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EXHIBIT 10.3
EXECUTION VERSION
FORBEARANCE AGREEMENT
This FORBEARANCE AGREEMENT (this “Agreement”) is entered into as of March 26,
2012 by and among Comverge, Inc., a Delaware corporation, (“Comverge”),
Alternative Energy Resources, Inc., a Delaware corporation (“AER”), Enerwise
Global Technologies, Inc., a Delaware corporation (“Enerwise”), Comverge Giants,
LLC, a Delaware limited liability company (“Giants”), Public Energy Solutions,
LLC, a New Jersey limited liability company (“PES”), Public Energy Solutions NY,
LLC, a Delaware limited liability company (“PESNY”), and Clean Power Markets,
Inc., a Pennsylvania corporation (“CPM”; and together with Comverge, AER,
Enerwise, Giants, PES and PESNY, each a “Borrower” and individually,
collectively, jointly and severally, the “Borrowers”), and Grace Bay Holdings
II, LLC (“Grace Bay”), as the sole holder of the Loans.
WHEREAS, Borrowers and the predecessor-in-interest to Grace Bay entered into
that certain Loan and Security Agreement (as the same has been amended,
restated, supplemented or otherwise modified from time to time, including
pursuant to this Agreement, the “Credit Agreement”);
WHEREAS, Events of Defaults are currently in existence under (i) Section 6.1(c)
of the Credit Agreement as a result of Borrowers’ failure to comply with
Section 6(a) of the Schedule to the Credit Agreement by the Borrowers failing to
deliver a Compliance Certificate, whether in redacted form or not, for the month
ending December 31, 2011 by January 30, 2012 (with a five Business Day grace
period pursuant to Section 6.1(c) of the Credit Agreement ending
February 6, 2012), (ii) Section 6.1(c) of the Credit Agreement as a result of
Borrowers’ failure to comply with Section 6(a) of the Schedule to the Credit
Agreement by the Borrowers failing to deliver a Compliance Certificate for the
month ending January 31, 2012 by March 1, 2012 (with a five Business Day grace
period pursuant to Section 6.1(c) of the Credit Agreement ending on
March 8, 2012), (iii) Sections 6.1(d) and 6.1(l) of the Credit Agreement as a
result of Borrowers’ failure to comply with Section 3.14 of the Credit Agreement
and Section 3 of the Intellectual Property Agreement dated November 5, 2010 by
and among the Borrowers and the holders of the Loans with respect to the
Borrowers failing to notify the holders of the Loans about the trademark
applications and patent applications that were filed with the United States
Patent and Trademark Office after the date the Credit Agreement that are listed
on Schedule A attached hereto, (iv) Section 6.1(b) of the Credit Agreement as a
result of Borrowers’ failure to pay the February and March Amortization Payments
(as defined below) by the Due Date (as defined below), (v) Section 6.1(c) of the
Credit Agreement as a result of Borrowers’ failure to deliver any Report when
due prior to the date hereof, (vi) Section 6.1(f) of the Credit Agreement as a
result of (1) the “Existing Event of Default” as defined in the Senior
Forbearance Agreement as in effect on the date hereof and (2) the breach of any
terms of the Senior Debt Documents for the same underlying events giving rise to
any Events of Default set forth in clauses (i) - (v) and clause (vii) of this
paragraph, (vii) Section 6.1(f) of the Credit Agreement as a result of (1) the
“Existing Event of Default” as defined in the Bridge Loan Forbearance Agreement
(as defined below) as in effect on the date hereof and (2) the breach of any
terms of that certain Note Purchase Agreement dated as of the date hereof (as
the same has been amended, restated,
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supplemented or otherwise modified from time to time, the “NPA”), by and among
the Borrowers, the Bridge Lender (as defined below) and the other parties
thereto, for the same underlying events giving rise to any Events of Default set
forth in clauses (i) - (vi) of this paragraph (all such Events of Default
mentioned in (i) – (vii) in this paragraph, the “Specified Existing Events of
Default”);
WHEREAS, in addition to the Specified Existing Events of Default, Borrowers have
informed Grace Bay that they do not expect to be in compliance with (i) Sections
3.16(f), 4.9 and 4.10 of the Credit Agreement because of the possibility that
the Borrowers will fail to remain a Reporting Issuer and to cause the common
stock of Comverge to be authorized for quotation on the NasdaqGM and
(ii) Section 4.6(xii) of the Credit Agreement because of Comverge South Africa
Ltd.’s conducting active business and holding Non-Trivial assets, such
additional Events of Default when same shall actually come into existence under
the Credit Agreement, the “Specified Future Defaults”);
WHEREAS, the Borrowers failed to meet the Minimum Revenues test set forth in
Section 1(d) of the Schedule to the Credit Agreement for the fiscal quarter
ended December 31, 2011 (the “Missed December Minimum Revenues Threshold”), and
as a result of the Missed December Minimum Revenues Threshold and in accordance
with Section 1(d) of the Schedule to the Credit Agreement, Grace Bay has
exercised its Amortization Right, with the first principal payment of $562,500
being due and payable on February 1, 2012 with subsequent principal payments
being due on the first of each calendar month thereafter in accordance with the
terms of the Credit Agreement. Grace Bay deferred the payments of $562,000 that
were due and payable both on February 1, 2012 and March 1, 2012 (the “February
and March Amortization Payments”) until March 9, 2012 (the “Due Date”);
WHEREAS, the Borrowers have informed Grace Bay that it may not satisfy the
Minimum Revenues test for any fiscal quarter ending during the Forbearance
Period (the “Missed Forbearance Period Minimum Revenues Tests”);
WHEREAS, Borrowers have requested that, during the Forbearance Period, Grace Bay
forbear (i) from exercising the rights and remedies they may possess under the
Credit Agreement and the other Loan Documents as a result of (A) the Specified
Existing Events of Default and any other Events of Default that are not Material
Defaults that are existing on or prior to the date hereof (collectively, the
“Existing Events of Default”), and (B) the Specified Future Defaults and
Non-Material Future Defaults, and (ii) from exercising its Amortization Right
with respect to the Missed December Minimum Revenues Threshold and the Missed
Forbearance Period Minimum Revenues Test, for, in each case, a certain period of
time; and
WHEREAS, Grace Bay is willing to forbear from exercising their rights and
remedies as a result of the Existing Events of Default, Specified Future
Defaults, the Non-Material Future Defaults, the Missed December Minimum Revenues
Threshold and the Missed Forbearance Period Minimum Revenues Test for, in each
case, during the Forbearance Period, on the terms and subject to the conditions
set forth herein.
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covenants contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which hereby are acknowledged, the parties hereto
agree as follows:
1. Defined Terms. Capitalized terms used but not defined herein, including in
the preamble and recitals above, shall have the meanings ascribed to such terms
in the Credit Agreement. As used herein, the following terms shall have the
respective meanings given to them below:
(a) “Acquisition Agreement” means that certain Agreement and Plan of Merger
dated as of the date of this Agreement by and among Comverge, Peak Holding Corp.
and Peak Merger Corp.
(b) “Applicable Termination Date” means the earliest to occur of (1) in the
event of a termination of the Acquisition Agreement pursuant to any of
Section 9.1(a), Section 9.1(b)(i), Section 9.1(b)(ii), Section 9.1(d)(i)(B) (if
such Company Adverse Recommendation Change is not made in connection with a
Superior Proposal, as such terms are defined in the Acquisition Agreement),
Section 9.1(d)(i)(C), Section 9.1(d)(ii) or Section 9.2 thereof, the date of
such termination, (2) in the event of a termination of the Acquisition Agreement
pursuant to any of Section 9.1(c)(i), Section 9.1(c)(iii), Section 9.1(d)(i)(A)
or Section 9.1(d)(i)(B) (if such Company Adverse Recommendation Change is made
in connection with a Superior Proposal) thereof, the earlier of (x) the date
that is 45 days following the date of such termination and (y) the consummation
of the Superior Proposal (pursuant to and as defined in the Acquisition
Agreement) in connection with which the Acquisition Agreement was terminated and
(3) in the event of a termination of the Acquisition Agreement pursuant to any
of Section 9.1(c)(ii), or Section 9.1(d)(iii), the later of (x) the date that is
30 days following the date of such termination or (y) the date that is 40 days
following the date of this Agreement.
(c) “Call Make-Whole Amount” means, on any date of prepayment of all or any
portion of the Obligations, an amount in cash equal to 125% of the then
applicable Make-Whole Amount.
(d) “Forbearance Period” shall have the meaning set forth in Section 3(b)
hereof.
(e) “Forbearance Termination Date” means the earlier to occur of (i) the
Applicable Termination Date and (ii) the date on which the forbearance
effectuated by Section 3(b) of this Agreement shall cease due to the occurrence
of any of the events described in Section 4 hereof.
(f) “Material Default” means the occurrence of any of the following events:
(a) an Event of Default occurs that would reasonably be expected to result in a
Material Adverse Change;
(b) any Event of Default arising under or caused by (i) Sections 6.1(b) of the
Credit Agreement, (ii) Section 6.1(e) of the Credit Agreement,
(iii) Section 6.1(g) of the Credit Agreement, (iv) Section 6.1(h) of the Credit
Agreement, (v) Section 6.1(i) of the Credit Agreement, or (vi) Section 6.1(m) of
the Credit Agreement; and
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(c) any Event of Default arising with respect to any material failure to comply
with (i) Section 4.5 of the Credit Agreement, (ii) Section 4.6(iv) of the Credit
Agreement, (iii) Section 4.6(vi) of the Credit Agreement, (iv) Section 4.6(ix)
of the Credit Agreement, (v) Section 4.6(xiii) of the Credit Agreement (it being
agreed that transactions pursuant to the Acquisition Agreement, including
actions taken in accordance with the Acquisition Agreement in connection with a
Superior Proposal (as defined in the Acquisition Agreement) shall not constitute
a “Material Default” as long as Borrowers comply with Section 2 of this
Agreement, or (vi) Section 5 of the Schedule to the Credit Agreement.
For the avoidance of doubt, no Material Default shall be deemed to exist
(i) with respect to an Event of Default under Section 6.1(f) of the Credit
Agreement arising (a) from a default under the NPA and/or the Note Documents (as
defined in the NPA) that does not constitute a “Material Default” as long as the
forbearance pursuant to the Bridge Loan Forbearance Agreement (as in effect on
the date hereof) has not been terminated or otherwise ceased to be in effect,
(b) from a default under the Senior Debt Documents that does not constitute a
“Material Default” as long as the forbearance pursuant to the Senior Forbearance
Agreement (as in effect on the date hereof) has not been terminated or otherwise
ceased to be in effect, and (ii) from a default under Section 7 hereof (other
than Section 7(a) hereof).
(g) “Make-Whole Amount” means, on any date of prepayment of all or any portion
of the Obligations, an amount in cash equal to the present value, as determined
by Grace Bay in its reasonable discretion, of all required interest payments
(including interest payments on interest paid in kind) due on Obligations that
are prepaid from the date of prepayment through and including the Maturity Date
(it being acknowledged and agreed that the interest rate applicable to all such
interest shall be 10.25%, which includes Default Rate interest), discounted to
the date of prepayment on a quarterly basis (assuming a 360-day year and actual
days elapsed) at a rate equal to the sum of the Treasury Rate plus 0.50%. The
parties hereto acknowledge and agree that, in light of the impracticality and
extreme difficulty of ascertaining actual damages, the Make-Whole Amount set
forth herein in intended to be a reasonable calculation of the actual damages
that would be suffered by Grace Bay as a result of any such
repayment/prepayment. The parties hereto further acknowledge and agree that the
Make-Whole Amount is not intended to act as a penalty or to punish the Borrowers
for any such repayment/prepayment.
(h) “Material Adverse Change” is (a) a material impairment in the perfection,
priority or enforceability of Grace Bay’s Lien in the Collateral (taken as a
whole) or in the value of such Collateral (taken as a whole); (b) a material
adverse change in the business, operations or financial condition of the
Borrowers and their Subsidiaries, taken as a whole; (c) an event of default in
the payment of any interest or principal (other than principal payments with
respect to the Amortization Right during the Forbearance Period) on the Loans;
(d) a material impairment in the Borrowers’ ability to make any payment of
Obligations; or (e) any warranty, representation or statement made or delivered
by the Borrowers to Grace Bay, now or in the future, shall be untrue or
misleading in any material respect with respect to the Collateral (taken as a
whole), the perfection, priority or enforceability of Grace Bay’s Lien in the
Collateral (taken as a whole) or the financial statements delivered by the
Borrowers to Grace Bay, when made or deemed to be made.
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(i) “Maturity Date” means that certain date set forth in Section 4 of the
Schedule to the Credit Agreement.
(j) “Non-Material Future Default” means any Default or Event of Default that is
not a Material Default that occurs after the date hereof but prior to the
Forbearance Termination Date.
(k) “Treasury Rate” means a rate equal to the then current yield to maturity on
actively traded United States of America Treasury securities having a constant
maturity and having a duration equal to (or the nearest available tenor) the
period from the date that payment is received to the date that falls on the
Maturity Date.
2. Consent; Mandatory Prepayment; Optional Prepayment.
(a) Subject to the terms and conditions set forth herein, and notwithstanding
anything to the contrary in the Credit Agreement and the other Loan Documents,
Grace Bay hereby irrevocably consents to the transactions set forth in the
Acquisition Agreement (as defined below) and any Superior Proposal (pursuant to
and as defined in the Acquisition Agreement), so long as, all of the Obligations
(including the Make-Whole Amount or the Call Make-Whole Amount, as applicable),
but excluding contingent indemnification obligations under the Credit Agreement
for which no claim has been asserted, are paid in full within two (2) business
days of the time of the consummation of the tender offer contemplated by the
Superior Proposal.
(b) Notwithstanding anything to the contrary in the Credit Agreement and the
other Loan Documents, if the Acquisition Agreement is terminated either (i) by
Comverge pursuant to Section 9.1(c)(i) or Section 9.1(c)(iii) of the Acquisition
Agreement or (ii) by Peak Holding Corp. (the “Bridge Lender”) pursuant to
Section 9.1(d)(i)(A) or Section 9.1(d)(i)(B) (if such Company Adverse
Recommendation Change is made in connection with a Superior Proposal, as such
terms are defined in the Acquisition Agreement) of the Acquisition Agreement,
then, within two (2) business days after the consummation of the tender offer
contemplated by the Superior Proposal (pursuant to and as defined in the
Acquisition Agreement), at the election of Grace Bay (which election shall be
made within 1 business day of the termination of the Acquisition Agreement), the
Borrowers shall prepay all of the Obligations (including the Make-Whole Amount),
for which no claim has been asserted, to Grace Bay.
(c) Notwithstanding anything to the contrary in the Credit Agreement and the
Acquisition Agreement), at the election of the Borrower (which election shall be
Borrowers shall prepay all of the Obligations (including the Call Make-Whole
Amount), but excluding contingent indemnification obligations under the Credit
Agreement for which no claim has been asserted, to Grace Bay.
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(d) Notwithstanding anything to the contrary in the Credit Agreement and the
other Loan Documents, if the Acquisition Agreement is terminated pursuant to
either Section 9.1(c)(ii) or Section 9.1(d)(iii) of the Acquisition Agreement,
then, within thirty (30) days after such termination, the Borrowers may elect at
their option to prepay all (but not less than all) of the Obligations (including
the Make-Whole Amount), but excluding contingent indemnification obligations
under the Credit Agreement for which no claim has been asserted, to Grace Bay.
3. Forbearance in Respect of the Existing Events of Default, Specified Future
Defaults and Non-Material Future Defaults.
(a) Acknowledgment of Specified Existing Events of Default, Specified Future
Defaults and Existing Debt. Grace Bay and each Borrower hereby acknowledges and
agrees that (i) the Specified Existing Events of Default have occurred and are
continuing and are material, (ii) upon the occurrence thereof the Specified
Future Defaults shall be material Events of Default and (iii) the Amortization
Right that has been exercised by Grace Bay due to the Missed December Revenues
Threshold is a material right of Grace Bay. Grace Bay has not waived, presently
does not intend to waive, and may never waive the Existing Events of Default,
any the Specified Future Defaults, any other Events of Default and its
Amortization Right with respect to the Missed December Revenues Threshold and
nothing contained herein or in the transactions contemplated hereby shall be
deemed to constitute any such waiver or to establish a custom or course of
dealing. Each Borrower acknowledges and agrees that, as of the date hereof the
outstanding principal balance of the Loan is $15,000,000. The Borrowers hereby
irrevocably and unconditionally withdraw their letter dated March 5, 2012 to
Grace Bay and the other holders of the Loans and agree and acknowledge all of
the actions and events claimed in that certain letter dated February 27, 2012
(the “February 27th Letter”), by Partners for Growth III, L.P. (“PFG”), a former
holder of Loans, and Grace Bay to the Borrowers and that certain letter dated
March 2, 2012 (the “March 2nd Letter”), by PFG and Grace Bay to the Borrowers.
From the date hereof and at all times hereafter, the Borrowers agree not to
argue against, repudiate or claim any defense against any action or event
claimed by Grace Bay and the holders of the Loans set forth in the February 27th
Letter and the March 2nd Letter.
(b) Forbearance. In reliance upon the representations, warranties and covenants
of the Borrowers contained in this Agreement, and subject to the terms,
conditions, modifications and amendments set forth in this Agreement and any
documents or instruments executed in connection herewith, Grace Bay, subject to
the provisions of Section 3(c) below, agrees to forbear, during the period (the
“Forbearance Period”) commencing on the date hereof and ending on the
Forbearance Termination Date, from exercising its rights and remedies under the
Credit Agreement and other Loan Documents or applicable law in respect of or
arising out of the Existing Events of Default, Specified Future Defaults,
Non-Material Future Defaults and its Amortization Right with respect to the
Missed December Revenues Threshold and the Missed Forbearance Period Minimum
Revenues Test. Upon the termination of the Forbearance Period, the agreement of
Grace Bay to forbear pursuant to this Section 3(b) shall automatically and
without further action terminate and be of no force and effect, it being
expressly agreed that the effect of such termination will be to permit Grace Bay
to exercise all rights and remedies in
6
respect of any Events of Default and its Amortization Right with respect to the
Missed December Revenues Threshold (regardless of whether 20 Business Days have
passed since the Borrowers delivered a report certifying as to the Minimum
Revenues test for December 31, 2011) immediately in accordance with the Credit
Agreement and other Loan Documents or applicable law.
(c) No Forbearance. Notwithstanding anything to the contrary contained in
Section 3(b):
(i) The Existing Events of Default (and each Specified Future Default and each
Non-Material Future Default, in each case, upon the occurrence thereof) shall
constitute an Event of Default under the Credit Agreement and each other Loan
Document for the purpose of determining whether or not certain actions or
in-actions may be taken or otherwise acquiesced to by or on behalf of any
Borrower, as set forth therein. Accordingly, any actions or in-actions taken or
omitted by any Borrower in violation of any provision governing whether such
action or in-action may or may not be taken or omitted while any Event of
Default exists will constitute additional Events of Default under the Credit
Agreement and the other Loan Documents, as well as a breach of the terms of this
Agreement.
(ii) Grace Bay’s Amortization Rights with respect to the Missed December
Revenues Threshold shall continue to exist regardless of any action or
in-actions taken or otherwise acquiesced to by or on behalf of any Borrower. The
forbearance of the Amortization Right with respect to the Missed December
Minimums Revenues Threshold and any Missed Forbearance Period Minimum Revenues
Tests provided under Section 3(b) shall not affect the ability or right of Grace
Bay to exercise the Amortization Right with respect to any missed Minimum
Revenues test for any other future fiscal quarters and shall in no way be
considered a course of dealing or a right of the Borrowers to any forbearance or
waiver of Grace Bay’s right to exercise its Amortization Right with respect to
any future fiscal quarter.
(iii) Notwithstanding anything to the contrary and regardless of whether the
Forbearance Period is still in effect, the right to request Subsequent Notes has
been permanently terminated due to the Missed December Revenues Threshold. Any
decision to allow the Borrowers to exercise their right to request Subsequent
Notes hereafter, if at all, shall be in the Grace Bay’s sole and absolute
discretion and shall be made on a case-by-case basis without waiving, ceasing or
curing any Specified Existing Event of Default, any Specified Future Default
that becomes an Event of Default or any other Event of Default.
(iv) The Default Rate shall continue to be charged on the applicable Obligations
during the Forbearance Period as a result of the existence of the Specified
Existing Events of Default in accordance with the terms of Section 6.2 of the
Credit Agreement, and the Borrowers hereby agree that such Default Rate shall be
charged on such Obligations from the earliest date that a Specified Existing
Event of Default occurred (which the Borrowers agree is January 31, 2012) and
shall continue to bear interest at the Default Rate until such time as all
Specified Existing Events of Default (including, without limitation, any
Existing Events of Default and any Specified Future Defaults or Non-Material
Future Defaults that become Events of Default) and all other Events of Default
have been cured or waived in writing in accordance with the terms of the Credit
Agreement. The Default Rate on such Specified Existing Events of Default shall
be due and payable in full on April 1, 2012 and on demand thereafter.
