the Plan.
1.28 Plan.
“Plan” means the IDAHO POWER COMPANY EMPLOYEE SAVINGS PLAN, the terms of which
are set forth herein, as amended from time to time.
1.29 Plan Year.
“Plan Year” means the period with respect to which the records of the Plan are
maintained, which shall be the 12-month period beginning on January 1 and ending
on December 31.
1.30 QDRO.
“QDRO” means a qualified domestic relations order within the meaning of Code
section 414(p).
1.31 Qualified Matching Contribution.
“Qualified Matching Contribution” means a contribution by an Employer to the
Plan pursuant to Section 10.7 which is used to satisfy the Contribution
Percentage test set forth in that Section.
1.32 Qualified Non-Elective Contribution
“Qualified Non-Elective Contribution” means a contribution by an Employer to the
Plan that is made pursuant to Section 10.6. Such contributions shall be
considered Deferral Contributions for all purposes of the Plan and shall be used
to satisfy the “Actual Deferral Percentage” test as set forth in Section 10.6.
1.33 Qualified Plan.
“Qualified Plan” means an employee benefit plan that is qualified under Code
sections 401(a) or 403(a).
6
1.34 Rollover Contribution.
“Rollover Contribution” means a contribution described in Section 3.5.
1.35 Self-Directed Brokerage Fund
“Self-Directed Brokerage Fund” means an Investment Fund that consists solely of
all or part of the assets of a single Participant’s Account, which assets the
Participant controls by investment directives to the Trustee and which may not
be commingled with assets of any other Participant’s Accounts.
1.36 Spouse.
“Spouse” means the person to whom a Participant is legally married at a
specified time; “surviving Spouse” means the person to whom a Participant is
legally married at the time of his or her death. The term “Spouse” shall be
interpreted in a manner consistent with section 105(b) of the Code.
1.37 Trust Agreement.
“Trust Agreement” means the agreement or agreements between the Company and the
Trustee establishing a trust fund to provide for the investment, reinvestment,
administration and distribution of contributions made under the Plan and the
earnings thereon, as amended from time to time, including any successor trust
that may be established with a successor trustee.
1.38 Trust Fund.
“Trust Fund” or “Trust” means the assets of the Plan held by the Trustee
pursuant to the Trust Agreement.
1.39 Trustee.
“Trustee” means the one or more individuals or organizations who have entered
into the Trust Agreement as Trustee(s), and any duly appointed successor.
1.40 Valuation Date.
“Valuation Date” means the date with respect to which the Trustee determines the
fair market value of the assets comprising the Trust Fund or any portion
thereof. The regular Valuation Date shall mean every business day of the
Trustee, if a financial institution; otherwise, every business day on which the
New York Stock Exchange is open.
7
2. PARTICIPATION
2.1 Eligibility to Participate.
2.1.1 General
Each Employee, other than an ineligible Employee under Section 2.3, will be
eligible to become a Participant once he or she has attained age 18, if then
employed by an Employer.
2.1.2 Matching Contributions.
Matching Contributions will be due for all Employee Contributions as provided in
Section 3.4.
2.2 Commencement of Participation.
An Employee eligible to participate in the Plan may enroll as a Participant on
his or her hire date or as of any subsequent pay period.
2.3 Exclusions from Participation.
2.3.1 Ineligible Employees.
An Employee who is otherwise eligible to participate in the Plan will not become
or continue as an active Participant if such Employee:
(i) is covered by a collective bargaining agreement that does not
expressly provide for participation in the Plan;
(ii) is a leased employee required to be treated as an Employee under
Code section 414(n);
(iii) is employed by a Controlled Group Member or an organizational unit
thereof that is not an Employer; or
(iv) is a person performing services for the Employer who is not
contemporaneously treated as a common law employee on the Employer's payroll
records and personnel records, including, but not limited to, any person (A)
whom the Employer treats as an independent contractor, (B) who is paid through a
third party business entity's payroll, or (C) who is hired through an agreement
with an employee staffing agency, regardless of whether the relationship between
the Employer and the person subsequently is determined to be an employer/common
law employee relationship because of (1) reclassification by a governmental
agency (whether retroactively or
8
prospectively), (2) decision by a court, mediation, arbitration, or similar
proceeding, or (3) mutual agreement between the Employer and the person.
2.3.2 Participation after Exclusion.
An Employee or Participant who is or becomes ineligible to participate in the
Plan will be eligible to participate in the Plan on the first day he or she is
no longer described in subsection 2.3.1 and is credited with one or more hours
of service by an Employer, provided that he or she has otherwise met the
requirements of Section 2.1. Such an Employee or Participant may commence or
resume participation in the Plan as soon as administratively feasible, after
completing the enrollment procedure established by the Administrator.
9
3. CONTRIBUTIONS
3.1 Deferral Contributions.
3.1.1 Amount of Deferral Contributions.
Upon enrollment, a Participant may direct that his or her Employer make Deferral
Contributions to the Trust Fund of from 1% to 100% of his or her Compensation
(in 1% increments) for each pay period. If a Participant’s Deferral
Contributions must be reduced to comply with the requirements of Section 10.6 or
the requirements of applicable law, the Deferral Contributions as so reduced
will be the maximum percentage of his or her Compensation permitted by such
Section or law notwithstanding the 1% increments requirement. A Participant’s
Deferral Contributions, After-Tax Contributions and Roth Deferrals are limited
to 100% of a Participant’s Compensation for a Plan Year.
3.1.2 Payments to Trustee.
Deferral Contributions made for a Participant during a pay period pursuant to a
salary reduction agreement will be transmitted to the Trustee as soon as
practicable, but in no event later than the period prescribed by law.
3.1.3 Changes in/Suspension of Contributions.
The percentage or percentages designated by a Participant shall continue in
effect, notwithstanding any changes in the Participant’s Compensation. A
Participant may, however, in accordance with the percentages permitted by
subsection 3.1.1, change the percentage of his or her Deferral Contributions,
effective as of any pay period (with respect to all pay periods ending on or
after such period), by filing a notice with the Administrator prior to such pay
period in accordance with procedures established by the Administrator from time
to time. A Participant may suspend Deferral Contributions at any time, to be
effective as soon as administratively feasible thereafter.
3.1.4 Resumption of Contributions.
A Participant who suspends Deferral Contributions may, upon prior notice to the
Administrator, resume making such Deferral Contributions as of any pay period.
3.1.5 Establishment of Procedures by Administrator.
The Administrator may establish procedures for electing and changing deferrals
which may, without limitation, provide for different notice periods, different
methods (including telephonic or electronic, as permitted by applicable law) of
making deferral elections and changes and more or less frequent times at which
deferral elections or changes may become effective.
10
3.2 Excess Deferrals.
3.2.1 Limit on Deferral Contributions.
(a) A Participant’s Deferral Contributions for any taxable year of such
Participant shall not exceed the dollar limitation contained in Code section
402(g) in effect for such taxable year except to the extent permitted under
Section 3.2.1(b) and Code section 414(v). For purposes of this Section and
except as otherwise provided in this Section, a Participant’s Deferral
Contributions shall include (i) any employer contribution made under any
qualified cash or deferred arrangement as defined in Code section 401(k) to the
extent not includable in gross income for the taxable year under Code section
402(e)(3) (determined without regard to Code section 402(g)), (ii) any employer
contribution to the extent not includable in gross income for the taxable year
under Code section 402(h)(1)(B) (determined without regard to Code section
402(g)), and (iii) any employer contribution to purchase an annuity contract
under Code section 403(b) under a salary reduction agreement within the meaning
of Code section 312(a)(5)(D).
(b) A Participant who is eligible to make Deferral Contributions under the
Plan and who will attain age 50 before the close of the Plan Year shall be
eligible to make catch-up contributions in accordance with, and subject to the
limitations of, Code section 414(v). Such catch-up contributions shall not be
taken into account for purposes of the provisions of the Plan implementing the
required limitations of Code sections 402(g) or 415. The Plan shall not be
treated as failing to satisfy the provision of the Plan implementing the
requirements of Code sections 401(k)(3), 410(b) or 416 by reason of making such
catch-up contributions
3.2.2 Distribution of Excess Deferrals.
If a Participant’s Deferral Contributions exceed the amount described in
subsection 3.2.1 (hereinafter called the “excess deferrals”) during a taxable
year of the Participant, such excess deferrals (adjusted for Trust Fund earnings
and losses in the manner described in subsection 4.4.3) shall be distributed to
the Participant by April 15 following the close of the taxable year in which
such excess deferrals occurred if, by March 1 following the close of such
taxable year, the Participant notifies the Administrator of any excess deferral
amount allocated to the Participant’s Deferral Contribution under this Plan.
3.2.3 Preventing Excess Deferrals.
To ensure that excess deferrals will not be made to the Plan for any taxable
year for any Participant, the Administrator will monitor (or cause to be
monitored) the amount of Deferral Contributions being made to the Plan for each
Participant during each taxable year and may take action to prevent Deferral
Contributions made for any Participant under the Plan for any taxable year from
exceeding the maximum amount under this Section. This action is in addition to,
and not in lieu of, any other actions
that may be taken hereunder or that may be permitted by applicable law or
regulation in order to ensure that the limitations described in this Section are
met.
3.2.4 Matching Contributions Attributable to Excess Deferrals.
If a Participant receives a distribution of excess deferrals pursuant to
subsection 3.2.2, Matching Contributions, if any, made with respect to such
distributed Deferral Contributions (adjusted for Trust Fund earnings and losses
as set forth in subsection 4.4.3) shall be forfeited and credited against the
Employer’s obligation to make Matching Contributions under Section 3.4.
3.3 After-Tax and Roth Contributions.
Upon enrollment, a Participant will be entitled to contribute to the Trust Fund
an amount between 1% and 100% of his or her Compensation (in 1% increments) for
each pay period as an After-Tax or Roth Contribution which is non-deductible.
Deferral Contributions, After-Tax and Roth Contributions are limited to 100% of
a Participant’s Compensation.
The percentage of Compensation designated by the Participant as his or her
After-Tax or Roth Contribution rate will continue in effect (unless restricted
hereunder) until he or she elects to change such percentage. A Participant may
elect to begin After-Tax or Roth Contributions or change After-Tax or Roth
Contribution rate effective as of any payroll period. Such change shall be
effected in accordance with procedures established by the Administrator. A
Participant may suspend his or her After-Tax or Roth Contributions to the Plan
at any time. The suspension will be effective as soon as administratively
feasible. A Participant who suspends After-Tax or Roth Contributions can once
again make After-Tax or Roth Contributions as of any payroll period.
3.4 Matching Contributions.
3.4.1 Amount of Matching Contributions.
Each Employer will contribute to the Trust on account of each Plan Year a
Matching Contribution equal to 100% of each Participant’s Employee Contributions
for a pay period, in an amount up to the first 2% of the Participant’s
Compensation with respect to such pay period. For the Employee Contributions
equal to the next 4% of the Participant’s Compensation for a pay period (i.e.,
above 2% to 6%), the Employer will make a Matching Contribution of 50%.
3.4.2 Time of Matching Contributions.
Each Employer will make its Matching Contributions to the Trust in one or more
installments not later than the due date (including extensions) for the filing
of the Employer’s income tax return for the year for which the contributions are
made.
12
3.5 Rollover Contributions.
Rollover Contributions shall be permitted, subject to the provisions of this
Section. The Administrator may direct the Trustee to accept, in accordance with
procedures approved by the Administrator, all or part of an Eligible Rollover
Distribution for the benefit of a Participant from (i) the Participant, (ii)
another Qualified Plan, including, in a trustee-to-trustee transfer, After-Tax
Contributions or Roth Deferrals to that plan, (iii) an annuity contract
described in Code section 403(b), (iv) an individual retirement account (except
a Roth IRA) or annuity as defined in Code sections 408(a) or 408(b) that is
eligible to be rolled over and otherwise would be includible in gross income, or
(v) an eligible plan under Code section 457(b) which is maintained by a state,
political subdivision of a state, or any agency or instrumentality of a state or
political subdivision of a state.
3.6 Actual Deferral Percentage Limitation on Deferral Contributions.
Deferral Contributions will be subject to the average percentage test set forth
in Section 10.6.
3.7 Actual Contribution Percentage Limitation on Matching, After-Tax and
Roth Deferral Contributions.
After-Tax Contributions, Roth Deferrals and Matching Contributions will be
subject to the average contribution percentage test set forth in Section 10.7.
3.8 Military Service.
Notwithstanding any provision of this Plan to the contrary, contributions,
benefits and service credit with respect to qualified military service will be
provided in accordance with Code section 414(u).
13
4. ALLOCATIONS TO PARTICIPANTS’ ACCOUNTS
4.1 Establishment of Accounts.
The Administrator will establish a Deferral Contribution Account, After-Tax
Contribution Account, Roth Deferral Account, Matching Contribution Account, and,
if applicable, a Rollover Account, for each Participant and may establish one or
more subaccounts of a Participant’s Accounts, if the Administrator determines
that subaccounts are necessary or desirable in administering the Plan.
4.2 Allocation of Contributions.
4.2.1 Deferral Contributions.
Deferral Contributions made by an Employer on behalf of a Participant will be
allocated to the Participant’s Deferral Contribution Account.
4.2.2 After-Tax Contributions
After-Tax Contributions made by a Participant will be allocated to the
Participant’s After-Tax Contribution Account.
4.2.3 Roth Deferral Contributions.
Roth Deferral Contributions made by a Participant will be allocated to the
Participant’s Roth Deferral Contribution Account.
4.2.4 Matching Contributions.
Matching Contributions made by an Employer on behalf of a Participant will be
allocated to the Participant’s Matching Contribution Account.
4.2.5 Rollover Contributions.
Each Rollover Contribution made by a Participant shall be allocated to his or
her Rollover Account.
4.2.6 Qualified Non-Elective Contributions and Qualified Matching
Contributions.
Qualified Non-Elective Contributions and Qualified Matching Contributions will
be allocated to the Deferral Contribution Accounts of the Participants
designated as the group of Participants to whom the contribution is to be
allocated based on the ratio that each designated Participant’s Compensation for
the Plan Year bears to the Compensation of all designated Participants for the
Plan Year; provided, however, that subaccounts will be maintained for the
purpose of excluding Qualified Matching Contributions from the"Actual Deferral
Percentage" test pursuant to Section 10.6 below and for the purpose of excluding
Qualified Matching Contributions and Qualified
Non-Elective Contributions from the amount available for hardship withdrawals
under Section 7.8 below.
4.3 Limitation on Allocations.
Article 10 sets forth certain rules under Code Sections 401(k), 401(m) and 415
that limit the amount of Employee Contributions and Employer contributions that
may be allocated to a Participant’s Accounts for a Plan Year.
4.4 Allocation of Trust Fund Income and Loss.
4.4.1 Accounting Records.
The Administrator, through its accounting records, will segregate each Account
and subaccount and will maintain a separate and distinct record of all income
and losses of the Trust Fund attributable to each Account or subaccount. Income
or loss of the Trust Fund will include any unrealized increase or decrease in
the fair market value of the assets of the Trust Fund.
4.4.2 Method of Allocation.
(a) With respect to Investment Funds which have a readily determinable
fair market value as of the end of each business day during the calendar year,
the share of net income or net loss of the Trust Fund to be credited to, or
deducted from, each Account will be the allocable portion of the net income or
net loss of the Trust Fund attributable to each Account determined by the
Administrator as of each Valuation Date, based upon the ratio that each Account
balance as of the previous Valuation Date bears to all Account balances after
adjustment for withdrawals, distributions and other additions or subtractions.
The share of net income or net loss to be credited to, or deducted from, any
subaccount will be an allocable portion of the net income or net loss credited
to or deducted from the Account under which the subaccount is established.
(b) With respect to Investment Funds which do not have a readily
determinable fair market value as of the end of each business day during the
calendar year, the Trustee shall determine a method of allocation which shall
take into account the period over which a readily determinable fair market value
is not available (using time weighted averages) and which the Trustee deems
appropriate, and the Trustee’s determination of such method of allocation will
be conclusive on all interested persons for all purposes of the Plan.
(c) To the extent that Investment Funds are mutual funds or similar
investments, share-based accounting may be used in keeping records for the Plan,
and the provisions of this subsection shall be applied and interpreted
accordingly.
15
4.4.3 Determination of Earnings and Losses On Forfeitures & Returned
Contributions.
The earnings and losses of the Trust Fund for the Plan Year allocable to
Deferral Contributions or After-Tax Contributions or Roth Deferral Contributions
to be returned to a Participant or Matching Contributions to be forfeited or
returned to a Participant pursuant to subsection 3.2.2, 10.6.5, or 10.7.4, will
be determined by multiplying the Trust Fund earnings or losses for the Plan Year
allocable to the Participant’s Deferral Contribution Account, After-Tax
Contribution Account, Roth Deferral Contribution Account, or Matching
Contribution Account, as applicable, by a fraction, the numerator of which is
the amount of Deferral Contributions, After-Tax Contributions, Roth Deferral
Contributions or Matching Contributions to be distributed to the Participant or
the amount of Matching Contributions to be forfeited by the Participant, as
applicable, and the denominator of which is the balance of the Participant’s
Deferral Contribution Account, After-Tax Contribution Account, Roth Deferral
Contribution Account or Matching Contribution Account, as applicable, on the
last day of the Plan Year, reduced by the earnings and increased by the losses
allocable to such Account for the Plan Year. The earnings and losses of the
Trust Fund allocable to the Deferral Contributions, After-Tax Contributions or
Roth Deferral Contributions to be returned or Matching Contributions to be
returned or forfeited shall not include earnings and losses for the period
between the end of the Plan Year and the date of such distribution or
forfeiture.
16
5. INVESTMENT OF CONTRIBUTIONS
5.1 Investment Funds.
The Trust Fund will be divided into such Investment Funds (including an ESOP
Company Stock Fund and Self-Directed Brokerage Funds, as identified below) as
shall be designated by the Administrator from time to time, and a Participant’s
Account will be invested therein as provided in this Article. A Participant’s
Account will be invested and reinvested in such funds in accordance with the
terms of the Trust Agreement and the provisions of this Article.
Notwithstanding any provision of the Plan to the contrary, the Administrator in
its sole discretion may direct the Trustee to keep such portion of each
Investment Fund in cash or cash equivalents as the Administrator may from time
to time deem to be advisable to maintain sufficient liquidity to meet the
obligations of the Plan or for other reasons.
5.1.1 Company Stock Funds
There is no limitation under the Plan on the amount of qualifying employer
securities within the meaning of ERISA section 407(d)(5) (including Company
Stock) that can be held in the Trust Fund under the Plan, provided, however,
that the Plan will not hold employer securities acquired with an exempt loan as
defined in section 4975(d)(3) of the Code and Treasury Regulations thereunder.
Shares of Company Stock held or distributed by the Trustee may include such
legend restrictions on transferability as the Company may reasonably require in
order to assure compliance with applicable Federal and state securities laws.
Except as otherwise provided in this Section, no shares of Company Stock held or
distributed by the Trustee may be subject to a put, call or other option, or
buy-sell or similar arrangement.
Company Stock held by the Plan shall be invested in the ESOP Company Stock Fund
or such additional Company Stock Funds as established by the Administrator in
its sole discretion. Such funds will be maintained on a share-based accounting
method, and Participants will be credited with fractional shares, as
appropriate. Dividends on Company Stock will be reinvested in Company Stock or
paid to Participants in cash in accordance with Participant elections as
provided for under Section 5.1.2 below.
A Participant may at any time there are amounts credited to his or her ESOP
Company Stock Fund (or such other Company Stock Funds as are established by the
Administrator in its sole discretion) direct a transfer of investment into any
other Investment Fund under the Plan in accordance with written procedures
established by the Administrator.
5.1.2 Cash Dividends Paid on Company Stock
In accordance with the Participant’s election, any dividends payable on Company
Stock allocated to the Account of a Participant will be (i) paid to the Plan and
credited to the ESOP Company Stock Fund in the Account of the Participant and
reinvested in
Company Stock or (ii) paid to the Plan and credited to the ESOP Company Stock
Fund in the Account of the Participant and distributed in cash to the
Participant not later than 90 days after the close of the Plan Year in which the
dividend is paid by the Company.
The election described in this Section 5.1.2 will be made by a Participant
pursuant to written procedures established by the Administrator. Such election
procedures will provide the Participant with a reasonable opportunity to make
the dividend election before the dividend is paid or distributed to the
Participant, and will provide the Participant with an opportunity to change the
dividend election at least annually. The procedures will require that a
Participant’s dividend election will be irrevocable with respect to any
particular dividend before that dividend is credited to the ESOP Company Stock
Fund in the Account of the Participant for the purpose of either being
reinvested in Company Stock or paid to the Participant within 90 days after the
Plan Year in which the dividend is paid by the Company.
Notwithstanding the foregoing, the Administrator may identify one of the options
described above to serve as a default election if a Participant fails to make an
affirmative election with respect to the Participant’s Company Stock dividend.
Notwithstanding any other provisions of the Plan, the Administrator is
authorized to direct the investment of dividends if they are accumulated
pursuant to a Participant election to distribute them within 90 days after the
close of the Plan Year in which the dividend is paid by the Company. Earnings
on such accumulated dividends will be allocated to the Participant’s Account
when the dividends are distributed.
5.1.3 Self-Directed Brokerage Fund
The Administrator may (but is not required to) establish Self-Directed Brokerage
Funds as additional Investment Funds for individual Participants, and may adopt
rules and procedures for Self-Directed Brokerage Funds that are different from
the rules and procedures that apply to other Investment Funds. If the
Administrator establishes such Self-Directed Brokerage Funds, the Participant
for whom a Self-Directed Brokerage Fund is established shall direct the Trustee
to invest the assets of the Self-Directed Brokerage Fund in investments that the
Participant chooses, subject to limitations imposed by the Administrator’s rules
and procedures. In no event, however, shall the Participant be allowed to
direct the investment of such assets into any work of art, rug or antique, metal
or gem, stamp or coin, alcoholic beverage or other similar tangible personal
property if the Secretary of the Treasury shall have prohibited investment in
such property.
In the event of distributions to a Participant from the Plan that are required
by law or the terms of the Plan, including without limitation, distributions
necessary to effect compliance with nondiscrimination testing, allocation limits
and minimum required distributions, such distributions will be made first from
Investment Funds other than the Participant’s Self-Directed Brokerage Fund. If
the assets in such Investment Funds are insufficient, the Administrator will
direct the Trustee to effect a sale of securities in the Self-Directed Brokerage
Fund and an investment exchange to the Plan’s other investment options to
provide sufficient funds for the distribution.
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5.2 Investment Options
Each Participant will, by direction to the Administrator, direct that all
Deferral Contributions, After-Tax Contributions, Roth Deferral Contributions,
Matching Contributions and Rollover Contributions made by or for such
Participant be invested in one or more of the Investment Funds (but not to a
Self-Directed Brokerage Fund) in percentages which are multiples of 1%. If a
Self-Directed Brokerage Fund has been established for a Participant, the
Participant may direct the Administrator to have funds transferred from other
Investment Funds into the Self-Directed Brokerage Fund, subject to the rules and
procedures established by the Administrator. An investment option selected by a
Participant will remain in effect unless and until an investment change is made
by him or her and becomes effective pursuant to Section 5.3. In the absence of
an effective investment direction, such contributions made by or for a
Participant will be invested in the Investment Fund that maximizes the goals of
liquidity and preservation of principal, as determined by the Administrator.
5.3 Change of Investment Option.
A Participant may elect and change investment options in accordance with
procedures established by the Administrator, which may, without limitation,
provide for various notice periods, various methods (including telephonic or
electronic, as permitted by applicable law) of making investment elections and
changes and various times at which investment elections or changes may become
effective.
5.4 Directions to Trustee.
The Administrator shall give appropriate and timely directions to the Trustee in
order to permit the Trustee to give effect to the investment choice and
investment change elections made under this Article and to provide funds for
distributions pursuant to Article 7.
5.5 Valuation of Trust Fund.
The fair market value of the total net assets comprising the Trust Fund and of
each Investment Fund will be determined by the Trustee as of the close of
business on each Valuation Date. Each such valuation will be made on the basis
of the market value (as determined by the Trustee) of the Trust assets, except
that property which the Trustee determines does not have a readily determinable
market value will be valued at fair market value as determined by the Trustee in
such manner as it deems appropriate, and the Trustee’s determination of such
value will be conclusive on all interested persons for all purposes of the
Plan. In determining such value, the Trustee shall deduct all permissible
expenses for which the Trustee has not yet obtained reimbursement from the
Employer or the Trust Fund.
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5.6 No Guarantee.
The Employers, the Administrator and the Trustee do not guarantee the
Participants or their Beneficiaries against loss or depreciation or fluctuation
of the value of the assets of the Trust Fund or any Investment Fund.
5.7 Securities Laws Limitations.
The Administrator may impose such investment and other restrictions under the
Plan as the Administrator, in its sole discretion, deems necessary or
appropriate to ensure compliance with the Securities Exchange Act of 1934, as
amended (“Act”), or any other applicable law. Although Participants affected
generally will include only those Participants subject to the reporting
requirements of the Act, other participants may be affected in the discretion of
the Administrator. No transfers will be permitted under the Plan that would
result in a violation of the Company’s insider trading policy.
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6. VESTING
6.1 Fully Vested Interests
Participants shall be fully vested in their Deferral Contribution, After-Tax
Contribution, Rollover Contribution, and Roth Accounts. A Participant shall
have a 100% vested and nonforfeitable interest in his or her Matching
Contribution Account upon completion of one year of service. A year of service
for this purpose is a cumulative twelve month period commencing with the
Participant’s first date of employment.
6.2 Forfeitures
Any balance in the Matching Contribution Account of a Participant who terminates
his or her employment before being fully vested shall be forfeited, and shall be
used to reduce the Employer’s Matching Contributions under the Plan during the
Plan Year following the Plan Year in which the forfeiture arose.
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7. DISTRIBUTIONS
7.1 Distribution Events.
Except as set forth in Sections 7.8, 7.9 or 7.10, and subject to the provisions
and restrictions in Article 12, a Participant’s interest in his or her Deferral
Contribution Account, After-Tax Contribution Account, Roth Account, Matching
Contribution Account and Rollover Account, may be distributed only after the
Participant’s Disability, termination of employment with all members of the
Controlled Group, or death. Upon a Participant’s Disability, he or she will be
entitled to a distribution in the same form and at the same time as if he or she
had terminated employment.
7.1.1 Distribution Notice
At least 30 days and, effective January 1, 2007, not more than 180 days prior to
a distribution date, the Administrator must provide a written distribution
notice (or a summary notice as permitted under Treasury regulations) to a
Participant or Beneficiary. The distribution notice must explain the option
forms of benefit in the Plan, including the material features and relative value
of those options, the Participant’s or Beneficiary’s right to postpone
distribution, and the consequences of failing to defer receipt of distribution.
7.1.2 Qualified Reservist Distribution
Notwithstanding any 401(k) distributions in this Plan, the Plan permits a
Participant to elect a Qualified Reservist Distribution. A “Qualified Reservist
Distribution” is any distribution to an individual who is ordered or called to
active duty after September 11, 2001, if: (i) the distribution is from amounts
attributable to elective deferrals in a 401(k) plan; (ii) the individual was (by
reason of being a member of a reserve component, as defined in section 101 of
title 37, United States Code) ordered or called to active duty for a period in
excess of 179 days or for an indefinite period; and (iii) the Plan makes the
distribution during the period beginning on the date of such order or call, and
ending at the close of the active duty period.
7.2 Form of Distributions (and Small Account Cash Out).
Distributions will be made in the form provided in this and the following
Sections of this Article. A Participant or Beneficiary eligible to receive a
distribution under the Plan shall request such distribution in accordance with
procedures (including telephonic or electronic, as permitted by law) established
by the Administrator, including furnishing such information as the Administrator
may reasonably require. Notwithstanding any other provision of this Article,
but subject to the requirements of Section 12.2, if the value of a Participant's
vested interest in his or her Accounts does not exceed $1,000, determined
according to Section 7.7 below, distribution to such Participant or Beneficiary
will be made in the form of a single lump sum payment of the full value of the
Accounts (or so much thereof to which a Beneficiary is entitled) as soon
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as practicable after the Participant’s Disability, death, or termination of
employment with the Controlled Group.
7.2.1 Right to Receive Company Stock
The Participant (or Beneficiary) may elect to receive any distribution of all or
a portion of his or her Accounts in the form of whole shares of Company Stock
(with the value of any fractional share paid in cash) by directing the
investment of all or a portion of his or her Accounts in the Company Stock Fund
prior to any distribution. Distributions from the Company Stock Fund will be
made in kind unless otherwise elected; provided, however, (i) that fractional
shares of Company Stock will in all cases be distributed in cash, and (ii) that
partial withdrawals may not be made through a combination of stock and cash
distributions. Shares of Company Stock distributed by the Trustee shall be
readily tradable on an established securities market.
7.3 Distributions upon Termination of Employment.
If a Participant’s employment with the Controlled Group is terminated for any
reason other than death, such Participant shall receive his or her Account
balance in the form of a single lump sum or as periodic partial withdrawals, in
accordance with the provisions of this Article 7 (including Section 7.5.1), as
the participant elects.
7.4 Distributions upon Death.
7.4.1 If the Beneficiary is not the Participant’s Surviving Spouse and
not a Designated Beneficiary
Upon the death of a Participant, if his or her Beneficiary is not his or her
surviving Spouse, then the entire Account balance shall be paid to the
Beneficiary within five years after the Participant’s death, and after
completion of procedures established by the Administrator.
7.4.2 If the Beneficiary is the Participant’s Surviving Spouse
Upon the death of a Participant, if his or her Beneficiary is his or her
surviving Spouse, then the Beneficiary shall have the option of commencing
distributions as soon as practicable after completion of procedures established
by the Administrator, or delaying distributions, subject to the limitations in
Article 12.
7.4.3 If the Beneficiary is the Designated Beneficiary and not the
Participant’s Surviving Spouse
For distributions after December 31, 2006, a non-spouse beneficiary who is a
“designated beneficiary” under Code §401(a)(9)(E) and the regulations
thereunder, by a direct trustee-to-trustee transfer ("direct rollover"), may
roll over all or any portion of his or her distribution to an individual
retirement account the beneficiary establishes for purposes of receiving the
distribution. In order to be able to roll over the distribution, the
distribution otherwise must satisfy the definition of an eligible rollover
distribution. If
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a non-spouse beneficiary receives a distribution from the Plan, the distribution
is not eligible for a “60-day” rollover. If the Participant’s named beneficiary
is a trust, the Plan may make a direct rollover to an individual retirement
account on behalf of the trust, provided the trust satisfies the requirements to
be a designated beneficiary within the meaning of Code §401(a)(9)(E). A
non-spouse beneficiary may not roll over an amount which is a required minimum
distribution, as determined under applicable Treasury regulations and other
Revenue Service guidance. If the Participant dies before his or her required
beginning date and the non-spouse beneficiary rolls over to an IRA the maximum
amount eligible for rollover, the beneficiary may elect to use either the 5-year
rule or the life expectancy rule, pursuant to Treas. Reg. §1.401(a)(9)-3,
A-4(c), in determining the required minimum distributions from the IRA that
receives the non-spouse beneficiary’s distribution.
7.5 Timing of Distributions.
Any distribution to a Participant or Beneficiary effected pursuant to this
Article shall be made as soon as administratively feasible after an event of
distribution described in Section 7.1 above, as the Participant or Beneficiary
directs, subject to the rules set forth below and in Article 12.
7.5.1 Timing of Distributions upon Disability or Termination.
If a Participant’s Account balance exceeds $1,000 after the Participant’s
service with the Controlled Group terminates or the Participant becomes
Disabled, distribution of the vested Account balance will not be made or
commenced (subject to Section 12.4) unless he or she elects to receive such
distribution. Subject to Section 12.2, a Participant can request a distribution
at any time after termination of employment with the Controlled Group or
Disability, and such distribution will be made as soon as administratively
feasible after such request is received by the Administrator, subject to such
further notices and elections which may be required under the terms of the
Plan. If a Participant’s Account balance is $1,000 or less, it will be
distributed to him or her in a lump sum, as soon as administratively feasible
after the applicable event.
7.5.2 Timing of Distributions to Beneficiaries.
Distribution of a Participant’s Account balance to the Participant’s Beneficiary
will be made or will commence as soon as administratively feasible following
notification to the Administrator of the Participant’s death.
7.6 Reemployment of Participant.
If a Participant who terminated employment again becomes an Employee before
receiving a distribution of his or her Account balance pursuant to this Article,
no distribution from the Trust Fund will be made while he or she is an Employee,
and amounts distributable on account of such termination will be held in the
Trust Fund until he or she is again entitled to a distribution under the Plan.
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7.7 Valuation of Accounts.
A Participant’s distributable Account balance will be valued as of the Valuation
Date immediately preceding the date the Account is to be distributed, except
that there will be added to the value of the Account the fair market value of
any amounts allocated to the Account under Article 4 after that Valuation Date.
7.8 Hardship Distributions.
7.8.1 Availability of Hardship Distributions.
A Participant may request approval from the Administrator to have all or a
portion of the value of the sum of (i) his or her Deferral Contribution Account
(but excluding any earnings credited to the Deferral Contribution Account after
December 31, 1988, Qualified Non-Elective Contributions and Qualified Matching
Contributions), and (ii) his or her Rollover Account distributed to such
Participant, provided that the Participant is suffering from hardship. A
distribution will be on account of hardship only if the distribution is
necessary to satisfy an immediate and heavy financial need of the Participant,
as defined below, and satisfies all other requirements of this Section 7.8.
7.8.2 Immediate and Heavy Financial Need.
A distribution shall be made on account of an immediate and heavy financial need
of a Participant only if the distribution is on account of:
(a) Medical expenses described in section 213(d) of the Code incurred
by or necessary for the care of the Participant, the Participant’s Spouse, or
any of the Participant’s dependents (as defined in section 152 of the Code);
(b) The purchase (excluding mortgage payments) of a principal residence
of the Participant;
(c) The payment of tuition, related educational fees, and room and
board expenses, for the next 12 months (beginning with the date of distribution)
of post secondary education for the Participant or the Participant’s Spouse,
children or dependents, provided that no withdrawal will be permitted for this
purpose more than 6 months before payment is actually required to be made to the
educational institution or other appropriate person;
(d) The need to prevent the eviction of the Participant from his or her
principal residence or the foreclosure on the mortgage of the Participant’s
principal residence;
(e) Payments for burial or funeral expenses for the Participant’s
deceased parent, spouse, children or dependents;
25
(f) Expenses for repair of damage to the Participant’s principal
residence that would qualify for the casualty deduction under Code §165 (without
regard to the 10% of AGI threshold); or
(g) Any other financial need which the Commissioner of Internal
Revenue, through the publication of revenue rulings, notices and other documents
of general applicability, may from time to time designate as a deemed immediate
and heavy financial need as provided in section 1.401(k)-1(d)(2)(iv) of the
Treasury Regulations.
7.8.3 Distributions Deemed Necessary.
A distribution shall be deemed to be necessary to satisfy an immediate and heavy
financial need only if:
(a) The distribution does not exceed the financial need of the
Participant (including amounts necessary to pay any federal, state or local
income taxes or penalties reasonably anticipated to result from the
distribution);
(b) The Participant has obtained all distributions (other than hardship
distributions) and all nontaxable loans currently available under all of the
Employer’s plans;
(c) The Participant’s Deferral Contributions, After-Tax Contributions
and Roth Contributions, and all similar employee contributions under all of the
Employer’s qualified and non-qualified plans of deferred compensation shall be
suspended for a period of six months after the receipt of the hardship
distribution.
7.8.4 Method of Requesting/Form of Distribution.
The Participant’s request for a hardship distribution shall be made in
accordance with procedures (including telephonic or electronic, as permitted by
law) established by the Plan Administrator from time to time, and the
Participant shall furnish the Plan Administrator with such information as the
Plan Administrator requests in its evaluation of the Participant’s withdrawal
request.
7.8.5 Amount and Timing of Distribution.
The cumulative amount distributed to a Participant on account of hardship will
not exceed the amount set forth in subsection 7.8.1 above that has not been
previously distributed. Distributions pursuant to this subsection will be made
as soon as administratively feasible after the Participant’s request and amounts
will be withdrawn first, from the Participant’s Rollover Account (if any), and
then from the Participant’s Deferral Contribution account.
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7.9 Distributions After Age 59-1/2.
A Participant who attains age 59-1/2 and who is still employed by a Controlled
Group Member may elect a distribution of all or a portion of the amount then
credited to his or her Deferral Contribution Account, Matching Contribution
Account and Rollover Account. Partial withdrawals will be permitted at such
times and in accordance with such procedures as will be determined by the
Administrator, provided they are permitted at least quarterly.
7.10 Distributions From After-Tax Contribution Account.
A Participant may elect a distribution of all or a portion of the amounts
credited to his or her After-Tax Contribution Account. Partial withdrawals will
be permitted at such times and in accordance with such procedures as will be
determined by the Administrator, provided they are permitted at least
quarterly. Distributions from a Participant’s After-Tax Contribution Account
(including amounts transferred from the prior Company Employee Stock Ownership
Plan, which was merged into the Plan) shall be made, first, from such
contributions made prior to January 1, 1987 (not including earnings thereon). A
Participant may elect as to the order of distribution from his or her After-Tax
Account, or from other pre-tax Deferral Accounts, or partly from each.
7.11 Direct Rollovers.
7.11.1 Rollovers Permitted.
Notwithstanding any other provision herein to the contrary, a Distributee
entitled to a distribution may elect (in such form and at such time as the
Administrator may prescribe) to have all or a portion of an Eligible Rollover
Distribution paid to an Eligible Retirement Plan in a Direct Rollover.
7.11.2 Direct Rollover of Non-Spousal Distribution.
A non-spouse beneficiary who is a “designated beneficiary” under Code
§401(a)(9)(E) and the regulations thereunder, by a direct trustee-to-trustee
transfer ("direct rollover"), may roll over all or any portion of his or her
distribution to an individual retirement account the beneficiary establishes for
purposes of receiving the distribution. In order to be able to roll over the
distribution, the distribution otherwise must satisfy the definition of an
eligible rollover distribution. If the Participant's named beneficiary is a
trust, the Plan may make a direct rollover to an individual retirement account
on behalf of the trust, provided the trust satisfies the requirements to be a
designated beneficiary within the meaning of Code §401(a)(9)(E). A non-spouse
beneficiary may not roll over an amount which is a required minimum
27
7.11.3 Amount of Rollover.
Notwithstanding the foregoing, a Distributee may make an election under this
Section only if the total amount of all Eligible Rollover Distributions made to
such Distributee during a year is reasonably expected to exceed $200.
Furthermore, if a Distributee elects to have only a portion of an Eligible
Rollover Distribution paid in a Direct Rollover, the portion paid in a Direct
Rollover must equal at least $500. If a Distributee’s Eligible Rollover
Distribution is $500 or less, he or she may make an election only to have all of
such distribution paid in a Direct Rollover.
7.11.4 Waiver of Notice Period.
Such distribution may commence less than 30 days after notice is given about the
Participant’s right to make a Direct Rollover, provided that the Administrator
informs the Participant that he or she has at least 30 days after receiving such
notice to consider whether or not to make a Direct Rollover and the Participant,
after receiving the notice, affirmatively elects to receive the distribution.
7.12 Restrictions on Distributions.
Article 12 sets forth certain rules under various provisions of the Code
relating to restrictions on distributions to Participants and their
Beneficiaries.
7.13 Unclaimed Distribution.
If the Administrator cannot locate a person entitled to receive a benefit under
the Plan within a reasonable period (as determined by the Administrator in its
discretion), the amount of the benefit will be treated as a forfeiture during
the Plan Year in which the period ends. Such forfeitures will be applied in the
discretion of the Administrator (i) to pay administrative expenses under the
Plan, (ii) to reduce or offset Employers’ subsequent Matching Contributions
required under the Plan, and (iii) to correct errors, omissions and exclusions
as described in Section 9.10 below. If a person who was entitled to a benefit
which has been forfeited under this Section makes a claim to the Administrator
or the Trustee for his or her benefit, he or she will be entitled to receive, as
soon as administratively feasible, a benefit in an amount equal to the value of
the forfeited benefit on the date of forfeiture. This benefit will be
reinstated first from forfeitures and second from Employer contributions for
that Plan Year.
7.14 Partial Withdrawals
Any person otherwise entitled to a distribution under the Plan, to whom a
lump-sum distribution of the balance of the Accounts (or portion thereof) to
which he or she is entitled has not been made under the terms of Section 7.2,
may elect to make partial withdrawals at such time and in accordance with such
procedures as will be determined by the Administrator, provided such withdrawals
are permitted at least quarterly.
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7.15 Installment Distributions
In lieu of a lump sum distribution as provided in Section 7.3 and 7.4, and
subject to the limitations in Article 12, a Participant may elect to receive
distribution of his or her Account balance in monthly, quarterly, semi-annual or
annual installments.
7.16 HEART Act
7.16.1 Death Benefits.
In the case of a death occurring on or after January 1, 2007, if a Participant
dies while performing qualified military service (as defined in Code § 414(u)),
the survivors of the Participant are entitled to any additional benefits (other
than benefit accruals relating to the period of qualified military service)
provided under the Plan as if the Participant had resumed and then terminated
employment on account of death.
7.16.2 Differential Wage Payments.
For years beginning after December 31, 2008, (i) an individual receiving a
differential wage payment, as defined by Code §3401(h)(2), is treated as an
employee of the Employer making the payment, (ii) the differential wage payment
is treated as Compensation, and (iii) the Plan is not treated as failing to meet
the requirements of any provision described in Code §414(u)(1)(C) by reason of
any contribution or benefit which is based on the differential wage payment.
7.16.3 Severance From Employment.
Notwithstanding Section 7.16.2(i), for years beginning after December 31, 2008,
for purposes of Code §401(k)(2)(B)(i)(I), an individual is treated as having
been severed from employment during any period the individual is performing
service in the uniformed services described in Code §3401(h)(2)(A).
a. Suspension of deferrals. If an individual elects to receive a
distribution by reason of severance from employment, death or disability, the
individual may not make an elective deferral or employee contribution during the
6-month period beginning on the date of the distribution.
b. Nondiscrimination requirement. Section 7.16.2(iii) applies only if
all employees of the Employer performing service in the uniformed services
described in Code §3401(h)(2)(A) are entitled to receive differential wage
payments (as defined in Code §3401(h)(2)) on reasonably equivalent terms and, if
eligible to participate in a retirement plan maintained by the employer, to make
contributions based on the payments on reasonably equivalent terms (taking into
account Code §§410(b)(3), (4), and (5)).
29
8. SPECIAL RULES REGARDING ACQUISITIONS, DISPOSITIONS & TRANSFERS
8.1 Service Crediting
The Administrator may, but is not required to, grant past service credit to
those individuals who are employed by a business acquired by Controlled Group
Members (referred to herein as an “Acquisition Business”) at the time it became
a Controlled Group Member. Such grant would provide that the period of time
that such individuals were in the employ of the Acquisition Business prior to
its becoming part of the Controlled Group would count as a period of employment
for purposes of eligibility for Matching Contributions. Any such grant shall be
made either by an amendment to the Plan or by the Administrator maintaining a
record of such service on the books of the Plan, and reflecting such grant in an
appropriate document.
8.2 Transfer From Another Qualified Plan in Controlled Group.
If a Participant is also a participant in another Qualified Plan which is
sponsored by an Acquisition Business or Controlled Group Member, the Participant
may direct the Trustee, subject to the approval of the Administrator, to accept
from such Qualified Plan an amount representing such Participant’s interest in
such plan, to be held by the Trustee subject to all of the terms and conditions
of the Plan and Trust Agreement, in the Participant’s Rollover Account;
provided, however, that property other than cash shall not be transferred to the
Trustee without the Administrator’s approval, and provided, further, that the
Administrator may establish such procedures (including but not limited to
required notice periods) as the Administrator shall deem appropriate, which must
be followed by the Participant as a condition to such a transfer of assets. The
Administrator may not approve any transfer to the Plan if such transfer would
require the Plan to offer benefits, rights and features not offered under the
Plan in order to comply with the requirements of Code section 411(d) and the
regulations thereunder. Amounts transferred to the Plan from another Qualified
Plan, other than such amounts transferred in a direct rollover transfer within
the meaning of Code section 401(a)(31), shall retain all benefits, rights, and
features provided under the Qualified Plan and protected under Code section
411(d)(6), except to the extent that such benefits, rights and features may be
eliminated under the regulations under Code section 411(d)(6).
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9. ADMINISTRATION OF THE PLAN AND TRUST AGREEMENT
9.1 Administrator.
The Company will have all authority, rights and responsibility of the
Administrator hereunder. Any action taken by the Company as Administrator may
be taken by any one of its officers authorized by the Board, or any other person
authorized by such officers to act on the Company’s behalf in its capacity as
Administrator.
9.2 Employees of the Administrator.
The Administrator may employ and suitably compensate such persons or
organizations to render advice with respect to the duties of the Administrator
under the Plan as the Administrator determines to be necessary or desirable.
9.3 Expenses and Compensation.
The expenses of the Administrator properly incurred in the performance of its
duties under the Plan will be paid from the Trust Fund, unless the Employers in
their discretion pay such expenses. To the extent Plan expenses are paid from
the Trust Fund, the Administrator will establish procedures for allocating such
expenses to the Accounts of Participants, including procedures based on
transactions which involve such Participant’s Accounts.
9.4 General Powers and Duties of the Administrator.
The Administrator will have the full power and responsibility to administer the
Plan and the Trust Agreement and to construe and apply their provisions. For
purposes of ERISA, the Administrator will be the Named Fiduciary with respect to
the operation and administration of the Plan and the Trust Agreement; provided,
however, that the Administrator shall have no responsibility for or control over
the funding, investment or management of Plan assets, except as specifically
provided in this Plan. In addition, the Administrator will have the powers and
duties granted by the terms of the Trust Agreement. The Administrator, and all
other persons with discretionary control respecting the operation,
administration, control or management of the Plan, the Trust Agreement or the
Trust Fund, will perform their duties under the Plan and the Trust Agreement
solely in the interests of Participants and their Beneficiaries.
9.5 Specific Powers and Duties of the Administrator.
The Administrator will administer the Plan and have all powers necessary to
accomplish that purpose, including the following: (i) resolving all questions
relating to the eligibility of Employees to become Participants; (ii)
determining the amount of benefits payable to Participants or their
Beneficiaries and determining the time and manner in which such benefits are to
be paid; (iii) authorizing and directing all disbursements by the Trustee from
the Trust Fund; (iv) engaging any administrative, legal, medical, accounting,
clerical or other services it deems appropriate in administering the Plan or the
Trust Agreement; (v) in its sole and absolute discretion
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construing and interpreting the Plan and the Trust Agreement (including, without
limitation, by supplying omissions from, correcting deficiencies in, or
resolving inconsistencies or ambiguities in, the language of the Plan and the
Trust Agreement) and adopting and amending rules for administration of the Plan
and the Trust Agreement which are not inconsistent with the terms of such
documents; (vi) compiling and maintaining all records it determines to be
necessary, appropriate or convenient in connection with the administration of
the Plan and the Trust Agreement; and (vii) determining the disposition of
assets in the Trust Fund if the Plan is terminated.
9.6 Allocation of Fiduciary Responsibility.
The Administrator from time to time may delegate to any other persons or
organizations any of its rights, powers, duties and responsibilities with
respect to the operation and administration of the Plan and the Trust Agreement
that are permitted to be delegated under ERISA. Any such allocation or
delegation will be made in writing, will be reviewed periodically by the
Administrator, and will be terminable upon such notice as the Administrator in
its discretion deems reasonable and proper under the circumstances. Whenever a
person or organization has the power and authority under the Plan or the Trust
Agreement to delegate discretionary authority respecting the administration of
the Plan or the Trust Fund to another person or organization, the delegating
party’s responsibility with respect to such delegation is limited to the
selection of the person to whom authority is delegated and the periodic review
of such person’s performance and compliance with applicable law and
regulations. Any breach of fiduciary responsibility by the person to whom
authority has been delegated which is not proximately caused by the delegating
party’s failure to properly select or supervise, and in which breach the
delegating party does not otherwise participate, will not be considered a breach
by the delegating party.
9.7 Notices, Statements and Reports.
The Company will be the “administrator” of the Plan as defined in ERISA section
3(16)(A) for purposes of the reporting and disclosure requirements imposed by
ERISA and the Code.
9.8 Claims Procedure.
The claims procedure set forth in this Section 9.8 shall be the procedure for
the resolution of disputes and disposition of claims arising under the Plan.
For the purposes of this Section 9.8, a request for resolution of a dispute is
considered a claim.
9.8.1 Filing Claim for Benefits.
If a Participant or Beneficiary does not receive the benefits which he or she
believes he or she is entitled to receive under the Plan, he or she may file a
claim for benefits with the Administrator. All claims will be made in writing
and will be signed by the claimant. If the claimant does not furnish sufficient
information to determine the
32
validity of the claim, the Administrator will indicate to the claimant any
additional information which is required.
9.8.2 Notification by the Administrator.
Each claim will be approved or disapproved by the Administrator within 90 days
following the receipt of the information necessary to process the claim. The 90
day claims review period may be extended an additional 90 days, provided that
notice of such extension of time is given the claimant within the first 90 day
period. If the Administrator denies a claim for benefits in whole or in part,
the Administrator will notify the claimant in writing of the denial of the
claim. Such notice by the Administrator will also set forth, in a manner
calculated to be understood by the claimant, the specific reason for such
denial, the specific Plan provisions on which the denial is based, a description
of any additional material or information necessary to perfect the claim with an
explanation of why such material or information is necessary, and an explanation
of the Plan’s claim review procedure as set forth in subsection 9.8.3. If no
action is taken by the Administrator on a claim within 90 days, the claim will
be deemed to be denied for purposes of the review procedure.
9.8.3 Review Procedure.
A claimant may appeal a denial of his or her claim by requesting a review of the
decision by the Administrator or a person designated by the Administrator, which
person will be a Named Fiduciary for purposes of this Section. An appeal must
be submitted in writing within 60 days after the denial and must (i) request a
review of the claim for benefits under the Plan, (ii) set forth all of the
grounds upon which the claimant’s request for review is based and any facts in
support thereof, and (iii) set forth any issues or comments which the claimant
deems pertinent to the appeal. The Administrator or the Named Fiduciary
designated by the Administrator will make a full and fair review of each appeal
and any written materials submitted in connection with the appeal. The
Administrator or the Named Fiduciary designated by the Administrator will act
upon each appeal within 60 days after receipt thereof unless special
circumstances require an extension of the time for processing, in which case a
decision will be rendered as soon as possible but not later than 120 days after
the appeal is received. The claimant will be given the opportunity to review
pertinent documents or materials upon submission of a written request to the
Administrator or Named Fiduciary, provided the Administrator or Named Fiduciary
finds the requested documents or materials are pertinent to the appeal. On the
basis of its review, the Administrator or Named Fiduciary will make an
independent determination of the claimant’s eligibility for benefits under the
Plan. The decision of the Administrator or Named Fiduciary on any claim for
benefits will be final and conclusive upon all parties thereto. If the
Administrator or Named Fiduciary denies an appeal in whole or in part, it will
give written notice of the decision to the claimant, which notice will set forth
in a manner calculated to be understood by the claimant the specific reasons for
such denial and which will make specific reference to the pertinent Plan
provisions on which the decision was based.
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9.8.4 Claims Must Be Timely.
A claim may be denied if it is not timely. To be considered timely under the
Plan’s claim review procedure, a claim must be filed with the Administrator
within one (1) year after the claimant knew or reasonably should have known of
the principal facts upon which the claim is based. If or to the extent that the
claim relates to a failure to effect a Participant’s or Beneficiary’s investment
directions or a Participant’s election regarding contributions, the one (1) year
period shall be thirty (30) days.
9.9 Service of Process.
The Administrator may from time to time designate an agent of the Plan for the
service of legal process. In the absence of such a designation, the Company
will be the agent of the Plan for the service of legal process.
9.10 Corrections.
If an error or omission is discovered in the Accounts of a Participant, or in
the amount distributed to a Participant, or if an Employee is determined to have
been improperly or mistakenly excluded from participation in the Plan, the
Administrator will make such equitable adjustments in the records of the Plan as
may be necessary or appropriate to correct such error, omission or exclusion as
of the Plan Year in which such error, omission or exclusion is discovered.
Further, an Employer may, in its discretion, make a special contribution to the
Plan, to be allocated by the Administrator only to the Account of one or more
Employees or Participants to correct such error, omission or exclusion.
9.11 Payment to Minors or Persons Under Legal Disability.
If any benefit becomes payable to a minor or to a person under a legal
disability, payment of such benefit will be made only to the conservator or the
guardian of the estate of such person appointed by a court of competent
jurisdiction or such other person or in such other manner as the Administrator
determines is necessary to ensure that the payment will legally discharge the
Plan’s obligation to such person.
9.12 Uniform Application of Rules and Policies.
The Administrator in exercising its discretion granted under any of the
provisions of the Plan or the Trust Agreement will do so only in accordance with
rules and policies established by it which will be uniformly applicable to all
Participants and Beneficiaries.
9.13 Funding Policy.
The Plan is to be funded through Employer and Participant contributions and
earnings on such contributions, and benefits will be paid to Participants and
Beneficiaries as provided in the Plan.
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9.14 The Trust Fund.
The Trust Fund will be held by the Trustee for the exclusive benefit of
Participants and Beneficiaries. The assets held in the Trust Fund will be
invested and reinvested in accordance with the terms of the Trust Agreement,
which is hereby incorporated into and made a part of the Plan. All benefits
will be paid solely out of the Trust Fund, and no Employer will be otherwise
liable for benefits payable under the Plan.
35
10. LIMITATIONS ON CONTRIBUTIONS AND ALLOCATIONS TO PARTICIPANTS’
ACCOUNTS
10.1 Priority over Other Contribution and Allocation Provisions.
The provisions set forth in this Article supersede any conflicting provisions of
this Plan.
10.2 Definitions Used in this Article.
The following words and phrases will have the meanings set forth below, for
purposes of this Article only.
10.2.1 Annual Addition.
“Annual Addition” means the sum of Deferral Contributions, After-Tax
Contributions, Roth Contributions, Matching Contributions, and profit sharing
contributions credited to the Participant under the Plan and all other defined
contribution plans maintained by Controlled Group Members for the Limitation
Year, and, if the Participant is a Key Employee (pursuant to subsection 13.2.8)
for the applicable or any prior Limitation Year, medical benefits provided
pursuant to Code section 419A(d)(1) (“Welfare Fund”) for the Limitation Year.
A Participant’s Annual Addition will not include (i) any amounts allocated to
his Rollover Account, or (ii) Deferral Contributions (and corresponding Matching
Contributions) that are in excess of the Code section 402(g) amount and that are
refunded by April 15 of the following Plan Year. A corrective allocation
pursuant to Section 9.10 will be considered an Annual Addition for the
Limitation Year to which it relates.
A Participant’s Annual Addition shall not exceed the amount provided under Code
Section 415(c) and the regulations issued thereunder, including the Final 415
Regulations.
10.2.2 Compensation.
“Compensation” shall be determined at the election of the Administrator as an
definition of Compensation that satisfies Code section 414(s) and the Treasury
Regulations thereunder. Compensation of an Employee taken into account for
purposes of determining excess Deferral Contributions under Section 10.6 and
excess Matching Contributions under Section 10.7 in any Plan Year shall be
limited as set forth in subsection 1.10.1.
10.2.3 Defined Benefit Plan.
“Defined Benefit Plan” means a Qualified Plan other than a Defined Contribution
Plan.
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10.2.4 Defined Contribution Plan.
“Defined Contribution Plan” means a Qualified Plan described in Code section
414(i). References to a Defined Contribution Plan shall also refer to a Welfare
Fund, as appropriate under Code section 415 and the regulations thereunder.
10.2.5 Eligible Employee and Eligible Highly Compensated Employee.
“Eligible Employee and eligible Highly Compensated Employee” means an Employee
eligible to become a Participant under the provisions of Article 2.
10.2.6 Highly Compensated Employee.
“Highly Compensated Employee” includes any Employee who (1) was a five percent
owner of the Employer at any time during the current Plan Year or the preceding
Year, or (2) received more than $110,000 in compensation in the preceding Plan
Year (as defined in Code section 414(q)(4) and adjusted under Code section
415(d)).
10.2.7 Includable Compensation.
“Includable Compensation” means the Employee’s compensation in the amount
reported by the Employer or any Controlled Group Member as “Wages, tips, other
compensation” for purposes of Internal Revenue Service Form W-2, Box 1, or any
successor method of reporting under Code section 6041(d).
10.2.8 Limitation Year.
“Limitation Year” means the 12 consecutive month period used by a Qualified Plan
for purposes of computing the limitations on benefits and annual additions under
Code section 415. The Limitation Year for this Plan is the Plan Year.
10.2.9 Maximum Annual Addition.
“Maximum Annual Addition” means with respect to a Participant (except as
otherwise permitted by Section 3.2.1(b) and Code section 414(v)), an Annual
Addition equal to the lesser of (i) $49,000 (as adjusted for the cost of living
pursuant to Code section 415(d)) or (ii) 100% of the Participant’s Includable
Compensation.
10.3 Excess Allocations.
10.3.1 Correcting an Excess Annual Addition.
If the amount otherwise allocable to a Participant's Account would exceed the
Maximum Annual Addition (resulting from a reasonable error in estimating an
employee's Compensation or in determining the amount of After-Tax Contributions
or Deferral Contributions or other facts and circumstances acceptable to the
Internal
Revenue Service), the Administrator shall dispose of the excess amount in
accordance with the Employee Plans Compliance Resolution System (EPCRS).
10.3.2 Correcting a Multiple Plan Excess.
If, in addition to this Plan, the Participant is covered under another Defined
Contribution Plan maintained by a Controlled Group Member during the Limitation
Year the Annual Addition which may be credited to a Participant’s Account under
this Plan for any such Limitation Year will not exceed the Maximum Annual
Addition reduced by the Annual Addition credited to a Participant’s accounts
under the other Defined Contribution Plans for the same Limitation Year.
10.4 Excess Deferral Contributions Under Code section 401(k).
10.4.1 Actual Deferral Percentage Test - Prior Year Testing Method.
Notwithstanding the provisions of Article 3, for any Plan Year,
(a) the actual deferral percentage (as defined in subsection 10.4.3)
for the group of eligible Highly Compensated Employees for the Plan Year shall
not exceed the actual deferral percentage for the group comprised of all other
eligible Employees for the preceding Plan Year multiplied by 1.25, or
(b) the excess of the actual deferral percentage for the group of
eligible Highly Compensated Employees for the Plan Year over the actual deferral
percentage for the group comprised of all other eligible Employees for the
preceding Plan Year shall not exceed 2 percentage points; and the actual
deferral percentage for the group of eligible Highly Compensated Employees for
the Plan Year shall not exceed the actual deferral percentage for the group
comprised of all other eligible Employees for the preceding Plan Year multiplied
by 2.
10.4.2 Aggregation and Disaggregation of Plans.
If two or more plans which include cash or deferred arrangements are considered
as one plan for purposes of Code Sections 401(a)(4) or 410(b), such arrangements
included in such plans shall be treated as one arrangement for the purposes of
subsection 10.4.1; and if any eligible Highly Compensated Employee is a
participant under two or more cash or deferred arrangements of the Controlled
Group, all such arrangements shall be treated as one cash or deferred
arrangement for purposes of determining the deferral percentage with respect to
such eligible Highly Compensated Employee. If the Plan benefits Employees who
are covered by a collective bargaining agreement, the portion of the Plan
covering such union Employees will be treated as a separate plan (or multiple
plans for various union groups as determined by the Administrator) for the
purposes of subsection 10.4.1.
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10.4.3 Definition of Actual Deferral Percentage.
For the purposes of this Section, the actual deferral percentage for a specified
group of eligible Employees for a Plan Year shall be the average of the ratios
(calculated separately for each eligible Employee in such group) of (i) the
amount of Deferral Contributions actually paid to the Trust Fund for each such
eligible employee for such Plan Year (including any “excess deferrals” described
in Section 3.2) to (ii) the eligible Employee’s Compensation (as defined in
subsection 10.2.2 for such Plan Year). The actual deferral percentage for an
eligible Employee who makes no Deferral Contribution during the Plan Year shall
be taken into account and shall be zero.
10.4.4 Suspension of Deferral Contributions.
If at any time during a Plan Year the Administrator determines, on the basis of
estimates made from information then available, that the limitation described in
subsection 10.4.1 above will not be met for the Plan Year, the Administrator in
its discretion may reduce or suspend the Deferral Contributions of one or more
Participants who are Highly Compensated Employees to the extent necessary (i) to
enable the Plan to meet such limitation or (ii) to reduce the amount of excess
Deferral Contributions that would otherwise be distributed pursuant to
subsection 10.4.5 below.
10.4.5 Distribution of Excess Contributions.
If the actual deferral percentage test of subsection 10.4.1 is not satisfied
based upon the Deferral Contributions made for the Plan Year, the Administrator
shall determine the maximum actual deferral percentage for Highly Compensated
Employees that would satisfy the test. For all Highly Compensated Employees
whose individual actual deferral percentage exceeds such maximum percentage, the
Administrator shall calculate excess Deferral Contributions by subtracting the
product of such maximum percentage and the Highly Compensated Employee’s
Compensation from the Highly Compensated Employee’s actual Deferral
Contributions for the Plan Year. The total of all such excess Deferral
Contribution amounts for the Plan Year shall constitute the “excess
contributions” under the Plan for the Plan Year. The Administrator shall direct
the Trustee to distribute such “excess contributions” (adjusted for Trust Fund
earnings and losses in the manner described in subsection 4.4.3, except that for
Plan Years beginning after December 31, 2007, the Administrator will not
calculate and the Trustee will not distribute allocable income for the gap
period (i.e., the period after the close of the Plan Year in which the excess
contribution occurred and prior to the distribution)) to the extent
administratively feasible, on or before March 15th of the following Plan Year
and in no event later than the end of the following Plan Year, in accordance
with the following leveling method:
(a) The Administrator shall reduce the Deferral Contributions for the
Highly Compensated Employee with the largest dollar amount of Deferral
Contributions by the amount equal to the lesser of the total "excess
contributions" for all Highly Compensated Employees or the dollar amount that
would cause his or her Deferral Contribution dollar amount to equal that of the
39
Highly Compensated Employee with the next largest Deferral Contribution dollar
amount for the Plan Year. The Administrator shall then reduce equally the
Deferral Contributions for the two Highly Compensated Employees with the largest
Deferral Contribution dollar amounts, and then reduce equally for the three
Highly Compensated Employees with the largest Deferral Contribution dollar
amounts, and so forth, until the sum of all such reductions equals the “excess
contributions” for the Plan Year.
(b) The Administrator shall thereupon direct the Trustee to refund the
amounts by which Deferral Contributions are reduced under subparagraph (a) above
(less any amount of such Deferral Contributions refunded under subsection 3.2.2)
to the respective Highly Compensated Employees. The refunds shall first be made
from Deferral Contributions not subject to Matching Contributions under Section
3.4. Any Matching Contributions shall be forfeited and applied to reduce any
subsequent Employer Contribution.
10.4.6 Qualified Non-Elective Contributions.
Notwithstanding the foregoing, within 12 months after the end of the Plan Year,
an Employer may make a special Qualified Non-Elective Contribution on behalf of
a class of Participants designated by the Employer in an amount sufficient to
satisfy the actual deferral percentage test set forth in subsection 10.4.1.
10.5 Excess Matching Contributions Under Code Section 401(m).
10.5.1 Actual Contribution Percentage Test - Prior Year Testing Method.
(a) the actual contribution percentage (as defined in subsection
10.5.3) for the group of eligible Highly Compensated Employees for the Plan Year
shall not exceed the actual contribution percentage for the group comprised of
all other eligible Employees for the preceding Plan Year multiplied by 1.25, or
(b) the excess of the actual contribution percentage for the group of
eligible Highly Compensated Employees for the Plan Year over the actual
contribution percentage for the group comprised of all other eligible Employees
for the preceding Plan Year shall not exceed 2 percentage points; and the actual
contribution percentage for the group of eligible Highly Compensated Employees
for the Plan Year shall not exceed the actual contribution percentage for the
group comprised of all other eligible Employees for the preceding Plan Year
multiplied by 2.
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10.5.2 Aggregation and Disaggregation of Plans.
If the Plan benefits Employees who are covered by a collective bargaining
agreement, the portion of the Plan covering such union Employees will be treated
as a separate plan (or multiple plans for various union groups as determined by
the Administrator) for the purposes of subsection 10.5.1.
10.5.3 Definition of Actual Contribution Percentage.
For the purposes of this Section, the contribution percentage for a specified
(calculated separately for each eligible Employee in such group) of (i) the sum
of the After-Tax Contributions, Roth Contributions and the Matching
Contributions paid under the Plan by or on behalf of each such eligible Employee
for such Plan Year to (ii) the eligible Employee’s Compensation for such Plan
Year. The contribution percentage of an eligible Employee who makes no Deferral
or After-Tax or Roth Contribution during the Plan Year shall be taken into
account and shall be zero.
For purposes of determining whether the Plan satisfies the actual contribution
percentage test of Code section 401(m), the requirements of section 401(m) of
the Code and the Treasury Regulations thereunder (in particular concerning the
aggregation of plans), are incorporated herein by this reference.
10.5.4 Treatment of Excess Aggregate Contributions.
If the contribution percentage test of subsection 10.5.1 is not satisfied based
upon the After-Tax, Roth and Matching Contributions made for the Plan Year, the
Administrator shall determine the maximum contribution percentage for Highly
Compensated Employees that would satisfy the test. For any Highly Compensated
percentage, the Administrator shall calculate excess After-Tax, Roth and
Matching Contributions by subtracting the product of such maximum percentage and
the Highly Compensated Employee’s Compensation from the After-Tax, Roth and
Matching Contributions allocated to the Highly Compensated Employee’s Account
for the Plan Year. The total of all such excess Matching Contribution amounts
for the Plan Year shall constitute the “excess aggregate contributions” under
the Plan for the Plan Year. The Administrator shall direct the Trustee to
distribute such “excess aggregate contributions” (adjusted for Trust Fund
aggregate contribution occurred and prior to the distribution)) to the extent
administratively feasible on or before March 15th of the following Plan Year
(and in no event later than the end of the Plan Year), in accordance with the
following leveling method:
41
(a) The Administrator shall reduce the After-Tax and Roth Contributions
for the Highly Compensated Employee with the largest dollar amount of After-Tax
and Roth Contributions by the amount equal to the lesser of the total “excess
aggregate contributions” for all Highly Compensated Employees or the dollar
amount that would cause his or her After-Tax and Roth Contribution dollar amount
to equal that of the Highly Compensated Employee with the next largest After-Tax
and Roth Contribution dollar amount for the Plan Year. The Administrator shall
then reduce equally the After-Tax and Roth Contributions for the two Highly
Compensated Employees with the largest After-Tax and Roth Contribution dollar
amounts, and then reduce equally for the three Highly Compensated Employees with
the largest After-Tax and Roth Contribution dollar amounts, and so forth, until
the sum of all such reductions equals the “excess aggregate contributions” for
the Plan Year.
(b) The Administrator shall thereupon direct the Trustee to distribute
the amounts by which After-Tax and Roth Contributions are reduced under
subparagraph (a) above to the respective Highly Compensated Employees.
(c) To the extent the process described in subsection 10.5.4(a) is not
sufficient to fully correct the “excess aggregation contributions” for the Plan
Year, the same process will be used to reduce Matching Contributions for Highly
Compensated Employees.
10.5.5 Order of Determinations.
The determination of excess aggregate contributions under this Section shall be
made after (i) first determining the excess deferrals under Section 3.2, and
(ii) then determining the excess contributions under Section 10.4.
10.5.6 Qualified Matching Contribution.
an Employer may make a special Qualified Matching Contribution on behalf of a
class of Participants designated by the Employer in an amount sufficient to
satisfy the Actual Contribution Percentage test set forth in subsection 10.5.1.
10.6 Gap Period Income on Distributed Excess Contributions and Excess
Aggregate Contributions.
This Section applies to excess contributions (as defined in Code §401(k)(8)(B))
and excess aggregate contributions (as defined in Code §401(m)(6)(B)). The Plan
Administrator will not calculate and distribute allocable income for the gap
contribution or excess aggregate contribution occurred and prior to the
distribution).
42
10.7 Plan Termination Distribution Availability.
For purposes of determining whether the Employer maintains an alternative
defined contribution plan (described in Treas. Reg. §1.401(k)-1(d)(4)(i)) that
would prevent the Employer from distributing elective deferrals (and other
amounts, such as QNECs, that are subject to the distribution restrictions that
apply to elective deferrals) from a terminating 401(k) plan, an alternative
defined contribution plan does not include an employee stock ownership plan
defined in Code §§4975(e)(7) or 409(a), a simplified employee pension as defined
in Code §408(k), a SIMPLE IRA plan as defined in Code §408(p), a plan or
contract that satisfies the requirements of Code §403(b), or a plan that is
described in Code §§457(b) or (f).
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11. PLAN LOANS
11.1 Authorization.
The Administrator is authorized to administer the loan program, and to adopt
from time to time such forms and procedures as it considers necessary or
appropriate to administer the loan program. The Administrator may appoint an
agent to administer the loan program in accordance with the Administrator’s
prescribed forms and procedures.
11.2 Conditions and Limitations
Plan loans made to Participants will be made on a reasonably equivalent basis.
Plan loans may be subject to conditions and limitations adopted by the
Administrator that are not inconsistent with the Plan and those conditions and
limitations within this Section 11.2. Loans to a Participant shall not be made
from such Participant’s Roth Account.
11.2.1 Eligibility
Employees, and other Participants who are “parties in interest” within the
meaning of ERISA section 3(14), who have an Account balance, may apply for
loans. A Participant may have only one outstanding loan at any one time.
11.2.2 Maximum Principal Amount
The maximum principal amount of any loan is the lesser of (i) fifty percent
(50%) of the balance of the Participant’s Account, determined on the day of the
loan, minus the balance of all other loans from all other qualified plans of the
Employer, outstanding on that date, or (ii) $50,000, minus the highest
outstanding principal balance of loans from the Plan, and from all other
qualified plans of the Employer, to the Participant during the period of one
year ending on the day preceding the origination of the loan being requested.
Amounts held in a Self-Directed Brokerage Fund, if any, will be included in the
calculation of the maximum principal amount available for a loan but may not be
used as a source for a loan. Therefore, if a Participant has amounts in a
Self-Directed Brokerage Fund, the maximum that that Participant may borrow is
the lesser of the maximum available amount calculated according to the formula
described above or the Participant’s Account balance minus the portion held in
the Participant’s Self-Directed Brokerage Fund.
11.2.3 Minimum Principal Amount
The minimum principal amount of any loan is $1,000.
44
11.2.4 Duration
The repayment period of any general purpose loan will be no more than five (5)
years. The repayment period of any primary residence loan will be no more than
ten (10) years.
11.2.5 Repayment Method
A loan will generally be repaid in substantially equal installments by payroll
deduction from each paycheck. If the Participant is not an active Employee or if
the amount of the Participant’s paycheck is insufficient to make any repayment
when due, the Participant must make scheduled payments directly to the Trustee
at the address provided by the Administrator.
11.2.6 Timing of Repayment
Repayment will begin with the first payroll as soon as administratively
practicable following the loan issuance.
If a Participant is granted an authorized unpaid leave of absence as determined
by the Administrator, the Participant’s loan payments will be suspended for a
period of up to one year upon request. When the Participant returns to active
employment with the Employer, payments will resume through payroll deduction.
The amount of each periodic payment will be adjusted, so that the unpaid balance
will continue to be paid in equal installments in amounts sufficient to retire
the entire loan indebtedness (principal and interest) by the original maturity
date of the loan.
11.2.7 Plan Accounting
The distribution of the proceeds of a loan will be charged solely against the
Participant’s Account, and against the various investments within that Account
(excluding a Self-Directed Brokerage Fund) on a pro rata basis. All repayments
of principal and interest will be credited solely to the Participant’s Account
and invested in accordance with the Participant’s then current election option
for new contributions (excluding elections to invest in any Self-Directed
Brokerage Fund) as determined in Section 5.2. The unpaid principal balance of a
loan will be reflected as a receivable for the Participant’s Account. The
Participant will be required to pay the administrative expenses incurred by the
Trustee and the Administrator in connection with a loan, and any such expenses
not paid directly by the Participant will be charged against the Participant’s
Account.
11.2.8 Interest Rate
The rate of interest charged will be a reasonable rate that provides the Plan
with a return commensurate with the interest rate charged by persons in the
business of lending money for loans which would be made under similar
circumstances. The rate will be determined in a manner prescribed in the
Administrator's loan procedures as
adopted from time to time. The interest rate so determined will remain fixed
throughout the duration of the loan.
11.2.9 Security
Each loan will be secured by the assignment of up to fifty percent (50%) of the
Participant’s Account balance. No other security will be required or accepted.
11.3 Loan Default
Other than for payments suspended during an authorized unpaid leave of absence,
if a Participant fails to make an installment payment on a loan when due, and
this failure continues for thirty (30) days, the loan will be treated as in
default. The Administrator will give the Participant written notice of the right
to cure the default by making up missed payments or repaying the loan in full.
If a failure to make an installment repayment is not cured by ninety (90) days
from the date of the first missed payment, the default will be final. The Plan
is authorized to offset the entire outstanding amount of the loan against the
Participant’s Account at the time the Participant is eligible for a distribution
from the Plan. If a Participant experiences a default as described in this
paragraph, that Participant will be ineligible for any future loans from the
Plan.
If a distribution is required to be made under a QDRO affecting a Participant’s
Account, and the distribution would exceed the amount of that Participant’s
interest in the Plan, less the outstanding loan balance, then the loan will be
deemed to be in default and will be immediately payable. The Participant will
have ninety (90) days to cure this default. Failure to do so will result in the
consequences outlined above, including ineligibility for any future loans from
the Plan.
11.4 Termination of Employment
A Participant will have ninety (90) days from termination of employment to repay
a loan in full (unless the Participant continues to be a “party in interest”
within the meaning of ERISA section 3(14), in which case the Participant must
continue to make scheduled payments directly to the Trustee when due). If the
Participant is required to and does not repay a loan within ninety (90) days of
termination, the unpaid loan balance will be treated as a distribution paid
directly to the Participant. If a Participant takes a distribution of the
Participant’s Account balance before repaying the Participant’s loan, the
distribution will consist first of the unpaid loan balance and then of any
remaining cash balance in the Participant’s Account. For any amounts actually
distributed in cash the Participant will continue to have the ability to request
a distribution in the form of IDACORP, Inc. stock.
11.5 Procedure for Applying for and Accepting Loans
The Administrator will establish procedures for applying for and accepting
loans, which will create a legally enforceable agreement between the Participant
and the Plan. At a minimum, by agreeing to the terms of the loan, a Participant
will make an
46
irrevocable agreement to repay the loan through payroll deduction (provided the
Participant is an active Employee at that time), and will assign and grant to
the Plan a security interest of up to fifty percent (50%) of the balance of the
Participant’s Account.
11.6 Approval or Denial
The Administrator will approve or deny loans based solely on the basis of this
Article 11. There shall be no discretion to grant or deny a loan request.
Denials shall be processed under the claims procedure rules of the Plan listed
in Section 9.8.
11.7 Repayment in Full
The entire balance of the loan may be repaid at any time, without penalty or
service fee, by certified check made payable to the Trustee, and sent to the
address provided by the Administrator.
11.8 Tax Reporting
To the extent required by section 72(p) of the Code, the Trustee shall report,
from time to time, distributions of income in connection with loans made under
this Plan. The operation of those tax rules is entirely independent of the rules
of the Plan.
11.9 Truth in Lending
This Plan shall make all disclosures required under federal truth-in-lending
regulations (Regulation Z issued by the Board of Governors of the Federal
Reserve System).
47
12. RESTRICTIONS ON DISTRIBUTIONS TO PARTICIPANTS AND BENEFICIARIES
12.1 Priority over Other Distribution Provisions.
this Plan.
12.2 Restrictions on Distributions Prior to Severance from Employment.
A Participant’s Deferral Contributions, Matching Contributions, and earnings
attributable to these contributions will be distributed on account of the
Participant’s severance from employment, regardless of when that severance from
employment occurred; however, such a distribution shall be subject to the other
provisions of the Plan regarding distributions.
12.3 Restrictions on Commencement of Distributions.
Unless a Participant elects otherwise, distribution of the Participant’s
interest in his or her Accounts will begin no later than the 60th day after the
close of the Plan Year in which occurs the latest of (i) the date on which the
Participant attains age 65, (ii) the tenth anniversary of the Plan Year in which
the Participant began participation in the Plan, and (iii) the Participant’s
termination of employment.
12.4 Restrictions on Delay of Distributions.
Distribution of a Participant’s Account balance will commence not later than
April 1 of the calendar year following the later of (1) the calendar year in
which he or she attains age 70-1/2, or (2) termination of employment with the
Controlled Group. Such Account will be distributed in a single lump-sum, unless
the Participant is eligible to and elects to make partial withdrawals. If the
Participant elects partial withdrawals, and the entire Account balance has not
been distributed by the foregoing date, and if the partial withdrawals in each
year do not equal the required mandatory minimum distribution under Code section
401(a)(9) and applicable regulations, then the Administrator will direct the
Trustee to make such additional distributions as are necessary to satisfy the
mandatory minimum distribution requirements of the Code.
A Participant or Beneficiary who would have been required to receive minimum
required distributions for 2009 but for the enactment of Section 401(a)(9)(H) of
the Code (“2009 RMDs”), and who would have satisfied that requirement by
receiving distributions that are (1) equal to the 2009 RMDs or (2) one or more
payments in a series of substantially equal distributions (that include the 2009
RMDs) made at least annually and expected to last for the life (or life
expectancy) of the Participant, the joint lives (or joint life expectancies) of
the Participant and the Participant’s designated Beneficiary, or for a period of
at least 10 years ("Extended 2009 RMDs"), will not receive those distributions
for 2009 unless the Participant or Beneficiary chooses to
48
receive such distributions. 2009 RMDs and Extended 2009 RMDs will also be
treated as eligible rollover distributions in 2009.
12.4.1 Limitation to Assure Benefits Payable to Beneficiaries are
Incidental.
Any payments to a Beneficiary must conform to the “incidental benefit” rules of
Code section 401(a)(9)(G) and any regulations promulgated thereunder.
12.4.2 Restrictions Upon Death.
Upon the death of a Participant prior to the date identified in Section 12.4,
survived by a Beneficiary who is not a surviving Spouse, the entire Account
balance of the Participant shall be distributed to the Beneficiary within five
years of the death of the Participant, unless the Beneficiary is a designated
beneficiary, as provided in Subsection 7.4.3, in which event the Account balance
may be distributed as provided therein. Prior to the end of the five year
period and if the Beneficiary is otherwise eligible, the Beneficiary may elect
to make partial withdrawals under the terms of Article 7, provided the entire
Account balance is distributed prior to the end of the five year period.
survived by a Beneficiary who is a surviving Spouse, distributions of the
Account balance must commence on or before the later of (1) December 31 of the
calendar year following the calendar year in which the Participant died, or (2)
December 31 of the calendar year in which the Participant would have attained
age 70-1/2. If the surviving Spouse is otherwise eligible, the surviving Spouse
may elect to make partial withdrawals under the terms of Article 7, provided
that after the date by which distributions must commence as provided in this
paragraph, if partial withdrawals are less than the minimum mandatory
distributions required under Code section 401(a)(9) and applicable regulations,
then the Administrator will direct the Trustee to make such additional
distributions as necessary to satisfy the mandatory minimum distribution
requirements of the Code.
Upon the death of a Participant with an Account balance on or after the date
identified in Section 12.4, distribution of the Participant’s Account balance to
his or her Beneficiary must proceed at least as rapidly as it would have been
distributed had the Participant survived. If the Beneficiary is eligible for
and makes partial withdrawals that are less than the minimum mandatory
distributions as are necessary to satisfy the mandatory minimum distribution
49
12.4.3 Compliance with Regulations.
The Plan will apply the minimum distribution requirements of Code section
401(a)(9) in accordance with the regulations under section 401(a)(9),
notwithstanding any provision of the Plan to the contrary.
12.4.4 Delayed Payments.
If the amount of a distribution required to begin on a date determined under the
applicable provisions of the Plan cannot be ascertained by such date, or if it
is not possible to make such payment on such date because the Administrator has
been unable to locate a Participant or Beneficiary after making reasonable
efforts to do so, a payment retroactive to such date may be made no later than
60 days after the earliest date on which the amount of such payment can be
ascertained or the date on which the Participant or Beneficiary is located
(whichever is applicable).
12.4.5 5% Owners.
Notwithstanding the foregoing, a five-percent owner Participant must commence to
receive his or her Account balance not later than April 1 of the calendar year
following the calendar year in which he or she attains age 70-1/2. A
Participant is treated as a five-percent owner for purposes of this subsection
if the Participant is a five-percent owner as defined in Code section 416(i)
(determined according to section 416 but without regard to whether the Plan is
top-heavy) at any time during the Plan Year ending in the calendar year in which
12.5 Restrictions in Connection with QDRO.
No distribution (including but not limited to hardship distributions, rollovers,
transfers to other plans, and loans) may be made to a Participant during the
period in which the Administrator is making a determination of whether a
domestic relations order affecting the Participant’s Accounts is a QDRO.
Furthermore, if the Administrator has received a written document indicating
that a QDRO affecting a Participant’s Accounts is being sought, it may prohibit
such Participant from commencing to receive a distribution (or from taking a
loan) until the Administrator has determined that such distribution would not be
inconsistent with any such order or that no such order will be submitted. If
the Administrator is in receipt of a QDRO with respect to any Participant’s
benefits, it may prohibit such Participant from receiving a distribution until
the Alternate Payee’s rights under such order are satisfied. A domestic
relations order that otherwise satisfies the requirements for a qualified
domestic relations order (“QDRO”) will not fail to be a QDRO: (i) solely
because the order is issued after, or revises, another domestic relations order
or QDRO; or (ii) solely because of the time at which the order is issued,
including issuance after the annuity starting date or after the Participant’s
death.
50
13. TOP HEAVY PROVISIONS
13.1 Priority over Other Plan Provisions.
If the Plan is or becomes a Top-Heavy Plan in any Plan Year, the provisions of
this Article will supersede any conflicting provisions of the Plan. However,
the provisions of this Article will not operate to increase the rights or
benefits of Participants under the Plan except to the extent required by Code
section 416 and other provisions of law applicable to Top Heavy Plans.
13.2 Definitions Used in this Article.
The following words and phrases will have the meanings set forth below for
13.2.1 “Defined Benefit Dollar Limitation”
“Defined Benefit Dollar Limitation” means $195,000 (or such larger amount as is
determined by the Secretary of the Treasury in accordance with Code section
415(d)(1)).
13.2.2 “Defined Benefit Plan”
“Defined Benefit Plan” means the Qualified Plan described in subsection 10.2.3.
13.2.3 “Defined Contribution Dollar Limitation”
“Defined Contribution Dollar Limitation” means $49,000 (or such larger amount as
is determined by the Secretary of Treasury in accordance with Code section
13.2.4 “Defined Contribution Plan”
“Defined Contribution Plan” means the Qualified Plan described in subsection
10.2.4.
13.2.5 “Determination Date”
“Determination Date” means for the first Plan Year of the Plan the last day of
the Plan Year and for any subsequent Plan Year the last day of the preceding
Plan Year.
13.2.6 “Determination Period”
“Determination Period” means the Plan Year containing the Determination Date,
and the prior Plan Year, except that, with respect to any distribution made for
a reason other than separation from service, death, or disability, the
Determination Period shall include the Plan Year containing the Determination
Date and the previous five (5) Plan Years.
51
13.2.7 “Includable Compensation”
“Includable Compensation” means the compensation described in subsection 10.2.7,
13.2.8 “Key Employee”
“Key Employee” means any employee or former employee (including any deceased
employee) who at any time during the Plan Year that includes the Determination
Date was an officer of a Controlled Group Member having Compensation greater
than $150,000 (as adjusted under Code section 416(i)(1)), a 5-percent owner of a
Controlled Group Member, or a 1-percent owner of a Controlled Group Member
having Compensation of more than $150,000. The determination of who is a Key
Employee will be made in accordance with Code section 416(i)(1) and the
applicable regulations and other guidance of general applicability issued
thereunder.
13.2.9 “Minimum Allocation”
“Minimum Allocation” means the allocation described in the first sentence of
subsection 13.3.1.
13.2.10 “Permissive Aggregation Group”
“Permissive Aggregation Group” means the Required Aggregation Group of Qualified
Plans plus any other Qualified Plan or Qualified Plans of a Controlled Group
Member which, when considered as a group with the Required Aggregation Group,
would continue to satisfy the requirements of Code Sections 401(a)(4) and 410.
13.2.11 “Present Value”
“Present Value” means present value based only on the interest and mortality
rates specified in a Defined Benefit Plan.
13.2.12 “Required Aggregation Group”
“Required Aggregation Group” means the group of plans consisting of (i) each
Qualified Plan of a Controlled Group Member in which at least one Key Employee
participates or participated at any time during the Determination Period
(regardless of whether the Qualified Plan has terminated) and (ii) any other
Qualified Plan of a Controlled Group Member which enables a Qualified Plan to
meet the requirements of Code Sections 401(a)(4) or 410.
13.2.13 “Top-Heavy Plan”
“Top-Heavy Plan” means the Plan for any Plan Year in which any of the following
conditions exists: (i) if the Top-Heavy Ratio for the Plan exceeds 60% and the
Plan is not a part of any Required Aggregation Group or Permissive Aggregation
Group of Qualified Plans; (ii) if the Plan is a part of a Required Aggregation
Group but not part of a Permissive Aggregation Group of Qualified Plans and the
Top-Heavy Ratio for the Required Aggregation Group exceeds 60%; or (iii) if the
Plan is a part of a Required Aggregation Group and part of
a Permissive Aggregation Group of Qualified Plans and the Top-Heavy Ratio for
the Permissive Aggregation Group exceeds 60%.
13.2.14 “Top-Heavy Ratio”
“Top-Heavy Ratio” means a fraction, the numerator of which is the sum of the
Present Value of accrued benefits and the account balances (as required by Code
section 416) of all Key Employees with respect to such Qualified Plans as of the
Determination Date (including any part of any accrued benefit or Account balance
distributed during the appropriate Determination Period as determined in
accordance with Section 13.2.6), and the denominator of which is the sum of the
Present Value of the accrued benefits and the account balances (including any
part of any accrued benefit or Account balance distributed during the
appropriate Determination Period as determined in accordance with Section
13.2.6) of all Employees with respect to such Qualified Plans as of the
Determination Date. The value of account balances and the Present Value of
accrued benefits will be determined as of the most recent Top-Heavy Valuation
Date that falls within or ends with the 12 month period ending on the
Determination Date, except as provided in Code section 416 for the first and
second Plan Years of a Defined Benefit Plan. The account balances and accrued
benefits of a participant who is not a Key Employee but who was a Key Employee
in a prior year will be disregarded. The calculation of the Top-Heavy Ratio,
and the extent to which distributions, rollovers, transfers and contributions
unpaid as of the Determination Date are taken into account will be made in
accordance with Code section 416. Employee contributions described in Code
section 219(e)(2) will not be taken into account for purposes of computing the
Top-Heavy Ratio. When aggregating plans, the value of account balances and
accrued benefits will be calculated with reference to the Determination Dates
that fall within the same calendar year. The accrued benefit of any Employee
other than a Key Employee will be determined under the method, if any, that
uniformly applies for accrual purposes under all Qualified Plans maintained by
all Controlled Group Members and included in a Required Aggregation Group or a
Permissive Aggregation Group or, if there is no such method, as if the benefit
accrued not more rapidly than the slowest accrual rate permitted under the
fractional accrual rate of Code section 411(b)(1)(C). Notwithstanding the
foregoing, the account balances and accrued benefits of any Employee who has not
performed services for an employer maintaining any of the aggregated plans
during the one-year period ending on the Determination Date will not be taken
into account for purposes of this section.
13.2.15 “Top-Heavy Valuation Date”
“Top-Heavy Valuation Date” means the last day of each Plan Year.
53
13.3 Minimum Allocation.
13.3.1 Calculation of Minimum Allocation.
For any Plan Year in which the Plan is a Top-Heavy Plan, each Participant who is
not a Key Employee will receive an allocation of Employer contributions and
forfeitures of not less than the lesser of 3% of his or her Includable
Compensation for such Plan Year or, if the Controlled Group Members maintain no
Defined Benefit Plan which covers a Participant in this Plan, the percentage of
Includable Compensation that equals the largest percentage of Employer
contributions and forfeitures allocated to a Key Employee expressed as a
percentage of the first $160,000 (or such other amount as is determined by the
Secretary under Code section 401(a)(17) to be in effect for that year) of
Includable Compensation received by such Key Employee in that Plan Year. The
Minimum Allocation applies even though under other Plan provisions the
Participant would not otherwise be entitled to receive an allocation, or would
have received a lesser allocation for the Plan Year because (i) the non Key
Employee fails to make mandatory contributions to the Plan, (ii) the non Key
Employee’s Compensation is less than a stated amount, or (iii) the non Key
Employee fails to complete 3 months of service in the Plan Year. Matching
Contributions shall be taken into account for purposes of satisfying the Minimum
Allocation requirements of Code section 416(c)(2) and the Plan. Matching
Contributions that are used to satisfy the Minimum Allocation requirements shall
be treated as Matching Contributions for purposes of the actual contribution
test of Section 10.7 and applicable provisions of Code section 401(m).
13.3.2 Limitation on Minimum Allocation.
No Minimum Allocation will be provided pursuant to subsection 13.3.1 to a
Participant who is not employed by a Controlled Group Member on the last day of
the Plan Year.
13.3.3 Minimum Allocation When Participant is Covered by Another Qualified
Plan.
If a Controlled Group Member maintains one or more other Defined Contribution
Plans covering Employees who are Participants in this Plan, the Minimum
Allocation will be provided under this Plan, unless such other Defined
Contribution Plans make explicit reference to this Plan and provide that the
Minimum Allocation will not be provided under this Plan, in which case the
provisions of subsection 13.3.1 will not apply to any Participant covered under
such other Defined Contribution Plans. If a Controlled Group Member maintains
one or more Defined Benefit Plans covering Employees who are Participants in
this Plan, and such Defined Benefit Plans provide that Employees who are
participants therein will accrue the minimum benefit applicable to top heavy
Defined Benefit Plans notwithstanding their participation in this Plan (making
explicit reference to this Plan), then the provisions of subsection 13.3.1 will
not apply to any Participant covered under such Defined Benefit Plans. If a
Controlled Group Member maintains one or more Defined Benefit Plans covering
Employees who are Participants in this Plan, and the provisions of the preceding
sentence do not apply, then each Participant
54
who is not a Key Employee and who is covered by such Defined Benefit Plans will
receive a Minimum Allocation determined by applying the provisions of subsection
13.3.1 with the substitution of “5%” in each place that “3%” occurs therein.
13.4 Modification of Aggregate Benefit Limit.
13.4.1 Modification.
Subject to the provisions of subsection 13.4.2, in any Plan Year in which the
Top Heavy Ratio exceeds 60%, the aggregate benefit limit described in Article 10
will be modified by substituting “100%” for “125%” in subsections 10.2.3 and
10.2.4.
13.4.2 Exception.
The modification of the aggregate benefit limit described in subsection 13.4.1
will not be required if the Top-Heavy Ratio does not exceed 90% and one of the
following conditions is met: (i) Employees who are not Key Employees do not
participate in both a Defined Benefit Plan and a Defined Contribution Plan which
are in the Required Aggregation Group, and the Minimum Allocation requirements
of subsection 13.3.1 are met when such requirements are applied with the
substitution of “4%” for “3%”; (ii) the Minimum Allocation requirements of
subsection 13.3.3 are met when such requirements are applied with the
substitution of “7 1/2%” for “5%”; or (iii) Employees who are not Key Employees
accrue a benefit for such Plan Year of not less than 3% of their average
Includable Compensation for the five consecutive Plan Years in which they had
the highest Includable Compensation (not to exceed a total such benefit of 30%),
expressed as a life annuity commencing at the Participant’s normal retirement
age in a Defined Benefit Plan which is in the Required Aggregation Group.
55
14. PARTICIPATING EMPLOYERS
14.1 Adoption Procedure.
Notwithstanding anything herein to the contrary, with the consent of the
Company, any Controlled Group Member may adopt this Plan and all of the
provisions hereof, and participate herein and be known as a Participating
Employer. The following are the Participating Employers:
* Idaho Power Company
* Ida West Energy Company
* IDACORP Financial Services, Inc.
14.2 Single Plan Status; Maintenance of Assets and Records.
It is intended that the Plan constitute a “single Plan” within the meaning of
Treas. Reg. section 1.414(l)-1(b)(1). Accordingly, the Trustee may, but shall
not be required to, commingle, hold and invest as one Trust Fund all
contributions made by Employers, as well as all increments thereon. However,
the assets of the Plan shall be available at all times to pay benefits to all
Participants and Beneficiaries under the Plan without regard to the Employer who
contributed such assets.
14.3 Designation of Agent.
Each Participating Employer shall be deemed to be a party to this Plan;
provided, however, that with respect to all of its relations with the Trustee
and Administrator for the purpose of this Plan and with respect to any amendment
or termination of the Plan, each Participating Employer shall be deemed to have
designated irrevocably Idaho Power Company as its agent. Unless the context of
the Plan clearly indicates the contrary, the word “Employer” shall be deemed to
include each Participating Employer as related to its adoption of the Plan.
14.4 Employee Transfers.
It is anticipated that an Employee may be transferred between Participating
Employers, and in the event of any such transfer, the Employee involved shall
carry with him or her accumulated service and eligibility. No such transfer
shall effect a termination of employment hereunder, and the Participating
Employer to which the Employee is transferred shall thereupon become obligated
hereunder with respect to such Employee in the same manner as was the
Participating Employer from whom the Employee was transferred.
14.5 Discontinuance of Participation.
Any Participating Employer shall be permitted to discontinue or revoke its
participation in the Plan, but only with the consent of the Company. At the
time of any such discontinuance or revocation, satisfactory evidence thereof and
of any applicable conditions imposed shall be delivered to the Administrator.
The Administrator shall
56
thereafter direct the transfer of all Trust Fund assets allocable to the
Participants of such Participating Employer to such new Trustee as shall have
been designated by such Participating Employer, in the event that it has
established a separate pension plan for its Employees, provided however, that no
such transfer shall be made if the result is the elimination or reduction of any
Code section 411(d)(6) protected benefits. If no successor is designated, the
Trustee shall retain such assets for the Employees of said Participating
Employer pursuant to the provisions of this Plan. In no such event shall any
part of the corpus or income of the Trust as it relates to such Participating
Employer be used for or diverted to purposes other than for the exclusive
benefit of the Employees of such Participating Employer. A discontinuance or
revocation of an Employer’s participation in the Plan shall not, by itself,
constitute a termination of employment with the Controlled Group for any
Employee of such Employer.
14.6 Administrator’s Authority.
The Administrator shall have authority to make any and all necessary rules or
regulations, binding upon all Participating Employers and all Participants, to
effectuate the purpose of this Article.
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15. AMENDMENT OF THE PLAN
15.1 Right of Company to Amend Plan.
The Company reserves the right to amend the Plan in whole or in part at any time
and from time to time to the extent it may deem advisable or appropriate,
provided that: (i) no amendment will increase the duties or liabilities of the
Trustee without its written consent; (ii) no amendment will cause a reversion of
Plan assets to the Employers not otherwise permitted under the Plan; (iii) no
amendment will have the effect of reducing the percentage of the vested and
nonforfeitable interest of any Participant in his or her Accounts nor will the
vesting provisions of the Plan be amended unless each Participant with at least
three Years of Service (including Years of Service disregarded pursuant to the
reemployment provisions herein) is permitted to elect to continue to have the
prior vesting provisions apply, within 60 days after the latest of the date on
which the amendment is adopted, the date on which the amendment is effective and
the date on which the Participant is issued written notice of the amendment; and
(iv) no amendment will be effective to the extent that it has the effect of
decreasing a Participant’s Account balance or eliminating an optional form of
distribution as it applies to an existing Account balance, except as may be
permitted by Treasury regulations.
15.2 Amendment Procedure.
Any amendment to the Plan will be evidenced in writing and made either by action
of the Board, or by the Company acting in accordance with any procedure
authorized by the Board. Upon execution of the instrument of amendment by an
officer of the Company, the Plan shall be deemed amended as of the effective
date specified in such instrument. If no effective date is specified, the
effective date shall be the date of execution of such instrument. The effective
date may be before, on or after the date of execution and before, on or after
the date of any action taken with respect to such amendment.
15.3 Effect on Employers.
Unless an amendment expressly provides otherwise, all Employers will be bound by
any amendment to the Plan.
58
16. TERMINATION, PARTIAL TERMINATION AND COMPLETE DISCONTINUANCE OF
CONTRIBUTIONS
16.1 Continuance of Plan.
The Employers expect to continue the Plan indefinitely, but they do not assume
an individual or collective contractual obligation to do so, and the right is
reserved to the Company to terminate the Plan or to completely discontinue
contributions thereto at any time. In addition, subject to the remaining
provisions of this Article, any Employer at any time may discontinue its
participation in the Plan with respect to its Employees.
16.2 Disposition of the Trust Fund.
If the Plan is terminated, or if there is a complete discontinuance of
contributions to the Plan, the Administrator will instruct the Trustee either
(i) to continue to administer the Plan and pay benefits in accordance with the
Plan until the Trust Fund has been depleted, or (ii) to distribute the assets
remaining in the Trust Fund. If the Trust Fund is to be distributed, the
Administrator will make, after deducting estimated expenses for termination of
the Trust Fund and distribution of its assets, the allocations required under
the Plan as though the date of completion of the Trust Fund termination were a
Valuation Date. The Trustee will distribute to each Participant the amount
credited to his or her Account as of the date of completion of the Trust Fund
termination.
16.3 Withdrawal by a Participating Employer.
See Section 13.5 for requirements for withdrawal by a Participating Employer.
16.4 Procedure for Termination.
Any termination of the Plan shall be evidenced in writing and made either by
action of the Board, or by the Company acting in accordance with any procedure
authorized by the Board. Upon execution of the instrument of termination by the
Company, the Plan shall be deemed terminated as of the effective date specified
in such instrument. If no effective date is specified, the effective date shall
be the date of execution of such instrument. The effective date may be before,
on or after the date of execution and before, on or after the date of any action
taken by the Board with respect to such termination.
59
17. MISCELLANEOUS
17.1 Reversion Prohibited.
17.1.1 General Rule.
Except as specifically provided otherwise herein, it will be impossible for any
part of the Trust Fund either (i) to be used for or diverted to purposes other
than those which are for the exclusive benefit of Participants and their
Beneficiaries (except for the payment of taxes and administrative expenses) or
(ii) to revert to a Controlled Group Member.
17.1.2 Disallowed Deductions.
Each contribution of the Employers under the Plan is expressly conditioned upon
the deductibility of the contribution under Code section 404. If all or part of
an Employer’s contribution is disallowed as a deduction under Code section 404,
such disallowed amount (reduced by any Trust Fund losses attributable thereto)
may be returned by the Trustee to the Employer with respect to which the
deduction was disallowed (upon the direction of the Administrator) within one
year after the disallowance.
17.1.3 Mistaken Contributions.
If a contribution is made by an Employer by reason of a mistake of fact, then so
much of the contribution as was made as a result of the mistake (reduced by any
Trust Fund losses attributable thereto) may be returned by the Trustee to the
Employer (upon direction of the Administrator) within one year after the
mistaken contribution was made.
17.2 Merger, Consolidation or Transfer of Assets.
There will be no merger or consolidation of all or any part of the Plan with, or
transfer of the assets or liabilities of all or any part of the Plan to, any
other Qualified Plan unless each Participant who remains a Participant hereunder
and each Participant who becomes a participant in the other Qualified Plan would
receive a benefit immediately after the merger, consolidation or transfer
(determined as if the other Qualified Plan and the Plan were then terminated)
which is equal to or greater than the benefit they would have been entitled to
receive under the Plan immediately before the merger, consolidation or transfer
if the Plan had then terminated.
17.3 Spendthrift Clause.
The rights of any Participant or Beneficiary to and in any benefits under the
Plan will not be subject to assignment or alienation, and no Participant or
Beneficiary will have the power to assign, transfer or dispose of such rights,
nor will any such rights to benefits be subject to attachment, execution,
garnishment, sequestration, the laws of bankruptcy or any other legal or
equitable process. Notwithstanding the foregoing, the
60
Administrator and Trustee shall honor a QDRO and may distribute amounts from the
Plan to an Alternate Payee described in any such order in accordance with the
terms of the order and prior to the earliest retirement date specified in
section 414(p)(4)(B) of the Code. The Administrator shall establish procedures
to determine the qualified status of domestic relations orders and to administer
the provisions of, and distributions under, such orders in accordance with
section 414(p) of the Code.
17.4 Rights of Participants.
Participation in the Plan will not give any Participant the right to be retained
in the employ of a Controlled Group Member or any right or interest in the Plan
or the Trust Fund except as expressly provided herein.
17.5 Headings.
Headings of Articles, Sections and subsections as used herein are inserted
solely for convenience and reference and constitute no part of the Plan.
17.6 Governing Law.
The Plan will be construed and governed in all respects in accordance with
applicable federal law and, to the extent not preempted by such federal law, in
accordance with the laws of the State of Idaho applicable to contracts to be
performed entirely within that State.
Executed this 31st day of December , 2009.
Idaho
Power Company
By /s/Luci
McDonald
Luci McDonald
61
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Exhibit 10.11B
AMENDMENT NO.1
TO
EMPLOYMENT AGREEMENT
This Amendment No. 1 to Employment Agreement is made as of this _26th day
of December, 2006 (this “Amendment”), between AVALON PHARMACEUTICALS, INC., a
Delaware corporation (“Company”) and DAVID D. MUTH (“Executive”).
Company and Executive are each sometimes referred to as a “Party,” and are
sometimes referred to together as the “Parties.”
Background:
The Parties entered into a letter of employment on September 12, 2006 (the
“Employment Agreement”).
In consideration of Executive’s continued employment with Company, the
Parties want to amend the Employment Agreement on the terms and conditions set
forth in this Amendment.
Now, therefore, in consideration of the foregoing, the Parties agree as
follows:
1. Capitalized terms used in this Amendment without definition, shall have
the meanings give those terms in the Employment Agreement.
2. The first paragraph under the caption “Termination” of the Employment
Agreement is amended to read in its entirety as follows:
“Upon termination for any reason, the Company shall pay you within two weeks of
such termination, your current base salary earned through the termination date,
plus accrued vacation, if any, and other benefits or payments, if any, to which
you are entitled as provided in accordance with the terms and conditions of such
benefit plan. In the event you are terminated by the Company after the 90-day
Introductory Period without “Cause” (as hereinafter defined), or if you
terminate your employment with the Company for “Good Reason” (as hereinafter
defined), the Company shall (i) immediately vest one half (1/2) of any shares
granted to you under the Company’s stock option plans that have not vested as of
the date of your termination; (ii) pay you a lump sum severance payment equal to
six months of your base salary as in effect at the time of termination (twelve
months in the event such termination is without Cause or for Good Reason within
eighteen months after a Change in Control (as hereinafter defined));
(iii) provide you with outplacement services; and (iv) reimburse you for
premiums you pay for health care insurance under the Consolidated Omnibus Budget
Reconciliation Act (“COBRA”), for the same level of coverage that you maintain
at the time of your termination, for a period up to six months (twelve months in
the event such termination is without Cause or for Good Reason within eighteen
months after a
Change in Control) following termination, provided you elect COBRA coverage. The
Company’s reimbursement obligation will end immediately if you become eligible
to obtain health care insurance from any other employer during the payment
period. You shall not be required to mitigate damages by seeking employment
elsewhere. If you are terminated with cause, the Company shall pay you only your
current base salary earned through the termination date, plus accrued vacation,
if any, to which you are entitled as provided in accordance with the terms and
conditions of such benefit plan.”
3. A new paragraph shall be added under the caption “Termination” of the
Employment Agreement at the end of such section and shall read in its entirety
as follows:
“Should the Company be the subject of a Change in Control, the Company shall
immediately vest (i) in the event such Change in Control takes effect prior to
the first year anniversary of your Start Date, one-quarter (1/4) of all shares
and options granted to you that have not vested as of the date the Change in
Control takes effect; (ii) in the event such Change in Control takes effect on
or after the first year anniversary of your Start Date and prior to the second
year anniversary of your Start Date, one-half (1/2) of all shares and options
granted to you that have not vested as of the date the Change in Control takes
effect; and (iii) in the event such Change in Control takes effect on or after
the second year anniversary of your Start Date, all shares and options granted
to you that have not vested as of the date the Change in Control takes effect.”
4. Except as set forth in this Amendment, the terms and conditions of the
Employment Agreement shall remain in full force and effect.
[SIGNATURES ON NEXT PAGE]
2
IN WITNESS WHEREOF, the Parties have executed this Amendment to Amended and
Restated Employment Agreement as of the date first set forth above.
AVALON PHARMACEUTICALS, INC.
By: /s/ Kenneth C. Carter Name: Title: CEO and
President EXECUTIVE:
/s/ David D. Muth David D. Muth
3 |
Name: Commission Regulation (EEC) No 2698/84 of 25 September 1984 fixing for Great Britain the level of the variable slaughter premium for sheep and the amounts to be charged on products leaving region 5
Type: Regulation
Date Published: nan
No L 256/6 Official Journal of the European Communities 26 . 9 . 84 COMMISSION REGULATION (EEC) No 2698/84 of 25 September 1984 fixing for Great Britain the level of the variable slaughter premium for sheep and the amounts to be charged on products leaving region 5 (EEC) No 1633/84 that the variable slaughter premium for sheep certified as eligible in the United Kingdom, and the amounts to be charged on products leaving region 5 of the aforesaid Member State during the week beginning 3 September 1984, shall be set out in the Annexes hereto, THE COMMISSION OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Economic Community, Having regard to Council Regulation (EEC) No 1837/80 of 27 June 1980 on the common organization of the market in sheepmeat and goatmeat ('), as last amended by Regulation (EEC) No 871 /84 (2), Having regard to Commission Regulation (EEC) No 1633/84 of 8 June 1984 laying down detailed rules for applying the variable slaughter premium for sheep and repealing Regulation (EEC) No 2661 /80 (3), and in particular Articles 3 ( 1 ) and 4 ( 1 ) thereof, Whereas the United Kingdom is the only country which grants the variable slaughter premium, in region 5, within the meaning of Article 3 (5) of Regulation (EEC) No 1837/80 ; whereas it is necessary therefore for the Commission to fix, for the week beginning 3 September 1984, the level of the premium and the amount to be charged on products leaving that region ; Whereas Article 3 ( 1 ) of Regulation (EEC) No 1633/84 stipulates that the level of the variable slaughter premium is to be fixed each week by the Commis sion ; Whereas Article 4 ( 1 ) of Regulation (EEC) No 1633 / 84 lays down that the amount to be charged on products leaving region 5 shall be fixed weekly by the Commis sion ; Whereas it follows from the application of the rules laid down in Article 9 ( 1 ) of Regulation (EEC) No 1837/80 and in Article 4 ( 1 ) and (3) of Regulation HAS ADOPTED THIS REGULATION : Article 1 For sheep or sheepmeat certified as eligible in the United Kingdom in region 5, within the meaning of Article 3 (5) of Regulation (EEC) No 1837/80 , for the variable slaughter premium during the week beginning 3 September 1984, the level of the premium shall be equivalent to the amount fixed in Annex I. Article 2 For products referred to in Article 1 (a) and (c) of Regulation (EEC) No 1837/80 which left the territory of region 5 during the week beginning 3 September 1984, the amounts to be charged shall be equivalent to those fixed in Annex II hereto . Article 3 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 3 September 1984. This Regulation shall be binding in its entirety and directly applicable in all Member States . Done at Brussels, 25 September 1984. For the Commission Poul DALSAGER Member of the Commission ( ¢) OJ No L 183 , 16 . 7 . 1980, p. 1 . (2) OJ No L 90, 1 . 4 . 1984, p. 35 . (3) OJ No L 154, 9 . 6 . 1984, p. 27 . 26. 9 . 84 Official Journal of the European Communities No L 256/7 ANNEX I Level of variable slaughter premium for certified sheep in region 5 for the week commencing 3 September 1984 Description Premium Certified sheep or sheepmeat 88,836 ECU per 100 kilograms of estimated or actual dressed carcase weight (') (') Within the weight limits laid down by the United Kingdom. No L 256/8 Official Journal of the European Communities 26. 9 . 84 ANNEX II Amount to be charged for products leaving region 5 during the week commencing 3 September 1984 (ECU/100 kg) CCT heading No Description Charge Live weight 01.04 B Live sheep and goats other than pure-bred bree ding animals 41,753 l Net weight 02.01 A IV a) Meat of sheep or goats, fresh or chilled : 1 . Carcases or half-carcases 88,836 2. Short forequarters 62,185 3 . Chines and/or best ends 97,720 4. Legs 115,487 5 . Other : aa) Unboned (bone-in) bb) Boned or boneless 115,487 161,682 02.01 A IV b) Meat of sheep or goats, frozen : 1 . Carcases or half-carcases 66,627 2. Short forequarters 46,639 3 . Chines and/or best ends 73,290 4. Legs 86,61 S 5 . Other : aa) Unboned (bone-in) bb) Boned or boneless 86,615 121,261 02.06 C II a) Meat of sheep or goats, salted in brine, dried or smoked : 1 . Unboned (bone-in) 115,487 2. Boned or boneless 161,682 ex 16.02 B III b) 2 aa) 1 1 ) Other prepared or preserved meat or meat offal of sheep or goats, uncooked ; mixtures of cooked meat or offal and uncooked meat or offal : unboned (bone-in) 115,487 \ boned or boneless 161,682 |
April 1, 2013 VIA EDGAR The United States Securities and Exchange Commission SEC Headquarters treet NE Washington, D.C. 20549 Subject: Nationwide Variable Account-II Nationwide Life Insurance Company SEC File No. 333-182494 Ladies and Gentlemen: Pursuant to Rule 461 of the Securities Act of 1933, Nationwide Life Insurance Company for itself and on behalf of its Nationwide Variable Account-II (the "Variable Account") respectfully requests acceleration of the effective date of the Registration Statement for the Variable Account.It is desired that the Registration Statement become effective on April 1, 2013, or as soon as practicable. Nationwide Life Insurance Company represents that the final prospectus will be filed as soon as possible after the effectiveness order is received. The undersigned is an officer of Nationwide Life Insurance Company and is duly authorized to request accelerated effectiveness of the Registration Statement. Please call Ben Mischnick at (614) 677-6123 should you have questions. Very truly yours, NATIONWIDE LIFE INSURANCE COMPANY /s/ CATHY MARASCO Cathy Marasco Associate Vice President Business Development cc: Ms. Rebecca Marquigny Stop 5-6 Office of Insurance Products April 1, 2013 VIA EDGAR The United States Securities and Exchange Commission SEC Headquarters treet NE Washington, D.C. 20549 Subject: Nationwide Variable Account-II Nationwide Investment Services Corporation SEC File No. 333-182494 Ladies and Gentlemen: Pursuant to Rule 461 of the Securities Act of 1933, Nationwide Investment Services Corporation, the General Distributor of the Individual Flexible Premium Deferred Variable Annuity Contracts to be issued by Nationwide Variable Account-II (the "Variable Account") respectfully requests acceleration of the effective date of the Registration Statement for the Variable Account.It is desired that the Registration Statement become effective on April 1, 2013, or as soon as practicable. Nationwide Investment Services Corporation represents that the final prospectus will be filed as soon as possible after the effectiveness order is received. The undersigned is an officer of Nationwide Investment Services Corporation and is duly authorized to request accelerated effectiveness of the Registration Statement. Please call Ben Mischnick at (614) 677-6123 should you have questions. Very truly yours, NATIONWIDE INVESTMENT SERVICES CORPORATION /s/ TERRY C. SMETZER Terry C. Smetzer Associate Vice President and Assistant Treasurer cc: Ms. Rebecca Marquigny Stop 5-6 Office of Insurance Products
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Exhibit 10.1
EMPLOYMENT AGREEMENT
May 3, 2019
This Employment Agreement (“Agreement”) is entered into by and between AMPLIFY
ENERGY CORP., a Delaware corporation (the “Company”), and Martyn Willsher (the
“Employee”), effective as of May 3, 2019 (the “Effective Date”), on the terms
set forth herein. The Company and Employee may sometimes hereafter be referred
to singularly as a “Party” or collectively as the “Parties.”
WHEREAS, the Parties intend for the terms of this Agreement to govern the terms
of the Employee’s employment with the Company and to replace and supersede any
prior agreements, understands, discussions or negotiations, whether written or
oral, between the parties hereto relating to the subject matter hereof,
including, without limitation, that certain change of control agreement from
Memorial Production Partners GP LLC dated April 27, 2017, as amended by that
certain change of control agreement dated May 4, 2017 by the Company, that
certain severance agreement dated May 4, 2017 from the Company and that certain
restrictive covenant agreement dated May 4, 2017 from the Company (collectively,
the “Prior Agreements”), and any promises or agreements providing for severance.
Accordingly, the Parties, intending to be legally bound, agree as follows:
Position and Duties
.
1.1Employment; Titles; Reporting. The Company agrees to employ the Employee and
the Employee agrees to commence employment with the Company, upon the terms and
subject to the conditions provided under this Agreement. During the Employment
Term (as defined in Section 2), the Employee will serve the Company as its
Senior Vice President and Chief Financial Officer. In such capacity, the
Employee will report to the Chief Executive Officer of the Company (the “CEO”)
or such position designated by the CEO and otherwise will be subject to the
direction and control of the CEO or such position designated by the CEO, and the
Employee will have such duties, responsibilities and authorities as may be
assigned to the Employee by the CEO or such position designated by the CEO from
time to time to the extent consistent with Employee’s position as Senior Vice
President and Chief Financial Officer in a publicly traded company comparable to
the Company.
1.2Duties. During the Employment Term, the Employee will devote substantially
all of the Employee’s full working time to the business and affairs of the
Company, will use the Employee’s best efforts to promote the Company’s interests
and will perform the Employee’s duties and responsibilities faithfully,
diligently and to the best of the Employee’s ability, consistent with sound
business practices. The Employee may be required by the CEO and/or the Board of
Directors of the Company (the “Board”) to provide services to, or otherwise
serve as an officer or director of, any direct or indirect subsidiary of the
Company. The Employee will comply with the Company’s policies, codes and
procedures, as they may be in effect from time to time, applicable to executive
officers of the Company. Subject to the preceding sentence, the Employee may,
with the prior written approval of the Board in each instance, engage in other
business and charitable activities, provided that such charitable and/or other
business activities do not violate Section 7,
create a conflict of interest or the appearance of a conflict of interest with
the Company, or interfere, individually or in the aggregate, with the
performance of the Employee’s obligations to the Company under this Agreement.
1.3Place of Employment. The Employee will perform the Employee’s duties under
this Agreement at the Company’s offices in Houston, Texas. The Employee
understands and agrees that Employee will be required to travel from time to
time for purposes of the Company’s business.
Term of Employment
.
The term of the Employee’s employment by the Company under this Agreement (the
“Employment Term”) will commence on the Effective Date and will continue until
the Employee’s employment is terminated by either Party under Section 5. The
date on which the Employee’s employment ends is referred to in this Agreement as
the “Termination Date.” For the purpose of Sections 5 and 6 of this Agreement,
the Termination Date shall be the date upon which the Employee incurs a
“separation from service” as defined in Section 409A of the Internal Revenue
Code of 1986, as amended (the “Code”), and regulations issued thereunder
(collectively, “Code Section 409A”).
Compensation
.
3.1Base Salary. During the Employment Term, the Employee will be entitled to
receive a base salary (“Base Salary”) at an annual rate of not less than
$300,000 for services rendered to the Company and any of its direct or indirect
subsidiaries, payable in accordance with the Company’s regular payroll
practices. The Employee’s Base Salary shall be reviewed annually by the Board
and may be adjusted upward in the Board’s sole discretion, but not downward.
3.2Bonus Compensation. During the Employment Term, the Employee shall be
eligible for discretionary bonus compensation with a target of 75% of the
Employee’s Base Salary (the “Target Bonus”) for each complete calendar year that
the Employee is employed by the Company hereunder (any bonus compensation
payable, the “Annual Bonus”). The performance targets that must be achieved in
order to be eligible for certain bonus levels shall be established by the Board
(or a committee thereof) annually. Each Annual Bonus, if any, shall be paid as
soon as administratively feasible after the Board (or a committee thereof)
certifies whether the applicable performance targets for the applicable calendar
year have been achieved, but in no event later than March 15 following the end
of such calendar year. Notwithstanding anything in this Section 3.2 to the
contrary, but subject to Section 6 below, no Annual Bonus, if any, nor any
portion thereof, shall be payable for any calendar year unless the Employee
remains continuously employed by the Company from the Effective Date through the
date on which such Annual Bonus is paid. Any Annual Bonus will be paid in the
form of (a) cash, with respect to 25% of the amount of the Annual Bonus, and (b)
fully-vested shares of the Company’s common stock having an aggregate fair
market value on the grant date (as determined by the Board) equal to 75% of the
amount of the Annual Bonus.
3.3Long-Term Incentive Compensation. Long-term incentive compensation awards may
be made to the Employee from time to time during the Employment Term by the
Board in its
2
sole discretion, whose decision will be based upon performance and award
guidelines for executive officers of the Company established periodically by the
Board in its sole discretion.
Expenses and Other Benefits
.
4.1Reimbursement of Business Expenses. The Employee will be entitled to receive
prompt reimbursement for all reasonable business expenses incurred by the
Employee during the Employment Term (in accordance with the policies and
practices presently followed by the Company or as may be established by the
Board from time to time for the Company’s senior executive officers) in
performing services under this Agreement, provided that the Employee properly
accounts for such expenses in accordance with the Company’s policies as in
effect from time to time. Each reimbursement shall be paid within 30 days after
it has been properly submitted to the Company by the Employee in accordance with
all applicable policies, but in no event later than the end of the calendar year
following the calendar year in which any such reimbursable expense was incurred.
The Company shall not be obligated to pay any such reimbursement amount for
which the Employee fails to submit an invoice or other documented reimbursement
request at least ten business days before the end of the calendar year next
following the calendar year in which the expense was incurred. Business related
expenses shall be reimbursable only to the extent they were incurred during the
Employment Term, but in no event shall the time period extend beyond the later
of the lifetime of the Employee or, if longer, 20 years. The amount of such
reimbursements that the Company is obligated to pay in any given calendar year
shall not affect the amount the Company is obligated to pay in any other
calendar year. In addition, the Employee may not liquidate or exchange the right
to reimbursement of such expenses for any other benefits.
4.2Paid Time Off. The Employee shall be entitled to paid time off in accordance
with the Company’s policy as then in effect (prorated for any calendar year
during which the Employee is employed with the Company for less than the entire
year, based on the number of days that the Employee is employed with the Company
during such calendar year).
4.3Other Employee Benefits. In addition to the foregoing, during the Employment
Term, the Employee will be entitled to participate in and to receive benefits as
a senior executive under all of the Company’s employee benefit plans, programs
and arrangements available to senior executives, subject to the eligibility
criteria and other terms and conditions thereof, as such plans, programs and
arrangements may be duly amended, terminated, approved or adopted by the Company
Termination of Employment
.
5.1Death. The Employee’s employment under this Agreement will terminate upon the
Employee’s death.
5.2Termination by the Company.
(a)Terminable at Will. The Company may terminate the Employee’s employment under
this Agreement at any time with or without Cause (as defined below).
3
(b)Definition of Cause. For purposes of this Agreement, “Cause” means any of the
Employee’s: (1) conviction of a felony, or plea of guilty or nolo contendere to,
any felony or any crime of moral turpitude; (2) repeated intoxication by alcohol
or drugs during the performance of the Employee’s duties; (3) embezzlement or
other willful and intentional misuse of any of the funds of the Company or its
direct or indirect subsidiaries, (4) commission of a demonstrable act of fraud;
(5) willful and material misrepresentation or concealment on any written reports
submitted to the Company or its direct or indirect subsidiaries; (6) material
breach of this Agreement; (7) failure to follow or comply with the reasonable,
material and lawful written directives of the Board; or (8) conduct constituting
a material breach of the Company’s then-current code of conduct or other similar
written policy which has been provided to the Employee.
(c)Notice and Cure Opportunity in Certain Circumstances. The Employee may be
afforded a reasonable opportunity to cure any act or omission that would
otherwise constitute Cause hereunder according to the following terms: The Board
shall give the Employee written notice stating with reasonable specificity the
nature of the circumstances determined by the Board in its reasonable and good
faith judgment to constitute Cause. If, in the reasonable and good faith
judgment of the Board, the alleged breach is reasonably susceptible to cure, the
Employee will have 15 days from the Employee’s receipt of such notice to effect
the cure of such circumstances or such breach to the reasonable and good faith
satisfaction of the Board. The Board will state whether the Employee will have
such an opportunity to cure in the initial notice of Cause referred to above.
Prior to a termination for Cause, in those instances where the initial notice of
Cause states that the Employee will have an opportunity to cure, the Company
shall provide an opportunity for the Employee to be heard by the Board or a
Board committee designated by the Board to hear the Employee. The decision as to
whether the Employee has satisfactorily cured the alleged breach shall be made
at such meeting. If, in the reasonable and good faith judgment of the Board, the
alleged breach is not reasonably susceptible to cure, or such circumstances or
breach have not been satisfactorily cured within such 15 day cure period, such
breach will thereupon constitute Cause hereunder.
5.3Termination by the Employee.
(a)Terminable at Will. The Employee may terminate the Employee’s employment
under this Agreement at any time with or without Good Reason (as defined below).
(b)Notice and Cure Opportunity. If such termination is for Good Reason, the
Employee will give the Company written notice, which will identify with
reasonable specificity the grounds for the Employee’s resignation and provide
the Company with 30 days from the day such notice is given to cure the alleged
grounds for resignation contained in the notice. A termination will not be for
Good Reason if such notice is given by the Employee to the Company more than 45
days after the first occurrence of the event that the Employee alleges is Good
Reason for the Employee’s termination hereunder. The Employee must actually
terminate Employee’s employment within 30 days following the expiration of the
Company’s 30-day cure period. Otherwise, any claim of such circumstances
constituting “Good Reason” shall be deemed irrevocably waived by the Employee.
(c)Definition of Good Reason. For purposes of this Agreement, “Good Reason” will
mean any of the following to which the Employee will not consent in writing: (i)
a
4
relocation of the Employee’s principal work location to a location in excess of
40 miles from its then current location; (ii) a reduction in the Employee’s then
current Base Salary or Target Bonus, or both; (iii) a material breach of any
provision of this Agreement by the Company; or (iv) any material reduction in
the Employee’s title, authority, duties, responsibilities or reporting
relationship from those in effect as of the Effective Date, except to the extent
such reduction occurs in connection with the Employee’s termination of
employment for Cause or due to the Employee’s death or Disability.
5.4Notice of Termination. Any termination of the Employee’s employment by the
Company or by the Employee during the Employment Term (other than termination
pursuant to Section 5.1) will be communicated by written Notice of Termination
to the other Party hereto in accordance with Section 8.7. For purposes of this
Agreement, a “Notice of Termination” means a written notice that (a) indicates
the specific termination provision in this Agreement relied upon, (b) to the
extent applicable, sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Employee’s employment under
the provision so indicated, and (c) if the Termination Date is other than the
date of receipt of such notice, specifies the Termination Date (which
Termination Date will be not more than 30 days after the giving of such notice).
5.5Disability. If the Company determines in good faith that the Disability (as
defined herein) of the Employee has occurred during the Employment Term, it may,
without breaching this Agreement, give to the Employee written notice in
accordance with Section 5.4 of its intention to terminate the Employee’s
employment. In such event, the Employee’s employment with the Company will
terminate effective on the 30th day after receipt of such notice by the
Employee, provided that, within 30 days after such receipt, the Employee has not
returned to full-time performance of the Employee’s duties hereunder.
“Disability” means the earlier of (a) written determination by a physician
selected by the Company and reasonably agreed to by the Employee that the
Employee has been unable to perform substantially the Employee’s usual and
customary duties under this Agreement for a period of at least 120 consecutive
days or a non-consecutive period of 180 days during any 12-month period as a
result of incapacity due to mental or physical illness or disease; and (b)
“disability” as such term is defined in the Company’s applicable long-term
disability insurance plan. At any time and from time to time, upon reasonable
request therefor by the Company, the Employee will submit to reasonable medical
examination for the purpose of determining the existence, nature and extent of
any such disability. Any physician selected by Company shall be Board Certified
in the appropriate field and shall have no actual or potential conflict of
interest.
Compensation of the Employee Upon Termination
. Subject to the provisions of Section 6.9, the Employee shall be entitled to
receive the amount specified upon the termination events designated below:
6.1Death. If the Employee’s employment under this Agreement is terminated by
reason of the Employee’s death, the Company shall pay to the person or persons
designated by the Employee for that purpose in a notice filed with the Company,
or, if no such person has been so designated, to the Employee’s estate, the
following:
5
(a)an amount equal to the Employee’s accrued but unpaid then current Base Salary
through the Termination Date, payable in a lump sum within 30 days following the
Termination Date; plus
(b)if the Termination Date occurs after the end of the calendar year but prior
to the date on which annual bonuses are paid, an amount equal to the Annual
Bonus that the Employee would have received (if any) had Employee been employed
on the payment date (the “Actual Full Year Bonus Amount”), payable at the same
time annual bonuses for such year are paid to actively-employed senior
executives of the Company; plus
(c)a pro-rata portion of the Employee’s Annual Bonus for the calendar year in
which the Employee’s Termination Date occurs, based on actual results for such
year (determined by multiplying the amount of such Annual Bonus which would be
due for the full calendar year by a fraction, (i) the numerator of which is the
number of days during the calendar year that the Employee is employed by the
Company and (ii) the denominator of which is three hundred sixty-five (365))
(the “Actual Pro Rata Bonus Amount”), if any, payable at the same time annual
bonuses for such year are paid to actively-employed senior executives of the
Company; plus
(d)any other amounts that may be reimbursable by the Company to the Employee as
expressly provided under this Agreement, payable in a lump sum within 30 days
The Employee’s entitlement to the amounts set forth in Section 6.1(b) and
Section 6.1(c) is subject to the provisions of Section 6.5.
Thereafter, the Company will have no further obligation to the Employee under
this Agreement, other than for payment of any amounts accrued and vested under
any employee benefit plans or programs of the Company and any payments or
benefits required to be made or provided under applicable law.
6.2Disability. In the event of the Employee’s termination by reason of
Disability pursuant to Section 5.5, the Employee will continue to receive the
Employee’s Base Salary in effect immediately prior to the Termination Date and
participate in applicable employee benefit plans or programs of the Company
through the Termination Date, subject to offset dollar-for-dollar by the amount
of any disability income payments provided to the Employee under any Company
disability policy or program that is maintained by the Company. The Company also
shall pay to the Employee the amounts set forth in Section 6.1(a) through
Section 6.1(d), at the times and subject to the conditions set forth in
Section 6.1. Thereafter, the Company will have no further obligation to the
Employee under this Agreement, other than for payment of any amounts accrued and
vested under any employee benefit plans or programs of the Company and any
payments or benefits required to be made or provided under applicable law.
6.3By the Company for Cause or by the Employee Without Good Reason.
(a)Termination by Company For Cause. If the Employee’s employment is terminated
by the Company for Cause, the Employee will receive (i) the Employee’s accrued
but unpaid then current Base Salary through the Termination Date and (ii) any
expressly provided under this Agreement, in
6
each case, payable in a lump sum within 30 days following the Termination Date.
any employee benefit plans or programs of the Company, and any payments or
benefits required to be made or provided under applicable law. No bonus will be
paid to the Employee for a termination of the Employee’s employment for Cause.
(b)Termination by Employee Without Good Reason. If the Employee’s employment is
terminated by the Employee without Good Reason, the Employee will receive (i)
the Employee’s accrued but unpaid then current Base Salary through the
Termination Date and (ii) any other amounts that may be reimbursable by the
Company to the Employee as expressly provided under this Agreement, in each
paid to the Employee for a termination of the Employee’s employment without Good
Reason.
6.4By the Employee for Good Reason or by the Company Without Cause. Subject to
the provisions of Section 6.5, if the Company terminates the Employee’s
employment without Cause, or the Employee terminates Employee’s employment for
Good Reason, then the Employee will be entitled to the following (with the
amounts payable under clauses (b), (c), (e) and (f) below, collectively, the
“Severance Benefits”):
Termination Date; plus
to the date on which annual bonuses are paid, the Actual Full Year Bonus Amount,
payable at the same time annual bonuses for such year are paid to
actively-employed senior executives of the Company; plus
(c)the Actual Pro Rata Bonus Amount, if any, payable at the same time annual
Company; plus
expressly provided under this Agreement; plus
(e)(i) if the Employee’s termination occurs on or prior to December 11, 2019 ,
an amount equal to the Employee’s monthly Base Salary rate as in effect on the
day before the Termination Date (but not as an employee), and (ii) if the
Employee’s termination occurs after December 11, 2019, an amount equal to 200%
of the Employee’s monthly Base Salary rate as in effect on the day before the
Termination Date, in each case, payable in accordance with the Company’s
regularly scheduled payroll practices for a period of 12 months following the
Termination Date; provided that to the extent the payment of any amount
constitutes “nonqualified deferred compensation” for purposes of Code
Section 409A, any such payment scheduled to occur during the first 60 days
following the Termination Date shall not be paid until the first regularly
7
scheduled pay period following the 60th day after the Termination Date and shall
include payment of any amount that was otherwise scheduled to be paid prior
thereto; plus
(f)subject to the Employee’s (i) timely election of continuation coverage under
the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
(“COBRA”), and (B) continued copayment of premiums at the same level and cost to
the Employee as if the Employee were a senior executive of the Company
(excluding, for purposes of calculating cost, an employee’s ability to pay
premiums with pre-tax dollars), continued participation in the Company’s group
health plan (to the extent permitted under applicable law and the terms of such
plan) which covers the Employee (and Employee’s spouse and eligible dependents,
if applicable) for a period of 12 months, provided that the Employee is eligible
and remains eligible for COBRA coverage; provided, further, that the Company may
modify the continuation coverage contemplated by this Section 6.4(f) to the
extent reasonably necessary to avoid the imposition of any excise taxes on the
Company for failure to comply with the nondiscrimination requirements of the
Patient Protection and Affordable Care Act of 2010, as amended, and/or the
Health Care and Education Reconciliation Act of 2010, as amended (to the extent
applicable); and provided, further, that in the event that the Employee obtains
other employment that offers group health plan coverage, such continuation of
coverage by the Company under this Section 6.4(f) shall cease as of the end of
the month in which the Employee obtains such other employer-provided, group
health plan coverage.
6.5Conditions to Receipt of Certain Post-Termination Payments and Benefits.
(a)Release. As a condition to receiving the Actual Full Year Bonus Amount, the
Actual Pro Rata Bonus Amount and/or any Severance Benefits to which the Employee
may otherwise be entitled under Section 6.1, Section 6.2 or Section 6.4, the
Employee must execute and not revoke a general release of claims, which will
include an affirmation of the restrictive covenants set forth in Section 7, in
form and substance satisfactory to the Company (the “Release”). The Company will
provide the Release to the Employee for signature within ten days after the
Termination Date. If the Company has provided the Release to the Employee for
signature within ten days after the Termination Date, and if the Release is not
executed and non-revocable within 60 days after the Termination Date and prior
to the date on which such payment and/or benefits are to be first paid or
provided to the Employee, the Employee will not be entitled to the Actual Full
Year Bonus Amount, the Actual Pro Rata Bonus Amount and/or any Severance
Benefits, as the case may be, and the Company will have no further obligations
with respect to the provision of those payments and/or benefits except as may be
required by law. If the Release consideration period spans two calendar years,
no payments and/or benefits subject to the Release will be paid or provided
until the later of (i) the date on which the Release becomes effective and
non-revocable and (ii) January 2nd of the second calendar year.
(b)Limitation on Benefits. If, following a termination of employment that gives
the Employee a right to the payment of the Actual Full Year Bonus Amount, the
Employee violates any of the covenants in Section 7 or as otherwise set forth in
the Release, the Employee will have no further right or claim to the Actual Full
Year Bonus Amount, the Target Pro Rata Bonus Amount and/or any Severance
Benefits to which the Employee may otherwise be entitled under Section 6.1,
Section 6.2 or
8
Section 6.4 from and after the date on which the Employee engages in such
activities, and the Company will have no further obligations with respect to
such payments or benefits, and the covenants in Section 7 will nevertheless
continue in full force and effect.
6.6Certain Amounts Not Includable for Employee Benefits Purposes. Except to the
extent the terms of any applicable benefit plan, policy or program provide
otherwise, any benefit programs of the Company that take into account the
Employee’s income will exclude the Actual Full Year Bonus Amount, the Actual Pro
Rata Bonus Amount and/or any Severance Benefits to which the Employee may
otherwise be entitled under Section 6.1, Section 6.2 or Section 6.4.
6.7Exclusive Severance Benefits. The Actual Full Year Bonus Amount, the Actual
otherwise be entitled under Section 6.1, Section 6.2 or Section 6.4, if they
become payable under the terms of this Agreement, will be in lieu of any other
severance or similar benefits that would otherwise be payable under any other
agreement, plan, program or policy of the Company, excluding, for this purpose,
any post-termination treatment of equity incentive awards provided under the
terms of the governing award agreements.
6.8Code Section 280G; Code Section 409A. Notwithstanding anything in this
Agreement to the contrary:
(a)If any of the payments or benefits received or to be received by the Employee
(including, without limitation, any payment or benefits received in connection
with a “change of control” or the Employee’s termination of employment, whether
agreement, or otherwise) (all such payments collectively referred to herein as
the (“280G Payments”) constitute “parachute payments” within the meaning of
Section 280G of the Code and would, but for this Section 6.8(a), be subject to
the excise tax imposed under Section 4999 of the Code (the “Excise Tax”), then
prior to making the 280G Payments, a calculation shall be made comparing (i) the
Net Benefit (as defined below) to the Employee of the 280G Payments after
payment of the Excise Tax to (ii) the Net Benefit to the Employee if the 280G
Payments are limited to the extent necessary to avoid being subject to the
Excise Tax. Only if the amount calculated under clause (i) above is less than
the amount under clause (ii) above will the 280G Payments be reduced to the
minimum extent necessary to ensure that no portion of the 280G Payments is
subject to the Excise Tax. “Net Benefit” shall mean the present value of the
280G Payments net of all federal, state, local, foreign income, employment and
excise taxes. Any reduction made pursuant to this Section 6.8(a) shall be made
in a manner determined by the Company that is consistent with the requirements
of Code Section 409A and that maximizes the Employee’s economic position and
after-tax income; for the avoidance of doubt, the Employee shall not have any
discretion in determining the manner in which the payments and benefits are
reduced.
(b)In the event that any benefits payable or otherwise provided under this
Agreement would be deemed to constitute non-qualified deferred compensation
subject to Code Section 409A, the Company will have the discretion to adjust the
terms of such payment or benefit (but not the amount or value thereof) to the
minimum extent reasonably necessary to comply with the requirements of Code
Section 409A to avoid the imposition of any excise tax or other penalty with
respect to such payment or benefit under Code Section 409A.
9
6.9Timing of Payments by the Company. Notwithstanding anything in this Agreement
to the contrary, in the event that the Employee is a “specified employee” (as
determined under Code Section 409A) at the time of the separation from service
triggering the payment or provision of benefits, any payment or benefit under
this Agreement which is determined to provide for a deferral of compensation
pursuant to Code Section 409A shall not commence being paid or made available to
the Employee until after six months from the Termination Date that constitutes a
“separation from service” within the meaning of Code Section 409A or such
earlier date as may be permitted under Code Section 409A.
Restrictive Covenants
.
7.1Confidential Information. During the Employment Term and thereafter, the
Employee shall keep secret and retain in strictest confidence, and shall not use
for the benefit of himself or others, any confidential matters or trade secrets
of, or confidential and competitively valuable information concerning, the
Company and its direct or indirect subsidiaries (collectively, the “Company
Group”), including, without limitation, information concerning their
organization and operations, business and affairs, formulae, manufacturing
processes, proprietary information, technical data, “know-how”, customer lists,
details of client or consultant contracts, vendor and purchasing arrangements,
terms and discounts, pricing methods and policies, financial information,
operational methods, marketing plans or strategies, business acquisition plans,
new personnel acquisition plans, technical processes, projects,
financing/financial projections, budget information and procedures, marketing
plans or strategies, and research products. The confidentiality obligations set
forth in this Section 7.1 shall not apply to any information that becomes part
of the public domain other than through the Employee’s disclosure in violation
of the terms hereof. Nothing herein shall be construed as prohibiting the
Employee from using or disclosing such confidential information as is necessary
and has been authorized in Employee’s proper performance of services for the
Company Group.
(a)SEC Provisions. The Employee understands that nothing contained in this
Agreement limits the Employee’s ability to file a charge or complaint with the
Securities and Exchange Commission (“SEC”). The Employee further understands
that this Agreement does not limit the Employee’s ability to communicate with
the SEC or otherwise participate in any investigation or proceeding that may be
conducted by the SEC, including providing documents or other information,
without notice to the Company. This Agreement does not limit the Employee’s
right to receive an award for information provided to the SEC. This
Section 7.1(a) applies only for the period of time that the Company is subject
to the Dodd-Frank Act.
(b)Trade Secrets. The parties specifically acknowledge that 18 U.S.C. § 1833(b)
provides: “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—(i) in confidence to a Federal, State, or local government
official, either directly or indirectly, or to an attorney; and (ii) 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.” Nothing in this Agreement is intended to
conflict with 18 U.S.C. § 1833(b) or create liability for disclosures of trade
secrets that are expressly allowed by 18 U.S.C. § 1833(b). Accordingly,
notwithstanding anything to the contrary in the foregoing, the Parties have the
right to disclose in confidence trade secrets to federal, state, and local
government officials, or to an attorney, for the
10
sole purpose of reporting or investigating a suspected violation of law. If the
Employee files a lawsuit for retaliation against the Company for reporting a
suspected violation of law, the Employee may disclose the Company’s trade
secrets to the Employee’s attorney and use the trade secret information in the
court proceeding, if the Employee first files any document containing the trade
secret under seal and does not disclose the trade secret, except pursuant to
court order.
7.2No Interference. Notwithstanding any other provision of this Agreement, (a)
the Employee may disclose confidential information (as described in Section 7.1
above) when required to do so by a court of competent jurisdiction, by any
governmental agency having authority over the Employee or the business of the
Company or by any administrative body or legislative body (including a committee
thereof) with jurisdiction to order the Employee to divulge, disclose or make
accessible such information, in each case, subject to the Employee’s obligations
to notify the Company and first obtain a protective order, to the extent
permitted by applicable law; and (b) nothing in this Agreement is intended to
interfere with the Employee’s right to (i) report possible violations of state
or federal law or regulation to any governmental or law enforcement agency or
entity; (ii) make other disclosures that are protected under the whistleblower
provisions of state or federal law or regulation (including the right to receive
an award for information provided to any such government agencies); (iii) file a
claim or charge any governmental agency or entity; or (iv) testify, assist or
participate in an investigation, hearing, or proceeding conducted by any
governmental or law enforcement agency or entity, or any court. For purposes of
clarity, in making or initiating any such reports or disclosures or engaging in
any of the conduct outlined in subsection (b) above, the Employee may disclose
confidential information to the extent necessary to such governmental or law
enforcement agency or entity or such court, need not seek prior authorization
from the Company and is not required to notify the Company of any such reports,
disclosures or conduct.
7.3Return of Property. The Employee agrees to deliver promptly to the Company,
upon termination of the Employee’s employment hereunder, or at any other time
when the Company so requests, all documents relating to the business of the
Company Group; provided, however, that the Employee will be permitted to retain
copies of any documents or materials of a personal nature or otherwise related
to the Employee’s rights under this Agreement, copies of this Agreement and any
attendant or ancillary documents specifically including any documents referenced
in this Agreement and copies of any documents related to the Employee’s
long-term incentive awards and other compensation.
7.4Non-Competition. The Employee acknowledges that the Employee (a) will perform
services of a unique nature for the Company Group that are irreplaceable, and
that the Employee’s performance of such services to a competing business will
result in irreparable harm to the Company Group, (b) will have access to
Confidential Information which, if disclosed, would unfairly and inappropriately
assist in competition against the Company Group, (c) would inevitably use or
disclose such Confidential Information in the course of the Employee’s
employment by a competitor, (d) will have access to the customers of the Company
Group, (e) will receive specialized training from the Company Group, and (f)
will generate goodwill for the Company Group in the course of the Employee’s
employment. Accordingly, during the Employment Term and for a period of 12
months immediately thereafter, the Employee agrees that the Employee will not,
directly or indirectly, other than through the Company, engage or participate
(or prepare to engage or participate), in any manner, whether directly or
indirectly
11
through an employee, employer, consultant, agent, principal, partner, more than
1% shareholder, officer, director, licensor, lender, lessor or in any other
individual or representative capacity, in any business or activity which is in
competition with the business of the Company Group in the leasing, acquiring,
exploring or producing hydrocarbons and related products within the boundaries
of, or within a ten-mile radius of the boundaries of, any mineral property
interest of any member of the Company Group (including, without limitation, a
mineral lease, overriding royalty interest, production payment, net profits
interest, mineral fee interest or option or right to acquire any of the
foregoing, or an area of mutual interest as designated pursuant to contractual
agreements between any member of the Company Group and any third party), or any
other property on which any of the Company Group has an option, right, license
or authority to conduct or direct exploratory activities, such as
three-dimensional seismic acquisition or other seismic, geophysical and
geochemical activities (but not including any preliminary geological mapping),
provided that the foregoing will not restrict the Employee from obtaining
post-termination employment with an entity that only has de minimis operations
in the restricted territory (as determined by the Board in good faith); provided
that, this Section 7.4 will not preclude the Employee from making passive
national stock exchange, if (i) the aggregate amount owned by the Employee and
Employee’s spouse and children, if any, does not exceed 1% of such company’s
outstanding securities, and (ii) the aggregate amount invested in such
investments by the Employee and Employee’s spouse and children does not exceed
$1,000,000.
7.5Non-Solicitation; Non-Interference.
(a)During the Employment Term and for a period of 12 months immediately
thereafter, the Employee agrees that Employee shall not, except in the
furtherance of the Employee’s duties hereunder, directly or indirectly,
individually or on behalf of any other person, firm, corporation or other
entity, induce or attempt to induce any customer, supplier, agent, intermediary
or other business relation of the Company Group to reduce or cease doing
business with the Company Group, or interfere with the relationship between any
such customer, supplier, agent, intermediary or business relation and the
Company Group (including making any negative statements or communications
concerning the Company Group); provided that nothing contained in this
Section 7.5(a) will prohibit public advertising or general solicitations that
are not specifically directed to customers, suppliers, licensees or other
business relations of the Company Group.
(b)During the Employment Term and for a period of 12 months immediately
entity, solicit, aid or induce any employee, representative or agent of the
Company Group to leave such employment or retention or to accept employment with
or render services to or with any other person, firm, corporation or other
entity unaffiliated with the Company Group or hire or retain any such employee,
representative or agent, or take any action to materially assist or aid any
other person, firm, corporation or other entity in identifying, hiring or
soliciting any such employee, representative or agent. An employee,
representative or agent shall be deemed covered by this Section 7.5(b) while so
employed or retained and for a period of six months thereafter.