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(v) Notwithstanding anything to the contrary and regardless of whether the
Forbearance Period is still in effect, no Mandatory Conversion can be exercised
while the Specified Existing Events of Default, any Specified Future Defaults
that become Defaults or any other Default is existing.
(vi) The forbearance set forth in Section 3(b) on the part of Grace Bay shall
not, and shall not be deemed to, relieve in any manner any Borrower from
complying with all limitations, restrictions, prohibitions or requirements that
would otherwise be effective or applicable under the Credit Agreement or any
other Loan Documents (including all limitations, restrictions, prohibitions or
requirements that extend to subsidiaries not party to the Credit Agreement)
during the term of this Agreement, or otherwise during the continuance of any
4. Automatic Termination of Forbearance Period. Grace Bay’s agreement to forbear
pursuant to Section 3(b) of this Agreement shall automatically terminate,
without notice or any other further act or instrument being required, upon the
(a) if any Borrower makes or pursues a claim pursuant to a judicial process
against Grace Bay or any of its affiliates in respect of matters arising under
the Loan Documents;
(b) the existence of any Material Default, other than the Existing Events of
Default and Specified Future Defaults;
(c) a Borrower material breach of any agreement or covenant contained in this
Agreement (it being acknowledged that breaches of Section 5 and 7(a) of this
Agreement beyond any applicable grace period provided therein shall be deemed to
be material);
(d) any representation or warranty made by any Borrower in Section 8(g) of this
Agreement shall prove to be false or misleading as of the date when made;
(e) the forbearance by the Senior Lender under that certain Senior Forbearance
Agreement (as defined below) shall have terminated for any reason or otherwise
ceases to be in full force and effect;
(f) the Senior Lender (or any agent or representative of the Senior Lender)
takes any action or remedy with respect to any default or event of default that
occurs under the Senior Debt Documents (including, without limitation,
acceleration of the maturity of the Indebtedness under the Senior Debt
Documents); and
(g) the forbearance by the Bridge Lender under that certain Forbearance
Agreement by and among Borrowers and Peak Holding Corp. dated as of the date
hereof (the “Bridge Loan Forbearance Agreement”) shall have terminated for any
reason or otherwise ceases to be in full force and effect.
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5. Certain Agreements.
(a) From the date hereof and at all times thereafter, the Borrowers agree that
the reports in Sections 6(a) and (b) of the Schedule to the Credit Agreement
shall be provided within the time periods set forth in such Section, regardless
of whether such reports contain material non-public information. The Borrowers
shall not refute or otherwise claim any defense to providing a Compliance
Certificate within 30 days of the end of each month and shall not redact any
information from such Compliance Certificate.
(b) From the date hereof and at all times thereafter, the Borrowers agree that
the Amortization Right shall be exercisable by Grace Bay upon receiving
knowledge that the Minimum Revenues test for the applicable fiscal quarter has
not been met, regardless of whether a Compliance Certificate or any other report
been delivered to Grace Bay or any other Person. For the avoidance of doubt,
subject to the terms, conditions, modifications and amendments set forth in this
Agreement and any documents or instruments executed in connection herewith,
Grace Bay, subject to the provisions of Section 3(c), has agreed to forbear,
during the Forbearance Period, from exercising its rights and remedies under the
arising out of the its Amortization Right with respect to the Missed December
Revenues Threshold and the Missed Forbearance Period Minimum Revenues Test.
(c) From the date hereof and at all times thereafter, the Borrowers shall
deliver to Grace Bay: (i) as soon as available, but no later than thirty
(30) days after the last day of each month, a consolidated balance sheet and
income statement prepared by the Borrowers covering the Borrowers’ and their
Subsidiaries’ consolidated operations for such month certified by the chief
financial officer of Comverge in form satisfactory to Grace Bay; (ii) as soon as
available, but no later than forty-five (45) days after the last day of each
fiscal quarter, a consolidated balance sheet and income statement prepared by
the Issuers covering the Issuers’ and their Subsidiaries’ consolidated
operations for such fiscal quarter certified by the chief financial officer of
Comverge and in form satisfactory to Grace Bay; (iii) as soon as available, but
no later than ninety (90) days after the last day of each Issuer’s fiscal year,
audited consolidated financial statements of Comverge prepared under GAAP,
consistently applied, together with an unqualified opinion (except for the
opinion delivered in connection with the financial statements for the 2011
fiscal year, which opinion may be qualified) on the financial statements from an
independent certified public accounting firm acceptable to Grace Bay in its
reasonable discretion (it being acknowledged and agreed that
PricewaterhouseCoopers or any other nationally recognized accounting firm is
acceptable to Grace Bay); (iv) to the extent not already delivered to Grace Bay,
(a) copies of all notices of default delivered to or received from Senior Lender
within two days of the receipt or delivery thereof, (b) amendments,
restatements, or other modifications of the Senior Debt Documents or any other
material agreements entered into between any Borrower or guarantor and Senior
Lender in connection with the Senior Debt Documents on the same day as such
amendment, restatement or modification is entered into, and (c) copies of all
financial reporting and borrowing base certificates delivered to Senior Lender,
on the same day as delivered to Senior Lender (iv) in the event that any
Borrower becomes subject to the reporting requirements under the Securities
Exchange Act of 1934 (as in effect from time to time) within five (5) days of
filing, all reports on Form 10-K, 10-Q and 8-K filed with the United States
Securities and Exchange Commission (and any successor thereto) or a link thereto
on such Borrower’s or another website on the Internet; (vi) a prompt report of
any legal
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actions pending or threatened against any Borrower or any of its Subsidiaries
which, if adversely determined, could reasonably be expected to cause a Material
Adverse Change; (vii) prompt notice of an event that materially and adversely
affects the value of the intellectual property owned or licensed by any
Borrower; and (viii) budgets, sales projections, operating plans and other
financial information reasonably requested by Grace Bay within the time period
provided at the time of such request (provided such time period shall be
reasonable in light of the information requested).
(d) From the date hereof and at all times thereafter, the Borrowers shall
deliver on every other Wednesday (or if Wednesday is not a Business Day, on the
next succeeding Business Day) (i) a rolling 13 week cash flow, reflecting actual
results from the prior week period compared to (A) the immediately preceding
rolling 13 week cash flow delivered to Grace Bay and (B) any annual forecast
delivered pursuant to Section 5(c)(viii) of this Agreement and (ii) the
projected results for the subsequent 13 week period, together with management’s
discussion of any variance from the prior cash flow or any annual forecast.
A breach (which shall continue to exist for a period of (a) five (5) days with
respect to Sections 5(a), 5(b) and 5(c) of this Agreement and (b) two
(2) Business Days with respect to Section 5(d) of this Agreement, after the
occurrence of such breach) by any Borrower of any of the foregoing provisions of
this Section 5 shall constitute an Event of Default under the Credit Agreement.
6. Conditions Precedent. The effectiveness of this Agreement is subject to the
following conditions precedent:
(a) the execution and delivery of this Agreement by Grace Bay and each Borrower
and this Agreement shall be in full force and effect;
(b) all representations and warranties made by the Borrowers in Section 8 below
being true and correct in all material respects as of the date hereof;
(c) the Acquisition Agreement shall have been duly executed by the parties
thereto, and such Acquisition Agreement shall be in full force and effect;
(d) Borrowers shall have delivered to Grace Bay a copy, certified by an
authorized officer of Comverge as true, correct and complete, of the
fully-executed Forbearance Agreement and Sixth Amendment with respect to the
Senior Debt Documents, by and among the Borrowers, the Senior Lender and the
other parties thereto, such agreement shall be in full force and effect and
shall be in form and substance reasonably acceptable to Grace Bay (the “Senior
Forbearance Agreement”); and
(e) Grace Bay shall have received a forbearance fee of $75,000 (the “Forbearance
Fee”), which Forbearance Fee shall be fully earned, due and payable in
immediately available funds, and non-refundable on the date hereof and shall be
paid in full by the Borrowers on the date hereof.
7. Post-Closing Covenant. The Borrowers shall comply with the following
covenants (it being understood and agreed that the failure to comply with such
covenants by the due date set forth below shall be an Event of Default under the
Credit Agreement):
(a) On or prior to 10 days after the date of this Agreement, Borrowers shall
deliver to Grace Bay Comverge’s board of director’s approved financial plan (the
“Forecast”) for the 2012 fiscal year in order to set the financial covenants in
Section 5 of the Schedule to the Credit Agreement and to set the Minimum Revenue
thresholds in Section 1(d) of the Schedule to the Credit Agreement for the 2012
fiscal year;
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(b) On or prior to 30 days after the date of this Agreement (or such later date
as Grace Bay may agree in its sole discretion), Grace Bay shall receive evidence
satisfactory to Grace Bay that the Indebtedness related to that certain UCC-1
financing statement filed with the Delaware Department of State on January 10,
2007 with the initial filing number of 2007 0136019 by General Electric Capital
Corporation against Comverge has been paid in full and a UCC-3 termination
statement has been filed with respect to such UCC-1 financing statement and all
other Liens with respect to such Indebtedness have been released in a manner
satisfactory to Grace Bay;
(c) Borrowers shall pay, or reimburse Grace Bay for, all reasonable
out-of-pocket costs and expenses incurred by Grace Bay in connection with this
Agreement, including, without limitation, the preparation, negotiation and
execution of this Agreement (including reasonable attorney’s fees of counsel to
Grace Bay) within five (5) days after receipt of an invoice;
(d) On or before 10 days after the date of this Agreement, Borrowers shall
provide to Grace Bay a pledge agreement and appropriate certificates and powers
or financing statements, pledging all of the direct or beneficial ownership
interest in each Person that Senior Lender has received a pledge agreement for,
in form and substance reasonably satisfactory to Grace Bay; and
(e) On or before 30 days after the date of this Agreement (or such later date as
Grace Bay may agree in its sole discretion), Borrowers shall (i) provide to
Grace Bay a pledge agreement and appropriate certificates and powers or
financing statements, pledging all of the direct or beneficial ownership
interest in Comverge International and Comverge South Africa, Ltd. in form and
substance reasonably satisfactory to Grace Bay; provided, that only 65% of the
total outstanding voting Equity Interests of Comverge International and Comverge
South Africa, Ltd. shall be required to be pledged if both (A) such Person is a
“controlled foreign corporation” (as that term is defined in the Internal
Revenue Code of 1986, as in effect from time to time) and (B) pledging a greater
amount would result in adverse tax consequences and (ii) execute such documents
and take such other actions as Grace Bay may reasonably request to accomplish
the foregoing.
8. Representations and Warranties. Each Borrower hereby represents and warrants
to Grace Bay as follows:
(a) each Borrower is a corporation or limited liability company, as applicable,
jurisdiction of its incorporation or formation, as applicable;
(b) each Borrower has the power and authority to execute and deliver this
Agreement and to perform its obligations under this Agreement;
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(c) the execution, delivery and performance by each Borrower of this Agreement
and the performance by such Borrower of each other Loan Document to which it is
a party (i) are within its corporate, limited liability company or other entity
powers, (ii) have been duly authorized by all necessary action, (iii) are not in
contravention of any law, rule, or regulation applicable to it, or any order,
judgment, decree, writ, injunction, or award of any arbitrator, court, or
Governmental Body, or of the terms of its Constitutional Documents, or of any
contract or undertaking to which it is a party or by which any of its properties
may be bound or affected, (iv) do not and will not result in or require the
creation of any Lien (other than Permitted Liens) upon or with respect to any of
its properties, (v) do not and will not result in any default, noncompliance,
suspension, revocation, impairment, forfeiture or nonrenewal of any permit,
license, authorization or approval material to its operations or any of its
properties, and (vi) do not and will not require any approval of such Borrower’s
interestholders or any approval or consent of any Person under any material
contractual obligation of such Borrower, other than consents or approvals that
have been obtained and that are still in force and effect
(d) no authorization or approval or other action by, and no notice to or filing
with, any Governmental Body is required in connection with the due execution,
delivery and performance by such Borrower of this Agreement or any other Loan
Document to which it is or will be a party or any other Loan Document to which
it is or will be a party, other than filings with the United States Securities
and Exchange Commission.
(e) this Agreement constitutes the legal, valid and binding obligation of each
Borrower, enforceable against each Borrower in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency, or
similar laws affecting the enforcement of creditor’s rights generally or by
equitable principles relating to enforceability;
(f) no injunction, writ, restraining order, or other order of any nature
prohibiting, directly or indirectly, the consummation of the transactions
contemplated herein has been issued and remains in force by any Governmental
Body against any Borrower;
(g) no Material Default exists or is continuing, other than the Specified
Existing Events of Default;
(h) this Agreement has been entered into without force or duress, of the free
will of any Borrower. Each Borrower’s decision to enter into this Agreement is a
fully informed decision and such Borrower is aware of all legal and other
ramifications of such decision;
(i) (i) the Borrowers have thoroughly read and reviewed the terms and provisions
of this Agreement in its full and final form and are familiar with the same,
(ii) the terms and provisions contained herein are clearly understood by the
Borrowers and have been fully and unconditionally consented to by the Borrowers,
(iii) the Borrowers have had full benefit and advice of counsel of their own
selection, or the opportunity to obtain the benefit and advice of counsel of
their own selection, in regard to understanding the terms, meaning and effect of
this Agreement and (iv) this Agreement has been entered into by the Borrowers
freely, voluntarily, and with full knowledge, and (v) in executing this
Agreement, each Borrower is relying on no representations, either written or
oral, express or implied, made to such Borrower by any other party hereto or any
other Person. Each Borrower acknowledges that Grace Bay’s agreements set forth
in this Agreement are adequate and sufficient consideration for the agreements
of the Borrowers set forth in this Agreement; and
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(j) the representations and warranties contained in the Credit Agreement are
true and correct, in all material respects, as of the date hereof, except to the
extent that such representations and warranties relate expressly to an earlier
date, in which case they are true and correct in all material respect as of such
earlier date.
9. No Waiver. Except as amended or modified pursuant to this Agreement,
(i) Grace Bay reserves all rights, privileges and remedies under the Loan
Documents and (ii) the Credit Agreement and other Loan Documents remain
unmodified and in full force and effect. All references in the Loan Documents to
the Credit Agreement shall be deemed to be references to the Credit Agreement as
amended hereby.
10. Counterparts. This Agreement may be executed by one or more of the parties
to this Agreement in any number of separate counterparts, each of which when so
executed, shall be deemed an original and all said counterparts when taken
together shall be deemed to constitute but one and the same instrument. Any
facsimiled or photocopied signatures hereto, or signatures delivered by email
(in .pdf format) shall be deemed original signatures hereto, all of which shall
be equally valid.
11. Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of each Borrower and its respective successors and assigns and Grace
Bay and its successors and assigns; provided, however, no Borrower shall assign
any of its rights or obligations under this Agreement and any such prohibited
assignment shall be absolutely void ab initio.
12. Further Assurance. Each Borrower hereby agrees to execute and deliver or
cause to be executed and delivered, from time to time, as and when reasonably
requested by Grace Bay, all such documents, instruments and agreements and to
take or cause to be taken such further or other action as the Grace Bay may
reasonably deem necessary or desirable in order to carry out the intent and
purposes of this Agreement, the Credit Agreement and the other Loan Documents.
13. GOVERNING LAW; JURISDICTION; VENUE; MUTUAL JURY TRIAL WAIVER. THE PROVISIONS
IN THE CREDIT AGREEMENT WITH RESPECT TO GOVERNING LAW, JURISDICTION, VENUE AND
MUTUAL WAIVER OF JURY TRIAL ARE APPLICABLE TO THIS AGREEMENT AS IF FULLY SET
FORTH HEREIN.
14. Severability. Wherever possible, each provision of this Agreement shall be
but if any provision of this Agreement shall be prohibited by or invalid under
such law, such provision shall be ineffective to the extent of such prohibition
or invalidity without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
15. Reaffirmation. Each Borrower as debtor, grantor, pledgor, guarantor,
assignor, or in any other similar capacity in which such Borrower grants Liens
or security interests in its property or otherwise acts as accommodation party
or guarantor, as the case may be, hereby
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(a) ratifies and reaffirms all of its payment and performance obligations,
contingent or otherwise, under each of the Loan Documents to which it is a party
(after giving effect hereto) and (b) to the extent such Borrower granted Liens
on or security interests in any of its property pursuant to any such Loan
Document as security for or otherwise guaranteed the Obligations and/or its
obligations under or with respect to the Loan Documents, ratifies and reaffirms
such guarantee and grant of security interests and Liens and confirms and agrees
that such security interests and Liens hereafter secure all of the Obligations
as amended hereby. Each of the Borrowers hereby consents to this Agreement and
acknowledges that each of the Loan Documents remains in full force and effect
and is hereby ratified and reaffirmed. The execution of this Agreement shall not
operate as a waiver of any right, power or remedy of Grace Bay, constitute a
waiver of any provision of any of the Loan Documents or serve to effect a
novation of the Obligations.
16. Ratification of Liability; Acknowledgment of Rights; Release of Claims.
(a) Each Borrower hereby ratifies and confirms its respective liabilities,
obligations and agreements under the Credit Agreement and the other Loan
Documents and the Liens and security interests created thereby, and acknowledges
that: (i) it has no defenses, claims or set-offs to the enforcement by Grace Bay
of such liabilities, obligations and agreements; (ii) Grace Bay has fully
performed all undertakings owed to it as of the date hereof and (iii) except to
the limited extent of Grace Bay’s consents contained in this Agreement, Grace
Bay does not waive, diminish or limit any term or condition contained in the
Credit Agreement or in any of the other Loan Documents.
(b) Effective on the date hereof, each Borrower, for itself and on behalf of its
successors, assigns, and officers, directors, employees, agents and attorneys,
and any Person acting for or on behalf of, or claiming through it, hereby
waives, releases, remises and forever discharges Grace Bay, each of its
affiliates, and each of its respective successors in title, past, present and
future officers, directors, employees, limited partners, general partners,
investors, attorneys, assigns, subsidiaries, shareholders, trustees, agents and
other professionals and all other Persons and entities to whom Grace Bay would
be liable if such Persons or entities were found to be liable to such Borrower
(each a “Releasee” and collectively, the “Releasees”), from any and all past,
present and future claims, suits, liens, lawsuits, adverse consequences, amounts
paid in settlement, debts, deficiencies, diminution in value, disbursements,
demands, obligations, liabilities, causes of action, damages, losses, costs and
expenses of any kind or character, whether based in equity, law, contract, tort,
implied or express warranty, strict liability, criminal or civil statute or
common law (each a “Claim” and collectively, the “Claims”), whether known or
unknown, fixed or contingent, direct, indirect, or derivative, asserted or
unasserted, matured or unmatured, foreseen or unforseen, past or present,
liquidated or unliquidated, suspected or unsuspected, which such Borrower ever
had from the beginning of the world, now has, or might hereafter have against
any such Releasee which relates, directly or indirectly to the Credit Agreement,
any other Loan Document, in each case, for any acts or omissions occurring on or
prior to the date of this Agreement of any such Releasee with respect to the
Credit Agreement or any other Loan Document, or to the lender-borrower
relationship evidenced by the Loan Documents, except for the duties and
obligations set forth in this Agreement. As to each and every Claim released
hereunder, each Borrower hereby represents that it has received the advice of
legal counsel with regard to the releases contained herein, and having been so
advised, specifically waives the benefit of the provisions of Section 1542 of
the Civil Code of California which provides as follows:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH A CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM, MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.”
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As to each and every Claim released hereunder, each Borrower also waives the
benefit of each other similar provision of applicable federal or state law
(including, without limitation, the laws of the state of California), if any,
pertaining to general releases after having been advised by its legal counsel
with respect thereto.
Each Borrower acknowledges that it may hereafter discover facts different from
or in addition to those now known or believed to be true with respect to such
Claims and agrees that this instrument shall be and remain effective in all
respects notwithstanding any such differences or additional facts. This release
shall be and remain in full force and effect notwithstanding the discovery by
each Borrower after the date hereof (i) of any new or additional Claim against
any Releasee, (ii) of any new or additional facts in any way relating to this
release, (iii) that any fact relied upon by it was incorrect, or (iv) that any
representation or warranty made by any Releasee was untrue or that any Releasee
concealed any fact, circumstance or claim relevant to such Borrower’s execution
of this release. Each Borrower understands, acknowledges and agrees that the
release set forth above may be pleaded as a full and complete defense and may be
used as a basis for an injunction against any action, suit or other proceeding
which may be instituted, prosecuted or attempted in breach of the provisions of
such release.
(c) Each Borrower, for itself and on behalf of its successors, assigns, and
officers, directors, employees, agents and attorneys, and any Person acting for
or on behalf of, or claiming through it, hereby absolutely, unconditionally and
irrevocably, covenants and agrees with and in favor of each Releasee above that
(i) none of the provisions of the above release shall be construed as or
constitute an admission of any liability on the part of any Releasee; (ii) it
will not sue (at law, in equity, in any regulatory proceeding or otherwise) any
Releasee on the basis of any Claim released, remised and discharged by such
Person pursuant to this Section 16; and (iii) any attempt to assert a Claim
barred by the provisions of this Section 16 shall subject it to the provisions
of applicable law setting forth the remedies for the bringing of groundless,
frivolous or baseless claims or causes of action. Each Borrower further agrees
that it shall not dispute the validity or enforceability of the Credit Agreement
or any of the other Loan Documents or any of its obligations thereunder, or the
validity, priority, enforceability or the extent of Grace Bay’s Lien on any item
of Collateral under the Credit Agreement or the other Loan Documents. If any
Borrower or any of its respective successors, assigns, or officers, directors,
employees, agents or attorneys, or any Person acting for or on behalf of, or
claiming through it violate the foregoing covenant, such Person, for itself and
its successors, assigns and legal representatives, agrees to pay, in addition to
all attorneys’ fees and costs incurred by such Releasee as a result of such
violation. In agreeing to the foregoing release, each Borrower expressly
disclaims
15
any reliance on any representations or warranties, acts or omissions by any of
the Releasees and hereby agrees and acknowledges that the validity and
effectiveness of the above release do not depend in any way on any such
representations or warranties, acts or omissions or the accuracy, completeness
or validity thereof.
(d) The provisions of this Section 16 shall survive the termination of this
Agreement and the other Loan Documents and the payment in full of the
Obligations.
(e) Borrower acknowledges that the foregoing release is a material inducement to
the Grace Bay’s decision to enter into this Agreement.
17. No Disregard of Loan Documents. Each Borrower acknowledges that the parties
hereto have not entered into a mutual disregard of the terms and provisions of
the Credit Agreement or the other Loan Documents, or engaged in any course of
dealing in variance with the terms and provisions of the Credit Agreement or the
other Loan Documents, within the meaning of any applicable law of the State of
California or otherwise.
18. Borrowers Remain in Control. Each Borrower acknowledges that it remains in
control of its business and affairs and determines the business plan, for, and
employment, management and operating directions and decisions for its business
and affairs.
19. Submission of Agreement. The submission of this Agreement to the parties or
commitment by Grace Bay to forbear from exercising any of their rights and
remedies under the Loan Documents, and this Agreement shall have no binding
force or effect until all of the conditions to the effectiveness of this
Agreement have been satisfied as set forth herein.
20. Loan Document. This Agreement constitutes a Loan Document. Any breach by any
Borrower of any material term, provision, covenant, agreement, representation or
warranty set forth in this Agreement shall constitute an immediate Event of
Default under the Credit Agreement.
21. Rights of Grace Bay in Bankruptcy; Tolling of Certain Time-Related Defenses.
Each Borrower acknowledges and agrees that all time-related defenses, such as
statutes of limitations, doctrines of estoppel, doctrines of laches or any other
rules of law or equity of similar nature, are hereby tolled with respect to all
rights, claims and causes of action of any kind whatsoever that Grace Bay may
have against Borrowers under the Credit Agreement and the other Loan Documents
as of the time of the effective date of this Agreement through and including the
date which is sixty (60) days after the Forbearance Termination Date. Each
Borrower hereby waives all such time-related defenses to the extent such
defenses are hereby tolled.
22. Amendment to Credit Agreement.
(a) Clause (xi) of Section 4.6 of the Credit Agreement is hereby amended in its
entirety as follows:
“(xi) directly or indirectly enter into or permit to exist any material
transaction with any Affiliate of any Borrower, except for (a) transactions that
are in the ordinary course of such Borrower’s business, upon fair and reasonable
terms that are no less favorable to such Borrower than would be obtained in an
arm’s length transaction with a non-affiliated Person, (b) transactions between
or among the Borrowers, and (c) transfer of any assets of a Subsidiary which is
not a Borrower to a Borrower to, including pursuant to dividends from such
Subsidiary to a Borrower;”
16
(b) Section 7 of the Credit Agreement is hereby amended by amending and
restating the definition of “Adjusted Quick Ratio” in its entirety as follows:
“Adjusted Quick Ratio” is a ratio of (i) (A) as of any date, Borrowers’
consolidated, unrestricted cash and Cash Equivalents, to the extent that each of
the foregoing is deposited or maintained with Senior Lender, plus (B) Borrowers’
billed and unbilled Accounts to (ii) (A) Current Liabilities, minus (B) the
current portion of Deferred Revenue.
(c) The following definitions are hereby added to Section 7 of the Credit
Agreement:
“Forbearance Agreement” means that certain Forbearance Agreement with respect to
the Loan, dated as of March 26, 2012, by and among Borrowers and Grace Bay
Holdings II, LLC.
“Grace Bay” means Grace Bay Holdings II, LLC.
“NPA” means that certain Note Purchase Agreement dated as of March 26, 2012 by
and among borrowers, Peak Holding Corp., and the purchasers pursuant thereto.
“Note Documents” has the meaning set forth in the NPA.
(d) The definition of “Permitted Indebtedness” in Section 7 of the Credit
Agreement is amended to add the following clause (xi):
“(xi) Indebtedness incurred under the NPA and the Note Documents, in each case,
as in effect on the date of the Forbearance Agreement.”
(e) The definition of “Permitted Liens” in Section 7 of the Credit Agreement is
amended to add the following clauses:
“(xviii) Liens of landlords (i) arising by statute or under any lease entered
into in the ordinary course of business, (ii) on fixtures and movable tangible
property located on the real property leased or subleased from such landlord,
(iii) for amounts not overdue or that are being contested in good faith by
appropriate proceedings diligently conducted and (iv) for which adequate
reserves or other appropriate provisions are maintained on the books of such
Person in accordance with GAAP;
17
(xix) Liens, pledges or deposits to secure the performance of bids, tenders,
sales, contracts, licenses and leases (other than for the repayment of
Indebtedness), statutory obligations, surety or appeal bonds, customs or
ordinary course of business (in each case not related to judgments or
litigation);
(xx) encumbrances arising by reason of zoning restrictions, licenses,
reservations, covenants, easements, rights-of-way, restrictions and other
similar encumbrances affecting real property which do not in any case materially
detract or impair from the value or marketability of the property subject
thereto or materially adversely interfere with the ordinary conduct of the
(xxi) any interest of title of a lessor under, and Liens arising from UCC-1
financing statements (or equivalent filings, registrations or agreements in
foreign jurisdictions) relating to operating leases;
(xxii) (i) Liens in favor of Wells Fargo Bank, N.A. in that certain Deposit
Account described in clause (c) of the final sentence of Section 8(b) of the
Schedule and (ii) Liens in favor of Entergy Corporation in that certain Deposit
Account described in clause (e) of the final sentence of Section 8(b) of the
Schedule; and
(xxiii) Liens arising under the NPA and Note Documents, in each case, as in
effect on the date of the Forbearance Agreement.”
(f) Section 8(b) of the Schedule to the Credit Agreement is amended to delete
the final sentence thereof and replace it with the following sentence:
“Notwithstanding the foregoing, Grace Bay shall not require a Control Agreement
in respect of the following Deposit Accounts solely to the extent that such
Deposit Accounts are not subject to a Control Agreement or, except with respect
to clause (a) solely to the extent the Deposit Accounts are maintained at
Silicon Valley Bank with no Control Agreement over such Deposit Accounts, any
other method of “control” as defined in the Code in favor of the Senior Lender
or any holder of Indebtedness incurred under the Senior Debt Documents or Peak
Holding Corp. or any holder of Indebtedness under the NPA: (a) any Deposit
Accounts exclusively used for payroll, payroll taxes and other employee wage and
benefit payments to or for the benefit of any Borrower’s employees and
identified to Grace Bay by Borrower as such, (b) that certain Deposit Account,
account number ending 6759, maintained by the Issuers at Wells Fargo Bank, N.A.
so long as the aggregate amount on deposit in such account does not exceed
$50,000 at any one time, (c) that certain Deposit Account, account number ending
2831, maintained by the Borrower at Wells Fargo Bank, N.A. so long as the
aggregate amount on deposit in such account does not exceed $650,000 at any one
time and so long as such account is used solely to hold lease deposits and funds
used to cash collateralize letters of credit or credit cards issued by Wells
Fargo Bank, N.A., (d) that certain Deposit Account, account number ending 30511,
maintained by the Borrower at Blackrock, Inc. so long as the aggregate amount on
deposit in such account does not exceed $2,000,000 at any one time
18
and so long as such account is used solely to hold funds used to cash
collateralize bids in connection with ISO New England auctions, and (e) that
certain Deposit Account, to be opened after the Effective Date in the name of
Comverge and maintained as a customer incentive account for Entergy Corporation,
$500,000 at any one time and so long as such account is used solely to hold
funds used to cash collateralize bids in connection with ISO New England
auctions; provided, that Borrower shall deliver to Grace Bay, concurrently with
the Compliance Certificate delivered pursuant to Section 6(a) of the Schedule, a
report detailing the balance in each of the foregoing Deposit Accounts at the
end of each calendar month and the highest balance in each such Deposit Account
during such month and, upon request of Grace Bay, copies of all bank statements
with respect to such Deposit Accounts.”
(g) Section 8.5 of the Loan Agreement is hereby deleted in its entirety and
replaced with the following in lieu thereof:
“Notwithstanding anything to the contrary in this Agreement or the other Loan
Documents to the contrary, all notices, consents, requests, approvals, demands,
or other communication by any party to the Credit Agreement or any other Loan
Document must be in writing and shall be deemed to have been validly served,
given, or delivered: (a) upon the earlier of actual receipt and three
(3) Business Days after deposit in the U.S. mail, first class, registered or
certified mail return receipt requested, with proper postage prepaid; (b) upon
transmission, when sent by electronic mail or facsimile transmission; (c) one
(1) Business Day after deposit with a reputable overnight courier with all
charges prepaid; or (d) when delivered, if hand-delivered by messenger, all of
which shall be addressed to the party to be notified and sent to the address,
facsimile number, or email address indicated below. Grace Bay or the Borrowers
may change their mailing or electronic mail address or facsimile number by
giving the other party written notice thereof in accordance with the terms of
this Section 8.5.
If to any Borrower:
c/o Comverge, Inc.
5390 Triangle Parkway
Suite 300
Norcross, Georgia 30092
Attn: Mr. David Mathieson
Fax: (770) 696-7665
Email: dmathieson@comverge.com
Baker Botts L.L.P.
98 San Jacinto Blvd., Suite 1500
Austin, Texas 78701
Attn: Steven Tyndall, Esq.
Fax: (512) 322-8328
Email: steve.tyndall@bakerbotts.com
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If to Grace Bay:
Grace Bay Holdings II, LLC
1450 Brickell Avenue, 31st Floor
Miami, Florida 33131
Attn: Fraser Preston
Fax: (305) 379-2322
Email: fpreston@higcapital.com
Kirkland & Ellis LLP
555 California Street
San Francisco, California 94104
Attn: Francesco Penati, Esq.
Fax: (415) 277-6154
Email: fpenati@kirkland.com”
23. Amendment to Compliance Certificate. The Compliance Certificate shall be
amended and modified as follows:
(a) the reference to “Partners for Growth III, L.P. (“PFG)” shall be deleted and
replaced with “Grace Bay Holdings II, LLC (“Grace Bay”)”;
(b) each reference to “PFG” shall be deleted and replaced with “Grace Bay”; and
(c) the reference to “(the “Agreement”)” shall be deleted and replaced with “(as
amended, restated, supplemented or otherwise modified prior to the date hereof,
the “Agreement”; the capitalized terms used herein without definition shall have
the meanings ascribed to such terms in the Agreement)”.
24. Temporary Amendment to Compliance Certificate. During (but not after) the
Forbearance Period, the Compliance Certificate shall be amended and modified as
follows:
(a) the language in certification (ii) of the Compliance Certificate shall be
deleted in its entirety and replaced with the following in lieu thereof:
“all representations and warranties of the Borrowers stated in the Loan
Documents are true and are not misleading in any material respect with respect
to the Collateral (taken as a whole), the perfection, priority or enforceability
of Grace Bay’s Lien in the Collateral (taken as a whole) or the financial
statements delivered by the Borrowers to Grace Bay, when made or deemed to be
made,”; and
(b) the language in certification (v) of the Compliance Certificate shall be
“there are no defaults under the Loan Documents or Events of Default existing,
other than Existing Events of Default (as defined in the Forbearance Agreement)
and default or Events of Default which are not Material Defaults (as defined in
the Forbearance Agreement), in each case, that are currently being forborne
under the Forbearance Agreement.”.
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25. Legend. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE
SUBORDINATE IN THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN AMENDED
AND RESTATED SUBORDINATION AGREEMENT (THE “INTERCREDITOR AGREEMENT”) DATED AS OF
MARCH 26, 2012 BY AND AMONG SILICON VALLEY BANK, GRACE BAY HOLDINGS II, LLC AND
PEAK HOLDING CORP., AS NOTE AGENT, TO THE INDEBTEDNESS (INCLUDING INTEREST) OWED
BY THE BORROWERS.
[Remainder of page intentionally left blank; signature pages follow]
21
forth above.
BORROWERS:
COMVERGE, INC.,
a Delaware corporation
By:
/s/ David Mathieson
Name: David Mathieson Title: Executive Vice President and Chief
Financial Officer
a Delaware corporation
By:
Name: David Mathieson Title: Vice President
COMVERGE GIANTS, LLC,
By:
PUBLIC ENERGY SOLUTIONS, LLC,
a New Jersey limited liability company
By:
PUBLIC ENERGY SOLUTIONS NY, LLC,
By:
[SIGNATURE PAGE TO FORBEARANCE AGREEMENT]
CLEAN POWER MARKETS, INC.,
a Pennsylvania corporation
By:
ALTERNATIVE ENERGY RESOURCES, INC.,
a Delaware corporation
By:
forth above.
GRACE BAY HOLDINGS II, LLC,
as sole holder of the Loans
By:
/s/ Richard Siegel
Name: Richard Siegel Title: Authorized Signatory
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ITEMID: 001-61959
LANGUAGEISOCODE: ENG
RESPONDENT: HRV
BRANCH: CHAMBER
DATE: 2004
DOCNAME: CASE OF BLECIC v. CROATIA
IMPORTANCE: 2
CONCLUSION: No violation of Art. 8;No violation of P1-1
JUDGES: Christos Rozakis
TEXT: 7. The applicant was born in 1926 and lives in Zadar, Croatia.
8. In 1953 the applicant, together with her husband, acquired a specially protected tenancy (stanarsko pravo) of a flat in Zadar. After her husband’s death in 1989 the applicant became the sole holder of the specially protected tenancy.
9. On 3 June 1991, Parliament enacted the Specially Protected Tenancies (Sale to Occupier) Act (Zakon o prodaji stanova na kojima postoji stanarsko pravo), which regulates the sale of publicly-owned flats previously let under specially protected tenancy.
10. On 26 July 1991 the applicant went to visit her daughter who lived in Rome. She intended to stay with her daughter for the summer. She locked the flat in Zadar and left all the furniture and personal belongings in it. She asked a neighbour to pay the bills in her absence and to take care of the flat. However, by the end of August 1991, the armed conflict escalated in Dalmatia, resulting in severe travel difficulties in that area, including the town of Zadar.
11. In October 1991 the Croatian authorities stopped paying the applicant’s pension. The payments were resumed in April 1994. The applicant also lost the right to medical insurance. In these circumstances, the applicant decided to remain in Rome.
12. From 15 September 1991 the town of Zadar was exposed to constant shelling and the supply of electricity and water was disrupted for over one hundred days.
13. In November 1991 a certain M.F., with his wife and two children, broke into the applicant’s flat in Zadar.
14. On 12 February 1992 the Zadar Municipality (Općina Zadar) brought a civil action against the applicant before the Zadar Municipal Court (Općinski sud u Zadru) for termination of her specially protected tenancy on the flat in question. The Municipality claimed that the applicant had been absent from the flat for more than six months without justified reason.
15. In her submissions to the court, the applicant explained that she had been forced to stay with her daughter in Rome from July 1991 until May 1992. She had not been able to return to Zadar since she had no means of subsistence and no medical insurance and was in poor health. Furthermore, during her stay in Rome, she had learned from the neighbour that M.F. had broken into her flat with his family. When she had enquired about her flat and her possessions in the flat, M.F. had threatened her over the telephone.
16. On 9 October 1992 the Zadar Municipal Court terminated the applicant’s specially protected tenancy. The court established that the applicant had left Zadar on 26 July 1991 and had not returned until 15 May 1992. It stated that in the relevant period no order had been issued to the citizens of Zadar to evacuate the town owing to the escalation of the armed conflict but that it had been the personal decision of every citizen whether to leave the town or to stay. On that basis the court found that the applicant’s absence was not justified by the war in Croatia.
17. Furthermore, the court did not accept the applicant’s explanation that she had fallen ill during her stay in Rome and was not able to travel. It was established that the applicant had suffered from spinal arthrosclerosis and diffuse osteoporosis for a long time, which had not affected her ability to travel. Even though her left shoulder had been dislocated on 25 March 1992, she had been able to travel following the immobilisation of the injured joint. Furthermore, by 25 March 1992 she had already been absent from the flat for a period of more than six months.
18. The applicant’s further explanation that she had stopped receiving her pension in October 1991 and thus had been left without any means of subsistence was not accepted by the court as a justified reason for not returning to Zadar. It took the view that the applicant’s daughter could have sent her money. Therefore, the court concluded that the applicant’s reasons for not having lived in the flat were not justified.
19. Following an appeal by the applicant against the judgment, it was quashed by the Zadar County Court (Županijski sud u Zadru) on 10 March 1993. The County Court found that the court of first instance had not taken into careful consideration the applicant’s personal circumstances, namely her age and poor health, the fact that she had lost her pension and the fact that she had lived alone in Zadar without any close relatives. Furthermore, the applicant’s decision to prolong her stay in Rome should have been carefully assessed against the background of objective circumstances, namely that Zadar had been exposed to daily shelling and had not had a regular supply of water or electricity in the material period, and that third persons had occupied the applicant’s flat. The case was remitted to the first-instance court.
20. In the resumed proceedings, on 18 January 1994 the Zadar Municipal Court ruled again in favour of the municipality and terminated the applicant’s specially protected tenancy. It observed that she had been absent from the flat for over six months without justified reason and repeated in substance the findings of the judgment of 9 October 1992.
21. The applicant appealed. On 19 October 1994 the County Court reversed the first-instance judgment and dismissed the municipality’s claim. It found that the escalation of war and the applicant’s personal circumstances, as described above (see paragraphs 11-13), justified her absence from the flat.
22. On 10 April 1995 the Zadar Municipality filed a request for revision on points of law (revizija) with the Supreme Court (Vrhovni sud Republike Hrvatske).
23. On 15 February 1996 the Supreme Court accepted the request for revision and reversed the County Court’s judgment. It found that the reasons submitted by the applicant for her absence from the flat were not justified.
24. The relevant part of the Supreme Court’s judgment reads as follows:
“In the period of the aggression against Croatia, living conditions were the same for all citizens of Zadar and, as rightly submitted by the plaintiff, it is neither possible nor legitimate to separate the defendant’s case from the context of that aggression. Holding the contrary would mean assessing her case in a manner isolated from all the circumstances which marked that time and determined the conduct of each individual.
Contrary to the appellate court’s opinion, this court, assessing in that context the defendant’s decision not to return to Zadar during the aggression but to stay in Italy, considers the non-use of the flat unjustified. The factual findings made in the case reveal that, in view of her health condition and the available travel connections, the defendant was able to come to Zadar; her health would not have deteriorated because of her stay in Zadar; and she could have taken care of herself. The assumption that she would have had to make a considerable mental and physical effort in order to provide for her basic living needs (all the residents of Zadar who remained in the town, from the youngest to the oldest, were exposed to the same living conditions) does not justify her failure to return to Zadar and, accordingly, does not constitute a justified reason for the non-use of the flat.”
25. On 8 November 1996 the applicant filed a constitutional complaint with the Constitutional Court (Ustavni sud Republike Hrvatske). She claimed that her rights to respect for her home and property had been violated and that she had been deprived of a fair trial.
26. On 8 November 1999 the Constitutional Court dismissed the applicant’s complaint. It found that the Supreme Court had correctly applied the relevant legal provisions to the factual background established by the lower courts when holding that the applicant’s absence from the flat for more than six months had been unjustified. The Constitutional Court concluded that the applicant’s constitutional rights had not been violated.