12
7.6Non-Disparagement. The Employee agrees not to make any negative, disparaging,
detrimental or derogatory remarks or public statements (written, oral,
telephonic, electronic, or by any other method) about the Company or any other
member of the Company Group or their respective successors and assigns or any of
their respective officers, directors, employees, shareholders, agents or
products. The Company agrees not to make any negative, disparaging, detrimental
or derogatory remarks or public statements (written, oral, telephonic,
electronic or by any other method) about the Employee. The foregoing shall not
be violated by truthful statements in response to legal process, required
governmental testimony or filings, or administrative or arbitral proceedings
(including, without limitation, depositions in connection with such
proceedings).
7.7Assignment of Developments.
(a)The Employee acknowledges and agrees that all ideas, methods, inventions,
discoveries, improvements, work products, developments, software, know-how,
processes, techniques, works of authorship and other work product, whether
patentable or unpatentable, (i) that are reduced to practice, created, invented,
designed, developed, contributed to, or improved with the use of any Company
Group resources and/or within the scope of the Employee’s work with the Company
Group or that relate to the business, operations or actual or demonstrably
anticipated research or development of the Company Group, and that are made or
conceived by the Employee, solely or jointly with others, during the Employment
Term, or (ii) suggested by any work that the Employee performs in connection
with the Company Group, either while performing the Employee’s duties with the
Company Group or on the Employee’s own time, but only insofar as the Inventions
are related to the Employee’s work as an employee or other service provider to
the Company Group, shall belong exclusively to the Company (or its designee),
whether or not patent or other applications for intellectual property protection
are filed thereon (the “Inventions”). The Employee will keep full and complete
written records (the “Records”), in the manner prescribed by the Company, of all
Inventions, and will promptly disclose all Inventions completely and in writing
to the Company. The Records shall be the sole and exclusive property of the
Company, and the Employee will surrender them upon the termination of the
Employment Term, or upon the Company’s earlier request. The Employee irrevocably
conveys, transfers and assigns to the Company the Inventions and all patents or
other intellectual property rights that may issue thereon in any and all
countries, whether during or subsequent to the Employment Term, together with
the right to file, in the Employee’s name or in the name of the Company (or its
designee), applications for patents and equivalent rights (the “Applications”).
The Employee will, at any time during and subsequent to the Employment Term,
make such applications, sign such papers, take all rightful oaths, and perform
all other acts as may be requested from time to time by the Company to perfect,
record, enforce, protect, patent or register the Company’s rights in the
Inventions, all without additional compensation to the Employee from the
Company. The Employee will also execute assignments to the Company (or its
designee) of the Applications, and give the Company and its attorneys all
reasonable assistance (including the giving of testimony) to obtain the
Inventions for the Company’s benefit, all without additional compensation to the
Employee from the Company, but entirely at the Company’s expense.
(b)In addition, the Inventions will be deemed Work for Hire, as such term is
defined under the copyright laws of the United States, on behalf of the Company,
and the Employee agrees that the Company will be the sole owner of the
Inventions, and all underlying rights therein,
13
in all media now known or hereinafter devised, throughout the universe and in
perpetuity without any further obligations to the Employee. If the Inventions,
or any portion thereof, are deemed not to be Work for Hire, or the rights in
such Inventions do not otherwise automatically vest in the Company, the Employee
hereby irrevocably conveys, transfers and assigns to the Company, all rights, in
perpetuity, in and to the Inventions, including, without limitation, all of the
Employee’s right, title and interest in the copyrights (and all renewals,
revivals and extensions thereof) to the Inventions, including, without
limitation, all rights of any kind or any nature now or hereafter recognized,
including, without limitation, the unrestricted right to make modifications,
adaptations and revisions to the Inventions, to exploit and allow others to
exploit the Inventions and all rights to sue at law or in equity for any
infringement, or other unauthorized use or conduct in derogation of the
Inventions, known or unknown, prior to the date hereof, including, without
limitation, the right to receive all proceeds and damages therefrom. In
addition, the Employee hereby waives any so-called “moral rights” with respect
to the Inventions. To the extent that the Employee has any rights in the results
and proceeds of the Employee’s service to the Company that cannot be assigned in
the manner described herein, the Employee agrees to unconditionally waive the
enforcement of such rights. The Employee hereby waives any and all currently
existing and future monetary rights in and to the Inventions and all patents and
other registrations for intellectual property that may issue thereon, including,
without limitation, any rights that would otherwise accrue to the Employee’s
benefit by virtue of the Employee being an employee of or other service provider
to the Company.
7.8Injunctive Relief. The Employee acknowledges that a breach of any of the
covenants contained in this Section 7 may result in material, irreparable injury
to the Company Group for which there is no adequate remedy at law, that it will
not be possible to measure damages for such injuries precisely, and that, in the
event of such a breach or threat of breach, the Company or any other member of
the Company Group will be entitled to obtain a temporary restraining order
and/or a preliminary or permanent injunction restraining the Employee from
engaging in activities prohibited by this Section 7 or such other relief as may
be required to specifically enforce any of the covenants in this Section 7.
7.9Adjustment of Covenants. The Parties consider the covenants and restrictions
contained in this Section 7 to be reasonable. However, if and when any such
modified, such covenant or restriction will be deemed to have been applied with
Parties to have made it valid, enforceable and effective.
7.10Forfeiture Provision.
(a)Detrimental Activities. If the Employee engages in any activity that violates
any covenant or restriction contained in this Section 7, in addition to any
other remedy the Company may have at law or in equity, (i) the Employee will be
entitled to no further payments or benefits from the Company under this
Agreement or otherwise, except for any payments or benefits required to be made
or provided under applicable law; (ii) all forms of equity compensation held by
or credited to the Employee will terminate effective as of the date on which the
Employee engages in that activity, unless terminated sooner by operation of
another term or condition of this Agreement or other applicable plans and
agreements; and (iii) any exercise,
14
payment or delivery pursuant to any equity compensation award that occurred
within one year prior to the date on which the Employee engages in that activity
may be rescinded within one year after the first date that any member of the
Board first became aware that the Employee engaged in that activity. In the
event of any such rescission, the Employee will pay to the Company the amount of
any gain realized or payment received as a result of the rescinded exercise,
payment or delivery (after deducting the Employee’s actual income tax liability
incurred with respect to such gain or payment), in such manner and on such terms
and condition as may be required. Notwithstanding any provision of this
Agreement to the contrary, if the Employee disputes whether Employee has
violated any covenant or restriction contained in Section 7, and such dispute
has been adjudicated to a final decision pursuant to Section 8.5 in the
Employee’s favor, the Company will pay to the Employee all amounts withheld or
clawed back pursuant to this Section 7.11 to the extent ordered by a court of
competent jurisdiction; provided that legal action in this respect is filed by
the Employee within 60 days after being notified of the Company’s decision
affecting the Employee under this Section 7.11.
(b)Right of Setoff. The Employee consents to a deduction from any amounts the
Company owes the Employee from time to time (including amounts owed as wages or
amounts owed to the Employee by the Company), to the extent of the amounts the
Employee owes the Company under Section 7.11(a) (above). Whether or not the
Company elects to make any setoff in whole or in part, if the Company does not
recover by means of setoff the full amount the Employee owes, calculated as set
forth above, the Employee agrees to pay immediately the unpaid balance to the
Company.
Miscellaneous
.
8.1Assignment; Successors; Binding Agreement. This Agreement may not be assigned
by either Party, whether by operation of law or otherwise, without the prior
written consent of the other Party, except that any right, title or interest of
the Company arising out of this Agreement may be assigned to any corporation or
entity controlling, controlled by, or under common control with the Company, or
succeeding to the business and substantially all of the assets of the Company or
any affiliates for which the Employee performs substantial services. Subject to
the foregoing, this Agreement will be binding upon and will inure to the benefit
of the Parties and their respective heirs, legatees, devisees, personal
representatives, successors and assigns. The Company shall obtain from any
successor or other person or entity acquiring a majority of the Company’s assets
or equity securities a written agreement to perform all terms of this Agreement,
and any failure by the Company to obtain such written agreement shall be a
material breach of this Agreement.
8.2Modification and Waiver. Except as otherwise provided below, no provision of
this Agreement may be modified, waived, or discharged unless such waiver,
modification or discharge is duly approved by the Board and is agreed to in
writing by the Employee and such officer(s) as may be specifically authorized by
the Board to effect it. No waiver by any Party of any breach by any other Party
of, or of compliance with, any term or condition of this Agreement to be
performed by any other Party, at any time, will constitute a waiver of similar
or dissimilar terms or conditions at that time or at any prior or subsequent
time.
8.3Entire Agreement. This Agreement, together with any documents specifically
referenced in this Agreement, embodies the entire understanding of the Parties
hereto, and, upon
15
the Effective Date, will supersede all other oral or written agreements or
understandings between them regarding the subject matter hereof including any
promises or agreements providing for severance including, without limitation,
the Prior Agreements, and any promises or agreements providing for severance;
provided, however, that if there is a conflict between any of the terms in this
Agreement and the terms in any award agreement between the Company and the
Employee pursuant to any long-term incentive plan or otherwise, the terms of the
award agreement shall govern. No agreement or representation, oral or otherwise,
express or implied, with respect to the subject matter of this Agreement, has
been made by either Party which is not set forth expressly in this Agreement or
the other documents referenced in this Section 8.3.
8.4Governing Law. The validity, interpretation, construction and performance of
this Agreement will be governed by the laws of the State of Texas other than the
conflict of laws provision thereof.
8.5Consent to Jurisdiction; Service of Process; Waiver of Right to Jury Trial.
(a)Disputes. In the event of any dispute, controversy or claim between the
Company and the Employee arising out of or relating to the interpretation,
application or enforcement of the provisions of this Agreement, the Company and
the Employee agree and consent to the personal jurisdiction of the state and
local courts of Harris County, Texas and/or the United States District Court for
the Southern District of Texas, Houston Division for resolution of the dispute,
controversy or claim, and that those courts, and only those courts, shall have
any jurisdiction to determine any dispute, controversy or claim related to,
arising under or in connection with this Agreement. The Company and the Employee
also agree that those courts are convenient forums for the parties to any such
dispute, controversy or claim and for any potential witnesses and that process
issued out of any such court or in accordance with the rules of practice of that
court may be served by mail or other forms of substituted service to the Company
at the address of its principal executive offices and to the Employee at the
Employee’s last known address as reflected in the Company’s records.
(b)Waiver of Right to Jury Trial. THE COMPANY AND THE EMPLOYEE HEREBY
VOLUNTARILY, KNOWINGLY AND INTENTIONALLY WAIVE ANY AND ALL RIGHTS TO TRIAL BY
JURY TO ALL CLAIMS ARISING OUT OF OR RELATING TO THIS AGREEMENT, AS WELL AS TO
ALL CLAIMS ARISING OUT OF THE EMPLOYEE’S EMPLOYMENT WITH THE COMPANY OR
TERMINATION THEREFROM.
8.6Withholding of Taxes. The Company will withhold from any amounts payable
under the Agreement all federal, state, local or other taxes as legally will be
8.7Notices. All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) sent by facsimile
(with written confirmation of receipt), provided that a copy is mailed by
registered mail, return receipt requested, or (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and facsimile
numbers set forth below (or to such other addresses and facsimile numbers as a
Party may designate by notice to the other parties).
16
To the Company:
AMPLIFY ENERGY CORP.
Attn: General Counsel
500 Dallas Street
Suite 1700
Houston, TX 77002 17
Facsimile: (713) 456-2940
To the Employee:
At the address reflected in the Company’s written records.
Addresses may be changed by written notice sent to the other Party at the last
recorded address of that Party.
8.8Severability. The invalidity or unenforceability of any provision or
provisions of this Agreement will not affect the validity or enforceability of
any other provision of this Agreement, which will remain in full force and
effect.
8.9Counterparts. This Agreement may be executed in one or more counterparts,
each of which will be deemed to be an original but all of which together will
8.10Headings. The headings used in this Agreement are for convenience only, do
not constitute a part of the Agreement, and will not be deemed to limit,
characterize, or affect in any way the provisions of the Agreement, and all
provisions of the Agreement will be construed as if no headings had been used in
the Agreement.
8.11Construction. As used in this Agreement, unless the context otherwise
requires: (a) the terms defined herein will have the meanings set forth herein
for all purposes; (b) references to “Section” are to a section hereof; (c)
“include,” “includes” and “including” are deemed to be followed by “without
limitation” whether or not they are in fact followed by such words or words of
like import; (d) “writing,” “written” and comparable terms refer to printing,
typing, lithography and other means of reproducing words in a visible form; (e)
“hereof,” “herein,” “hereunder” and comparable terms refer to the entirety of
this Agreement and not to any particular section or other subdivision hereof or
attachment hereto; (f) references to any gender include references to all
genders; and (g) references to any agreement or other instrument or statute or
regulation are referred to as amended or supplemented from time to time (and, in
the case of a statute or regulation, to any successor provision).
8.12Capacity; No Conflicts. The Employee represents and warrants to the Company
that: (a) the Employee has full power, authority and capacity to execute and
deliver this Agreement, and to perform the Employee’s obligations hereunder, (b)
such execution, delivery and performance will not (and with the giving of notice
or lapse of time, or both, would not) result in the breach of any agreement or
other obligation to which the Employee is a party or is otherwise bound, and (c)
this Agreement is the Employee’s valid and binding obligation, enforceable in
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IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the date
first written above.
AMPLIFY ENERGY CORP.
By:
/s/ Kenneth Mariani
Name:
Kenneth Mariani
Title:
EMPLOYEE
/s/ Martyn Willsher
Martyn Willsher
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EMPLOYMENT CONTRACT
BETWEEN: Wuhan Fengze Agricultural Science and Technology Development Co.,
Ltd., a company legally incorporated under the laws of People’s Republic of
China, (Mailing address: Suite F, 23rd Floor, Building B, Jiangjing Mansion, 228
Yanjiang Ave., Jiang’an District, Wuhan City, Hubei Province) acting and
represented herein by Ms. Hanying Li, chairwoman of the board, declaring duly
authorized, (Hereinafter referred to "Fengze")
AND: Mr. Jun Wang, residing at Room 101, Building 102, Wuhan Tielu
Residential Quarter, Wuhan City, Hubei Province (hereinafter referred to "Mr.
Jun Wang")
(Fengze and Mr. Jun Wang hereinafter collectively called "Parties")
1. PREAMBLE
The preamble is an integral part of this contract.
WHEREAS FENGZE requires the services of Mr. Jun Wang as Chief Financial Officer
(CFO);
WHEREAS, Mr. Jun Wang agreed to provide FENGZE his full-time services as CFO;
WHEREAS the parties wish to confirm their agreement in writing;
WHEREAS the parties have the capacity and quality of exercise all the rights
necessary for the conclusion and implementation of the agreement found in this
contract;
THEREFORE THE FOREGOING, THE PARTIES AGREE AS FOLLOWS:
2. PURPOSE
2.1 Services
Mr. Jun Wang agrees to assume full-time for FENGZE (minimum of forty (40) hours
per week) the role of CFO during the entire duration of the contract;
2.2 Term
This contract is for an initial term of 30 months( From July 09, 2013 to
December 31, 2015) renewable for an additional period of 24 months unless either
party terminates it in writing at least three (3) months before the expiration
of the initial term;
3. CONSIDERATION
3.1 Service Awards
In consideration of the provision of services, FENGZE to pay Mr. Jun Wang, as
compensation;
The gross amount of RMB 480,000 ($76,190 US dollars) annually is constituted by
a basis compensation of RMB 240,000 ($38,095 US dollars) and a conditional
Year-end awards that no more than RMB 240,000 ($38,095 US dollars).
The basis compensation is calculated at the rate of twelve (12) equal monthly
installments consecutively of RMB 20,000 ($3,175 US dollars) each, less
withholding taxes applicable.
The Year-end award shall only be paid under the condition of 3.3.3
3.2 Expenditure incurred
FENGZE will reimburse Mr. Jun Wang all reasonable expenses incurred in
connection with this Agreement, upon presentation of appropriate documentation;
3.3 Terms and conditions of payment
3 .3.1The price payable by FENGZE to Mr. Jun Wang is as follows:
3.3.2 The sum of RMB 20,000 ($3,175 US dollars) shall be paid on the 9th of each
month from July 9th, 2013.
3.3.3 The sum of Year-end award shall be paid on the December 31, 2013, 2014 and
2015 only under the condition that FENGZE’s annual profit reach or over 50% of
its last year’s annual profit. And the data of each FENGZE’s annual profit shall
in accordance with audit report issued at the end of corresponding year.
3.3.4 Expenses will be reimbursed on presentation of an expense account on the
24th of each month.
4. SPECIAL PROVISIONS
4.1 Obligations of FENGZE
FENGZE agrees and undertakes to Mr. Jun Wang as follows:
FENGZE to bring Mr. Jun Wang collaboration and will provide information
necessary to ensure the full and faithful discharge of services to be rendered;
4.2 Obligation to MR.JUN WANG
Mr. Jun Wang agrees and undertakes to FENGZE to the following:
The services must be made full time in a professional manner, according to the
rules generally accepted by industry.
4.3 Commitment to confidentiality and nondisclosure
Mr. Jun Wang recognizes that certain disclosures to be provided by FENGZE have
or may have considerable strategic importance, and therefore represent trade
secrets for purposes of this contract. During the term of this Contract and for
a period of 30 months following the end of it, Mr. Jun Wang is committed to
FENGZE to:
a) keep confidential and not disclose the information;
b) take and implement all appropriate measures to protect the confidentiality of
the information;
c) not disclose, transmit, exploit or otherwise use for its own account or for
others, elements of information;
4.4 Exclusivity of service provider
During the term of this Contract and for a period of 24 months following the
end of it, Mr. Jun Wang is committed to FENGZE not render services to or for
direct or indirect competitors of FENGZE.
4.5 Responsibilities
4.5.2
Maintain executive responsibility for financial operations, including working
capital, capital expenditures, debt levels, taxes, budget, and general
accounting.
4.5.3
Develop and direct financial plans to the strategic business plan, company
growth, and market opportunities and direction.
4.5.4
Establish and maintain stable cash flow management policies and procedures, and
ensure cash resources are available for daily operations and business and
product development.
4.5.5
Set-up and/or oversee all financial and operational controls and metrics within
the organization.
4.5.6
Analyze current and future business operations and plans to determine financial
effectiveness.
4.5.7
Manage outside lending and equity relationships, as well as relations with
investors and shareholders within the investment community.
4.5.8
Prepare and file federal, state, third-party, and other financial reports to
ensure compliance with GAAP, SEC, and IRS and other taxing entity requirements.
4.5.9
Establish the performance goals, allocate resources, and assess policies for
employees, through other managers.
4.6 Relationship between the parties
Neither party may bind the other in any way whatsoever to anyone, except in
accordance with the provisions of this contract.
4.7 Representations and Warranties Mr. Jun Wang
Mr. Jun Wang represents and warrants to FENGZE that:
a) he has the capacity required to undertake under this contract, such capacity
was not limited by any commitment to another person;
b) he has the expertise and experience required to execute and complete the its
obligations under this contract;
c) he will make services efficient and professional manner, according to the
rules generally accepted by industry;
4.8 Termination of Contract
Either party may terminate this contract at any time, upon presentation of a 60
days notice given to the other party. Amounts due and options purchases of
shares will be delivered when calculated on a pro-rata to the time elapsed since
the last payment or the last delivery of stock options.
5. GENERAL PROVISIONS
Unless specific provision to the contrary in this Agreement, the following
provisions apply.
5.1 Force Majeure
Neither party can be considered in default under this contract if the
performance of its obligations in whole or in part is delayed or prevented by
following a force majeure situation. Force majeure is an external event,
unforeseeable, irresistible and it absolutely impossible to fulfill an
obligation.
5.2 Severability
The possible illegality or invalidity of an article, a paragraph or provision
(or part of an article, a paragraph or provision) does not in any way affect the
legality of other items, paragraphs or provisions of this contract, nor the rest
of this article, this paragraph or provision unless a contrary intention is
evident in the text.
5.3 Notices
Any notice to a party is deemed to have been validly given if in writing and
sent by registered or certified mail, by bailiff or by courier to such party at
the address listed at the beginning of this contract or any other address that
the party may indicate a similar notice to another party. A copy of any notice
sent by mail must be sent by one mode of delivery mentioned above.
5.4 Titles
The headings used in this contract are only for reference and convenience only.
They do not affect the meaning or scope of the provisions they designate.
5.5 No Waiver
The inertia, neglect or delay by any party to exercise any right or remedy under
this Agreement shall in no way be construed as a waiver of such right or remedy.
5.6 Rights cumulative and not alternative
All the rights mentioned in this Agreement are cumulative and not alternative.
The waiver of a right should not be construed as a waiver of any other right.
5.7 Totality and entire agreement
This contract represents the full and entire agreement between the parties. No
statement, representation, promise or condition not contained in this agreement
can and should be allowed to contradict, modify or affect in any manner
whatsoever the terms thereof.
5.8 Contract Amendment
This contract may be amended only by a writing signed by all parties.
5.9 Gender and Number
All words and terms used in this agreement shall be interpreted as including the
masculine and feminine and singular and plural as the context or meaning of this
contract.
5.10 Assignable
Neither party may assign or otherwise transfer to any third party or of his
rights in this contract without the prior written permission of the other party
to that effect.
5.11 Computation of time
In computing any period fixed by the contract:
a) the day that marks the starting point is not counted, but the terminal is;
b) non-juridical days (Saturdays, Sundays and holidays) are counted;
c) when the last day is not legal, the deadline is extended to the next
juridical day.
5.12 Currencies
All sums of money under this contract refer to Chinese currency.
5.13 Applicable Laws
This contract is subject to the laws of the People’s Republic of China.
5.14 Election of domicile
The parties agree to elect domicile in the judicial district of Wuhan, China,
and chose it as the appropriate district to hear any claim arising from the
interpretation, application, and performance, the entry into force, validity and
effect of this contract.
5.15 Copies
When initialed and signed by all parties, each copy of this contract shall be
deemed an original, but these examples do not reflect all one and the same
agreement.
5.16 Scope of Contract
This contract binds the parties and their successors, heirs and assigns,
respectively.
5.17 Solidarity
If a party consists of two or more persons, they are forced and severally liable
to the other party.
5.18 Time is of Essence
If a party must fulfill an obligation under this contract within a specified
time, the passage of time will effectively be part of this notice.
6. EFFECTIVE DATE OF CONTRACT
This Agreement shall enter into force July 09, 2013.
SIGNED BY Two (2) copies,
IN THE CITY OF WUHAN, HUBEI PROVINCE,
DATED: July 09, 2013
Wuhan Fengze Agricultural Science and Technology Development Co., Ltd
______________________________
Mr. Jun Wang
______________________________
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Registration No. 333- As filed with the Securities and Exchange Commission on June 30, 2016 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORMS-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 H.B. FULLER COMPANY (Exact name of registrant as specified in its charter) Minnesota (State or other jurisdiction of incorporation or organization) 41-0268370 (I.R.S. Employer Identification No.) 1200 Willow Lake Boulevard St. Paul, Minnesota 55110-5101 (Address, including zip code, of registrant’s principal executive offices) H.B. FULLER COMPANY 2 (Full title of the plan) Timothy J. Keenan, Esq. Vice President, General Counsel and Corporate Secretary H.B. Fuller Company 1200 Willow Lake Boulevard
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Exhibit 3.1 USE BLACK INK ONLY - DO NOT HIGHLIGHT ABOVE SPACE IS FOR OFFICE USE ONLY Certificate of Amendment to Articles of incorporation for Nevada Profit Qoroorations (Pursuant to NRS 78.385 and 78.380 - After issuance of Stock) 1. Name of corporation: Blacksands Petroleum, Inc. 2.Thearticles have been amended as follows: (provide article numbers, If available) ARTICLE IV Section 4.01 The Corporation is authorized:to issue two classes of stock. One class of stock shall be Common Stock, par value $0.001. The second class of stock shall be Preferred Stock, par value S0.001. **(PLEASE SEE FULL DESCRIPTION OF ARTICLE IV ATTACHED HERETO AND MADE PART HEREOF)** 3.The vote by which the stockholders holding shares In the corporation entitling them to exercise a least a majority of the voting power, or such greater proportion of the voting power as may be required in the case of a vote by classes or series, or as may be required by the provisions of thearticles of incorporation* have voted in favor of the amendment is: N/A 4.Effective date of filing: (optional) 1/4/11 (must not be later than 90 days after the certificate is filed) 5.Signature: (required) Signature of Officer• * If any proposed amendment would alter or change any preference or any relative or other right given to any class or series of outstanding shares, then the amendment must be approved by the vote, In addition to the affirmative vote otherwise required, of the holders of shares representing a majority of the voting power of each class or series affected by the amendment regardless to limitations or restrictions on.the voting power thereof. IMPORTANT: Failure to Include any of the above Information and submit with the proper fees may cause this filing to be rejected. This form must be accompanied by appropriate fees. (ATTACEMENT) CERTIFICATE OF AI,TENDMENT TO ARTICLES OF INCORPORATION OF Blacksands Petroleum, Inc, ARTICLE IV Section 4.01 The Corporation is authorized to issue two classes of stock. One class of stock shall be Common Stock, par value $0.001. The second class of stock shall be Preferred Stock, par value $0.001. The Preferred Stock, or any series thereof; shall have such designations, preferences and relative, participating, optional or other special rights and qualifications, limitations or restrictions thereof as shall be expressed in the resolution or resolutions providing for the issue of such stock adopted by the board of directors and may be made dependent upon facts ascertainable outside such resolution' or resolutions of the board of directors, provided that the matter in which such facts shall operate upon such designations, preferences, rights and qualifications; limitations or restrictions of such class or series of stock is clearly and expressly set forth in the resolution or resolutions providing for the issuance of such stock by the board of directors. The number of authorized, but unissued shares and the number of outstanding shares of Common Stook shall be reverse split on a one-for-three basis, effective as of the filing date of this Certificate of Amendment. The total number of shares of stock of each class which the Corporation shall have authority to issue and the par value of each share of each class of stock are as follows: Class Par Value Authorized Shares Common Preferred Totals:
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2013 o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-35898 CAPITOL ACQUISITION CORP. II (Exact Name of Registrant as Specified in Its Charter) Delaware 27-4749725 (State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification Number) 509 7th Street, N.W. Washington, D.C. (Address of Principal Executive Offices) (Zip Code) 202-654-7060 (Registrant’s Telephone Number, Including Area Code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Common Stock, par value $0.0001 per share The NASDAQ Stock Market LLC Warrants, each to purchase one share of Common Stock at an exercise price of $11.50 The NASDAQ Stock Market LLC Units, each to purchase one share of Common Stock and one half of One Warrant The NASDAQ Stock Market LLC 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 of the Securities Act.Yes o No x Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act.Yes o No x Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 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 requirement for the past 90 days. Yes x 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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the 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, a non-accelerated filer or a smaller reporting company. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer o Accelerated filer o Non-accelerated filer x Smaller reporting company o (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes x No o As of June 28, 2013 (the last business day of the registrant’s most recently completed second fiscal quarter), the aggregate market value of the common stock held by non-affiliates of the registrant was approximately $202,000,000 based on its last reported sales price of $10.10 on NASDAQ Stock Market LLC. As of March 6, 2014, there were 25,000,000 shares of common stock, $0.0001 par value per share, outstanding. Documents Incorporated by Reference: None. CAPITOL ACQUISITION CORP. II FORM 10-K TABLE OF CONTENTS PART I 1 Item 1. Business. 1 Item 1A. Risk Factors. 14 Item 1B. Unresolved Staff Comments. 30 Item 2. Properties. 30 Item 3. Legal Proceedings. 31 Item 4. Mine Safety Disclosures. 31 PART II 32 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. 32 Item 6. Selected Financial Data. 34 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 34 Item 7A. Quantitative and Qualitative Disclosures About Market Risk. 38 Item 8. Financial Statements and Supplementary Data. 39 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures. 39 Item 9A. Controls and Procedures. 39 Item 9B. Other Information. 40 PART III 41 Item 10. Directors, Executive Officers and Corporate Governance. 41 Item 11. Executive Compensation. 46 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. 46 Item 13. Certain Relationships and Related Transactions, and Director Independence. 49 Item 14. Principal Accounting Fees and Services. 53 PART IV 55 Item 15. Exhibits, Financial Statement Schedules. 55 PART I Item 1.Business. In this Annual Report on Form 10-K (the “Form 10-K”), references to “Capitol” or the “Company” and to “we,” “us” and “our” refer to Capitol Acquisition Corp. II. Introduction We are a Delaware company incorporated on August 9, 2010 for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities. Company History In February 2011, we issued 4,417,684 shares of common stock (“founder’s shares”) to Capitol Acquisition Management 2 LLC (our “sponsor”) for $25,000 in cash, at a purchase price of approximately $0.006 share, in connection with our organization. In March 2013, our sponsor contributed an aggregate of 105,184 shares of our common stock to our capital, resulting in our sponsor owning an aggregate of 4,312,500 founder’s shares. The sponsor received no consideration for this contribution. Such contribution was made solely to maintain the sponsor’s collective 20% ownership interest in our shares of common stock based on the then current size of our initial public offering. Thereafter, also in March 2013, our sponsor transferred an aggregate of 1,078,126 founder’s shares to our executive officers and directors. In April 2013, our sponsor and Dyson Dryden, our chief financial officer and a director, transferred an aggregate of 22,998 founder’s shares to Messrs. Calcano, Donaldson and Sodha, each a director, resulting in our sponsor owning an aggregate of 3,222,875 founder’s shares and Mr. Dryden owning an aggregate of 974,626 founder’s shares. The shares were transferred for the same per share consideration originally paid for by the transferors.In May 2013, we effected a stock dividend of 0.2 shares for each outstanding share of common stock, resulting in our sponsor and officers and directors holding an aggregate of 5,175,000 founder’s shares, of which 175,000 shares were subsequently forfeited. On May 15, 2013, we consummated our initial public offering (“Offering”) of 20,000,000 units, including 2,000,000 units under the underwriters’ over-allotment option, with each unit consisting of one share of common stock and one half of one warrant, each whole warrant to purchase one share of common stock.The shares of common stock and the warrants included in the units traded as a unit until July 1, 2013 when separate trading of common stock and warrants began.No fractional warrants will be issued and only whole warrants will trade. Holders now have the option to continue to hold units or separate their units into the component pieces. Each whole warrant entitles its holder, upon exercise, to purchase one share of common stock for $11.50 subject to certain adjustments, during the period commencing on the later of thirty days after we complete an initial business combination or May 10, 2014 and terminating on the five-year anniversary of the completion of our initial business combination. The units were sold at an offering price of $10.00 per unit, generating gross proceeds of $200,000,000. 1 Simultaneously with the consummation of the Offering, we consummated the private placement (“Private Placement”) of 5,600,000 warrants (“sponsor’s warrants”) at a price of $1.00 per warrant, generating total proceeds of $5,600,000. The sponsor’s warrants are identical to the warrants included in the units sold in the Offering except that the sponsor’s warrants: (i) will not be redeemable by us and (ii) may be exercised for cash or on a cashless basis, in each case so long as they are held by the initial purchasers or any of their permitted transferees. The purchasers of the sponsor’s warrants have also agreed not to transfer, assign or sell any of the sponsor’s warrants, including the common stock issuable upon exercise of the sponsor’s warrants (except to certain permitted transferees), until 30 days after the completion of an initial business combination. We incurred a total of $4,000,000 in underwriting discounts and commissions (not including deferred fees) and $666,300 for other costs and expenses related to the Offering. After deducting the underwriting discounts and commissions and the offering expenses, the total net proceeds to us from the Offering were $200,933,700. Of this amount, $200,000,000 we received from the sale of units in the Offering and the Private Placement of sponsor’s warrants was deposited into a trust account.Except as described in this Form 10-K, these funds will not be released to us until the earlier of the completion of a business combination or our liquidation upon our failure to consummate a business combination within the required time period (which may not occur until May 15, 2015). Business Strategy We have identified the following criteria and guidelines that we believe are important in evaluating prospective target businesses. While these are being used in evaluating business combination opportunities, we may decide to enter into a business combination with a target business(es) that does not meet all of the criteria and guidelines. Growth Orientation.We intend to acquire companies that we expect to experience substantial growth post-acquisition. We believe that we are well-positioned to evaluate a company’s current growth prospects and opportunities to enhance its growth post-acquisition. Strong Competitive Position in Industry.We intend to acquire businesses that have developed leading positions within industries that exhibit strong fundamentals. We evaluate each industry based on several factors including its growth characteristics, competitive landscape, profitability margins and sustainability. We also analyze the strengths and weaknesses of target businesses relative to their competitors in order to identify those best positioned to grow their market share and profitability. Hidden Intrinsic Value.We are seeking situations where we are able to acquire target companies that have unseen value or other characteristics that have been disregarded by the marketplace. We intend to leverage the operational experience and financial acumen of our team to focus on unlocking value others may have overlooked, as a means to generate significant growth post closing. 2 Attractive Return on Investment.We intend to identify businesses that will offer an attractive risk-adjusted return on investment for our shareholders. We will look to consummate an acquisition on attractive terms and to use our corporate structure as an asset in negotiations with owners of prospective targets. Financial returns are evaluated based on both organic cash flow growth potential and an ability to create value through new initiatives such as future acquisitions, repositioning the company, increasing investment in new products or distribution channels and operational restructuring. This potential upside from growth in the business is weighed against the downside risks inherent in the plan and in the business. Outstanding Management Team.We believe that experienced, proven entrepreneurial managers working as a complementary team are a critical component to creating and sustaining long-term value. We are looking for businesses that have management teams with a proven track record for delivering top line growth and bottom line profits, but, in each situation, we assess opportunities to improve a target’s management team and to recruit additional talent through our extensive network of contacts. Competitive Strengths We believe we have the following competitive strengths: Status as a public company We believe our structure makes us an attractive business combination partner to target businesses. As an existing public company, we offer a target business an alternative to the traditional initial public offering through a merger or other business combination. In this situation, the owners of the target business would exchange their shares of stock in the target business for shares of our stock or for a combination of shares of our stock and cash, allowing us to tailor the consideration to the specific needs of the sellers. We believe target businesses might find this method a more certain and cost effective method to becoming a public company than the typical initial public offering. In a typical initial public offering, there are additional expenses incurred in marketing, roadshow and public reporting efforts that will likely not be present to the same extent in connection with a business combination with us. Furthermore, once the business combination is consummated, the target business will have effectively become public, whereas an initial public offering is always subject to the underwriters’ ability to complete the offering, as well as general market conditions, that could prevent the offering from occurring. Once public, we believe the target business would then have greater access to capital and an additional means of providing management incentives consistent with stockholders’ interests than it would have as a privately-held company. It can offer further benefits by augmenting a company’s profile among potential new customers and vendors and aid in attracting talented employees. While we believe that our status as a public company makes us an attractive business partner, some potential target businesses may view the inherent limitations in our status as a blank check company as a deterrent and may prefer to effect a business combination with a more established entity or with a private company. 3 Financial position With a trust account initially in the amount of approximately $200 million, we offer a target business a variety of options such as providing the owners of a target business with shares in a public company and a public means to sell such shares, providing capital for the potential growth and expansion of its operations or strengthening its balance sheet by reducing its debt ratio. Because we are able to consummate our initial business combination using our cash, debt or equity securities, or a combination of the foregoing, we have the flexibility to use the most efficient combination that will allow us to tailor the consideration to be paid to the target business to fit its needs and desires. Management Expertise and Prior Blank Check Experience We seek to capitalize on the approximately 21 years of private equity and venture capital investing experience and significant contacts of our Chief Executive Officer, Mark D. Ein. Since January 2007, Mr. Ein has been the Co-Chairman and Majority Owner of Kastle Systems, LLC, a firm specializing in building and office security systems, which he acquired through his personal investment holding company, Leland Investments Inc. Mr. Ein also currently serves as the Chairman and Lead Investor of Reed Krakoff International LLC, a luxury women’s clothing and accessories company. Mr. Ein is the founder and Chief Executive Officer of Venturehouse Group, LLC, a holding company that creates, invests in, grows and builds technology, communications and related business services companies. Venturehouse was founded in 1999 to work closely with a small number of portfolio companies at any one time and to provide operational, strategic, and financing support throughout their lifecycle. Prior to forming Venturehouse, from 1992 to 1999, Mr. Ein was a Principal with The Carlyle Group, a leading global private equity firm. Mr. Ein led many of Carlyle’s technology and telecommunications private equity investment activities totaling more than $300 million. Earlier in his career, from 1989 to 1990, Mr. Ein worked for Brentwood Associates, a leading West Coast growth-focused private equity firm, and from 1986 to 1989 for Goldman, Sachs & Co. From June 2007 to October 2009, Mr. Ein was the founder, Chairman and Chief Executive Officer of Capitol Acquisition Corp. (“Capitol I”), a blank check company formed for substantially similar purposes as our company. Additionally, Lawrence Calcano, Richard C. Donaldson and Piyush Sodha, each a member of our Board of Directors, each served on the Board of Directors of Capitol I. Capitol I completed its business combination with Two Harbors Investment Corp., or Two Harbors, a Maryland real estate investment trust, in October 2009. Mr. Ein played the lead role in Capitol I’s search for a target business and in consummating its business combination, including, among other things, assisting in identifying and evaluating numerous prospective target businesses, including the ultimate target, and the business plan presented by its control persons, and assisting in the solicitation of stockholder approval for such a transaction. While Mr. Ein did not evaluate the specific assets that Two Harbors anticipated acquiring prior to consummation of the business combination with Capitol I, nor has he evaluated the specific assets that Two Harbors has since acquired, Mr. Ein currently serves as Vice Chairman of the board of directors. In addition, CLA Founders LLC, an entity controlled by Mr. Ein and for which he plays an active role, provides services as sub-manager to the manager of Two Harbors (PRCM Advisers LLC) pursuant to a Sub-Management Agreement that was entered into in connection with the transaction. Investors in Capitol I’s initial public offering who held the stock through December 31, 2013 have seen a total return of approximately 64.6% while the S&P 500 has been up approximately 43.6% over the same time period, including dividends. 4 Effecting a Business Combination General We are not presently engaged in, and we will not engage in, any substantive commercial business for an indefinite period of time. We intend to utilize cash derived from the proceeds of our Offering and the Private Placement, our share capital, debt or a combination of these in effecting a business combination. Although substantially all of the net proceeds of our Offering and the Private Placement will be applied generally toward effecting a business combination as described in the prospectus for our Offering and this Form 10-K, the proceeds have not been otherwise designated for any more specific purposes. Accordingly, our investors do not have the opportunity to evaluate the specific merits or risks of any one or more business combinations prior to making an investment in us. A business combination may involve the acquisition of, or merger with, a company which does not need substantial additional capital but which desires to establish a public trading market for its shares, while avoiding what it may deem to be adverse consequences of undertaking a public offering itself. These include time delays, significant expense, loss of voting control and compliance with various Federal and state securities laws. In the alternative, we may seek to consummate a business combination with a company that may be financially unstable or in its early stages of development or growth. While we may seek to effect simultaneous business combinations with more than one target business, we will probably have the ability, as a result of our limited resources, to effect only a single business combination. Sources of Target Businesses We anticipate that target business candidates will be brought to our attention from various unaffiliated sources, including investment bankers, venture capital funds, private equity funds, leveraged buyout funds, management buyout funds and other members of the financial community. Target businesses may be brought to our attention by such unaffiliated sources as a result of being solicited by us through calls, advertisements or mailings. These sources may also introduce us to target businesses they think we may be interested in on an unsolicited basis, since many of these sources will have read the prospectus for our Offering and know what types of businesses we are targeting. Our officers and directors, as well as their affiliates, may also bring to our attention target business candidates that they become aware of through their business contacts as a result of formal or informal inquiries or discussions they may have, as well as attending trade shows or conventions.Our management has experience in evaluating transactions, but will retain advisors as they deem necessary to assist them in their due diligence efforts. In no event, however, will any of our officers, directors or sponsors, or any entity with which they are affiliated, be paid any finder’s fee, consulting fee or other compensation prior to, or for any services they render in order to effectuate, the consummation of a business combination (regardless of the type of transaction that it is). If we determine to enter into a business combination with a target business that is affiliated with our officers, directors or sponsors or their affiliates, we would do so only if such transaction is approved by a majority of our disinterested independent directors and we obtained an opinion from an independent investment banking firm that is a member of FINRA that the business combination is fair to our unaffiliated shareholders from a financial point of view. As of the date of this Form 10-K, there are no affiliated entities that we would consider as a business combination target. 5 Selection of a Target Business and Structuring of a Business Combination Subject to the limitation that a target business have a fair market value of at least 80% of the balance in the trust account at the time of the execution of a definitive agreement for our initial business combination, as described below in more detail, our management will have virtually unrestricted flexibility in identifying and selecting a prospective target business. We have not established any specific attributes or criteria (financial or otherwise) for prospective target businesses. In evaluating a prospective target business, our management may consider a variety of factors, including one or more of the following: · financial condition and results of operation; · growth potential; · brand recognition and potential; · experience and skill of management and availability of additional personnel; · capital requirements; · competitive position; · barriers to entry; · stage of development of its products, processes or services; · existing distribution and potential for expansion; · degree of current or potential market acceptance of the products, processes or services; · proprietary aspects of products and the extent of intellectual property or other protection for its products, processes or services; · impact of regulation on the business; · regulatory environment of the industry; · costs associated with effecting the business combination; · industry leadership, sustainability of market share and attractiveness of market industries in which a target business participates; and · macro competitive dynamics in the industry within which the company competes. We believe such factors will be important in evaluating prospective target businesses. We will generally use these criteria and guidelines in evaluating acquisition opportunities although this list is not intended to be exhaustive. Furthermore, we may decide to enter into a business combination with a target business that does not meet these criteria and guidelines. Any evaluation relating to the merits of a particular business combination will be based, to the extent relevant, on the above factors as well as other considerations deemed relevant by our management in effecting a business combination consistent with our business objective. In evaluating a prospective target business, we will conduct an extensive due diligence review which will encompass, among other things, meetings with incumbent management and inspection of facilities, as well as review of financial and other information which is made available to us. This due diligence review will be conducted either by our management or by unaffiliated third parties we may engage. 6 The time and costs required to select and evaluate a target business and to structure and complete the business combination cannot presently be ascertained with any degree of certainty. Any costs incurred with respect to the identification and evaluation of a prospective target business with which a business combination is not ultimately completed will result in a loss to us and reduce the amount of capital available to otherwise complete a business combination. Fair Market Value of Target Business Pursuant to the NASDAQ Stock Market LLC listing rules, the target business or businesses that we acquire must collectively have a fair market value equal to at least 80% of the balance of the funds in the trust account (excluding deferred underwriting commissions and taxes payable on the income earned on the trust account) at the time of the execution of a definitive agreement for our initial business combination, although we may acquire a target business whose fair market value significantly exceeds 80% of the trust account balance. We currently anticipate structuring a business combination to acquire 100% of the equity interests or assets of the target business or businesses. We may, however, structure a business combination where we merge directly with the target business or where we acquire less than 100% of such interests or assets of the target business. If we acquire less than 100% of the equity interests or assets of the target business, we will not enter into a business combination unless either we or our public shareholders acquire at least a controlling interest in the target business (meaning not less than 50.1% of the voting equity interests in the target or all or substantially all of the assets of such target). If we acquire less than 100% of the equity interest in a target business or businesses, the portion of such business that we acquire must have a fair market value equal to at least 80% of the trust account balance. In order to consummate such an acquisition, we may issue a significant amount of our debt or equity securities to the sellers of such businesses and/or seek to raise additional funds through a private offering of debt or equity securities. Since we have no specific business combination under consideration, we have not entered into any such fund raising arrangement. The fair market value of the target will be determined by our board of directors based upon one or more standards generally accepted by the financial community (such as actual and potential sales, earnings, cash flow and/or book value). If our board is not able to independently determine that the target business has a sufficient fair market value, we will obtain an opinion from an unaffiliated, independent investment banking firm that is a member of FINRA with respect to the satisfaction of such criteria. We will not be required to obtain an opinion from an independent investment banking firm, or another independent entity that commonly renders valuation opinions on the type of target business we are seeking to acquire, as to the fair market value if our board of directors independently determines that the target business complies with the 80% threshold. 7 Stockholder Approval of Business Combination In connection with any proposed business combination, we will seek stockholder approval of an initial business combination at a meeting called for such purpose at which stockholders may seek to convert their shares, regardless of whether they vote for or against the proposed business combination, into their pro rata share of the aggregate amount then on deposit in the trust account, less any taxes then due but not yet paid, subject to the limitations described herein. The amount in the trust account is currently approximately $10.00 per share. We will consummate our initial business combination only if we have net tangible assets of at least $5 million upon such consummation and a majority of the outstanding shares of common stock voted are voted in favor of the business combination. Our sponsor and officers and directors have agreed (i) to vote any shares owned by them in favor of any proposed business combination and (ii) not to convert any shares in connection with a stockholder vote to approve a proposed initial business combination. Voting Restrictions in Connection with Stockholder Meeting In connection with any vote for a proposed business combination, our sponsor, as well as all of our officers and directors, have agreed to vote the shares of common stock owned by them in favor of such proposed business combination. None of our officers, directors, sponsor or their affiliates has indicated any intention to purchase any units or shares of common stock from persons in the open market or in private transactions. However, if a significant number of stockholders votes, or indicates an intention to vote, against such proposed business combination, our officers, directors, sponsor or their affiliates could make such purchases in the open market or in private transactions in order to influence the vote. The purpose of such arrangements would be to increase the likelihood of satisfaction of the requirements that the holders of a majority of our shares of common stock outstanding vote in favor of a proposed business combination and that we have at least $5 million of net tangible assets upon consummation of such business combination where it appears that such requirements would otherwise not be met. All shares purchased by our sponsor, officers, directors or their affiliates would be voted in favor of the proposed business combination. No such arrangements currently exist. Conversion Rights In connection with any proposed initial business combination, public stockholders may seek to convert their shares, regardless of whether they vote for or against the proposed business combination, into their pro rata share of the aggregate amount then on deposit in the trust account, less any taxes then due but not yet paid. Notwithstanding the foregoing, a public stockholder, together with any affiliate of his or any other person with whom he is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act) will be restricted from seeking conversion rights with respect to 10% or more of the shares of common stock sold in the Offering. Such a public stockholder would still be entitled to vote against a proposed business combination with respect to all shares of common stock owned by him or his affiliates. We believe this restriction will prevent stockholders from accumulating large blocks of shares before the vote held to approve a proposed business combination and attempt to use the conversion right as a means to force us or our management to purchase their shares at a significant premium to the then current market price. By limiting a stockholder’s ability to convert no more than 10% of the shares of common stock sold in the Offering, we believe we have limited the ability of a small group of stockholders to unreasonably attempt to block a transaction which is favored by our other public stockholders. 8 Our sponsor, officers and directors will not have conversion rights with respect to any shares of common stock owned by them, directly or indirectly. We may also require public stockholders, whether they are a record holder or hold their shares in “street name,” to either tender their certificates to our transfer agent at any time through the vote on the business combination or to deliver their shares to the transfer agent electronically using Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, at the holder’s option. There is a nominal cost associated with the above-referenced delivery process and the act of certificating the shares or delivering them through the DWAC System. The transfer agent will typically charge the tendering broker $45.00 and it would be up to the broker whether or not to pass this cost on to the holder. However, this fee would be incurred regardless of whether or not we require holders seeking to exercise conversion rights. The need to deliver shares is a requirement of exercising conversion rights regardless of the timing of when such delivery must be effectuated. However, in the event we require stockholders seeking to exercise conversion rights prior to the consummation of the proposed business combination and the proposed business combination is not consummated this may result in an increased cost to stockholders. The proxy solicitation materials that we will furnish to stockholders in connection with the vote for any proposed business combination will indicate whether we are requiring stockholders to satisfy such certification and delivery requirements. Accordingly, a stockholder would have from the time the stockholder received our proxy statement through the vote on the business combination to deliver his shares if he wishes to seek to exercise his conversion rights. This time period varies depending on the specific facts of each transaction. However, as the delivery process can be accomplished by the stockholder, whether or not he is a record holder or his shares are held in “street name,” in a matter of hours by simply contacting the transfer agent or his broker and requesting delivery of his shares through the DWAC System, we believe this time period is sufficient for an average investor. However, we cannot assure you of this fact. The foregoing is different from the procedures used by many blank check companies. Traditionally, in order to perfect conversion rights in connection with a blank check company’s business combination, the company would distribute proxy materials for the stockholders’ vote on an initial business combination, and a holder could simply vote against a proposed business combination and check a box on the proxy card indicating such holder was seeking to exercise his conversion rights. After the business combination was approved, the company would contact such stockholder to arrange for him to deliver his certificate to verify ownership. As a result, the stockholder then had an “option window” after the consummation of the business combination during which he could monitor the price of the company’s stock in the market. If the price rose above the conversion price, he could sell his shares in the open market before actually delivering his shares to the company for cancellation. As a result, the conversion rights, to which stockholders were aware they needed to commit before the stockholder meeting, would become a “continuing” right surviving past the consummation of the business combination until the holder delivered its certificate. The requirement for physical or electronic delivery prior to the meeting ensures that a holder’s election to convert his shares is irrevocable once the business combination is approved. 9 Any request to convert such shares once made, may be withdrawn at any time up to the vote on the proposed business combination. Furthermore, if a holder of a public share of common stock delivered his certificate in connection with an election of their conversion and subsequently decides prior to the applicable date not to elect to exercise such rights, he may simply request that the transfer agent return the certificate (physically or electronically). If the initial business combination is not approved or completed for any reason, then our public stockholders who elected to exercise their conversion rights would not be entitled to convert their shares for the applicable pro rata share of the trust account. In such case, we will promptly return any shares delivered by public holders. Liquidation if No Business Combination Our amended and restated certificate of incorporation provides that we will have only until February 15, 2015 (or May 15, 2015 if we have executed a letter of intent, agreement in principle or definitive agreement for an initial business combination by February 15, 2015 but have not completed the initial business combination by February 15, 2015) to complete an initial business combination. If we have not completed an initial business combination by such date, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the outstanding public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including any interest but net of franchise and income taxes payable, divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. Our sponsor, officers and directors have agreed that they will not propose any amendment to our amended and restated certificate of incorporation that would affect the substance or timing of our obligation to redeem 100% of our public shares if we do not complete a business combination by February 15, 2015 (or May 15, 2015 if we have executed a letter of intent, agreement in principle or definitive agreement for an initial business combination by February 15, 2015 but have not completed the initial business combination by February 15, 2015). If, nevertheless, such an amendment is approved by our stockholders, we will provide our public stockholders with the opportunity to convert their shares of common stock upon such approval at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest but net of franchise and income taxes payable, divided by the number of then outstanding public shares. 10 Under the Delaware General Corporation Law, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. The pro rata portion of our trust account distributed to our public stockholders upon the redemption of 100% of our outstanding public shares in the event we do not complete our initial business combination within the required time period may be considered a liquidation distribution under Delaware law. If the corporation complies with certain procedures set forth in Section 280 of the Delaware General Corporation Law intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution. Furthermore, if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of 100% of our public shares in the event we do not complete our initial business combination within the required time period is not considered a liquidation distribution under Delaware law and such redemption distribution is deemed to be unlawful, then pursuant to Section 174 of the Delaware General Corporation Law, the statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidation distribution. If we are unable to complete a business combination within the prescribed time frame, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the outstanding public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including any interest but net of franchise and income taxes payable, divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. Accordingly, it is our intention to redeem our public shares as soon as reasonably possible following February 15, 2015 or May 15, 2015, as applicable, and, therefore, we do not intend to comply with those procedures. As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend well beyond the third anniversary of such date. Because we will not be complying with Section 280 of the Delaware General Corporation Law, Section 281(b) of the Delaware General Corporation Law requires us to adopt a plan, based on facts known to us at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against us within the subsequent ten years. However, because we are a blank check company, rather than an operating company, and our operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers, investment bankers, etc.) or prospective target businesses. 11 We are required to have all third parties (including any vendors or other entities we engage) and any prospective target businesses enter into valid and enforceable agreements with us waiving any right, title, interest or claim of any kind they may have in or to any monies held in the trust account. As a result, the claims that could be made against us will be limited, thereby lessening the likelihood that any claim would result in any liability extending to the trust. We therefore believe that any necessary provision for creditors will be reduced and should not have a significant impact on our ability to distribute the funds in the trust account to our public stockholders. Nevertheless, we cannot assure you of this fact as there is no guarantee that vendors, service providers and prospective target businesses will execute such agreements. Nor is there any guarantee that, even if they execute such agreements with us, they will not seek recourse against the trust account. Our executive officers have agreed that they will be personally liable to pay debts and obligations to target businesses or vendors or other entities that are owed money by us for services rendered or contracted for or products sold to us, but we cannot assure you that they will be able to satisfy their indemnification obligations if they are required to do so. Additionally the agreement they entered into by our executive officers specifically provides for two exceptions to the personal indemnity they have given: they will have no personal liability (1) as to any claimed amounts owed to a target business or vendor or other entity who has executed a valid and enforceable agreement with us waiving any right, title, interest or claim of any kind they may have in or to any monies held in the trust account, or (2) as to any claims under our indemnity with the underwriters of our Offering against certain liabilities, including liabilities under the Securities Act. As a result, if we liquidate, the per-share distribution from the trust account could be less than $10.00 due to claims or potential claims of creditors. We will distribute to all of our public stockholders, in proportion to their respective equity interests, an aggregate sum equal to the amount in the trust account, inclusive of any interest, plus any remaining net assets (subject to our obligations under Delaware law to provide for claims of creditors as described below). We anticipate notifying the trustee of the trust account to begin liquidating such assets promptly after such date and anticipate it will take no more than 10 business days to effectuate such distribution. Our sponsor has waived its rights to participate in any liquidation distribution with respect to its founder’s shares. There will be no distribution from the trust account with respect to our warrants, which will expire worthless. We will pay the costs of any subsequent liquidation from our remaining assets outside of the trust account and from interest income on the balance of the trust account (net income and other tax obligations) that may be released to us to fund our working capital requirements. If such funds are insufficient, our executive officers have agreed to pay the funds necessary to complete such liquidation (currently anticipated to be no more than approximately $15,000) and have agreed not to seek repayment of such expenses. If we are unable to complete an initial business combination and expend all of the net proceeds of our Offering, other than the proceeds deposited in the trust account, and without taking into account interest, if any, earned on the trust account, the initial per-share redemption price would be $10.00. The per share redemption price includes the deferred commissions that would also be distributable to our public stockholders. The proceeds deposited in the trust account could, however, become subject to claims of our creditors that are in preference to the claims of public stockholders. 12 Our public stockholders shall be entitled to receive funds from the trust account only in the event of our failure to complete a business combination within the required time period or if the stockholders seek to have us convert or purchase their respective shares upon a business combination which is actually completed by us. In no other circumstances shall a stockholder have any right or interest of any kind to or in the trust account. If we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, we cannot assure you we will be able to return to our public stockholders at least $10.00 per share. If we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover all amounts received by our stockholders. Furthermore, because we intend to distribute the proceeds held in the trust account to our public stockholders promptly after twenty four months from the date of our Offering, this may be viewed or interpreted as giving preference to our public stockholders over any potential creditors with respect to access to or distributions from our assets. Furthermore, our board may be viewed as having breached their fiduciary duties to our creditors and/or may have acted in bad faith, and thereby exposing itself and our company to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors. We cannot assure you that claims will not be brought against us for these reasons Competition In identifying, evaluating and selecting a target business, we may encounter intense competition from other entities having a business objective similar to ours. Many of these entities are well established and have extensive experience identifying and effecting business combinations directly or through affiliates. Many of these competitors possess greater technical, human and other resources than us and our financial resources will be relatively limited when contrasted with those of many of these competitors. While we believe there may be numerous potential target businesses that we could acquire with the net proceeds of our Offering, our ability to compete in acquiring certain sizable target businesses may be limited by our available financial resources. 13 The following also may not be viewed favorably by certain target businesses: · our obligation to seek stockholder approval of a business combination may delay the completion of a transaction; · our obligation to convert shares of common stock held by our public stockholders may reduce the resources available to us for a business combination; and · our outstanding warrants, and the potential future dilution they represent. Any of these factors may place us at a competitive disadvantage in successfully negotiating a business combination. Our management believes, however, that our status as a public entity and potential access to the United States public equity markets may give us a competitive advantage over privately-held entities having a similar business objective as ours in acquiring a target business with significant growth potential on favorable terms. If we succeed in effecting a business combination, there will be, in all likelihood, intense competition from competitors of the target business. We cannot assure you that, subsequent to a business combination, we will have the resources or ability to compete effectively. Employees We have two executive officers. These individuals are not obligated to devote any specific number of hours to our matters and devote only as much time as they deem necessary to our affairs. The amount of time they devote in any time period varies based on whether a target business has been selected for the business combination and the stage of the business combination process the company is in. Accordingly, once management locates a suitable target business to acquire, they will spend more time investigating such target business and negotiating and processing the business combination (and consequently spend more time to our affairs) than they would prior to locating a suitable target business. We do not have any full time employees as of the date of this Form 10-K and we do not plan to have any full time employees prior to the consummation of a business combination. Item 1A.Risk Factors. An investment in our securities involves a high degree of risk. You should consider carefully the material risks described below, which we believe represent the material risks related to our business and our securities, together with the other information contained in this Form 10-K, before making a decision to invest in our securities. This Form 10-K also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of specific factors, including the risks described below. We are a development stage company with no operating history, and, accordingly, you will not have any basis on which to evaluate our ability to achieve our business objective. We are a development stage company with no operating results to date. Our business objective is to acquire an operating business; however, until such time as an operating business is acquired you will have no basis of evaluating the value of your investment. We will not generate any revenues until, at the earliest, after the consummation of a business combination. 14 If we are unable to consummate a business combination, our public stockholders may be forced to wait until May 15, 2015 or later before receiving distributions from the trust account. We have until February 15, 2015, or May 15, 2015 if we have entered into a letter of intent, agreement in principle or definitive agreement with a target business for a business combination by February 15, 2015 but have not completed the business combination by such date, to complete an initial business combination. We have no obligation to return funds to investors prior to such date unless we consummate a business combination prior thereto and only then in cases where investors have sought to tender or convert their shares. Only after the expiration of this full time period will public stockholders be entitled to distributions from the trust account if we are unable to complete a business combination. Accordingly, investors’ funds may be unavailable to them until after such date. If we are found to have violated the Securities Act, we could be required to repurchase securities sold in our initial public offering. We issued a press release on May 9, 2013 which contained certain statements in connection with our pricing of our initial public offering. We do not believe that the statements included in the press release result in our having violated Section 5 of the Securities Act. However, if it were held by a court that we did so violate the Securities Act, we could be required to repurchase the units sold to purchasers in the initial public offering at the original purchase price, plus statutory interest from the date of purchase, until May 9, 2014. We would contest vigorously any claim that a violation of the Securities Act occurred. We may issue shares of common stock or preferred stock or debt securities to complete a business combination, which would reduce the equity interest of our stockholders and likely cause a change in control of our ownership. Our amended and restated certificate of incorporation authorizes the issuance of up to 200,000,000 shares of common stock, par value $.0001 per share, and 1,000,000 shares of preferred stock, par value $.0001 per share. There are 159,400,000 authorized but unissued shares of common stock available for issuance (after appropriate reservation for the issuance of the shares upon full exercise of our outstanding warrants). Although we have no commitment as ofMarch 6, 2014, we may issue a substantial number of additional shares of common stock or shares of preferred stock, or a combination of shares of common stock and shares of preferred stock, to complete a business combination. The issuance of additional shares of common stock or preferred stock: · may significantly reduce the equity interest of our existing investors; · may subordinate the rights of holders of shares of common stock if we issue shares of preferred stock with rights senior to those afforded to our shares of common stock; · may cause a change in control if a substantial number of shares of common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors; and · may adversely affect prevailing market prices for our shares of common stock. 15 Similarly, if we issue debt securities, it could result in: · default and foreclosure on our assets if our operating revenues after a business combination are insufficient to repay our debt obligations; · acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant; · our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand; and · our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding. Notwithstanding the foregoing, if we incur indebtedness, our lenders will not have a claim on the cash in the trust account and such indebtedness will not decrease the per-share conversion amount in the trust account. The funds held in the trust account may not earn significant interest and, as a result, we may be limited to the funds held outside of the trust account and loans made available to us by our officers, directors or affiliates to fund our search for target businesses, to pay our tax obligations and to complete our initial business combination. We have $322,271 available to us outside the trust account to fund our working capital requirements. We will depend on sufficient interest being earned on the proceeds held in the trust account to provide us with additional working capital we will need to identify one or more target businesses and to complete our initial business combination, as well as to pay any tax obligations that we may owe. Interest rates on permissible investments for us have been less than 1% over the last several months. Accordingly, if we do not earn a sufficient amount of interest on the funds held in the trust account and use all of the funds held outside of the trust account, we may not have sufficient funds available with which to structure, negotiate or close an initial business combination. In such event, we would need to borrow funds from our initial stockholders to operate or may be forced to cease searching for a target business. Our Chief Executive Officer, Mark D. Ein, and our Chief Financial Officer, L. Dyson Dryden, have committed to provide loans to us of up to $615,000.These loans will be evidenced by notes and would either be repaid upon the consummation of a business combination or up to $500,000 of the notes may be converted into warrants at a price of $1.00 per warrant, which warrants would be identical to the sponsor’s warrants.Based on the foregoing, we believe we have sufficient cash to meet our needs through at least December 31, 2014.Our sponsor, officers and directors or their affiliates may, but are not required to, loan us additional funds in any amount they deem reasonable at their discretion. If third parties bring claims against us, the proceeds held in trust could be reduced and the per-share redemption price received by stockholders may be less than $10.00. Our placing of funds in trust may not protect those funds from third party claims against us. Although we will seek to have all vendors and service providers we engage and prospective target businesses we negotiate with execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public stockholders, they may not execute such agreements. Furthermore, even if such entities execute such agreements with us, they may seek recourse against the trust account. A court may not uphold the validity of such agreements. Accordingly, the proceeds held in trust could be subject to claims which could take priority over those of our public stockholders. If we are unable to complete a business combination within the required time periods, our executive officers have agreed that they will be personally liable to ensure that the proceeds in the trust account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by us for services rendered or contracted for or products sold to us. However, they may not be able to meet such obligation. Therefore, the per-share distribution from the trust account in such a situation may be less than the $10.00 per share held in the trust account as of December 31, 2013, plus any additional interest, due to such claims. 16 Additionally, if we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, or if we otherwise enter compulsory or court supervised liquidation, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, we may not be able to return to our public stockholders at least the $10.00 per share held in the trust account as of December 31, 2013. Our stockholders may be held liable for claims by third parties against us to the extent of distributions received by them. Our amended and restated certificate of incorporation provides that we will continue in existence only until February 15, 2015, or May 15, 2015 if we have entered into a letter of intent, agreement in principle or definitive agreement with a target business for a business combination by February 15, 2015 but have not completed the business combination by such date. If we have not completed a business combination by such date, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. We cannot assure you that we will properly assess all claims that may be potentially brought against us. As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend well beyond the third anniversary of the date of distribution. Accordingly, we cannot assure you that third parties will not seek to recover from our stockholders amounts owed to them by us. If we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover all amounts received by our stockholders. Furthermore, because we intend to distribute the proceeds held in the trust account to our public stockholders promptly after expiration of the deadlines set forth above, this may be viewed or interpreted as giving preference to our public stockholders over any potential creditors with respect to access to or distributions from our assets. Furthermore, our board may be viewed as having breached their fiduciary duties to our creditors and/or may have acted in bad faith, and thereby exposing itself and our company to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors. We cannot assure you that claims will not be brought against us for these reasons. 17 Our directors may decide not to enforce our executive officers’ indemnification obligations, resulting in a reduction in the amount of funds in the trust account available for distribution to our public stockholders. In the event that the proceeds in the trust account are reduced below $10.00 per public share and our executive officers assert that they are unable to satisfy their obligations or that they have no indemnification obligations related to a particular claim, our independent directors would determine whether to take legal action against our executive officers to enforce such indemnification obligations. While we currently expect that our independent directors would take legal action on our behalf against our executive officers to enforce such indemnification obligations to us, it is possible that our independent directors in exercising their business judgment may choose not to do so in any particular instance. If our independent directors choose not to enforce these indemnification obligations, the amount of funds in the trust account available for distribution to our public stockholders may be reduced below $10.00 per share. If we do not file and maintain a current and effective prospectus relating to the shares of common stock issuable upon exercise of the warrants, public holders will only be able to exercise such warrants on a “cashless basis.” If we do not file and maintain a current and effective prospectus relating to the shares of common stock issuable upon exercise of the public warrant at the time that holders wish to exercise such warrants, they will only be able to exercise them on a “cashless basis” pursuant to the exemption provided by Section 3(a)(9) of the Securities Act of 1933. As a result, the number of shares of common stock that holders will receive upon exercise of the public warrants will be fewer than it would have been had such holder exercised his warrant for cash. Further, if an exemption from registration is not available, holders would not be able to exercise on a cashless basis and would only be able to exercise their warrants for cash if a current and effective prospectus relating to the common stock issuable upon exercise of the warrants is available. Under the terms of the warrant agreement, we have agreed to use our best efforts to meet these conditions and to maintain a current and effective prospectus relating to the shares of common stock issuable upon exercise of the warrants until the expiration of the warrants. However, we cannot assure you that we will be able to do so. If we are unable to do so, the potential “upside” of the holder’s investment in our company may be reduced or the warrants may expire worthless. An investor will only be able to exercise a warrant if the issuance of shares of common stock upon such exercise has been registered or qualified or is deemed exempt under the securities laws of the state of residence of the holder of the warrants. No warrants will be exercisable for cash and we will not be obligated to issue shares of common stock unless the shares of common stock issuable upon such exercise has been registered or qualified or deemed to be exempt under the securities laws of the state of residence of the holder of the warrants. If the shares of common stock issuable upon exercise of the warrants are not qualified or exempt from qualification in the jurisdictions in which the holders of the warrants reside, the warrants may be deprived of any value, the market for the warrants may be limited and they may expire worthless if they cannot be sold. 18 We may amend the terms of the warrants in a way that may be adverse to holders with the approval by the holders of a majority of the then outstanding warrants. Our warrants are issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision. The warrant agreement requires the approval by the holders of a majority of the then outstanding warrants (including the sponsor’s warrants) in order to make any change that adversely affects the interests of the registered holders. Accordingly, we may amend the terms of the warrants in a manner adverse to a holder if the holders of a majority of the warrants approve of such amendment. Since we have not yet selected a particular industry or target business with which to complete a business combination, we are unable to currently ascertain the merits or risks of the industry or business in which we may ultimately operate. We may consummate a business combination with a company in any region or industry we choose. Accordingly, there is no current basis for you to evaluate the possible merits or risks of the particular industry in which we may ultimately operate or the target business which we may ultimately acquire. To the extent we complete a business combination with a financially unstable company or an entity in its development stage, we may be affected by numerous risks inherent in the business operations of those entities. If we complete a business combination with an entity in an industry characterized by a high level of risk, we may be affected by the currently unascertainable risks of that industry. Although our management will endeavor to evaluate the risks inherent in a particular industry or target business, we cannot assure you that we will properly ascertain or assess all of the significant risk factors. We also cannot assure you that an investment in our securities will not ultimately prove to be less favorable than a direct investment, if an opportunity were available, in a target business. Our ability to successfully effect a business combination and to be successful thereafter will be totally dependent upon the efforts of our key personnel, some of whom may join us following a business combination. While we intend to closely scrutinize any individuals we engage after a business combination, we cannot assure you that our assessment of these individuals will prove to be correct. Our ability to successfully effect a business combination is dependent upon the efforts of our key personnel. We believe that our success depends on the continued service of our key personnel, at least until we have consummated our initial business combination. We cannot assure you that any of our key personnel will remain with us for the immediate or foreseeable future. In addition, none of our officers are required to commit any specified amount of time to our affairs (although we expect them to devote approximately 10 hours per week to our business) and, accordingly, they will have conflicts of interest in allocating management time among various business activities, including identifying potential business combinations and monitoring the related due diligence. We do not have employment agreements with, or key-man insurance on the life of, any of our officers. The unexpected loss of the services of our key personnel could have a detrimental effect on us. 19 The role of our key personnel after a business combination, however, cannot presently be ascertained. Although some of our key personnel may serve in senior management or advisory positions following a business combination, it is likely that most, if not all, of the management of the target business will remain in place. While we intend to closely scrutinize any individuals we engage after a business combination, we cannot assure you that our assessment of these individuals will prove to be correct. These individuals may be unfamiliar with the requirements of operating a public company which could cause us to have to expend time and resources helping them become familiar with such requirements. This could be expensive and time-consuming and could lead to various regulatory issues which may adversely affect our operations. Our officers and directors may not have significant experience or knowledge regarding the jurisdiction or industry of the target business we may seek to acquire. We may consummate a business combination with a target business in any geographic location or industry we choose. We cannot assure you that our officers and directors will have enough experience or have sufficient knowledge relating to the jurisdiction of the target or its industry to make an informed decision regarding a business combination. Our key personnel may negotiate employment or consulting agreements with a target business in connection with a particular business combination. These agreements may provide for them to receive compensation following a business combination and as a result, may cause them to have conflicts of interest in determining whether a particular business combination is the most advantageous. Our key personnel will be able to remain with the company after the consummation of a business combination only if they are able to negotiate employment or consulting agreements or other appropriate arrangements in connection with the business combination. Such negotiations would take place simultaneously with the negotiation of the business combination and could provide for such individuals to receive compensation in the form of cash payments and/or our securities for services they would render to the company after the consummation of the business combination. The personal and financial interests of such individuals may influence their motivation in identifying and selecting a target business. Our officers and directors will allocate their time to other businesses thereby potentially limiting the amount of time they devote to our affairs. Our officers and directors are not required to commit their full time to our affairs, which could create a conflict of interest when allocating their time between our operations and their other commitments. We presently expect each of our employees to devote such amount of time as they reasonably believe is necessary to our business. We do not intend to have any full time employees prior to the consummation of our initial business combination. All of our officers and directors are engaged in several other business endeavors and are not obligated to devote any specific number of hours to our affairs. If our officers’ and directors’ other business affairs require them to devote more substantial amounts of time to such affairs, it could limit their ability to devote time to our affairs and could have a negative impact on our ability to consummate our initial business combination. We cannot assure you that these conflicts will be resolved in our favor. 20 Our officers, directors and their respective affiliates may in the future become affiliated with entities engaged in business activities similar to those intended to be conducted by us and accordingly, may have conflicts of interest in determining to which entity a particular business opportunity should be presented. Our officers and directors may in the future become affiliated with entities, including other “blank check” companies, engaged in business activities similar to those intended to be conducted by us. Additionally, our officers and directors may become aware of business opportunities which may be appropriate for presentation to us and the other entities to which they owe fiduciary duties. As a result, a potential target business may be presented to another entity prior to its presentation to us and this may negatively impact our ability to complete a business combination. In addition to the foregoing, Leland Investments Inc. provides management services to Kastle Acquisition LLC and its subsidiaries, which provides building security products and services. The agreement with Kastle Acquisition LLC contains a non-competition clause that provides that neither Leland Investments Inc., Mr. Ein nor any entity that he controls shall directly and materially compete with the business of Kastle Acquisition LLC and its subsidiaries. Accordingly, we generally will not be able to acquire a target business in the same line of business that Kastle Acquisition LLC and its subsidiaries are in. Our officers’ and directors’ personal and financial interests may influence their motivation in determining whether a particular target business is appropriate for a business combination. All of our officers and directors own founder shares. Such individuals have waived their right to receive distributions from the trust account with respect to their founder shares if we are unable to consummate a business combination. Accordingly, the founder shares, as well as the sponsor’s warrants, and any warrants purchased by our officers or directors in the aftermarket will be worthless if we do not consummate a business combination. The personal and financial interests of our directors and officers may influence their motivation in timely identifying and selecting a target business and completing a business combination. Consequently, our directors’ and officers’ discretion in identifying and selecting a suitable target business may result in a conflict of interest when determining whether the terms, conditions and timing of a particular business combination are appropriate and in our stockholders’ best interest. NASDAQ may delist our securities from quotation on its exchange which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions. Our securities are listed on the NASDAQ Stock Market LLC (“NASDAQ”), a national securities exchange. However, we cannot assure you that our securities will continue to be listed on NASDAQ in the future prior to an initial business combination. Additionally, in connection with our initial business combination, it is likely that NASDAQ will require us to file a new initial listing application and meet its initial listing requirements as opposed to its more lenient continued listing requirements. We cannot assure you that we will be able to meet those initial listing requirements at that time. 21 If NASDAQ delists our securities from trading on its exchange, we could face significant material adverse consequences, including: · a limited availability of market quotations for our securities; · reduced liquidity with respect to our securities; · a determination that our shares of common stock are “penny stock” which will require brokers trading in our shares of common stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our shares of common stock; · a limited amount of news and analyst coverage for our company; and · a decreased ability to issue additional securities or obtain additional financing in the future. The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered securities.” Because our units, common stock and warrants are listed on NASDAQ, our securities are covered securities. Although the states are preempted from regulating the sale of our securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. While we are not aware of a state having used these powers to prohibit or restrict the sale of securities issued by blank check companies, certain state securities regulators view blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of securities of blank check companies in their states. Further, if we were no longer listed on Nasdaq, our securities would not be covered securities and we would be subject to regulation in each state in which we offer our securities. We are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our shares of common stock less attractive to investors. We are an “emerging growth company,” as defined in the JOBS Act. We will remain an “emerging growth company” for up to five years. However, if our non-convertible debt issued within a three year period or revenues exceeds $1 billion, or the market value of our shares of common stock that are held by non-affiliates exceeds $700 million on the last day of the second fiscal quarter of any given fiscal year, we would cease to be an emerging growth company as of the following fiscal year. As an emerging growth company, we are not required to comply with the auditor attestation requirements of section 404 of the Sarbanes-Oxley Act, we have reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and we are exempt from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Additionally, as an emerging growth company, we have elected to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As such, our financial statements may not be comparable to companies that comply with public company effective dates. We cannot predict if investors will find our shares of common stock less attractive because we may rely on these provisions. If some investors find our shares of common stock less attractive as a result, there may be a less active trading market for our shares and our share price may be more volatile. 22 We may only be able to complete one business combination with the proceeds of our initial public offering, which will cause us to be solely dependent on a single business which may have a limited number of products or services. We may only be able to complete one business combination with the proceeds of our initial public offering. By consummating a business combination with only a single entity, our lack of diversification may subject us to numerous economic, competitive and regulatory developments. Further, we would not be able to diversify our operations or benefit from the possible spreading of risks or offsetting of losses, unlike other entities which may have the resources to complete several business combinations in different industries or different areas of a single industry. Accordingly, the prospects for our success may be: · solely dependent upon the performance of a single business, or · dependent upon the development or market acceptance of a single or limited number of products, processes or services. This lack of diversification may subject us to numerous economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact upon the particular industry in which we may operate subsequent to a business combination. Alternatively, if we determine to simultaneously acquire several businesses and such businesses are owned by different sellers, we will need for each of such sellers to agree that our purchase of its business is contingent on the simultaneous closings of the other business combinations, which may make it more difficult for us, and delay our ability, to complete the business combination. With multiple business combinations, we could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations and services or products of the acquired companies in a single operating business. If we are unable to adequately address these risks, it could negatively impact our profitability and results of operations. The ability of our stockholders to exercise their conversion rights may not allow us to effectuate the most desirable business combination or optimize our capital structure. If our business combination requires us to use substantially all of our cash to pay the purchase price, because we will not know how many stockholders may exercise conversion rights we may either need to reserve part of the trust account for possible payment upon such conversion, or we may need to arrange third party financing to help fund our business transaction. In the event that the business combination involves the issuance of our shares as consideration, we may be required to issue a higher percentage of our shares to make up for a shortfall in funds. Raising additional funds to cover any shortfall may involve dilutive equity financing or incurring indebtedness at higher than desirable levels. This may limit our ability to effectuate the most attractive business combination available to us. 23 We may be unable to consummate a business combination if a target business requires that we have cash in excess of the minimum amount we are required to have at closing pursuant to our amended and restated certificate of incorporation and public stockholders may have to remain stockholders of our company and wait until our liquidation to receive a pro rata share of the trust account or attempt to sell their shares in the open market. A potential target may make it a closing condition to our business combination that we have a certain amount of cash in excess of the $5,000,000 of net tangible assets we are required to have pursuant to our organizational documents available at the time of closing. If the number of our stockholders electing to exercise their conversion rights has the effect of reducing the amount of money available to us to consummate a business combination below such minimum amount required by the target business and we are not able to locate an alternative source of funding, we will not be able to consummate such business combination and we may not be able to locate another suitable target within the applicable time period, if at all. In that case, public stockholders may have to remain stockholders of our company and wait until February 15, 2015 (or until May 15, 2015, if we have executed a letter of intent, agreement in principle or definitive agreement for a business combination by February 15, 2015 but have not consummated the business combination by such date) in order to be able to receive a pro rata portion of the trust account, or attempt to sell their shares in the open market prior to such time, in which case they may receive less than a pro rata share of the trust account for their shares. In connection with any vote to approve a business combination, we will offer each public stockholder the option to vote in favor of a proposed business combination and still seek conversion of his, her or its shares. In connection with any vote to approve a business combination, we will offer each public stockholder (but not our sponsor, officers or directors) the right to have his, her or its shares of common stock converted to cash (subject to the limitations described in the prospectus for our Offering and in this Form 10-K) regardless of whether such stockholder votes for or against such proposed business combination. We will consummate our initial business combination only if we have net tangible assets of at least $5 million upon such consummation and a majority of the outstanding shares of common stock voted are voted in favor of the business combination. Public stockholders, together with any affiliates of theirs or any other person with whom they are acting in concert or as a “group,” will be restricted from seeking conversion rights with respect to more than 10% of the public shares. In connection with any vote to approve a proposed business combination, we will offer each public stockholder (but not holders of our founder shares) the right to have his, her, or its shares of common stock converted into cash. Notwithstanding the foregoing, a public stockholder, together with any affiliate of his or any other person with whom he is acting in concert or as a “group” will be restricted from seeking conversion rights with respect to more than 10% of the public shares. Accordingly, if you hold more than 10% of the public shares and a proposed business combination is approved, you will not be able to seek conversion rights with respect to the full amount of your shares and may be forced to hold the shares in excess of 10% or sell them in the open market. We cannot assure you that the value of such excess shares will appreciate over time following a business combination or that the market price of our shares of common stock will exceed the per-share conversion price. 24 We may require stockholders who wish to convert their shares in connection with a proposed business combination to comply with specific requirements for conversion that may make it more difficult for them to exercise their conversion rights prior to the deadline for exercising their rights. We may require public stockholders who wish to convert their shares in connection with a proposed business combination to either tender their certificates to our transfer agent at any time prior to the vote taken at the stockholder meeting relating to such business combination or to deliver their shares to the transfer agent electronically using the Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System. In order to obtain a physical stock certificate, a stockholder’s broker and/or clearing broker, DTC and our transfer agent will need to act to facilitate this request. It is our understanding that stockholders should generally allot at least two weeks to obtain physical certificates from the transfer agent. However, because we do not have any control over this process or over the brokers or DTC, it may take significantly longer than two weeks to obtain a physical stock certificate. While we have been advised that it takes a short time to deliver shares through the DWAC System, we cannot assure you of this fact. Accordingly, if it takes longer than we anticipate for stockholders to deliver their shares, stockholders who wish to convert may be unable to meet the deadline for exercising their conversion rights and thus may be unable to convert their shares. If we require public stockholders who wish to convert their shares to comply with specific requirements for conversion, such converting stockholders may be unable to sell their securities when they wish to in the event that the proposed business combination is not approved. If we require public stockholders who wish to convert their shares to comply with specific requirements for conversion and such proposed business combination is not consummated, we will promptly return such certificates to the tendering public stockholders. Accordingly, investors who attempted to convert their shares in such a circumstance will be unable to sell their securities after the failed acquisition until we have returned their securities to them. The market price for our shares of common stock may decline during this time and you may not be able to sell your securities when you wish to, even while other stockholders that did not seek conversion may be able to sell their securities. Because of our structure, other companies may have a competitive advantage and we may not be able to consummate an attractive business combination. We expect to encounter intense competition from entities other than blank check companies having a business objective similar to ours, including venture capital funds, leveraged buyout funds and operating businesses competing for acquisitions. Many of these entities are well established and have extensive experience in identifying and effecting business combinations directly or through affiliates. Many of these competitors possess greater technical, human and other resources than we do and our financial resources will be relatively limited when contrasted with those of many of these competitors. While we believe that there are numerous potential target businesses that we could acquire with the net proceeds of our initial public offering, our ability to compete in acquiring certain sizable target businesses will be limited by our available financial resources. This inherent competitive limitation gives others an advantage in pursuing the acquisition of certain target businesses. Furthermore, seeking stockholder approval of a business combination may delay the consummation of a transaction. Additionally, our outstanding warrants, and the future dilution they potentially represent, may not be viewed favorably by certain target businesses. Any of the foregoing may place us at a competitive disadvantage in successfully negotiating a business combination. 25 We may be unable to obtain additional financing, if required, to complete a business combination or to fund the operations and growth of the target business, which could compel us to restructure or abandon a particular business combination. Although we believe that the net proceeds of our initial public offering will be sufficient to allow us to consummate a business combination, because we have not yet identified any prospective target business, we cannot ascertain the capital requirements for any particular transaction. If the net proceeds of our initial public offering prove to be insufficient, either because of the size of the business combination, the depletion of the available net proceeds in search of a target business, or the obligation to convert into cash a significant number of shares from dissenting stockholders, we will be required to seek additional financing. Such financing may not be available on acceptable terms, if at all. To the extent that additional financing proves to be unavailable when needed to consummate a particular business combination, we would be compelled to either restructure the transaction or abandon that particular business combination and seek an alternative target business candidate. In addition, if we consummate a business combination, we may require additional financing to fund the operations or growth of the target business. The failure to secure additional financing could have a material adverse effect on the continued development or growth of the target business. None of our officers, directors or stockholders is required to provide any financing to us in connection with or after a business combination. Our sponsor, officers and directors control a substantial interest in us and thus may influence certain actions requiring a stockholder vote. Our sponsor, officers and directors collectively own 20% of our issued and outstanding shares of common stock. In connection with any vote for a proposed business combination, our sponsor, as well as all of our officers and directors, have agreed to vote their founder shares as well as any shares of common stock acquired in the aftermarket in favor of such proposed business combination. Our board of directors is and will be divided into three classes, each of which will generally serve for a term of three years with only one class of directors being elected in each year. It is unlikely that there will be an annual meeting of stockholders to elect new directors prior to the consummation of a business combination, in which case all of the current directors will continue in office until at least the consummation of the business combination. Because we have not held an annual meeting since our formation, a stockholder could submit an application to the Delaware Court of Chancery to require us to hold such a meeting. This application would be summarily approved by the Court of Chancery and such Court could then issue orders calling for the meeting to be held and setting forth the time and place of such meeting and the record date for determination of stockholders entitled to vote at such meeting. If there is an annual meeting, as a consequence of our “staggered” board of directors, only a minority of the board of directors will be considered for election and our initial stockholders, because of their ownership position, will have considerable influence regarding the outcome. Accordingly, our sponsor, officers and directors will continue to exert control at least until the consummation of a business combination. 26 Our outstanding warrants may have an adverse effect on the market price of shares of common stock and make it more difficult to effect a business combination. We have issued the warrants to purchase 10,000,000 shares of common stock as part of the units sold in our initial public offering and the sponsor’s warrants to purchase 5,600,000 shares of common stock. We may also issue additional warrants to our officers, directors, sponsor or their affiliates upon conversion of promissory notes issued to such persons or entities for loans made to supplement our working capital requirements, as described elsewhere in this Form 10-K and the prospectus for our initial public offering. To the extent we issue shares of common stock to effect a business combination, the potential for the issuance of a substantial number of additional shares upon exercise of these warrants could make us a less attractive acquisition vehicle in the eyes of a target business. Such securities, when exercised, will increase the number of issued and outstanding shares of common stock and reduce the value of the shares issued to complete the business combination. Accordingly, our warrants may make it more difficult to effectuate a business combination or increase the cost of acquiring the target business. Additionally, the sale, or even the possibility of sale, of the shares underlying the warrants could have an adverse effect on the market price for our securities or on our ability to obtain future financing. If and to the extent these warrants are exercised, you may experience dilution to your holdings. We may redeem the warrants at a time that is not beneficial to public investors. We may call the public warrants for redemption at any time after the redemption criteria described in the prospectus for our initial public offering have been satisfied. If we call the public warrants for redemption, public stockholders may be forced to accept a nominal redemption price or sell or exercise the warrants when they may not wish to do so. Our management’s ability to require holders of our warrants to exercise such warrants on a cashless basis will cause holders to receive fewer shares of common stock upon their exercise of the warrants than they would have received had they been able to exercise their warrants for cash. If we call our public warrants for redemption after the redemption criteria described in the prospectus for our initial public offering have been satisfied, our management will have the option to require any holder that wishes to exercise its warrant (including any warrants held by our initial stockholders or their permitted transferees) to do so on a “cashless basis.” If our management chooses to require holders to exercise their warrants on a cashless basis, the number of shares of common stock received by a holder upon exercise will be fewer than it would have been had such holder exercised his warrant for cash. This will have the effect of reducing the potential “upside” of the holder’s investment in our company. If our stockholders exercise their registration rights with respect to their securities, it may have an adverse effect on the market price of our shares of common stock and the existence of these rights may make it more difficult to effect a business combination. Our sponsor, officers and directors are entitled to make a demand that we register the resale of their founder shares at any time commencing three months prior to the date on which their shares may be released from escrow. Additionally, the purchasers of the sponsor warrants are entitled to demand that we register the resale of their warrants and any other warrants we issue to them (and the underlying shares of common stock) at any time after we consummate a business combination. The presence of these additional shares of common stock trading in the public market may have an adverse effect on the market price of our securities. In addition, the existence of these rights may make it more difficult to effectuate a business combination or increase the cost of acquiring the target business, as the stockholders of the target business may be discouraged from entering into a business combination with us or will request a higher price for their securities because of the potential effect the exercise of such rights may have on the trading market for our shares of common stock. 27 If we are deemed to be an investment company, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to complete a business combination. A company that, among other things, is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting, owning, trading or holding certain types of securities would be deemed an investment company under the Investment Company Act of 1940, as amended (“Investment Company Act”). Since we will invest the proceeds held in the trust account, it is possible that we could be deemed an investment company. Notwithstanding the foregoing, we do not believe that our anticipated principal activities will subject us to the Investment Company Act. To this end, the proceeds held in trust may be invested by the trustee only in United States treasuries. By restricting the investment of the proceeds to these instruments, we intend to meet the requirements for the exemption provided in Rule 3a-1 promulgated under the Investment Company Act. If we are nevertheless deemed to be an investment company under the Investment Company Act, we may be subject to certain restrictions that may make it more difficult for us to complete a business combination, including: · restrictions on the nature of our investments; and · restrictions on the issuance of securities. In addition, we may have imposed upon us certain burdensome requirements, including: · registration as an investment company; · adoption of a specific form of corporate structure; and · reporting, record keeping, voting, proxy, compliance policies and procedures and disclosure requirements and other rules and regulations. Compliance with these additional regulatory burdens would require additional expense for which we have not allotted. We may complete a business combination with a target business that is privately held, which may present certain challenges to us, including the lack of available information about this company. We may complete a business combination with a target business that is privately held. Generally, very little public information exists about such companies, and we would be required to rely on the ability of our management team to obtain adequate information to evaluate the potential returns from investing in one of these companies. If we are unable to uncover all material information about such a target business, we may not make a fully informed investment decision, and we may lose money on our investments. 28 If we effect a business combination with a company located outside of the United States, we would be subject to a variety of additional risks that may negatively impact our business operations and financial results. We may effect a business combination with a company located outside of the United States. If we did, we would be subject to any special considerations or risks associated with companies operating in the target business’ governing jurisdiction, including any of the following: · rules and regulations or currency redemption or corporate withholding taxes on individuals; · tariffs and trade barriers; · regulations related to customs and import/export matters; · longer payment cycles; · tax issues, such as tax law changes and variations in tax laws as compared to the United States; · currency fluctuations; · challenges in collecting accounts receivable; · cultural and language differences; and · employment regulations. We cannot assure you that we would be able to adequately address these additional risks. If we were unable to do so, our operations might suffer. If we effect a business combination with a company located outside of the United States, the laws applicable to such company will likely govern all of our material agreements and we may not be able to enforce our legal rights. If we effect a business combination with a company located outside of the United States, the laws of the country in which such company operates will govern almost all of the material agreements relating to its operations. We cannot assure you that the target business will be able to enforce any of its material agreements or that remedies will be available in this new jurisdiction. The system of laws and the enforcement of existing laws in such jurisdiction may not be as certain in implementation and interpretation as in the United States. The inability to enforce or obtain a remedy under any of our future agreements could result in a significant loss of business, business opportunities or capital. Additionally, if we acquire a company located outside of the United States, it is likely that substantially all of our assets would be located outside of the United States and a majority of our officers and directors will reside outside of the United States. As a result, it may not be possible for investors in the United States to enforce their legal rights, to effect service of process upon our directors or officers or to enforce judgments of United States courts predicated upon civil liabilities and criminal penalties of our directors and officers under Federal securities laws. 29 Compliance with the Sarbanes-Oxley Act of 2002 will require substantial financial and management resources and may increase the time and costs of completing an acquisition. Section 404 of the Sarbanes-Oxley Act of 2002 requires that we evaluate and report on our system of internal controls and may require us to have such system audited by an independent registered public accounting firm beginning with our annual report for the year ending December 31, 2014. If we fail to maintain the adequacy of our internal controls, we could be subject to regulatory scrutiny, civil or criminal penalties and/or stockholder litigation. Any inability to provide reliable financial reports could harm our business. A target may also not be in compliance with the provisions of the Sarbanes-Oxley Act regarding the adequacy of internal controls. The development of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition. Furthermore, any failure to implement required new or improved controls, or difficulties encountered in the implementation of adequate controls over our financial processes and reporting in the future, could harm our operating results or cause us to fail to meet our reporting obligations. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our securities. We do not intend to pay any dividends until our consummation of a business combination at the earliest. We have not paid any cash dividends on our shares of common stock to date and do not intend to pay cash dividends prior to the completion of an initial business combination. The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of a business combination. The payment of any dividends subsequent to a business combination will be within the discretion of our board of directors at such time. It is the present intention of our board of directors to retain all earnings, if any, for use in our business operations and, accordingly, our board of directors does not anticipate declaring any dividends in the foreseeable future. As a result, any gain you will realize on our securities will result solely from the appreciation of such securities. Item 1B.Unresolved Staff Comments. Not Applicable. Item 2. Properties. We maintain our principal executive offices at 509 7th Street, N.W., Washington, D.C. 20004. The cost for this office is included in the aggregate $7,500 per-month fee Venturehouse Group, LLC, an affiliate of Mark D. Ein, our chief executive officer, commenced charging us for office space, utilities and administrative services on consummation of our Offering.We believe, based on rents and fees for similar services in the Washington, D.C. area, that the fee charged by Venturehouse Group, LLC is at least as favorable as we could have obtained from an unaffiliated person. 30 The Company entered into a fifteen month office lease for office space and support services in New York, New York.The agreement calls for monthly rent of $6,700 plus additional fees for administrative support and includes free rent on the first, fifth and ninth month of the term. We consider our current office space adequate for our current operations. Item 3. Legal Proceedings. None. Item 4. Mine Safety Disclosures. Not Applicable. 31 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our units, warrants and common stock are traded on the Nasdaq Stock Market LLC under the symbols CLACU, CLACW and CLAC, respectively. The following table sets forth the high and low sales prices for our units, warrants and common stock for the periods indicated since our units commenced public trading on May 10, 2013, and since our warrants and common stock commenced separate trading on July 1, 2013. Common Stock Warrants Units Period High Low High Low High Low 2014: First Quarter* $ 2013: Fourth Quarter $ Third Quarter** $ Second Quarter** $ $ *Through March 3, 2014. ** Trading commenced May 10, 2013 for our units and July 1, 2013 for our warrants and common stock. Holders As of February 27, 2014, there were one holder of record of our units, six holders of record of our shares of common stock and six holders of record of our warrants.Management believes we have in excess of 300 beneficial holders of our securities. Dividends We have not paid any cash dividends on our common stock to date and do not intend to pay cash dividends prior to the completion of our initial business combination. The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of our initial business combination. The payment of any dividends subsequent to our initial business combination will be within the discretion of our board of directors at such time. It is the present intention of our board of directors to retain all earnings, if any, for use in our business operations and, accordingly, our board of directors does not anticipate declaring any dividends in the foreseeable future. In addition, our board of directors is not currently contemplating and does not anticipate declaring any stock dividends in the foreseeable future. Further, if we incur any indebtedness in connection with our initial business combination, our ability to declare dividends may be limited by restrictive covenants we may agree to in connection therewith. 32 Use of Proceeds On May 15, 2013, we consummated the Offering of 20,000,000 units, including 2,000,000 units under the underwriters’ over-allotment option, with each unit consisting of one share of common stock and one half of one warrant, each whole warrant to purchase one share of common stock.The shares of common stock and the warrants included in the units traded as a unit until July 1, 2013 when separate trading of common stock and warrants began.No fractional warrants will be issued and only whole warrants will trade. Holders now have the option to continue to hold units or separate their units into the component pieces. Each whole warrant entitles its holder, upon exercise, to purchase one share of common stock for $11.50 subject to certain adjustments, during the period commencing on the later of thirty days after the completion by us of our initial business combination or twelve months from the date of the consummation of the Offering and terminating on the five-year anniversary of the completion by us of our initial business combination or earlier upon redemption or liquidation of the Trust Account. The units were sold at an offering price of $10.00 per unit, generating gross proceeds of $200,000,000.Citigroup Global Markets Inc. and Deutsche Bank Securities Inc. acted as the joint book-running managers of the Offering.Ladenburg Thalmann & Co. Inc. and Imperial Capital LLC served as co-managers.The units sold in the offering were registered under the Securities Act of 1933 on registration statements on Form S-1 (Nos. 333-187519 and 333-188503). The Securities and Exchange Commission declared the registration statement effective on May 9, 2013. Simultaneously with the consummation of the Offering, we consummated the Private Placement of 5,600,000 sponsor’s warrants at a price of $1.00 per warrant, generating total proceeds of $5,600,000. The sponsor’s warrants are identical to the warrants included in the units sold in the Offering except that the sponsor’s warrants: (i) will not be redeemable by us and (ii) may be exercised for cash or on a cashless basis, in each case so long as they are held by the initial purchasers or any of their permitted transferees. The purchasers of the sponsor’s warrants have also agreed not to transfer, assign or sell any of the sponsor’s warrants, including the common stock issuable upon exercise of the sponsor’s warrants (except to certain permitted transferees), until 30 days after the completion of an initial business combination. We incurred a total of $4,000,000 in underwriting discounts and commissions (not including deferred fees) and $666,300 for other costs and expenses related to the offering. After deducting the underwriting discounts and commissions and the offering expenses, the total net proceeds to us from the Offering were $200,933,700. Of this amount, $200,000,000 we received from the sale of units in the Offering and the Private Placement of sponsor’s warrants was deposited into a trust account. 33 Generally, the proceeds held in the trust account will not be released to us until the earlier of the completion of an initial business combination and our liquidation upon our failure to consummate a business combination within the required time period. Notwithstanding the foregoing, there can be released to us from the trust account (i) any interest earned on the funds in the trust account that we need to pay our income or other tax obligations and (ii) any remaining interest, up to a maximum of approximately $1.75 million, earned on the funds in the trust account that we need for our working capital requirements. Through March6, 2014, we have withdrawn $30,000 from the interest income earned on the trust account for our working capital and tax obligations. Subject to the foregoing, our management has broad discretion with respect to the specific application of the net proceeds of the offering and the Private Placement, although substantially all of the net proceeds are intended to be generally applied toward consummating a business combination with one or more businesses or entities. To the extent that our capital stock is used in whole or in part as consideration to effect a business combination, the remaining proceeds held in the trust account as well as any other net proceeds not expended will be used as working capital to finance the operations of the target business. Purchases of Equity Securities by Issuer and Affiliates No purchases of our equity securities have been made by us or affiliated purchasers within the fourth quarter of the fiscal year ended December 31, 2013. Item 6. Selected Financial Data. Not Applicable. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion should be read in conjunction with our Financial Statements and footnotes thereto contained in this report. Forward Looking Statements All statements other than statements of historical fact included in this Form 10-K including, without limitation, statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding our financial position, business strategy and the plans and objectives of management for future operations, are forward looking statements. When used in this Form 10-K, words such “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions, as they relate to us or our management, identify forward looking statements. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other Securities and Exchange Commission (“SEC”) filings.References to “we”, “us”, “our” or the “Company” are to Capitol Acquisition Corp. II, except where the context requires otherwise.Such forward looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to, our management. No assurance can be given that results in any forward-looking statement will be achieved and actual results could be affected by one or more factors, which could cause them to differ materially. The cautionary statements made in this Annual Report on Form 10-K should be read as being applicable to all forward-looking statements whenever they appear in this Annual Report.For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act.Actual results could differ materially from those contemplated by the forward looking statements as a result of certain factors detailed in our filings with the Securities and Exchange Commission. All subsequent written or oral forward looking statements attributable to us or persons acting on our behalf are qualified in their entirety by this paragraph. 34 Overview We are a blank check company in the development stage, formed on August 9, 2010 to acquire, through a merger, share exchange, asset acquisition, stock purchase, plan of arrangement, recapitalization, reorganization or other similar business combination, one or more businesses or entities. We do not have any specific initial business transaction under consideration, but we are actively searching for a target business. We presently have no revenue, have had losses since inception from incurring formation costs and have no other operations other than the active solicitation of a target business with which to complete a business combination.We have relied upon the sale of our securities and loans from our officers and directors to fund our operations. The registration statement for our Offering was declared effective on May 9, 2013. On May 10, 2013, we filed a new registration statement to increase the size of the Offering by 20% pursuant to Rule 462(b) under the Securities Act of 1933, as amended.On May 15, 2013, we consummated the Offering and received proceeds net of the underwriter’s discount and other offering expenses of $195,333,700 and simultaneously received $5,600,000 from the issuance of 5,600,000 sponsor’s warrants in the Private Placement.From the net proceeds, $933,700 was available for working capital and tax purposes.Our management has broad discretion with respect to the specific application of the net proceeds of the Offering and the Private Placement, although substantially all of the net proceeds are intended to be applied generally towards consummating a business combination successfully. Results of Operations Our entire activity since inception up to the closing of our initial public offering on May 15, 2013 was in preparation for that event.Since the offering, our activity has been limited to the evaluation of business combination candidates, and we will not generate any operating revenues until the closing and completion of our initial business combination.We expect to generate small amounts of non-operating income in the form of interest income on cash and cash equivalents.Interest income is not expected to be significant in view of current low interest rates on risk-free investments (treasury securities).We currently incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses. 35 For the years ended December 31, 2013 and 2012, we had net losses of $721,020 and $4,768, respectively, and for the period from August 9, 2010 (inception) through December 31, 2013, we had cumulative net losses of $728,265.We incurred operating expenses for the years ended December 31, 2013 and 2012 of $748,654 and $4,768, respectively, for the period from August 9, 2010 (inception) through December 31, 2013 of $755,899.These costs consist mainly of professional and consulting fees, rent, office administrative costs and Delaware franchise tax. We incurred offering costs of $666,300 with regard to the offering, which were netted against additional paid-in capital upon the consummation of the offering. Liquidity and Capital Resources As of December 31, 2013, we had cash of $312,298 and marketable securities of $9,973.In addition, we had $200,033,561 in cash and equivalents held in trust, of which $33,561 represents interest income earned to be used for working capital and tax purposes and $200,000,000 of restricted funds to be used for a business combination or to convert our common shares, in certain circumstances.Our activity from August 9, 2010 (inception) through May 15, 2013 was to prepare for our initial public offering. Since May 15, 2013 our efforts have been devoted to identifying an acquisition candidate. We intend to use the proceeds not held in the trust account plus the interest earned on the funds held in the trust account that may be released to us to fund our working capital requirements.We are allowed to have released to us up to $1,750,000 of the interest earned in the Trust Account (net of applicable taxes, if any) for working capital purposes during our search for an initial business combination. However, there is no assurance that we will be able to successfully effect a business combination. As of December 31, 2013, no interest that can be utilized for working capital purposes had been released to us. We will depend on sufficient interest being earned on the proceeds held in the Trust Account to provide us with additional working capital that we may need to identify one or more target businesses, conduct due diligence and complete a Business Combination, as well as to pay any franchise and income taxes that we may owe. The amounts in the Trust Account may be invested only in U.S. government treasury bills with a maturity of 180 days or less or money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations. The current low interest rate environment may make it more difficult for such investments to generate sufficient funds, together with the amounts available outside the Trust Account, to locate, conduct due diligence, structure, negotiate and close a Business Combination. We have experienced significant recurring net operating losses as well as negative cash flows from operations.Our main source of liquidity was from the Offering and the Private Placement, proceeds from which have been used to fund the search for a prospective target business. We currently have a cash position of approximately $356,000, which includes approximately $34,000 held in the trust account available to us and approximately $10,000 invested in U.S. Treasury Bills.Our Chief Executive Officer, Mark D. Ein, and our Chief Financial Officer, L. Dyson Dryden, have also committed to provide loans to us of up to $615,000. These loans will be evidenced by notes and would either be repaid upon the consummation of a business combination or up to $500,000 of the notes may be converted into warrants at a price of $1.00 per warrant, which warrants would be identical to the sponsor’s warrants.Based on the foregoing, we believe we have sufficient cash to meet our needs through December 31, 2014.Our sponsor, officers and directors or their affiliates may, but are not required to, loan us additional funds in any amount they deem reasonable at their discretion. 36 Off-Balance Sheet Arrangements We did not have any off-balance sheet arrangements as of December 31, 2013. Contractual Obligations We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities. Critical Accounting Policies Our financial statements and the notes to our financial statements contain information that is pertinent to management's discussion and analysis. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. On a continual basis, management reviews its estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such reviews, and if deemed appropriate, those estimates are adjusted accordingly. Actual results may vary from these estimates and assumptions under different and/or future circumstances. Management considers an accounting estimate to be critical if: a. it requires assumptions to be made that were uncertain at the time the estimate was made; and b. changes in the estimate, or the use of different estimating methods that could have been selected, could have a material impact on the Company's results of operations or financial condition. The following critical accounting policies have been identified that affect the more significant judgments and estimates used in the preparation of the financial statements. We believe that the following are some of the more critical judgment areas in the application of our accounting policies that affect our financial condition and results of operations. We have discussed the application of these critical accounting policies with our Audit Committee. The following critical accounting policies are not intended to be a comprehensive list of all of the Company's accounting policies or estimates. 37 Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Income Taxes The Company accounts for income taxes under Accounting Standards Codification (“ASC”) 740, “Income Taxes” (“ASC 740”). ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statements and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized. ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Recently Issued Accounting Pronouncements Management does not believe that any recently issued accounting standards would have a material effect on future financial statements. Item 7A. Quantitative and Qualitative Disclosures About Market Risk. From our inception through December 31, 2013, our efforts were limited to organizational activities, activities relating to our initial public offering and the search for an acquisition candidate; we had neither engaged in any operations nor generated any revenues. Market risk is a broad term for the risk of economic loss due to adverse changes in the fair value of a financial instrument. These changes may be the result of various factors, including interest rates, foreign exchange rates, commodity prices and/or equity prices. Net proceeds from our initial public offering of $200.0 million (which includes $8.0 million of the proceeds attributable to the Underwriters’ deferred discount from the initial public offering) have been placed in a trust account at J. P. Morgan Securities, with Continental Stock Transfer & Trust Company acting as trustee. As of December 31, 2013, the balance of the trust account was $200.0 million. We are allowed to use $1.75 million (net of applicable tax obligations, if any) of the interest and dividends earned on the money in the Trust Account for working capital purposes. The proceeds held in trust are invested in United States Treasury Bills with a maturity of 180 days or less.As of December 31, 2013, the effective annualized interest rate payable on our Treasury Bills was approximately 0.07%. Due to the short-term nature of these investments and the low interest rates related to these types of investments, we believe there will be no material exposure related to interest rate risk.We do not believe that the effect of other changes, such as foreign exchange rates, commodity prices and/or equity prices currently pose significant market risk for us. We have not engaged in any hedging activities since our inception. We do not currently expect to engage in any hedging activities. 38 Item 8. Financial Statements and Supplementary Data. This information appears following Item 15 of this Report and is included herein by reference. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures. None. Item 9A. Controls and Procedures. Evaluation of Disclosure Controls and Procedures We maintain disclosure controls and procedures. Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management, with the participation of our principal executive officer and principal financial and accounting officer, evaluated the effectiveness of our disclosure controls and procedures, as of December 31, 2013. Based on this evaluation, our principal executive, financial and accounting officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) were effective as of December 31, 2013. 39 Management’s Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as that term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our evaluation under that framework, management concluded that our internal control over financial reporting was effective as of December 31, 2013. This Form 10-K does not include an attestation report of our independent registered certified public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our independent registered certified public accounting firm pursuant to the Sarbanes-Oxley Act of 2002, as amended, and the rules of the SEC promulgated thereunder, which permit the Company to provide only management’s report in this Annual Report. Changes in Internal Control Over Financial Reporting For the quarter ended December 31, 2013, there has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information. None. 40 PART III Item 10.Directors, Executive Officers and Corporate Governance. Directors and Executive Officers Our current directors and executive officers are as follows: Name Age Position Mark D. Ein 49 Chairman, Chief Executive Officer, Treasurer, Secretary and Director L. Dyson Dryden 38 Chief Financial Officer and Director Lawrence Calcano 50 Director Richard C. Donaldson 54 Director Piyush Sodha 55 Director Mark D. Ein has served as our Chairman, Chief Executive Officer, Treasurer, Secretary and Director since our inception. From June 2007 to October 2009, Mr. Ein was the Chief Executive Officer and Director of Capitol I, a blank check company formed for substantially similar purposes as our company. Capitol I completed its business combination with Two Harbors Investment Corp., a Maryland real estate investment trust, in October 2009. Since October 2009, Mr. Ein has served as the Non-Executive Vice Chairman of Two Harbor’s board of directors. Mr. Ein is the Founder of Venturehouse Group, LLC, a holding company that creates, invests in and builds companies, and has served as its Chief Executive Officer since 1999. Venturehouse’s portfolio includes or has included the seed investment in Matrics Technologies in August 2000 (sold to Symbol Technologies in September 2004), the lead investment in the buyout of Cibernet Corporation from the CTIA in March 2003 (sold to MACH S.à.r.l. in April 2007), the acquisition of VSGi from Net2000 Communications, and an early investment in XM Satellite Radio. He has also been the President of Leland Investments Inc., a private investment firm, since 2005. An entity owned by Mr. Ein is also the majority owner and managing member, and Mr. Ein is Co-Chairman, of Kastle Holding Company LLC, which through its subsidiaries conducts the business of Kastle Systems, LLC, a provider of building and office security systems that was acquired in January 2007. Mr. Ein also currently serves as the Chairman and Lead Investor of Reed Krakoff International, LLC, a luxury women’s clothing and accessories company.Mr. Ein also founded, and is the owner of, the Washington Kastles, the World Team Tennis franchise in Washington, D.C., in 2008. From 1992 to 1999, Mr. Ein was a Principal with The Carlyle Group, a global private equity firm. Mr. Ein worked for Brentwood Associates, a West Coast growth-focused private equity firm, from 1989 to 1990 and for Goldman, Sachs & Co. in the real estate and mortgage finance group from 1986 to 1989. Mr. Ein is the chairman of the board of VSGi, a video conferencing, telepresence, and audi-visual integration company. Mr. Ein is the Chairman of the District of Columbia Public Education Fund, a non-profit organization that catalyzes private sector support for the Washington, D.C. public school system. He also serves on the board of directors of The District of Columbia College Access Program (DC-CAP), a non-profit organization supporting the academic success of Washington, D.C. area public high school students, the United States Tennis Association and the International Tennis Hall of Fame. He was appointed by Mayor Vincent Gray to be a member of the D.C. Tax Revision Commission and also serves on the Executive Committee of the Federal City Council.He previously served on the Trustee’s Council of the National Gallery of Art and the boards of the Wolf Trap Foundation, The Washington Tennis and Education Fund, the Executive Committee of the Federal City Council, The Foundation for the National Institutes of Health (NIH), and the SEED School and Foundation. Mr. Ein received a B.S. in Economics with a concentration in Finance from the University of Pennsylvania’s Wharton School of Finance and an M.B.A. from the Harvard Business School. We believe Mr. Ein is well-qualified to serve as a member of the board due to his public company experience, business leadership, operational experience, and experience in prior blank check offerings, such as Capitol I. 41 L. Dyson Dryden has served as our Chief Financial Officer and a member of the Board of Directors since March 2013. Mr. Dryden is the founder of Dryden Capital Management, LLC, a private investment firm that invests in and builds private companies, and has served as its President since March 2013. From August 2005 to February 2013, Mr. Dryden held the role of Managing Director in Citigroup’s Investment Banking division in New York where he led the coverage effort for a number of the firm’s Global Technology, Media and Telecommunications clients. From 2000 to 2005, Mr. Dryden held the titles of Associate and Vice President at Jefferies & Company, a middle market investment banking firm. From 1998 to 2000, Mr. Dryden worked in the investment banking group at BB&T Corporation. Mr. Dryden received a Bachelor of Science in Business Administration with a dual concentration in finance and management from the University of Richmond in 1998. We believe Mr. Dryden is well-qualified to serve as a member of the board due to his capital markets experience, including experience assisting blank check companies like our company in completing their initial public offerings and business combinations. Lawrence Calcano has served as a member of our Board of Directors since March 2013. Mr. Calcano co-founded il Biometrics, a privately held information and technology company developing protection and performance products for the sports and military markets, in June 2012 and served as the company’s Chief Executive Officer from June 2012 to September 2013. From January 2010 to June 2012, Mr. Calcano served as Chairman and Chief Executive Officer of Bite Tech, Inc., a maker of protective and performance oriented oral devices for the athletic marketplace. He continues to serve on the Board of Directors of Bite Tech, Inc. From October 2007 until its merger with Two Harbors in October 2009, Mr. Calcano served as a member of the Board of Directors of Capitol I. From 1990 to June 2007, Mr. Calcano was affiliated with Goldman, Sachs & Co., most recently serving as the co-head of the Global Technology Banking Group of the Investment Banking Division, prior to which he headed the firm’s east coast technology group and was the co-Chief Operating Officer of the High Technology Department. From 1985 to 1988, Mr. Calcano was an analyst at Morgan Stanley. Mr. Calcano is a director of 1-800-FLOWERS.COM, Inc., a Nasdaq listed provider of flowers and plants, gift baskets, gourmet foods and confections. Mr. Calcano was named to the Forbes Midas List of the most influential people in venture capital in 2001 (the inaugural year), 2002, 2004, 2005 and 2006. Mr. Calcano received a B.A. from Holy Cross College, and attended the Amos Tuck School of Business at Dartmouth from 1988 to 1990, and graduated as a Tuck Scholar. We believe Mr. Calcano is well-qualified to serve as a member of the board due to his public company experience, business leadership, operational experience, and experience in Capitol I. 42 Richard C. Donaldson has served as a member of our Board of Directors since March 2013. Mr. Donaldson has been with Pillsbury Winthrop Shaw Pittman LLP, a global law firm, as an attorney since 1985, where he is a Partner, and has served as Pillsbury’s Chief Operating Officer since June 2006. As Chief Operating Officer, Mr. Donaldson oversees the finances, capital structure and operations of Pillsbury, with nearly 650 lawyers, $540 million in 2013 revenues and 14 offices across the United States and overseas. Mr. Donaldson serves on the Pillsbury Executive Team and has been a member of Pillsbury’s Board of Directors since 2006. From September 2007 until its merger with Two Harbors in October 2009, Mr. Donaldson served as a member of the Board of Directors of Capitol I. Mr. Donaldson also serves on the Board of Directors of Arizona Cardinals Holdings, Inc. From June 2000 to August 2001, Mr. Donaldson served as Managing Director of Venturehouse Group and he has served as a member of its Board of Directors since June 2000. He previously served on the Board of Directors of Greater DC Cares and the Board of Directors of the Woolly Mammoth Theatre Company in Washington, D.C. Mr. Donaldson received a B.A. from Cornell University in 1982 and a J.D. from The University of Chicago Law School in 1985. We believe Mr. Donaldson is well-qualified to serve as a member of the board due to his public company experience, business leadership, operational experience, and experience in Capitol I. Piyush Sodha has served as a member of our Board of Directors since March 2013. Mr. Sodha has served as the Chief Executive Officer and Co-Chairman of Kastle Systems, LLC since April 2008. Prior to joining Kastle Systems, Mr Sodha was Chief Technical Officer and head of the Americas Region for MACH S.á.r.l., a leading global provider of clearing and settlement services for the mobile phone industry. He previously served as the Chairman and Chief Executive Officer of Cibernet Corporation which merged into MACH S. à.r.l. in April 2007. Prior to that, he was a General Manager and Vice President of Symbol Technologies, Inc., a company which acquired Matrics, Inc. Mr. Sodha had served as the Chairman and Chief Executive Officer of Matrics, Inc., which was a leading provider of RFID technology solutions and infrastructure products. From June 2007 until its merger with Two Harbors in October 2009, Mr. Sodha served as a member of the Board of Directors of Capitol I. Earlier in his career, Mr. Sodha had served as Chief Executive Officers of WirelessHome, NextLinx Corp and LCC International, a Nasdaq listed provider of integrated network design, implementation and optimization solutions for wireless voice and data communication networks which went public under his leadership in 1996. Mr. Sodha is currently a director of Orchestro, a data analytics company serving the retail industry. Mr. Sodha received a Bachelor of Science in Electrical Engineering from India Institute of Technology in New Delhi, India, a Master of Science in Electrical Engineering from Drexel University and an M.B.A. from Wharton Business School. We believe Mr. Sodha is well-qualified to serve as a member of the board due to his public company experience, business leadership, operational experience, and experience in Capitol I. Our board of directors is divided into three classes with only one class of directors being elected in each year and each class serving a three-year term. The term of office of the first class of directors, consisting of Lawrence Calcano and Richard C. Donaldson, will expire at our first annual meeting of stockholders. The term of office of the second class of directors, consisting of L. Dyson Dryden and Piyush Sodha, will expire at the second annual meeting. The term of office of the third class of directors, consisting of Mark D. Ein, will expire at the third annual meeting. 43 Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Securities Exchange Act of 1934 requires our officers, directors and persons who own more than ten percent of a registered class of our equity securities to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Officers, directors and ten percent shareholders are required by regulation to furnish us with copies of all Section 16(a) reports they file. Based solely on a review of such reports received by us and written representations from certain reporting persons that no Form 5s were required for those persons, we believe that, during the fiscal year ended December 31, 2013, all reports required to be filed by our officers, directors and persons who own more than ten percent of a registered class of our equity securities were filed on a timely basis. Code of Ethics In May 2013, we adopted a code of ethics that applies to all of our executive officers, directors and employees. The code of ethics codifies the business and ethical principles that govern all aspects of our business. We will provide, without charge, upon request, copies of our code of ethics. Requests for copies of our code of ethics should be sent in writing to Capitol Acquisition Corp. II, 509 7th Street, N.W., Washington, D.C. 20004. Corporate Governance Audit Committee Our audit committee consists of Messrs. Calcano, Donaldson and Sodha, each of whom is an independent director. The audit committee’s duties, which are specified in our Audit Committee Charter, include, but are not limited to: · reviewing and discussing with management and the independent auditor the annual audited financial statements, and recommending to the board whether the audited financial statements should be included in our Form 10-K; · discussing with management and the independent auditor significant financial reporting issues and judgments made in connection with the preparation of our financial statements; · discussing with management major risk assessment and risk management policies; · monitoring the independence of the independent auditor; · verifying the rotation of the lead (or coordinating) audit partner having primary responsibility for the audit and the audit partner responsible for reviewing the audit as required by law; · reviewing and approving all related-party transactions; · inquiring and discussing with management our compliance with applicable laws and regulations; 44 · pre-approving all audit services and permitted non-audit services to be performed by our independent auditor, including the fees and terms of the services to be performed; · appointing or replacing the independent auditor; · determining the compensation and oversight of the work of the independent auditor (including resolution of disagreements between management and the independent auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or related work; · establishing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls or reports which raise material issues regarding our financial statements or accounting policies; and · approving reimbursement of expenses incurred by our management team in identifying potential target businesses. Financial Experts on Audit Committee The audit committee is composed exclusively of “independent directors” who are “financially literate” as defined under the NASDAQ Stock Market LLC listing standards. The NASDAQ Stock Market LLC listing standards define “financially literate” as being able to read and understand fundamental financial statements, including a company’s balance sheet, income statement and cash flow statement. In addition, we must certify to the NASDAQ Stock Market LLC that the committee has, and will continue to have, at least one member who has past employment experience in finance or accounting, requisite professional certification in accounting, or other comparable experience or background that results in the individual’s financial sophistication. The board of directors has determined that each of Mr. Calcano and Mr. Sodha qualifies as an “audit committee financial expert,” as defined under rules and regulations of the SEC. Nominating Committee Our nominating committee consists of Messrs. Calcano, Donaldson and Sodha, each of whom is an independent director. The nominating committee is responsible for overseeing the selection of persons to be nominated to serve on our board of directors. The nominating committee considers persons identified by its members, management, shareholders, investment bankers and others. Guidelines for Selecting Director Nominees The guidelines for selecting nominees, which are specified in the Nominating Committee Charter, generally provide that persons to be nominated: · should have demonstrated notable or significant achievements in business, education or public service; · should possess the requisite intelligence, education and experience to make a significant contribution to the board of directors and bring a range of skills, diverse perspectives and backgrounds to its deliberations; and · should have the highest ethical standards, a strong sense of professionalism and intense dedication to serving the interests of the shareholders. 45 The Nominating Committee will consider a number of qualifications relating to management and leadership experience, background and integrity and professionalism in evaluating a person’s candidacy for membership on the board of directors. The nominating committee may require certain skills or attributes, such as financial or accounting experience, to meet specific board needs that arise from time to time and will also consider the overall experience and makeup of its members to obtain a broad and diverse mix of board members. The nominating committee does not distinguish among nominees recommended by shareholders and other persons. There have been no material changes to the procedures by which security holders may recommend nominees to our board of directors. Item 11.Executive Compensation. To date, no executive officer or director has received any cash compensation for services rendered to us. Commencing on May 10, 2013 through the consummation of a business combination, we will pay Venturehouse Group, LLC, an affiliate of Mr. Ein, a fee of $7,500 per month for providing us with office space and certain office and secretarial services.However, this arrangement is solely for our benefit and is not intended to provide Mr. Ein compensation in lieu of a salary.Other than the $7,500 per month administrative fee, no compensation of any kind, including finders, consulting or other similar fees, will be paid to any of our sponsor, officers and directors, or any of their respective affiliates, prior to, or for any services they render in order to effectuate, the consummation of a business combination. However, such individuals will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. There is no limit on the amount of these out-of-pocket expenses. After our initial business combination, members of our management team who remain with us may be paid consulting, management or other fees from the combined company with any and all amounts being fully disclosed to shareholders, to the extent then known, in the proxy solicitation materials furnished to our shareholders. It is unlikely the amount of such compensation will be known at the time of a stockholder meeting held to consider our initial business combination, as it will be up to the directors of the post-combination business to determine executive and director compensation. In this event, such compensation will be publicly disclosed at the time of its determination in a Current Report on Form 8-K, as required by the SEC. Since our formation, we have not granted any stock options or stock appreciation rights or any other awards under long-term incentive plans to any of our executive officers or directors. 46 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The following table sets forth information regarding the beneficial ownership of our ordinary shares as of March 6, 2014 by: · each person known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock; · each of our officers and directors; and · all of our officers and directors as a group. Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them. Name and Address of Beneficial Owner(1) Amount and Nature of Beneficial Ownership Approximate Percentage of Outstanding Shares of Common Stock Mark D. Ein % L. Dyson Dryden % Lawrence Calcano * Richard C. Donaldson * Piyush Sodha * Capitol Acquisition Management 2 LLC % T. Rowe Price Associates, Inc. % Fir Tree Inc. % BlueMountain Capital Management, LLC % AQR Capital Management, LLC % Brian Taylor % TD Asset Management Inc. % All directors and executive officers as a group (five individuals) % Unless otherwise indicated, the business address of each of the individuals is 509 7th Street, N.W., Washington, D.C. 20004. Represents shares held by Capitol Acquisition Management 2 LLC, of which Leland Investments Inc., an entity controlled by Mr. Ein, is the sole member.Does not include 3,652,175 shares issuable upon exercise of sponsor’s warrants held by Capitol Acquisition Management 2 LLC that are not exercisable. 47 Does not include 1,217,391 shares issuable upon exercise of sponsor’s warrants that are not exercisable. Does not include 243,478 shares issuable upon exercise of sponsor’s warrants that are not exercisable. Does not include 3,652,175 shares issuable upon exercise of sponsor’s warrants held by Capitol Acquisition Management 2 LLC that are not exercisable. The business address of T. Rowe Price Associates, Inc. is 100 E. Pratt Street, Baltimore, Maryland 21202.Information derived from a Schedule 13G filed on February 11, 2014. The business address of Fir Tree Inc. is 505 Fifth Avenue, 23rdFloor, New York, New York 10017.Information derived from a Schedule 13G filed on February 13, 2014. The business address of BlueMountain Capital Management LLC is 280 Park Avenue, 5th Floor East, New York, New York 10017.Represents shares held by entities which BlueMountain Capital Management LLC acts as investment manager to, and exercises investment discretion over.Information derived from a Schedule 13G filed on May 17, 2013. The business address of AQR Capital Management, LLC is Two Greenwich Plaza, 3rd Floor, Greenwich, Connecticut 06830.Information derived from a Schedule 13G filed on February 11, 2014. The business address of Brian Taylor is Pine River Capital Management L.P., 601 Carlson Parkway, Suite 330, Minnetonka, MN 55305. Represents shares controlled by Pine River Capital Management L.P. Information derived from a Schedule 13G/A filed on February 6, 2014 The business address of TD Asset Management Inc. is Canada Trust Tower, BCE Place, 161 Bay Street, 35th Floor, Toronto, Ontario, M5J 2T2. Information derived from a Schedule 13G filed on July 19, 2013. Does not include 5,600,000 shares issuable upon exercise of sponsor’s warrants that are not exercisable. Our initial shareholders beneficially own 20% of our issued and outstanding shares of common stock.Because of the ownership block held by our initial stockholders, such individuals may be able to effectively exercise influence over all matters requiring approval by our shareholders, including the election of directors and approval of significant corporate transactions other than approval of our initial business combination. 48 All of the founder shares outstanding prior to the date of our Offering were placed in escrow with Continental Stock Transfer & Trust Company, as escrow agent, to be held until one year after the date of the consummation of our initial business combination or earlier if, subsequent to our business combination, (i) the last sales price of our common stock equals or exceeds $12.00 per share for any 20 trading days within any 30-trading day period after our initial business combination or (ii) we consummate a subsequent liquidation, merger, share exchange or other similar transaction which results in all of our shareholders having the right to exchange their ordinary shares for cash, securities or other property. In addition, a portion of the shares (equal to 5.0% of our issued and outstanding shares after the Offering) (the “founder forfeiture shares”) will be subject to forfeiture in the event the last sales price of our stock does not equal or exceed $13.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period within four years following the closing of our initial business combination.Such shares will be released from escrow at the same time as the other founder’s shares to the extent they have been earned at such time. During the escrow period, the holders of the founder shares are not able to sell or transfer their securities except (i) for transfers to an entity’s members upon its liquidation, (ii) to relatives and trusts for estate planning purposes, (iii) by virtue of the laws of descent and distribution upon death, (iv) pursuant to a qualified domestic relations order, (v) by certain pledges to secure obligations incurred in connection with purchases of our securities or (vi) by private sales made at or prior to the consummation of a business combination at prices no greater than the price at which the shares were originally purchased, in each case where the transferee agrees to the terms of the escrow agreement, but will retain all other rights as our shareholders, including, without limitation, the right to vote their ordinary shares and the right to receive cash dividends, if declared. If dividends are declared and payable in ordinary shares, such dividends will also be placed in escrow. If we are unable to effect a business combination and liquidate the trust account, none of our initial shareholders will receive any portion of the liquidation proceeds with respect to their founder shares. Our sponsor, officers and directors purchased an aggregate of 5,600,000 sponsor’s warrants for an aggregate purchase price of $5,600,000.The sponsor’s warrants are identical to the warrants held by the public shareholders except that the sponsor’s warrants are exercisable for cash or on a cashless basis, at the holder’s option, and are not redeemable by us, in each case so long as such warrants are held by the initial purchasers or their affiliates. The purchases agreed not to not sell or transfer the sponsor’s warrants (except to certain permitted transferees) until after we have completed a business combination. If necessary to meet our working capital needs, our officers, directors, initial shareholders or their affiliates may, but are not obligated to, loan us funds, from time to time or at any time, in their sole discretion. Each loan would be evidenced by a promissory note. The notes would either be paid upon consummation of our initial business combination, without interest, or, at the holder’s discretion, up to $500,000 of the notes may be converted into warrants at a price of $1.00 per warrant. The warrants would be identical to the sponsor’s warrants. If we do not complete a business combination, the loans will be forgiven. 49 Equity Compensation Plans As of December 31, 2013, we had no compensation plans (including individual compensation arrangements) under which equity securities of the registrant were authorized for issuance. Item 13. Certain Relationships and Related Transactions, and Director Independence. In February 2011, we issued 4,417,684 shares of common stock to Capitol Acquisition Management 2 LLC for $25,000 in cash, at a purchase price of approximately $0.006 share, in connection with our organization. In March 2013, our sponsor contributed an aggregate of 105,184 shares of our common stock to our capital, resulting in our sponsor owning an aggregate of 4,312,500 founder’s shares. The sponsor received no consideration for this contribution. Such contribution was made solely to maintain the sponsor’s collective 20% ownership interest in our shares of common stock based on the current size of our initial public offering. Thereafter, also in March 2013, our sponsor transferred an aggregate of 1,078,126 founder’s shares to our executive officers and directors. In April 2013, our sponsor and Mr. Dryden transferred an aggregate of 22,998 founder’s shares to Messrs. Calcano, Donaldson and Sodha, resulting in our sponsor owning an aggregate of 3,222,875 founder’s shares and Mr. Dryden owning an aggregate of 974,626 founder’s shares. The sponsor received no consideration for these transfers. In May 2013, we effected a stock dividend of 0.2 shares for each outstanding share of common stock, resulting in our sponsor and officers and directors holding an aggregate of 5,175,000 founder’s shares, of which 175,000 shares were subsequently forfeited. Our sponsor, officers and directors purchased an aggregate of 5,600,000 sponsor’s warrants (for a total purchase price of $5,600,000) from us on a private placement basis simultaneously with the consummation of our Offering. The sponsor’s warrants are identical to the warrants included in the units sold in the offering except that the sponsor’s warrants: (i) will not be redeemable by us and (ii) may be exercised for cash or on a cashless basis, as described in the prospectus for our initial public offering, so long as they are held by the initial purchasers or any of their permitted transferees. If the sponsor’s warrants are held by holders other than the initial purchasers or any of their permitted transferees, the sponsor’s warrants will be redeemable by us and exercisable by the holders on the same basis as the warrants included in the units being sold in the Offering. The initial purchasers of the sponsor’s warrants have agreed not to transfer, assign or sell any of the sponsor’s warrants, including the common stock issuable upon exercise of the sponsor’s warrants (except to certain permitted transferees), until 30 days after the completion of our initial business combination. In order to meet our working capital needs, our Chief Executive Officer, Mark D. Ein, and our Chief Financial Officer, L. Dyson Dryden, have committed to provide loans to us of up to $615,000. These loans will be evidenced by notes and would either be repaid upon the consummation of a business combination or up to $500,000 of the notes may be converted into warrants at a price of $1.00 per warrant, which warrants would be identical to the sponsor’s warrants.Based on the foregoing, we believe we have sufficient cash to meet our needs through December 31, 2014.Our sponsor, officers and directors or their affiliates may, but are not required to, loan us additional funds in any amount they deem reasonable at their discretion. 50 The holders of our founder’s shares, as well as the holders of the sponsor’s warrants and any warrants our sponsor, officers, directors or their affiliates may be issued in payment of working capital loans made to us (and all underlying securities), are entitled to registration rights pursuant to an agreement signed on the effective date of the Offering. The holders of a majority of these securities are entitled to make up to two demands that we register such securities. The holders of the majority of the founder’s shares can elect to exercise these registration rights at any time commencing three months prior to the date on which these shares of common stock are to be released from escrow. The holders of a majority of the sponsor’s warrants or warrants issued in payment of working capital loans made to us (or underlying securities) can elect to exercise these registration rights at any time after we consummate a business combination. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to our consummation of a business combination. We will bear the expenses incurred in connection with the filing of any such registration statements. Leland Investments Inc., an affiliate of Mr. Ein, advanced to us an aggregate of $150,000 to cover expenses related to the Offering. The loan was payable without interest on the consummation of the offering. The loan was repaid from the proceeds of the Offering. Venturehouse Group, LLC, an affiliate of Mark D. Ein, has agreed that, commencing on May 10, 2013 through the earlier of our consummation of our initial business combination or our liquidation, it will make available to us certain general and administrative services, including office space, utilities and administrative support, as we may require from time to time. We have agreed to pay Venturehouse Group, LLC $7,500 per month for these services. Mr. Ein is the Chief Executive Officer of Venturehouse Group, LLC. Accordingly, Mr. Ein will benefit from the transaction to the extent of his interest in Venturehouse Group, LLC. However, this arrangement is solely for our benefit and is not intended to provide Mr. Ein compensation in lieu of a salary. We believe, based on rents and fees for similar services in the D.C. metropolitan area, that the fee charged by Venturehouse Group, LLC is at least as favorable as we could have obtained from an unaffiliated person. Other than this $7,500 per month fee and the repayment of the $150,000 loan from Leland Investments Inc., no compensation or fees of any kind, including finder’s fees, consulting fees or other similar compensation, will be paid to any of our sponsor, officers, directors or their respective affiliates, for services rendered to us prior to, or in connection with the consummation of our initial business combination (regardless of the type of transaction that it is). However, such individuals will receive reimbursement for any out-of-pocket expenses incurred by them in connection with activities on our behalf, such as identifying potential target businesses, performing business due diligence on suitable target businesses and business combinations as well as traveling to and from the offices, plants or similar locations of prospective target businesses to examine their operations. There is no limit on the amount of out-of-pocket expenses reimbursable by us. After our initial business combination, members of our management team who remain with us may be paid consulting, management or other fees from the combined company with any and all amounts being fully disclosed to stockholders, to the extent then known, in the proxy solicitation materials furnished to our stockholders. It is unlikely the amount of such compensation will be known at the time of a stockholder meeting held to consider an initial business combination, as it will be up to the directors of the post-combination business to determine executive and director compensation. In this event, such compensation will be publicly disclosed at the time of its determination in a Current Report on Form 8-K, as required by the SEC. 51 All ongoing and future transactions between us and any of our officers and directors or their respective affiliates will be on terms believed by us to be no less favorable to us than are available from unaffiliated third parties. Such transactions will require prior approval by a majority of our uninterested “independent” directors or the members of our board who do not have an interest in the transaction, in either case who had access, at our expense, to our attorneys or independent legal counsel. We will not enter into any such transaction unless our disinterested “independent” directors determine that the terms of such transaction are no less favorable to us than those that would be available to us with respect to such a transaction from unaffiliated third parties. Related Party Policy In May 2013, we adopted a Code of Ethics, which requires us to avoid, wherever possible, all related party transactions that could result in actual or potential conflicts of interests, except under guidelines approved by the board of directors (or the audit committee). Related-party transactions are defined as transactions in which (1) the aggregate amount involved will or may be expected to exceed $120,000 in any calendar year, (2) we or any of our subsidiaries is a participant, and (3) any (a) executive officer, director or nominee for election as a director, (b) greater than 5% beneficial owner of our ordinary shares, or (c) immediate family member, of the persons referred to in clauses (a) and (b), has or will have a direct or indirect material interest (other than solely as a result of being a director or a less than 10% beneficial owner of another entity). A conflict of interest situation can arise when a person takes actions or has interests that may make it difficult to perform his or her work objectively and effectively. Conflicts of interest may also arise if a person, or a member of his or her family, receives improper personal benefits as a result of his or her position. We will also require each of our directors and executive officers to annually complete a directors’ and officers’ questionnaire that elicits information about related party transactions. All ongoing and future transactions between us and any of our officers and directors or their respective affiliates will be on terms believed by us to be no less favorable to us than are available from unaffiliated third parties. Such transactions will require prior approval by a majority of our uninterested “independent” directors (to the extent we have any) or the members of our board who do not have an interest in the transaction, in either case who had access, at our expense, to our attorneys or independent legal counsel. We will not enter into any such transaction unless our disinterested “independent” directors (or, if there are no “independent” directors, our disinterested directors) determine that the terms of such transaction are no less favorable to us than those that would be available to us with respect to such a transaction from unaffiliated third parties. 52 These procedures are intended to determine whether any such related party transaction impairs the independence of a director or presents a conflict of interest on the part of a director, employee or officer. To further minimize potential conflicts of interest, we have agreed not to consummate a business combination with an entity which is affiliated with any of our initial shareholders unless we obtain an opinion from an independent investment banking firm that the business combination is fair to our unaffiliated shareholders from a financial point of view. We currently do not anticipate entering into a business combination with an entity affiliated with any of our initial shareholders. We do not intend to pursue a business combination with any company that is a portfolio company of, or otherwise affiliated with, or has received financial investment from, an entity with which our existing shareholders, executive officers or directors are affiliated. However, if circumstances change and we decide to acquire such an entity, we are required to obtain an opinion from an independent investment banking firm that is a member of FINRA that the business combination is fair to our unaffiliated shareholders from a financial point of view. Furthermore, in no event will any of our sponsor, existing officers, directors or any entity with which they are affiliated, be paid any finder’s fee, consulting fee or other compensation prior to, or for any services they render in order to effectuate, the consummation of a business combination. Director Independence Currently, Messrs. Calcano, Donaldson and Sodha would each be considered an “independent director” under the listing rules of the NASDAQ Stock Market LLC, which is defined generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship, which, in the opinion of the company’s board of directors would interfere with the director’s exercise of independent judgment in carrying out the responsibilities of a director. Our independent directors will have regularly scheduled meetings at which only independent directors are present. Any affiliated transactions will be on terms no less favorable to us than could be obtained from independent parties. Any affiliated transactions must be approved by a majority of our independent and disinterested directors. Item 14.Principal Accounting Fees and Services. The firm of Marcum LLP acts as our independent registered public accounting firm. The following is a summary of fees paid to Marcum LLP for services rendered. Audit Fees During the year ended December 31, 2013 and 2012 audit fees for our independent registered public accounting firm were $68,150 and $27,500, respectively. 53 Audit-Related Fees During the year ended December 31, 2013 and 2012, audit related fees from our independent registered public accounting firm were $0 and $0, respectively. Tax Fees During the year ended December 31, 2013 and 2012, fees for tax services were $0 and $0, respectively. All Other Fees During the year ended December 31, 2013 and 2012, fees for other services were $0 and $0, respectively. Audit Committee Approval Since our audit committee was not formed until May 2013, the audit committee did not pre-approve any of the foregoing services prior to such date, although any services rendered prior to the formation of our audit committee were reviewed and ratified by our board of directors. Our audit committee pre-approved all the foregoing services subsequent to such date. In accordance with Section 10A(i) of the Securities Exchange Act of 1934, before we engage our independent accountant to render audit or non-audit services on a going-forward basis, the engagement will be approved by our audit committee. 54 PART IV Item 15. Exhibits, Financial Statement Schedules. (a) The following documents are filed as part of this Form 10-K: Financial Statements: Page Report of Independent Registered Public Accounting Firm F-2 Balance Sheets F-3 Statements of Operations F-4 Statements of Changes in Shareholders’ Equity F-6-F-7 Statements of Cash Flows F-8-F-9 Notes to Financial Statements F-10-F-18 Financial Statement Schedules: None. The following exhibits are filed as part of this Form 10-K: Exhibit No. Description Included Form Filing Date Amended and Restated Certificate of Incorporation. By Reference 8-K May 15, 2013 Bylaws. By Reference S-1 February 15, 2011 Specimen Unit Certificate. By Reference S-1/A April 15, 2013 Specimen Common Stock Certificate. By Reference S-1/A April 15, 2013 Specimen Warrant Certificate. By Reference S-1/A April 29, 2013 Warrant Agreement. By Reference 8-K May 15, 2013 Letter Agreement signed by each of Capitol Acquisition Management 2 LLC and Mark D. Ein. By Reference 8-K May 15, 2013 Letter Agreement signed by L. Dyson Dryden. By Reference 8-K May 15, 2013 Form of Letter Agreement signed by each of Lawrence Calcano, Piyush Soda and Richard C. Donaldson. By Reference 8-K May 15, 2013 Investment Management Trust Agreement between Continental Stock Transfer & Trust Company and the Company. By Reference 8-K May 15, 2013 Stock Escrow Agreement between the Company, Continental Stock Transfer & Trust Company and each of Capitol Acquisition Management 2 LLC, Lawrence Calcano, Richard C. Donaldson, Piyush Sodha and L. Dyson Dryden. By Reference 8-K May 15, 2013 Registration Rights Agreement among the Company and each of Capitol Acquisition Management 2 LLC, Lawrence Calcano, Richard C. Donaldson, Piyush Sodha and L. Dyson Dryden By Reference 8-K May 15, 2013 Sponsor Warrants Purchase Agreement among the Company, Graubard Miller and each of Capitol Acquisition Management 2 LLC, Lawrence Calcano, Richard C. Donaldson, Piyush Sodha and L. Dyson Dryden. By Reference 8-K May 15, 2013 55 Exhibit No. Description Included Form Filing Date Form of Administrative Services Agent between the Registrant and Venturehouse Group, LLC. By Reference S-1/A April 29, 2013 Promissory Note issued to Leland Investments Inc. By Reference S-1 February 15, 2011 Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Herewith Certification of Principal Financial and Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Herewith Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Herewith Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Herewith Form of Audit Committee Charter. By Reference S-1/A October 3, 2013 Form of Nominating Committee Charter. By Reference S-1/A October 3, 2013 101.INS XBRL Instance Document Herewith 101.SCH XBRL Taxonomy Extension Schema Herewith 101.CAL XBRL Taxonomy Extension Calculation Linkbase Herewith 101.DEF XBRL Taxonomy Extension Definition Linkbase Herewith 101.LAB XBRL Taxonomy Extension Label Linkbase Herewith 101.PRE XBRL Taxonomy Extension Presentation Linkbase Herewith 56 SIGNATURES Pursuant to the requirements of the Section 13 or 15 or 15(d) 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 on the6th day of March, 2014. CAPITOL ACQUISITION CORP. II By: /s/ Mark D. Ein Mark D. Ein Chief Executive Officer (Principal executive officer) By: /s/ L. Dyson Dryden L. Dyson Dryden Chief Financial Officer (Principal financial and accounting officer) POWER OF ATTORNEY The undersigned directors and officers of Capitol Acquisition Corp. II hereby constitute and appoint Mark D. Ein and L. Dyson Dryden with full power to act as our true and lawful attorney-in-fact with full power to execute in our name and behalf in the capacities indicated below, this annual report on Form10-K and any and all amendments thereto and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, and hereby ratify and confirm all that such attorneys-in-fact, or any of them, or their substitutes shall lawfully do or cause to be done by virtue hereof. In accordance with the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Name Title Date /s/ Mark D. Ein Chairman, Chief Executive Officer, Treasurer, Secretary and Director (Principal Executive Officer) March 6, 2014 Mark D. Ein /s/ L. Dyson Dryden Chief Financial Officer (Principal Financial and Accounting Officer) March 6, 2014 L. Dyson Dryden /s/ Lawrence Calcano Director March 6, 2014 Lawrence Calcano /s/ Richard C. Donaldson Director March 6, 2014 Richard C. Donaldson /s/ Piyush Sodha Director March 6, 2014 Piyush Sodha 57 Capitol Acquisition Corp. II (a development stage company) INDEX TO FINANCIAL STATEMENTS Page Audited Financial Statements Report of Independent Registered Public Accounting Firm F-2 Financial Statements Balance Sheets as of December 31, 2013 and 2012 F-3 Statements of Operations for the years ended December 31, 2013 and 2012 and for the period from August 9, 2010 (inception) through December 31, 2013. F-4 Statements of Comprehensive Loss for the years ended December 31, 2013 and 2012 and for the period from August 9, 2010 (inception) through December 31, 2013 F-5 Statements of Changes in Stockholder’s Equity for the period from August 9, 2010 (inception) through December 31, 2013 F-6-F-7 Statements of Cash Flows for the years ended December 31, 2013 and 2012 and for the period from August 9, 2010 (inception) through December 31, 2013. F-8-F-9 Notes to Financial Statements F-10–F-18 F-1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Audit Committee of the Board of Directors and Stockholders of Capitol Acquisition Corp. II We have audited the accompanying balance sheets of Capitol Acquisition Corp. II (a development stage company) (the “Company”) as of December 31, 2013 and 2012, and the related statements of operations, comprehensive loss, changes in stockholders’ equity and cash flows for the years ended December 31, 2013 and 2012 and for the period from August 9, 2010 (inception) through December 31, 2013.These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Capitol Acquisition Corp. II, (a development stage company) as of December 31, 2013 and 2012, and the results of its operations and its cash flows for the years ended December 31, 2013 and 2012 and for the period from August 9, 2010 (inception) through December 31, 2013 in conformity with accounting principles generally accepted in the United States of America. /s/ Marcum LLP Marcum llp Melville, NY March 6, 2014 F-2 Capitol Acquisition Corp. II (a development stage company) Balance Sheets December 31, December 31, ASSETS Current assets Cash and cash equivalents $ $ Investment in marketable securities Cash and cash equivalents held in trust account, interest income available for working capital and taxes - Accrued interest receivable - Prepaid expenses - Total current assets Cash and cash equivalents held in trust account, restricted - Other assets - Deferred offering costs - Total assets $ $ LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities Accounts payable and accrued expenses $ $
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13G Under the Securities Exchange Act of 1934 (Amendment)* Ceres, Inc. (Name of Issuer) Common Stock, par value $0.01 per share (Title of Class of Securities) 156773103 (CUSIP Number) December 31, 2012 (Date of Event which Requires Filing of this Statement) Check the appropriate box to designate the rule pursuant to which this Schedule is filed: [ ] Rule 13d-1(b) [ ] Rule 13d-1(c) [X] Rule 13d-1(d) *The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be “filed” for the 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). Page 1 CUSIP No. 156773103 13G 1. Name of Reporting Person:Gimv N.V. 2. Check the Appropriate Box if a Member of a Group(a)[](b)[] 3. SEC Use Only 4. Citizenship or Place of Organization:Belgium NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 5. Sole Voting Power:1,569,072 (1) 6. Shared Voting Power:0 7. Sole Dispositive Power:1,569,072 (1) 8. Shared Dispositive Power:0 9. Aggregate Amount Beneficially Owned by Each Reporting Person:1,569,072 (1) Check Box if the Aggregate Amount in Row (9) Excludes Certain Shares (See Instructions) Percent of Class Represented by Amount in Row (9):6.3% (2) Type of Reporting Person (See Instructions):CO (1) See Item 4. (2) Calculation based on the total number of shares of Issuer common stock (“Shares”) outstanding, calculated as the sum of: (a) 24,801,986 Shares issued and outstanding as of January 7, 2013, according to the Issuer’s quarterly report on Form 10-Q, filed January 10, 2013, and (b) 148,718 Shares that may be acquired pursuant to the exercise of warrants held by the Reporting Person and Adviesbeheer Gimv Life Sciences 2004 N.V. Page 2 CUSIP No. 156773103 13G 1. Name of Reporting Person:Adviesbeheer Gimv Life Sciences 2004 N.V. 2. Check the Appropriate Box if a Member of a Group(a)[](b)[] 3. SEC Use Only 4. Citizenship or Place of Organization:Belgium NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 5. Sole Voting Power:97,780 (1) 6. Shared Voting Power:0 7. Sole Dispositive Power:97,780 (1) 8. Shared Dispositive Power:0 9. Aggregate Amount Beneficially Owned by Each Reporting Person:97,780 (1) Check Box if the Aggregate Amount in Row (9) Excludes Certain Shares (See Instructions) Percent of Class Represented by Amount in Row (9):0.4% (2) Type of Reporting Person (See Instructions):CO (1) See Item 4. (2) Calculation based on the total number of Shares outstanding, calculated as the sum of: (a) 24,801,986 Shares issued and outstanding as of January 7, 2013, according to the Issuer’s quarterly report on Form 10-Q, filed January 10, 2013, and (b) 22,308 Shares that may be acquired pursuant to the exercise of warrants held by the Reporting Person. Page 3 Item 1. (a).Name of Issuer Ceres, Inc. (the “Issuer”) (b).Address of Issuer’s Principal Executive Offices: 1535 Rancho Conejo Boulevard, Thousand Oaks, CA 91320 Item 2(a). Name of Person Filing Item 2(b). Address of Principal Business Office Item 2(c). Citizenship (i) Gimv N.V. (“Gimv”) Karel Oomsstraat 37, B-2018 Antwerpen, Belgium Citizenship: Belgium naamloze vennootschap (ii) Adviesbeheer Gimv Life Sciences 2004 N.V. (“Adviesbeheer Gimv 2004”) Karel Oomsstraat 37, B-2018 Antwerpen, Belgium Citizenship: Belgium naamloze vennootschap The foregoing persons are hereinafter sometimes collectively referred to as the “Reporting Persons.” Item 2(d). Title of Class of Securities: Common Stock, par value $0.01 (the “Shares”) Item 2(e). CUSIP Number:156773103 Item 3. If this statement is filed pursuant to Rule 13d-1(b), or 13d-2(b) or (c), check whether the person filing is a: This Item 3 is not applicable. Item 4. Ownership. (a)Amount beneficially owned: As of December 31, 2012, (i) Gimv is (A) the record owner of 1,344,882 Shares and (B) the beneficial owner of 1,569,072 Shares (including 75,472 Shares held of record by Adviesbeheer Gimv 2004 and 126,410 Shares and 22,308 Shares that may be acquired pursuant to the exercise of warrants held by Gimv and Adviesbeheer Gimv 2004, respectively) and (ii) Adviesbeheer Gimv 2004 is (A) the record owner of 75,472 Shares and (B) the beneficial owner of 97,780 Shares (including 22,308 Shares that may be acquired pursuant to the exercise of warrants held by Adviesbeheer Gimv 2004). (b)Percent of class: As of December 31, 2012, Gimv may be deemed the beneficial owner of approximately 6.3% of Shares outstanding and Adviesbeheer Gimv 2004 may be deemed the beneficial owner of approximately 0.4% of Shares outstanding. (There were 24,801,986 Shares issued and outstanding as of January 7, 2013, according to the Issuer’s quarterly report on Form 10-Q, filed January 10, 2013.) Page 4 (c)Number of Shares as to which the Reporting Person has: Gimv: (i) Sole power to vote or to direct the vote: (ii) Shared power to vote or to direct the vote: 0 (iii) Sole power to dispose or to direct the disposition of: (iv) Shared power to dispose or to direct the disposition of: 0 Adviesbeheer Gimv 2004: (v) Sole power to vote or to direct the vote: (vi) Shared power to vote or to direct the vote: 0 (vii) Sole power to dispose or to direct the disposition of: (viii) Shared power to dispose or to direct the disposition of: 0 Item 5. Ownership of Five Percent or Less of a Class If this statement is being filed to report the fact that as of the date hereof the reporting person has ceased to be the beneficial owner of more than five percent of the class of securities, check the following: Item 6. Ownership of More than Five Percent on Behalf of Another Person. This Item 6 is not applicable. Item 7. Identification and Classification of the Subsidiary Which Acquired the Security Being Reported on by the Parent Holding Company. This Item 7 is not applicable. Item 8. Identification and Classification of Members of the Group. This Item 8 is not applicable. Item 9. Notice of Dissolution of Group. This Item 9 is not applicable. Item 10. Certification. Each of the Reporting Persons hereby makes the following certification: Page 5 By signing below I certify that, to the best of my knowledge and belief, the securities referred to above were not acquired and are not held for the purpose of or with the effect of changing or influencing the control of the issuer of the securities and were not acquired and are not held in connection with or as a participant in any transaction having that purpose or effect. Page 6 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. GIMV N.V. By: /s/ Guy Mampaey /s/ Edmond Bastijns Name: Guy Mampaey Edmond Bastijns Title: Gimv Partner Gimv Partner ADVIESBEHEER GIMV LIFE SCIENCES 2004 N.V. By: /s/ Guy Mampaey /s/ Edmond Bastijns Name: Guy Mampaey Edmond Bastijns Title: Gimv Partner Gimv Partner Dated: February 12, 2013 Page 7
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Exhibit31.1 CERTIFICATIONS CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER I, Bennett K. Hatfield, certify that: 1. I have reviewed this Quarterly Report on Form 10-Q (this “Report”) of International Coal Group, Inc. (the “Registrant”); 2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report; 3. Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this Report; 4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have: a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared; b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c. Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and d. Disclosed in this Report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and 5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions): a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting. /s/ Bennett K. Hatfield Bennett K. Hatfield President and Chief Executive Officer (Principal Executive Officer) Date: August 6,
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington,D.C. 20549 Form10-Q (Mark One) þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2012 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number000-22405 Information Analysis Incorporated (Exact Name of Registrant as Specified in Its Charter) Virginia 54-1167364 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 11240 Waples Mill Road Suite 201 Fairfax, Virginia 22030 (703)383-3000 (Registrant’s telephone number, including area code) Not applicable (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1)has filed all reports required to be filed by Section13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12months (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 90days. YesþNoo 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 Rule405 ofRegulationS-T(§ 232.405 of this chapter) during the preceding 12months (or for such shorter period that the registrant was required to submit and post such files). YesþNoo 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” inRule12b-2of the Exchange Act. Large accelerated filero Accelerated filero Non-acceleratedfilero Smaller reporting companyþ (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined inRule12b-2of the Exchange Act). YesoNoþ As of November 7, 2012, 11,201,760 shares of common stock, par value $0.01 per share, of the registrant were outstanding. Information Analysis Incorporated Form 10-Q Third Quarter 2012 INFORMATION ANALYSIS INCORPORATED FORM 10-Q Index Page Number PARTI.