27. The relevant provisions of the 1990 Croatian Constitution (Ustav Republike Hrvatske, Official Gazette nos. 56/1990 and 135/97), as in force during the material period, read as follows:
“Rights and freedoms may only be restricted by law to protect the rights and freedoms of others, the legal order, public morals or health.”
“The home is inviolable.”
“1. The right to property is guaranteed.
2. Property implies duties. Holders of the right to property and its users shall have a duty to contribute to the general welfare.”
“International agreements concluded and ratified in accordance with the Constitution and made public shall be part of the Republic’s internal legal order and shall be [hierarchically] superior to the [domestic] statutes.”
28. Article 17 of the International Covenant on Civil and Political Rights (which entered into force in respect of Croatia by notification of succession on 8 October 1991) provides:
“1. No one shall be subjected to arbitrary or unlawful interference with his...home...
2. Everyone has the right to the protection of the law against such interference...”
29. The relevant provisions of section 99 of the Housing Act (Zakon o stambenim odnosima, Official Gazette nos. 51/1985, 42/1986, 22/1992 and 70/1993), as in force in the material period, provided as follows:
“1. A specially protected tenancy may be terminated if the tenant [...] ceases to occupy the flat for an uninterrupted period exceeding six months.
2. The termination of a specially protected tenancy under the provisions of paragraph 1 of this section may not be effected in respect of a person who does not use the flat on account of undergoing medical treatment, performing military service or for other justified reasons.”
30. In case no. Rev-3839/93 the Supreme Court interpreted section 99(1) of the Housing Act as follows:
“War events per se, without any particular reasons indicating the impossibility of using a flat, do not constitute a justified reason for the non-use of the flat.”
31. In case no. Rev-155/1994-2 the Supreme Court interpreted another aspect of section 99(1) of the Housing Act as follows:
“The fact that a flat that is not being used by its tenant is illegally occupied by a third person does not, per se, make the non-use [of the flat by the tenant] justified. In other words, if the tenant fails to take the appropriate steps to regain possession of the flat within the statutory time-limits set forth in section 99(1) of the Housing Act..., then the [illegal occupation of the flat by a third person] is not an obstacle to the termination of the specially protected tenancy.”
32. The Specially Protected Tenancies (Sale to Occupier) Act (Official Gazette no. 27/1991) regulates the conditions of sale of flats let under specially protected tenancies. The Act entitles the holder of a specially protected tenancy on a publicly-owned flat to purchase it under favourable conditions.
NON_VIOLATED_ARTICLES: 8
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EXHIBIT 10.19
NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE
SECURITIES LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF
FORM OF COMMON STOCK PURCHASE WARRANT
RLJ ENTERTAINMENT, INC.
Warrant No. _________Initial Exercise Date: May ___, 2015
Warrant Shares: _______Exchange Date: September __, 2016
received, _____________ or its assigns (the “Holder”) is entitled, upon the
terms and subject to the limitations on exercise and the conditions hereinafter
set forth, at any time on or after May ___, 2015 (the “Initial Exercise Date”)
and on or prior to the close of business on the five year anniversary of the
for and purchase from RLJ Entertainment, Inc., a Nevada corporation (the
“Company”), up to ______ shares (as subject to adjustment hereunder, the
“Warrant Shares,” and such number of Warrant Shares, the “Warrant Share
Number”)) of Common Stock. The purchase price of one share of Common Stock
2(b).
Section 1.Definitions. Capitalized terms used and not otherwise defined herein
shall have the meanings set forth in that certain Securities Purchase Agreement
(the “Purchase Agreement”), dated May __, 2015, among the Company and the
purchasers signatory thereto. This Warrant is issued pursuant to an Amendment
and Exchange Agreement, dated as of August __, 2016, by and between the Holder
and the Company (the “Exchange Agreement”) in exchange for a Common Stock
Purchase Warrant, exercisable into the Warrant Share Number of shares of Common
Stock, originally issued on the Initial Exercise Date pursuant to the Purchase
Agreement.
meanings:
a)“Bloomberg” means Bloomberg, L.P.
1
b)“Convertible Securities” means any stock or other security (other than
Options) that is at any time and under any circumstances, directly or
indirectly, convertible into, exercisable or exchangeable for, or which
otherwise entitles the holder thereof to acquire, any shares of Common Stock.
c)“Options” means any rights, warrants or options to subscribe for or purchase
shares of Common Stock or Convertible Securities.
Section 2.Exercise.
a)Exercise of Warrant. Exercise of the purchase rights represented by this
appearing on the books of the Company) of a duly executed facsimile copy (or
e-mail attachment) of the Notice of Exercise in the form annexed hereto and
within three (3) Trading Days of the date said Notice of Exercise is delivered
to the Company, the Company shall have received payment of the aggregate
Exercise Price of the shares thereby purchased by wire transfer or cashier’s
check drawn on a United States bank or, if available, pursuant to the cashless
exercise procedure specified in Section 2(c) below. No ink-original Notice of
Exercise shall be required, nor shall any medallion guarantee (or other type of
guarantee or notarization) of any Notice of Exercise form be
required. Notwithstanding anything herein to the contrary, the Holder shall not
to the Company for cancellation within three (3) Trading Days of the date the
final Notice of Exercise is delivered to the Company. Partial exercises of this
Shares available hereunder shall have the effect of lowering the outstanding
number of Warrant Shares purchasable hereunder in an amount equal to the
applicable number of Warrant Shares purchased. The Holder and the Company shall
such purchases. The Company shall deliver any objection to any Notice of
Exercise within one (1) Business Day of receipt of such notice. The Holder and
face hereof.
b)Exercise Price. The exercise price per share of the Common Stock under this
Warrant shall be $[1.50/2.37/3.00], subject to adjustment hereunder (the
“Exercise Price”).
c)Cashless Exercise. If at any time after the six month anniversary of the date
of the Purchase Agreement, there is no effective Registration Statement
registering, or no current prospectus available for, the resale of the Warrant
Shares by the Holder,
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then this Warrant may also be exercised, in whole or in part, at such time by
means of a “cashless exercise” in which the Holder shall be entitled to receive
a number of Warrant Shares equal to the quotient obtained by dividing [(A-B)
(X)] by (A), where:
(A) = the VWAP on the Trading Day immediately preceding the date on which Holder
elects to exercise this Warrant by means of a “cashless exercise,” as set forth
in the applicable Notice of Exercise;
(B) = the Exercise Price of this Warrant, as adjusted hereunder; and
(X) = the number of Warrant Shares that would be issuable upon exercise of this
Warrant in accordance with the terms of this Warrant if such exercise were by
means of a cash exercise rather than a cashless exercise.
If Warrant Shares are issued in such a cashless exercise, the parties
acknowledge and agree that in accordance with Section 3(a)(9) of the Securities
Act, the Warrant Shares shall take on the registered characteristics of the
Warrants being exercised, and the holding period of the Warrants being exercised
may be tacked on to the holding period of the Warrant Shares. The Company
agrees not to take any position contrary to this Section 2(c).
Common Stock is then listed or quoted as reported by Bloomberg (based on a
on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or
reported in the “Pink Sheets” published by OTC Markets, Inc. (or a similar
most recent bid price per share of the Common Stock so reported, or (d) if the
Company and the Holder are unable to agree upon the fair market value of such
security, then such dispute shall be resolved in accordance with the procedures
in Section 5(p).
Notwithstanding anything herein to the contrary, on the Termination Date, this
Warrant shall be automatically exercised via cashless exercise pursuant to this
Section 2(c) (except, that to the extent such exercise would violate Section
2(e) below, the aggregate number of Warrant Shares issuable upon exercise in
full of this Warrant via a cashless exercise shall be automatically exchanged
into a right to receive such aggregate number of Warrant Shares, subject to a
restriction on exercise in the form of Section 2(e) below).
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d)
Mechanics of Exercise.
i.Delivery of Warrant Shares Upon Exercise. Warrant Shares purchased hereunder
account of the Holder’s or its designee’s balance account with The Depository
Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if
the Company is then a participant in such system and either (A) there is an
effective registration statement permitting the issuance of the Warrant Shares
to or resale of the Warrant Shares by the Holder or (B) the Warrant Shares are
eligible for resale by the Holder pursuant to Rule 144, and otherwise by
physical delivery of a certificate, registered in the Company’s share register
in the name of the Holder or its designee, for the number of Warrant Shares to
which the Holder is entitled pursuant to such exercise to the address specified
by the Holder in the Notice of Exercise by the date that is one (1) Trading Day
after the delivery to the Company of the Notice of Exercise (such date, the
purposes, as of the date the Warrant has been exercised, with payment to the
Company of the Exercise Price (or by cashless exercise, if permitted) and all
taxes required to be paid by the Holder, if any, pursuant to Section 2(d)(vi)
prior to the issuance of such shares, having been paid. If the Company fails
for any reason to deliver to the Holder the Warrant Shares subject to a Notice
(increasing to $20 per Trading Day on the fifth Trading Day after such
liquidated damages begin to accrue) for each Trading Day after such Warrant
Share Delivery Date until such Warrant Shares are delivered or Holder rescinds
such exercise.
ii.Delivery of New Warrants Upon Exercise. If this Warrant shall have been
surrender of this Warrant certificate, at the time of delivery of the Warrant
Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder
Warrant shall in all other respects be identical with this Warrant.
iii.Rescission Rights. If the Company fails to cause the Transfer Agent to
transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the
Warrant Share Delivery Date, then the Holder will have the right to rescind such
exercise.
iv.Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon
Exercise. In addition to any other rights available to the Holder, if the
Company fails to cause the Transfer Agent to transmit to the Holder the Warrant
Shares in accordance with the provisions of Section 2(d)(i) above
4
pursuant to an exercise on or before the Warrant Share Delivery Date (a
“Delivery Failure”), and if after such date the Holder is required by its broker
to purchase (in an open market transaction or otherwise) or the Holder’s
brokerage firm otherwise purchases, shares of Common Stock to deliver in
satisfaction of a sale by the Holder of the Warrant Shares which the Holder
(A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s
Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the
number of Warrant Shares that the Company was required to deliver to the Holder
in connection with the exercise at issue times (2) the price at which the sell
order giving rise to such purchase obligation was executed, and (B) at the
number of Warrant Shares for which such exercise was not honored (in which case
such exercise shall be deemed rescinded) or deliver to the Holder the number of
shares of Common Stock that would have been issued had the Company timely
complied with its exercise and delivery obligations hereunder. For example, if
under clause (A) of the immediately preceding sentence the Company shall be
required to pay the Holder $1,000. The Holder shall provide the Company written
and, upon request of the Company, evidence of the amount of such loss. Nothing
failure to timely deliver shares of Common Stock upon exercise of the Warrant as
v.No Fractional Shares or Scrip. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. As to any
vi.Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made
expense in respect of the issuance of Warrant Shares, all of which taxes and
expenses shall be paid by the Company, and such Warrant Shares shall be issued
Holder; provided, however, that in the event that Warrant Shares are to be
surrendered for exercise shall be accompanied by the Assignment Form attached
incidental thereto.
5
The Company shall pay all Transfer Agent fees required for same-day processing
of any Notice of Exercise and all fees to the Depository Trust Company (or
another established clearing corporation performing similar functions) required
for same-day electronic delivery of the Warrant Shares.
vii.Closing of Books. The Company will not close its stockholder books or
pursuant to the terms hereof.
viii.Disputes. In the case of a dispute as to the determination of the Exercise
Price or the arithmetic calculation of the number of Warrant Shares to be issued
pursuant to the terms hereof, the Company shall promptly issue to the Holder the
number of Warrant Shares that are not disputed and resolve such dispute in
accordance with Section 5(p).
e)Holder’s Exercise Limitations. The Company shall not effect any exercise of
this Warrant, pursuant to Section 2 or otherwise, to the extent that after
Affiliates), would beneficially own in excess of the Beneficial Ownership
conversion of the unexercised or nonconverted portion of any other securities of
the Company (including, without limitation, any other Common Stock Equivalents)
subject to a limitation on conversion or exercise analogous to the limitation
in accordance therewith. To the extent that the limitation contained in this
Section 2(e) applies, the determination of whether this Warrant is exercisable
be deemed to be the Holder’s determination of whether this Warrant is
no obligation to verify or confirm the accuracy of such determination. In
determined in accordance with Section 13(d) of the
6
of this Section 2(e), in determining the number of outstanding shares of Common
shall be determined after giving effect to the conversion or exercise of
Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99%
or 9.99% of the number of shares of the Common Stock outstanding immediately
exercise of this Warrant, as elected by the applicable initial Holder on the
Closing Date or in the applicable Blocker Election Notice (as defined
below). The provisions of this paragraph shall be construed and implemented in
a manner otherwise than in strict conformity with the terms of this Section 2(e)
successor holder of this Warrant. Notwithstanding anything herein to the
contrary, unless a Holder otherwise notifies the Company in writing on or prior
to the Closing Date, this Section 2(e) shall not apply to a Holder who is, or
whose Affiliate is, a director or a director by designation of the Company or
any of its Subsidiaries when such Holder first acquires Preferred Shares or
thereafter, until such time as the Holder delivers written notice (a “Blocker
Election Notice”) to the Company that this Section 2(e) shall thereafter apply
to this Warrant (which notice may not be waived, withdrawn or modified once
given).
Section 3.Certain Adjustments.
Stock outstanding immediately after such event, and the number of shares
issuable upon exercise of this Warrant shall be proportionately adjusted such
that
7
the aggregate Exercise Price of this Warrant shall remain unchanged. Any
adjustment made pursuant to this Section 3(a) shall become effective immediately
after the record date for the determination of stockholders entitled to receive
such dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or re‑classification.
b)Subsequent Equity Sales. If and whenever on or after the Closing Date, the
Company issues or sells, or in accordance with this Section 3 is deemed to have
issued or sold, any shares of Common Stock (including the issuance or sale of
shares of Common Stock owned or held by or for the account of the Company, but
excluding any Excluded Securities issued or sold or deemed to have been issued
or sold) for a consideration per share (the “Base Share Price”) less than a
price equal to the VWAP immediately prior to such issuance or sale or deemed
issuance or sale (such VWAP then in effect is referred to herein as the
“Applicable Price”) (the foregoing a “Dilutive Issuance”), then immediately
after such Dilutive Issuance, the Exercise Price then in effect shall be reduced
to the price equal to the Exercise Price in effect immediately prior to the
Dilutive Issuance multiplied by the quotient obtained by dividing (A) the sum of
(i) the amount of Common Stock outstanding prior to the Dilutive Issuance
(including any shares of Common Stock deemed to have been issued pursuant to
Section 3(b)(i) or Section 3(b)(ii) but excluding the number of shares of Common
Stock for which this Warrant is exercisable immediately prior to such Dilutive
Issuance (the “Warrant Exercise Shares”) plus (ii) the number of shares of
Common Stock equal to the price payable to exercise the Dilutive Issuance
divided by the VWAP as of the date immediately prior to the Dilutive Issuance,
by (B) the sum of (i) the amount of Common Stock outstanding prior to the
Dilutive Issuance (including any shares of Common Stock deemed to have been
issued pursuant to Section 3(b)(i) or Section 3(b)(ii) but excluding the Warrant
Exercise Shares) plus (ii) the number of shares of Common Stock issuable
pursuant to the Dilutive Issuance. For all purposes of the foregoing
(including, without limitation, determining the adjusted Exercise Price and the
Base Share Price under this Section 3(b)), the following shall be applicable:
i.Issuance of Options. If the Company in any manner grants or sells any Options
and the lowest price per share for which one share of Common Stock is at any
time issuable upon the exercise of any such Option or upon conversion, exercise
or exchange of any Convertible Securities issuable upon exercise of any such
Option or otherwise pursuant to the terms thereof is less than the Applicable
Price, then such share of Common Stock shall be deemed to be outstanding and to
have been issued and sold by the Company at the time of the granting or sale of
such Option for such price per share. For purposes of this Section 3(b)(i), the
“lowest price per share for which one share of Common Stock is issuable upon the
exercise of any such Options or upon conversion, exercise or exchange of any
Convertible Securities issuable upon exercise of any such Option or otherwise
pursuant to the terms thereof” shall be equal to (1) the lower of (x) the sum
of the lowest amounts of consideration (if any) received or receivable by the
Company with respect to any one share of Common Stock upon the granting or sale
of such Option, upon exercise of such Option and upon conversion, exercise or
exchange of any Convertible Security issuable upon exercise of such Option or
otherwise
8
pursuant to the terms thereof and (y) the lowest exercise price set forth in
such Option for which one share of Common Stock is issuable upon the exercise of
any such Options or upon conversion, exercise or exchange of any Convertible
Securities issuable upon exercise of any such Option or otherwise pursuant to
the terms thereof minus (2) the sum of all amounts paid or payable to the holder
of such Option (or any other Person) upon the granting or sale of such Option,
upon exercise of such Option and upon conversion, exercise or exchange of any
Convertible Security issuable upon exercise of such Option or otherwise pursuant
to the terms thereof plus the value of any other consideration received or
receivable by, or benefit conferred on, the holder of such Option (or any other
Person). Except as contemplated below, no further adjustment of the Exercise
Price shall be made upon the actual issuance of such shares of Common Stock or
of such Convertible Securities upon the exercise of such Options or otherwise
pursuant to the terms of or upon the actual issuance of such shares of Common
Stock upon conversion, exercise or exchange of such Convertible Securities.
ii.Issuance of Convertible Securities. If the Company in any manner issues or
sells any Convertible Securities and the lowest price per share for which one
share of Common Stock is at any time issuable upon the conversion, exercise or
exchange thereof or otherwise pursuant to the terms thereof is less than the
Applicable Price, then such share of Common Stock shall be deemed to be
outstanding and to have been issued and sold by the Company at the time of the
issuance or sale of such Convertible Securities for such price per share. For
the purposes of this Section 3(b)(ii), the “lowest price per share for which one
share of Common Stock is issuable upon the conversion, exercise or exchange
thereof or otherwise pursuant to the terms thereof” shall be equal to (1) the
lower of (x) the sum of the lowest amounts of consideration (if any) received or
receivable by the Company with respect to one share of Common Stock upon the
issuance or sale of the Convertible Security and upon conversion, exercise or
exchange of such Convertible Security or otherwise pursuant to the terms thereof
and (y) the lowest conversion price set forth in such Convertible Security for
which one share of Common Stock is issuable upon conversion, exercise or
exchange thereof or otherwise pursuant to the terms thereof minus (2) the sum of
all amounts paid or payable to the holder of such Convertible Security (or any
other Person) upon the issuance or sale of such Convertible Security plus the
value of any other consideration received or receivable by, or benefit conferred
on, the holder of such Convertible Security (or any other Person). Except as
contemplated below, no further adjustment of the Exercise Price shall be made
upon the actual issuance of such shares of Common Stock upon conversion,
exercise or exchange of such Convertible Securities or otherwise pursuant to the
terms thereof, and if any such issuance or sale of such Convertible Securities
is made upon exercise of any Options for which adjustment of this Warrant has
been or is to be made pursuant to other provisions of this Section 3(b), except
as contemplated below, no further adjustment of the Exercise Price shall be made
by reason of such issuance or sale.
iii.Change in Option Price or Rate of Conversion. If the purchase or exercise
price provided for in any Options, the additional consideration, if any,
9
payable upon the issue, conversion, exercise or exchange of any Convertible
Securities, or the rate at which any Convertible Securities are convertible into
or exercisable or exchangeable for shares of Common Stock increases or decreases
at any time (other than proportional changes in conversion or exercise prices,
as applicable, in connection with an event referred to in Section 3(a)), the
Exercise Price in effect at the time of such increase or decrease shall be
adjusted to the Exercise Price which would have been in effect at such time had
such Options or Convertible Securities provided for such increased or decreased
purchase price, additional consideration or increased or decreased conversion
rate, as the case may be, at the time initially granted, issued or sold. For
purposes of this Section 3(b)(iii), if the terms of any Option or Convertible
Security that was outstanding as of the Closing Date are increased or decreased
in the manner described in the immediately preceding sentence, then such Option
or Convertible Security and the shares of Common Stock deemed issuable upon
exercise, conversion or exchange thereof shall be deemed to have been issued as
of the date of such increase or decrease. No adjustment pursuant to this
Section 3(b) shall be made if such adjustment would result in an increase of the
Exercise Price then in effect.
iv.Calculation of Consideration Received. If any Option is issued in connection
with the issuance or sale of any other securities of the Company together
comprising one integrated transaction in which no specific consideration is
allocated to such Option by the parties thereto, the Options will be deemed to
have been issued for a consideration of $0.01. If any shares of Common Stock,
Options or Convertible Securities are issued or sold or deemed to have been
issued or sold for cash, the consideration received therefor will be deemed to
be the net amount of consideration received by the Company therefor. If any
shares of Common Stock, Options or Convertible Securities are issued or sold for
a consideration other than cash, the amount of such consideration received by
the Company will be the fair value of such consideration, except where such
consideration consists of publicly traded securities, in which case the amount
of consideration received by the Company for such securities will be the
arithmetic average of the VWAPs of such security for each of the five (5)
Trading Days immediately preceding the date of receipt. If any shares of Common
Stock, Options or Convertible Securities are issued to the owners of the
non-surviving entity in connection with any merger in which the Company is the
surviving entity, the amount of consideration therefor will be deemed to be the
fair value of such portion of the net assets and business of the non-surviving
entity as is attributable to such shares of Common Stock, Options or Convertible
Securities. The fair value of any consideration other than cash or publicly
traded securities will be determined jointly by the Company and the Holder. If
such parties are unable to reach agreement within ten (10) days after the
occurrence of an event requiring valuation (the “Valuation Event”), the fair
value of such consideration will be determined within five (5) Trading Days
after the tenth (10th) day following such Valuation Event by an independent,
reputable appraiser jointly selected by the Company and the Holder. The
determination of such appraiser shall be final and binding upon all parties
absent manifest error. If such appraiser’s valuation differs by less than 5%
from the Company’s proposed
10
valuation, the fees and expenses of such appraiser shall be borne by the Holder,
and if such appraiser’s valuation differs by more than 5% from the Company’s
proposed valuation, the fees and expenses of such appraiser shall be borne by
the Company.
v.Record Date. If the Company takes a record of the holders of shares of Common
Stock for the purpose of entitling them (A) to receive a dividend or other
distribution payable in shares of Common Stock, Options or in Convertible
Securities or (B) to subscribe for or purchase shares of Common Stock, Options
or Convertible Securities, then such record date will be deemed to be the date
of the issuance or sale of the shares of Common Stock deemed to have been issued
or sold upon the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription or
purchase (as the case may be).
c)Number of Warrant Shares. Simultaneously with any adjustment to the Exercise
Price pursuant to Section 3(a), the number of Warrant Shares that may be
purchased upon exercise of this Warrant shall be increased or decreased
the aggregate Exercise Price in effect immediately prior to such adjustment
(without regard to any limitations on exercise contained herein).
d)Other Events. In the event that the Company (or any Subsidiary) shall take
any action to which the provisions hereof are not strictly applicable, or, if
applicable, would not operate to protect the Holder from dilution or if any
event occurs of the type contemplated by the provisions of this Section 3 but
not expressly provided for by such provisions (including, without limitation,
the granting of stock appreciation rights, phantom stock rights or other rights
with equity features), then the Company’s board of directors shall in good faith
determine and implement an appropriate adjustment in the Exercise Price and the
number of Warrant Shares (if applicable) so as to protect the rights of the
Holder, provided that no such adjustment pursuant to this Section 3(d) will
increase the Exercise Price or decrease the number of Warrant Shares as
otherwise determined pursuant to this Section 3, provided further that if the
Holder does not accept such adjustments as appropriately protecting its
interests hereunder against such dilution, then the Company’s board of directors
and the Holder shall agree, in good faith, upon an independent investment bank
of nationally recognized standing to make such appropriate adjustments, whose
determination shall be final and binding absent manifest error. If such
investment bank’s resolution differs by less than 5% from the Company’s proposed
determination, the fees and expenses of such investment bank shall be borne by
the Holder, and if such investment bank’s resolution differs by more than 5%
from the Company’s proposed determination, the fees and expenses of such
investment bank shall be borne by the Company.
e)Voluntary Adjustment By Company. The Company may at any time during the term
of this Warrant, with the prior written consent of the Holder, reduce the
11
then current Exercise Price to any amount and for any period of time deemed
appropriate by the board of directors of the Company.
f)Notice; Variable Rate Transactions. The Company shall notify the Holder, in
writing, no later than the Trading Day following the issuance or deemed issuance
of any Common Stock or Common Stock Equivalents subject to Section 3(b),
indicating therein the applicable issuance price, or applicable reset price,
exchange price, conversion price and other pricing terms (such notice, the
“Dilutive Issuance Notice”). For purposes of clarification, whether or not the
Company provides a Dilutive Issuance Notice pursuant to Section 3(b), upon the
occurrence of any Dilutive Issuance, the Holder is entitled to receive a number
of Warrant Shares based upon the Base Share Price regardless of whether the
Holder accurately refers to the Base Share Price in the Notice of Exercise. If
the Company enters into a Variable Rate Transaction, despite the prohibition
thereon in the Purchase Agreement, the Company shall be deemed to have issued
Common Stock or Common Stock Equivalents at the lowest possible conversion or
exercise price at which such securities may be converted or exercised.
g)Subsequent Rights Offerings. In addition to any adjustments pursuant to
Section 3(a) above, if at any time the Company grants, issues or sells any
of Common Stock acquirable upon complete exercise of this Warrant (without
regard to any limitations on exercise hereof, including without limitation, the
h)Pro Rata Distributions. During such time as this Warrant is outstanding, if
the Company shall declare or make any dividend or other distribution of its
assets (or rights to acquire its assets) to holders of shares of Common Stock,
by way of return of capital or otherwise (including, without limitation, any
arrangement or other similar transaction) (a “Distribution”), at any time after
the issuance of this Warrant, then, in each such case, the Holder shall be
entitled to participate in such Distribution to the same extent that the Holder
would have participated therein if the Holder had held the number of shares of
Common Stock acquirable upon complete exercise of this Warrant (without regard
to any limitations on
12
exercise hereof, including without limitation, the Beneficial Ownership
Limitation) immediately before the date of which a record is taken for such
holders of shares of Common Stock are to be determined for the participation in
such Distribution (provided, however, to the extent that the Holder's right to
participate in any such Distribution would result in the Holder exceeding the
Beneficial Ownership Limitation, then the Holder shall not be entitled to
participate in such Distribution to such extent (or in the beneficial ownership
of any shares of Common Stock as a result of such Distribution to such extent)
and the portion of such Distribution shall be held in abeyance for the benefit
the Holder exceeding the Beneficial Ownership Limitation).
i)Fundamental Transaction. If, at any time while this Warrant is outstanding,
all of its assets in one or a series of related transactions, (iii) the Company,
directly or indirectly, assists or agrees to assist a purchase offer, tender
offer or exchange offer pursuant to which holders of Common Stock are permitted
and such offer has been accepted by the holders of 50% or more of the
securities, cash or property, or (v) the Company, directly or indirectly, in one
or more related transactions consummates a stock or share purchase agreement or
recapitalization, spin-off or scheme of arrangement and any sale of control by a
controlling stockholder or stockholders that is facilitated by the Company) with
another Person or group of Persons whereby such other Person or group acquires
“Fundamental Transaction”), then (1) in the event of a Fundamental Transaction
in which the consideration received by the holders of Common Stock is
exclusively cash, the Company or the Successor Entity (as the case may be) shall
purchase this Warrant from the Holder as promptly as practicable on the date of
such consummation by paying to the Holder cash equal to (x) the amount, if any,
by which the purchase price per share paid for the shares of Common Stock
acquired in the Fundamental Transaction exceeds the Exercise Price, multiplied
by (y) the number of Warrant Shares, and (2) in the event of a Fundamental
Transaction in which the consideration received by the holders of Common Stock
is not exclusively cash, upon any subsequent exercise of this Warrant, the
Holder shall have the right to receive (without regard to any limitation in
Section 2(e) on the exercise of this Warrant), for each Warrant Share that would
have been issuable upon such exercise immediately prior to the occurrence of
such Fundamental Transaction the number of shares of Common Stock of the
13
surviving corporation, and any additional consideration (the “Alternate
exercisable immediately prior to such Fundamental Transaction (without regard to
any limitation in Section 2(e) on the exercise of this Warrant). For purposes
appropriately adjusted to apply to such Alternate Consideration based on the
amount of Alternate Consideration issuable in respect of one share of Common
Stock in such Fundamental Transaction, and the Company shall apportion the
Exercise Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate
Consideration. If holders of Common Stock are given any choice as to the
receives upon any exercise of this Warrant following such Fundamental
the other Transaction Documents in accordance with the provisions of this
Section 3(i) pursuant to written agreements in form and substance reasonably
satisfactory to the Holder and approved by the Holder (without unreasonable
Holder, deliver to the Holder in exchange for this Warrant a security of the
and substance to this Warrant, which is exercisable for a corresponding number
equivalent to the shares of Common Stock acquirable and receivable upon exercise
Warrant) prior to such Fundamental Transaction, and with an exercise price that
of protecting the economic value of this Warrant immediately prior to the
Transaction, the provisions of this Warrant and the other Transaction Documents
obligations of the Company under this Warrant and the other Transaction
Company herein.
j)Calculations. All calculations under this Section 3 shall be made to the
of this Section 3, the number of shares of Common Stock deemed to be issued and
14
k)Notice to Holder.
i.Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant
to any provision of this Section 3, the Company shall promptly mail to the
Holder a notice setting forth the Exercise Price after such adjustment and any
resulting adjustment to the number of Warrant Shares and setting forth a brief
statement of the facts requiring such adjustment.
any stockholders of the Company shall be required in connection with any
other property deliverable upon such reclassification, consolidation, merger,
the corporate action required to be specified in such notice. To the extent
that any notice provided in this Warrant constitutes, or contains, material,
Company shall simultaneously file such notice with the Commission pursuant to a
Current Report on Form 8-K. The Holder shall remain entitled to exercise this
date of the event triggering such notice except as may otherwise be expressly
set forth herein.
l)[Insert in Non-Management Warrants: [Intentionally Omitted]
[Insert in Management Warrants:
15
Limitation on Adjustment. The foregoing provisions of this Section 3
notwithstanding, in no event shall the Exercise Price be reduced, as a result of
the application of Section 3(b), 3(d) or 3(e), to less than $2.37 per
share. For the avoidance of doubt, the foregoing limitation does not apply to
any adjustment as a result of the application of Section 3(a).]
Section 4.Transfer of Warrant.
a)Transferability. Subject to compliance with any applicable securities laws
and the conditions set forth in Section 4(d) hereof and to the provisions of
Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder
(including, without limitation, any registration rights) are transferable, in
upon the making of such transfer. Upon such surrender and, if required, such
and this Warrant shall promptly be cancelled. Notwithstanding anything herein
Warrant to the Company unless the Holder has assigned this Warrant in full, in
which case, the Holder shall surrender this Warrant to the Company within three
(3) Trading Days of the date the Holder delivers an assignment form to the
Company assigning this Warrant full. The Warrant, if properly assigned in
Warrant Shares without having a new Warrant issued.
written notice specifying the names and denominations in which new Warrants are
to be issued, signed by the Holder or its agent or attorney. Subject to
compliance with Section 4(a), as to any transfer which may be involved in such
except as to the number of Warrant Shares issuable pursuant thereto.
of the record Holder hereof from time to time. The Company may deem and treat
other purposes, absent actual notice to the contrary.
16
d)Transfer Restrictions. This Warrant may be offered for sale, sold, transferred
or assigned without the consent of the Company, except as may otherwise be
required by Section 4.1 of the Purchase Agreement.
e)Representation by the Holder. The Holder, by the acceptance hereof,
Securities Act.
Section 5.Miscellaneous.
a)No Rights as Stockholder Until Exercise. This Warrant does not entitle the
Company prior to the exercise hereof as set forth in Section 2(d)(i), except as
expressly set forth in Section 3.
c)Saturdays, Sundays, Holidays, etc. If the last or appointed day for the
d)Authorized Shares.
i.The Company covenants that, during the period the Warrant is outstanding, it
will reserve from its authorized and unissued Common Stock a sufficient number
any purchase rights under this Warrant (the
“Required Reserve Amount”). The Company further covenants that its issuance of
this Warrant shall constitute full authority to its officers who are charged
with the duty of issuing the necessary Warrant Shares upon the exercise of the
purchase rights under this Warrant. The Company will take all such reasonable
requirements of the Trading Market upon which the Common Stock may be
listed. The Company covenants that all Warrant Shares which may be issued
17
transfer occurring contemporaneously with such issue).
ii.If, notwithstanding the foregoing, and not in limitation thereof, at any time
while the Warrant remain outstanding, the Company does not have a sufficient
number of authorized and unreserved shares of Common Stock to satisfy its
obligation to reserve the Required Reserve Amount (an “Authorized Share
to allow the Company to reserve the Required Reserve Amount for all the Warrants
then outstanding. Without limiting the generality of the foregoing sentence, as
soon as practicable after the date of the occurrence of an Authorized Share
Failure, but in no event later than ninety (90) days after the occurrence of
such Authorized Share Failure, the Company shall hold a meeting of its
stockholders for the approval of an increase in the number of authorized shares
of Common Stock. In connection with such meeting, the Company shall provide
each stockholder with a proxy statement and shall use its reasonable best
efforts to solicit its stockholders’ approval of such increase in authorized
shares of Common Stock and to cause its board of directors to recommend to the
stockholders that they approve such proposal.
iii.Except and to the extent as waived or consented to by the Holder, the
certificate of incorporation or through any reorganization, transfer of assets,
Warrant against impairment. Without limiting the generality of the foregoing,
amount payable therefor upon such exercise immediately prior to such increase in
that the Company may validly and legally issue fully paid and nonassessable
Warrant Shares upon the exercise of this Warrant and (iii) use reasonable best
efforts to obtain all such authorizations, exemptions or consents from any
enable the Company to perform its obligations under this Warrant.
iv.Before taking any action which would result in an adjustment in the number of
the Company shall obtain all such authorizations or exemptions
18
body or bodies having jurisdiction thereof.
and interpretation of this Warrant shall be determined in accordance with the
provisions of the Purchase Agreement.
f)Restrictions. The Holder acknowledges that the Warrant Shares acquired upon
the exercise of this Warrant, if not registered and the Holder does not utilize
cashless exercise, will have restrictions upon resale imposed by state and
federal securities laws.
g)Nonwaiver and Expenses. No course of dealing or any delay or failure to
such right or otherwise prejudice the Holder’s rights, powers or remedies,
notwithstanding the fact that all rights hereunder terminate on the Termination
Date. If the Company willfully and knowingly fails to comply with any provision
Company shall pay to the Holder such amounts as shall be sufficient to cover any
including those of appellate proceedings, incurred by the Holder in collecting
powers or remedies hereunder.
h)Notices. Any notice, request or other document required or permitted to be
given or delivered to the Holder by the Company shall be delivered in accordance
with the notice provisions of the Purchase Agreement.
i)Limitation of Liability. No provision hereof, in the absence of any
affirmative action by the Holder to exercise this Warrant to purchase Warrant
Shares, and no enumeration herein of the rights or privileges of the Holder,
shall give rise to any liability of the Holder for the purchase price of any
asserted by the Company or by creditors of the Company.
j)Remedies. The remedies provided in this Warrant shall be cumulative and in
addition to all other remedies available under this Warrant and the other
Transaction Documents, at law or in equity (including a decree of specific
performance and/or other injunctive relief), and nothing herein shall limit the
right of the Holder to pursue actual and consequential damages for any failure
by the Company to comply with the terms of this Warrant. The Company covenants
to the Holder that there shall be no characterization concerning this instrument
other than as expressly provided herein. Amounts set forth or provided for
herein with respect to payments, exercises and the like (and the computation
thereof) shall be the amounts to be received by the Holder and shall not, except
as expressly provided herein, be subject to any other obligation of the Company
(or the performance thereof). The Company acknowledges that a breach by it of
its obligations hereunder will cause irreparable harm to the Holder and that the
remedy at law for any such breach may be inadequate. The Company therefore
agrees that, in the
19
event of any such breach or threatened breach, the holder of this Warrant shall
be entitled, in addition to all other available remedies, to an injunction
restraining any breach, without the necessity of showing economic loss and
without any bond or other security being required. The Company shall provide
all information and documentation to the Holder that is requested by the Holder
to enable the Holder to confirm the Company’s compliance with the terms and
conditions of this Warrant. The issuance of shares and certificates for shares
as contemplated hereby upon the exercise of this Warrant shall be made without
charge to the Holder or such shares for any issuance tax or other costs in
respect thereof, provided that the Company shall not be required to pay any tax
which may be payable in respect of any transfer involved in the issuance and
delivery of any certificate in a name other than the Holder or its agent on its
behalf. If (a) this Warrant is placed in the hands of an attorney for
collection or enforcement or is collected or enforced through any legal
proceeding or the holder otherwise takes action to collect amounts due under
this Warrant or to enforce the provisions of this Warrant or (b) there occurs
any bankruptcy, reorganization, receivership of the company or other proceedings
affecting company creditors’ rights and involving a claim under this Warrant,
then the Company shall pay the costs incurred by the Holder for such collection,
enforcement or action or in connection with such bankruptcy, reorganization,
receivership or other proceeding, including, without limitation, attorneys’ fees
and disbursements.
k)Successors and Assigns. Subject to applicable securities laws, this Warrant
successors and permitted assigns of Holder. The provisions of this Warrant are
l)Amendment. This Warrant (other than Section 2(e)) may be modified or amended
Holder. No waiver shall be effective unless it is in writing and signed by an
authorized representative of the waiving party.
m)Severability. If any provision of this Warrant is prohibited by law or
otherwise determined to be invalid or unenforceable by a court of competent
jurisdiction, the provision that would otherwise be prohibited, invalid or
unenforceable shall be deemed amended to apply to the broadest extent that it
would be valid and enforceable, and the invalidity or unenforceability of such
provision shall not affect the validity of the remaining provisions of this
Warrant so long as this Warrant as so modified continues to express, without
material change, the original intentions of the parties as to the subject matter
hereof and the prohibited nature, invalidity or unenforceability of the
provision(s) in question does not substantially impair the respective
expectations or reciprocal obligations of the parties or the practical
realization of the benefits that would otherwise be conferred upon the
parties. The parties will endeavor in good faith negotiations to replace the
prohibited, invalid or unenforceable provision(s) with a valid provision(s), the
effect of which comes as close as possible to that of the prohibited, invalid or
unenforceable provision(s).
20
n)Headings. This Warrant shall be deemed to be jointly drafted by the Company
and the Holder and shall not be construed against any Person as the drafter
hereof. The headings of this Warrant are for convenience of reference and shall
not form part of, or affect the interpretation of, this Warrant. Terms used in
this Warrant but defined in the other Transaction Documents shall have the
meanings ascribed to such terms on the Closing Date in such other Transaction
Documents unless otherwise consented to in writing by the Holder.
o)Governing Law. This Warrant shall be governed by and construed and enforced
in accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Warrant shall be governed by, the
internal laws of the State of New York, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of New York or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York. The Company hereby irrevocably
such suit, action or proceeding by mailing a copy thereof to the Company at the
address set forth on its signature page to the Purchase Agreement and agrees
that such service shall constitute good and sufficient service of process and
notice thereof. The Company hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in The City of New York,
Borough of Manhattan, for the adjudication of any dispute hereunder or in
jurisdiction of any such court, that such suit, action or proceeding is brought
improper. Nothing contained herein shall be deemed to limit in any way any
right to serve process in any manner permitted by law. Nothing contained herein
shall be deemed or operate to preclude the Holder from bringing suit or taking
other legal action against the Company in any other jurisdiction to collect on
the Company’s obligations to the Holder, to realize on any collateral or any
other security for such obligations, or to enforce a judgment or other court
ruling in favor of the Holder. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT
ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS WARRANT OR
ANY TRANSACTION CONTEMPLATED HEREBY.
p)
DISPUTE RESOLUTION
i.
Submission to Dispute Resolution.
(A)In the case of a dispute relating to the Exercise Price, the Closing Sale
Price, the Bid Price, or fair market value or the arithmetic calculation of the
number of Warrant Shares (as the case may be) (including, without limitation, a
dispute relating to the determination of any of the foregoing), the Company or
the Holder (as the case may be) shall submit the dispute to the other party via
facsimile (A) if by the Company, within two (2) Business Days after the
occurrence of the
21
circumstances giving rise to such dispute or (B) if by the Holder, at any time
after the Holder learned of the circumstances giving rise to such dispute. If
the Holder and the Company are unable to promptly resolve such dispute relating
to such Exercise Price, such Closing Sale Price, such Bid Price, or such fair
market value or such arithmetic calculation of the number of Warrant Shares (as
the case may be), at any time after the second (2nd) Business Day following such
initial notice by the Company or the Holder (as the case may be) of such dispute
to the Company or the Holder (as the case may be), then the Holder may, at its
sole option, select an independent, reputable investment bank to resolve such
dispute.