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Exhibit 10.43
PHARMANET DEVELOPMENT GROUP, INC. AMENDED AND RESTATED ETHICS POLICY
Adopted by the Board of Directors
of PharmaNet Development Group, Inc.
On August 24, 2006 and as amended and restated on February 26, 2007
Introduction
This Ethics Policy will serve as PharmaNet Development Group, Inc.’s
(“PDG” or “Company”) Code of Ethics (“Policy”) and as such they cover a wide
spectrum of business practices and procedures, and are applicable to all
directors, officers and employees. They do not cover every issue that may arise,
but they set out some basic principles to guide all directors, officers and
employees of PDG. We expect all of our directors, officers and employees to
comply with them and to seek to avoid improper behavior or even the appearance
of improper behavior. The Policy expressly apply to all directors, officers and
employees, even when we do not specifically refer to each of them.
If a law conflicts with a policy in this Policy, you must comply with
the law. If you have any questions about these conflicts, you should ask your
supervisor how to handle the situation.
Those who violate this Policy may be subject to disciplinary action,
which may include termination of employment, depending on the nature of the
violation. If you observe, learn of, or, in good faith, suspect a violation of
this Policy, you must follow the reporting procedures set forth in Section 14
below.
Statements in this Policy to the effect that certain actions may be
taken only with approval will be interpreted to mean that appropriate directors,
officers or supervisors and managers must give prior written approval before the
proposed action may be undertaken.
This Policy should be read in conjunction with the Company’s other
policy statements, including the Company’s Insider Trading Policy, Blackout
Policy, as well as the discrimination and harassment policies adopted by our
Company and its respective subsidiaries.
1. Compliance with Laws, Rules and Regulations
Obeying the law, both in letter and in spirit, is the foundation on
which PDG’s ethical standards and our reputation are built. All employees must
respect and obey the laws of the cities, states and nations in which we operate.
A variety of laws apply to the Company and its operations, and some carry
criminal penalties. These laws include securities laws, and state laws relating
to duties owed by corporate directors and officers. Examples of criminal
violations of the law include: stealing, embezzling, misapplying corporate or
bank funds, or making payments, whether corporate or personal, of cash or other
items of value that are intended to influence the judgment or actions of
political candidates, government officials or businesses in connection with any
of the Company’s activities. The Company must and will report all suspected
criminal violations to the appropriate authorities for possible prosecution, and
will investigate, address and report, as appropriate, non-criminal violations.
2. Conflicts of Interest
A “conflict of interest” exists when a person’s private interest
interferes in any way with the interests of PDG. A conflict may arise when an
employee, officer or director takes actions or has interests that may make it
difficult to perform his or her PDG work objectively and effectively. Conflicts
of interest may also arise when an employee, officer or director, or members of
position with PDG.
2
Conflicts of interest are prohibited as a matter of PDG policy, except
under specific Policy approved by the Board of Directors. Conflicts of interest
may not always be clear-cut, so if you have a question, you should consult with
higher levels of management or PDG’s legal counsel. Any employee, officer or
director who becomes aware of a conflict or potential conflict must bring it to
the attention of a supervisor, manager or other appropriate personnel or utilize
the procedures set forth in Section 14 below.
a. Outside Activities/Employment
Any outside activity, including employment, should not significantly
encroach on the time and attention employees devote to their corporate duties,
should not adversely affect the quality or quantity of their work, and should
not make use of corporate equipment, facilities, or supplies, or imply (without
the Company’s approval) the Company’s sponsorship or support. Employees are
prohibited from taking part in any outside employment without the Company’s
prior approval. It is almost always a conflict of interest for an PDG employee
to work simultaneously for a competitor, client or supplier. The best policy is
for employees to avoid any direct or indirect business connection with our
clients, suppliers or competitors, except on our behalf. Directors may engage in
outside activities that do not interfere with their responsibilities as
directors for the Company, and do not give rise to an actual or apparent
conflict of interest.
b. Civic/Political Activities
The Company allows each employee to dedicate up to eight hours per
year to a Company sponsored charitable or volunteer activity. In addition,
employees may participate in other civic or charitable activities as long as
such participation does not encroach on the time and attention they are expected
to devote to their Company-related duties. For non-Company sponsored events,
activities are to be conducted in a manner that does not involve the Company or
its assets
3
or facilities, and does not create an appearance of Company involvement or
endorsement, absent prior written approval.
c. Loans to Employees
The Company will not make loans or extend credit guarantees to or for
the personal benefit of executive officers and directors, except as permitted by
law. Loans or guarantees may be extended to other employees only with Company
approval.
d. Gifts
The purpose of business entertainment and gifts in a commercial
setting is to create goodwill and sound working relationships, not to gain
unfair advantage with clients or other business partners. No gift or
entertainment should ever be offered, given, provided or accepted by any PDG
employee, family member of an employee, or agent unless it: (1) is not a cash
gift, (2) is consistent with customary business practices, (3) is not excessive
in value, (4) cannot be construed as a bribe or payoff, and (5) does not violate
any laws or regulations. Under-the-table payments to foreign
physician-investigators is an example of inappropriate gifts or payments.
Employees should discuss with their supervisor any gifts or proposed gifts which
may be considered inappropriate.
3. Insider Trading
Employees who have access to confidential information are not
permitted to use or share that information for trading purposes or for any other
purpose except the conduct of our business. All non-public information about PDG
should be considered confidential information. Among other things, trading while
in possession of material inside information, or to “tip” others who might make
an investment decision on the basis of this information, is not only a violation
of Company policy, but may subject an employee to criminal or civil liability.
In order to assist
4
with compliance with laws against insider trading, PDG has adopted a specific
policy governing employees’ trading in securities of PDG, which policy is
incorporated by reference into this Policy. This policy has previously been
distributed is available upon request. Questions about the insider trading
policy should be addressed to PDG’s legal counsel.
4. Corporate Opportunities
Employees, officers and directors are prohibited from taking for
themselves personally, opportunities that are discovered through the use of
corporate property, information, or position without the written consent of the
Board of Directors. No employee may use corporate property, information, or
position, for improper personal gain, and no employee may compete with PDG
directly or indirectly. Employees, officers and directors owe a duty to PDG to
advance its legitimate interests when the opportunity to do so arises.
5. Competition and Fair Dealing
We seek to outperform our competition fairly and honestly. Stealing
proprietary information, possessing trade secret information that was obtained
without the owner’s consent, or inducing such disclosures by past or present
employees of other companies is prohibited. Each employee should endeavor to
respect the rights of and deal fairly with PDG’s clients, suppliers, competitors
and other employees. No employee should take unfair advantage of anyone through
manipulation, concealment, abuse of privileged or confidential information,
misrepresentation of material facts, fraud, or any other intentional unfair
dealing practice.
6. Discrimination and Harassment
The diversity of PDG’s employees is a tremendous asset. We are firmly
committed to providing equal opportunity in all aspects of employment and will
not tolerate any illegal discrimination or harassment. PDG’s Insider Trading
Policy, Blackout Policy, as well as the
5
discrimination and harassment policies adopted by our Company and its respective
subsidiaries are incorporated by reference into this Policy.
7. Health and Safety
PDG strives to provide each employee with a safe and healthy work
environment. Each employee has responsibility for maintaining a safe and healthy
workplace for all employees by following safety and health rules and practices
and reporting accidents, injuries and unsafe equipment, practices or conditions.
Violence and threatening behavior are not permitted. Employees should
report to work in condition to perform their duties, free from the influence of
illegal drugs or alcohol. The use of illegal drugs in the workplace will not be
tolerated.
8. Record-Keeping
PDG requires honest and accurate recording and reporting of
information in order to make responsible business decisions. For example, only
the true and actual number of hours worked should be reported.
Some employees are authorized to use business expense accounts, which
must be documented and recorded accurately. If you are not sure whether a
certain expense is legitimate, ask your supervisor or PDG’s controller.
All of PDG’s books, records, accounts and financial statements must be
maintained in reasonable detail, must appropriately reflect PDG’s transactions
and must conform both to applicable legal requirements and to PDG’s system of
internal controls. Unrecorded or “-off the books” funds or assets should not be
maintained unless permitted by applicable law or regulation.
6
Business records and communications often become public, and we should
avoid exaggeration, derogatory remarks, guesswork, or inappropriate
characterizations of people and companies that can be misunderstood. This
applies equally to e-mail, internal memos, and formal reports. Records should
always be retained or destroyed according to PDG’s record retention policies and
communications.
9. Confidentiality
Employees must maintain the confidentiality of confidential
information entrusted to them by PDG or its clients except when disclosure is
authorized by PDG’s legal counsel or required or protected by laws or
regulations. Confidential information includes all non-public information that
might be of use to competitors, or harmful to PDG or its clients, if disclosed.
It also includes information that suppliers and clients, and our clinical
research subjects, have entrusted to us. The obligation to preserve confidential
information continues even after employment ends. In connection with this
obligation, every employee is bound by a duty of confidentiality.
10. Protection and Proper Use of PDG Assets
All employees should endeavor to protect PDG’s assets and ensure their
efficient use. Theft, carelessness, and waste have a direct impact on PDG’s
profitability. Any suspected incident of fraud or theft should be immediately
reported for investigation. PDG equipment should not be used for non-PDG
business. Occasional and incidental personal use of PDG’s communications systems
may be permitted if it does not otherwise interfere with the Company’s
operations. Use of the Company’s communications systems or other property for
any solicitations is prohibited.
7
The obligation of employees to protect PDG’s assets includes its
proprietary information. Proprietary information includes intellectual property
such as trade secrets, patents, trademarks, and copyrights, as well as business,
marketing and service plans, ideas, designs, databases, records, salary
information and any unpublished financial data and reports. Unauthorized use or
disclosure of this information would violate PDG policy and may subject the
employee to criminal or civil penalties.
11. Delegation of Authority
Each employee, and particularly each of the Company’s officers, must
exercise due care to ensure that any delegation of authority is reasonable and
appropriate in scope, and includes appropriate and continuous monitoring. No
authority may be delegated to employees who the Company has reason to believe,
through the exercise of reasonable due diligence, may have a propensity to
engage in illegal activities.
12. Payments to Government Personnel
The U.S. Foreign Corrupt Practices Act prohibits giving anything of
value, directly or indirectly, to officials of foreign governments or foreign
political candidates in order to obtain or retain business. It is strictly
prohibited to make illegal payments to government officials of any country. The
Act also applies to the making of improper payments to obtain business from
commercial clients in the United States.
In addition, the U.S. government has a number of laws and regulations
regarding business gratuities that may be accepted by U.S. government personnel.
The promise, offer or delivery to an official or employee of the U.S. government
of a gift, favor or other gratuity in violation of these rules violates PDG
policy and may be a criminal offense. State and local governments, as well as
foreign governments, may have similar rules. Gifts or payments to non-government
8
individuals are also prohibited unless they meet the criteria set forth in
Section 2. Please contact the Company’s legal counsel if you have questions in
this area.
13. Waivers of This Ethics Policy
Any waiver of this Policy for executive officers or directors may be
made only by the Board of Directors and will be promptly disclosed as required
by law, regulation or listing standards. Requests for a waiver of a provision of
this Policy must be submitted in writing to the Chief Financial Officer or Board
of Directors for appropriate review and decision. The Audit Committee must
review and approve any “related party” transaction as defined in Item 404(a) of
Regulation S-K and section 17 (below) before it is consummated.
14. Reporting Any Illegal or Unethical Behavior
Employees are encouraged to talk to supervisors, managers or other
appropriate personnel about observed illegal or unethical behavior and when in
doubt about the best course of action in a particular situation. It is the
policy of PDG not to allow retaliation for reports of misconduct by others made
in good faith by employees. Employees are expected to cooperate in internal
investigations of misconduct.
Any employee may submit a good faith concern regarding questionable
accounting or auditing matters or other matters without fear of dismissal or
retaliation of any kind to our whistleblower hotline run by a third-party
service provider, The Network, who may be contacted, effective September 15,
2006, at 1-800-528-4577 or www.tnwinc.com/webreport, or Mr. Jack Levine, CPA,
who is chairman of our Audit Committee. He may be reached as follows: 16855 NE
2“d Avenue, Suite 303, North Miami Beach, FL 33162, (305) 651-0400. You may also
submit such a concern to our outside counsel, Denis Segota, Esquire, Morgan
Lewis & Bockius LLP, 502 Carnegie Center, Princeton, NJ 08540, (609) 919-6622.
9
15. Compliance Guidance
Because this Policy cannot anticipate every situation that will arise,
here are a few suggestions on how to approach and analyze a new question or
issue:
• Make sure you have all the facts in order to reach the right solutions; we
must be as fully informed as possible. • Ask yourself: What specifically am
I being asked to do? Does it seem unethical or improper? This will enable you to
focus on the specific question you are faced with, and the alternatives you
have. Use your judgment and common sense. • Clarify your responsibility and
role. In most situations, there is shared responsibility. Are your colleagues
informed? It may help to get others involved and discuss the problem. •
Discuss the problem with your supervisor. This is the basic guidance for all
situations. In many cases, your supervisor will be more knowledgeable about the
question, and will appreciate being brought into the decision-making process.
Remember that it is your supervisor’s responsibility to help solve problems. •
Seek help from PDG resources. In the rare case where it may not be appropriate
to discuss an issue with your supervisor, or where you do not feel comfortable
approaching your supervisor with your question, discuss it with the Chief
Financial Officer, your office manager or a human resources officer.
16. Special Policies with Respect to Certain Officers
The Chief Executive Officer (“CEO”), all senior financial officers,
including the Chief Financial Officer (“CFO”), the principal accounting officer
or controller, and other persons performing similar functions (collectively, the
“Senior Executive, Financial and Accounting Officers”), are bound by the
provisions set forth above including those relating to ethical conduct,
conflicts of interest and compliance with law. In addition, the Senior
Executive, Financial and Accounting Officers are subject to the following
additional specific policies:
a. The Senior Executive, Financial and Accounting Officers are
responsible for full, fair, accurate, timely and understandable disclosure in
the reports and documents filed by PDG with the Securities and Exchange
Commission (“SEC”) and other public communications.
10
Accordingly, it is the responsibility of the Senior Executive, Financial and
Accounting Officers promptly to bring to the attention of the Board of Directors
or the Audit Committee any information of which he or she may become aware that
affects the disclosures made by PDG in its SEC filings or other public
communications, and to otherwise assist the Board and the Audit Committee in
fulfilling their responsibilities.
b. The Senior Executive, Financial and Accounting Officers shall
promptly bring to the attention of the Board and the Audit Committee, any
information he or she may have concerning (a) significant deficiencies in the
design or operation of internal controls which could adversely affect PDG’s
ability to record, process, summarize and report financial data or any material
weaknesses in internal controls, (b) any fraud, whether or not material, that
involves management or other employees who have a significant role in PDG’s
financial reporting, disclosures or internal controls.
c. The Senior Executive, Financial and Accounting Officers shall
promptly bring to the attention of the Chief Financial Officer or the CEO, and
to the Audit Committee, any information he or she may have concerning any
violation of this Policy, including any actual or apparent conflicts of interest
between personal and professional relationships, involving any management or
other employees who have a significant role in PDG’s financial reporting,
disclosures or internal controls.
d. The Senior Executive, Financial and Accounting Officers shall
to the Audit Committee, any information he or she may have concerning evidence
of a violation of the securities or other laws, rules or regulations applicable
to PDG and the operation of its business, by PDG or any agent thereof, or of
violation of this Policy or of these additional special policies and procedures.
11
e. The Board of Directors shall determine, or designate appropriate
persons to determine, appropriate actions to be taken in the event of violations
of this Policy or these additional special procedures by the Senior Executive,
Financial and Accounting Officers. Such actions shall be reasonably designed to
deter wrongdoing and to promote accountability for adherence to this Policy and
to these additional special procedures, and shall include written notices to the
individual involved that the Board has determined that there has been a
violation, censure by the Board, demotion or re-assignment of the individual
involved, suspension with or without pay or benefits (as determined by the
Board) and termination of the individual’s employment. In determining what
action is appropriate in a particular case, the Board of Directors or such
designee shall take into account all relevant information, including the nature
and severity of the violation, whether the violation was a single occurrence or
repeated occurrences, whether the violation appears to have been intentional or
inadvertent, whether the individual in question had been advised prior to the
violation as to the proper course of action and whether or not the individual in
question had committed other violations in the past.
f. The Company expects that the Senior Executive, Financial and
Accounting Officers, and all other employees who participate in the preparation
of any part of the Company’s financial statements, follow this Policy:
• Act with honesty and integrity, avoiding violations of this Policy,
including actual or apparent conflicts of interest with the Company in personal
and professional relationships. • Disclose to the Chief Financial Officer
any material transaction or relationship that reasonably could be expected to
give rise to any violations of this Policy, including actual or apparent
conflicts of interest with the Company. • Provide the Company’s other
employees, consultants, and advisors with information that is accurate,
complete, objective, relevant, timely, and understandable. • Endeavor to
ensure full, fair, timely, accurate, and understandable disclosure in the
Company’s periodic reports.
12
• Comply with rules and regulations of federal, state, provincial and local
governments, and other appropriate private and public regulatory agencies. •
Act in good faith, responsibly, and with due care, competence and diligence,
without misrepresenting material facts or allowing your independent judgment to
be subordinated. • Respect the confidentiality of information acquired in
the course of your work except where you have Company approval or where
disclosure is otherwise legally mandated or protected. Confidential information
acquired in the course of your work should not be used for personal advantage.
• Share and maintain skills important and relevant to the Company’s needs.
• Proactively promote ethical behavior among peers in your work environment.
• Achieve responsible use of and control over all assets and resources
employed or entrusted to you. • Record or participate in the recording of
entries in the Company’s books and records that are accurate to the best of your
knowledge.
The foregoing are set forth as policies for the Senior Executive,
Financial and Accounting Officers but, are, in fact, statements of mandatory
conduct. It is also important to note that Federal law requires that any waiver
of, or amendment to the requirements in this Section will be subject to public
disclosure.
17. Related Party Hires/Transactions
For the purpose of this Policy, the term “related party” shall mean:
Affiliates of PDG; entities for which investments are accounted for by the
equity method by PDG; trusts for the benefit of employees, such as pension and
profit-sharing trusts that are managed by or under the trusteeship of
management; principal owners of PDG; its management; members of the immediate
families (including step-children, step-parents and step-siblings) of principal
owners of PDG and its management; and other parties with which PDG may deal if
one party controls or can significantly influence the management or operating
policies of the other to an extent that one of the transacting parties might be
prevented from fully pursuing its own separate interests. Another party also is
a related party if it can significantly influence the management or operating
policies of the transacting parties or if it has an ownership interest in one of
the transacting parties and can significantly influence the other to an extent
that one or more of the transacting parties might be prevented from fully
pursuing its own separate interests.
13
To ensure that individuals hired by PDG are hired based upon their
merit and ability to contribute to PDG and not due to their relationship to an
employee of PDG, all new employee hires must be reviewed by PDG’s Human
Resources Department. In the event a “related party” is hired, PDG’s Human
Resources Department must communicate to the Audit Committee (the “Audit
Committee”) of the Board of Directors of PDG any related party hire, and the
Audit Committee must approve that related party hire. In addition, the Audit
Committee must approve all related party transactions; provided, however, that
such review and approval shall not be necessary if the related party transaction
(a) does not require SEC disclosure pursuant to Regulation S-K, Item 402 or Item
404, and (b) the transaction is one in which PDGI was or is to be a participant
and the amount involved is less than $60,000 per person per year, and in which
any related person had or will have a direct or indirect material interest. In
the event a transaction falls under (a) and (b) above, then such transaction
will only require approval of the Company’s Chief Executive Officer and Chief
Financial Officer.
14 |
SECOND AMENDMENT TO SALARY CONTINUATION AGREEMENT This Second Amendment (the “Amendment”) to the Salary Continuation Agreement, dated as of November 29, 2004 and as amended December 16, 2008 (the “Agreement”), by and among Peoples Federal Savings Bank (the “Bank”) and James J. Gavin (the “Executive”) is effective as of March 1, 2011.Capitalized terms which are not defined herein shall have the same meaning as set forth in the Agreement. WHEREAS, the parties desire to amend the Agreement in order to increase the Executive’s annual normal retirement benefit set forth in Section 2.1 of the Agreement; and WHEREAS, pursuant to Article 7 of the Agreement, the Agreement may be amended by a written agreement signed by the Bank and the Executive. NOW, THEREFORE, the Agreement is hereby amended as follows: 1.Section 2.1.1 is hereby amended and restated to read in its entirety as follows: “2.1.1Amount of Benefit.The annual benefit under Section 2.1 is One Hundred Eighty Three Thousand Two Hundred Seventy Six ($183,276).” 2.The Executive’s Accrual Balance shall be updated to reflect the change in the amount of benefit provided in Section 2.1.1 as set forth in this Amendment. [Signature Page to Follow] IN WITNESS WHEREOF, the Bank, on behalf of its duly authorized officer, and the Executive have caused this Amendmentto be executed as of the dates provided below. PEOPLES FEDERAL SAVINGS BANK April 14, 2011 By: /s/ Thomas J. Leetch Date Print Name: Thomas J. Leetch EXECUTIVE April 14, 2011 /s/ James J. Gavin Date James J. Gavin
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UNITED STATESSECURITIES 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 16, 2010 NEWPORT CORPORATION(Exact name of registrant as specified in its charter) Nevada 000-01649 94-0849175 (State or other jurisdiction of (Commission File Number) (IRS Employer Identification No.) incorporation) 1791 Deere Avenue, Irvine, California 92606 (Address of principal executive offices) (Zip Code) (949) 863-3144 (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: ¨ 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 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year. Certificate of Amendment to Restated Articles of Incorporation, as amended On August 16, 2010, Newport Corporation (the “Registrant”) filed a Certificate of Amendment to its Restated Articles of Incorporation, as amended (the “Articles”), with the Nevada Secretary of State (the “Amendment”).A copyof the Amendment is attached to this Form 8-K as Exhibit 3.1. The Amendment amends Article Fifth, Subsection (c) of the Articles to provide for the phased elimination over four years of the classified structure of the Registrant’s Board of Directors. The Amendment was previously approved by the Registrant’s stockholders at its 2010 Annual Meeting of Stockholders and is described in more detail in the Registrant’s Definitive Proxy Statement filed with the Securities and Exchange Commission on April 7, 2010. Amended and Restated Bylaws On August 16, 2010, the Board of Directors of the Registrant adopted Amended and Restated Bylaws (the “Amended and Restated Bylaws”), which incorporate certain amendments to the Registrant’s Restated Bylaws, as amended, previously in effect (the “Previous Bylaws”). A copy of the Amended and Restated Bylaws is attached to this Form 8-K as Exhibit 3.2. The key amendments to the Previous Bylaws, which are reflected in the Amended and Restated Bylaws, are: (1) amendments to Article III, Section 2 of the Previous Bylaws, which conform to the amendments to the Registrant’s Articles, to provide for the phased elimination over four years of the classified structure of the Registrant’s Board of Directors; and (2) amendments to the provisions relating to indemnification of directors and officers set forth in Article VII of the Previous Bylaws, to conform to the provisions of the current Nevada Revised Statutes so as to provide for indemnification of directors and officers to the fullest extent permitted under Nevada law. Other immaterial updates to the Previous Bylaws have also been included in the Amended and Restated Bylaws to (i) clarify ambiguities in and/or update certain provisions related to procedural matters, to conform to the provisions of the current Nevada Revised Statutes and to prior resolutions of the Board of Directors; (ii) update certain Registrant information; and (iii) update certain references to applicable law, rules and regulations, correct typographical errors and remove certain inconsistencies. Item 9.01. Financial Statements and Exhibits. (d) Exhibits. Exhibit No. Description 3.1 Certificate of Amendment to Restated Articles of Incorporation, as amended, filed with the Nevada Secretary of State effective as of August 16, 2010. 3.2 Amended and Restated Bylaws adopted by the Board of Directors of the Registrant effective as of August 16, 2010. 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. August 20, 2010 NEWPORT CORPORATION By: /s/ Jeffrey B. Coyne Jeffrey B.
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Exhibit 10.1
AGENCY AGREEMENT
This Agency Agreement made as of this 10th day of November, 2009 by and between
GRANDE ROTUNDA, LLC (hereinafter referred to as the “Owner”) and HEKEMIAN
DEVELOPMENT RESOURCES, LLC (hereinafter the “Agent”) both having an address at
505 Main Street, Hackensack, New Jersey 07601.
WHEREAS, The Owner is the owner of the office and retail property located at 711
West 40th Street in Baltimore, Maryland (the “Property”); and
WHEREAS, the Owner is about to or has commenced the Project for the
redevelopment of the Property in accordance with the plans approved by the
Owner; and
WHEREAS, Owner wishes to retain the Agent to advise it in all phases of the
Project and to act on behalf of the Owner, as Owner shall so direct, in
connection with the Architect, Engineer, and Contractors hereinafter defined;
and
WHEREAS, Agent is willing to undertake such responsibilities as are hereinafter
set forth in accordance with the terms and conditions contained in this
Agreement; and
NOW THEREFORE, for One ($1.00) Dollar and other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, to the terms
contained herein the Owner and Agent agree as follows:
1.
DEFINITIONS:
(a)
Approved Plans: The plans and specifications prepared by the Design Team as same
may be modified from time to time with the prior approval of the Owner with
respect to material changes to the site plan and to gross leasable area of any
building.
(b) Architect: Design Collective, Inc.
(c)
Architect's Agreement: Dated November 28, 2007, and attached hereto as Exhibit
A.
(d) Buildings: The buildings identified on the Approved Plans.
(e) Engineer: STV, Inc.
(f)
Contractor: A Contractor is defined to include the general contractor and all
site contractors, building contractors and subcontractors retained by the Owner
in connection with the Project.
1
(g) Design Team: The Architect and Engineer(s).
(h)
Development Costs: “Development Costs” shall mean the aggregate amount
actually expended by Owner for the construction of the Project, excluding the
acquisition costs of the Property and all soft costs expended for architectural
and other professional fees, but not to exceed $136,000,000 (the amount
reflected in the pro forma construction cost schedule dated February 2007
submitted to the Owner) unless the Owner has approved a change in the Project
Scope which increases the scope and size of the Project, in which event the
maximum amount of $136,000,000 shall be increased to the extent and in the
amount approved by the Owner in connection with any such change in Project
Scope, it being confirmed that no such change in Project Scope has been approved
by the Owner since February 2007. The term "Development Costs" shall be utilized
for the determination of Agent's Fee and not the ultimate costs of the Project.
(i)
Development Scope: Two hundred ninety-seven (297) apartment units, forty-four
(44) residential condominium units (to be constructed by a third party), 205,331
square feet of new retail space, including a Giant Supermarket shell building,
redevelopment and repositioning of the existing retail within the property, a
hotel (to be constructed by a third party), 1504 above and below ground parking
and a plaza level deck with amenities and all site work and Buildings as
depicted on the (as set forth in the pro forma dated February 2007).
(j) Lender: To be designated by Owner, in its sole discretion.
(k)
Owner's Representative: Donald Barney. If Donald Barney is not available, the
Owner's Representative shall be Ronald Artinian or such other party that Owner
designates as the Owner's Representative.
(l)
Project: Project is defined as all approvals and redevelopment of the Property
including the construction of all improvements, in accordance with the Approved
Plans in effect as of the date hereof.
(m)
Project Personnel: Project Personnel shall be deemed to be all architectural
and engineering firms (in addition to the Architect and Engineer), surveyors,
traffic consultants, environmental consultants, security personnel, marketing
and public relations specialists and lobbyists and any other personnel as are
determined by the Agent to be reasonably necessary for the timely completion of
the Project, so long as retaining such personnel is consistent with this
Agreement and any other written agreement approved by the Owner.
(n)
Property: The Property consisting of the Rotunda Center owned by Owner in
Baltimore, Maryland.
(o)
Soft Costs: Soft Costs are all fees and expenses paid for architectural,
engineering, accountants, attorneys and other professional fees.
2
(p)
Site Plan: The plan prepared by STV, Inc. approved by the City of Baltimore as
the same may be modified from time to time with the prior approval of the Owner
with respect to material changes to the building layout.
2.
PROJECT SCOPE: The Agent on behalf of Owner shall undertake the following (the
“Project Scope:) in accordance with this Agreement and Owner's instructions
based on the Approved Plans:
(a)
Research development options through studying various conceptual plans, existing
zoning and comprehensive zoning;
(b)
Negotiation of all requisite contracts for the Project subject to the approval
of Owner and Owner's designated legal counsel, for all contracts which exceed
the dollar amount set forth in Paragraph 3(o) hereof;
(c)
Obtaining of all approvals for the Project;
(d)
Phased demolition of the Project, in accordance with the Project Plan;
(e)
Construction of the Project, in accordance with the Approved Plans and the Site
Plan;
(f)
Oversight of existing and new lease negotiations with tenants and any brokers;
(g)
Coordination of existing tenant relocations within the Project;
(h)
Review all bidding of contracts for the Project and recommendations to the Owner
for the hiring of Contractors;
(i)
Negotiation of all requisite contracts for the improvements, subject to the
approval of Owner and Owner's legal counsel, for all contracts which exceed the
dollar amount set forth in Paragraph 3(o);
(j) Liaison between Contractor(s) and Design Team:
(1) Review progress and scheduling;
(2)
Review change orders, subject to approval of the Owner and Design Team;
(3) Coordinate requests for information with the Design Team;
(4) Coordinate requests for clarifications with the Design Team;
(5)
Oversee approvals of submittals and Shop drawings with the Design Team;
(6) Oversee construction scheduling as Owner's representative; and
(7) Oversee Project closeout with the Design Team.
(k) Coordination with Owner's Lender:
(1)
Process draw requests to Lender pursuant to a written draw request, provided
that the Architect has previously approved such draw.
3
(l)
Exclusions: The following are excluded from Agent's scope of services:
(1)
Means and Methods of Construction;
(2)
Defects or deficiencies in the work of the Contractors or delays in any of the
work performed;
(3)
Errors and/or omissions of the Design Team;
(4)
Cost overruns;
(5)
Oversight of various trades subcontractors;
(6)
Arbitration or litigation preparation and arbitration or court appearances on
behalf of Owner; and
(7)
Brokerage Services.
3.
SCOPE OF SERVICES: So long as Agent's actions are consistent with this
Agreement and any other written agreement which the Owner has formally approved
in writing, the Agent shall be responsible to perform the following in a timely
manner, on behalf of Owner and at Owner's expense and subject to the provision
of Paragraph 5 thereof:
(a)
Engage the Design Team, Contractors, consultants, on-site staff and such other
personnel as Agent deems commercially reasonable and necessary in order to
complete the Project;
(b)
Recommend to Owner the hiring of Project Personnel as the Agent deems
appropriate for the Project;
(c)
Recommend to Owner the retaining of marketing and public relations consultants
and/or firms, lobbyists and such other consultants of Owner and Agent deem
necessary to complete and lease up the Project;
(d)
Undertake the necessary actions to implement the Project Scope;
(e)
Use commercially reasonable efforts to assist in negotiating fair and complete
agreements with Contractors and material suppliers and to obtain satisfactory
performance from each of the Project Personnel, subject to Owner's approval and
the approval of Owner's legal counsel as designated by Owner and further subject
to Paragraph 3(o);
(f)
Monitor construction costs and provide the Owner with reports on actual costs
for the Project and estimates for the Project completion as the same are
adjusted from time to time;
(g)
Administer the contracts of the Project for compliance with the terms and
conditions of each contract;
(h)
At the direction of the Design Team, require additional inspections and testing
of the work, and reject work which does not conform to the requirements of the
Approved Plans and the Site Plan;
4
(i)
Solicit bids from all prospective contractors and material suppliers and assist
the Owner in the determination of the most qualified and cost efficient
Contractor or material suppliers;
(j)
Coordinate with the Design Team to obtain final approvals for the Project and
verify that interim inspections are performed in order to obtain such
certificates of occupancies as may be required by applicable governmental
authorities having jurisdiction over the Project;
(k)
Maintain a copy of all plans, specifications, contracts, invoices and financial
matters related to the Project and supply a copy thereof to Owner and upon the
completion of the Project, Agent shall provide a complete copy of the foregoing
to the Owner upon Owner's request;
(l)
Use commercially reasonable efforts to secure lien waivers from Contractors and
material suppliers;
(m)
Submit to Owner, for Owner's prior approval, any change order whose cost may
reasonably be anticipated to exceed Fifty Thousand ($50,000) Dollars to the
Owner;
(n)
When the aggregate cost of all change orders for any phase of the Project
exceeds seven (7%) percent of the Development Costs allocated to such phase,
Agent shall report all change orders to Owner's Representative and thereafter,
provide Owner's Representative with a monthly status report relative to the
construction of the Project;
(o)
Submit to Owner, for Owner's prior approval, any individual contract whose cost
may reasonably be anticipated to exceed One Hundred Thousand ($100,000) Dollars.
4.
OWNER'S RESPONSIBILITIES: In order for Agent to undertake its duties pursuant
to this Agreement, the Owner shall be responsible to perform the following, in a
timely manner:
(a) Provide Agent with all plans and intended goals for the Project;
(b) Respond to all inquiries and/or requests by Agent;
(c)
Based upon the reasonable recommendations of the Agent, to purchase and provide
written evidence it has obtained the appropriate type and amount of insurance,
including, but not limited to builders all risk insurance for the Project
pursuant to which the Agent is named as an additional insured;
(d)
Following the approval of work by the Architect, the Design Team and the Lender
where applicable of the requisition for such work, Owner shall pay all Project
bills and invoices necessary to comply with contract obligations for all
Contractors, Project Personnel and Fees due Agent;
5
(e)
Pay all Project bills, invoices and Fee.
5.
AGENT FEES.
5.1. Subject to the terms of this Paragraph 5, Owner shall pay Agent a
fee for Agent's services pursuant to this Agreement (the "Fee") in an amount
equal to six and three-eights percent (6 3/8%) of the lesser of (i) actual
Development Costs; or (ii) the Guaranteed Maximum Price (“GMP”). Owner agrees to
pay $3,000,000.00 of the Fee for services rendered by Agent in connection with
the Project of which amount $1,000,000.00 has heretofore been paid by Owner to
Agent. The remaining $2,000,000.00 shall be paid upon the execution of this
Agreement. The payment of $3,000,000.00 is in recognition of the following:
(1)
All services rendered by Agent up to the date of this Agreement;
(2)
Any and all future contacts and meetings with governmental authorities relating
to the Project Scope;
(3)
Any and all future dealings with the Architect, Engineer and attorneys engaged
in obtaining the necessary government approvals up to and including the
obtaining of Project building permits. Thereafter, Agent shall not be entitled
to receive any additional portion of the Fee, except as provided in
Subparagraphs 5.2, 5.3 and 5.4 hereof.
5.2. In the event the Owner determines in writing to proceed with the
entirety of the Project as the sole Owner, the balance of the Fee shall be paid
as hereinafter provided. If the Project Scope and / or Scope of Services is
increased, the Fee shall be increased by an amount to be agreed upon in writing
by Owner and Agent. If the Project Scope and / or Scope of Services is reduced,
the Fee shall be reduced in an amount agreed upon in writing by the Owner and
Agent. The balance of the Fee shall be paid in the following manner:
(1)
Upon Owner's written direction to Agent to obtain a building permit for any of
the apartments, retail space or the garage and the issuance of a building permit
therefore, fifty (50%) percent of the Fee as modified if there is a change in
project scope, less $3,000,000.00 shall be due and payable. Example: If there
has been no change in the Project Scope at time of issuance of the building
permit, Agent shall be paid ($136,000,000 X .06375 / 2= $4,335,000 - less
$3,000,000) $1,335,000
(2)
Balance of fifty (50%) percent of the Fee shall thereafter be paid in monthly
installments, based upon the percentage of completion of the Project as
reflected In the general contractor's requisition and approved by the Architect,
less a hold back of ten (10%) percent, in accordance with the following formula,
wherein:
6
"C" is Architect's certification of percentage of completion of entire Project
"H" is one-half of the amount of the Fee
"I" is the amount of the monthly installments
"P" is that portion of the second half of the Fee which has been previously paid
(C x H x 90%) - P = I
(3)
The ten percent (10%) hold-back portion of the Fee shall be paid within thirty
(30) days after issuance of an unconditional certificate of occupancy for the
entire Project (or equivalent jurisdictional approval) (the `CO").
Notwithstanding anything herein to the contrary, the total fee shall not exceed
6 3/8% of the actual Development Cost. If at any time, it is determined that
actual Development Cost will be less than $136,000,000, the schedule for payment
of the balance of the Fee shall be reduced to insure that the aforementioned ten
(10%) percent hold-back shall be held back until issuance of CO.
5.3. In the event that the Owner never determines in writing to
proceed with the entire Project as the sole Owner, the amount set forth in
Paragraph 5.1 shall constitute full payment to the Agent except under the
conditions and circumstances set forth in this Subparagraph 5.3. Nevertheless,
the Owner and Agent, acknowledge that the Agent may be called upon to render
additional services, but the scope and value of such services is difficult to
determine at the present time. Accordingly, at such time as the Owner determines
what the future of the Project may be, and what the role of the Owner and Agent
respectively may be in the Project, the Owner and Agent shall then endeavor in
good faith to enter into an agreement for a future role for the Agent and as to
the amount of compensation to be paid to the Agent in such future role, provided
however, that unless Owner and Agent agree in writing to the contrary, in no
event shall Agent's total compensation, if any, exceed_ the Fee which Agent
would receive pursuant to the provisions of Subparagraph 5.2 and Owner should
have no obligation to pay an additional fee absent a written agreement providing
for such additional fee.
5.4. In the event Owner elects to discontinue the Project, Agent shall
cease work on the Project, except for work directed at securing a grandfathering
exception for the Project from the Leeds or similar ordinance that the City of
Baltimore is currently considering. Any additional work prior to the
determination to commence the entire Project is includable within the scope of
the $3,000,000.00 in fees paid to date. However, with respect to a redesign of
the Project, Agent will make a presentation to the Owner regarding the redesign
work, including the proposed costs thereof, as well as a separate proposed fee
for Agent's additional work,' but Owner shall have no obligation to pay an
additional fee absent a written agreement expressly providing for such
additional fee.
7
6.
INDEMNIFICATION:
(a)
The parties acknowledge that Agent is acting in an agency capacity on behalf of
the Owner in accordance with this Agreement and in such capacity Agent shall
have the right to undertake such action on behalf of the Owner, but only in
strict accordance with this Agreement, subject, however, to modification of such
authority by written Agreement between the Owner and the Agent. In connection
with such agency, the Owner covenants and agrees that it shall indemnify, defend
and hold harmless the Agent as well as the Agent's officers, employees, agents,
attorneys and members (hereinafter referred to collectively as the “Agent
Indemnified Parties” and individually as an “Agent Indemnified Party”) from and
against any and all losses, damages, expenses or liabilities of any kind or
nature and from any suits, claims, or demands, including reasonable counsel fees
incurred in investigating or defending such claim, suffered by any of them if
caused by, relating to, arising out of, resulting from, or in any way connected
with the Agent's actions contemplated herein; provided, however, the Owner shall
not be obligated to indemnify, defend and hold harmless an Agent Indemnified
Party, if the loss, damage, expense or liability was caused by or resulted from
an Agent Indemnified Party's: (I) own gross negligence; (2) willful misconduct;
(3) a material breach of the terms of this Agreement; and (4) any act or
omission which exceeds the authority granted to the Agent by the terms of this
Agreement which results in monetary loss to the Owner. In case any action shall
be brought against an Agent Indemnified Party based upon any of the above and in
respect to which indemnity may be sought against the Owner, the Agent
Indemnified Party against whom such action was brought, shall promptly notify
the Owner in writing, and the Owner shall assume the defense thereof, including
the retainer of counsel selected by the Owner and reasonably satisfactory to
said Agent Indemnified Party and the payment of all costs incurred in connection
therewith. Owner shall retain the exclusive right to negotiate and consent to
any settlement.
(b)
The Agent covenants and agrees that it shall indemnify, defend and hold harmless
the Owner as well as the Owner's officers, employees, agents, attorneys and
members (hereinafter referred to collectively as the “Owner Indemnified
Parties” and individually as an “Owner Indemnified Party”) from and against any
and all losses, damages, expenses or liabilities of any kind or nature and from
any suits, claims, or demands, including reasonable counsel fees incurred
investigating or defending such claim, suffered by any of them if caused by,
relating to, arising out of, resulting from, or in any way connected with the
Agent's material breach of the terms and conditions of this Agreement, its gross
negligence or willful misconduct, or any act or omission which exceeds the
authority granted to the Agent by the terms of this agreement which results in
monetary loss to the Owner, however, the Agent shall not be obligated to
indemnify, defend and hold harmless an Owner indemnified Party if the loss,
damage, expense or liability was caused by or resulted from an Owner Indemnified
Party's (1) own negligence; (2) willful misconduct; (3) material breach f the
terms of this Agreement; and (4) any act or omission arising out of the Owner's
obligations hereunder. In case any action shall be brought against an Owner
Indemnified Party based upon any of the above and in respect to which indemnity
may he sought against the Agent, the Owner Indemnified Party against whom such
action shall be brought, shall promptly notify the Agent in writing, and the
Agent shall assume the defense thereof, including the retainer of counsel
selected by the Agent and reasonably satisfactory to the Owner, and the payment
of all costs incurred in connection therewith. Agent shall retain the exclusive
right to negotiate and consent to any settlement wherein Agent is paying the
settlement amount.
8
7.
TERMINATION BY THE OWNER FOR CAUSE: Should the Agent fail in the performance of
its duties hereunder (excepting delays occasioned by strikes, floods, fires,
accidents, the negligence of the Owner and other natural disasters which are
beyond the control of the Agent), the Owner shall notify the Agent in writing of
the Owner's intent to declare the Agent in default under this Agreement. Within
twenty (20) days from the date Owner sends this notice to Agent, Agent shall
cure the default or, if such default cannot reasonably be cured during such
twenty (20) day period, Agent shall commence curing and diligently prosecute
curing the default until such default is cured. Failure by the Agent to cure or
diligently prosecute curing the default within such twenty (20) day period shall
constitute a material breach of this Agreement on the part of the Agent. In such
event, the Owner shall have the right to terminate this Agreement. In such case,
the Owner shall pay the Agent the unpaid balance of the amount due Agent to be
paid under this Agreement as of the date of termination hereof and neither party
shall be further obligated to the other and there should be no obligation or
Liability going forward.
8.
TERMINATION BY AGENT: The Agent may terminate this Agreement only if the Owner
shall fail to pay the Fee in accordance with the terms of this Agreement, or as
set forth in Paragraph 9 below.
9.
SUSPENSION OF WORK: Should Owner desire to suspend the Project, then the Owner
must notify Agent in writing of its desire to suspend the Project. If Owner
suspends construction of the Project for a period of ninety (90) consecutive
days, Agent may upon written notice to the Owner state that it is seeking
additional compensation for expenses caused by such suspension. Within 15 days
of receipt of such notice, Owner may at its option either (a) agree to accept a
claim for additional compensation; or (b) permit Agent to terminate this
Agreement without additional compensation. For the purposes of this Agreement,
the period of suspension shall commence on the date when Owner gives notice to
the Agent that suspension has commenced. In the event the Project is suspended
for any reason by the Owner, then only the Owner shall be liable for any claims
by Contractors and the Design Team for suspension of the Project and the Owner
shall indemnify the Agent for all claims made by the foregoing pursuant to
Paragraph 6 of this Agreement.
9
10.
ENTIRE AGREEMENT: This Agreement contains the final and entire agreement
between the parties hereto and each shall not be bound by any terms, conditions,
statements, warranties or representations, oral or written, not contained
herein. All understandings and agreements heretofore made between the parties
are merged in this Agreement, which alone fully and completely expresses the
agreement of the parties and which may not be changed, modified or terminated
except by a written instrument signed by the parties or their respective
counsel.
11.
CHOICE OF LAW: This Agreement shall be interpreted in accordance with the laws
and enforced in the Courts of the State of New Jersey without regard to
principles of conflicts of laws. Any disputes shall be litigated in the Superior
Court of New Jersey, Bergen County.
12.
COUNTERPARTS: This Agreement may be executed in any number of counterparts,
each of which counterparts shall be deemed to be an original and all of which
counterparts shall constitute the same Agreement, at such time as each party
shall have executed and delivered to the other at least one (1) copy of this
Agreement.
13.
BINDING EFFECT: This Agreement shall be binding upon and shall inure to the
benefit of Owner and Agent and their respective successors and permitted
assigns.
14.
NOTICES: All notices, requests, consents and other communications hereunder
shall be in writing and shall be either: (i) mailed in a United States Post
Office depository by certified mail, return receipt requested, postage prepaid;
or (ii) delivered by an overnight courier delivery service, with a receipt
provided therefore and charges prepaid, addressed to the parties at the address
set forth above and notices shall be deemed given on the date of receipt or
refusal.
15.
PREPARATION OF AGREEMENT. This Agreement shall not be construed more strongly
against either party regardless of who is responsible for its preparation.
[signature lines appear on following page]
10
In witness whereof, the parties have executed this Agreement as of the date set
forth above.
OWNER:
AGENT:
GRANDE ROTUNDA, LLC
By: FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY, Managing Member
HEKEMIAN DEVELOPMENT RESOURCES, LLC
By: /s/ Donald Barney
By: /s/ Bryan
Hekemian
Donald Barney, President
Bryan Hekemian, Managing Member
11
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EXHIBIT 10.33
A.M. CASTLE & CO.
CEO RESTRICTED STOCK UNIT AWARD AGREEMENT
GRANTEE: Scott Dolan
NUMBER OF RESTRICTED STOCK UNITS: ________________
GRANT DATE: _____________
This is an award agreement (the "Award Agreement") between A.M. Castle & Co., a
Maryland corporation (the "Corporation"), and the individual named above (the
"Grantee"). Subject to the conditions set forth herein, the Corporation hereby
grants to the Grantee, as of the Grant Date specified above, the above-stated
number of Restricted Stock Units, as an employment inducement award pursuant to
Section 303A.08 of the New York Stock Exchange Listed Company Manual.
1. Vesting. Subject to Sections 2, 3 and 4, the Corporation shall deliver to
the Grantee one share of Common Stock for each whole Restricted Stock Unit that
vests in accordance with the terms of this Award Agreement. Subject to the
terms and conditions of this Award Agreement, the Restricted Share Units shall
vest as follows:
NUMBER OF SHARES: [25% of award] VESTED ON OR AFTER: [one year] NUMBER OF
SHARES: [25% of award] VESTED ON OR AFTER: [two years] NUMBER OF SHARES: [25%
of award] VESTED ON OR AFTER: [three years] NUMBER OF SHARES: [25% of award]
VESTED ON OR AFTER: [four years]
2. Delivery of Shares. The number of shares of Common Stock that the Grantee
earns under Section 1 will be delivered to the Grantee as soon as
administratively practicable after the respective vesting date; provided,
however, that in lieu of shares of Common Stock, the payment may be made in cash
or other equity based property or any combination thereof, as the Committee may
determine in its sole discretion. No fractional shares will be delivered
pursuant to this Award and fractional shares shall be rounded down.
3. Employment Termination. If the Grantee’s employment with the Corporation
terminates prior to the Final Vesting Date for any reason, Grantee shall forfeit
all outstanding Restricted Stock Units remaining subject to this Award on the
date of such termination, except to the extent otherwise expressly provided in
the October 10, 2012 offer letter or a change-in-control or severance agreement
between the Corporation and the Grantee.
4. Transferability. The Restricted Stock Units shall not be sold, pledged,
assigned, hypothecated, transferred or disposed of in any manner, whether by the
operation of law or otherwise. Any attempted transfer of the Restricted Stock
Units prohibited by this Section 4 shall be null and void.
5. Adjustments. In the event of any change in the outstanding shares of
Common Stock of the Corporation by reason of any stock dividend, split, spinoff,
recapitalization, merger, consolidation, combination, exchange of shares or
other similar change, the terms and the number of shares of Restricted Stock
Units shall be equitably adjusted by the Committee. Adjustments under this
Section 5 shall be made by the Committee, whose determination as to what
adjustments shall be made, and the extent thereof, shall be final, binding and
conclusive.
EX-44-
6. Withholding. The Grantee is responsible for all applicable federal, state
and local income and employment taxes (including taxes of any foreign
jurisdiction) which the Corporation is required to withhold at any time with
respect to the Restricted Stock Units to satisfy its minimum statutory
withholding requirements. Such payment shall be made in full at the Grantee’s
election, in cash or check, by withholding from the Grantee’s next normal
payroll check, or by the tender of shares of Common Stock payable under this
Award. Shares of Common Stock tendered as payment of required withholding shall
be valued at the closing price per share of Common Stock on the date such
withholding obligation arises or, if the Common Stock is not traded on that
date, on the next preceding date on which the Common Stock was so traded.
7. Miscellaneous
(a) Disclaimer of Rights. Nothing contained herein shall constitute
an obligation for continued employment or interfere in any way with the right of
the Corporation or any subsidiary thereof to terminate the employment or service
of the Grantee at any time.
(b) Rights Unsecured. The Grantee shall have only the Corporation’s
unfunded, unsecured promise to pay pursuant to the terms of this Award. The
Grantee’s rights shall be that of an unsecured general creditor of the
Corporation and the Grantee shall not have any security interest in any assets
of the Corporation.
(c) No Adjustment for Dividends. The number of Restricted Stock
Units shall not be adjusted for the payment of any cash dividend on shares of
common stock of the Corporation before the issuance of a stock certificate
representing the earned Award.
(d) Offset. The Corporation may deduct from amounts otherwise
payable under this Award all amounts owed by the Grantee to the Corporation and
its affiliates to the maximum extent permitted by applicable law.
(e) Rights as Shareholder. Subject to Section 7(c) of this Agreement,
the Grantee shall have the same rights as a shareholder of the Corporation in
respect to the Restricted Stock Units, except that the Restricted Stock Units
shall not include the right to vote until and unless the Restricted Stock Units
have vested and ownership of shares of Common Stock represented by the
Restricted Stock Units have been transferred to (or on behalf of) the Grantee.
(f) Amendment. This Award Agreement may be amended only by a writing
executed by the Corporation and the Grantee that specifically states that it is
amending this Award Agreement. Notwithstanding the foregoing, this Award
Agreement may be amended solely by the Committee by a writing which specifically
states that it is amending this Award Agreement, so long as a copy of such
amendment is delivered to the Grantee, and provided that no such amendment
adversely affecting the rights of the Grantee hereunder may be made without the
Grantee’s written consent. Without limiting the foregoing, the Committee
reserves the right to change, by written notice to the Grantee, the provisions
of the Restricted Stock Units or this Award Agreement in any way it may deem
necessary or advisable to carry out the purpose of the grant as a result of any
change in applicable laws or regulations or any future law, regulation, ruling
or judicial decisions, provided that any such change shall be applicable only to
the Restricted Stock Units which are than subject to restrictions as provided
herein.
(g) Severability. If any term, provision, covenant or restriction
contained herein is held by a court or a federal regulatory agency of competent
jurisdiction to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions contained herein shall remain in full
force and effect, and shall in no way be affected, impaired or invalidated.
(h) Controlling Law. The Award shall be construed, interpreted and
applied in accordance with the law of the State of Illinois, without giving
effect to the choice of law provisions thereof. The Grantee agrees to
irrevocably submit any dispute arising out of or relating to this Award to the
exclusive concurrent jurisdiction of the state and federal courts located in
Illinois. The Grantee also irrevocably waive, to the fullest extent permitted
by applicable law, any objection the Grantee may now or hereafter have to the
laying of venue of any such dispute brought in such court or any defense of
inconvenient forum for the maintenance of such dispute, and the Grantee agree to
accept service of legal process from the courts of Illinois.
(i) Code Section 409A Compliance. To the extent applicable, it is
intended that this Award not be subject to or otherwise comply with the
provisions of Code Section 409A, so that the income inclusion provisions of Code
Section 409A(a)(1) do not apply. This Award shall be interpreted and
administered in a manner consistent with this intent, and any provision that
would cause the Award to fail to satisfy Code Section 409A shall have no force
and effect until amended to comply with Code Section 409A (which amendment may
be retroactive to the extent permitted by Code Section 409A and may be made by
the Corporation without the Grantee’s consent). .
EX-45-
8. Definitions. As used herein, the following terms shall be defined as set
forth below:
(a) “Award” means the Restricted Stock Unit Award to the Grantee as
set forth herein, and as may be amended as provided herein.
(b) “Board” means the Corporation’s Board of Directors.
(e) “Committee” means the Human Resources Committee of the Board.
(f) “Common Stock” means the Corporation’s $.01 par value common
stock.
(g) “Final Vesting Date” means the fourth anniversary of the Grant
Date.
(h) “Grant Date” means the date this Award is made to the Grantee, as
set forth on the first page of this Award Agreement.
(i) “Restricted Stock Unit” means a bookkeeping entry that records
the equivalent of one share of Common Stock.
The Corporation and the Grantee hereby agree to the terms and conditions of this
Award Agreement and have executed it as of the Date of Grant set forth above.
A. M. CASTLE & CO.
____________________________________
By: Robert J. Perna
Its: Vice President, General Counsel & Secretary
Grantee:
____________________________________
Scott Dolan
EX-46-
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SUPPLEMENT DATED AUGUST 30, 2010 TO PROSPECTUS DATED APRIL 30, 2010 FOR KEYPORT ADVISOR TO PROSPECTUSES DATED DECEMBER 31, 2003 FOR KEYPORT ADVISOR OPTIMA AND KEYPORT ADVISOR CHARTER ISSUED BY SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.) KEYPORT VARIABLE ACCOUNT A The Board of Trustees of the Columbia Funds Variable Insurance Trust (the “Trust”) approved a proposal to merger the following Columbia Funds Variable Insurance Trust funds (each an “Acquired Fund”) with and into the corresponding acquiring fund (each, an “Acquiring Fund”) listed in the table below: Acquired Fund Acquiring Fund Columbia Federal Securities Fund, Variable Series to merge into RiverSource Variable Portfolio – Short Duration U.S. Government Fund Columbia International Fund, Variable Series to merge into Threadneedle Variable Portfolio – International Opportunity Fund Columbia Large Cap Value Fund, Variable Series to merge into RiverSource Variable Portfolio – Diversified Equity Income Fund Each of the mergers identified in the table above is subject to certain conditions, including final approval by the Board of the Acquired Fund and the Acquiring Fund of the definitive terms of each proposed merger and approval by shareholders of the Acquired Fund. It is currently anticipated that proxy materials regarding the mergers will be distributed to shareholders later this year or in early 2011, and that meetings of shareholders to consider the mergers will be held in the first half of 2011. If shareholders approve the proposal relating to the merger of the funds of the Trust, shortly after shareholder approval, all of the assets of each Acquired Fund will be transferred to the corresponding Acquiring Fund and shareholders of an Acquired Fund will receive shares of the corresponding Acquiring Fund in exchange for their shares. Please retain this supplement with your prospectus for future reference. Keyport Advisor, Advisor Charter, Advisor Optima (US)8/2010
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Exhibit 99.2 PLEDGE AGREEMENT (Ready Mix) PLEDGE AGREEMENT, dated as of February 2, 2009 (this "Agreement"), made by MEADOW VALLEY PARENT CORP., a Delaware corporation ("Pledgor"), in favor of LBC CREDIT PARTNERS II, L.P., as agent for the lenders from time to time party to the Loan Agreement described below (the "Agent"). W I T N E S S E T H: WHEREAS, pursuant to that certain Holdco Term Loan and Security Agreement dated as of the date hereof, by and among Pledgor, as Borrower, Meadow Valley Contractors, Inc., a Nevada corporation, Meadow Valley Solutions LLC, a Delaware limited liability company, Meadow Valley Corporation, a Nevada corporation, Apex Testing Corp., a Nevada corporation, each of the financial institutions from time to time party thereto (individually each a "Lender" and collectively, the "Lenders") and Agent (including all annexes, exhibits and schedules thereto, and as from time to time amended, amended and restated, joined, extended, supplemented or otherwise modified, the "Loan Agreement"; capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Loan Agreement), Agent and the Lenders have agreed to make the Term Loan to Pledgor; WHEREAS, Pledgor is the legal record and beneficial owner of all of the Pledged Shares (as defined below); and WHEREAS, in order to induce Agent and the Lenders to make the Term Loan as provided for in the Loan Agreement, Pledgor has agreed to pledge the Pledged Collateral (as defined below) to Agent for the benefit of the Lenders in accordance herewith and has determined that such pledge is necessary or convenient to the conduct, promotion or attainment of its business. NOW, THEREFORE, in consideration of the premises and the covenants hereinafter contained and to induce Agent and the Lenders to make the Term Loan under the Loan Agreement, it is agreed as follows: SECTION 1.Definitions.As used herein, the following terms shall have the meanings herein specified (to be equally applicable to both the singular and plural forms of the terms defined): "EBITDA" means, for any period, with respect to Ready Mix, (i) net income (as determined in accordance with GAAP) for such period, plus (ii) the amount of depreciation and amortization of fixed and intangible assets deducted in determining such net income for such period, plus (iii) all Interest Expense and, to the extent deducted in determining net income, all fees for the use of money or the availability of money, including commitment, facility and like fees and charges upon Indebtedness paid, payable or accrued during such period, plus (iv) all tax liabilities paid or accrued during such period, less (v) the amount of all gains (or plus the amount of all losses) realized during such period upon the sale or other disposition of property or assets that are sold or otherwise disposed of outside the ordinary course of business, plus (vi) any other non-cash charges (or minus the amount of all non-cash income) for such period, plus (vii) non-recurring charges related to the winding down of exited facilities and the discontinuance of certain product lines, in each case included in the determination of net income during such period in an aggregate amount not to exceed $100,000. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Pledged Collateral" has the meaning set forth in Section 2. "Pledged Shares" has the meaning set forth in Section 2. "Ready Mix ERISA Affiliate" means any entity required to be aggregated with Ready Mix under Section 414(b), (c), (m) or (o) of the Internal Revenue Code. "Ready Mix Material Adverse Effect" means (i)a material adverse effect on the business, operations, results of operations, assets, liabilities or financial condition of Ready Mix, (ii)the material impairment of the ability of the Agent or the Lenders to realize upon the Pledged Collateral, or (iii)a material adverse effect on (A) the value or saleability of the Pledged Collateral taken as a whole or (B) the rights and remedies of the Agent or the Lenders under the Loan Documents with respect to Pledged Collateral. "Ready Mix Multiemployer Plan" means a multiemployer plan, as defined in Section 4001(a)(3) of ERISA, to which Ready Mix or any Ready Mix ERISA Affiliate has contributed within the past six years or with respect to which Ready Mix or any Ready Mix ERISA Affiliate may incur any liability. "Ready Mix Pension Plan" means a pension plan (as defined in Section 3(2) of ERISA) subject to Title IV of ERISA (other than a Ready Mix Multiemployer Plan) which Ready Mix or any Ready Mix ERISA Affiliate sponsors or maintains, or to which it makes, is making, or is obligated to make contributions, or in the case of a multiple employer plan (as described in Section 4064(a) of ERISA) has made contributions at any time during the immediately preceding five plan years. "Ready Mix Permitted Liens" means (i)Liens created hereunder, and (ii)other Liens encumbering assets of Ready Mix which could not be expected to have a Ready Mix Material Adverse Effect, as determined by Agent in its sole discretion. "Ready Mix Plan" means any employee benefit plan, as defined in Section3(3) of ERISA, maintained or contributed to by Ready Mix or any Ready Mix ERISA Affiliate or with respect to which Ready Mix or any Ready Mix ERISA Affiliate may incur liability. "Ready Mix SEC Reports" means all filings made by Ready Mix with the Securities and Exchange Commission or any Governmental Authority which may be substituted therefor or any national securities exchange. "Ready Mix Tax Affiliate" means (a) Ready Mix and its Subsidiaries and (b) any Affiliate of Ready Mix with which Ready Mix files or is eligible to file consolidated, combined or unitary tax returns. Pledge Agreement -2- "Sarbanes-Oxley Act" means the Sarbanes-Oxley Act of 2002, as amended. "Triggering Event" has the meaning set forth in Section 12(a). SECTION 2.Pledge.The Pledgor hereby pledges to Agent and grants to Agent a Lien on and security interest in the following, whether now owned or at any time hereafter acquired by the Pledgor (collectively, the "Pledged Collateral"): (a) all of the issued and outstanding Capital Stock specified in Schedule1 (the "Pledged Shares") of Ready Mix, Inc., a Nevada corporation ("Ready Mix") and the certificates representing the Pledged Shares, and all dividends, distributions, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Pledged Shares, and all additional Capital Stock of or in Ready Mix from time to time acquired in any manner by the Pledgor, and the certificates, if any, representing such additional Capital Stock, and all dividends, distributions, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of any or all of such additional Capital Stock; and (b) all proceeds of any of the foregoing (including, without limitation, proceeds constituting any property of the types described above). The Pledgor will deliver to Agent each of the certificates representing the Pledged Shares not later than the date specified on Schedule 7.1(p) to the Loan Agreement and has delivered to the Agent on the Closing Date an undated stock power with respect to each such certificate, executed in blank by Pledgor. SECTION 3.Security for Obligations.The pledge of, and the grant of a Lien on and security interest in, the Pledged Collateral hereunder secures the prompt and complete payment when due (whether at the stated maturity, by acceleration or otherwise) of all of the Obligations. SECTION 4.Representations and Warranties.Pledgor represents and warrants as follows: (a) Organization and Qualification.Ready Mix is a duly organized and validly existing corporation in good standing under the laws of Nevada.Ready Mix has the requisite corporate or similar power and authority to own, lease and operate its properties and conduct its business as currently conducted.Ready Mix is duly qualified and in good standing as a foreign corporation authorized to do business in each of the jurisdictions in which the character of the properties owned by or held under lease by it or the nature of the business transacted by it makes such qualification necessary, except as has not had and could not be expected to have, individually or in the aggregate, a Ready Mix Material Adverse Effect.Ready Mix is not in breach of its organizational or governing documents in any material respect. Pledge Agreement -3- (b) Reports; SEC Matters; Financial Statements. (i) To the knowledge of a Responsible Officer of the Pledgor, except as previously disclosed to the Agent in writing on or prior to the Closing Date, Ready Mix has filed or furnished all forms, reports, statements, certifications and other documents required to be filed or furnished by it with or to the Securities and Exchange Commission since August 23, 2005, all of which have complied, as to form, as of their respective filing dates (and, if amended, as of the date of the last such amendment) in all material respects with all applicable requirements of the Securities Act, the Exchange Act and the Sarbanes-Oxley Act.To the knowledge of a Responsible Officer of the Pledgor, none of the Ready Mix SEC Reports, including any financial statements or schedules included or incorporated by reference therein, at the time filed or furnished contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. (ii) Except as set forth in Section 3.5(b)(ii) of the Company Disclosure Letter, the audited and unaudited consolidated financial statements (including the related notes thereto) of Ready Mix included (or incorporated by reference) in the Ready Mix SEC Reports, as amended or supplemented, have been prepared in accordance with GAAP and fairly present in all material respects the consolidated financial position of Ready Mix and its Subsidiaries as of their respective dates, and the consolidated stockholders’ equity, results of operations and cash flows for the periods presented therein (subject, in the case of unaudited statements, to normal and recurring year-end adjustments that are not expected to be material in amount or effect).As of the Closing Date, Ready Mix does not have any Subsidiaries. (c) Litigation.To the knowledge of a Responsible Officer of the Pledgor, there is no claim, action, suit, proceeding, arbitration, mediation or governmental investigation pending or overtly threatened against (or for which Ready Mix has assumed liability) Ready Mix, or any properties or assets of Ready Mix, including by way of indemnity or contribution that could be expected to have, individually or in the aggregate, a Ready Mix Material Adverse Effect. (d) Sufficiency of Assets.Except as could not be expected to have a Ready Mix Material Adverse Effect, the assets of Ready Mix and its Subsidiaries include all of the tangible and intangible assets, properties and rights material to Ready Mix and its Subsidiaries and all of the assets or properties necessary to conduct Ready Mix’s and its Subsidiaries’ businesses as presently conducted. (e) Incorporation of Representations and Warranties from Closing Date Merger Agreement.Each of the representations and warranties set forth in Article III of the Closing Date Merger Agreement made with respect to Ready Mix are hereby incorporated herein by reference mutatis mutandis and such representations and warranties are true and correct (without giving effect to any “materiality” or “Material Adverse Effect” qualifications contained therein) with respect to Ready Mix, except for such failures to be true and correct as could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect (as defined in the Closing Date Merger Agreement), in each case as of the date of the Closing Date Merger Agreement and as of the Closing Date as though made as of such date, except to the extent such representations and warranties expressly relate to an earlier date (in which case the truth and correctness of such representations and warranties shall be measured on and as of such earlier date), without giving effect to the proviso in such definition of “Material Adverse Effect” that states that any events, changes, effects, developments, conditions or occurrences that cause, or are reasonably likely to cause, either individually or in the aggregate, a decrease in the fair market value of the Company (as defined in the Closing Date Merger Agreement) in excess of $6.0 million shall constitute a Material Adverse Effect. Pledge Agreement -4- SECTION 5.Further Assurances. (a) The Pledgor covenants and agrees that at any time and from time to time, at the expense of the Pledgor, the Pledgor will promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or desirable, or that Agent may request in the exercise of its Permitted Discretion, in order to perfect and protect any Liens granted or purported to be granted hereby or to enable Agent to exercise and enforce its rights and remedies hereunder with respect to any Pledged Collateral.Without limiting the generality of the foregoing, the Pledgor will execute and file such financing or continuation statements, or amendments thereto, and such other instruments or notices, as may be necessary or desirable, or as Agent may request in the exercise of its Permitted Discretion, in order to perfect and preserve the Liens granted or purported to be granted hereby. (b) The Pledgor hereby authorizes Agent to file one or more financing or continuation statements, and amendments thereto, relative to all or any part of the Pledged Collateral.A carbon, photographic or other reproduction of this Agreement or any financing statement covering the Pledged Collateral or any part thereof shall be sufficient as a financing statement where permitted by law. SECTION 6.Affirmative Covenants Until payment and satisfaction of all Obligations (other than Unasserted Obligations) in full, each of the following shall continue to occur or exist at all times and any failure thereof shall be a Triggering Event hereunder: (a) Corporate Existence.Ready Mix shall (i) preserve and maintain its corporate existence and good standing under the laws of its jurisdiction of incorporation and (ii)preserve, renew and keep in full force and effect, its respective rights, privileges and franchises necessary or desirable in the normal conduct of business, except as could not be expected to have a Ready Mix Material Adverse Effect in the determination of Agent in its sole discretion. (b) Maintenance of Property.Ready Mix shall keep all property useful and necessary to Ready Mix's business in good working order and condition (ordinary wear and tear excepted), except as could not be expected to have a Ready Mix Material Adverse Effect in the determination of Agent in its sole discretion. (c) Taxes.Ready Mix and each of the Ready Mix Tax Affiliates (other than the Pledgor) shall pay when due (i)all material tax assessments, and other governmental charges and levies imposed against it or any of its property and (ii)all lawful claims that, if unpaid, might by law become a Lien upon its property, except, in each case, as could not be expected to have a Ready Mix Material Adverse Effect as determined by Agent in its sole discretion. Pledge Agreement -5- (d) Requirements of Law.Ready Mix shall comply with all Requirements of Law applicable to Ready Mix, including, without limitation, all applicable federal, state, local or foreign laws and regulations, including, without limitation, those relating to environmental and employee matters (including the collection, payment and deposit of employees' income, unemployment, Social Security and Medicare hospital insurance taxes) and with respect to pension liabilities, provided that it shall not be a violation hereof if the failure to comply with any of the foregoing could not be expected to have a Ready Mix Material Adverse Effect as determined by the Agent in its sole discretion. (e) Qualify to Transact Business.Ready Mix shall qualify to transact business as a foreign corporation in each jurisdiction where the nature or extent of its business or the ownership of its property requires it to be so qualified or authorized and where failure to qualify or be authorized could be expected to have a Ready Mix Material Adverse Effect as determined by Agent in its sole discretion. (f) Financial Reporting.Agent shall receive the following: (i) within ninety days after the end of each fiscal year of Ready Mix (or such other time period as required or expressly permitted by the Securities and Exchange Commission), annual audited Financial Statements of Ready Mix; and (ii) within forty five days after the end ofeach fiscal quarter of Ready Mix (or such other time period as required or expressly permitted by the Securities and Exchange Commission), quarterly Financial Statements of Ready Mix; provided, however, that the Financial Statements required to be received by Agent hereunder shall be deemed delivered and received upon Ready Mix’s timely filing of the Ready Mix SEC Reports containing the Financial Statements required hereunder. (g) ERISA.Except as could not be expected to have a Ready Mix Material Adverse Effect as determined by Agent in its sole discretion, Ready Mix and each of its Ready Mix ERISA Affiliates shall (i)maintain each Ready Mix Plan intended to qualify under Section 401(a) of the Internal Revenue Code so as to satisfy the qualification requirements thereof, (ii)contribute, or require that contributions be made, in a timely manner to each Ready Mix Plan in amounts sufficient (A)to satisfy the minimum funding requirements of Section 302 of ERISA or Section 412 of the Internal Revenue Code, if applicable and (B)to satisfy any other Requirements of Law, (iii)cause each Ready Mix Plan to comply in all material respects with applicable law (including all applicable statutes, orders, rules and regulations) and (iv)pay in a timely manner, in all material respects, all required premiums to the PBGC. (h) Environmental Matters.Except as could not be expected to have a Ready Mix Material Adverse Effect as determined by Agent in its sole discretion, Ready Mix shall conduct its business so as to comply in all respects with all applicable Environmental Laws including, without limitation, compliance in all respects with the terms and conditions of all applicable permits and governmental authorizations. Pledge Agreement -6- SECTION 7.Negative Covenants Until payment and satisfaction of all Obligations (other than Unasserted Obligations) in full, each of the following shall continue to occur or exist at all times and any failure thereof shall be a Triggering Event hereunder: (a) Indebtedness.Ready Mix shall not directly or indirectly, at any time create, incur, assume or suffer to exist any Indebtedness other than such Indebtedness that could not be expected to have a Ready Mix Material Adverse Effect, as determined by Agent in its sole discretion. (b) Contingent Obligations.Ready Mix shall not directly or indirectly, incur, assume, or suffer to exist any Contingent Obligation other than such Contingent Obligations that could not be expected to have a Ready Mix Material Adverse Effect, as determined by Agent in its sole discretion. (c)
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Exhibit (a)(1)(iv)(b) Form of Notice of Withdrawal of Tender for Clients of Merrill Financial Advisors NOTICE OF WITHDRAWAL OF TENDER Regarding Class A Units and Class I Units of CPG CARLYLE FUND, LLC (formerly, CPG Carlyle Private Equity Fund, LLC) Tendered Pursuant to the Offer to Purchase Dated September 25, 2015 THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT THE END OF THE DAY ON FRIDAY, OCTOBER 23, 2015, AT 12:00 MIDNIGHT, NEW YORK TIME, UNLESS THE OFFER IS EXTENDED. CPG CARLYLE FUND, LLC Should you wish to withdraw your tender in accordance with Section 5 of the Offer to Purchase, please complete this Notice of Withdrawal and mail or fax it to your Merrill Lynch, Pierce, Fenner & Smith, Inc. Financial Advisor ("Merrill FA").You are responsible for confirming that this Notice of Withdrawal is received by your Merrill FA.If you fail to confirm receipt with your Merrill FA of this Notice of Withdrawal, there can be no assurance that any withdrawal you may make will be honored by the Fund. Ladies and Gentlemen: Please withdraw the tender previously submitted by the undersigned. FOR INDIVIDUAL INVESTORS AND JOINT TENANTS: Signature: (Signature of Owner(s) Exactly as Appeared on Investor Certification) / Date Print Name of Investor: Joint Tenant Signature: (If joint tenants, both must sign.) (Signature of Owner(s) Exactly as Appeared on Investor Certification) / Date Print Name of Joint Tenant: FOR OTHER INVESTORS: Print Name of Investor: Signature: (Signature of Owner(s) Exactly as Appeared on Investor Certification) / Date Print Name of Signatory and Title: Co-Signatory if necessary: (Signature of Owner(s) Exactly as Appeared on Investor Certification) / Date Print Name of Co-Signatory and Title:
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Registration No. 333-121449 File No. 811-21686 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM N-1A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 x Pre-Effective Amendment No. o Post-Effective Amendment No. 12 x and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 x Amendment No. 14 x OPPENHEIMER PORTFOLIO SERIES (Exact Name of Registrant as Specified in Charter) 6803 South Tucson Way, Centennial, Colorado 80112-3924 (Address of Principal Executive Offices)(Zip Code) (303) 768-3200 (Registrant’s Telephone Number, including Area Code) Arthur S. Gabinet, Esq. OFI Global Asset Management, Inc. Two World Financial Center, 225 Liberty Street 11th Floor, New York, New York 10281-1008 (Name and Address of Agent for Service) It is proposed that this filing will become effective (check appropriate box): x Immediately upon filing pursuant to paragraph (b) o On , pursuant to paragraph (b) o 60 days after filing, pursuant to paragraph (a)(1) o On , pursuant to paragraph (a)(1) o 75 days after filing, pursuant to paragraph (a)(2) o On , pursuant to paragraph (a)(2) of Rule 485. If appropriate, check the following box: o This post-effective amendment designates a new effective date for a previously filed post-effective amendment. SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets all the requirements for effectiveness of this Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York and State of New York on the 12th day of June, 2012. OPPENHEIMER PORTFOLIO SERIES By: William F. Glavin, Jr.* William F. Glavin, Jr., President and Principal Executive Officer Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities on the dates indicated: Signatures Title Date Brian F. Wruble* Chairman of the June 12, 2013 Brian F. Wruble Board of Trustees William F. Glavin, Jr.* President and Principal June 12, 2013 William F. Glavin, Jr. Executive Officer Brian W. Wixted* Treasurer, Principal June 12, 2013 Brian W. Wixted Financial & Accounting Officer David K. Downes* Trustee June 12, 2013 David K. Downes Matthew P. Fink* Trustee June 12, 2013 Matthew P. Fink Phillip A. Griffiths* Trustee June 12, 2013 Phillip A. Griffiths Mary F. Miller* Trustee June 12, 2013 Mary F. Miller Joel W. Motley* Trustee June 12, 2013 Joel W. Motley Mary Ann Tynan* Trustee June 12, 2013 Mary Ann Tynan Joseph M. Wikler* Trustee June 12, 2013 Joseph M. Wikler Peter I. Wold* Trustee June 12, 2013 Peter I. Wold *By: /s/ Mitchell J. Lindauer Mitchell J. Lindauer, Attorney-in-Fact EXHIBIT INDEX Exhibit No. Description Ex-101.INS XBRL Instance Document Ex-101.SCH XBRL Taxonomy Extension Schema Document Ex-101.CAL XBRL Taxonomy Extension Calculation Linkbase Document Ex-101.DEF XBRL Taxonomy Extension Definition Linkbase Ex-101.LAB XBRL Taxonomy Extension Labels Linkbase Ex-101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
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As filed with the Securities and Exchange Commission on March 1, 2012 Registration No. 333-177509 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 AMENDMENT NO. 2 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ORO EAST MINING, INC. (Exact name of registrant as specified in its charter) Delaware 26-2012582 (State or Other Jurisdiction of (Primary Standard Industrial (IRS Employer Incorporation or Organization) Classification Number) Identification Number) 1127 Webster Street, Suite 28 Oakland,California94607 (Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices) Tian Qing Chen Chairman and Chief Executive Officer Oro East Mining, Inc. 1127 Webster Street, Suite 28, Oakland,California 94607 (510) 544-1516 (Address, including zip code, and telephone number, including area code, of agent for service) Copies to: Thomas E. Puzzo, Esq. Law Offices of Thomas E. Puzzo, PLLC 3823 44th Ave. NE Seattle, Washington 98105 Telephone No.: (206) 522-2256 Facsimile No.: (206) 260-0111 Approximate date of proposed sale to the public: As soon as practicable and from time to time after the effective date of this Registration Statement. 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 filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company x (Do not check if a smaller reporting company) CALCULATION OF REGISTRATION FEE TitleofEachClass Proposed Maximum Proposed Maximum ofSecurities AmounttoBe OfferingPrice Aggregate Amountof tobeRegistered Registered (1) perShare OfferingPrice RegistrationFee Common Stock, par value $0.0001 per share $ $ $ Common Stock, par value $0.0001 per share $ $ $ TOTAL $ $ $ (1) In the event of a stock split, stock dividend or similar transaction involving our common stock, the number of shares registered shall automatically be increased to cover the additional shares of common stock issuable pursuant to Rule 416 under the Securities Act of 1933, as amended. (2) The registration fee for securities to be offered by the Registrant is based on an estimate of the proposed maximum aggregate offering price of the securities, and such estimate is solely for the purpose of calculating the registration fee pursuant to Rule 457(o). (3) This registration statement also covers the resale under a separate resale prospectus (the “Resale Prospectus”) by the selling stockholders of the Registrant of up to 1,866,440 shares of common stock, $0.0001 par value per share (the “Common Stock”). (4) The offering price has been estimated solely for the purpose of computing the amount of the registration fee in accordance with Rule 457(o). Our common stock is not traded on any national exchange and in accordance with Rule 457, the offering price was determined by the price of the shares that were sold to our shareholders in a private placement pursuant to an exemption from registration under the Securities Act. The price of $3.00 is a fixed price at which the selling stockholders may sell their shares until our common stock is quoted on the OTC Bulletin Board or other U.S. trading exchange, at which time the shares may be sold at prevailing market prices or privately negotiated prices. 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 SECTION 8(A), MAY DETERMINE. THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION (“SEC”) IS EFFECTIVE. THIS PRELIMINARY PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION DATED FEBRUARY 27, 2012 ORO EAST MINING, INC. 5,000,, INC. This prospectus relates to both (i) the initial public offering of our common stock, in which we are offering a maximum of 5,000,000 of our common stock, and (ii) the resale by certain selling stockholders of Oro East Mining, Inc. of up to 1,866,440 shares of common stock held by selling stockholders of Oro East Mining, Inc. No public market currently exists for the securities being offered. While we will receive proceeds from our own sale of our common stock, we will not receive any of the proceeds from the sale of the shares by the selling stockholders. Any purchaser of common stock in the offerings may be the only purchaser, given the lack of a minimum offering amount. In our initial public offering, we are offering for sale a total of 5,000,000 shares of common stock at a fixed price of $3.00 per share for the duration of the offering. There is no minimum number of shares that must be sold by us for the offering to proceed, and we will retain theproceeds from the sale of any of the offered shares. The offering is being conducted on a self-underwritten, best efforts basis, which means our management, will attempt to sell the shares.This Prospectus will permit our Chief Executive Officer, Mr. Tian Q. Chen, as well as our President, Ms. Danni Zhong, to sell the shares directly to the public, with no commission or other remuneration payable to them for any shares they may sell.Mr. Chen and Ms. Zhong will sell the shares and intends to offer them to friends, family members and business acquaintances.Mr. Chen and Ms. Zhong will not sell any of their respective shares until he Company sells all of the 5,000,000 shares in its offering.In offering the securities on our behalf, they will rely on the safe harbor from broker-dealer registration set out in Rule 3a4-1 under the Securities and Exchange Act of 1934.The shares will be offered at a fixed price of $3.00 per share for the duration of the offering, which is a period of 16 months from the effective date of this prospectus. OfferingPrice PerShare Commissions Proceedsto Company BeforeExpenses if 10% of the shares are sold Proceedsto Company BeforeExpenses if 50% of the shares are sold Proceedsto Company BeforeExpenses if 100% of the shares are sold Common Stock Not Applicable Totals Not Applicable In the resale by certain selling stockholders, the selling stockholders will be offering our shares of common stock at a fixed price of $3.00 per share, for the duration of the offering, until our shares are quoted on the OTC Bulletin Board or other U.S. trading exchange and thereafter at prevailing market prices or privately negotiated prices. Each of the selling stockholders may be deemed to be an “underwriter” as such term is defined in the Securities Act of 1933, as amended (the “Securities Act”).The net proceeds to be received by the selling stockholders is $5,599,320, assuming that the selling shareholders sell all 1,866,440 shares they are collectively offering. There has been no market for our securities and a public market may never develop, or, if any market does develop, it may not be sustained. Our common stock is not traded on any exchange or on the over-the-counter market. After the effective date of the registration statement relating to this prospectus, we hope to have a market maker file an application with the Financial Industry Regulatory Authority for our common stock to be eligible for trading on the Over-the-Counter Bulletin Board or other U.S. trading exchange. We do not yet have a market maker who has agreed to file such application. There can be no assurance that our common stock will ever be quoted on a stock exchange or a quotation service or that any market for our stock will develop. Any funds that we raise from our offering of 5,000,000 shares will be immediately available for our use and will not be returned to investors. We do not have any arrangements to place the funds received from our offering of 5,000,000 shares of common stock in an escrow, trust or similar account. Accordingly, if we file for bankruptcy protection or a petition for involuntary bankruptcy is filed by creditors against us, your funds will become part of the bankruptcy estate and administered according to the bankruptcy laws. If a creditor sues us and obtains a judgment against us, the creditor could garnish the bank account and take possession of the subscriptions. As such, it is possible that a creditor could attach your subscription which could preclude or delay the return of money to you. If that happens, you will lose your investment and your funds will be used to pay creditors. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. Investing in our common stock involves a high degree of risk. Before buying any shares, you should carefully read the discussion of material risks of investing in our common stock in “Risk Factors” beginning on page9 of this prospectus. - 2 - The following table of contents has been designed to help you find information contained in this prospectus. We encourage you to read the entire prospectus. TABLE OF CONTENTS Page Prospectus Summary 4 Risk Factors 9 Risk Factors Relating to Our Company 9 Risk Factors Relating to Our Common Stock 18 Use of Proceeds 21 Determination of Offering Price 23 Selling Security Holders 23 Plan of Distribution 27 Description of Securities 28 Description of Business 31 Our Executive Offices 45 Legal Proceedings 45 Market for Common Equity and Related Stockholder Matters 45 Management’s Discussion and Analysis of Financial Condition and Results of Operations 46 Directors, Executive Officers, Promoters and Control Persons 54 Executive Compensation 55 Security Ownership of Certain Beneficial Owners and Management 56 Certain Relationships and Related Transactions 57 Disclosure of Commission Position on Indemnification for Securities Act Liabilities 58 Where You Can Find More Information 58 Changes In and Disagreements with Accountants on Accounting and Financial Disclosure 58 Financial Statements F-1 Until , 2012 (90 business days after the effective date of this prospectus) all dealers that effect transactions in these securities whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealer’s obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions. A CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This prospectus contains forward-looking statements which relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors,” that may cause our or our industry’s 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 these forward-looking statements. - 3 - While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results. PROSPECTUS SUMMARY As used in this prospectus, references to the “Company,” “we,” “our”, “us”, “Oro East” or “Oro East Mining, Inc.” refer to Oro East Mining, Inc. unless the context otherwise indicates. The following summary highlights selected information contained in this prospectus. Before making an investment decision, you should read the entire prospectus carefully, including the “Risk Factors” section, the financial statements, and the notes to the financial statements. OUR COMPANY Oro East Mining, Inc. (“Oro East”), a Delaware corporation, is an exploration stage mining company that has acquired rights to develop certain tenement lands in the Republic of Philippines for the mining of gold, copper, and other precious or industrial mineral deposits.We have no operating history, no customers and no revenues and expect to begin operations in before the end of 2012.As of November 28, 2011 we had $115,000 in cash reserves.Our monthly expenses have equaled, on average, approximately $20,000.At this rate, our present capital will last until June 30, 2012. Our business may not materialize in the event we are unable to execute on our plan described on this and the following pages.The events or circumstances that may prevent the accomplishment of our business objectives, include, without limitation, (i) the fact that the assignment of claims to the Company will revert back to Oro East Mining Company LTD should we fail to become a publicly listed company, as required by Section 3 of our Assignment of Rights Agreement with Oro East Mining Company LTD, (ii) minerals prices could be lower than the cost of development and sale of those minerals, (iii) the possibility that exploration efforts will not yield economically recoverable quantities of minerals, (iv) accidents resulting in physical injuries that give rise to claims associated with mineral exploration and development operations, (v) the risk that the Company will encounter unanticipated geological factors,(vi) the Company’s need for and ability to obtain additional financing, (vii) the possibility that the Company may not be able to secure permitting and other governmental clearances necessary to carry out the Company’s exploration and development plans, and (viii) the exercise of voting control the Company’s officers and directors collectively hold of the Company’s voting securities. The Company will initially focus on its sole asset that was assigned to the Company by Ore East Mining Company LTD. (“Assignor”), a privately-held corporation organized under the laws of theRepublic of the Philippines to further explore, extract and process ore within the guild lines of our Mineral Right Sharing Agreement (MPSA) with the Philippine Government granted in March of 2010. The claim is named MPSA 320-2010-XI and is comprised of 7,855 hectares (19,401 acres) of mining rights on Mindanao Island in the Davao region of the Philippines.The Company’s claim is fee simple with all applicable permits obtained to erect infrastructure, refining, smelting plants and power stations for extraction and production of gold and copper asprimary targets, and iron ore and other metals as secondary. The Company will continue exploration on MPSA 320-2010-XI as it transitions itself from an exploration company with the intention to become a gold, silver and copper production company with plans to advance the identified MPSA 320-2010-XI deposits through to production by as early as 2012.The Company has not identified any mineral reserves in connection with MPSA 320-2010-XI. The principals of Assignor, controlled by our CEO, Tian Qing Chen, acquired a controlling interest in the Company for the purpose of operating as a publicly-reporting company and determined that it is in their best interests to assign Assignor’s rights to the claims.Assignor receives a benefit from the assignment of the claim to Assignee because the Company plans to finance the exploration and development of the Company’s business, the cornerstone of which is the claim, for the benefit of its shareholders. To identify the mineral resources on MPSA 320-2010-XI , the Assignorconducted a semi-detailed geological mapping using compass and tape method backed by Global PositioningSystem (GPS) and manual test-pitting, artisanal tunneling and trenching activities which suggested Copper (CU) grades on the sulphide side from 4% to as high as 15% Cu (from more than 40 laboratory assays on grab, outcrop, test-pit and composite sampling grade range and Au (gold) grab and composite sample contents of 1.5 to 5 gms/ton from 2-3 meter deep testpits)This was conducted by Agetro Davao Mapping Team from June 29, 2008 to August 27, 2008 on 4,939 hectares of Oro East Mining Claim dominated as MPSA 320-2010-XI Parcel II (approximately two thirds of the fully permitted claim MPSA 320-2010-XI ). The Company now plans on taking a two phase approach.In Phase I the Company will analyze the exploration data that was completed and provided by Assignor followed byexpanded prospecting, mapping, sampling and ultimately diamond drilling, effective mine planning and implementation will be facilitated. In Phase II the Company will identify and implement the mining method(s) best adapted to maximize production, including: (i) effective extraction of ore delineated by the exploration, mine geology and grade control department., (ii) proper handling of ore and blending method to attain an economical grade without sacrificingthe quality of the ore, (iii) proper, effective and economical milling plant operation that can recover the gold at the highest percentage possible, and (iv) proper disposal of plant tails. - 4 - Our current plans, predicated on raising $15,000,000 from the sale of 5,000,000 shares of common stock is to begin with Phase I, which will consist of validation of previous exploration programs completed by Assignor that will include road repairs, expanded prospecting, mapping, sampling and ultimately diamond drilling, effective mine planning and implementation will be facilitated of at a cost of $2,500,000 to the Company.If Phase I is favorable, we would then Phase II that transitions the Company into a gold, silver and copper production company at an estimated total cost of $12,500,000, which is a reflection of local costs for the type of work program planned.We will proceed to Phase II only if we are successful in being able to secure the capital funding required to complete Phase II.Therefore, we expect to expend $2,500,000 on Phase I. We plan a two-phase program to properly evaluate the potential of the property to determine if there are commercially exploitable deposits of gold, silver and copper.We must conduct exploration to determine to validate deposits and determine if they can be economically extracted and profitably processed. We do not claim to have any ores or reserves whatsoever at this time. We anticipate Phase I planned geological exploration program will cost $2,500,000.Phase I may require up to sixteen weeks for the base work and an additional two to three months for analysis, evaluation of the work completed and the preparation of a report.Costs for Phase I consist of wages, fees, geological and geochemical supplies, assaying, equipment, diamond drilling and operation costs. It is our intention to carry the work out in 2011 and early 2012, predicated on completion of the offering described in this registration statement.The Company has four employees and has not hired any engineers or geoscientists and will not do so until funds are available to proceed with the first phase of exploration on the property. We will assess the results of this program upon receipt of an appropriate engineering or geological report. It is our intention to retain a U.S.-educated geoscientist to evaluate and conform to American standards the phase I work program and to author a report to American standards for future capital raising. Phase II is not planned to be carried out until 2012 and will be contingent upon favorable results from phase I and specific recommendations of a professional geoscientist based on those results. Favorable results means that a geoscientist, engineer or other recognized professional states that there is a strong likelihood of value being added by transitioning into a gold, silver and copper production company, makes a written recommendation that we proceed to the next phase of production, a resolution is approved by the Board of Directors of the Company indicating such work should proceed and that it is feasible to finance the next phase of production. A detailed outline of the proposed timetable can be found on page 38 under the heading “Management’s Discussion, Analysis of Financial Condition and Results of Operations”. Recent Developments During the first nine months of 2011, Oro East spent $641,701 on general infrastructures including paving roads and building improvements in the Philippines to facilitate the exploration of mining properties. About Oro East Mining, Inc. We were incorporated in the State of Delaware on February 15, 2008, and established an end of December fiscal year end. Our corporate headquarters is located at 1127 Webster Street, Suite 28, Oakland, CA 946076 and our telephone number is +1 (510) 544-1516. Our business plans for the current fiscal year through February 28, 2012, are detailed in the Management Discussion and Analysis on page 38. - 5 - THE OFFERING The Offering Securities offered: We are offering up to 5,000,000 of our common stock. The sellingstockholders are hereby offering up to 1,866.440 shares of our common stock. Offering price: The selling stockholders will offer and sell their shares of common stock at a fixed price of $3.00per share until our shares are quoted on the OTC Bulletin Board or other US trading exchange, if our shares of common stock are ever quoted on the OTC Bulletin Board or other US trading exchange, and thereafter at prevailing market prices or privately negotiated prices. December 31, 2010 ($) Financial Summary Cash and Deposits Total Assets Total Liabilities Total Stockholder’s Equity (Deficit) AccumulatedFrom February 15, 2008 (Inception)to December 31, 2010($) Statement of Operations Total Expenses Net Loss for the Period ) Net Loss per Share - 6 - Shares outstanding prior to offering: Shares outstanding after offering: Market for the common shares: There is no public market for our shares. Our common stock is not traded on any exchange or on the over-the-counter market. After the effective date of the registration statement relating to this prospectus, we hope to have a market maker file an application with the Financial Industry Regulatory Authority (“FINRA”) for our common stock to eligible for trading on the Over The Counter Bulletin Board or other U.S. trading exchange. We do not yet have a market maker who has agreed to file such application. There is no assurance that a trading market will develop, or, if developed, that it will be sustained. Consequently, a purchaser of our common stock may find it difficult to resell the securities offered herein should the purchaser desire to do so when eligible for public resale. Use of proceeds: We intend to use the net proceeds from the sale of our 5,000,000 shares (after deducting estimated offering expenses payable by us) for professional fees, general business development, administration expenses, option fees and geological survey fees. See “Use of Proceeds” on page20 for more information on the use of proceeds. We will not receive any proceeds from the sale of shares of common stock by the selling stockholders who are simultaneously offering 1,866,440 shares of common stock under this prospectus. We will not receive any proceeds from the sale of shares by the selling stockholders. SUMMARY FINANCIAL INFORMATION The tables and information below are derived from our audited financial statements for the period from February 15, 2008 (Inception) to December 31, 2010, and our unaudited financial statements as of September 30 2011 and 2010. Our working capital as at September 30, 2011 was $347,485. September 30, 2011 ($) Financial Summary (Unaudited) Cash and Deposits Total Assets Total Liabilities Total Stockholder’s Equity AccumulatedFrom February 15, 2008 (Inception)to September 30, 2011($) Statement of Operations (Unaudited) Total Expenses Net Loss for the Period - 7 - September 30, 2010 ($) Financial Summary (Unaudited) Cash and Deposits Total Assets Total Liabilities Total Stockholder’s Equity (Deficit) AccumulatedFrom February 15, 2008 (Inception)to September 30, 2010($) Statement of Operations (Unaudited) Total Expenses Net Loss for the Period Glossary of Exploration Terms The following terms, when used in this registration statement, have the respective meanings specified below: Andesite An extrusive usually dark grayish rock consisting essentially of oligoclase or feldspar. Dacite A fine-grained light gray volcanic rock consisting primarily of quartz, plagioclase, and potassium feldspar, and also containing biotite, hornblende, or pyroxene. Assay A chemical test performed on a sample of ores or minerals to determine the amount of valuable metals contained. Dendrite A branching treelike figure produced on or in a mineral by a foreign mineral. Dendritic Resembling or having dendrites. Branching like a tree. Deposit When mineralized material has been systematically drilled and explored to the degree that a reasonable estimate of tonnage and economic grade can be made. Development Preparation of a mineral deposit for commercial production, including installation of plant and machinery and the construction of all related facilities. The development of a mineral deposit can only be made after a commercially viable mineral deposit, a reserve, has been appropriately evaluated as economically and legally feasible. Diamond drill A type of rotary drill in which the cutting is done by abrasion rather than percussion. The cutting bit is set with diamonds and is attached to the end of long hollow rods through which water is pumped to the cutting face. The drill cuts a core of rock, whichis recovered in long cylindrical sections an inch or more in diameter. Diorite A granular crystalline igneous rock commonly of acid plagioclase and hornblende, pyroxene, or biotite. Exploration The prospecting, trenching, mapping, sampling, geochemistry, geophysics, diamond drilling and other work involved in searching for mineral bodies’ a mining prospectwhich has not yet reached either the development or production stage. Mafic Mafic-ultramafic Of, relating to, or being a group of usually dark-colored minerals rich in magnesium and iron. Mafic and untramafic minerals together. Mineral A naturally occurring inorganic element or compound having an orderly internal structure and characteristic chemical composition, crystal form and physical properties. Mineral Reserve A mineral reserve is that part of a deposit which could be economically and legally extracted or produced at the time of the reserve determination. Mineralization Rock containing an undetermined amount of minerals or metals. Miocene Of, relating to, or being an epoch of the Tertiary between the Pliocene and the Oligocene or the corresponding series of rocks. Paleogene Of, relating to, or being the earlier part of the Tertiary including the Paleocene, Eocene, and Oligocene or the corresponding series of rocks. Ultramafic Minerals that are very low in silica and rich in iron and magnesium. Trenching The digging of long, narrow excavation through soil, or rock, to expose potential mineralization for geological examination or assays. Waste Material that is too low in grade to be mined and milled at a profit. - 8 - RISK FACTORS An investment in our common stock involves a number of very significant risks. You should carefully consider the following known material risks and uncertainties in addition to other information in this prospectus in evaluating our company and its business before purchasing shares of our company’s common stock. You could lose all or part of your investment due to any of these risks. RISKS RELATING TO OUR COMPANY OUR AUDITORS HAVE EXPRESSED SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN. Our audited financial statements for the year ended December 31, 2009, December 31, 2010 and unaudited financial statements ended June 31, 2010 were prepared assuming that we will continue our operations as a going concern. We were incorporated on February 15, 2008 and do not have a history of earnings. As a result, our independent accountants in their audit report have expressed substantial doubt about our ability to continue as a going concern. Continued operations are dependent on our ability to complete equity or debt financings or generate profitable operations. Such financings may not be available or may not be available on reasonable terms. Our financial statements do not include any adjustments that may result from the outcome of this uncertainty. WE MAY REQUIRE ADDITIONAL FUNDS WHICH WE PLAN TO RAISE THROUGH THE SALE OF OUR COMMON STOCK, WHICH REQUIRES FAVORABLE MARKET CONDITIONS AND INTEREST IN OUR ACTIVITIES BY INVESTORS. IF WE ARE NOT BE ABLE TO SELL OUR COMMON STOCK, FUNDING WILL NOT BE AVAILABLE FOR CONTINUED OPERATIONS, AND OUR BUSINESS WILL FAIL. We anticipate that our cash position of $347,485 at September 30, 2011 will be insufficient to complete the first phase of any initial exploration program of any mining claim. Subsequent exploration activities will require additional funding.Our current plans, predicated on raising $15,000,000, accomplished by the sale of the of5,000,000shares in our offering calls only for the completion of Phase I at a cost of $2,500,000to the Company.If Phase I is not favorable, we may terminate the option and cease operations.If Phase I is favorable we would then proceed to Phase II at an estimated total cost of $12,500,000.We will proceed to Phase II only if we are also successful in being able to secure the capital funding required to complete Phase II.Our only present means of funding is through the sale of our common stock. The sale of common stock requires favorable market conditions for exploration companies like ours, as well as specific interest in our stock, neither of which may exist if and when additional funding is required by us. If we are unable to raise additional funds in the future, our business will fail. WE HAVE A VERY LIMITED HISTORY OF OPERATIONS AND ACCORDINGLY THERE IS NO TRACK RECORD THAT WOULD PROVIDE A BASIS FOR ASSESSING OUR ABILITY TO CONDUCT SUCCESSFUL MINERAL EXPLORATION ACTIVITIES. WE MAY NOT BE SUCCESSFUL IN CARRYING OUT OUR BUSINESS OBJECTIVES. We were incorporated on February 15, 2008 and to date, have been involved primarily in organizational activities and obtaining financing. Accordingly we have no track record of successful exploration activities, strategic decision making by management, fund-raising ability, and other factors that would allow an investor to assess the likelihood that we will be successful as a junior resource exploration company. Junior exploration companies often fail to achieve or maintain successful operations, even in favorable market conditions. There is a substantial risk that we will not be successful in our exploration activities, or if initially successful, in thereafter generating any operating revenues or in achieving profitable operations. - 9 - Investors must consider the risks and difficulties frequently encountered by early stage companies, particularly in rapidly evolving markets. Such risks include the following: ● Competition ● ability to anticipate and adapt to a competitive market ● ability to effectively manage expanding operations; amount and timing of operating costs and capital expenditures relating to expansion of our business, operations, and infrastructure; and ● dependence upon key personnel to market and sell our services and the loss of one of our key managers may adversely affect the marketing of our services. We cannot be certain that our business strategy will be successful or that we will successfully address these risks. In the event that we do not successfully address these risks, our business, prospects, financial condition, and results of operations could be materially and adversely affected and we may not have the resources to continue or expand our business operations. DUE TO THE SPECULATIVE NATURE OF MINERAL PROPERTY EXPLORATION, THERE IS SUBSTANTIAL RISK THAT NO COMMERCIALLY VIABLE MINERAL DEPOSITS WILL BE FOUND ON OUR MPSA 184-XI CLAIM OR OTHER MINERAL PROPERTIES THAT WE ACQUIRE. In order for us to even commence mining operations we face a number of challenges which include finding mining claims, qualified professionals to conduct exploration programs, obtaining adequate financing to continue exploration programs, locating viable mineral bodies, partnering with senior mining companies, obtaining mining permits, and ultimately selling minerals in order to generate revenue. Moreover, exploration for commercially viable mineral deposits is highly speculative in nature and involves substantial risk that no viable mineral deposits will be located on any future mineral properties. There is a substantial risk that any exploration program that we conduct on future claims may not result in the discovery of any significant mineralization, and therefore no commercial viable mineral deposit. There are numerous geological features that we may encounter that would limit our ability to locate mineralization or that could interfere with our exploration programs as planned, resulting in unsuccessful exploration efforts. In such a case, we may incur significant costs associated with an exploration program, without any benefit. This would likely result in a decrease in the value of our common stock. DUE TO THE INHERENT DANGERS INVOLVED IN MINERAL EXPLORATION, THERE IS A RISK THAT WE MAY INCUR LIABILITY OR DAMAGES AS WE CONDUCT OUR BUSINESS. The search for minerals involves numerous hazards. As a result, we may become subject to liability for such hazards, including pollution, cave-ins and other hazards against which we cannot insure or may elect not to insure. We currently have no such insurance nor do we expect to obtain such insurance for the foreseeable future. If a hazard were to occur, the costs of rectifying the hazard may exceed our asset value and cause us to liquidate all our assets and cease operations, resulting in the loss of your entire investment. THE MARKET PRICE FOR PRECIOUS METALS IS BASED ON NUMEROUS FACTORS OUTSIDE OF OUR CONTROL. THERE IS A RISK THAT THE MARKET PRICE FOR PRECIOUS METALS WILL SIGNIFICANTLY DECREASE, WHICH WILL MAKE IT DIFFICULT FOR US TO FUND FURTHER MINERAL EXPLORATION ACTIVITIES, AND WOULD DECREASE THE PROBABILITY THAT ANY SIGNIFICANT MINERALIZATION THAT WE LOCATE CAN BE ECONOMICALLY EXTRACTED. - 10 - Numerous factors beyond our control may affect the marketability of minerals. These factors include market fluctuations, the proximity and capacity of natural resource markets and processing equipment, government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in our not receiving an adequate return on invested capital and you may lose your entire investment in this offering by existing investors. CURRENT MANAGEMENT’S LACK OF EXPERIENCE IN AND/OR WITH MINING AND, IN PARTICULAR, MINERAL EXPLORATION ACTIVITY, MEANS THAT IT IS DIFFICULT TO ASSESS, OR MAKE JUDGMENTS ABOUT, OUR POTENTIAL SUCCESS. A majority of our officersand directorsdo not have any prior experience with or has ever been employed in the mining industry. Additionally, our officersand directors have no collegeor university degree, or other educational background, in mining or geology or in a field related to mining. More specifically, our officers and directors lacktechnical training and experience with exploring for, starting, and/or operating a mine. With no direct training or experience in these areas, our officer and director may not be fully aware of many of the specific requirements related to mineral exploration, let alone the overall mining industry as a whole. For example, management and our directors’ decisions and choices may fail to take into account standard engineering and other managerial approaches mineral exploration companies commonly use.Consequently, our operations, earnings, and ultimate financial success could suffer irreparable harm due to our officers’ and directors’ future possible mistakes, lack of sophistication, judgment or experience in this particular industry. As a result, if we do obtain the funding or other means to implement a bona fide mineral exploration program, such program will likely have to be implemented and carried out by joint venturers, partners or independent contractors who would have the requisite mineral exploration experience and know-how that we currently lack. IF THE SELLING SHAREHOLDERS SELL A LARGE NUMBER OF SHARES ALL AT ONCE OR IN BLOCKS, THE MARKET PRICE OF OUR SHARES WOULD MOST LIKELY DECLINE. The selling shareholders are offering up to 1,866,440 shares of our common stock through this prospectus. Our common stock is presently not traded or quoted on any market or securities exchange, but should a market develop, shares sold at a price below the current market price at which the common stock is quoted will cause that market price to decline. Moreover, the offer or sale of a large number of shares at any price may cause the market price to fall. The outstanding shares of common stock covered by this prospectus represent 6.85% of the common shares outstanding as of the date of this prospectus. DEPENDENCE ON THE MANAGEMENT, WITHOUT WHOSE SERVICES COMPANY BUSINESS OPERATIONS COULD CEASE. At this time, our officers and directors are wholly responsible for the development and execution of our business plan. Our officers and directors are under no contractual obligation to remain employed by us, although they have no present intent to leave. If our officers and directors should choose to leave us for any reason before we have hired additional personnel our operations may fail. Even if we are able to find additional personnel, it is uncertain whether we could find qualified management who could develop our business along the lines described herein or would be willing to work for compensation the Company could afford. Without such management, the Company could be forced to cease operations and investors in our common stock or other securities could lose their entire investment. - 11 - OUR OFFICERS AND DIRECTORS DEVOTE LIMITED TIME TO THE COMPANY’S BUSINESS AND ARE ENGAGED IN OTHER BUSINESS ACTIVITIES At this time, four of our officers and directors devote their full-time attention to the Company’s business. Based upon the growth of the business, we would intend to employ additional management and staff. The limited time devoted to the Company’s business could adversely affect the Company’s business operations and prospects for the future. Without full-time devoted management, the Company could be forced to cease operations and investors in our common stock or other securities could lose their entire investment. CONCENTRATED CONTROL RISKS; SHAREHOLDERS COULD BE UNABLE TO CONTROL OR INFLUENCE KEY CORPORATE ACTIONS OR EFFECT CHANGES IN THE COMPANY’S BOARD OF DIRECTORS OR MANAGEMENT. Currently, the Company has two shareholders that own more than 96.17% of our outstanding shares, Mutual Gain Hong Kong, Limited currently owns 23,850,000 shares of our common stock, representing approximately 85.43% of the voting control of the Company. Accelerated Venture Partners LLC currently owns 3,000,000 shares of our common stock, representing approximately 10.74% voting control of the Company.Our current shareholders therefore have the power to make all major decisions regarding our affairs, including decisions regarding whether or not to issue stock and for what consideration, whether or not to sell all or substantially all of our assets and for what consideration and whether or not to authorize more stock for issuance or otherwise amend our charter or bylaws. LACK OF EMPLOYMENT AGREEMENTS WITH KEY MANAGEMENT RISKING POTENTIAL OF THE LOSS OF THE COMPANY’S TOP MANAGEMENT We do not currently have an employment agreement with any of our key management or key man insurance on their lives. Our future success will depend in significant part on our ability to retain and hire key management personnel. Competition for such personnel is intense and we may not be be successful in attracting and retaining such personnel. Without such management, the Company could be forced to cease operations and investors in our common stock or other securities could lose their entire investment. WE ARE SOLELY GOVEREND BY A SMALL NUMBER OF EXECUTIVE OFFICERS AND DIRECTORS, AND, AS SUCH, THERE MAY BE SIGNIFICANT RISK TO US FROM A CORPORATE GOVERNANCE PERSPECTIVE. Mr. Chen and Ms. Chen, our only two (2) directors make decisions such as the approval of related party transactions, the compensation of executive officers, and the oversight of the accounting function. Additionally, because we only have three (3) executive officers, there may be limited segregation of executive duties, and thus, there may not be effective disclosure and accounting controls to comply with applicable laws and regulations, which could result in fines, penalties and assessments against us. In addition, Mr. Chen and Ms. Chen will exercise full control over all matters that require the approval of a Board of Directors. Accordingly, the inherent controls that arise from the segregation of executive duties and review and/or approval of those duties by the Board of Directors may not prevail. We have not adopted corporate governance measures such as an audit or other independent committees as we presently do not have any independent directors. Prospective investors should bear in mind our current lack of corporate governance measures in formulating their investment decisions. - 12 - SINCE SOME OF OUR EXECUTIVE OFFICERS AND DIRECTORS, ARE NOT RESIDENTS OF THE UNITED STATES, IT MAY BE DIFFICULT TO ENFORCE ANY LIABILITIES AGAINST THEM. Shareholders may have difficulty enforcing any claims against us because certain of our officers and directors reside outside the United States. If a shareholder desired to sue, shareholders would have to serve a summons and complaint. Even if personal service is accomplished and a judgment is entered against that person, the shareholder would then have to locate the assets of that person, and register the judgment in the foreign jurisdiction where the assets are located. LACK OF ADDITIONAL WORKING CAPITAL MAY CAUSE CURTAILMENT OF ANY EXPANSION PLANS WHILE RAISING OF CAPITAL THROUGH SALE OF EQUITY SECURITIES WOULD DILUTE EXISTING SHAREHOLDERS’ PERCENTAGE OF OWNERSHIP Our available capital resources will not be adequate to fund our working capital requirements based upon our present level of operations for the 12-month period subsequent to June 30, 2012. A shortage of capital would affect our ability to fund our working capital requirements. If we require additional capital, funds may not be available on acceptable terms, if at all. In addition, if we raise additional capital through the sale of equity or convertible debt securities, the issuance of these securities could dilute existing shareholders. If funds are not available, we could be placed in the position of having to cease all operations. WE DO NOT PRESENTLY HAVE A TRADITIONAL CREDIT FACILITY WITH A FINANCIAL INSTITUTION. THIS ABSENCE MAY ADVERSELY AFFECT OUR OPERATIONS We do not presently have a traditional credit facility with a financial institution. The absence of a traditional credit facility with a financial institution could adversely impact our operations. If adequate funds are not otherwise available, we may be required to delay, scale back or eliminate portions of our operations and product development efforts. Without such credit facilities, the Company could be forced to cease operations and investors in our common stock or other securities could lose their entire investment. OUR INABILITY TO SUCCESSFULLY ACHIEVE SALES COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION We may not be able to successfully achieve sales in order to cover our operating expenses and achieve sustainable profitability. Without such critical mass of sales, the Company could be forced to cease operations. OUR SUCCESS IS SUBSTANTIALLY DEPENDENT ON GENERAL ECONOMIC CONDITIONS AND BUSINESS TRENDS, A DOWNTURN OF WHICH COULD ADVERSELY AFFECT OUR OPERATIONS The success of our operations depends to a significant extent upon a number of factors relating to business spending. These factors include economic conditions, activity in the financial markets, general business conditions, personnel cost, inflation, interest rates and taxation. Our business is affected by the general condition and economic stability of our customers and their continued willingness to work with us in the future. An overall decline in the demand for government services could cause a reduction in our sales and the Company could face a situation where it never achieves a critical mass of sales and thereby be forced to cease operations. - 13 - CHANGES IN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES COULD HAVE AN ADVERSE EFFECT ON OUR BUSINESS FINANCIAL CONDITION, CASH FLOWS, REVENUE AND RESULTS OF OPERATIONS We are subject to changes in and interpretations of financial accounting matters that govern the measurement of our performance. Based on our reading and interpretations of relevant guidance, principles or concepts issued by, among other authorities, the American Institute of Certified Public Accountants, the Financial Accounting Standards Board, and the United States Securities and Exchange Commission, our management believes that our current contract terms and business arrangements have been properly reported. However, there continue to be issued interpretations and guidance for applying the relevant standards to a wide range of contract terms and business arrangements that are prevalent in the industries in which we operate. Future interpretations or changes by the regulators of existing accounting standards or changes in our business practices could result in future changes in our revenue recognition and/or other accounting policies and practices that could have a material adverse effect on our business, financial condition, cash flows, revenue and results of operations. WE WILL NEED TO INCREASE THE SIZE OF OUR ORGANIZATION, AND MAY EXPERIENCE DIFFICULTIES IN MANAGING GROWTH. We are a small company with four full-time employees. We expect to experience a period of significant expansion in headcount, facilities, infrastructure and overhead and anticipate that further expansion will be required to address potential growth and market opportunities. Future growth will impose significant added responsibilities on members of management, including the need to identify, recruit, maintain and integrate managers. Our future financial performance and its ability to compete effectively will depend, in part, on its ability to manage any future growth effectively. WE ARE SUBJECT TO COMPLIANCE WITH SECURITIES LAW, WHICH EXPOSES US TO POTENTIAL LIABILITIES, INCLUDING POTENTIAL RESCISSION RIGHTS. We have offered and sold our common stock to investors pursuant to certain exemptions from the registration requirements of the Securities Act of 1933, as well as those of various state securities laws. The basis for relying on such exemptions is factual; that is, the applicability of such exemptions depends upon our conduct and that of those persons contacting prospective investors and making the offering. We have not received a legal opinion to the effect that any of our prior offerings were exempt from registration under any federal or state law. Instead, we have relied upon the operative facts as the basis for such exemptions, including information provided by investors themselves. If any prior offering did not qualify for such exemption, an investor would have the right to rescind its purchase of the securities if it so desired. It is possible that if an investor should seek rescission, such investor would succeed. A similar situation prevails under state law in those states where the securities may be offered without registration in reliance on the partial preemption from the registration or qualification provisions of such state statutes under the National Securities Markets Improvement Act of 1996. If investors were successful in seeking rescission, we would face severe financial demands that could adversely affect our business and operations. Additionally, if we did not in fact qualify for the exemptions upon which it has relied, we may become subject to significant fines and penalties imposed by the SEC and state securities agencies. WE INCUR COSTS ASSOCIATED WITH SEC REPORTING COMPLIANCE. The Company made the decision to become an SEC “reporting company” in order to comply with applicable laws and regulations. We incur certain costs of compliance with applicable SEC reporting rules and regulations including, but not limited to attorneys fees, accounting and auditing fees, other professional fees, financial printing costs and Sarbanes-Oxley compliance costs in an amount estimated at approximately $25,000 per year. On balance, the Company determined that the incurrence of such costs and expenses was preferable to the Company being in a position where it had very limited access to additional capital funding. - 14 - THE AVAILABILITY OF A LARGE NUMBER OF AUTHORIZED BUT UNISSUED SHARES OF COMMON STOCK MAY, UPON THEIR ISSUANCE, LEAD TO DILUTION OF EXISTING STOCKHOLDERS. We are authorized to issue 100,000,000 shares of common stock, $0.0001 par value per share, of which, as of the date of this prospectus, 27,916,440 shares of common stock were issued and outstanding. We are also authorized to issue 10,000,000 shares of preferred stock, $0.0001 par value, none of which are issued and outstanding. These shares may be issued by our board of directors without further stockholder approval. The issuance of large numbers of shares, possibly at below market prices, is likely to result in substantial dilution to the interests of other stockholders. In addition, issuances of large numbers of shares may adversely affect the market price of our common stock. WE MAY NEED ADDITIONAL CAPITAL THAT COULD DILUTE THE OWNERSHIP INTEREST OF INVESTORS. We require substantial working capital to fund our business. If we raise additional funds through the issuance of equity, equity-related or convertible debt securities, these securities may have rights, preferences or privileges senior to those of the rights of holders of our common stock and they may experience additional dilution. We cannot predict whether additional financing will be available to us on favorable terms when required, or at all. Since our inception, we have experienced negative cash flow from operations and expect to experience significant negative cash flow from operations in the future. The issuance of additional common stock by the Company may have the effect of further diluting the proportionate equity interest and voting power of holders of our common stock. WE MAY NOT HAVE ADEQUATE INTERNAL ACCOUNTING CONTROLS. WHILE WE HAVE CERTAIN INTERNAL PROCEDURES IN OUR BUDGETING, FORECASTING AND IN THE MANAGEMENT AND ALLOCATION OF FUNDS, OUR INTERNAL CONTROLS MAY NOT BE ADEQUATE. Our disclosure controls and procedures were ineffective at September 30, 2011 because of a material weakness in your internal controls over financial reporting, as set forth in your Form 10-Q for the period then ended.We are constantly striving to improve our internal accounting controls. Our board of directors has not designated an Audit Committee and we do not have any outside directors. We do not have a dedicated full time Chief Financial Officer. We hope to develop an adequate internal accounting control to budget, forecast, manage and allocate our funds and account for them. There is no guarantee that such improvements will be adequate or successful or that such improvements will be carried out on a timely basis. If we do not have adequate internal accounting controls, we may not be able to appropriately budget, forecast and manage our funds, we may also be unable to prepare accurate accounts on a timely basis to meet our continuing financial reporting obligations and we may not be able to satisfy our obligations under US securities laws. WE DO NOT HAVE ADEQUATE INSURANCE COVERAGE At this time, we do not have adequate insurance coverage and therefore have the risk of loss or damages to our business and assets. We may face liability upon the occurrence of any event which could result in any loss or damages being assessed against the Company. Moreover, any insurance we may ultimately acquire may not be adequate to cover any loss or liability we may incur. WE ARE SUBJECT TO NUMEROUS LAWS AND REGULATIONS THAT CAN ADVERSELY AFFECT THE COST, MANNER OR FEASIBILITY OF DOING BUSINESS. Our operations are subject to extensive federal, state and local laws and regulations relating to the financial markets. Future laws or regulations, any adverse change in the interpretation of existing laws and regulations or our failure to comply with existing legal requirements may result in substantial penalties and harm to our business, results of operations and financial condition. We may be required to make large and unanticipated capital expenditures to comply with governmental regulations. Our operations could be significantly delayed or curtailed and our cost of operations could significantly increase as a result of regulatory requirements or restrictions. We are unable to predict the ultimate cost of compliance with these requirements or their effect on our operations. - 15 - WE HAVE NOT VOLUNTARILY IMPLEMENTED VARIOUS CORPORATE GOVERNANCE MEASURES, IN THE ABSENCE OF WHICH, SHAREHOLDERS MAY HAVE MORE LIMITED PROTECTIONS AGAINST INTERESTED DIRECTOR TRANSACTIONS, CONFLICTS OF INTEREST AND SIMILAR MATTERS. Recent Federal legislation, including the Sarbanes-Oxley Act of 2002, has resulted in the adoption of various corporate governance measures designed to promote the integrity of the corporate management and the securities markets. Some of these measures have been adopted in response to legal requirements. Others have been adopted by companies in response to the requirements of national securities exchanges, such as the NYSE or the Nasdaq Stock Market, on which their securities are listed. Among the corporate governance measures that are required under the rules of national securities exchanges are those that address board of directors' independence, audit committee oversight, and the adoption of a code of ethics.We have not yet adopted any of these corporate governance measures and, since our securities are not yet listed on a national securities exchange, we are not required to do so.It is possible that if we were to adopt some or all of these corporate governance measures, stockholders would benefit from somewhat greater assurances that internal corporate decisions were being made by disinterested directors and that policies had been implemented to define responsible conduct.Prospective investors should bear in mind our current lack of corporate governance measures in formulating their investment decisions. THE IMPRECISION OF MINERAL DEPOSIT ESTIMATES MAY PROVE ANY RESOURCE CALCULATIONS THAT WE MAKE TO BE UNRELIABLE. Mineral deposit estimates and related databases are expressions of judgment based on knowledge, mining experience, and analysis of drilling results and industry practices. Valid estimates made at a given time may significantly change when new information becomes available. By their nature, mineral deposit estimates are imprecise and depend upon statistical inferences, which may ultimately prove unreliable. Mineral deposit estimates included here, if any, have not been adjusted in consideration of these risks and, therefore, we cannot be sure that any mineral deposit estimate will ultimately be reclassified as reserves. If our exploration program locates a mineral deposit, such deposits may never besuch deposits may never be classified as reserves. WE ARE SENSITIVE TO FLUCTUATIONS IN THE PRICE OF GOLD, SILVER AND OTHER METALS WHICH IS BEYOND OUR CONTROL. THE PRICE OF PRECIOUS METALS IS VOLATILE AND PRICE CHANGES ARE BEYOND OUR CONTROL. The price of gold and other precious metals can fluctuate. The prices of gold and other precious metals have been and will continue to be affected by numerous factors beyond our control. Factors that affect the price of gold and other precious metals include the demand from consumers for products that use such metals, economic conditions, over supply from secondary sources and costs of production. Price volatility and downward price pressure, which can lead to lower prices, could have a material adverse effect on the costs or the viability of our projects. MINERAL EXPLORATION AND PROSPECTING IS HIGHLY COMPETITIVE AND A SPECULATIVE BUSINESS AND WE MAY NOT BE SUCCESSFUL IN SEEKING AVAILABLE OPPORTUNITIES. The process of mineral exploration and prospecting is a highly competitive and speculative business. In seeking available opportunities, we will compete with a number of other companies, including established, multi-national companies that have more experience and resources than us. We compete with other exploration companies looking for gold and copper deposits. Because we may not have the financial and managerial resources to compete with other companies, we may not be successful in our efforts to acquire projects of value, which, ultimately, become productive. However, while we compete with other exploration companies, there is no competition for the exploration or removal of minerals from our claims. - 16 - COMPLIANCE WITH ENVIRONMENTAL CONSIDERATIONS AND PERMITTING COULD HAVE A MATERIAL ADVERSE EFFECT ON THE COSTS OR THE VIABILITY OF OUR PROJECTS. THE HISTORICAL TREND TOWARD STRICTER ENVIRONMENTAL REGULATION MAY CONTINUE, AND, AS SUCH, REPRESENTS AN UNKNOWN FACTOR IN OUR PLANNING PROCESSES. All mining is regulated by the government agencies at the Federal and Provincial levels of government in the Philippines. Compliance with such regulation has a material effect on the economics of our operations and the timing of project development. Our primary regulatory costs have been related to obtaining licenses and permits from government agencies before the commencement of mining activities. An environmental impact study that must be obtained on each property in order to obtain governmental approval to mine on the properties is also a part of the overall operating costs of a mining company. The possibility of more stringent regulations exists in the areas of worker health and safety, the dispositions of wastes, the decommissioning and reclamation of mining and milling sites and other environmental matters, each of which could have an adverse material effect on the costs or the viability of a particular project. Compliance with environmental considerations and permitting could have a material adverse effect on the costs or the viability of our projects. MINING AND EXPLORATION ACTIVITIES ARE SUBJECT TO EXTENSIVE REGULATION BY FEDERAL AND PROVINCIAL GOVERNMENTS. FUTURE CHANGES IN GOVERNMENTS, REGULATIONS AND POLICIES, COULD ADVERSELY AFFECT OUR RESULTS OF OPERATIONS FOR A PARTICULAR PERIOD AND OUR LONG-TERM BUSINESS PROSPECTS. Mining and exploration activities are subject to extensive regulation by government. Such regulation relates to production, development, exploration, exports, taxes and royalties, labor standards, occupational health, waste disposal, protection and remediation of the environment, mine and mill reclamation, mine and mill safety, toxic substances and other matters. Compliance with such laws and regulations has increased the costs of exploring, drilling, developing, constructing and operating mines and other facilities. Furthermore, future changes in governments, regulations and policies could adversely affect our results of operations in a particular period and our long-term business prospects. The development of mines and related facilities is contingent upon governmental approvals, which are complex and time consuming to obtain and which, depending upon the location of the project, involve various governmental agencies. The duration and success of such approvals are subject to many variables outside our control. TRANSPORTATION DIFFICULTIES AND WEATHER INTERRUPTIONS MAY AFFECT AND DELAY PROPOSED MINING OPERATIONS AND IMPACT OUR PROPOSED BUSINESS. Our mining properties are accessible by road. The climate in the area is hot and dry in the summer but is subject to heavy rain in the winter months, which could at times hamper accessibility depending on the winter season precipitation levels. As a result, our exploration and mining plans could be delayed for several months each year. SUPPLIES NEEDED FOR EXPLORATION MAY NOT ALWAYS BE AVAILABLE. IF WE ARE UNABLE TO SECURE EXPLORATION SUPPLIES WE MAY HAVE TO DELAY OUR ANTICIPATED BUSINESS OPERATIONS. Competition and unforeseen limited sources of supplies needed for our proposed exploration work could result in occasional spot shortages of supplies of certain products, equipment or materials. There is no guarantee we will be able to obtain certain products, equipment and/or materials as and when needed, without interruption, or on favorable terms. Such delays could affect our anticipated business operations and increase our expenses. - 17 - RISKS RELATING TO OUR COMMON STOCK THERE IS NO LIQUIDITY AND NO ESTABLISHED PUBLIC MARKET FOR OUR COMMON STOCK AND WE MAY NOT BE SUCCESSFUL AT OBTAINING A QUOTATION ON A RECOGNIZED QUOTATION SERVICE. IN SUCH EVENT IT MAY BE DIFFICULT TO SELL YOUR SHARES. There is presently no public market in our shares. We may never be successful at developing a public market or in having our common stock quoted on a quotation facility such as the OTC Bulletin Board. There are risks associated with obtaining a quotation, including that broker dealers will not be willing to make a market in our shares, or to request that our shares be quoted on a quotation service. In addition, even if a quotation is obtained, the OTC Bulletin Board and similar quotation services are often characterized by low trading volumes, and price volatility, which may make it difficult for an investor to sell our common stock on acceptable terms. If trades in our common stock are not quoted on a quotation facility, it may be very difficult for an investor to find a buyer for their shares in our Company. Because there is no escrow, trust or similar account, the offering proceeds could be seized by creditors or by a trustee in bankruptcy, in which case investors would lose their entire investment. Any funds that we raise from our offering of 5,000,000 shares of common stock will be immediately available for our use and will not be returned to investors. We do not have any arrangements to place the funds received from our offering of 5,000,000 shares of common stock in an escrow, trust or similar account. Accordingly, if we file for bankruptcy protection or a petition for involuntary bankruptcy is filed by creditors against us, your funds will become part of the bankruptcy estate and administered according to the bankruptcy laws. If a creditor sues us and obtains a judgment against us, the creditor could garnish the bank account and take possession of the subscription funds. As such, it is possible that a creditor could attach your subscription funds which could preclude or delay the return of money to you. If that happens, you will lose your investment and your funds will be used to pay creditors. OUR COMMON STOCK IS SUBJECT TO THE “PENNY STOCK” RULES OF THE SEC AND THE TRADING MARKET IN OUR SECURITIES IS LIMITED, WHICH MAKES TRANSACTIONS IN OUR STOCK CUMBERSOME AND MAY REDUCE THE VALUE OF AN INVESTMENT IN OUR STOCK. Under U.S. federal securities legislation, our common stock will constitute “penny stock”. Penny stock is any equity security that has a market price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require that a broker or dealer approve a potential investor’s account for transactions in penny stocks, and the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. In order to approve an investor’s account for transactions in penny stocks, the broker or dealer must obtain financial information and investment experience objectives of the person, and make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the Commission relating to the penny stock market, which, in highlight form sets forth the basis on which the broker or dealer made the suitability determination. Brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock. Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. WE MAY, IN THE FUTURE, ISSUE ADDITIONAL COMMON SHARES, WHICH WOULD REDUCE INVESTORS’ PERCENT OF OWNERSHIP AND MAY DILUTE OUR SHARE VALUE. Our Articles of Incorporation authorize the issuance of 100,000,000 shares of common stock. As ofthe date of this prospectus, the Company had 27,916,440 shares of common stock issued and outstanding. Accordingly, we may issue up to an additional 72,083,560 shares of common stock. The future issuance of common stock may result in substantial dilution in the percentage of our common stock held by our then existing shareholders. We may value any common stock issued in the future on an arbitrary basis. The issuance of common stock for future services or acquisitions or other corporate actions may have the effect of diluting the value of the shares held by our investors, and might have an adverse effect on any trading market for our common stock. - 18 - THERE IS NO CURRENT TRADING MARKET FOR OUR SECURITIES AND IF A TRADING MARKET DOES NOT DEVELOP, PURCHASERS OF OUR SECURITIES MAY HAVE DIFFICULTY SELLING THEIR SHARES. There is currently no established public trading market for our securities and an active trading market in our securities may not develop or, if developed, may not be sustained. We intend to have an application filed for admission to quotation of our securities on the OTC Bulletin Board or other U.S trading exchange after this prospectus is declared effective by the SEC. If for any reason our common stock is not quoted on the OTC Bulletin Board or a public trading market does not otherwise develop, purchasers of the shares may have difficulty selling their common stock should they desire to do so. No market makers have committed to becoming market makers for our common stock and none may do so. STATE SECURITIES LAWS MAY LIMIT SECONDARY TRADING, WHICH MAY RESTRICT THE STATES IN WHICH AND CONDITIONS UNDER WHICH YOU CAN SELL THE SHARES OFFERED BY THIS PROSPECTUS. Secondary trading in common stock sold in this offering will not be possible in any state until the common stock is qualified for sale under the applicable securities laws of the state or there is confirmation that an exemption, such as listing in certain recognized securities manuals, is available for secondary trading in the state. If we fail to register or qualify, or to obtain or verify an exemption for the secondary trading of, the common stock in any particular state, the common stock could not be offered or sold to, or purchased by, a resident of that state. In the event that a significant number of states refuse to permit secondary trading in our common stock, the liquidity for the common stock could be significantly impacted thus causing you to realize a loss on your investment. The Company does not intend to seek registration or qualification of its shares of common stock the subject of this offering in any State or territory of the United States. Aside from a “secondary trading” exemption, other exemptions under state law and the laws of US territories may be available to purchasers of the shares of common stock sold in this offering, ANTI-TAKEOVER EFFECTS OF CERTAIN PROVISIONS OF DELAWARE STATE LAW HINDER A POTENTIAL TAKEOVER OF ORO EAST MINING, INC. We may be subject to Section203 of the DGCL, an anti-takeover statute. In general, Section203 of the DGCL prohibits a publicly held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a period of three years following the time the person became an interested stockholder, unless the business combination or the acquisition of shares that resulted in a stockholder becoming an interested stockholder is approved in a prescribed manner. Generally, a “business combination” includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. Generally, an “interested stockholder” is a person who, together with affiliates and associates, owns (or within three years prior to the determination of interested stockholder status did own) 15% or more of a corporation’s voting stock. The existence of this provision would be expected to have an anti-takeover effect with respect to transactions not approved in advance by our board of directors, including discouraging attempts that might result in a premium over the market price for the shares of common stock held by our stockholders. - 19 - For purposes of Delaware law, an “interested stockholder” is any person who that (i) is the owner of 15% or more of the outstanding voting stock of the corporation, or (ii) is an affiliate or associate of the corporation and was the owner of 15% or more of the outstanding voting stock of the corporation at any time within the 3-year period immediately prior to the date on which it is sought to be determined whether such person is an interested stockholder, and the affiliates and associates of such person; provided, however, that the term "interested stockholder" shall not include (x) any person who (A) owned shares in excess of the 15% limitation set forth herein as of, or acquired such shares pursuant to a tender offer commenced prior to, December 23, 1987, or pursuant to an exchange offer announced prior to the aforesaid date and commenced within 90 days thereafter and either (I) continued to own shares in excess of such 15% limitation or would have but for action by the corporation or (II) is an affiliate or associate of the corporation and so continued (or so would have continued but for action by the corporation) to be the owner of 15% or more of the outstanding voting stock of the corporation at any time within the 3-year period immediately prior to the date on which it is sought to be determined whether such a person is an interested stockholder or (B) acquired said shares from a person described in item (A) of this paragraph by gift, inheritance or in a transaction in which no consideration was exchanged; or (y) any person whose ownership of shares in excess of the 15% limitation set forth herein is the result of action taken solely by the corporation; provided that such person shall be an interested stockholder if thereafter such person acquires additional shares of voting stock of the corporation, except as a result of further corporate action not caused, directly or indirectly, by such person. For the purpose of determining whether a person is an interested stockholder, the voting stock of the corporation deemed to be outstanding shall include stock deemed to be owned by the person through (i) Beneficially owns such stock, directly or indirectly; or (ii) Has (A) the right to acquire such stock (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding, or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise; provided, however, that a person shall not be deemed the owner of stock tendered pursuant to a tender or exchange offer made by such person or any of such person's affiliates or associates until such tendered stock is accepted for purchase or exchange; or (B) the right to vote such stock pursuant to any agreement, arrangement or understanding; provided, however, that a person shall not be deemed the owner of any stock because of such person's right to vote such stock if the agreement, arrangement or understanding to vote such stock arises solely from a revocable proxy or consent given in response to a proxy or consent solicitation made to 10 or more persons; or (iii) Has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting, or disposing of such stock with any other person that beneficially owns, or whose affiliates or associates beneficially own, directly or indirectly, such stock. The definition of the term “business combination” is sufficiently broad to cover virtually any kind of transaction that would allow a potential acquiror to use the corporation’s assets to finance the acquisition or otherwise to benefit its own interests rather than the interests of the corporation and its other stockholders. The effect of Delaware’s business combination law is to potentially discourage parties interested in taking control of Oro East Mining, Inc. from doing so if it cannot obtain the approval of our board of directors. BECAUSE WE DO NOT INTEND TO PAY ANY CASH DIVIDENDS ON OUR COMMON STOCK, OUR STOCKHOLDERS WILL NOT BE ABLE TO RECEIVE A RETURN ON THEIR SHARES UNLESS THEY SELL THEM. We intend to retain any future earnings to finance the development and expansion of our business. We do not anticipate paying any cash dividends on our common stock in the foreseeable future. Unless we pay dividends, our stockholders will not be able to receive a return on their shares unless they sell them. Stockholders may never be able to sell shares when desired.Before you invest in our securities, you should be aware that there are various risks. You should consider carefully these risk factors, together with all of the other information included in this annual report before you decide to purchase our securities. If any of the following risks and uncertainties develop into actual events, our business, financial condition or results of operations could be materially adversely affected. - 20 - USE OF PROCEEDS Our public offering of 5,000,000 is being made on a self-underwritten basis: no minimum number of shares must be sold in order for the offering to proceed. The net proceeds to us from the sale of up to 5,000,000 shares offered at a public offering price of $3.00 per share will vary depending upon the total number of shares sold. Regardless of the number of shares sold, we expect to incur offering expenses estimated at $16,899 for legal, accounting, printing and other costs in connection with this offering (see “Other Expenses of Issuance and Distribution” in Part II). We will not receive any proceeds from the sale of shares by the selling shareholders. We will not maintain an escrow account for the receipt of proceeds from the sale of our shares. We are working under a phased-in work program and a decision will be made at the end of each phase as to whether we will carry on to the work required in the next phase. Therefore, if the initial phase, or any subsequent phase, is unfavorable we may cease further work on the property. It is possible that we could cease further exploration after the expenditure of $2,500,000 with the completion of phase I and unfavorable results. The following table sets forth the uses of proceeds from the primary offering would be used assuming the sale of 25%, 50%, 75% and 100%, respectively, of the securities offered for sale by the Company. There is no assurance that we will raise the full $15,000,000 as anticipated. Percent of total shares offered 25% 50% 75% 100% Shares Sold $ Gross Proceeds from offering Less offering expenses (1) Net offering proceeds Use of Net Proceeds Phase One Exploration Geological Surveys, Grid & related Trenching & related Diamond Drilling Sample Analysis & Assays Geological Report on Phase I Contingencies Sub-total – Phase I Expenses North American geoscientist – review of Phase I work & U.S. conformity Working Capital Regulatory Costs (EDGAR, PRINTING etc.) Legal Accounting Other – Payroll, Office & Miscellaneous Reserve for Phase II Sub-total for Working Capital Unallocated working capita l * 0 0 0 0 Total Use of Proceeds Such $16,899 of offering expenses consisting of an SEC registration fee of $2,389, transfer agent fees of $1,000, legal fees of $10,000, accounting fees of $3,000, printing costs of 100 and miscellaneous costs of $410. - 21 - The above figures represent only estimated costs. All proceeds will be deposited into our corporate bank account. Any funds that we raise from our offering of 5,000,000 shares will be deposited in a Company bank account in the United States immediately available for our use and will not be returned to investors.We do not have any arrangements to place the funds received from our offering of $15,000,000 in an escrow, trust or similar account. Accordingly, if we file for bankruptcy protection or a petition for involuntary bankruptcy is filed by creditors against us, your funds will become part of the bankruptcy estate and administered according to the bankruptcy laws. If a creditor sues us and obtains a judgment against us, the creditor could garnish the bank account and take possession of the subscriptions. As such, it is possible that a creditor could attach your subscription which could preclude or delay the return of money to you. If that happens, you will lose your investment and your funds will be used to pay creditors. The net proceeds from the primary offering may be as much as $15,000,000, assuming all shares are sold, which we can't guarantee, after deducting $10,000 for estimated offering expenses including legal and accounting fees. We will use the proceeds for exploration and working capital. Working capital includes future general non-exploration expenses and costs such as legal, accounting and filing costs associated with keeping the Company in good standing with appropriate regulatory authorities as well as office and related expenses and costs associated with raising additional capital for Phase II, if warranted. We expect to spend between $2,500,000, based on completing only the first phase of a two-phase program, and $12,500,000 to fully complete our two-phase activities depending upon what we encounter in the exploration process and how far we progress on the scheduled exploration program. These sums are based on the technical report and are a reflection of local costs for the specified type of work. If it turns out that we have not raised enough money to complete our exploration program, we will try to raise additional funds from a second public offering, a private placement, loans or other undetermined means. At the present time, we have not made any plans to raise additional money and there is no assurance that we would be able to do such in the future. If we need additional and can't raise it, we will have to suspend or cease operations. Our current plans, predicated on raising $15,000,000 net, accomplished by the sale of the of5,000,000shares of the offering as noted in the preceding table, calls only for the completion of Phase I at a cost of $2,500,000to the Company. If Phase I is not favorable, we may terminate the option and cease operations. If Phase I is favorable we would then proceed to Phase II at an estimated total cost of $12,500,000, which cost is, again, a reflection of local costs for the type of work program planned. We will proceed to Phase II only if we are also successful in being able to secure the capital funding required to complete Phase II. Phase II activities still fall within the pre-production stage of operations, with the budget of $12,500,000 allocated for the following: · Exploration:After the prospecting Phase I, areas of greatest mineral potential warranting exploration will have been identified, and exploration in these areas will commence.Costs for said exploration will be an estimated $1,500,000 and includes both labor, fees to contractors and surveyors, and equipment, post-acquisition exploration and appraisal costs. · Development:To gain access to mineral reserves, we estimate the cost will be $8,500,000 to sinking shafts, permanent excavations, building transport infrastructure and begin initial removal of the overburden, which fall within the company’s stripping costs. Construction:We estimate the cost to establish and commission facilities, machinery and infrastructure to extract and transport minerals will be $2,500,000.There will be various pods of construction costs, each related to a single mineral cost center, which cost is, again, a reflection of local costs for the type of work program planned. The use of the net proceeds table above describes the expenses that will be incurred in association with Phase I of the projected exploration program. Phase II of the exploration program will not be formulated or implemented until the success of Phase I has been evaluated to determine whether further exploration work is warranted. For this reason we will retain as working capital any sums not utilized in Phase I until further financing is obtained for Phase II assuming mining production work is warranted. Our current plans, predicated on raising $15,000,000 net, accomplished by the sale of the of5,000,000shares of the offering as noted in the preceding table, calls only for the completion of Phase I at a cost of $2,500,000to the Company. If Phase I is not favorable, we may terminate the option and cease operations. If Phase I is favorable we would then proceed to Phase II at an estimated total cost of $12,500,000. Phase II activities still fall within the pre-production stage of operations, with the budget of $12,500,000 allocated for the following: Exploration: After the prospecting Phase I, areas of greatest mineral potential warranting exploration will have been identified, and exploration in these areas will commence.Costs for said exploration include both labor, fees to contractors and surveyors, and equipment, post-acquisition exploration and appraisal costs.Development: To gain access to mineral reserves, we will allocate a significant portion of the $12,500,000 to sinking shafts, permanent excavations, building transport infrastructure and begin initial removal of the overburden, which fall within the company’s stripping costs.Construction: Oro East will also need to establish and commission facilities, machinery and infrastructure to extract and transport minerals. There will be various pods of construction costs, each related to a single mineral cost center. which cost is, again, a reflection of local costs for the type of work program planned.We will proceed to Phase II only if we are also successful in being able to secure the capital funding required to complete Phase II. It is possible that no proceeds may be raised from the primary offering. If no shares are sold we will have to delay or modify our plan. There can be no assurance that any delay or modification will not adversely affect our progress. If we require additional funds, as noted above, in order to develop our plan, such funds may not be available on terms acceptable to us. Any funds not used for the purposes indicated will be used for general working capital. If less than the entire offering is completed, funds will be applied according to the priorities outlined above. For example, if only $500,000, net, is received, the entire amount will be applied toward the exploration program and costs of the primary offering and quarterly and annual reports required under the Exchange Act. In addition, most of our existing working capital will be utilized. In the event that we raise funds greater than the amount required to fund the first phase of exploration, any such additional funds not used will be used for general working capital. In the event that the first phase work is not favorable we will evaluate all the options. In that not favorable event any excess working capital will be used to maintain our standing with the various regulatory authorities until such time as we are able to restructure our operations and locate a new project. We will not maintain an escrow account for the receipt of proceeds from the sale of our shares. - 22 - Our offering expenses are comprised of SEC and EDGAR filing fees, legal and accounting expenses, printing and transfer agent fees and any necessary state registration fees. Our selling director will not receive any compensation for their effort in selling our shares. We intend to use the proceeds of the primary offering in the manner set forth above. No material amount of the proceeds are to be used to acquire assets or finance the acquisition of other businesses. At present, no material changes are contemplated. Should there be any material changes in the projected use of proceeds in connection with this offering, we will issue an amended prospectus reflecting the same. Tian Qing Chen, our President and Chairman, is familiar and experienced with the daily operations of the tenement lands in the Republic of Philippines, prepared the cost estimates in this Use of Proceeds section, with the administrative aid of his hired associates and interns. The hired associates and interns worked directly under Mr. Chen’s supervision. In drafting the cost estimates, Mr. Chen relied substantially on the following documents: - The Mabalante Main Area Copper-Gold Project Valuation Report, prepared by Skynix Holdings (2008) - Memorandum, prepared by Nick Pastoriza, on the Results of the Analyses of Samples Submitted December 26, 2007 (January 11, 2008) - Oro East Massive Sulfide Resistivity Report (2007) - Oro East Project Pre-Launch Abstract, prepared by Jose Raymundo (June 2008) - Mineral Product Sharing Agreement (February 10, 2010) - Geophysics Survey Plan Memorandum and Proposal, prepared by Crispin S. Remollo, jr. to Nick Pastroiza (November 9, 2007) - Financial Report, prepared by Pascual, Pascual & Co., CPA (December 31, 2008) - Legal Opinion Letter, prepared by Clarence Guerrero, Esq. of Guerrero & Partners (October 19, 2009) In making the cost estimates, Mr. Chen relied substantially on the exploration and productions recommendations that came from the Assignors Semi-detailed Geological Mapping Report of Oro East Mining Claim MPSA320-2010-XI PARCEL II, conducted by Agetro Commoditiesin September of 2008. Agetro Commodities is a Philippine company located in Davao City that specializes in geological reports, topographic assay studies, and general geology consulting. Paul S. Ortega is the lead Consulting Geologist & Contractor who works closely with the Company. Francisco C. Rebillon and Noel Z. Franco are Consulting Geologists who, from time to time assist Mr. Ortega. Mr. Ortega formally served as the Senior Geologist at Apex Mining Corp., a public company in the Philippines. He is geologist licensed by the Philippine Board of Examination of the Professional Regulation Commission. He has over 30 years of experience in the mining industry. The cost estimates are based on the following observations and recommendations; 1. Initial exposure at the main Mabalante copper-gold complex: The potential of the prospect can possibly be for commercial operations. The geological investigation which includes semi-detailed geological mapping is aimed at actually proving its copper gold potentiality and accomplishing the same by undertaking the following: 1(a) Further prospecting at the general area of potential mineralized zone; 1(b) Fast track implementation of trench dozing at the proposed trenches to prove persistence of the lateral extent of the vein/structure; Prioritize excavation of trenches programmed at the southwestern part of the mining claims. Initially three (3) trenches were programmed at the southwestern part at 50 meter interval. Three (3) more trenches were also programmed and marked on the ground at the northeastern part of the vein/structure, also at 50- meter intervals. The results and exposure at the trenches will be the basis in the exploration, development and diamond drilling programs to come up with positive ore reserve which will then be the basis of the mining program. The same program should be facilitated at the Mabalante south vein complex and Mabalante east vein complex, respectively. 1(c) Knowing the details of the ore which is very important. This is actually advance information not only for the Geologists but for the mining and metallurgical technical staff who will be conducting studies in the near future. In view: a. Collect vein samples and submit to the Mines & Geo-sciences Bureau for polish sectioning and mineralogical analysis; b. A 50-kilo bag ore should also be collected and submitted to any reliable laboratory for metallurgical testing, subject to the approval of the metallurgical engineers. 2. New portal is hereby recommended to be installed or put up at lower elevation. For safety reasons, portal should be located at stable ground; off vein and aimed to intercept the main structure after a 5-10 meters advance, then facilitate drifting south at Mabalante main vein. 3. With the plan to resume tunneling/drifting, grade control and mine geology team should be organized to regularly monitor daily advance of the underground working(s) and at the same time implement effective grade control procedures. 4. Access road to be used, repaired and constructed should be considered. The Cangusan-Bongco road is one good shorter route to the mine site. 5. As observed, the impressive copper ore bodies and ore veins are located at the northern part of the claim particularly at Mabalante and its proximity. High sulphidation copper and gold ore system is very common in Mabalante. The Ore system shows permeability control governed by lithology, structure, changes in wall rock alteration and ore mineralogy. Based on studies, this system has been developed from the reaction with host rock or hot acidic magmatic fluids to produce alteration and later sulphide, gold, copper and silver deposition. On the other hand, veins delineated at the southern part of the claim can be generally classified as clean ore. Low sulphidation within these areas are well pronounced as exhibited by the veins located thereat. These type of deposits based on studies have been developed from dilute near neutral ph fluids and display mineralogies derived dominantly from magmatic source rocks and others with mineralogies dominated from circulating geothermal fluid sources. 6. Several quartz vein systems were delineated within Manlandog, Karamatyan, Pamatian and the Onlo-Botog areas, respectively. Majority of these veins delineated during the mapping are clean ore material which is very ideal when fed to carbon-in-pulp (CIP) carbon-in-leach (CIL) milling process. The material is composed of quartz calcite with lesser sulphides and other poly metallic materials. To prove persistence of the aforesaid veins, the following are hereby recommended: 6a) Prioritize trench dozing at the abovementioned areas. The location of the proposed trenches are already marked at the ground. The results of the trench dozing will also be the basis in the preparation of diamond drilling program to prove persistence of the vein at depth. 6b) Conduct extensive prospecting particularly within the proximity of the quartz vein outcrops. Lithological surface cappings like the limestone have extensively blanketed the areas where the lateral extension of the veins are supposed to have been found. 7. Several factors have to be considered, should viable, mineable deposit will be blocked at the southern part of the claims. 7a) The access to the main highway is much more accessible. 7b) Three (3) phase source of electricity which is very vital when constructing and operating a mill plant is available at and near Barangay Limot, a few kilometers from the ore source. 7c) Several areas at the Sitio Botog-Nasa are ideal for mine, mill and other mining facilities. Several areas are also ideal for building a tailings dam. There is abundant source of potable and industrial water which can be tapped. 8. Lastly, the Oro East Parcel II claim is within the southern portion of the southern cordillera ranges. This mountain range which appears to be the backbone of the Southeastern Mindanao area is known to have hosted multiple impressive mineable deposits. Some of these deposits are already being exploited both by big scale and small scale mining method. During the course of the semi-detailed geological mapping conducted by the Agetro Davao Team, not only that the team was able to locate the now famous Mabalante copper-gold-molybdenum complex but also found several traces of multiple vein systems along and within the other part of the claims particularly towards south. The possibility of finding and proving other impressive, commercial and mineable vein systems is not remote. TianQ. Chen has visits the Company’s regularly, not less thantwice per year, with the last visit taking place from August to November 2011. DETERMINATION OF THE OFFERING PRICE The offering price of the 5,000,000 shares being offered has been determined arbitrarily by us.The price does not bear any relationship to our assets, book value, earnings, or other established criteria for valuing a privately held company.In determining the number of shares to be offered and the offering price, we took into consideration our cash on hand and the amount of money we would need to implement our business plan.Accordingly, the offering price should not be considered an indication of the actual value of the securities. We will not receive any of the proceeds from the sale of the 1,866,440 common shares being offered for sale by the selling stockholders, which 1,866,440 shares of our common stock may be offered and sold from time to time by the selling stockholders. The selling shareholders will sell our shares at $3.00 per share until our shares are quoted on the OTCBB or other U.S. trading exchange , and thereafter at prevailing market prices or privately negotiated prices. This price was arbitrarily determined by us. SELLING STOCKHOLDERS The common shares being offered for resale by the 67 selling stockholders consist 27,916,440 of our common stock, $0.0001 par value. The following table sets forth the shares beneficially owned, as of the date of this prospectus, by the selling stockholders prior to the offering by existing stockholders contemplated by this prospectus, the number of shares each selling stockholder is offering by this prospectus and the number of shares which each would own beneficially if all such offered shares are sold. Beneficial ownership is determined in accordance with Securities and Exchange Commission rules. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to vote or direct the voting of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under the Securities and Exchange Commission rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary beneficial interest. Except as noted below, each person has sole voting and investment power. The percentages below are calculated based on 27,916,440 shares of our common stock issued and outstanding as of the date of this prospectus. We do not have any outstanding options, warrants or other securities exercisable for or convertible into shares of our common stock. - 23 - Nameof SellingShareholder Shares Owned Before theOffering Total Numberof Sharestobe Offeredfor the Security Holder’s Account TotalShares OwnedAfter the Offeringis Complete Percentageof Sharesowned After theOfferingis Complete Mutual Gain Hong Kong Group Limited (1) 84.00% Accelerated Venture Partners LLC (2) 9.31% Torin Yao 0 0 Yi Lun Yao 0 0 Jie Zhen Lu 0 0 Jia Wei Yao 0 0 Henry Zhao 0 0 Lily Kwan 0 0 Cindy Ka Hei Lai 0 0 Wen Liu 0 0 Kruz Investments.LLC (3) 0 0 Fei L Tsai 0 0 Chi Kit Chung 0 0 Sammy Ming Pui Chung 0 0 Reagan Yu-Hin Chung 0 0 Leonne Yu-Ton Chung 0 0 Melissa Wai Chow 0 0 Solar Infiniti Corporation (4) 0 0 Ching Yuen Chung 0 0 Anzhong Chen 0 0 Ricardo C Soltero 0 0 Jeffrey J. Hayden 0 0 Yiming Zhong 0 0 Linda P Chen 0 0 Edward Luo 0 0 Gene Luo 0 0 Ayana Chen 0 0 Ranolfo S. Yulo 0 0 Patty M Chu36-10634 0 0 Adrea Chu 0 0 Samuel Wong 0 0 Sher Jeong Wong 0 0 Mui Ling Wong 0 0 J. Cooper Tsai 0 0 Entrust Administration, Inc. FBO:IRA# 30602 Timothy Chen Benficiary for Wanda Wai Yee Lew (Deceased) 0 0 - 24 - Nameof SellingShareholder Shares Owned Before theOffering Total Numberof Sharestobe Offeredfor the Security Holder’s Account TotalShares OwnedAfter the Offeringis Complete Percentageof Sharesowned After theOfferingis Complete Entrust Administration, Inc. FBO: Roth IRA #30625Dennies Tan Ni Chung Beneficiary Wanda Wai Yee Lew (Deceased) 0 0 Entrust Administration, Inc. FBO:Coverdell IRA # 33993Ayana X. Y. Chen 0 0 Link Harvest Green Resources Limited (5) 0 0 Global Burner Limited (6) 0 0 PL China Limited (7) 0 0 Bugsy Limited (8) 0 0 Ted T Lee 0 0 Jung - Cheun Lien 0 0 Romain C. Bacou 0 0 Jiangyan Yi 0 0 IRA Service Trust Company, FBO: Roth IRA #230844Emily Chen 0 0 IRA Service Trust Company, FBO: Roth IRA #230856Neil Stuverude 0 0 IRA Service Trust Company, FBO: Roth IRA #234205Gene Shin 0 0 Szu Y Cheng 0 0 IRA Service Trust Company, FBO: Roth IRA #235908Jing Hua Ma 0 0 Xiangtian Li 0 0 Fei Liang 0 0 Shuyue Luan 0 0 Luiwei Xie 0 0 Jaton Corporation (9) 0 0 Yee Shin Chin 0 0 Ching Ying Chen 0 0 Ma International (10) 0 0 Hobson Consultant Limited (11) 0 0 David Patrick Gamba 0 0 Chia Wei Wang 0 0 Jun Xi Cao 0 0 Bret Sherrell 0 0 Xiaolin Huang and Yang Zhao 0 0 Shuling Luo 0 0 Wendy Yen-Wen Chang 0 0 IRA Service Trust Company, FBO: Roth IRA #247844 0 0 Total 93.33% - 25 - Voting or investment power for Mutual Gain Hong Kong Group Limited. is held by Tian Qing Chen, CEO of the Company.Mr. Chen is also the COO of Mutual Gain Hong Kong Group Limited, who acquired its controlling interest in the Company on June 23, 2010.Mr. Chen also became CEO and a director of the Company on June 23, 2010. Voting or investment power for Accelerated Venture Partners, LLC. is held by Timothy J. Neher.Mr. Neher is the former sole office and director of the Company, having resigned as sole officer and director on June 23, 2010.Mr. Neher is also the sole manager of Accelerated Venture Partners, LLC. Voting or investment power for Kruz Investments, LLC. is held by Fei Tsai. Voting or investment power for Solar Infinit Corporation is held by Yiming Zhong. Voting or investment power for Link Harvest Green Resources Limited is held by Fang Yin. Voting or investment power for Global Burner Limited is held by Chiu Yuk Sun. Voting or investment power for PL China Limited is held by Chu Wai Ha. Voting or investment power for Bugsy Limied is held by Tung Lap Wah Jeanphilip. Voting or investment power for Jaton Corporation is held by Vicky Hong. Voting or investment power for Ma International is held by Bi Yun Ma. Voting or investment power for Hobson Consultant Limited is held by Chan Tai Kwong. None of the selling stockholders is a broker-dealer or an affiliate of a broker-dealer. - 26 - DILUTION The price of our offering our offering of 5,000,000 shares is fixed at $3.00 per share. This price is significantly higher than the average approximately $0.05 price per share paid by the selling stockholders for the 1,866,440 shares of common stock they are reselling. Dilution represents the difference between the offering price and the net tangible book value per share immediately after completion of this offering.Net tangible book value is the amount that results from subtracting total liabilities and intangible assets from total assets.Dilution arises mainly as a result of our arbitrary determination of the offering price of the shares being offered.Dilution of the value of the shares you purchase is also a result of the lower book value of the shares held by our existing stockholders.The following tables compare the differences of your investment in our shares with the investment of our existing stockholders. As of September 30, 2011, the net tangible book value of our shares of common stock was $431,372 or $.015 per share based upon 27,916,440 shares outstanding. Existing Stockholders if all of the Shares are Sold Price per share $ Net tangible book value per share before offering $ Potential gain to existing shareholders $ Net tangible book value per share after offering $ Increase to present stockholders in net tangible book value per share after offering $ Capital contributions $ Number of shares outstanding before the offering Number of shares after offering held by existing stockholders Percentage of ownership after offering % Purchasers of Shares in this Offering if all Shares Sold Price per share $ Dilution per share $ Capital contributions $ Percentage of capital contributions 91 % Number of shares after offering held by public investors Percentage of ownership after offering % Purchasers of Shares in this Offering if 75% of Shares Sold Price per share $ Dilution per share $ Capital contributions $ Percentage of capital contributions % Number of shares after offering held by public investors Percentage of ownership after offering % Purchasers of Shares in this Offering if 50% of Shares Sold Price per share $ Dilution per share $ Capital contributions $ Percentage of capital contributions % Number of shares after offering held by public investors Percentage of ownership after offering % Purchasers of Shares in this Offering if 25% of Shares Sold Price per share $ Dilution per share $ Capital contributions $ Percentage of capital contributions % Number of shares after offering held by public investors Percentage of ownership after offering % - 27 - PLAN OF DISTRIBUTION Plan of Distribution for the Company’s Initial Public Offering of 5,000,000 Oro East Mining, Inc. has 27,916,440 common shares of common stock issued and outstanding as of the date of this prospectus.The Company is registering an additional 5,000,000 shares of its common stock for sale at the price of $3.00 per share. There is no arrangement to address the possible effect of the offering on the price of the stock. In connection with the Company’s selling efforts in the offering, Tian Q. Chen and Danni Zhong will not register as a broker-dealer pursuant to Section 15 of the Exchange Act, but rather will rely upon the “safe harbor” provisions of SEC Rule 3a4-1, promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Generally speaking, Rule 3a4-1 provides an exemption from the broker-dealer registration requirements of the Exchange Act for persons associated with an issuer that participate in an offering of the issuer’s securities. Mr. Chen and Ms. Zhong are not subject to any statutory disqualification, as that term is defined in Section 3(a)(39) of the Exchange Act. Mr. Chen and Ms. Zhong will not be compensated in connection with their participation in the offering by the payment of commissions or other remuneration based either directly or indirectly on transactions in our securities. Mr. Chen and Ms. Zhong are not, nor have they been within the past 12 months, a broker or dealer, and they are not, nor have they been within the past 12 months, an associated person of a broker or dealer. At the end of the offering, Mr. Chen and Ms. Zhong will continue to primarily perform substantial duties for the Company or on its behalf otherwise than in connection with transactions in securities. Mr. Chen and Ms. Zhong will not participate in selling an offering of securities for any issuer more than once every 12 months other than in reliance on Exchange Act Rule 3a4-1(a)(4)(i) or (iii). Oro East Mining, Inc. will receive all proceeds from the sale of the 5,000,000 shares being offered. The price per share is fixed at $3.00 for the duration of this offering. Although our common stock is not listed on a public exchange or quoted over-the-counter, we intend to seek to have our shares of common stock quoted on the OTC Bulletin Board or other U,S, trading exchange . In order to be quoted on the OTC Bulletin Board or other U.S. trading exchange, a market maker must file an application on our behalf in order to make a market for our common stock. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, nor can there be any assurance that such an application for quotation will be approved. The Company’s shares may be sold to purchasers from time to time directly by and subject to the discretion of the Company. Further, the Company will not offer its shares for sale through underwriters, dealers, agents or anyone who may receive compensation in the form of underwriting discounts, concessions or commissions from the Company and/or the purchasers of the shares for whom they may act as agents. The shares of common stock sold by the Company may be occasionally sold in one or more transactions; all shares sold under this prospectus will be sold at a fixed price of $3.00 per share. In order to comply with the applicable securities laws of certain states, the securities will be offered or sold in those only if they have been registered or qualified for sale; an exemption from such registration or if qualification requirement is available and with which Oro East Mining, Inc. has complied. In addition and without limiting the foregoing, the Company will be subject to applicable provisions, rules and regulations under the Exchange Act with regard to security transactions during the period of time when this Registration Statement is effective. Oro East Mining, Inc. will pay all expenses incidental to the registration of the shares (including registration pursuant to the securities laws of certain states). The Company expects to pay compensation of approximately $250,000 to each of Mr. Chen and Ms. Zhong at such time as the Company sells at least 25% of the shares of its offering. - 28 - Plan of Distribution for the Offering of 1,866,440 Shares by the Selling Stockholders As of the date of this prospectus, there is no market for our securities. After the date of this prospectus, we expect to have an application filed with the Financial Industry Regulatory Authority for our common stock to be eligible for trading on the OTC Bulletin Board or other U.S. trading exchange. Until our common stock becomes eligible for trading on the OTC Bulletin Board or other U.S trading exchange, the selling stockholders will be offering our shares of common stock at a fixed price of $3.00 per common share. After our common stock becomes eligible for trading on the OTC Bulletin Board or other US trading exchange, the selling stockholders may, from time to time, sell all or a portion of the shares of common stock on OTC Bulletin Board or other U.S. trading exchange, in privately negotiated transactions or otherwise. After our common stock becomes eligible for trading on the OTC Bulletin Board or other US trading exchange, such sales may be at fixed prices prevailing at the time of sale, at prices related to the market prices or at negotiated prices. After our common stock becomes eligible for trading on the OTC Bulletin Board or other US trading exchange, the shares of common stock being offered for resale by this prospectus may be sold by the selling stockholders by one or more of the following methods, without limitation: · ordinary brokerage transactions and transactions in which the broker solicits purchasers; · privately negotiated transactions; · market sales (both long and short to the extent permitted under the federal securities laws); · at the market to or through market makers or into an existing market for the shares; · through transactions in options, swaps or other derivatives (whether exchange listed or otherwise); and · a combination of any of the aforementioned methods of sale. In the event of the transfer by any of the selling stockholders of its shares of common stock to any pledgee, donee or other transferee, we will amend this prospectus and the registration statement of which this prospectus forms a part by the filing of a post-effective amendment in order to have the pledgee, donee or other transferee in place of the selling stockholder who has transferred his, her or its shares. In effecting sales, brokers and dealers engaged by the selling stockholders may arrange for other brokers or dealers to participate. Brokers or dealers may receive commissions or discounts from a selling stockholder or, if any of the broker-dealers act as an agent for the purchaser of such shares, from a purchaser in amounts to be negotiated which are not expected to exceed those customary in the types of transactions involved. Before our common stock becomes eligible for trading on the OTC Bulletin Board or other US trading exchange, broker-dealers may agree with a selling stockholder to sell a specified number of the shares of common stock at a price per share of $3.00 After our common stock becomes eligible for trading on the OTC Bulletin Board or other US trading exchange, broker-dealers may agree with a selling stockholder to sell a specified number of the shares of common stock at a stipulated price per share. Such an agreement may also require the broker-dealer to purchase as principal any unsold shares of common stock at the price required to fulfill the broker-dealer commitment to the selling stockholder if such broker-dealer is unable to sell the shares on behalf of the selling stockholder. Broker-dealers who acquire shares of common stock as principal may thereafter resell the shares of common stock from time to time in transactions which may involve block transactions and sales to and through other broker-dealers, including transactions of the nature described above. After our common stock becomes eligible for trading on the OTC Bulletin Board or other US trading exchange, such sales by a broker-dealer could be at prices and on terms then prevailing at the time of sale, at prices related to the then-current market price or in negotiated transactions. In connection with such re-sales, the broker-dealer may pay to or receive from the purchasers of the shares commissions as described above. The selling stockholders and any broker-dealers or agents that participate with the selling stockholders in the sale of the shares of common stock may be deemed to be “underwriters” within the meaning of the Securities Act in connection with these sales. In that event, any commissions received by the broker-dealers or agents and any profit on the resale of the shares of common stock purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. - 29 - From time to time, any of the selling stockholders may pledge shares of common stock pursuant to the margin provisions of customer agreements with brokers. Upon a default by a selling stockholder, their broker may offer and sell the pledged shares of common stock from time to time. After our common stock becomes eligible for trading on the OTC Bulletin Board or other US trading exchange, upon a sale of the shares of common stock, the selling stockholders intend to comply with the prospectus delivery requirements under the Securities Act by delivering a prospectus to each purchaser in the transaction. We intend to file any amendments or other necessary documents in compliance with the Securities Act that may be required in the event any of the selling stockholders defaults under any customer agreement with brokers. To the extent required under the Securities Act, a post effective amendment to this registration statement will be filed disclosing the name of any broker-dealers, the number of shares of common stock involved, the price at which the shares of common stock is to be sold, the commissions paid or discounts or concessions allowed to such broker-dealers, where applicable, that such broker-dealers did not conduct any investigation to verify the information set out or incorporated by reference in this prospectus and other facts material to the transaction. We and the selling stockholders will be subject to applicable provisions of the Exchange Act and the rules and regulations under it, including, without limitation, Rule 10b-5 and, insofar as a selling stockholder is a distribution participant and we, under certain circumstances, may be a distribution participant, under Regulation M. All of the foregoing may affect the marketability of the shares of common stock. All expenses of the registration statement including, but not limited to, legal, accounting, printing and mailing fees are and will be borne by us. Any commissions, discounts or other fees payable to brokers or dealers in connection with any sale of the shares of common stock will be borne by the selling stockholders, the purchasers participating in such transaction, or both. Any shares of common stock covered by this prospectus which qualify for sale pursuant to Rule 144 under the Securities Act, as amended, may be sold under Rule 144 rather than pursuant to this prospectus. Penny Stock Rules The Securities Exchange Commission has also adopted rules that regulate broker-dealer practices in connection with transactions in “penny stocks” as such term is defined by Rule 15g-9. 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). The shares offered by this prospectus constitute penny stock under the Securities and Exchange Act. The shares will remain penny stock 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 or her investment. Any broker-dealer engaged by the purchaser for the purpose of selling his or her shares in our company will be subject to the penny stock rules. - 30 - The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, deliver a standardized risk disclosure document prepared by the Commission, which: (i)contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; (ii)contains a description of the broker’s or dealer’s duties to the customer and of the rights and remedies available to the customer with respect to a violation to such duties or other requirements of Securities’ laws; (iii)contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and significance of the spread between the bid and ask price; (iv)contains a toll-free telephone number for inquiries on disciplinary actions; (v)defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and (vi)contains such other information and is in such form as the Commission shall require by rule or regulation. The broker-dealer also must provide to the customer, prior to effecting any transaction in a penny stock, (i)bid and offer quotations for the penny stock; (ii)the compensation of the broker-dealer and its salesperson in the transaction; (iii)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; and (iv)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 acknowledgment 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 those securities. REGULATION M During such time as we may be engaged in a distribution of any of the shares we are registering by this registration statement, we are required to comply with Regulation M. In general, Regulation M precludes any selling security holder, any affiliated purchasers and any broker-dealer or other person who participates in a distribution from bidding for or purchasing, or attempting to induce any person to bid for or purchase, any security which is the subject of the distribution until the entire distribution is complete. Regulation M defines a “distribution” as an offering of securities that is distinguished from ordinary trading activities by the magnitude of the offering and the presence of special selling efforts and selling methods. Regulation M also defines a “distribution participant” as an underwriter, prospective underwriter, broker, dealer, or other person who has agreed to participate or who is participating in a distribution. Regulation M under the Exchange Act prohibits, with certain exceptions, participants in a distribution from bidding for or purchasing, for an account in which the participant has a beneficial interest, any of the securities that are the subject of the distribution. Regulation M also governs bids and purchases made in order to stabilize the price of a security in connection with a distribution of the security. We have informed the selling shareholders that the anti-manipulation provisions of Regulation M may apply to the sales of their shares offered by this prospectus, and we have also advised the selling shareholders of the requirements for delivery of this prospectus in connection with any sales of the common stock offered by this prospectus. - 31 - Pursuant to the our Articles of Incorporation, as amended, our authorized capital stock consists of (i) 100,000,000 shares of common stock, no par value per share, of which 27,916,440 shares are issued and outstanding as of the date of hereof, and (ii) 10,000,000 shares of “blank check” preferred stock, no par value per share, of which no shares are issued or outstanding as of the date hereof. Common Stock On the date hereof, there were 27,916,440 shares of common stock issued and outstanding. Each share of common stock entitles the holder to one(1) vote on each matter submitted to a vote of our shareholders, including the election of Directors. There is no cumulative voting. Subject to preferences that may be applicable to any outstanding preferred stock, our Shareholders are entitled to receive ratably such dividends, if any, as may be declared from time to time by the Board of Directors. Shareholders have no preemptive, conversion or other subscription rights. There are no redemption or sinking fund provisions related to the common stock. In the event of liquidation, dissolution or winding up of the Company, our Shareholders are entitled to share ratably in all assets remaining after payment of liabilities, subject to prior distribution rights of preferred stock, if any, then outstanding. Preferred Stock We are authorized to issue up to 10,000,000 shares of our preferred stock.As of the date hereof, the Company had no shares of its preferred stock issued or outstanding.Preferred Stock may be issued from time to time in one or more series as determined by the Board of Directors in its sole discretion. Our Board of Directors is authorized to determine or alter any or all of the rights, preferences, privileges and restrictions granted to or imposed upon any wholly unissued series of preferred stock and, within the limitations or restrictions stated in any resolution or resolutions of the Board of Directors originally fixing the number of shares constituting any series, to increase or decrease (but not below the number of shares of any such series then outstanding) the number of shares comprising any such series subsequent to the issue of shares of that series, to set the designation of any series, and to provide for rights and terms of redemption, conversion, dividends, voting rights, and liquidation preferences of the shares of any such series. Options We have no options to purchase shares of our common stock or any other of our securities outstanding as of the date of this prospectus. Warrants We have no warrants to purchase shares of our common stock or any other of our securities outstanding as of the date of this Prospectus. Registration Rights Agreements We have not entered into any registration rights agreements. Transfer Agent and Registrar We have not retained a transfer agent to serve as transfer agent for shares of our common stock. Until we engage such a transfer agent, we will be responsible for all record-keeping and administrative functions in connection with the shares of our common stock. Indemnification and Limited Liability Provisions We have authority under the General Corporation Law of the State of Delaware to indemnify our directors and officers to the extent provided in that statute. Our Articles of Incorporation and our Bylaws require the company to indemnify each of our directors and officers against liabilities imposed upon them (including reasonable amounts paid in settlement) and expenses incurred by them in connection with any claim made against them or any action, suit or proceeding to which they may be a party by reason of their being or having been a director or officer of the company. We intend to enter into indemnification agreements with each of our officers and directors containing provisions that may require us, among other things, to indemnify our officers and directors against certain liabilities that may arise by reason of their status or service as officers or directors (other than liabilities arising from willful misconduct of a culpable nature) and to advance their expenses incurred as a result of any proceeding against them as to which they could be indemnified. Management believes that such indemnification provisions and agreements are necessary to attract and retain qualified persons as directors and executive officers. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions or otherwise, we have been advised that in the opinion or the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. - 32 - DESCRIPTION OF BUSINESS OUR BUSINESS ORGANIZATION WITHIN THE LAST FIVE YEARS From inception (February 15, 2008), Oro East Mining, Inc. was organized as a vehicle to investigate and, if such investigation warrants, acquire a target company or business seeking the perceived advantages of being a publicly held corporation. Our principal business objectives were to achieve long-term growth potential through a combination with a business rather than immediate, short-term earnings. The Company has since indentified mining properties in the Republic of the Philippines, obtained exploration and production rights and is now a minerals exploration company.We are no longer a blank check company. Our current stockholders invested in us by way of our directors and officers making private offerings of securities to their business affiliates and venture capitalists who had previously invested in or worked with Oro East Mining Company LTD., a Philippines corporation and previous owner of the mining claims and rights under which we now operate our business. On February 15, 2008, the Company sold 5,000,000 shares of Common Stock to Accelerated Venture Partners, LLC for an aggregate investment of $8,000.00. On June 23, 2010, Mutual Gain Hong Kong Group Limited (“Purchaser”) agreed to acquire 23,850,000 shares of the Company’s common stock par value $0.0001 (the “Shares”) for a price of $0.0001 per share. At the same time, Accelerated Venture Partners, LLC agreed to tender 3,500,000 of its 5,000,000 shares of the Company’s common stock par value $0.0001 for cancellation. Following these transactions, Mutual Gain Hong Kong, Limited owned 94.1% of the Company’s 25,350,000, issued and outstanding shares of common stock par value $0.0001 and the interest of Accelerated Venture Partners, LLC was reduced to approximately 5.9% of the total issued and outstanding shares. Simultaneously with the share purchase, Timothy Neher resigned from the Company’s Board of Directors effective immediately and Tian Qing Chen was simultaneously appointed to the Company’s Board of Directors. Such action represented a change of control of the Company. The Purchaser used its working capital to acquire the Shares. The Purchaser did not borrow any funds to acquire the Shares. Prior to the purchase of the Shares, the Purchaser was not affiliated with the Company. However, the Purchaser is now deemed an affiliate of the Company as a result of its stock ownership interest in the Company. The purchase of the shares by the Purchaser was completed pursuant to a written Subscription Agreement with the Company. The purchase was not subject to any other terms and conditions other than the sale of the Shares in exchange for the cash payment. On June 24, 2010, the Company entered into a Consulting Services Agreement with Accelerated Venture Partners LLC (“AVP”), a company controlled by Timothy J. Neher. The agreement requires AVP to provide theCompanywith certain advisory services that includereviewing the Company’s business plan, identifying and introducing prospective financial and business partners, and providing general business advice regarding the Company’s operations and business strategy in consideration of (a) an option granted by the Company to AVP to purchase 1,500,000 shares of the Company’s common stock at a price of $0.0001 per share (the “AVP Option”) (which was immediately exercised by the holder) subject to a repurchase option granted to the Company to repurchase the shares at a price of $0.0001 per sharein the event the Company fails to complete funding as detailed in the agreement subject to the following milestones: - 33 - .● Milestone 1 The right of repurchase will lapse with respect to 70% of the Shares upon a successful reverse merger with a publicly listed SEC reporting entity or Company’s securing at least $5 million in available cash, ● Milestone2 Company’s right of repurchase will lapse with respect to 20% of the Shares upon securing $10 million in available cash (inclusive of any amounts attributable to Milestone 1); ● Milestone3 Company’s right of repurchase will lapse with resilestone 2); and (b) cash compensation at a rate of $133,333 per month. The payment of such compensation is subject to Company’s achievement of certain designated milestones, specifically, cash compensation of $400,000 is due consultant upon the achievement of Milestone 1, $400,000 upon the achievement of Milestone 2 and $800,000 upon the achievement of Milestone 3. Upon achieving each Milestone, the cash compensation is to be paid to consultant in the amount then due at the rate of $133,333 per month. The total cash compensation to be received by the consultant is not to exceed $1,600,000 unless the Company receives an amount of funding in excess of the amount specified in Milestone 3. If the Company receives equity or debt financing that is an amount less than Milestone 1, in between any of the above Milestones or greater than the above Milestones, the cash compensation earned by the Consultant under this Agreement will be prorated according to the above Milestones. The Company also has the option to make a lump sum payment to AVP in lieu of all amounts payable thereunder. The Company obtain rights to its principal mining claim, MPSA 320-2010-XI, by way of entering into an Assignment of Rights Agreement (“Rights Agreement”), dated July 2, 2010,with Oro-East Mining Company LTD, a Philippines corporation indirectly controlled by Tian Qing Chen, our Chief Executive Officer.Pursuant to the terms of the Rights Agreement, Assignor assigned to the Company certain rights and obligations with respect to permitted mining claims of approximately $1.6 billion. Pursuant to the Rights Agreement, The Company assumed the rights and obligations of Assignor to explore, extract, refine and produce precious metals and other industrial deposits on the claims and earn fees with respect to such services. By entering into the Rights Agreement, the Company commenced business as an exploration, mining, refinery and production company.Assignor assigned to the Company two (2) mineral claims with the Mines and Geosciences Bureau for the Republic of the Philippines: MPSA 184-XI and APSA 167-XI “Portfolio of Mineral Claims”, and assigned all mineral rights related to Assignor’s claims to the Company.After the execution of the Rights Agreement, the numbering of claim“MPSA 184-XI” changed to MPSA 320-2010-XI.The assignment includes control of the surface, the subsurface and the air above any and all real property or claims owned by Assignor. The Company may freely sell, lease, gift or bequest these rights individually or entirely to others, within the scope and terms of the Rights Agreement and applicable laws of the Republic of Philippines. The Rights Agreement also grants to the Company all rights to production, which shall include but not be limited to right to mineral extraction on all mineral claims and tenements owned or controlled by Assignor, the right to control production in all aspects, right to enter the property and remove the minerals or resources at its election.The Company intends to focus on extracting gold, silver, copper, iron ore and other industrial minerals. Under the Mineral Rights Agreement the rep[ublic of the Philippines has granted the Company the rights to the exploration, development and commercialization of gold, copper, silver, zinc and “other associated mineral deposits”for a 25-year term, expiring February 10, 2035.Company must to commence exploration activities no later than three months after the effective date of the agreement, which the Company has already done, and continue such exploration activities for a term of not longer than six years for nonmetallic metals and eight years for metallic metals.In the first year, the Company must spend not less than 8,242,000 PhP (approximately $193,000) on its exploration work program.In the second year, the Company must spend not less than 4,420,000 PhP (approximately $103,500) on its exploration work program.The Company must complete the development of the mine, including the construction of production facilities, within 36 months from the submission and approval of its Declaration of Mining Project Feasibility under the agreement. If the Company fails to become a publicly listed company with the United States Securities Exchange Commission (“SEC”) and the Company’s common shares fail to commence trading by January 1, 2013, then the Rights Agreement shall terminate immediately and the Claims and all rights thereto shall revert back to Oro.The Company is a “reporting issuer” with the SEC, but the Company’s shares are not yet publicly traded.If the Company fails to become publicly traded by January 1, 2013, it will lose its rights, and hence the core of its mining business, under the Rights Agreement. On September 20, 2010, the Company filed a Certificate of Amendment of its Certificate of Incorporation with the Secretary of State of the State of Delaware pursuant to which the Company changed its name from Accelerated Acquisitions I, Inc. to Oro East Mining, Inc. On September 10, 2010, the Company entered into a Limited Agency and Services Agreement with Sichuan Dujiangyan Weida Company, Limited, dba Weida Co., Ltd. (the “Agent”). Pursuant to the terms of the Limited Agency and Services Agreement, the Agent agreed to perform certain research and purchase certain equipment for use in commencing the Company’s mining operations with respect to the Company’s mining claims in the Philippines. The agent further agreed to fund the cash required to fund the first three months of the Company’s mining operations in the Philippines, including the purchase of the required equipment. As compensation for such services and the purchase of the required equipment, the Company agreed to pay the Agent the sum of $860,000 on or before November 10, 2010. The $860,000 payable also carries interest at a rate of four percent (4%) per annum on any unpaid amounts.At the Agent’s option, the Agent may accept payment of the $860,000 in the Company’s common stock valued at $2.00 per share.The Agent also agreed to enter into a covenant not to compete with the Company for the duration of the Limited Agency and Services Agreement and for two (2) years thereafter.The parties agreed to a liquidated damages provision calling for a payment in the amount of $100,000 in the event of any breach of this covenant not to compete. On November 18, 2010, Oro East Mining, Inc. invested $50,000 to establish Oro East Greentech Philippines Inc.(“Greentech”). Greentech is wholly owned by Oro East and will be in charge of the mining business in Philippines. The financial statement presented are the consolidated for Oro East Mining, Inc. and Oro East Greentech Philippines Inc. On December 15, 2010, the Company entered into a Consulting Agreement with Hobson Consultant International, Ltd. (“Hobson”).In exchange for 225,000 shares of common stock of the Company, Consultant is obligated, for 15 days per month for a term expiring December 15, 2012 to (i) “[w]ork closely with the sales teams to expand business development in the East Asia region,” (ii) “[e]xpand global investment opportunities in the East Asia region by meeting with and preparing presentations for potential investors, venture capitalists, and shareholders;” and (iii) “[n]etwork with East Asia client, business partners, and affiliates to maintain existing and create new relationships.”The Company believes that Hobson is potentially important to the Company to help the Company find potential investors.To date, Hobson has not introduced any potential investors to the Company, and the Company will not be making any offers of its securities while the Form S-1, of which this prospectus is a part, is being reviewed by the SEC. On March 1, 2011, the Company entered into a Consulting Agreement with Ma International and Bi Yun Ma (collectively, “Consultant”).In exchange for 24,440 shares of common stock of the Company, Consultant is obligated, for 15 days per month for a term expiring March 1, 2013 to (i) “[w]ork closely with the sales teams to expand business development in the East Asia region,” (ii) “[e]xpand global investment opportunities in the East Asia region by meeting with and preparing presentations for potential investors, venture capitalists, and shareholders;” and (iii) “[n]etwork with East Asia client, business partners, and affiliates to maintain existing and create new relationships.”To date, Ma International has not introduced any potential investors to the Company, and the Company will not be making any offers of its securities while the Form S-1, of which this prospectus is a part, is being reviewed by the SEC. The Company and Oro Philippines are both controlled by the same principals who believe that substantial benefit may potentially be derived from the assignment of the claims and mining operations to a publicly-reporting entity by potentially opening up new funding resources for the business and thereby facilitating the funding of future operations and permitting the further expansion of the business. - 34 - IN GENERAL Oro East Mining, Inc. (“Oro East”), a Delaware corporation, is an exploration stage miningcompany that has acquired rights to develop certain tenement lands in the Republic of Philippines for the mining of gold, copper, and other precious or industrial mineral deposits.The Company will initially focus on its sole asset that was assigned to the Company by Ore East Mining Company Ltd. (“Assignor”), a privately-held corporation organized under the laws of theRepublic of the Philippines to further explore, extract and process ore within the guild lines of our Mineral Right Sharing Agreement (MPSA) with the Philippine Government granted in March of 2010. The claim is named MPSA 320-2010-XI and is comprised of 7,855 hectares (19,401 acres) of mining rights on Mindanao Island in the Davao region of the Philippines.The Company’s claim is fee simple with all applicable permits obtained to erect infrastructure, refining, smelting plants and power stations for extraction and production of gold and copper asprimary targets, and iron ore and other metals as secondary. The Company will continue exploration on MPSA 184 XI as it transitions itself from an exploration company with the intention to becomea gold, silver and copper production company with plans to advance the identified MPSA 320-2010-XI deposits through to production by as early as 2012.The Company has not identified any mineral reserves in connection with MPSA 320-2010-XI. To identify the mineral resources on MPSA 320-2010-XI , the Assignorconducted a semi-detailed geological mapping using compass and tape method backed by Global PositioningSystem (GPS) and manual test-pitting, artisanal tunneling and trenching activities which suggested Copper (CU) grades on the sulphide side from 4% to as high as 15% Cu (from more than 40 laboratory assays on grab, outcrop, test-pit and composite sampling grade range and Au (gold) grab and composite sample contents of 1.5 to 5 gms/ton from 2-3 meter deep testpits)This was conducted by Agetro Davao Mapping Team from June 29, 2008 to August 27, 2008 on 4,939 hectares of Oro East Mining Claim dominated as MPSA 320-2010-XI Parcel II (approximately two thirds of the fully permitted claim MPSA 320-2010-XI ). The Company now plans on taking a two phase approach.In Phase I the Company will analyze the exploration data that was completed and provided by Assignor followed byexpanded prospecting, mapping, sampling and ultimately diamond drilling, effective mine planning and implementation will be facilitated. In Phase II the Company will identify and implement the mining method(s) best adapted to maximize production, including: (i) effective extraction of ore delineated by the exploration, mine geology and grade control department., (ii) proper handling of ore and blending method to attain an economical grade without sacrificingthe quality of the ore, (iii) proper, effective and economical milling plant operation that can recover the gold at the highest percentage possible, and (iv) proper disposal of plant tails. Our current plans, predicated on raising $15,000,000from the sale of 5,000,000 shares of common stockis to begin with Phase I, which will consist of validation of previous exploration programs completed by Assignor that will include road repairs, expanded prospecting, mapping, sampling and ultimately diamond drilling, effective mine planning and implementation will be facilitated of at a cost of $2,500,000 to the Company.If Phase I is favorable, we would then Phase II that transitions the Company into a gold, silver and copper production company at an estimated total cost of $12,500,000, which is a reflection of local costs for the type of work program planned.We will proceed to Phase II only if we are successful in being able to secure the capital funding required to complete Phase II.Therefore, we expect to expend $2,500,000 on phase I. We plan a two-phase program to properly evaluate the potential of the property to determine if there are commercially exploitable deposits of gold, silver and copper.We must conduct exploration to determine to validate deposits and determine if they can be economically extracted and profitably processed. We do not claim to have any ores or reserves whatsoever at this time. - 35 - We anticipate Phase I planned geological exploration program will cost $2,500,000.Phase I may require up to sixteen weeks for the base work and an additional two to three months for analysis, evaluation of the work completed and the preparation of a report.Costs for Phase I consist of wages, fees, geological and geochemical supplies, assaying, equipment, diamond drilling and operation costs. It is our intention to carry the work out in 2011and early 2012, predicated on completion of the offering described in this registration statement.The Company has four employees and has not hired any engineers or geoscientists and will not do so until funds are available to proceed with the first phase of exploration on the property. We will assess the results of this program upon receipt of an appropriate engineering or geological report. It is our intention to retain a US-educated geoscientist to evaluate and conform to American standards the phase I work program and to author a report to American standards for future capital raising.Phase II is not planned to be carried out until 2012 and will be contingent upon favorable results from phase I and specific recommendations of a professional geoscientist based on those results. Favorable results means that a geoscientist, engineer or other recognized professional states that there is a strong likelihood of value being added by transitioning into a gold, silver and copper production company, makes a written recommendation that we proceed to the next phase of production, a resolution is approved by the Board of Directors of the Company indicating such work should proceed and that it is feasible to finance the next phase of production. A detailed outline of the proposed timetable can be found on page 38 under the heading “Management’s Discussion, Analysis of Financial Condition and Results of Operations”. - 36 - - 37 - PROPERTY HISTORY MPSA 320-2010-XI (7,855 hectares, 19,401 acres)is a tenement claim situated on the outskirts of Davao City in the Philippines. The parcel was applied-registered with the MINES AND GEOSCIENCES BUREAU REGION XI “ MGB Region XI” on May 16,1997. DESCRIPTION OF CLAIMS The Company acquired all exploration, extraction and production rights from Oro East Mining LLC. Philippines, a privately-held corporation organized under the laws of theRepublic of the Philippines licensed for mine acquisition, exploration, and development. Prior to the Company’s acquisition of its claims, Oro East Mining LLC. Philippines did manual test-pitting, artisanal tunneling and trenching activities which suggested Copper grades on the sulphide side from 4% to as high as 15% Cu (from more than 40 laboratory assays on grab, outcrop, test-pit and composite sampling grade range and Au grab and composite sample contents of 1.5 to 5 gms/ton from 2-3 meter deep testpits). MPSA 320-2010-XI (7,855 hectares, 19,401 acres)is a tenement claim situated on the outskirts of Davao City in the Philippines. The parcel was applied-registered with the MGB Region XI on May 16,1997. It is located in the municipalities of Lupon and Tarragona in the Davao Oriental Province,Island Region of Mindanao, Philippines. The project sites at Mt. Tagopo and Mt. Mayo are boundedby coordinates 7 degrees 01’00” to 7 degrees 05’ 00” latitude and 128 degrees 08’ 00” to 126degrees 11’30” longitude and 7 degrees 02’30” to 7 degrees 08’30” latitude and 126 degrees 17’00” to 126 degrees 19’20” longitude. Oro-East has undergone exploration for copper and gold-bearing veins or structures in this area. These exploration targets are shallow, for vein-type copper and gold-bearing deposits. Copper, gold, and silver are the primary mineral targets in this claim, with lead and zinc as secondary targets. These mineral claims are located beneath the Philippine Fault and thePacific Rim tectonic belt, also known as the “Pacific Ring of Fire,” The Company has obtained full permitting under the Mineral Right Sharing Agreement (MRSA) with the Philippine Government which allows the Company to commence full scale exploration and production as of May 15, 2010 on MPSA 320-2010-XI. Detained Description of the Claims. I. INTRODUCTION Semi-detailed geological mapping using compass and tape method backed by Global Positioning System (GPS) was conducted by Agetro Davao Mapping Team from June 29, 2008 to August 27, 2008 at the 4,939 hectares of Oro East Mining Claim dominated as MPSA 320-2010-XI -184-XI Parcel II. The geological mapping was undertaken to confirm actual location of the copper ore bodies, gold vein system, alteration zones, lithology and other pertinent geological features. Location of creeks, gulleys, major tributaries, trails, old and current access roads was also facilitated. Prior to the end of the mapping program, location of the initial proposed trenches was also conducted within the areas where copper and gold veins were located. The geological evaluation was undertaken to come up with an initial geological data and recommendation that is deemed necessary for the succeeding exploration and mine operation activities. - 38 - II. LOCATION AND ACCESSIBILITY The project area referred to as Parcel II under MPSA320-2010-XI with a total area of 4,939 hectares is more or less bounded by latitude 7 02'30” to 7 08'30” and longitude 126 17'00” to 126 19'30”. It is located within Sitio Mabalante, Barangay Calapagan, Municipality of Lupon and Sitio Manlandog, Bait, Antipolo, New Cebu, Botog, Nasa, Barangay Limot, Municipality of Taragona, all in the Province of Davao Oriental. From Davao City, the prospect can be reached on a three (3) to four (4) hours travel via commercial buses plying the Davao-Mati route. From the City of Mati, Mabalante area which is located at the northern part of the claim can be reached in a three (3) to four (4) hours travel on a 4x4 vehicle via the Mati-Tagbinunga-Calatagan Daticor old logging road towards Quinonoan headwaters Skynix camp area. Manlandog area on the other hand is accessible via Mati-Don Salvador-Cangusan access road in a 1-1/2 travel on a 4x4 vehicle or motorcycle. From Sitio Cangusan, another two (2) hours hike on a foot trail to Manlandog exploration fly camp east of Mayo River. The southern part of the claim is accessible via Mati-Limot-Botog access road , all within the Municipality of Taragona, Davo Oriental. The prospect areas which includes New Cebu, Bait, Antipolo, Onlo, Botog, and Aponing area, all of which are interconnected by either old logging road or by foot trails. III. TOPOGRAPHIC SETTING The area under consideration is characterized by rugged to extremely rugged topography with elliptical shape of top ridges, with elevations ranging from 500 to 1,751 meters above sea level. Mountain ranges exhibiting triangular facets are common in the area. The apparent physiographic conformity of deep valley seems to indicate an earlier mature erosion of land surface. The erosion surface has subsequently been dissected by youthful streams. IV. DRAINAGE, VEGETATION, CLIMATE Drainage is generally dendritic as exemplified by the Quinonoan and Mayo River as the major drainage system, with system of modified rectangular drainage pattern and network of tributaries and subtributaries. In the gently sloping area, vegetation abounds in the form of tropical cogon grass, ferns, coffee, abaca, vegetable, corn, variety of outcrop in the rugged and steep parts of the area, are overgrown with second growth forest with some large trees and thick undergrowth. The average weather variation of the region falls under Type 2 of the Climate Map of the Philippines where there is no definite dry season and a very pronounced maximum rainfall from November to January. V. GEOLOGIC SETTING A) REGIONAL GEOLOGY AND TECTONIC SETTING Regionally, the prospect is located strategically at the southern segment of the Philippine fault. It can also be considered as part of the Diwata range which appears to be a paleogene subduction zone with upthrusted mafic-ultramafic rocks, metamorphic rocks and clastics, comprising the northern part and some igneous rocks at the western flank on the south. The northern part is overlain by Miocene clastics and limestone intruded by middle miocene diorite, andesite and dacite. The north-south trending Diwata range extending from Surigao to Davao forms the backbone of eastern Mindanao. The range is rugged and has several peaks with elevation from 900 to 2,500 meters. The highest which is Mt. Kampaliis in the southern part of the range. The Diwata range which is also known as the Cordilleras of the South is a mineral district of Southeastern Mindanao where porphyry and vein type copper, gold, molybdenum, tactite iron deposits containing sulfides are known to exist. At the western flank of the prospect is a north-south trending batholith 4-8 kilometers wide by more than 20 kilometers long. This batholith is often called by Geologists as diorite intrusive complex, since it consists of different facies mainly diorite, quartz diorite and hornblende diorite porphyry. This batholith is exposed and serves as hostrock in most if not all copper and gold deposits within Taguibo, Calapagan, Marayag, to the western flank of San Mariano up to the Mountain Ranges of Mt. Kinayan in the Municipality of New Bataan. - 39 - At the northeastern part of the prospect is an exposure of a columnar basaltic rock formation which is believed to be the oldest rock formation exposed in the district. Probable age of this rock formation is cretaceous to Paleocene (geologic epoch that lasted from about 65.5to56 million years ago). At the eastern flank is a thick formation of limestone formation of Oligocene age (23-34 million years ago) capped by the Eocene age volcanic clastics rock from Quinonoan to Mt. Tagbac area. Dominating the geology of the region, the Eastern Mindanao ridge is a complex NNW-SSE trending volcanic island structure that developed during the upper cretaceous to quarternary as a result of convergent and transcurrent tectonics The area is inferred as being associated with relic east dipping subduction zone that collided with the west Mindanao ridge sometime in the late Miocene. B) WITHIN PROSPECTS 1. MABALANTE AREA The Mabalante-upper Quinonoan copper gold prospect is underlain essentially by three (3) rock units composed of diorite, intercalated sequences of metamorphosed volcanics and sedimentary rocks. Common rock exposure however at Mabalante area is volcanic clastics overlain by light to dark gray colored limestone formation. Porphyritic andesite dikes intruded the volcanic clastic rocks. These dikes are trending northwest and sub-parallel major faults in the area. In close proximity with these dikes are thin fractures filled with quartz anhydrite and calc silicate materials. At Mabalante area, the deposit is hosted to a large extent by andesite porphyry (Andesite is a type of igneous rock that is found in most volcanic regions of the world, especially around volcanoes that line the Pacific Basin), porphyritic-volcanic (a variety of igneous rock consisting of large-grained crystals) , volcanic clastics and partly by the uncomformity rock formation of sandy and basalt limestone, calcarenite, sandstone sequences that developed from spotty to hornfelsic texture. Silicification, chloritization, epidotization and kaolinization are common alteration in the prospect area. Copper mineralization consists predominantly of chalcopyrite, bornite and subordinates of sphalerite and galena, occurring usually as fracture filling and other interlacing minute fractures which serves as passageways or loci for sulfide mineralization. Malachite, azurite and chalcocite are dominant oxidation products. Three (3) distinct vein systems were mapped and sampled at Mabalante area, namely: Mabalante Copper-molybdenum vein complex which is the focus of the past mining activities; the Southeastern Mabalante vein complex and the Eastern Mabalante vein complex. 1a.MABALANTE COPPER-MOLYBDENUM VEIN COMPLEX The Mabalante copper-molybdenum vein complex also known as the main Mabalante vein system is a northeast-southwest trending copper vein system with multiple cymoidal and lacer structures along its strike. The main copper structure which was drifted prior to its collapse is composed of 2.0 meter massive copper vein, consisting of chalcopyrite, chalcocite, bornite and cubical specks of pyrite and botroidal marcasite. Fine bandings of white-grayish quartz, sericite and adularia were also noted. General trend of the main copper vein is North 48 -50 East dipping 45 southwest. Coatings of malachite and azurite are dominant especially near the portal. Two (2) minor faults at the footwall of the structure may have displaced the vein with a possible slight southeastern oblique movement. At upper elevation of the main portal are two (2) abandoned adits with exposure of 0.30 to 1.30 meters copper vein composed of chalcopyrite, bornite, chalcocite, with bonded quartz-calcite specked with fine pyrite. The vein based on its strike and dip is correlative to the structure disclosed at the main portal, located at lower elevation. 30-50 meters north of the main copper structure are two (2) 0.50 meters vein (sample no. M-OTC-09) which may have converged with the main structure at lower elevation where the 0.50-0.70 meters molybdenum vein was exposed. Chipping the hanging wall disclosed a massive copper complex which may have converged forming one (1) major structure at lower elevation. As of this writing, the total strike of the Mabalante main vein complex is 150 meters. Three (3) proposed trenches at 50 meters interval were delineated at the southwestern side of the vein and another three (3) trenches at the northeast side. - 40 - Map of Claim Location MPSA 320-2010-XI Mandanao Island, Davao Oriental. - 41 - COMPETITIVE CONDITIONS The mineral exploration business is an extremely competitive industry. We are competing with many other exploration companies looking for minerals. We are a very early stage mineral exploration company and a very small participant in the mineral exploration business. Being a junior mineral exploration company, we compete with other companies like ours for financing and joint venture partners. Additionally, we compete for resources such as professional geologists, camp staff, helicopters and mineral exploration supplies. GOVERNMENT APPROVALS AND RECOMMENDATIONS The Company is in the process of filing an application with the Department of Environment and Natural Resources for the Environmental Compliance Certificatethe only permit required under the MPSA 320-2010-XI to begin further exploration on the property. It is estimated to take three to six months to complete the process at a cost of an estimated $50,000 US dollars. The permit includes the following items: Environmental Compliance Certificate The Philippine Environmental Impact Statement (EIS) System under Presidential Decree 1586 requires all government and private entities to prepare an EIS for every project or activity which significantly affects the environment. PD 1586 mandates that environmentally critical projects (ECPs) and projects within environmentally critical areas (ECAs) shall require an EIS. Mining projects are considered ECPs and are thus required to submit their EIS. Upon evaluation of their EIS, mining projects are issued Environmental Compliance Certificates (ECCs), which contain the major elements of the environmental and social management plan that the companies need to implement to keep their adverse environmental impacts within acceptable limits. Environmental Protection and Enhancement Program The Environmental Protection and Enhancement Program (EPEP) provides the operational link between the ECC and the environmental protection and enhancement commitments of the company. It provides a description of the expected and considered-as-acceptable impacts and sets out the environmental protection and enhancement strategies during the life of the mine based on best practices in mine environmental management. The EPEP also includes the post-mining land use potential for various types of disturbed land. Contractors are also required to submit an Annual EPEP (AEPEP) at least thirty (30) days prior to the start of each calendar year. Final Mine Rehabilitation and/ or Decommissioning Plan The Final Mine Rehabilitation and/or Decommissioning Plan (FMRDP) ensures a smooth transition from active mining to eventual closure of the mine. The plan, which is formulated in consultation with the communities and local government units, must be submitted as an integral part of the EPEP. Using risk-based methodologies/ approaches, the FMRDP shall consider all mine closure scenarios and shall contain cost estimates for the implementation of the FMRDP, taking in consideration expected inflation, technological advances, the unique circumstances faced by the mining operation, among others. Such estimates shall be based on the cost of having the decommissioning and/or rehabilitation works done by third party contractors. Further, these estimates, on a per year basis, shall cover the full extent of work necessary to achieve the objectives of mine closure such as, but shall not be limited to, decommissioning, rehabilitation, maintenance and monitoring, and employee and other social costs, including residual care, if necessary, over a ten year period. The Company does not believe that the moratorium on mining in the area of the Philippines where the Company conducts its operations applies to the Company because the moratorium applies to open pit mining, an activity in which the Company does not engage. Oro East Mining, Inc. (“Oro East”), a Delaware corporation,is an exploration stage miningcompany that has acquired rights to develop certain tenement lands in the Republic of Philippines for the mining of gold, copper, and other precious or industrial mineral deposits.The Company will initially focus on its sole asset that was assigned to the Company by Ore East Mining Company Ltd. (“Assignor”), a privately-held corporation organized under the laws of theRepublic of the Philippines to further explore, extract and process ore within the guild lines of our Mineral Right Sharing Agreement (MPSA) with the Philippine Government granted in March of 2010. The claim is named MPSA 320-2010-XI and is comprised of 7,855 hectares (19,401 acres) of mining rights on Mindanao Island in the Davao region of the Philippines.The Company’s claim is fee simple with all applicable permits obtained to erect infrastructure, refining, smelting plants and power stations for extraction and production of gold and copper asprimary targets, and iron ore and other metals as secondary. The Company will continue exploration on MPSA 320-2010-XI as it transitions itself from an exploration company with the intention to become a gold, silver and copper production company with plans to advance the identified MPSA 320-2010-XI deposits through to production by as early as 2012.The Company has not identified any mineral reserves in connection with MPSA 320-2010-XI. To identify the mineral resources on MPSA 320-2010-XI, the Assignorconducted a semi-detailed geological mapping using compass and tape method backed by Global PositioningSystem (GPS) and manual test-pitting, artisanal tunneling and trenching activities which suggested Copper (CU) grades on the sulphide side from 4% to as high as 15% Cu (from more than 40 laboratory assays on grab, outcrop, test-pit and composite sampling grade range and Au (gold) grab and composite sample contents of 1.5 to 5 gms/ton from 2-3 meter deep testpits)This was conducted by Agetro Davao Mapping Team from June 29, 2008 to August 27, 2008 on 4,939 hectares of Oro East Mining Claim dominated as MPSA 320-2010-XI Parcel II (approximately two thirds of the fully permitted claim MPSA 320-2010-XI). - 42 - TheCompany’s exploration and productions recommendations come from the Assignors Semi-detailed Geological Mapping Report of ORO EAST MINING CLAIM MPSA320-2010-XI PARCEL II, conducted by Agetro Commoditiesin September of 2008. Agetro Commodities is a Philippine company located in Davao City that specializes in geological reports, topographic assay studies, and general geology consulting.Paul S. Ortega is the lead Consulting Geologist & Contractor who works closely with the Company.Francisco C. Rebillon and Noel Z. Franco are Consulting Geologists who, from time to time assist Mr. Ortega.Mr. Ortega formally served as the Senior Geologist at Apex Mining Corp., a public company in the Philippines.He is geologist licensed by the Philippine Board of Examination of the Professional Regulation Commission. He has over 30 years of experience in the mining industry. Agetro Commodities in not an affiliate of Oro-East Mining Company LTD., Oro East Mining, Inc. or any of their respective affiliates.Fees fees paid by Oro-East Mining Company LTD. pursuant to its engagement of Agetro with respect to its report is $7,500, and the only fees paid by Oro-East Mining Company LTD. or Oro East Mining, Inc. to Agetro during the past three fiscal years is such $7,500. 1. The initial exposure at the main Mabalante copper-gold complex is very impressive. The potential of the prospect can possibly be substantially big for commercial operations. The geological investigation which includes semi-detailed geological mapping is aimed at actually proving its copper gold potentiality and accomplishing the same by undertaking the following: 1a) Further prospecting at the general area of potential mineralized zone; 1b) Fast track implementation of trench dozing at the proposed trenches to prove persistence of the lateral extent of the vein/structure; Prioritize excavation of trenches programmed at the southwestern part of the mining claims. Initially three (3) trenches were programmed at the southwestern part at 50 meter interval. Three (3) more trenches were also programmed and marked on the ground at the northeastern part of the vein/structure, also at 50- meter interval. The results and exposure at the trenches will be the basis in the exploration, development and diamond drilling programs to come up with positive ore reserve which will then be the basis of the mining program. The same program should be facilitated at the Mabalante south vein complex and Mabalante east vein complex, respectively. 1c) Knowing the details of the ore which is very important. This is actually advance information not only for the Geologists but for the mining and metallurgical technical staff who will be conducting studies in the near future. In view: a. Collect vein samples and submit to the Mines & Geo-sciences Bureau for polish sectioning and mineralogical analysis; b. A 50-kilo bag ore should also be collected and submitted to any reliable laboratory for metallurgical testing, subject to the approval of the metallurgical engineers. 2. New portal is hereby recommended to be installed or put up at lower elevation. For safety reasons, portal should be located at stable ground; off vein and aimed to intercept the main structure after a 5-10 meters advance, then facilitate drifting south at Mabalante main vein. 3. With the plan to resume tunneling/drifting, grade control and mine geology team should be organized to regularly monitor daily advance of the underground working(s) and at the same time implement effective grade control procedures. 4. Access road to be used, repaired and constructed should be considered. The Cangusan-Bongco road is one good shorter route to the mine site. 5. As observed, the impressive copper ore bodies and ore veins are located at the northern part of the claim particularly at Mabalante and its proximity. High sulphidation copper and gold ore system is very common in Mabalante. The Ore system shows permeability control governed by lithology, structure, changes in wall rock alteration and ore mineralogy. Based on studies, this system has been developed from the reaction with host rock or hot acidic magmatic fluids to produce alteration and later sulphide, gold, copper and silver deposition. On the other hand, veins delineated at the southern part of the claim can be generally classified as clean ore. Low sulphidation within these areas are well pronounced as exhibited by the veins located thereat. These type of deposits based on studies have been developed from dilute near neutral ph fluids and display mineralogies derived dominantly from magmatic source rocks and others with mineralogies dominated from circulating geothermal fluid sources. - 43 - 6. Several quartz vein systems were delineated within Manlandog, Karamatyan, Pamatian and the Onlo-Botog areas, respectively. Majority of these veins delineated during the mapping are clean ore material which is very ideal when fed to carbon-in-pulp (CIP) carbon-in-leach (CIL) milling process. The material is composed of quartz calcite with lesser sulphides and other poly metallic materials. To prove persistence of the aforesaid veins, the following are hereby recommended: 6a) Prioritize trench dozing at the abovementioned areas. The location of the proposed trenches are already marked at the ground. The results of the trench dozing will also be the basis in the preparation of diamond drilling program to prove persistence of the vein at depth. 6b) Conduct extensive prospecting particularly within the proximity of the quartz vein outcrops. Lithological surface cappings like the limestone have extensively blanketed the areas where the lateral extension of the veins are supposed to have been found. 7. Several factors have to be considered, should viable, mineable deposit will be blocked at the southern part of the claims. 7a) The access to the main highway is much more accessible. 7b) Three (3) phase source of electricity which is very vital when constructing and operating a mill plant is available at and near Barangay Limot, a few kilometers from the ore source. 7c) Several areas at the Sitio Botog-Nasa are ideal for mine, mill and other mining facilities. Several areas are also ideal for building a tailings dam. There is abundant source of potable and industrial water which can be tapped. 