(B)The Holder and the Company shall each deliver to such investment bank (A) a
copy of the initial dispute submission so delivered in accordance with the first
sentence of this Section 5(p) and (B) written documentation supporting its
position with respect to such dispute, in each case, no later than 5:00 p.m.
(New York time) by the fifth (5th) Business Day immediately following the date
on which the Holder selected such investment bank (the “Dispute Submission
Deadline”) (the documents referred to in the immediately preceding clauses (A)
and (B) are collectively referred to herein as the “Required Dispute
Documentation”) (it being understood and agreed that if either the Holder or the
Company fails to so deliver all of the Required Dispute Documentation by the
Dispute Submission Deadline, then the party who fails to so submit all of the
Required Dispute Documentation shall no longer be entitled to (and hereby waives
its right to) deliver or submit any written documentation or other support to
such investment bank with respect to such dispute and such investment bank shall
resolve such dispute based solely on the Required Dispute Documentation that was
delivered to such investment bank prior to the Dispute Submission Deadline).
Unless otherwise agreed to in writing by both the Company and the Holder or
otherwise requested by such investment bank, neither the Company nor the Holder
shall be entitled to deliver or submit any written documentation or other
support to such investment bank in connection with such dispute (other than the
Required Dispute Documentation).
(C)The Company and the Holder shall cause such investment bank to determine the
resolution of such dispute and notify the Company and the Holder of such
resolution no later than ten (10) Business Days immediately following the
Dispute Submission Deadline. Such investment bank’s resolution of such dispute
shall be final and binding upon all parties absent manifest error. If such
22
ii.Miscellaneous. The Company expressly acknowledges and agrees that (i) this
Section 5(p) constitutes an agreement to arbitrate between the Company and the
Holder (and constitutes an arbitration agreement) under the rules then in effect
under § 7501, et seq. of the New York Civil Practice Law and Rules (“CPLR”) and
that the Holder is authorized to apply for an order to compel arbitration
pursuant to CPLR § 7503(a) in order to compel compliance with this Section 5(p),
(ii) a dispute relating to the Exercise Price includes, without limitation,
disputes as to (A) whether an issuance or sale or deemed issuance or sale of
Common Stock occurred under Section 3(b), (B) the consideration per share at
which an issuance or deemed issuance of Common Stock occurred, (C) whether any
issuance or sale or deemed issuance or sale of Common Stock was an issuance or
sale or deemed issuance or sale of Excluded Securities, (D) whether an
agreement, instrument, security or the like constitutes and Option or
Convertible Security and (E) whether a Dilutive Issuance occurred, (iii) the
terms of this Warrant and each other applicable Transaction Document shall serve
as the basis for the selected investment bank’s resolution of the applicable
dispute, such investment bank shall be entitled (and is hereby expressly
authorized) to make all findings, determinations and the like that such
investment bank determines are required to be made by such investment bank in
connection with its resolution of such dispute (including, without limitation,
determining (A) whether an issuance or sale or deemed issuance or sale of Common
Stock occurred under Section 3(b), (B) the consideration per share at which an
issuance or deemed issuance of Common Stock occurred, (C) whether any issuance
or sale or deemed issuance or sale of Common Stock was an issuance or sale or
deemed issuance or sale of Excluded Securities, (D) whether an agreement,
instrument, security or the like constitutes and Option or Convertible Security
and (E) whether a Dilutive Issuance occurred) and in resolving such dispute such
investment bank shall apply such findings, determinations and the like to the
terms of this Warrant and any other applicable Transaction Documents, (iv) the
Holder (and only the Holder), in its sole discretion, shall have the right to
submit any dispute described in this Section 5(p) to any state or federal court
sitting in The City of New York, Borough of Manhattan in lieu of utilizing the
procedures set forth in this Section 5(p) and (v) nothing in this Section 5(p)
shall limit the Holder from obtaining any injunctive relief or other equitable
remedies (including, without limitation, with respect to any matters described
in this Section 5(p)).
23
officer thereunto duly authorized as of the date first above indicated.
By:__________________________________________
Name:
Title:
24
EXHIBIT A
NOTICE OF EXERCISE
TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
WARRANT TO PURCHASE COMMON STOCK
The undersigned holder hereby exercises the right to purchase _________________
of the shares of Common Stock (“Warrant Shares”) of RLJ Entertainment, Inc., a
Nevada corporation (the “Company”), evidenced by Warrant to Purchase Common
Stock No. _______ (the “Warrant”). Capitalized terms used herein and not
otherwise defined shall have the respective meanings set forth in the Warrant.
1.Form of Exercise Price. The Holder intends that payment of the Aggregate
Exercise Price shall be made as:
____________
a “Cash Exercise” with respect to _________________ Warrant Shares; and/or
____________
a “Cashless Exercise” with respect to _______________ Warrant Shares.
2.Payment of Exercise Price. In the event that the Holder has elected a Cash
Exercise with respect to some or all of the Warrant Shares to be issued pursuant
hereto, the Holder shall pay the Aggregate Exercise Price in the sum of
$___________________ to the Company in accordance with the terms of the Warrant.
3.Delivery of Warrant Shares. The Company shall deliver to Holder, or its
designee or agent as specified below, __________ Warrant Shares in accordance
with the terms of the Warrant. Delivery shall be made to Holder, or for its
benefit, as follows:
oCheck here if requesting delivery as a certificate to the following name and to
the following address:
Issue to:
oCheck here if requesting delivery by Deposit/Withdrawal at Custodian as
follows:
DTC Participant:
DTC Number:
Account Number:
Date: _____________ __,
Name of Registered Holder
By:
Name:
Title:
Tax ID:____________________________
Facsimile:__________________________
E-mail Address:_____________________
EXHIBIT B
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply required
information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are
hereby assigned to
Name:
(Please Print)
Address:
(Please Print)
Dated: _______________ __, ______
Holder’s Signature:
Holder’s Address:
|
GEORGIA INTERNATIONAL MINING CORP. Exhibit 14.1 – Code of Ethics Georgia International Mining Corporation Code of Ethics for Principal Executive Officer and Senior Financial Officers I.INTRODUCTION A.Purpose of Code. Georgia International Mining Corporation (the “Corporation”) is committed to the highest standards of legal and ethical conduct, including providing full and accurate financial disclosure in compliance with applicable laws, rules and regulations and maintaining its books and records in accordance with applicable accounting policies, laws, rules and regulations. This Code of Ethics for Principal Executive Officer and Senior Financial Officers (this “Code”) is designed to set forth particular standards of conduct that the Corporation requires its principal executive officer and its senior financial officers to follow.Any activity by a principal executive officer or senior financial officer of the Corporation contrary to this Code is prohibited and is not within the scope of employment or authority of such persons. B.Persons Subject to this Code. This Code is applicable to the following Corporation personnel: 1.Principal executive officer 2.Principal financial officer 3.Principal accounting officer 4.Controller; and 5.Other persons performing similar functions as persons in the enumerated positions (individually, a “Covered Person” and collectively, the “Covered Persons”). C.Distribution and Commitment All Covered Persons will be given a copy of this Code.Each Covered Person will be required to certify that each (i) has read and understands the guidelines contained in this Code and (ii) will comply with the terms of this Code. II.COMPLIANCE WITH RULES AND REGULATIONS The Corporation is committed to conducting its business in accordance with all applicable laws, rules and regulations and in accordance with the highest standards of business ethics.As a Covered Person, you must not only comply with applicable laws, however.You also have leadership responsibilities that include creating a culture of high ethical standards and commitment to compliance; maintaining a work environment that encourages employees to raise concerns; and promptly addressing employee compliance concerns. III.CONFLICTS OF INTEREST A.General Statement. All Covered Persons are expected to use good ethical judgment, and to avoid situations that create an actual or potential conflict between the Covered Person’s personal interests and the interests of the Corporation. A conflict of interest also exists where the Covered Person’s loyalties or actions are divided between the Corporation’s interests and those of another, such as a competitor, supplier or customer. Both the fact and the appearance of a conflict should be avoided. GEORGIA INTERNATIONAL MINING CORP. Before making any investment, accepting any position or benefits or participating in any transaction or business arrangement that creates or appears to create a conflict of interest, Covered Persons must obtain the written approval of the Audit Committee of the Board of Directors. While it is not feasible to describe all possible conflicts of interest that could develop, the following are some of the more common examples. B.Examples of Conflicts. 1.Financial Interest in Another Business.Covered Persons should not have a direct or indirect financial interest in a customer, supplier, competitor or others with whom the Corporation does business. The ownership of less than one percent (1%) of the publicly traded stock of a corporation will not be considered a conflict. 2.Other Employment and Outside Activities.Covered Persons should not work for, become directly or indirectly involved with, or receive compensation of any sort from, a customer, supplier or competitor of the Corporation or others with whom the Corporation does business. Covered Persons should not engage in any activity which may be competitive with or contrary to the interests of the Corporation. 3.Corporate Opportunities.Business opportunities of which Covered Persons learn as a result of employment with the Corporation belong to the Corporation, if within the scope of the Corporation’s existing or contemplated business, and should not be taken advantage of for personal gain. IV.DISCLOSURE IN REPORTS The Corporation is committed to providing full, fair, accurate, timely and understandable disclosure in reports and documents filed with, or submitted to, the Securities and Exchange Commission and in other public communications made by the Corporation. V.COMPLIANCE WITH THIS CODE If Covered Persons have questions about this Code, advice should be sought from the Audit Committee of the Board of Directors. If a Covered Person knows of or suspects a conflict of interest or a violation of applicable laws or regulations or this Code, the Covered Person must immediately report that information to the Chief Executive Officer or, if the suspected violation concerns the Chief Executive Officer, to the Chairman of the Board. VI.ACCOUNTABILITY; WAIVER OF THIS CODE The Board shall determine, or designate appropriate persons to determine, appropriate actions to be taken in the event of violations of this Code.Such actions shall be reasonably designed to deter wrongdoing and to promote accountability for adherence to this Code, and may 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 and termination of the individual’s employment. The Corporation will waive application of the policies set forth in this Code only when circumstances warrant granting a waiver, and then only in conjunction with any appropriate monitoring of the particular situation. Changes in and waivers of this Code may be made only by the Board of Directors or the Audit Committee of the Board and will be disclosed as required under applicable law and regulations. GEORGIA INTERNATIONAL MINING CORP. GEORGIA INTERNATIONAL MINING CORPORATION CODE OF ETHICS FOR PRINCIPAL EXECUTIVE OFFICER AND SENIOR FINANCIAL OFFICERS RECEIPT AND AGREEMENT OF COMPLIANCE NOTICE OFFICER’S NAME: Ed Forister I have read and understand the Code of Ethics for Principal Executive Officer and Senior Financial Officers of Georgia International Mining Corporation and hereby acknowledge receipt thereof.I agree to comply with the requirements of such code. /s/ Ed Forister, CEO, CFO, CAO Signature April Date
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Exhibit 10.1
EXECUTION COPY
PURCHASE AND SALE AGREEMENT
BY AND BETWEEN
ATLANTIC CITY ELECTRIC COMPANY
and
DUQUESNE LIGHT HOLDINGS, INC.
Dated as of November 14, 2005
Jointly Owned Stations
EXHIBITS
Exhibit A
Exhibit B
Form of Bill of Sale
Exhibit C
Form of FIRPTA Affidavit
Exhibit D
Form of Deed- Conemaugh
Exhibit E
Form of Deed- Keystone
Exhibit F
Form of Seller’s Legal Opinion
Exhibit G
Form of Buyer’s Legal Opinion SCHEDULES
1.1(28)
Description of Conemaugh Station
1.1(63)
Description of Keystone Station
1.1(77)
Permitted Encumbrances
2.1(d)
Electrical Transmission Facilities
2.1(f)
Emission Allowances to be Transferred to Buyer
2.6
Inventories
4.3(a)
Seller’s Defaults and Violations
4.3(b)
Seller’s Required Regulatory Approvals
4.6
Environmental Matters
4.7
Real Property
4.9(a)
Seller’s Agreements
4.9(b)
Seller’s Agreements Exceptions
4.9(c)
Seller’s Agreements Defaults and Violations
4.10
Legal Proceedings
i
4.12
Brokers; Finders
5.3(a)
Buyer’s Defaults and Violations
5.3(b)
Buyer’s Required Regulatory Approvals
5.9
Environmental Site Assessments
7.1(c)
Certain Buyer’s Required Regulatory Approvals
7.2(c)
Certain Seller’s Required Regulatory Approvals
ii
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS 1.1. Definitions 1 1.2.
Construction 12 1.3. U.S. Dollars 13 1.4. Seller’s Interests in
Jointly Owned Stations 13 ARTICLE II PURCHASE AND SALE
2.1. Transfer of Assets 13 2.2. Excluded Assets 14 2.3. Assumed
Liabilities 16 2.4. Excluded Liabilities 17 2.5. Control of
Litigation 18 2.6. Inventories 18 ARTICLE III THE
CLOSING 3.1. Closing 18 3.2. Payment of Purchase Price 18 3.3.
Adjustment to Purchase Price 19 3.4. Tax Reporting and Allocation of
Purchase Price 20 3.5. Prorations 21 3.6. Deliveries by Seller 22
3.7. Deliveries by Buyer 23 3.8. Post-Closing Excluded Asset Deliveries
23 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER
4.1. Organization; Qualification 24 4.2. Authority 24 4.3.
Consents and Approvals; No Violation 24 4.4. Insurance 25 4.5. Title
and Related Matters 25 4.6. Environmental Matters 25 4.7. Real
Property 26 4.8. Condemnation 26 4.9. Contracts and Leases 26
iii
4.10. Legal Proceedings 26 4.11. Seller’s Permits 27 4.12.
Brokers; Finders 27 4.13. Special Purpose Financial Statements 27 4.14.
Employees 27 4.15. Disclosures 27 4.16. Taxes 27 ARTICLE
V REPRESENTATIONS AND WARRANTIES OF BUYER 5.1. Organization;
Qualification 28 5.2. Authority 28 5.3. Consents and Approvals; No
Violation 28 5.4. Buyer’s Permits 29 5.5. Availability of Funds
29 5.6. Financial Statements 29 5.7. Legal Proceedings 29 5.8. No
Knowledge of Seller’s Breach 30 5.9. Inspections 30 5.10. Regulation
as a Utility 30 5.11. Brokers; Finders 30 ARTICLE VI
COVENANTS OF THE PARTIES 6.1. Access to Information 30 6.2. Public
Statements 32 6.3. Further Assurances 32 6.4. Consents and Approvals
33 6.5. Certain Tax Matters 34 6.6. Advice of Changes 35 6.7.
Risk of Loss 36 6.8. PJM; MAAC 36 6.9. Emission Allowances 36
6.10. Certain Covenants 37 6.11. Exclusivity 37 ARTICLE VII
CONDITIONS 7.1. Conditions to Obligation of Buyer 38 7.2.
Conditions to Obligation of Seller 39 7.3. Separate Closings 40
iv
ARTICLE VIII INDEMNIFICATION AND ARBITRATION 8.1.
Indemnification 41 8.2. Defense of Claims 43 8.3. Arbitration 44
ARTICLE IX TERMINATION 9.1. Termination 45 9.2.
Effect of Termination 46 ARTICLE X MISCELLANEOUS PROVISIONS
10.1. Amendment and Modification 47 10.2. Expenses 47 10.3.
Fees and Commissions 47 10.4. Bulk Sales Laws 47 10.5. Waiver of
Compliance; Consents 47 10.6. Survival 47 10.7. Disclaimers 48
10.8. Notices 49 10.9. Assignment 50 10.10. Governing Law; Forum;
Service of Process 50 10.11. Counterparts 51 10.12. Interpretation
51 10.13. Schedules and Exhibits 51 10.14. Disclosure 51 10.15.
Entire Agreement 51
v
PURCHASE AND SALE AGREEMENT
PURCHASE AND SALE AGREEMENT, dated as of November 14, 2005 (this “Agreement”),
by and between Atlantic City Electric Company, a New Jersey corporation (“ACE”
or “Seller”), and Duquesne Light Holdings, Inc., a Pennsylvania corporation
(“Buyer”). Seller and Buyer may each be referred to herein individually as a
“Party,” and together as the “Parties.”
WITNESSETH
WHEREAS, Seller owns minority interests in two fossil fuel-fired electric
generating stations, and certain properties and assets associated therewith and
ancillary thereto; and
WHEREAS, Seller possesses certain Emission Allowances (as defined below); and
WHEREAS, Buyer desires to purchase and assume, and Seller desires to sell and
assign, or cause to be sold and assigned, the Purchased Assets (as defined
below) and certain associated Liabilities (as defined below), upon the terms and
conditions hereinafter set forth in this Agreement.
representations, warranties and agreements set forth herein, and intending to be
legally bound hereby, the Parties hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1. Definitions. As used in this Agreement, the following capitalized terms
have the meanings specified in this Section 1.1.
(1) “ACE” has the meaning set forth in the preamble to this Agreement.
(2) “Additional Agreements” means the Special Warranty Deeds, the Assignment and
Assumption Agreements and the Bills of Sale.
(3) “Affiliate” has the meaning set forth in Rule 12b-2 of the General Rules and
Regulations promulgated under the Exchange Act.
(4) “Agreement” means this Purchase and Sale Agreement together with the
Schedules and Exhibits hereto.
(5) “Assignment and Assumption Agreements” means the assignment and assumption
agreements between Seller and Buyer, to be delivered at the Closing,
substantially in the form of Exhibit A hereto, pursuant to which Seller shall
assign the Seller’s Agreements,
certain intangible assets and certain other Purchased Assets to Buyer, and Buyer
shall accept such assignment and assume the Assumed Liabilities.
(6) “Assumed Liabilities” has the meaning set forth in Section 2.3.
(7) “Authorized Agent” has the meaning set forth in Section 10.10.
(8) “Bills of Sale” means the bills of sale of Seller, to be delivered at the
Closing, substantially in the form of Exhibit B hereto.
(9) “Book Value” means, as of any date, original cost (including related capital
improvements, freight, commodity and handling (other than on-site handling) less
applicable depreciation and amortization, as reflected on Seller’s books and
records or the books and records of Conemaugh Fuels, LLC or Keystone Fuels, LLC,
in each case, through such date.
(10) “Business Day” means any day other than Saturday, Sunday and any day on
by Law to close.
(11) “Buyer” has the meaning set forth in the preamble to this Agreement.
(12) “Buyer Material Adverse Effect” has the meaning set forth in
Section 5.3(a).
(13) “Buyer’s Financial Statements” has the meaning set forth in Section 5.6.
(14) “Buyer’s Indemnitee” has the meaning set forth in Section 8.1(b).
(15) “Buyer’s Permits” has the meaning set forth in Section 5.4.
(16) “Buyer’s Required Regulatory Approvals” has the meaning set forth in
Section 5.3(b).
(17) “Capital Expenditures” means the total amount of funds paid by Seller, or
Liabilities incurred and subsequently paid by Seller, in a manner consistent
with the Jointly Owned Stations Operating Agreements, in respect of the period
commencing on September 1, 2005 and ending on the Closing Date for those capital
projects identified from time to time in (a) the General Ledger for each of
Conemaugh Station and Keystone Station and (b) the Monthly Work Order Status
Reports for each of Conemaugh Station and Keystone Station.
(18) “CERCLA” means the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended.
(19) “Closing” has the meaning set forth in Section 3.1.
(20) “Closing Adjustment Amount” means an amount equal to the amount by which
(a) the sum of (i) the Book Value of Seller’s right, title and interest in and
to the Inventories
2
(which, for purposes of clarity, the Parties acknowledge to include, for
purposes of this definition, Inventories of Conemaugh Fuels, LLC and Keystone
Fuels, LLC, to the extent of the Seller’s Interests therein), as of the Closing
Date, determined in a manner consistent with the determination of the Target
Adjustment Amount, plus (ii) Capital Expenditures exceeds (b) the Electricity
Sales Reimbursement Amount.
(21) “Closing Date” has the meaning set forth in Section 3.1.
(22) “Closing Payment” has the meaning set forth in Section 3.2(d).
(23) “Closing Statement” has the meaning set forth in Section 3.3(a).
(24) “Code” means the Internal Revenue Code of 1986, as amended.
(25) “Commercial Arbitration Rules” has the meaning set forth in Section 8.3(c).
(26) “Commercially Reasonable Efforts” means efforts which are reasonably within
the contemplation of the Parties at the time of entering into this Agreement and
which do not require the performing Party to expend funds other than
expenditures which are customary and reasonable in transactions of the kind and
nature contemplated by this Agreement in order for the performing Party to
satisfy its obligations hereunder.
(27) “Conemaugh Interest” means Seller’s 3.83% undivided interest as tenant in
common in Conemaugh Station.
(28) “Conemaugh Station” means the generating station known as Conemaugh
Station, located in the County of Indiana, Commonwealth of Pennsylvania, and
related properties and assets, all as more fully identified on Schedule 1.1(28)
attached hereto.