8. Lastly, the Oro East Parcel II claim is within the southern portion of the southern cordillera ranges. This mountain range which appears to be the backbone of the Southeastern Mindanao area is known to have hosted multiple impressive mineable deposits. Some of these deposits are already being exploited both by big scale and small scale mining method. During the course of the semi-detailed geological mapping conducted by the Agetro DavaoTeam, not only that the team was able to locate the now famous Mabalante copper-gold-molybdenum complex but also found several traces of multiple vein systems along and within the other part of the claims particularly towards south. The possibility of finding and proving other impressive, commercial and mineable vein systems is not remote. COSTS AND EFFECTS OF COMPLIANCE WITH ENVIRONMENTAL LAWS Environmental Laws In the past ten years, laws and policies for environmental protection in the Philippines have moved towards stricter compliance and stronger enforcement, therefore the exact costs of compliance is unknown but is estimated to $250,000 per year. The basic laws in the Philippines governing environmental protection in the mineral industry sector of the economy are the Environmental Protection Law, the Environment Impact Assessment Law and the Mineral Resources Law. The State Administration of Environmental Protection and its provincial counterparts are responsible for the supervision, implementation and enforcement of environment protection laws and regulations. Provincial governments also have the power to issue implementing rules and policies in relation to environmental protection in their respective jurisdictions. Applicants for exploration rights must submit environmental impact “assessments” and those projects that fail to meet environmental protection standards will not be granted licenses. - 44 - In addition, after exploration the licensee must perform water and soil maintenance and take steps towards environmental protection. After the exploration rights have expired or the concessionaire stops mining during the permit period and the mineral resources have not been fully developed, the concessionaire must perform water and soil maintenance, land recovery and environmental protection in compliance with the original development scheme, or must pay the costs of land recovery and environmental protection. After closing, the mining enterprises shall perform water and soil maintenance, land recovery and environmental protection in compliance with mine closure approval reports, or must pay the costs of land recovery and environmental protection. Penalties for breaching the Environmental Protection Law include a warning, payment of a penalty calculated on the damage incurred, or payment of a fine. When an entity fails to adopt preventative measures or control facilities that meet the requirements of the enacted environmental protection standards, it is subject to suspension of production or operations and for payment of a fine. Material violations of environmental laws and regulations causing property damage or casualties may result in criminal liabilities. COMPLIANCE WITH ENVIRONMENTAL CONSIDERATIONS AND PERMITTING COULD HAVE A MATERIAL ADVERSE EFFECT ON THE COSTS OR THE VIABILITY OF OUR PROJECTS. THE HISTORICAL TREND TOWARD STRICTER ENVIRONMENTAL REGULATION MAY CONTINUE, AND, AS SUCH, REPRESENTS AN UNKNOWN FACTOR IN OUR PLANNING PROCESSES. All mining is regulated by the government agencies at the Federal and Provincial levels of government in the Philippines. Compliance with such regulation has a material effect on the economics of our operations and the timing of project development. Our primary regulatory costs have been related to obtaining licenses and permits from government agencies before the commencement of mining activities. An environmental impact study that must be obtained on each property in order to obtain governmental approval to mine on the properties is also a part of the overall operating costs of a mining company. The possibility of more stringent regulations exists in the areas of worker health and safety, the dispositions of wastes, the decommissioning and reclamation of mining and milling sites and other environmental matters, each of which could have an adverse material effect on the costs or the viability of a particular project. Compliance with environmental considerations and permitting could have a material adverse effect on the costs or the viability of our projects. MINING AND EXPLORATION ACTIVITIES ARE SUBJECT TO EXTENSIVE REGULATION BY FEDERAL AND PROVINCIAL GOVERNMENTS. FUTURE CHANGES IN GOVERNMENTS, REGULATIONS AND POLICIES, COULD ADVERSELY AFFECT OUR RESULTS OF OPERATIONS FOR A PARTICULAR PERIOD AND OUR LONG-TERM BUSINESS PROSPECTS. Mining and exploration activities are subject to extensive regulation by government. Such regulation relates to production, development, exploration, exports, taxes and royalties, labor standards, occupational health, waste disposal, protection and remediation of the environment, mine and mill reclamation, mine and mill safety, toxic substances and other matters. Compliance with such laws and regulations has increased the costs of exploring, drilling, developing, constructing and operating mines and other facilities. Furthermore, future changes in governments, regulations and policies could adversely affect our results of operations in a particular period and our long-term business prospects. The development of mines and related facilities is contingent upon governmental approvals, which are complex and time consuming to obtain and which, depending upon the location of the project, involve various governmental agencies. The duration and success of such approvals are subject to many variables outside our control. - 45 - EMPLOYEES Initially, we intend to use the services of subcontractors for manual labor exploration work and an engineer or geoscientist to manage the exploration program. We have not retained any engineers or geoscientists; no agreements have been entered into as of the date of this registration statement. The Company currently has four full time employees. We intend to hire geologists, engineers and other subcontractors on an as needed basis. We have not entered into negotiations or contracts with any of them although it is our intention to retain a senior on-site geological consultant. It is our intention to also retain a North American educated geoscientist to evaluate and conform to American standards the phase I work program, to author a report to American standards for future capital raising and to render independent recommendations as to future work. We do not intend to initiate negotiations or hire anyone until we receive proceeds from our offering. At present, we have four employees, they do not have employment agreements with us. We presently do not have pension, health, annuity, insurance, profit sharing or similar benefit plans; however, we may adopt such plans in the future. There are presently no personal benefits available to any employee. The company is currently working to implement employments for our four employees and if, as and when a public market for the Company’s shares is established share from our incentive stock option plan may be issues to the employees. OUR EXECUTIVE OFFICES We were incorporated in the State of Delaware on February 15, 2008, and established an end of December fiscal year end. Our corporate headquarters is located at 1127 Webster Street, Suite 28, Oakland, CA 946076 and our telephone number is +1 (510) 544-1516. On July 28, 2010, the Company opened an office in Hong Kong located at Regus Millenium City, 32/F Tower 1, Millenium City, 388 Kwun Tong Road, Kwun Tong, Kowloon, Hong Kong pursuant to the terms of an Office Service Agreement with Regus Millenium City.The Company leases such offices. On or about September 1, 2010, the Company opened offices on the site of it mining operations in the Philippines at 1028 Tindalo St., Brgy., Sainz, Mati City, Philippines 8200.The Company leases such offices. LEGAL PROCEEDINGS There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company. The Company’s mineral claim is not the subject of any pending legal proceedings. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS MARKET INFORMATION ADMISSION TO QUOTATION ON THE OTC BULLETIN BOARD OR OTHER US TRADING EXCHANGE We intend to have our common stock be quoted on the OTC Bulletin Board or other US trading exchange. If our securities are not quoted on the OTC Bulletin Board or other US trading exchange, a security holder may find it more difficult to dispose of, or to obtain accurate quotations as to the market value of our securities. The OTC Bulletin Board differs from national and regional stock exchanges in that it: (1) is not situated in a single location but operates through communication of bids, offers and confirmations between broker-dealers, and (2) securities admitted to quotation are offered by one or more Broker-dealers rather than the “specialist” common to stock exchanges. - 46 - To qualify for quotation on the OTC Bulletin Board, an equity security must have one registered broker-dealer, known as the market maker, willing to list bid or sale quotations and to sponsor the company listing. We do not yet have an agreement with a registered broker-dealer, as the market maker, willing to list bid or sale quotations and to sponsor the Company listing. If the Company meets the qualifications for trading securities on the OTC Bulletin Board our securities will trade on the OTC Bulletin Board until a future time, if at all, that we apply and qualify for admission to quotation on the NASDAQ Capital Market. We may not now and it may never qualify for quotation on the OTC Bulletin Board or be accepted for listing of our securities on the NASDAQ Capital Market. TRANSFER AGENT The stock transfer agent for our securities is Island Stock Transfer. St. Petersburg, FL.Their address is 100 2ndAvenue South, 300N, St, Petersburg, Florida 33701. Their phone number is (727) 289-0010. HOLDERS As ofthe date of this prospectus, the Company had 27,916,440 shares of our common stock issued and outstanding held by 67 holders of record. The selling stockholders are offering hereby up to 1,866,440 shares of common stock atfixed price of $3.00 per share. DIVIDEND POLICY We have not declared or paid dividends on our common stock since our formation, and we do not anticipate paying dividends in the foreseeable future. Declaration or payment of dividends, if any, in the future, will be at the discretion of our Board of Directors and will depend on our then current financial condition, results of operations, capital requirements and other factors deemed relevant by the Board of Directors. There are no contractual restrictions on our ability to declare or pay dividends.See the Risk Factor entitled “BECAUSE WE DO NOT INTEND TO PAY ANY CASH DIVIDENDS ON OUR COMMON STOCK, OUR STOCKHOLDERS WILL NOT BE ABLE TO RECEIVE A RETURN ON THEIR SHARES UNLESS THEY SELL THEM.” SECURITIES AUTHORIZED UNDER EQUITY COMPENSATION PLANS We have no equity compensation or stock option plans. We may in the future adopt a stock option plan as our mineral exploration activities progress. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION Certain statements contained in this prospectus, including statements regarding the anticipated development and expansion of our business, our intent, belief or current expectations, primarily with respect to the future operating performance of the Company and the products we expect to offer and other statements contained herein regarding matters that are not historical facts, are “forward-looking” statements. Future filings with the Securities and Exchange Commission, future press releases and future oral or written statements made by us or with our approval, which are not statements of historical fact, may contain forward-looking statements, because such statements include risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. All forward-looking statements speak only as of the date on which they are made. We undertake no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they are made. - 47 - PLAN OF OPERATION We are a start-up, exploration stage corporation engaged in the search for gold, silver and copper and have not yet generated or realized any revenues from our business. The Company believes it can satisfy its cash requirements through the fiscal year end of December 31, 2011, from its cash of $127,375. However, if we fail to complete the offering, even at the minimum subscription level, we may have to cease our operations. As of September 30, 2011, we had $126,355 in working capital. During the fiscal period October, 2011, to February 28, 2012, the Company plans to concentrate its efforts on completing this registration statement and the offering contemplated therein and on the planned phase I exploration program on the company’s property at a cost of $2,5000,000 . If the program is favorable, we will proceed to phase II and commence planning for that for 2012. We do not expect any changes or hiring of employees since contracts are given to consultants and sub-contractor specialists in specific fields of expertise for the exploration work. We do not expect to purchase or sell any plant or significant equipment. We intend to lease or rent any equipment, such as a backhoe, diamond drill, generators and so on, that we will need in order to carry out our exploration activities. Over the next year we intend to complete the first phase of the exploration plan on our property which was obtained through an assignment agreement with Oro East Mining Company LTD. Philippines. If our initial exploration efforts are favorable, we intend to proceed with longer term development program on the property. Our plan of operation for the period through September 30, 2012, is: Prior to the commencement of Phase I of the work program, the Company will maintain its business and will remain compliant with regulatory requirements but will not advance its business plan until the sale of shares contemplated by this registration statement is completed. At that time we will engage our consulting geoscientist in preparation for the commencement of phase I. The next few months are expected to be taken up with completion of this registration statement and associated offering. Commencing no later than February 1, 2012 but which we expect to commence within one month of the completion of this offering, Phase I of the work program will establish a grid, complete general prospecting and geological mapping of the property, complete 20,000 cubic meters of trenching, diamond drill 20,000 meters as well as provide a report on the work accomplished with specific recommendations for the future at a total cost to the Company of $2,500,000. Specifically: Sixty Days – establishment of a grid over ten square kilometer (1000 hectares) with crosslines being set up every 50 meters and intersecting crosslines marked at each 25 meter point will be laid out over a square kilometer. A 1/2000 geological survey will then be completed. The cost of establishing the grid and supplies and carrying out the surveys will be approximately $50,000 and to establish grids with supplies on the entire 7,000 hectares will cost an estimated $300,000. Ninety Days – trenching will be run and a total of 20,000 cubic meters of soil and rock will be excavated from which representative samples will be taken; each of the samples will be analyzed for specific metals and their geological characteristics identified and recorded. The cost of the trenching to the company will be approximately $400,000. Thirty Days – the property will also be searched for outcroppings, trenches or areas that may indicate further exploration is warranted in a later phase. One-Hundred Twenty Days – a diamond drilling program will drill and sample 20,000 meters of rock drilled to various depths at an approximate cost to the Company of $1,300,000. - 48 - The cost to the Company of the general prospecting efforts as well as the mapping and sample collections, road construction, assaying of the samples and transportation will be approximately $2,475,000. Weeks 8 through 16 – the various samples will be sent to a lab for analysis of their chemical makeup which will cost the Company approximately $75,000 (included in the above estimates). Weeks 17 through 20 – once all the sample information is available, a professional geoscientist will require at least one month to correlate the information and write a report either recommending that further work is warranted or that the property cannot have any further value added by doing additional exploration in which case he would recommend abandonment. The cost of the report and his supervision during the physical work will be approximately $75,000. We have also included a contingency fee of $200,000 in our cost estimates required to complete the Phase I of the planned $2,500,000 expenditure for Phase I that will come from the primary offering. March 1, 2012 to September 30, 2012 or approximately six months after the Phase I work has been commenced we expect to have the report on Phase I of the exploration program in hand and will then be in a position to determine what the next step will be in the development of our business plan. If the report is favorable and advises that we proceed to Phase II of the development program, we will then have to determine how we can raise the funds required for Phase II which is estimated at $12,500,000. If the report advises abandoning the property as having little or no value, we will terminate the project and seek others. Various options will be reviewed as to funding – public financing, private funding, loans or possible joint venture opportunities. Each of these will have to be evaluated for merit, cost and the most favorable basis for the Company and its shareholders. This process will require from four to eight weeks to complete. It is our intention to retain a North American educated geoscientist to evaluate and conform to American standards the phase I work program and to make his own recommendations. (b) Management's Discussion, Analysis of Financial Condition and Results of Operations Our auditors have issued a going concern opinion. This means that they believe there is doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills because we have not generated any revenues and no revenues are anticipated until we begin removing and selling gold. Accordingly, we must raise cash from sources other than the sale of gold found on the property which at this time means investments by others in the Company. We must raise cash in order to implement our project and stay in business. In order to meet our need for cash we are attempting to raise money from the primary offering. There is no assurance that we will be able to raise enough money through the primary offering to stay in business. Whatever money we do raise, will be applied first to costs of this offering and then to exploration. If we do not raise all of the money we need from the primary offering, we will have to find alternative sources, such as a second public offering, a private placement of securities, or loans from our officer or director or others. Our director is unwilling to make any commitment to loan us any money at this time. At the present time, we have not made any arrangements to raise additional cash, other than through the primary offering. If we need additional cash and can't raise it we will either have to suspend operations until we do raise the cash, or cease business entirely. If we raise the maximum of $15,000,000, gross, in the primary offering, we believe that we can pay for our offering expenses and satisfy our cash requirements without having to raise additional funds for the next twelve months. If we raise less than $2,500,000, gross, we may have to raise additional funds or we may not be able to continue our proposed business involving the completion of Phase II, if such is recommended by a competent professional geoscientist or engineer. - 49 - If we are unable to sell the 5,000,000 shares of the planned offering we may not have sufficient capital available to fund the Phase I exploration program and we would have to suspend operations. We have not entered into any arrangements with creditors for unpaid offering expenses. If we are unable to complete any phase of exploration because we don’t have enough money, we will cease operations until we raise additional funds. If we can’t or don’t raise more money, we will cease operations. We have no intention of entering into a merger or acquisition if we cease operations. We have limited cash reserves which as of October 15, 2011, totaled $229,000. Until we actually commence Phase I of the exploration program, our monthly cash requirements are minimal. Results of Operations For the nine months ending September 30, 2011, the Company had no revenues and incurred exploration costs of $641,701 and general and administrative expenses of $624,767, compared to no revenues and general and administrative expenses of $208,829 for the corresponding period of 2010. - 50 - Limited Business History; Need for Additional Capital There is no historical financial information about the Company upon which to base an evaluation of our performance. We are an exploration stage corporation and have not generated any revenues from our business. We cannot guarantee we will be successful in our business plans. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources, possible delays in the exploration and/or development, and possible cost overruns due to price and cost increases in services. We have no intention of entering into a merger or acquisition within the next twelve months and we have a specific business plan and timetable to complete phase I of our exploration program based on the success of the primary offering. We anticipate that additional funding, if required, will be in the form of equity financing from the sale of our common stock. However, we cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of shares to fund additional expenditures. We do not currently have any arrangements in place for any future equity financing. Our limited operating history and our lack of significant tangible capital assets makes it unlikely that we will be able to obtain significant debt financing in the near future. If such financing is not available on satisfactory terms, we may be unable to continue or expand our business. Equity financing could result in additional dilution to existing shareholders. To become profitable and competitive, we must conduct exploration before we commence production of any gold, Silver or copper we may find. We are seeking equity financing in order to provide for the capital required to implement our exploration program. If our initial exploration efforts are favorable, we intend to proceed with longer term phase II. If we raise the $15,000,000 gross, in the primary offering, we believe that we can pay for our offering expenses and satisfy our cash requirements through phase II without having to raise additional funds for the next twelve months. Liquidity and Capital Resources As of September 30, 2011, the Company had current assets equal to $347,677 and had current liabilities of $559,985. The following is a summary of the Company's cash flows from operating, investing, and financing activities: For the Cumulative nine months ended September 30, 2011 Operating activities $ Investing activities $ - Financing activities $ Net effect on cash $ Off Balance Sheet Arrangements The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors. - 51 - Accounting and Audit Plan We intend to continue to have our Chief Financial Officer prepare our quarterly and annual financial statements and have these financial statements reviewed or audited by our independent auditor. Our independent auditor is expected to charge us approximately $3,000 to review our quarterly financial statements and approximately $9,000 to audit our annual financial statements. In the next twelve months, we anticipate spending approximately $18,000 to pay for our accounting and audit requirements. SEC Filing Plan We expect to become a reporting issuer during 2011 after our S-1 registration statement is declared effective. This means that we will continue to file documents with the SEC on a quarterly basis. We expect to incur filing costs of approximately $1,000 per quarter to support our quarterly and annual filings. In the next twelve months, we anticipate spending approximately $5,000 for legal costs in connection with our quarterly and annual filings and costs associated with filing the registration statement to register our common stock. Summary of Significant Accounting Policies Basis of Presentation The financial statements of the Corporation have been prepared in accordance with generally accepted accounting principles in the United States of America and are presented in US dollars. The Corporation's year end is December. Cash and Cash Equivalents The Corporation considers all highly liquid investments with original maturity of three months or less to be cash equivalents. Use of Estimates and Assumptions The preparation of our financial statements is in conformity with generally accepted accounting principles which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. Foreign Currency Translations The financial statements are presented in United States dollars. In accordance with Statement of Financial Accounting Standards No. 52, “Foreign Currency Translation”, foreign denominated monetary assets and liabilities are translated into their United States dollar equivalents using foreign exchange rates which prevailed at the balance sheet date. Revenue and expenses are translated at average rates of exchange during the year. Gains or losses resulting from foreign currency transactions are included in results of operations. Exploration Stage Company The Company complies with Financial Accounting Standards Board Statement No. 7 and SEC Guide 7 for its characterization of the Corporation as pre-exploration stage. - 52 - Fair Value of Financial Instruments Our financial instruments consist of cash and accounts payable. Unless otherwise noted, it is management's opinion the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. Because of the short maturity of such assets and liabilities the fair value of these financial instruments approximate their carrying values, unless otherwise noted. Income Taxes Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. We have adopted ASC Topic “Accounting for Income Taxes” (SFAS No. 109) as of its inception. Pursuant to SFAS No. 109 the Corporation is required to compute tax asset benefits for net operating losses carried forward. Basic and Diluted Net Income (Loss) Per Share The Corporation computes net income (loss) per share in accordance with ASC Topic 128, “Earnings per Share” (SFAS 128). ASC Topic 128 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of common shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period including stock options, using the treasury stock method, and convertible preferred stock, using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential common shares if their effect is anti-dilutive. Recent Accounting Pronouncements The Corporation does not expect the adoption of recently issued accounting pronouncements to have a significant impact on its results of operations, financial position or cash flow. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS The following individuals currently serve as our executive officers and directors: Name Age Positions Tian Q. Chen 49 Chairman, CEO Linda Chen 55 Director Danni Zhong 42 President Romy Yulo 48 COO - 53 - Tian Qing Chen Chairman and Chie Executive Officer Mr. Chen has served as Chief Executive Officer and Chairman of the Company since July of 2010.He currently devotes approximately 80% of his working time to the Company, and spends approximately 7 months per year at the company’s Philippine mining site, approximately 2 months per year at the Company’s offices in Hong Kong and approximately 1 month per year at the Company’s offices in the United States.Mr. Chen has been an entrepreneur in finance and real estate investments for over 20 years. Since 2007 until he joined the company, he has been the COO of Oro East Mining Ltd. Additionally, Mr. Chen is the President and CEO of Mutual Gain Hong Kong Group Limited, a venture capital firm based in Hong Kong since 1990, where he has worked with family conglomerates throughout East Asia to learn the trade in gold, iron, silver, steel and other precious metals. His firm has successfully invested and acquired mines in Singapore, Malaysia, the Republic of Philippines, the People’s Republic of China, and elsewhere across the Asian continent. Mr. Chen was educated in East Asia and received his bachelor’s degree from Guang Dong University.Mr. Chen’s knowledge about our mining properties led to our conclusion that Mr. Chen should be serving as a member of our Board of Directors. Linda Chen Director Ms. Chen received her Master degree from Washington State University and has over 28 years of experience in international trade and has launched several trading companies.She has worked with major family conglomerates throughout East Asia while gaining experience and knowledge on trade in gold, iron, silver, steel and other precious metals.Ms. Chen has successfully achieved additional skill and knowledge of the mining industry from deals in Malaysia, the Republic of Philippines, and the People’s Republic of China. Starting in 2006, she worked for 5 years as a consultant in Skynix Holdings Inc. She is currently the Vice President and Director of a mid-size global equity and investment firm. Additionally, she has been and currently is a director at Oro East Mining Inc.Ms. Chen’s general knowledge about mining led to our conclusion that Mr. Chen should be serving as a member of our Board of Directors. Danni Zhong President Ms. Zhong currently serves as our President and currently devotes approximately 80% of her working time to the Company.From 2006 to 2008, Ms. Zhong was the Chairman of Skynix Holding Inc. where she managed over 500 employees in the Philippines.Since 2008, she has served as Chairman of the Board for Southern Horizon Mining Corp. andas well as for Eastern Horizon Mining Co., Inc.Since 2009 she has served as Chairman of the Board for Viclode Mining Corp.Ms. Zhong also works with companies on mining projects, advising on activities, such as processing refinery plan set up, geological research, and the ore trading business.Ms. Zhong has been the CFO of Mutual Gain Hong Kong Group ltd. since 2004.Ms. Zhong holds a Bachelor’s Degree in Business Economics from the University of California. Romy Yulo Chief Operations Officer Mr. Yulo has over 20 years of experience in mining and logging operations including marketing and log export. He has a strong political base both locally and nationally.Mr. Yulo engaged inOro East copper and gold mining operation as a COO in Mati, Davao, Philippine since 2006. He also isa roadconstructiondesigner andmanagerin mine site over10 years. Mr. Yulo has a strong political base both locally and nationally and currently serves as the Chief Operation Officer of Oro East Mining Company. He holds a Bachelor’s Degree in Accounting from the University of San Carlos. Timothy J. Neher Founder, President, Secretary, Treasurer and sole director of the Company from its founding in February 2008 through June 23, 2010 when Mr. Neher resigned his positions. Mr. Neher is the founding partner of Accelerated Venture Partners, LLC, ( a shareholder of the Company) a private venture capital firm based in Foster City, California, and has over 15 years of experience in connection with the provision of debt and equity financing, mergers and public offering transactions. Timothy is the acting Chief Financial Officer, Treasurer and a Director of Mikojo, Inc. a public reporting company since 2009. Mr. Neher is also Director of Pinpointed Solutions Inc. a private company since 2008, Director of Ipaypod Inc., a private company since 2007 and Director of Internet Card Present, Inc., a private company since 2007. He is also the President, Secretary and sole director of following public reporting companies:Accelerated Acquisitions XIII, Inc., Accelerated Acquisitions XIV, Inc.and director of Virolaba public reporting company since May of 2010. Prior to founding Accelerated Venture Partners, Internet Card Present Industries, Pinpointed Solutions and Ipaypod, Timothy was Chairman and Chief Executive Officer of Wherify Wireless, a private to public company from 1999 to 2007.Other past experience includes roles as VP of Marketing & Sales for CTH Consumer Plastics and VP of Operations for Windy City Product Development. - 54 - On February15, 2008, the Registrant sold 5,000,000 shares of Common Stock to Accelerated Venture Partners, LLC for an aggregate investment of $8,000.00.The Registrant sold these shares of Common Stock under the exemption from registration provided by Section 4(2) of the Securities Act. On June 24, 2010 the Company entered into a Consulting Services Agreement with Accelerated Venture Partners, LLC described in the “CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS” section below. Mr. Neher had no prior relationship with Oro East Mining Inc. There are family relationships between our officers and directors.Each director is elected at our annual meeting of stockholders and holds office until the next annual meeting of stockholders, or until his successor is elected and qualified. DIRECTOR INDEPENDENCE Our board of directors is currently composed of two members, neither of whom does not qualify as an independent director in accordance with the published listing requirements of the NASDAQ Global Market (the Company has no plans to list on the NASDAQ Global Market).The NASDAQ independence definition includes a series of objective tests, such as that the director is not, and has not been for at least three years, one of our employees and that neither the director, nor any of his family members has engaged in various types of business dealings with us. In addition, our board of directors has not made a subjective determination as to our director that no relationships exist which, in the opinion of our board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, though such subjective determination is required by the NASDAQ rules. Had our board of directors made these determinations, our board of directors would have reviewed and discussed information provided by our director and us with regard to our director’s business and personal activities and relationships as they may relate to us and our management. SIGNIFICANT EMPLOYEES AND CONSULTANTS As of the date hereof, the Company has no significant employees. CONFLICTS OF INTEREST Since we do not have an audit or compensation committee comprised of independent directors, the functions that would have been performed by such committees are performed by our director. The Board of Directors has not established an audit committee and does not have an audit committee financial expert, nor has the Board established a nominating committee. The Board is of the opinion that such committees are not necessary since the Company is an early exploration stage company and has only two directors, and to date, such director has been performing the functions of such committees. Thus, there is a potential conflict of interest in that our director and officer has the authority to determine issues concerning management compensation, nominations, and audit issues that may affect management decisions. Other than as described above, we are not aware of any other conflicts of interest of our executive officer and director. INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS No director, person nominated to become a director, executive officer, promoter or control person of our company has, during the last ten years: (i) been convicted in or is currently subject to a pending a criminal proceeding (excluding traffic violations and other minor offenses); (ii) been a 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 any federal or state securities or banking or commodities laws including, without limitation, in any way limiting involvement in any business activity, or finding any violation with respect to such law, nor (iii) any bankruptcy petition been filed by or against the business of which such person was an executive officer or a general partner, whether at the time of the bankruptcy or for the two years prior thereto. - 55 - EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE The table below summarizes all compensation awarded to, earned by, or paid to our Officers for all services rendered in all capacities to us for the fiscal periods indicated. Nameand Principal Position Year Salary($) Bonus($) Stock Awards($) Option Awards($) Non-Equity Incentive Plan Compensation($) Nonqualified Deferred Compensation($) AllOther Compensation($) Total($) Tian Qing Chen (1) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Danni Zhong (2) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Romy Yulo (3) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 (1) Chairman and Chief Executive Officer. (2) President. (3) Chief Operating Officer. Our directors have not received monetary compensation since our inception to the date of this prospectus. We currently do not pay any compensation to any directors for serving on our board of directors. STOCK OPTION GRANTS We have not granted any stock options to our executive officer since our inception. Upon the further development of our business, we will likely grant options to directors and officers consistent with industry standards for junior mineral exploration companies. EMPLOYMENT AGREEMENTS The Company is not a party to any employment agreement and has no compensation agreement with any of its officers and directors. DIRECTOR COMPENSATION The following table sets forth director compensation as of October 15, 2011: Fees Non-Equity Nonqualified Earned Incentive Deferred Paidin Stock Option Plan Compensation AllOther Name Cash($) Awards($) Awards($) Compensation($) Earnings($) Compensation($) Total($) Tian Qing Chen 0 0 0 0 0 0 0 Linda Chen 0 0 0 0 0 0 0 - 56 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table lists, as of October 15, 2011, the number of shares of common stock of our Company that are beneficially owned by (i) each person or entity known to our Company to be the beneficial owner of more than 5% of the outstanding common stock; (ii) each officer and director of our Company; and (iii) all officers and directors as a group. Information relating to beneficial ownership of common stock by our principal shareholders and management is based upon information furnished by each person using “beneficial ownership” concepts under the rules of the Securities and Exchange Commission. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to vote or direct the voting of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under the Securities and Exchange Commission rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary beneficial interest. Except as noted below, each person has sole voting and investment power. The percentages below are calculated based on 27,916,440 shares of our common stock issued and outstanding as of the date of this prospectus. We do not have any outstanding warrant, options or other securities exercisable for or convertible into shares of our common stock. NameandAddress NumberofShares TitleofClass ofBeneficialOwner OwnedBeneficially PercentofClassOwned Common Stock: Mr. Tian Qing Chen, Chief Executive Officer, Secretary, Treasurer and Director (1) 85.43% % Common Stock Accelerated Venture Partners LLC % Common Stock: Romy Yulo, Chief Operating Officer (1) *. Common Stock: Linda Chen, Director (1) * Common Stock Danni Zhong, President (1) 0 * % All executive officers and directors as a group % (1) c/o Oro East Mining, Inc.,1127 Webster Street, Suite 28, Oakland, CA 94607. *less than 1%. - 57 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS On February15, 2008, the Registrant sold 5,000,000 shares of Common Stock to Accelerated Venture Partners, LLC for an aggregate investment of $8,000.00. On June 23, 2010, Mutual Gain Hong Kong Group Limited (“Purchaser”) controlled by Tian Qing Chen agreed to acquire 23,850,000 shares of the Company’s common stock par value $0.0001 (the “Shares”) for a price of $0.0001 per share. At the same time, Accelerated Venture Partners, LLC agreed to tender 3,500,000 of its 5,000,000 shares of the Company’s common stock par value $0.0001 for cancellation. Following these transactions, Mutual Gain Hong Kong Group Limited owned 94.1% of the Company’s 25,350,000, issued and outstanding shares of common stock par value $0.0001 and the interest of Accelerated Venture Partners, LLC was reduced to approximately 5.9% of the total issued and outstanding shares. Simultaneously with the share purchase, Timothy Neher resigned from the Company’s Board of Directors effective immediately and Tian Qing Chen was simultaneously appointed to the Company’s Board of Directors. Such action represented a change of control of the Company. The Purchaser used its working capital to acquire the Shares. The Purchaser did not borrow any funds to acquire the Shares. Prior to the purchase of the Shares, the Purchaser was not affiliated with the Company. However, the Purchaser is now deemed an affiliate of the Company as a result of its stock ownership interest in the Company. The purchase of the shares by the Purchaser was completed pursuant to a written Subscription Agreement with the Company. The purchase was not subject to any other terms and conditions other than the sale of the Shares in exchange for the cash payment. On June 24, 2010, the Company entered into a Consulting Services Agreement with Accelerated Venture Partners LLC (“AVP”), a company controlled by Timothy J. Neher. The agreement requires AVP to provide theCompanywith certain advisory services that includereviewing the Company’s business plan, identifying and introducing prospective financial and business partners, and providing general business advice regarding the Company’s operations and business strategy in consideration of (a) an option granted by the Company to AVP to purchase 1,500,000 shares of the Company’s common stock at a price of $0.0001 per share (the “AVP Option”) (which was immediately exercised by the holder) subject to a repurchase option granted to the Company to repurchase the shares at a price of $0.0001 per sharein the event the Company fails to complete funding as detailed in the agreement subject to the following milestones: .● Milestone 1 - The right of repurchase will lapse with respect to 70% of the Shares upon a successful reverse merger with a publicly listed SEC reporting entity or Company’s securing at least $5 million in available cash, ● Milestone2 - Company’s right of repurchase will lapse with respect to 20% of the Shares upon securing $10 million in available cash (inclusive of any amounts attributable to Milestone 1); ● Milestone3 - Company’s right of repurchase will lapse with respect to 10% of the Shares upon securing $20 million in available cash (inclusive of any amounts attributable to Milestone 2); and (b) cash compensation at a rate of $133,333 per month. The payment of such compensation is subject to Company’s achievement of certain designated milestones, specifically, cash compensation of $400,000 is due consultant upon the achievement of Milestone 1, $400,000 upon the achievement of Milestone 2 and $800,000 upon the achievement of Milestone 3. Upon achieving each Milestone, the cash compensation is to be paid to consultant in the amount then due at the rate of $133,333 per month. The total cash compensation to be received by the consultant is not to exceed $1,600,000 unless the Company receives an amount of funding in excess of the amount specified in Milestone 3. If the Company receives equity or debt financing that is an amount less than Milestone 1, in between any of the above Milestones or greater than the above Milestones, the cash compensation earned by the Consultant under this Agreement will be prorated according to the above Milestones. The Company also has the option to make a lump sum payment to AVP in lieu of all amounts payable thereunder. - 58 - The CEO of the company has paid expenses on behalf of the company totaling $116,919 since July 1, 2010. The balance is unsecured, non interest bearing and due on demand. DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES Our Bylaws provide to the fullest extent permitted by law that our directors or officers, former directors and officers, and persons who act at our request as a director or officer of a body corporate of which we are a shareholder or creditor shall be indemnified by us. We believe that the indemnification provisions in our By-laws are necessary to attract and retain qualified persons as directors and officers. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling the Company pursuant to provisions of the State of Delaware, the Company has been informed that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. WHERE YOU CAN FIND MORE INFORMATION We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and accordingly, file current and periodic reports, proxy statements and other information with the SEC.We have also filed a registration statement on Form S-1 under the Securities Act, as amended, in connection with this offering.We have also 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 by this prospectus. This prospectus, which forms a part of the registration statement, does not contain all the information set forth in the registration statement, as permitted by the rules and regulations of the Commission. For further information with respect to us and the securities offered by this prospectus, reference is made to the registration statement. We do not file reports with the Securities and ExchangeCommission, and we will not otherwise be subject to the proxy rules. The registration statement and other information may be read and copied at the Commission’s Public Reference Room at treet, N.E., Washington, D.C. 20549.The public may obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. The Commission maintains a web site at http://www.sec.gov that contains reports and other information regarding issuers that file electronically with the Commission. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE MALONE BAILEY, LLP is our independent registered public accounting firm. There have not been any changes in or disagreements with accountants on accounting and financial disclosure or any other matter. On March 17, 2011, the Board of Directors of the Company determined to dismiss its former independent registered public accounting firm, Paritz & Co. (“Paritz”) effective March 17, 2011.Paritz has served the Company well since 2008.Under Item 304 of Regulation S-K, the reason for the dismissal was neither resignation nor declining to stand for re-election by Paritz. On March 17, 2011, the Company decided to engage Malone and Bailey, Huston TX as its independent registered public accounting firm to report on the Company’s financial statements for the fiscal year ended December 31, 2010, including performing the required quarterly reviews. During the two most recent fiscal years and the interim period through the date of the resignation, there were no disagreements with Paritz on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to Paritz’s satisfaction, would have caused Paritz to make reference to the subject matter of the disagreements in connection with its reports. - 59 - During the two most recent fiscal years through the date of resignation, the reports of Paritz did not contain any adverse opinion or disclaimer of opinion, or was modified as to uncertainty, audit scope, or accounting principles other than the following: 1) The Report of Independent Registered Public Accounting Firm issued by Paritz with respect to the Company’s audited financial statements for the year ended December 31, 2009 contained the following statement: “The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has incurred a loss since inception, has a net accumulated deficit and may be unable to raise further equity. These factors raise substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.” 2) The Report of Independent Registered Public Accounting Firm issued by Paritz with respect to the Company’s audited financial statements for the year ended December 31, 2008 contained the following statement: “The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has incurred a loss since inception, has a net accumulated deficit and may be unable to raise further equity. These factors raise substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.” During the two most recent fiscal years and any subsequent interim period through the date of change in accountants, there were no reportable events (as defined in Regulation S-K Item 304(a)(1)(v)). The Company requested that Paritz furnish it with a letter addressed to the Securities and Exchange Commission ("SEC") stating whether or not Paritz agreed with the above statements.A copy of Paritz’s letter to the SEC dated March 29, 2011 is filed as Exhibit 16.1 to the Company’s Current Report on Form 8-K (File No. 000-53136) filed with the SEC on March 17, 2011. During the two most recent fiscal years and the subsequent interim period through the date of the dismissal of Paritz, the Company did not consult with Malone and Bailey regarding any matters described in Item 304(a)(2)(i)or(ii) of Regulation S-K. - 60 - ORO EAST MINING, INC. INDEX TO FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm F-2 Financial Statements F-3 Balance Sheets F-4 Statements of Operations F-5 Statements of Stockholders’ Equity (Deficit) F-6 Statements of Cash Flows F-7 Notes to Financial Statements F-8 Financial Statements for the nine months ended September 30, 2011 (unaudited) F-12 Balance Sheets for the nine months ended September 30, 2011 (unaudited) F-12 Statements of Operations for the nine months ended September 30, 2011 (unaudited) F-13 Statements of Cash Flows for the nine months ended September 30, 2011 (unaudited) F-14 Notes to Financial Statements for the nine months ended September 30, 2011 (unaudited) F-15 F - 1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders Oro East Mining, Inc. (formerly Accelerated Acquisitions I, Inc.) (An Exploration Stage Company) Oakland, California We have audited the accompanying consolidated balance sheets of Oro East Mining, Inc. (formerly Accelerated Acquisitions I, Inc.) (an exploration stage company) (the “Company”) as of December 31, 2010 and the related consolidated statements of operations, changes in stockholders' equity (deficit), and cash flows for the year then ended and from February 15, 2008 (inception) through December 31, 2010. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States ofAmerica).Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2010 and the results of its operations, and its cash flows for the year then ended and from February 15, 2008 (inception) through December 31, 2010 in conformity with accounting principles generally accepted in the United States of America. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has recurring losses and has not generated revenues from its planned principal operations. These factors raise substantial doubt that the Company will be able to continue as a going concern.Management’s plans regarding those matters also are described in Note 1.The financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/MALONE BAILEY, LLP MALONE BAILEY, LLP www.malonebailey.com Houston, Texas April 15, 2011 F - 2 Report of Independent Registered Public Accounting Firm Board of Directors and Stockholders We have audited the accompanying balance sheet ofAccelerated Acquisitions I, Inc. (a development stage company) as of December 31, 2009 and the related statements of operations, stockholder's deficiency and cash flows for the year ended December 31, 2009 and the period from inception (February 15, 2008) to December 31, 2009. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as, evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of(a development stage company) as of December 31, 2009 and December 31, 2008 and the results of its operations and its cash flows for the year ended December 31, 2009, the period from inception (February 15, 2008) to December 31, 2008 and the period from inception (February 15, 2008) to December 31, 2009 in conformity with accounting principles generally accepted in the United States of America. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has incurred a loss since inception, has a net accumulated deficit and may be unable to raise further equity.These factors raise substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/ Paritz & Co, PA Paritz & Co, PA Hackensack, New Jersey March 30, 2010 F - 3 ORO EAST MINING, INC (Formerly known as Accelerated Acquisitions I, Inc) (An Exploration Stage Company) CONSOLIDATED BALANCE SHEETS December31 December31, CURRENT ASSETS: Cash $ $ - Prepaid Expenses - Total Current assets NON CURRENT ASSETS: Fixed Assets TOTAL ASSETS $ $ - LIABILITIES AND STOCKHOLDER’S EQUITY (DEFICIT) CURRENT LIABILITIES Accrued liabilities $ $ Accounts payable - Short term debt - Shareholder advances TOTAL LIABILITIES $ $ STOCKHOLDERS’ EQUITY (DEFICIT): Preferred stock, $.0001 par value; 10,000,000 shares authorized; none issued and outstanding - - Common stock, $.0001 par value; 100,000,000 shares authorized; 27,100,500 and 5,000,000shares issued and outstanding at December 31, 2010 and December 31, 2009, respectively Additional paid-in capital Deficit accumulated during the exploration stage ) ) TOTAL STOCKHOLDERS’ EQUITY (DEFICIT) ) TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) $ $ - See accompanying notes to consolidated financial statements. F - 4 ORO EAST MINING, INC (Formerly known as Accelerated Acquisitions I, Inc) (An Exploration Stage Company) Consolidated Statements of Expenses Year Ended December 31, Year Ended December31, February 15, 2008 (Inception) through December31, General and administrative $ $ $ TotalOperating Expenses Other Income (expense) Interest Expense - Foreign currency loss Total other expense - Net Loss $ ) $ ) $ ) Basic earnings (loss)per share—Basic and Diluted $ ) $ ) Weighted average number of common shares outstanding See accompanying notes to financial statements. F - 5 ORO EAST MINING, INC) (Formerly known as Accelerated Acquisitions I, Inc) (An Exploration Stage Company) CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY (DEFICIT) From February 15, 2008 (Inception) through December 31, 2010 (Deficit) Accumulated Additional Duringthe PreferredStock CommonStock Paid-in Development Stockholder’s Shares Amount Shares Amount Capital Stage Deficit Issuance of common stock - $ - $ $ $ - $ Net (loss) - ) ) BALANCE AT DECEMBER 31, 2008 - - ) $ ) Net (loss) - ) ) BALANCE AT DECEMBER 31, 2009 - - ) $ ) Shares issued to investors - - Shares cancelled, and debt forgiven by investors - Shares issued to investors - - Shares issued in a private offering 15 - Shares issued for cash 5 - Shares issued for cash 5 - Net (Loss) ) ) BALANCE AT DECEMBER 31, 2010 - $ - $ $ $ ) $ See accompanying notes to consolidated financial statements. F - 6 ORO EAST MINING, INC (Formerly known as Accelerated Acquisitions I, Inc) CONSOLIDATED STATEMENTS OF CASH FLOWS February 15, For the For the Fiscal Fiscal year (Inception) Year ended ended through December 31, December 31, December 31, CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ) $ ) $ ) Adjustments to reconcile net loss to net cash used in operating activities: Changes in operating assets and liabilities: Prepaid expenses ) ) Accounts payable Accrued liabilities Net cash used in operating activities ) ) ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of the fixed assets ) - ) Net cash used in investing activities ) ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from the issuance of common stock - Shareholder advances ) ) Borrowings on debt Shareholder Advances/Repayments - Net cash provided by financing activities NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ) Cash and cash equivalents at beginning of period - CASH AND CASH EQUIVALENTS AT END OF PERIOD $ $ - $ Non-cash Transactions Debt forgiven by the shareholders $ Fixed assets purchased on short term debt $ The accompanying notes to the consolidated financial statements are an integral part of these statements F - 7 ORO EAST MINING, INC (Formerly known as Accelerated Acquisitions I, Inc) (an Exploration Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2010 NOTE1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (a)Organization and Business: Oro East Mining, Inc., formerly known as Accelerated Acquisitions I, Inc,(the“Company”) was incorporated inDelaware on February 15, 2008 for the purpose of raising capital that is intended to be used in connection with its business plan which may include a possible merger, acquisition or other business combination with an operating business. On July 2, 2010, the Company changed its business plan to become an exploration and refining company for the mining of gold, copper, and other precious or industrial mineral deposits through the acquisition of certain rights in the Republic of the Philippines. On that date, the Company entered into an Assignment of Rights Agreement with Oro-East Mining Company LTD (“Oro”). Oro assigned to the Company certain rights and obligations with respect to the permitted mining claims as described. The Company will assume the rights and obligations of Oro to explore, extract, refine and produce precious metals and other industrial deposits on the claims and earn fees with respect to such services.Thus, the Company commenced business as an exploration, mining, refinery and production company. The Company intends to focus on extracting gold, silver, copper, iron ore and other industrial minerals to primarily meet the demands of the Chinese Government and companies for the mined minerals. On September 20, 2010, Accelerated Acquisitions I, Inc changed is name to Oro East Mining, Inc On November 18, 2010, Oro East Mining, Inc. allocated $50,000 to open a new bank account in the name of Oro East Greentech Philippines Inc. (“Greentech”).Greentech is wholly owned by the Company and will be in charge of the mining business in Philippines. There areno transactions for Greentech in 2010 since the operations did not start until 2011. The Company is currently in the exploration stage as outline perASC 915-15 .All activities of the Company to date relate to its organization, initial exploration, initial funding and share issuances. (b)Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the balance sheet and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. (c)Cash and Cash Equivalents: For purposes of the statement of cash flows, the Company considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents. The total cash and cash equivalents were $ 126,355 and zero as of December 31, 2010 and 2009 respectively (d)Loss per Common Share: Basic loss per share is calculated using the weighted-average number of common shares outstanding during each reporting period. Diluted loss per share includes potentially dilutive securities such as outstanding options and warrants, using various methods such as the treasury stock or modified treasury stock method in the determination of dilutive shares outstanding during each reporting period. F - 8 (e)Fair Value of Financial Instruments: The carrying value of cash equivalents approximates fair value due to the short period of time to maturity. (f)Recent Accounting Pronouncements We do not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’sresults of operations, financial position or cash flow. (g)Going Concern The accompanying financial statements have been prepared on a going concern basis, which assumes the Company will realize its assets and discharge its liabilities in the normal course of business. As reflected in the accompanying financial statements, the Company has a deficit accumulated during the development stage of $386,840, and has negative working capital of $230,896 at December 31, 2010. The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management’s plan includes obtaining additional funds by equity financing and/or related party advances, however there is no assurance of additional funding being available. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might arise as a result of this uncertainty. NOTE2 - CAPITAL STOCK: On June 23, 2010, Mutual Gain Hong Kong, Limited. acquired 23,850,000 shares for $0.0001 per share or $2,385. At the same time, Accelerated Venture Partners, LLC (“AVP”), a company controlled by Timothy J. Neher canceled 3,500,000 of its 5,000,000 sharesand forgave $7,443 payable by the company. Mutual Gain caused Oro-East Mining Company, LTD (“Oro”) to enter into the Assignment of Rights Agreement with the Company (see below). Following these transactions, Mutual Gain Hong Kong, Limited owned 94.1% of the Company’s 25,350,000 issued and outstanding shares and the interest of AVP was reduced to approximately 5.9%.Timothy Neher resigned and Tian Qing Chen was appointed to the Company’s Board of Directors. Such action represented a change of control of the Company. Prior to the purchase of the Shares, Mutual Gain was not affiliated with the Company. However, Mutual Gain is now deemed an affiliate of the Company as a result of its stock ownership interest in the Company. The purchase of the shares by Mutual Gain was completed pursuant to a written Subscription Agreement with the Company. The purchase was not subject to any other terms and conditions other than the sale of the Shares in exchange for the cash payment. The Company intends to file a Certificate of Amendment to its Certificate of Incorporation with the Secretary of State of Delaware in order to change its name to “Oro East Mining Inc.”. On June 24, 2010, the Company entered into a Consulting Services Agreement with AVP. The agreement requires AVP to provide the Company with certain consultingservices in consideration of (a) an option granted by the company to AVP to purchase 1,500,000 shares of the company’s common stock at a price of $0.0001 per share (which option was immediately exercised by the holder) subject to a repurchase option granted to the company to repurchase the shares in the event the Company fails to complete funding as detailed in the agreement and (b) cash compensation at a rate of $133,333 per month. The payment of such compensation is subject to the company’s achievement of certain designated milestones detailed in the agreement and a company option to make a lump sum payment to AVP in lieu of all amounts payable thereunder. As of December 31, 2010, AVP exercised the option and purchased 1,500,000 shares of the company’s common stock subject to the repurchase by the company outlined above. F - 9 On July 6, 2010, the Company sold 150,500 common shares at a price of $2.00 per share to a total of 35 investors. The Company raised a total of $201,500 in this offering. On December 22, 2010 and December 27, 2010, 50,000 shares were issued to each of the two private investors for cash of $100,000 each. NOTE3- PROPERTY AND EQUIPMENT: Property and equipment is located at the Company's headquarters in the Philippines and is recorded at cost less accumulated depreciation. Depreciation and amortization is calculated using the straight-line method over the expected useful life of the asset, after the asset is placed in service. The Company generally uses the following depreciable lives for its major classifications of property and equipment: Description Useful Lives Computer hardware 3-5 years Computer software 3-5 years Furniture and Office 7 years Equipment 7 years The company bought 3 heavy trucks and other mining equipment for $59,091 and $204,093, respectively as of December 31, 2010.The company has not depreciated these fix assets as of December 31, 2010 since the assets were not put in service until 2011. NOTE 4 -SHORT-TERM NOTES PAYABLE The company signed a contract with Sichuan Dujiangyan Weida Company (“Weida”), Ltd on September 3, 2010 for equipment and services originally due by November 2010.Weida gave the company an $860,000 credit line with interest at 4% per annum. Weida has the option to receive the consideration as stock at $2.00 USD per share, up to the amount Weida is owed. On November 30, 2010, the company and Weida signed an addendum to modify the delivery date to April 10, 2011. As of December 31, 2010, the Company has borrowed $199,169 against the line of credit for purchasing the equipment. The company also owes $82,000 to an individual, due June 30, 2011 with interest at 5% with no collateral. NOTE 5 -INCOME TAXES The Company utilizes the asset and liability method of accounting for income taxes where the deferred tax assets and liabilities are determined based on the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities forfinancial and income tax purposes. During 2010, Oro East Mining incurred a net loss and therefore has no tax liability. The net deferred tax asset generated by the loss carry-forward has been fully reserved. The cumulative net operating loss carry-forward is $382,187 and it will expire in 2041 An allowance against deferred tax assets is recognized, when it is more likely than not, that such tax benefits will not be realized. At December 31, 2010 and 2009, deferred tax asset consisted of $129,944 and $5,994 respectively with full valuation allowance for both the years. NOTE 6 - RELATED PARTY TRANSACTIONS The CEO of the company paid expenses on behalf of the company in the amount of $1,930, The balance is unsecured, non interest bearing and due on demand. F - 10 NOTE 7 - SUBSEQUENT EVENTS On January 10, 2011, 85,000 shares are issued to a private investor at $2.00 per share for a total $170,000 cash. On January 18, 2011, 25,000 shares are issued to a private investor at $2.00 per share for a total $50,000.00 cash. On February 16, 2011, 15,000 shares are issued to a private investor at $2.00 per share for a total of $30,000.00 cash. F - 11 ORO EAST MINING, INC. (An Exploration Stage Company) BALANCE SHEETS (Unaudited) September 30, December31, (Restated) ASSETS CURRENT ASSETS: Cash and cash equivalents, $ $ Prepaid Expenses Total Current Assets NON CURRENT ASSETS Fixed Assets (net of depreciation of $28,200) TOTAL ASSETS $ $ LIABILITIES AND STOCKHOLDER’S EQUITY (DEFICIT) CURRENT LIABILITIES Accrued liabilities $ $ Accounts payable Short term debt Shareholder advances TOTAL LIABILITIES $ $ STOCKHOLDERS’ EQUITY: Preferred stock, $.0001 par value; 10,000,000 shares authorized; none issued and outstanding - Common stock, $.0001 par value; 100,000,000 shares authorized; 27,630,000and 27,100,500 shares issued and outstanding at September 30, 2011 and December 31, 2010, respectively Additional paid-in capital Deficit accumulated during the development stage ) ) TOTAL STOCKHOLDERS’ EQUITY TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ $ See notes to unaudited financial statements. F - 12 ORO EAST MINING, INC. (An Exploration Stage Company) Statements of Expenses (Unaudited) FOR NINE MONTHS ENDED SEPTEMBER 30, 2 Three months ended Nine months ended February 15,2008(Inception) September 30, September 30, through September 30, 2011 (Restated) (Restated) (Restated) Expenses: Exploration costs $ $ - $ $ - $ General and administrative Depreciation expense - - Total Operating Expenses ) Interest Income 58 - - Interest Expense ) - ) - ) Foreign exchange gain/(loss) - - Total other income/(expense) - - Net Loss $ ) ) $ ) $ ) $ ) PER SHARE INFORMATION: Basic and diluted, net loss per share $ ) $ ) $ ) $ ) Basic and diluted, weighted average shares outstanding See notes to unaudited financial statements. F - 13 ORO EAST MINING, INC. An Exploration Stage Company STATEMENTS OF CASH FLOWS (unaudited) FOR NINE MONTHS ENDED SEPTEMBER 30, 2 Forthe Nine months ended September 30, Forthe Nine months ended September 30, (Restated) February15, (Inception) through September 30, Restated Restated CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) $ ) $ ) $ ) Adjustments to reconcile net loss to net cash used in operating activities. Shares issued for services - Depreciation expense - Changes in operating assets and liabilities: Prepaid expenses and other current assets ) ) Increase (decrease) in accounts payable and accrued expenses Net cash used in operating activities ) ) ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of fixed assets - ) ) Net cash used in investing activities - ) ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of common stock Borrowings on debt - Shareholder advances ) Net cash provided by financing activities NNET(DECREASE)INCREASE IN CASH AND CASH EQUIVALENTS Cash and cash equivalents at beginning of period - - CASH AND CASH EQUIVALENTS AT END OF PERIOD $ $ $ NON-CASH TRANSACTIONS Debt forgiven by shateholders Fixed assets purchased on short term debt Fixed assets purchased on shareholder advances See notes to unaudited financial statements. F - 14 ORO EAST MINING, INC. (An Exploration Stage Company) NOTES TO UNAUDITED FINANCIAL STATEMENTS September 30, 2011 NOTE 1-ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (a)Organization and Business: Oro East Mining, Inc.(“Oro” or the “Company”) was incorporated in Delaware on February 15, 2008 for the purpose of raising capital that is intended to be used in connection with its business plan which may include a possible merger, acquisition or other business combination with an operating business. On July 2, 2010, the Company changed its business plan to become an exploration and refining company for the mining of gold, copper, and other precious or industrial mineral deposits through the acquisition of certain rights in the Republic of the Philippines. On that date, the Company entered into an Assignment of Rights Agreement with Oro-East Mining Company LTD.Oro assigned to the Company certain rights and obligations with respect to the permitted mining claims described in the Rights Agreement.Pursuant to the Rights Agreement, the Company will assume the rights and obligations of Oro to explore, extract, refine and produce precious metals and other industrial deposits on the claims and earn fees with respect to such services.By entering into the Rights Agreement, the Company commenced business as an exploration, mining, refinery and production company. On November 18th, 2010, Oro East Mining, Inc. invested $50,000 to establish Oro East Greentech Philippines Inc.(“Greentech”). Greentech is wholly owned by Oro East and will be in charge of the mining business in Philippines. The financial statement presented are the consolidated for Oro East Mining, Inc. and Oro East Greentech Philippines Inc. The Company is currently in the development stage. All activities of the Company to date relate to its organization, initial funding and share issuances. (b)Basis of Presentation The accompanying Interim Financial Statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission.In the opinion of management, all adjustments for a fair statement of the results and operations and financial position for the interim periods presented have been included.All such adjustments are of a normal recurring nature. The financial information should be read in conjunction with the Financial Statements and notes thereto included in the Company’s Form 10-K Annual Report for the year ended December 31, 2010. The September 30, 2011 consolidated financial statements presented herein may not be indicative of the results of the Company for the year ending December 31, 2011. (c)Going Concern The accompanying financial statements have been prepared on a going concern basis, which assumes the Company will realize its assets and discharge its liabilities in the normal course of business. As reflected in the accompanying financial statements,the Company has a negative deficit accumulated during the development stage of $785,551 and has negative working capital of $212,308 at September 30, 2011. The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management’s plan includes obtaining additional funds by equity financing and/or related party advances; however there is no assurance of additional funding being available. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might arise as a result of this uncertainty. F - 15 (d)Exploration Costs Mineral property exploration costs are expensed as incurred until such time as economic reserves are quantified. To date Oro East Mining, Inc. has not established any proven or probable reserves on its mineral properties. NOTE 2- RELATED PARTY TRANSACTIONS The CEO of the company has paid expenses on behalf of the company totaling $145,900. The balance is unsecured, non interest bearing and due on demand. NOTE 3- EQUITY During the 9 months ended September 30, 2011, the Company sold 529,500 shares at $2 per share for $1,059,000. NOTE 4 - CAPITALIZATION OF ROAD IMPROVEMENT During the first nine months of 2011, Oro East built roads in the Philippines to facilitate the exploration of mining properties. The roads were built without a signed property lease and the Company considers these as reasonable exploration expense and has capitalized the total road cost of $641,701. Since, the business operations have not commenced as of September 30, 2011 no depreciation is recognized. NOTE 5- SUBSEQUENT EVENTS On October 6, 2011, company issued 50,000 at $2 per share for $100,000. F - 16 NOTE 6- RESTATEMENT During November 2011, we discovered some errors in our financial statements , including (a) capitalized road costs that should have been expensed ($641,701), (b) depreciation not taken on trucks ($28,200) and (c) failure to previously record $180,970 in share based compensation for strategic and marketing consultingThe effects of these restatement on reported amounts for the six months ended June 30, 2011 are presented below in the following tables: Balance sheets As of September 30, 2011 As Reported Adjustments Restated ASSETS TOTAL CURRENT ASSETS $ $ Property, Plant and Equipment (net of depreciation of $28,200) ) Other Assets - - TOTAL ASSETS $ $ LIABILITIES AND STOCKHOLDERS' (DEFICIT) TOTAL LIABILITIES $ $ Commitments and Contingencies STOCKHOLDERS' (DEFICIT): Preferred stock, $.0001 par value; 10,000,000 shares authorized; no shares issued and outstanding at September 30, 2011 and December 31, 2010 - - Common stock, $.0001 par value; 100,000,000 shares authorized; 27,630,500 and 5,000,000 shares issued and outstanding at September 30, 2011 and December 31, 2010 Additional paid-in capital Deficit accumulated during the development stage ) ) ) Total Stockholders' (Deficit) TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) $ $ F - 17 Statement of expenses For three months ended September 30, 2011 As Reported Adjustments Restated Operating Expenses: Exploration cost $ - $ General and administrative expenses Depreciation expense - Total operating expenses Loss from Operations $ ) $ ) Other Income/(Expense) Foreign exchange gain/(loss) ) Interest expense ) - ) Interest income 58 - 58 Total Other Income (Expense) Net (Loss) $ ) $ ) Net (Loss) Per Share: Basic and Diluted $ ) $ ) Weighted Average Shares Outstanding Basic and Diluted F - 18 Statement of expenses For nine months ended September 30, 2011 As Reported Adjustments Restated Operating Expenses: Exploration cost $ - $ General and administrative expenses Depreciation expense - Total operating expenses Loss from Operations $ ) $ ) Other Income/(Expense) Foreign exchange gain/(loss) - Interest expense ) - ) Interest income - Total Other Income (Expense) Net (Loss) $ ) $ ) Net (Loss) Per Share: Basic and Diluted $ ) $ ) Weighted Average Shares Outstanding Basic and Diluted F - 19 Statement of cash flows For nine months ended September 30, 2011 As Reported Adjustments Restated Cash flows from Operating Activities: Net(loss) $ ) ) $ ) Adjustments to reconcile net loss to net cash used in operating activities: - Shares issued for services - Depreciation expense - Changes in operating assets an dliabilities: - Prepaid expenses and other current assets Increase(decrease) in accounts payable Net cash used in operating activities ) ) Cash flows from investing activites: Purchase of fixed assets ) - Net cash used in investing activities ) - Cash flows from financing activities: Proceeds from issuance of common stock shareholder advances - - Capital Stock Net cash provided by financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period $ $ Noncash investing and financing activities: Fixed assets purchased on shareholder advances ) - F - 20 Statement of cash flows From February 15, 2008 (inception) through September 30, 2011 As Reported Adjustments Restated Cash flows from Operating Activities: Net(loss) $ ) ) $ ) Adjustments to reconcile net loss to net cash used in operating activities: Shares issued for services - Depreciation expense - Changes in operating assets an dliabilities: Prepaid expenses and other current assets ) ) Increase(decrease) in accounts payable Net cash used in operating activities ) ) Cash flows from investing activites: Purchase of fixed assets ) ) Net cash used in investing activities ) ) Cash flows from financing activities: Proceeds from issuance of common stock shareholder advances Capital Stock Net cash provided by financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of period - - Cash and cash equivalents at end of period $ $ Noncash investing and financing activities: Debt forgiven by shareholders - Fixed assets purchased on short term debt - Fixed assets purchased on shareholder advances ) - F - 21 NOTE 7– Restatement Three and nine months ended September 30, 2010 In connection with our review of the financial statements of Oro East Mining, Inc for the quarter ended September 30, 2011, we identified a clerical error in statement of expenses for the three and nine months ended September 30, 2010 and statement of cash flows for the nine months ended September 30, 2010. The effects of the restatement on reported amounts for the quarter ended September 30, 2010 are presented below in the following tables: Statement of Expenses Three months ended September 30, 2010 As Reported Adjustments As Restated General and Administrative $ $ ) $ Net operating expenses ) Net Loss $ ) $ $ ) Net Loss per share: Basic and Diluted $ ) $ - $ ) Weighted average common shares outstanding: Basic and Diluted Statement of Expenses Nine months ended September 30, 2010 As Reported Adjustments As Restated General and Administrative $ $ ) $ Net operating expenses ) Net Loss $ ) $ $ ) Net Loss per share: Basic and Diluted $ ) $ - $ ) Weighted average common shares outstanding: Basic and Diluted F - 22 Statement of Cash flows Nine months ended September 30, 2010 As Reported Adjustments As Restated Cash flows from Operating Activities: Net(loss) $ ) $ ) $ ) Prepaid expenses and other current assets - ) ) Increase(decrease) in accounts payable ) Net cash used in operating activities ) ) Cash flows from investing activities: Purchase of fixed assets - ) ) Net cash used in investing activities - ) ) Cash flows from financing activities: Proceeds from issuance of common stock Shareholder advances ) Capital Stock 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 $ ) $ Noncash investing and financing activities: Debt forgiven by shareholders - Proceeds from the issuance of common stock ) - Cancellation of common shares ) - Additional paid-in capital ) - Stock subscription receivable ) - F - 23 [OUTSIDE BACK COVER PAGE] PROSPECTUS ORO EAST MINING, INC. COMMON STOCK TO BE SOLD BY ORO EAST MINING, INC. COMMON STOCK TO BE SOLD BY CURRENT SHAREHOLDERS We have not authorized any dealer, salesperson or other person to give you written information other than this prospectus or to make representations as to matters not stated in this prospectus. You must not rely on unauthorized information. This prospectus is not an offer to sell these securities or a solicitation of your offer to buy the securities in any jurisdiction where that would not be permitted or legal. Neither the delivery of this prospectus nor any sales made hereunder after the date of this prospectus shall create an implication that the information contained herein nor the affairs of the Issuer have not changed since the date hereof. Until , 2012 (90 days after the date of this prospectus), all dealers that effect transactions in these shares of common stock may be required to deliver a prospectus. This is in addition to the dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to their unsold allotments or subscriptions. THE DATE OF THIS PROSPECTUS IS , 2012 PART II - INFORMATION NOT REQUIRED IN PROSPECTUS OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION The following table sets forth the estimated expenses in connection with the issuance and distribution of the securities being registered hereby. All such expenses will be borne by the Company; none shall be borne by any selling security holders. Amount Item (US$) SEC Registration Fee $ Transfer Agent Fees Legal Fees Accounting Fees Printing Costs Miscellaneous 410 TOTAL $ 16,899 INDEMNIFICATION OF DIRECTORS AND OFFICERS The Registrant has authority under General Corporation Law of the State of Delaware to indemnify its directors and officers to the extent provided in such statute. The Registrant’s Articles of Incorporation provide that the Registrant shall indemnify each of its executive officers and directors against liabilities imposed upon them (including reasonable amounts paid in settlement) and expenses incurred by them in connection with any claim made against them or any action, suit or proceeding to which they may be a party by reason of their being or having been a director or officer of the Registrant. The provisions of the General Corporation Law of the State of Delaware that authorize indemnification do not eliminate the duty of care of a director, and in appropriate circumstances equitable remedies such as injunctive or other forms of nonmonetary relief will remain available under Delaware law. In addition, each director will continue to be subject to liability for (a) violations of the criminal law, unless the director had reasonable cause to believe his conduct was lawful or had no reasonable cause to believe his conduct was unlawful; (b) deriving an improper personal benefit from a transaction; (c) voting for or assenting to an unlawful distribution; and (d) willful misconduct or a conscious disregard for the best interests of the Registrant in a proceeding by or in the right of the Registrant to procure a judgment in its favor or in a proceeding by or in the right of a shareholder. The statute does not affect a director’s responsibilities under any other law, such as the federal securities laws or state or federal environmental laws. Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended (the “1933 Act”) may be permitted to directors, officers or controlling persons of Registrant, pursuant to the foregoing provisions or otherwise, Registrant has been advised that, in the opinion of the Securities and Exchange Commission (the “Commission”), such indemnification is against public policy as expressed in the 1933 Act, and is therefore unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of Registrant in the successful defense of any suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered hereunder, Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the 1933 Act and will be governed by the final adjudication of such issue. II - 1 RECENT SALES OF UNREGISTERED SECURITIES NameofPurchaser DateofSale Titleof Security Amountof Securities Sold Consideration Accelerated Venture Partners LLC (1) February 15, 2008 Common Stock $ Mutual Gain Hong Kong Group Limited June 23, 2010 Common Stock Accelerated Venture Partners LLC June 24, 2010 Common Stock Torin Yao July 6, 2010 Common Stock Yi Lun Yao July 6, 2010 Common Stock Jie Zhen Lu July 6, 2010 Common Stock Jia Wei Yao July 6, 2010 Common Stock Henry Zhao July 6, 2010 Common Stock Lily Kwan July 6, 2010 Common Stock Cindy Ka Hei Lai July 6, 2010 Common Stock Wen Liu July 6, 2010 Common Stock Kruz Investments.LLC July 6, 2010 Common Stock Fei L Tsai July 6, 2010 Common Stock Chi Kit Chung July 6, 2010 Common Stock Sammy Ming Pui Chung July 6, 2010 Common Stock Reagan Yu-Hin Chung July 6, 2010 Common Stock Leonne Yu-Ton Chung July 6, 2010 Common Stock Melissa Wai Chow July 6, 2010 Common Stock Solar Infiniti Corporation July 6, 2010 Common Stock Ching Yuen Chung July 6, 2010 Common Stock Anzhong Chen July 6, 2010 Common Stock Ricardo C Soltero July 6, 2010 Common Stock Jeffrey J. Hayden July 6, 2010 Common Stock Yiming Zhong July 6, 2010 Common Stock Linda P Chen July 6, 2010 Common Stock Edward Luo July 6, 2010 Common Stock Gene Luo July 6, 2010 Common Stock Ayana Chen July 6, 2010 Common Stock Ranolfo S. Yulo July 6, 2010 Common Stock Patty M Chu36-10634 July 6, 2010 Common Stock Adrea Chu July 6, 2010 Common Stock Samuel Wong July 6, 2010 Common Stock Sher Jeong Wong July 6, 2010 Common Stock Mui Ling Wong July 6, 2010 Common Stock J. Cooper Tsai July 6, 2010 Common Stock Entrust Administration, Inc. FBO:IRA# 30602 Timothy Chen Benficiary for Wanda Wai Yee Lew (Deceased) July 6, 2010 Common Stock Entrust Administration, Inc. FBO: Roth IRA #30625Dennies Tan Ni Chung Beneficiary Wanda Wai Yee Lew (Deceased) July 6, 2010 Common Stock Entrust Administration, Inc. FBO:Coverdell IRA # 33993Ayana X. Y. Chen July 6, 2010 Common Stock Link Harvest Green Resources Limited December 22, 2010 Common Stock Global Burner Limited December27, 2010 Common Stock II - 2 NameofPurchaser DateofSale Titleof Security Amountof Securities Sold Consideration PL China Limited January 14, 2011 Common Stock Bugsy Limited January 18, 2011 Yiming Zhong February 16, 2011 Common Stock Ted T Lee March 12, 2011 Common Stock Jung - Cheun Lien March 31, 2011 Common Stock Romain C. Bacou April 22, 2011 Common Stock Romain C. Bacou May 2, 2011 Common Stock Jiangyan Yi April 27, 2011 Common Stock IRA Service Trust Company, FBO: Roth IRA #230844Emily Chen April 27, 2011 Common Stock IRA Service Trust Company, FBO: Roth IRA #230856 Neil Stuverude April 27, 2011 Common Stock Szu Y Cheng May 12, 2011 Common Stock IRA Service Trust Company, FBO: Roth IRA #234205 Gene Shin May 4, 2011 Common Stock IRA Service Trust Company, FBO: Roth IRA# 235908 Jing Hua Ma May 4, 2011 Common Stock Xiangtian Li May 16, 2011 Common Stock Fei Liang May 16, 2011 Common Stock Shuyue Luan May 16, 2011 Common Stock Luiwei Xie May 16, 2011 Common Stock Jaton Corp June 6, 2011 Common Stock Yee Shin Chin June 23, 2011 Common Stock Ching Ying Chen June 23, 2011 Common Stock Ma International March 1, 2011 Common Stock Hobson Consultant Limited December 15, 2010 Common Stock Ching Yuen Chung July 6, 2011 Common Stock David Patrick Gamba September 1, 2011 Common Stock Chia Wei Wang September 1, 2011 Common Stock Jun Xi Cao September 1, 2011 Common Stock Bret Sherrell September 1, 2011 Common Stock Xiaolin Huang and Yang Zhao September 1, 2011 Common Stock Shuling Luo September 9, 2011 Common Stock Wendy Yen-Wen Chang September 9, 2011 Common Stock IRA Service Trust Company, FBO: Roth IRA #247844 Chia-Wei Wang September 9, 2011 Common Stock Link Harvest Green Resources Limited September 9, 2011 Common Stock (1) Accelerated Venture Partners, LLC originally acquired 5,000,000 shares and subsequently tendered 3,500,000 of such shares for cancellation. All of the securities issued in the above mentioned transactions were issued in connection with private placements exempt from the registration requirements of Section 5 of the Securities Act of 1933, as amended, pursuant to the terms of Section 4(2) of that Act and Rule 506 of Regulation D, promulgated thereunder, on the basis that each of offerings were made in non-public offerings solely to “accredited investors,” within the meaning of Rule 501 of Regulation D. II - 3 EXHIBITS AND FINANCIAL STATEMENT SCHEDULES The following exhibits are filed as part of this registration statement: Exhibit Description 3.1.1 Articles of Incorporation of Accelerated Acquisitions I, Inc.(1) Certificate of Amendment to Articles of Incorporation (7) 3.2 Bylaws of the Registrant (1) Specimen Stock Certificate (7) 5.1 Opinion of Law Offices of Thomas E. Puzzo, PLLC, regarding the legality of the securities being registered (4) AssignmentAgreement between Accelerated Acquisitions I, Inc. and Oro-East Mining Company LTD. (7) Consulting Agreement between Accelerated Acquisitions I, Inc. and Accelerated Venture Partners, LLC (2) Consulting Agreement between Ma International and Oro East Mining, Inc. (3) Consulting Agreement between Hobson Consultant Limitedand Oro East Mining , Inc. (3) Limited Agency and Services Agreement dated September 10, 2010, by and between Registrant and Sichuan Dujiangyan Weida Company, Limited, dba Weida Co., Ltd. (4) Mineral Production Sharing Agreement, dated February 10, 2010, by and between Registrant and the Republic of the Philippines Subscription Agreement, dated of June 24, 2010, between Accelerated Acquisitions I, Inc. and Mutual Gain Hong Kong, Limited (5) Letter dated June 24, 2009 from Accelerated Venture Partners toAccelerated Acquisitions I, Inc. regarding the tender of shares for cancellation (6) Consent of Law Offices of Thomas E. Puzzo, PLLC (included in Exhibit 5.1) (3) Consent of Malone Bailey LLP (7) Consent of Agetro Commodities (7) 23.4 Consent of Partiz & Co. 24 Power of Attorney Incorporated by reference to Exhibit 3.1 to the Registrant’s Form 10-12G (File No. 000-53136) filed with the Commission on March 19, 2008 Incorporated by reference to Exhibit 10.4 to the Registrant’s Form 8-K (File No. 000-53136) filed with the Commission on June 25, 2010. Incorporated by reference to the Registrant’s Form S-1 (File No. 333-177509) filed with the Commission on October 26, 2011. Incorporated by reference to the Registrant’s Form 8-K (File No. 000-53136) filed with the Commission on September 29, 2010. Incorporated by reference to Exhibit 10.1 the Registrant’s Form 8-K (File No. 000-53136) filed with the Commission on June 25, 2010. Incorporated by reference to Exhibit 10.2 the Registrant’s Form 8-K (File No. 000-53136) filed with the Commission on June 25, 2010. (7) Incorporated by reference to the Registrant’s Amendment No. 1 to Form S-1 (File No. 333-177509) filed with the Commission on January 30, 2012. UNDERTAKINGS The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales of securities are being made, a post-effective amendment to this registration statement to: (i) Include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) (§230.424(b) of this chapter) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement. (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (4) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser: (i) If the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use. (5) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities: The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: II - 5 (i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; (ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; (iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or our securities provided by or on behalf of the undersigned registrant; and (iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the “Act”) may be permitted to our directors, officers and controlling persons pursuant to the provisions above, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities, other than the payment by us of expenses incurred or paid by one of our directors, officers, or controlling persons in the successful defense of any action, suit or proceeding, is asserted by one of our directors, officers, or controlling persons in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification is against public policy as expressed in the Securities Act, and we will be governed by the final adjudication of such issue. SIGNATURES In accordance with the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-1 and has authorized this registration statement to be signed on its behalf by the undersigned, in Oakland, California, on the 297th day of February, 2012. ORO EAST MINING, INC. (Registrant) By: /s/ Tian Qing Chen Name: Tian Qing Chen Title: Chairman and CEO (Principal Executive Officer and Principal Financial and Accounting Officer) II - 6 Exhibit 24 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Tian Qing Chen, as his true and lawful attorney-in-fact and agent with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this Registration Statement on Form S-1 of Oro East Mining, Inc., and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, grant unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the foregoing, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitutes, may lawfully do or cause to be done by virtue hereof. In accordance with the requirements of the Securities Act of 1933, this registration statement was signed by the following persons in the capacities and on the dates stated. Signature Title Date /s/ Tian Qing Chen Chairman and Chief Executive Officer, March 1, 2012 Tian Qing Chen Secretary, Treasurer and Director (Principal Executive Officer and Principal Financial and Accounting Officer) /s/ Linda Chen March 1, 2012 Linda Chen Director II - 7 Exhibit Index Exhibit Description 3.1.1 Articles of Incorporation of Accelerated Acquisitions I, Inc.(1) Certificate of Amendment to Articles of Incorporation (7) 3.2 Bylaws of the Registrant (1) Specimen Stock Certificate (7) 5.1 Opinion of Law Offices of Thomas E. Puzzo, PLLC, regarding the legality of the securities being registered (4) AssignmentAgreement between Accelerated Acquisitions I, Inc. and Oro-East Mining Company LTD. (7) Consulting Agreement between Accelerated Acquisitions I, Inc. and Accelerated Venture Partners, LLC (2) Consulting Agreement between Ma International and Oro East Mining, Inc. (3) Consulting Agreement between Hobson Consultant Limitedand Oro East Mining , Inc. (3) Limited Agency and Services Agreement dated September 10, 2010, by and between Registrant and Sichuan Dujiangyan Weida Company, Limited, dba Weida Co., Ltd. (4) Mineral Production Sharing Agreement, dated February 10, 2010, by and between Registrant and the Republic of the Philippines Subscription Agreement, dated of June 24, 2010, between Accelerated Acquisitions I, Inc. and Mutual Gain Hong Kong, Limited (5) Letter dated June 24, 2009 from Accelerated Venture Partners toAccelerated Acquisitions I, Inc. regarding the tender of shares for cancellation (6) Consent of Law Offices of Thomas E. Puzzo, PLLC (included in Exhibit 5.1) (3) Consent of Malone Bailey LLP (7) Consent of Agetro Commodities (7) 23.4 Consent of Partiz & Co. 24 Power of Attorney Incorporated by reference to Exhibit 3.1 to the Registrant’s Form 10-12G (File No. 000-53136) filed with the Commission on March 19, 2008 Incorporated by reference to Exhibit 10.4 to the Registrant’s Form 8-K (File No. 000-53136) filed with the Commission on June 25, 2010. Incorporated by reference to the Registrant’s Form S-1 (File No. 333-177509) filed with the Commission on October 26, 2011. Incorporated by reference to the Registrant’s Form 8-K (File No. 000-53136) filed with the Commission on September 29, 2010. Incorporated by reference to Exhibit 10.1 the Registrant’s Form 8-K (File No. 000-53136) filed with the Commission on June 25, 2010. Incorporated by reference to Exhibit 10.2 the Registrant’s Form 8-K (File No. 000-53136) filed with the Commission on June 25, 2010. (7) Incorporated by reference to the Registrant’s Amendment No. 1 to Form S-1 (File No. 333-177509) filed with the Commission on January 30, 2012. II - 8
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