(29) “Confidentiality Agreement” means the Confidentiality Agreement, dated
May 11, 2005, between Seller and Duquesne Power, LP.
(30) “Courts” has the meaning set forth in Section 10.10.
(31) “Direct Claim” has the meaning set forth in Section 8.2(c).
(32) “Easements” means, collectively, all easements, licenses, rights of way and
other access rights reserved by Seller, or any Affiliate thereof, in the Special
Warranty Deeds, including those that authorize access, use, maintenance,
construction, repair, replacement and other activities by Seller, or any
Affiliate thereof, or are otherwise necessary for Seller, or any Affiliate
thereof, to operate and maintain its electrical and gas transmission and
distribution facilities, or information technology and telecommunications
assets, or fulfill legal requirements applicable thereto.
3
(33) “Electricity Sales Reimbursement Amount” means an amount equal to the sum
of all amounts actually paid to and received by Seller in respect of
(a) electric energy and capacity produced by the Jointly Owned Stations and sold
including, the PJM Transfer Date; and (b) any revenue in respect of ancillary
charges paid to and received by Seller less any applicable ancillary charges
incurred by Seller during the period from the Closing Date through, but not
including, the PJM Transfer Date and attributable to the Jointly Owned Stations.
(34) “Emission Allowances” means, collectively, NOx Allowances and SO2
Allowances.
(35) “Emission Budget Program” means, together, the NOx Budget Program and the
SO2 Budget Program.
(36) “Encumbrances” means any and all mortgages, pledges, liens, claims,
security interests, agreements, easements, activity and use limitations,
restrictions, defects of title or encumbrances of any kind.
(37) “Environmental Claims” has the meaning set forth in Section 8.1(c).
(38) “Environmental Condition” means the presence or Release to the environment,
including air, surface and subsurface water, groundwater, soil and sediments,
whether at the Sites or otherwise, of Hazardous Substances, including any
migration of Hazardous Substances through air, surface and subsurface water,
groundwater, soil and sediments at, to or from the Sites or at, to or from any
Off-Site Location, regardless of when such presence or Release occurred or is
discovered.
(39) “Environmental Laws” means all Laws, and judgments, orders and decrees of
any Government Authority, in each case, as amended from time to time,
(a) relating to pollution or protection of the environment, natural resources or
human health and safety, including Laws relating to Releases or threatened
Releases of Hazardous Substances or otherwise relating to the manufacture,
formulation, generation, processing, distribution, use, treatment, storage,
disposal, Release, transport, arrangement for transport for disposal or
treatment, arrangement for disposal or treatment, Remediation, abatement,
cleanup or handling of Hazardous Substances, (b) with regard to recordkeeping,
notification, disclosure and reporting requirements respecting Hazardous
Substances and (c) relating to the management, use, restoration, or compensation
for lost use of or damage to natural resources.
(40) “Environmental Permits” means all permits, certificates, licenses and
authorizations of all Governmental Authorities under Environmental Laws.
(41) “Estimated Adjustment Amount” has the meaning set forth in Section 3.2(c).
(42) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
4
(43) “Excluded Assets” has the meaning set forth in Section 2.2.
(44) “Excluded Liabilities” has the meaning set forth in Section 2.4.
(45) “Federal Power Act” means the Federal Power Act, as amended, and the rules
and regulations promulgated thereunder.
(46) “FERC” means the U.S. Federal Energy Regulatory Commission, and any
successor agency thereto.
(47) “FIRPTA Affidavit” means the Foreign Investment in Real Property Tax Act
Certification and Affidavit of Seller, to be delivered at the Closing,
substantially in the form of Exhibit C hereto.
(48) “Fuels Working Funds” has the meaning set forth in Section 2.1(i).
(49) “Governmental Authority” means any executive, legislative, judicial,
regulatory, tribal or administrative agency, body, commission, department,
board, court, tribunal or authority of the U.S. or any foreign country, or any
state, local or other governmental subdivision thereof.
(50) “Hazardous Substances” means (a) any petrochemical or petroleum products,
oil or coal ash, coal slag, radioactive materials, radon gas, lead paint,
asbestos in any form that is or could become friable, urea formaldehyde foam
insulation and transformers or other equipment that contain dielectric fluid
which may contain polychlorinated biphenyls, (b) any chemicals, materials or
substances defined as or included in the definition of “hazardous substances,”
“hazardous wastes,” “hazardous materials,” “hazardous constituents,” “restricted
hazardous materials,” “extremely hazardous substances,” “toxic substances,”
“contaminants,” “pollutants,” “toxic pollutants” or words of similar meaning and
regulatory effect under any applicable Environmental Law and (c) any other
chemical, material or substance, exposure to which is prohibited, limited or
regulated by any applicable Environmental Law.
(51) “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
(52) “Income Tax” means any Tax imposed by any Governmental Authority (a) based
upon, measured by or calculated with respect to net income, profits or receipts
(including capital gains Taxes and minimum Taxes) or (b) based upon, measured by
or calculated with respect to multiple bases (including corporate franchise
taxes) if one or more of such bases is described in clause (a), in each case,
together with any interest, penalties or additions attributable thereto.
(53) “Indemnifiable Loss” has the meaning set forth in Section 8.1(a).
(54) “Indemnifying Party” has the meaning set forth in Section 8.1(e).
(55) “Indemnitee” has the meaning set forth in Section 8.1(b).
5
(56) “Independent Accounting Firm” means such nationally recognized, independent
accounting firm as is mutually appointed by Seller and Buyer for purposes of
this Agreement.
(57) “Initial Amount” has the meaning set forth in Section 3.2(a).
(58) “Inspection” means all tests, reviews, examinations, inspections,
investigations, verifications, samplings and similar activities conducted by
Buyer or its Representatives.
(59) “Inventories” means coal, oil and other fuel inventories, limestone,
gypsum, materials, spare parts, capital spare parts, consumable supplies, and
chemical and gas inventories (together with related freight, commodity and
handling (other than on-site handling)) which are located at or in transit to
the Jointly Owned Stations for use in the operation of the Jointly Owned
Stations.
(60) “Jointly Owned Stations” means, together, Conemaugh Station and Keystone
Station.
(61) “Jointly Owned Stations Operating Agreements” means, together, (a) the
Operation and Maintenance Agreement, dated as of December 1, 2002, by and among
Reliant Energy Northeast Management Company, Atlantic City Electric Company,
Conemaugh Power LLC, Constellation Power Source Generation, Inc., Exelon
Generation Company, LLC, PPL Montour LLC, Allegheny Energy Supply Conemaugh,
LLC, PSEG Fossil LLC, Reliant Energy Mid-Atlantic Power Holdings, LLC and UGI
Development Company, with respect to the ownership and operation of Conemaugh
Station, and (b) the Operation and Maintenance Agreement, dated as of
December 1, 2002, by and among Reliant Energy Northeast Management Company,
Atlantic City Electric Company, Constellation Power Source Generation, Inc.,
Exelon Generation Company, LLC, Keystone Power LLC, PPL Montour LLC, PSEG Fossil
LLC and Reliant Energy Mid-Atlantic Power Holdings, LLC, with respect to the
ownership and operation of Keystone Station.
(62) “Keystone Interest” means Seller’s 2.47% undivided interest as tenant in
common in Keystone Station.
(63) “Keystone Station” means the generating station known as Keystone Station
located in Plumcreek Township, County of Armstrong, Commonwealth of
Pennsylvania, and related properties and assets, all as more fully identified on
Schedule 1.1(63) attached hereto.
(64) “Knowledge” means the actual knowledge, after due inquiry, of James Becker,
John Miller, Stuart Widom, Roland Miller, Randall Griffin and Betty Mincer.
(65) “Laws” means all laws, statutes, rules, regulations and ordinances of any
Governmental Authority.
(66) “Liability” or “Liabilities” means any liability or obligation (whether
known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or
6
unaccrued, whether liquidated or unliquidated and whether due or to become due),
including any liability for Taxes.
(67) “MAAC” means the Mid-Atlantic Area Council of the North American Electric
Reliability Council, and any successor entity thereto.
(68) “Material Adverse Effect” means any change in or effect on the Purchased
Assets, taken as a whole, or either of the Jointly Owned Stations or the
operation of the Purchased Assets, taken as a whole, or either of the Jointly
Owned Stations after the date hereof that is materially adverse to the
properties, results of operations or financial condition of the Purchased
Assets, taken as a whole, or either of the Jointly Owned Stations, in each case,
other than (a) any change or effect affecting the international, national,
regional or local electric industry as a whole and not specific and exclusive to
the Purchased Assets, (b) any change or effect resulting from changes in the
international, national, regional or local wholesale or retail markets for
electricity, including any change in or effect on the structure, operating
agreements, operations or procedures of PJM or its control area, (c) any change
or effect resulting from changes in the international, national, regional or
local markets for any fuel type that may be used at each of the Jointly Owned
Stations, (d) any change or effect resulting from changes in the international,
national, regional or local electricity transmission or distribution systems or
operations thereof, (e) changes in general economic conditions, interest rates
or securities markets in the U.S. or worldwide, (f) changes in Law, or any
judgments, orders or decrees that apply generally to similarly situated Persons,
(g) any change or effect to the extent constituting or involving an Excluded
Asset or an Excluded Liability, (h) any change or effect resulting from any
condition imposed on any Party or the Purchased Assets by a Governmental
Authority in connection with the grant of such Governmental Authority’s consent
or approval of the transactions contemplated hereby and by the Additional
Agreements, (i) any acts of war or terrorist activities, (j) strikes, work
stoppages or other labor disturbances that are not specific to the Jointly Owned
Stations or Seller, (k) any matter to the extent that (i) it is disclosed in
reasonable detail in any Schedule delivered by Seller on the date hereof and
(ii) such disclosed matter does not worsen in a material manner, (l) any change
or effect arising solely by reason of or relating to the announcement of the
transactions provided for in this Agreement, and (m) any change in or effect on
the Purchased Assets which is cured (including by payment of money) before the
earlier of the Closing and the termination of this Agreement pursuant to
Section 9.1.
(69) “NJBPU” means the New Jersey Board of Public Utilities, and any successor
agency thereto.
(70) “NOx” means oxides of nitrogen.
(71) “NOx Allowance” means an allowance or authorization used to comply with a
NOx Budget Program, including: (a) a NOx Allowance as that term is defined in 25
Pa. Code § 145.2 as of the date hereof; (b) a NOx allowance or authorization (or
similar term) as set forth in the U.S. federal Clean Air Interstate Rule
published in the Federal Register on May 12, 2005, including allowances or
authorizations relating to NOx emissions during the ozone season and during a
calendar year; (c) a NOx allowance or authorization (or similar term) as set
forth in Laws that may be promulgated by the Commonwealth of Pennsylvania or the
PaDEP after the
7
date hereof to implement such Clean Air Interstate Rule; and (d) a NOx allowance
or authorization (or similar term) promulgated pursuant to any future U.S.
federal or state Laws that amends or supersedes any of the foregoing.
(72) “NOx Budget Program” means a statutory or regulatory program promulgated by
the U.S. or a state pursuant to which the U.S. or state provides for a limit on
the NOx that can be emitted by all sources covered by the program and
establishes tradable allowances or authorizations as the means for ensuring
compliance with the limit.
(73) “Off-Site Location” means any real property other than the Sites.
(74) “PaDEP” means the Pennsylvania Department of Environmental Protection, and
any successor agency thereto.
(75) “PaPUC” means the Pennsylvania Public Utility Commission, and any successor
agency thereto.
(76) “Party” and “Parties” have the respective meanings set forth in the
preamble to this Agreement.
(77) “Permitted Encumbrances” means: (a) the Easements; (b) those exceptions to
title to the Purchased Assets listed on Schedule 1.1(77); (c) statutory liens
for Taxes or other charges or assessments of Governmental Authorities not yet
due or delinquent, or which are being contested in good faith by appropriate
proceedings; (d) mechanics’, carriers’, workers’, repairers’ and other similar
liens arising or incurred in the ordinary course of business; (e) zoning,
entitlement, conservation restriction and other land use and environmental
restrictions and regulations of Governmental Authorities; (f) Encumbrances
created by Buyer, or its successors and assigns; and (g) such other Encumbrances
as do not materially detract from the value of either the Jointly Owned Stations
or the Purchased Assets, taken as a whole, as currently used, or materially
interfere with the present use of either the Jointly Owned Stations or the
Purchased Assets, taken as a whole.
(78) “Person” means any individual, partnership, limited liability company,
joint venture, corporation, trust, unincorporated organization, other entity,
business association or Governmental Authority.
(79) “PJM” means PJM Interconnection, L.L.C., and any successor entity thereto.
(80) “PJM Agreement” means the Amended and Restated Operating Agreement of PJM
Interconnection, L.L.C., on file and effective at FERC as of June 22, 2005, as
(81) “PJM Transfer Date” means such date as the transfer of the Jointly Owned
Stations from Seller to Buyer is reflected in all applicable PJM systems and
databases.
(82) “Prime Rate” has the meaning set forth in Section 3.3(c).
8
(83) “Proprietary Information” of a Party means all information about any Party
or its properties or operations furnished to the other Party or its
Representatives by such Party or its Representatives, from and after the date
hereof, regardless of the manner or medium in which it is furnished. Proprietary
Information does not include information that: (a) is or becomes generally
available to the public, other than as a result of a disclosure by the other
Party or its Representatives; (b) was available to the other Party on a
non-confidential basis prior to its disclosure by the Party or its
Representatives; (c) is or becomes available to the other Party on a
non-confidential basis from a source other than such Party, provided that the
source of such information was not known by such Party or its Representatives,
after reasonable investigation, to be bound by a confidentiality agreement with
or other contractual, legal or fiduciary obligation of confidentiality to such
Party or any of its Representatives with respect to such material; (d) is
independently developed by the other Party; or (e) was disclosed pursuant to the
Confidentiality Agreement and remains subject to the terms and conditions of the
Confidentiality Agreement.
(84) “PUHCA” means the Public Utility Holding Company Act of 1935, as amended,
and the rules and regulations promulgated thereunder.
(85) “Purchase Price” has the meaning set forth in Section 3.2(a).
(86) “Purchased Assets” has the meaning set forth in Section 2.1.
(87) “Real Property” has the meaning set forth in Section 2.1(a).
(88) “Regulatory Material Adverse Effect” means, with respect to any Party, any
change in or effect resulting from any condition imposed by any Governmental
or approval of the transactions contemplated hereby or by the Additional
Agreements that either (a) is materially adverse to such Party, or its results
of operations, financial condition, business, properties, assets or liabilities,
(b) materially impairs such Party’s ability to operate its business, properties
or assets substantially in the manner operated on the date hereof,
(c) materially detracts from the value of such Party’s business, properties or
assets, or (d) materially affects the value of the transactions contemplated
hereby or by the Additional Agreements to such Party.
(89) “Release” means any release, spill, leak, discharge, disposal of, pumping,
pouring, emitting, emptying, injecting, leaching, dumping or allowing to escape
into or through the environment, whether air, surface or subsurface water,
groundwater, soil or sediment.
(90) “Remediation” means an action of any kind to address an Environmental
Condition or a Release of Hazardous Substances, including the following
activities: (a) monitoring, investigation, assessment, treatment, cleanup,
containment, removal, mitigation, response or restoration work; (b) obtaining
any permits, consents, approvals or authorizations of any Governmental Authority
necessary to conduct any such activity; (c) preparing and implementing any plans
or studies for any such activity; (d) obtaining a written notice from a
Governmental Authority with jurisdiction over the Jointly Owned Stations or the
Sites or an Off Site Location under Environmental Laws that no material
additional work is required by such Governmental Authority; (e) the use,
implementation, application, installation, operation or
9
maintenance of removal actions, remedial technologies applied to the surface or
subsurface soils, excavation and treatment or disposal of soils at an Off Site
Location, systems for long term treatment of surface water or groundwater,
engineering controls or institutional controls; and (f) any other activities
reasonably determined by a party to be necessary or appropriate or required
under Environmental Laws to address an Environmental Condition or a Release of
Hazardous Substances.
(91) “Representatives” of a Person means, collectively, such Person’s Affiliates
and its and their respective directors, officers, partners, members, employees,
representatives, agents, advisors (including accountants, legal counsel,
environmental consultants, engineering consultants and financial advisors),
parent entities and other controlling Persons.
(92) “SEC” means the U.S. Securities and Exchange Commission, and any successor
agency thereto.
(93) “Securities Act” means the Securities Act of 1933, as amended, and the
(94) “Seller” has the meaning set forth in the preamble to this Agreement.
(95) “Seller’s Agreements” means, collectively, (a) the contracts, agreements,
arrangements, licenses and leases of any nature to which, as of the date hereof,
Seller is a party, or by or to which Seller or the Purchased Assets is bound or
subject, in each case, relating to the ownership, lease, maintenance or
operation of the Purchased Assets, (b) those contracts, agreements,
arrangements, licenses and leases of any nature entered into by Seller on or
after the date of this Agreement consistent with the terms of this Agreement, in
each case, relating to the ownership, lease, maintenance or operation of the
Purchased Assets, and (c) those contracts, agreements, arrangements, licenses
and leases entered into by any party to the Jointly Owned Stations Operating
Agreements, for and on behalf of Seller, with or without Seller’s Knowledge, and
by or to which Seller or the Purchased Assets are bound or subject as of the
date hereof, or by or to which Seller or the Purchased Assets become bound or
subject after the date hereof, in each case, relating to the ownership, lease,
maintenance or operation of the Purchased Assets.
(96) “Seller’s Indemnitee” has the meaning set forth in Section 8.1(a).
(97) “Seller’s Interests” means, together, the Conemaugh Interest and the
Keystone Interest.
(98) “Seller’s Permits” has the meaning set forth in Section 4.11.
(99) “Seller’s Required Regulatory Approvals” has the meaning set forth in
(100) “Sites” means the real property forming a part, or used or usable in
connection with the operation, of the Jointly Owned Stations, including any real
property used for the disposal of solid waste or Hazardous Substances that is
included in the Real Property. Any
10
reference to the Sites shall include the surface and subsurface elements,
including the soil, surface water and groundwater present at the Sites.
(101) “SO2” means sulfur dioxide.
(102) “SO2 Allowance” means an allowance or authorization used to comply with a
SO2 Budget Program, including: (a) an Allowance as that term is defined in 40
CFR § 72.2; (b) a SO2 allowance or authorization (or similar term) as set forth
in the U.S. federal Clean Air Interstate Rule published in the Federal Register
on May 12, 2005; (c) a SO2 allowance or authorization (or similar term) as set
PaDEP after the date hereof to implement such Clean Air Interstate Rule; and
(d) a SO2 allowance or authorization (or similar term) promulgated pursuant to
any future U.S. federal or state Law that amends or supersedes any of the
foregoing.
(103) “SO2 Budget Program” means a statutory or regulatory program, promulgated
on the SO2 that can be emitted by all sources covered by the program and
(104) “Special Purpose Financial Statements” means, collectively, (a) the
audited special purpose statements of owners’ assets, liabilities, and
investments in each of the Keystone Station and the Conemaugh Station for each
of their respective fiscal years ended December 31, 2004 and 2003, together with
the related reports of their independent accountants, KPMG LLP, as furnished by
the Keystone-Conemaugh Project Office, (b) the audited balance sheets,
statements of operations, statements of members’ equity and statements of cash
flow of each of Keystone Fuels, LLC and Conemaugh Fuels, LLC for each of their
respective fiscal years ended December 31, 2004 and 2003, together with the
related reports of their independent accountants, KPMG LLP, as furnished by the
Keystone-Conemaugh Project Office, and (c) the unaudited General Ledger for each
of the Keystone Station, Conemaugh Station, Keystone Fuels, LLC and Conemaugh
Fuels, LLC for each month during the period beginning January 1, 2005 and ending
September 30, 2005, as prepared by the Keystone-Conemaugh Project Office.
(105) “Special Warranty Deeds” means the special warranty deeds, to be delivered
at the Closing, substantially in the form of Exhibit D and Exhibit E hereto,
pursuant to which Seller will convey the Real Property to Buyer.
(106) “Station Working Funds” means, as of the date immediately preceding the
Closing Date, the amount of working funds, as reflected in the respective
General Ledgers of the Jointly Owned Stations, to the extent of the Seller’s
Interests.
(107) “Subsidiary”, when used in reference to any Person, means any entity of
which outstanding securities or interests having ordinary voting power to elect
a majority of the board of directors or other governing body performing similar
functions of such entity are owned directly or indirectly by such Person.
(108) “Tangible Personal Property” has the meaning set forth in Section 2.1(d).
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(109) “Target Adjustment Amount” means $2,151,869, which amount represents the
Book Value, as of August 31, 2005, of Seller’s right, title and interest in and
to the Inventories (which, for purposes of clarity, the Parties acknowledge to
include for purposes of this definition Inventories of Conemaugh Fuels, LLC and
Keystone Fuels, LLC, to the extent of the Seller’s Interests therein), as
determined by the Keystone-Conemaugh Project Office in accordance with the terms
of the Jointly Owned Stations Operating Agreements.
(110) “Tax” or “Taxes” means all taxes, charges, fees, levies, penalties and
other assessments imposed by any Governmental Authority, including income, gross
receipts, excise, property, sales, transfer, use, franchise, payroll,
withholding, social security and other taxes, together with any interest,
penalties or additions attributable thereto.
(111) “Tax Return” means any return, report, information return or other
document, together with all amendments and supplements thereto (including any
related or supporting information), required to be supplied to any Governmental
Authority responsible for the administration of Laws governing Taxes.
(112) “Third-Party Claim” has the meaning set forth in Section 8.2(a).
(113) “Transfer Taxes” has the meaning set forth in Section 6.5(a).
(114) “Transmission Assets” has the meaning set forth in Section 2.2(a).
(115) “U.S.” means the United States of America.
(116) “USEPA” means the U.S. Environmental Protection Agency, and any successor
agency thereto.
1.2. Construction. In construing this Agreement, together with the Schedules and
Exhibits hereto, the following principles shall be followed:
(a) the terms “herein,” “hereof,” “hereby,” “hereunder” and other similar terms
refer to this Agreement as a whole and not only to the particular Article,
Section or other subdivision in which any such terms may be employed;
(b) except as otherwise set forth herein, references to Articles, Sections,
Schedules, Exhibits and other subdivisions refer to the Articles, Sections,
Schedules, Exhibits and other subdivisions of this Agreement;
(c) a reference to any Person shall include such Person’s predecessors;
(d) all accounting terms not otherwise defined herein have the meanings assigned
to them in accordance with U.S. generally accepted accounting principles;
12
(e) no consideration shall be given to the captions of the Articles, Sections,
Schedules, Exhibits, subdivisions, subsections or clauses, which are inserted
for convenience in locating the provisions of this Agreement and not as an aid
in its construction;
(f) examples shall not be construed to limit, expressly or by implication, the
matter they illustrate;
(g) the word “includes” and “including” and their syntactical variants mean
“includes, but is not limited to” and “including, without limitation,” and
corresponding syntactical variant expressions;
(h) a defined term has its defined meaning throughout this Agreement, regardless
of whether it appears before or after the place in this Agreement where it is
defined; and
(i) the plural shall be deemed to include the singular and vice versa.
1.3. U.S. Dollars. When used herein, the term “dollars” and the symbol “$” refer
to the lawful currency of the U.S.
1.4. Seller’s Interests in Jointly Owned Stations. The Parties acknowledge and
agree that Seller owns and holds (a) an undivided three and eighty-three
hundredths percent (3.83%) interest as tenant in common in the Conemaugh Station
and (b) an undivided two and forty-seven hundredths percent (2.47%) interest as
tenant in common in the Keystone Station. All references in this Agreement to
Seller’s right, title and interest in, to and under the Purchased Assets, and,
in each case, the rights, liabilities and obligations in connection therewith,
shall be construed in this context.
ARTICLE II
PURCHASE AND SALE
2.1. Transfer of Assets. Upon the terms and subject to the conditions set forth
in this Agreement, at the Closing, Seller shall sell, assign, convey, transfer
and deliver to Buyer, and Buyer shall purchase, assume and acquire from Seller,
free and clear of all Encumbrances, except for the Permitted Encumbrances, all
of Seller’s right, title and interest in, to and under the following assets and
properties, except as otherwise provided in Section 2.2, each as of the Closing
Date, but only to the extent of the Seller’s Interests (collectively, the
“Purchased Assets”):
(a) The real property (including all buildings and other improvements thereon
and all appurtenances thereto) described on Schedule 4.7 (the “Real Property”);
(b) The Inventories;
(c) The machinery, equipment, vehicles, furniture and other personal property
owned by Seller, in each case, located on the Real Property on the Closing Date,
other than the Transmission Assets;
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(d) The electrical transmission facilities set forth on Schedule 2.1(d)
(together with the Inventories and the personal property described in
Section 2.1(c), “Tangible Personal Property”);
(e) Subject to the receipt of necessary consents and approvals, the Seller’s
Agreements, including Seller’s rights to the Station Working Funds;
(f) The Emission Allowances set forth on Schedule 2.1(f);
(g) The names “Conemaugh Generating Station” and “Keystone Generating Station”;
provided, however, that Buyer expressly acknowledges and agrees that the
Purchased Assets do not include any right, title or interest in or to the names
“Atlantic City Electric Company”, “Atlantic Energy”, “ACE”, “Conectiv”, “Pepco”,
“Pepco Holdings” or any derivation thereof, as well as any related or similar
name, or any other trade names, trademarks, service marks, corporate names and
logos or any part, derivation, colorable imitation or combination thereof;
(h) All books, operating records, operating, safety and maintenance manuals,
engineering design plans, blueprints and as-built plans, specifications,
procedures and similar items relating specifically to the Jointly Owned Stations
(subject to the right of Seller to retain copies of same for its use), other
than such items as are proprietary to third parties and accounting records; and
(i) Seller’s membership interests in each of Conemaugh Fuels, LLC and Keystone
Fuels, LLC (it being understood that the sale, assignment, conveyance, transfer
and delivery by Seller to Buyer of such membership interests as Purchased Assets
shall, by operation of law, result in Buyer purchasing, acquiring and assuming
all assets, properties and Liabilities of Conemaugh Fuels, LLC and Keystone
Fuels, LLC, to the extent of the Seller’s Interests, including the amount of any
working funds, as reflected in the General Ledger of such entities on the date
immediately preceding the Closing Date (“Fuels Working Funds”)).
2.2. Excluded Assets. Notwithstanding any provision to the contrary in this
Agreement, nothing in this Agreement shall constitute or be construed as
requiring Seller to sell, assign, convey, transfer or deliver, and Buyer shall
not be entitled to purchase, assume or acquire, any right, title or interest in,
to or under any property, asset, business, operation or division of Seller, or
any Affiliate thereof, not expressly set forth in Section 2.1, including the
following assets and properties which are hereby specifically excluded from the
definition of Purchased Assets (collectively, the “Excluded Assets”):
(a) The right, title and interest of Seller and its successors, assigns and
Representatives in, to and under all electrical transmission or distribution
facilities (as opposed to generation facilities) or information technology and
telecommunications assets of Seller or any of its Affiliates located at or
forming a part of either of the Jointly Owned Stations (whether or not regarded
as a “transmission” or “generation” asset for regulatory or accounting
purposes), including all switchyard facilities, substation facilities and
support equipment, as well as all permits, contracts and warranties, to the
extent they relate to such transmission and distribution assets or information
technology and telecommunications assets (other than the electrical
14
transmission facilities set forth on Schedule 2.1(d), all of which are included
as Purchased Assets) (collectively, the “Transmission Assets”);
(b) All certificates of deposit, shares of stock, securities, bonds, debentures,
evidences of indebtedness, and interests (other than Seller’s membership
interests in Conemaugh Fuels, LLC and Keystone Fuels, LLC) in partnerships and
other entities;
(c) All cash (other than the Station Working Funds), cash equivalents, bank
deposits, accounts and notes receivable (trade or otherwise), and prepaid
expenses, including such as relate to any Excluded Assets or the operation of
the Purchased Assets, and any income, sales, payroll or other Tax receivables
(in each case, whether held by Seller or any third party, including under any
Jointly Owned Stations Operating Agreement);
(d) The right, title and interest of Seller and its successors, assigns and
Representatives in, to and under all intellectual property, including the names
logos, or any part, derivation, colorable imitation or combination thereof
(other than “Conemaugh Generating Station” and “Keystone Generating Station”);
(e) All tariffs, agreements and arrangements to which Seller or its
Representatives is a party for the purchase or sale of electric capacity or
energy, or for the purchase of transmission, distribution or ancillary services;
(f) The right, title and interest of Seller and its successors, assigns and
Representatives in, to and under all claims against third parties, if any,
relating to the ownership, lease, maintenance or operation of any Purchased
Assets by Seller prior to the Closing Date, whether accruing prior to, on or
after the Closing Date, including all claims for refunds, prepayments, offsets,
recoupment, insurance proceeds, insurance distributions, dividends or other
proceeds, condemnation awards, judgments and the like, whether received as
payment or credit against future Liabilities;
(g) All Tax refunds or credits (including refunds or credits of real property
Taxes paid or due with respect to the Jointly Owned Stations or any related real
property), which refunds or credits are with respect to periods prior to the
Closing Date, whether directly or indirectly, under the Jointly Owned Stations
Operating Agreements or otherwise, regardless of when actually paid;
(h) All employment agreements and personnel records of Seller and its
successors, assigns and Representatives;
(i) The minute books, stock transfer books, corporate seal and other corporate
records of Seller and its successors, assigns and Representatives;
(j) The right, title and interest of Seller and its successors, assigns and
Representatives in, to and under all contracts, agreements, arrangements,
licenses and leases of any nature, other than the Seller’s Agreements;
15
(k) All insurance policies relating to the ownership, lease, maintenance or
operation of the Purchased Assets;
(l) All other assets and properties owned or leased by Seller or its successors,
assigns and Representatives which are not used in the operation of the Jointly
Owned Stations;
(m) The right, title and interest of Seller and its successors, assigns and
Representatives under this Agreement and the Additional Agreements; and
(n) The right, title and interest of Seller and its successors, assigns and
Representatives in, to and under all Emission Allowances of Seller or any of its
Affiliates (other than the Emission Allowances set forth on Schedule 2.1(f)).
2.3. Assumed Liabilities. On the Closing Date, Buyer shall assume and agree to
pay, perform and otherwise discharge when due, without recourse to Seller or its
Affiliates, all of the Liabilities of Seller and its Affiliates, successors,
assigns or Representatives, which relate, directly or indirectly, to the
Purchased Assets, the Jointly Owned Stations or the Sites (collectively, the
“Assumed Liabilities”), including the following such Liabilities:
(a) All Liabilities of Seller under the Seller’s Agreements, including the
Jointly Owned Stations Operating Agreements in accordance with the respective
terms thereof, including (i) the contracts, agreements, arrangements, licenses
and leases of any nature entered into by Seller with respect to the Purchased
Assets, the Jointly Owned Stations or the Sites on or after the date hereof
consistent with the terms of this Agreement and (ii) those contracts,
agreements, arrangements, licenses and leases entered into by any party to the
Jointly Owned Stations Operating Agreements, for and on behalf of Seller, with
or without Seller’s Knowledge, and by or to which Seller or the Purchased Assets
are bound or subject as of the date hereof, or by or to which Seller or the
Purchased Assets become bound or subject after the date hereof, in each case,
relating to the ownership, lease, maintenance or operation of the Purchased
Assets, except, in each case, to the extent such Liabilities, but for a breach
or default by Seller, would have been paid, performed or otherwise discharged
(b) All Liabilities of Seller which relate to the Purchased Assets, the Jointly
Owned Stations and the Sites in respect of Taxes for which Buyer is liable
pursuant to Section 3.5 or 6.5;
(c) All Liabilities relating to or resulting from the following: (i) any
violation of or alleged violation, or non-compliance with, Environmental Laws or
Environmental Permits whether prior to, on or after the Closing Date, with
respect to the ownership, lease, maintenance, construction, modification or
operation of the Purchased Assets, the Jointly Owned Stations or the Sites,
including the cost of correcting any such violations or non-compliance, but
excluding any fines or penalties arising out of the ownership, maintenance,
lease, construction, modification or operation of the Purchased Assets, Jointly
Owned Stations or the Sites prior to the Closing Date; (ii) Environmental
Conditions or exposure to Hazardous Substances at, on, in, under or adjacent to,
or migrating or discharged to or from, the Purchased Assets, the Jointly Owned
Stations or the Sites prior to, on or after the Closing Date, including loss of
life, injury to persons or property (including from exposure to
asbestos-containing materials) and damage to
16
natural resources (whether or not such loss, injury or damage arose or was made
manifest before the Closing Date or arises or becomes manifest after the Closing
Date) and Remediation of Environmental Conditions (whether or not such
Remediation commenced before or after the Closing Date); and (iii) Remediation,
loss of life, injury to persons or property and damage to natural resources
arising from the storage, transportation, treatment, disposal, discharge
recycling or Release, at any Off-Site Location, or arising from the arrangement
for such activities, on or after the Closing Date, of Hazardous Substances
generated in connection with the ownership, lease, maintenance, construction,
modification or operation of the Purchased Assets, the Jointly Owned Stations or
the Sites; and
(d) All Taxes that may be imposed by any federal, state or local government on
the ownership, lease, maintenance, operations, use or sale of the Purchased
Assets, the Jointly Owned Stations or the Sites for tax periods commencing on or
after the Closing Date, except for any Income Taxes attributable to income
received by Seller.
2.4. Excluded Liabilities. Notwithstanding Section 2.3, other than, to the
extent of the Seller’s Interests, Liabilities of Conemaugh Fuels, LLC and
Keystone Fuels, LLC, Buyer shall not assume or be obligated to pay, perform or
otherwise discharge the following Liabilities of Seller (the “Excluded
Liabilities”):
(a) Any Liabilities of Seller in respect of any Excluded Assets or other assets
of Seller which are not Purchased Assets, except to the extent caused by the
acts or omissions of Buyer or its Representatives or Buyer’s ownership, lease,
maintenance or operation of the Purchased Assets;
(b) Any Liabilities of Seller in respect of Taxes attributable to the Purchased
Assets for taxable periods ending before the Closing Date, except for Taxes for
which Buyer is liable pursuant to Section 3.5 or 6.5;
(c) Any Liabilities of Seller arising from the breach prior to the Closing Date
by Seller of any of the Seller’s Agreements;
(d) Any Liabilities of Seller to third parties for personal injury or tort, or
similar causes of action to the extent arising out of the ownership, lease,
maintenance or operation of the Purchased Assets prior to the Closing Date,
other than the Liabilities assumed by Buyer under Section 2.3(c);
(e) Any fines or penalties imposed by any Governmental Authority resulting from
any violation of Law by Seller that occurred prior to the Closing Date, it being
understood that costs associated with correcting such violations shall not be
deemed to be fines or penalties for purposes hereof;
(f) Any payment obligations of Seller for services rendered prior to the Closing
Date;
(g) Any Liabilities of Seller relating to Remediation, loss of life, injury to
persons or property and damage to natural resources arising from the storage,
transportation, treatment, disposal, discharge recycling or Release of Hazardous
Substances at any Off-Site
17
Location, or arising from the arrangement for such activities, prior to the
Closing Date, which Hazardous Substances were generated in connection with the
ownership, lease, maintenance, construction, modification or operation of the
Purchased Assets, the Jointly Owned Stations or the Sites, provided, for
purposes of this Section, “Off-Site Location” does not include any adjacent or
nearby location to which Hazardous Substances, disposed, discharged or Released
at the Purchased Assets, the Jointly Owned Stations or the Sites have migrated
or come to be located; and
(h) Any Liability under or related to Environmental Laws arising as a result of
the operation by Seller or its Affiliates of the Transmission Assets, except to
the extent arising out of or relating to Buyer’s ownership, lease, maintenance,
construction, modification or operation of any Purchased Asset.
2.5. Control of Litigation. Seller shall be entitled exclusively to control,
defend and settle any suit, action or proceeding, and any investigation solely
arising out of or relating to any Excluded Assets or Excluded Liabilities, and
Buyer shall reasonably cooperate with Seller in connection therewith.
2.6. Inventories. Schedule 2.6 sets forth the categories of Inventories relating
to the Jointly Owned Stations that will be transferred to Buyer at the Closing
(which, for purposes of clarity, the Parties acknowledge to include for purposes
of this Section 2.6 Inventories of Conemaugh Fuels, LLC and Keystone Fuels,
LLC), to the extent located at or in transit to any Jointly Owned Station on the
Closing Date, and only to the extent of the Seller’s Interest, together with the
Book Value of such Inventories, in each case, as of August 31, 2005.
ARTICLE III
THE CLOSING
3.1. Closing. The sale, assignment, conveyance, transfer and delivery of the
Purchased Assets by Seller to Buyer, and the purchase, assumption and
acquisition by Buyer of the Purchased Assets and the Assumed Liabilities, and
the consummation of the other transactions contemplated hereby, shall take place
at a closing (the “Closing”) to be held at the offices of Blank Rome LLP, Chase
Manhattan Centre, 1201 Market Street, Suite 800, Wilmington, DE 19801, within
five (5) Business Days after the date on which the last of the conditions
precedent to the Closing set forth in Sections 7.1(a) and (c), and Sections
7.2(a) and (c) of this Agreement shall have been satisfied or, to the extent
permitted by applicable Law, waived by the Party for whose benefit such
conditions precedent exist, or at such other date, time and location as may be
agreed upon in writing between Buyer and Seller. The date on which the Closing
actually occurs is hereinafter called the “Closing Date.” The Closing shall be
effective for all purposes as of 12:01 a.m., New York City time, on the Closing
Date.
3.2. Payment of Purchase Price.
(a) Upon the terms and subject to the conditions set forth in this Agreement, in
consideration of the aforesaid sale, assignment, conveyance, transfer and
delivery of the Purchased Assets, Buyer shall (i) pay to Seller cash in an
aggregate amount equal to
18
(A) $173,100,000 (as may be adjusted pursuant to Section 3.2(b), the “Initial
Amount”) plus (B) the amount, if any, by which the Closing Adjustment Amount
exceeds the Target Adjustment Amount, or minus (C) the amount, if any, by which
the Target Adjustment Amount exceeds the Closing Adjustment Amount (the
“Purchase Price”), and (ii) assume and agree to pay, perform and otherwise
discharge the Assumed Liabilities. For the avoidance of doubt, Buyer
acknowledges that its assumption of, and agreement to pay, perform or otherwise
discharge, the Assumed Liabilities constitutes an integral part of the
consideration to be received by Seller in respect of the sale, assignment,
conveyance, transfer and deliver of the Purchased Assets hereunder, and that, in
the absence of such assumption and agreement by Buyer, Seller would not enter
into this Agreement.
(b) Notwithstanding any provision hereof to the contrary, the Initial Amount
shall be (i) increased at the rate of $32,877 per day for each day that the
Closing Date occurs before September 1, 2006 and (ii) decreased at the rate of
$32,877 per day for each day that the Closing Date occurs after September 1,
2006.
(c) At least three (3) Business Days prior to the Closing Date, Seller shall
provide to Buyer its good faith estimate of the Closing Adjustment Amount, which
estimate shall be certified in writing by an appropriate officer of Seller (the
“Estimated Adjustment Amount”).
(d) At the Closing, in furtherance but not in duplication of Section 3.2(a),
Buyer shall pay to Seller cash in an aggregate amount equal to (A) the Initial
Amount plus (B) the amount, if any, by which the Estimated Adjustment Amount
the Target Adjustment Amount exceeds the Estimated Adjustment Amount (the
“Closing Payment”). The Closing Payment shall be paid to Seller by Buyer at the
Closing by wire transfer of immediately available funds to the account
designated by Seller to Buyer at least two (2) Business Days prior to the
Closing Date.
3.3. Adjustment to Purchase Price.
(a) Within sixty (60) days after the Closing Date, Seller shall deliver to
Buyer, at Seller’s sole cost and expense, a statement setting forth the Closing
Adjustment Amount (the “Closing Statement”). Contemporaneously, Seller shall
deliver to Buyer a schedule setting forth a calculation of the Purchase Price
and the amount of any payment to be made, and by whom, pursuant to
Section 3.3(c).
(b) In the event that Buyer is in disagreement with the Closing Statement, Buyer
shall, within ten (10) Business Days after receipt of the Closing Statement,
notify Seller of such disagreements setting forth with specificity the nature
and amounts thereof. In the event that Buyer is in disagreement with only a
portion of the Closing Statement, Buyer or Seller, as the case may be, shall pay
all undisputed amounts in the manner set forth in Section 3.3(c); and all other
amounts shall be paid at such time as all disagreements are resolved in
accordance with this Section 3.3(b). If Buyer is in disagreement with the
Closing Statement, and Buyer notifies Seller within such ten (10) Business Day
period in accordance with this Agreement, then the Parties shall promptly
attempt to resolve such disagreements by negotiation. If the Parties are unable
to resolve such disagreements within thirty (30) days following such notice of
disagreement by Buyer, then the Parties shall appoint an Independent Accounting
Firm within
19
forty-five (45) days following such notice, which shall review the Closing
Statement and determine the Closing Adjustment Amount. In the event that Buyer
and Seller cannot promptly agree on the selection of an accounting firm to act
as the Independent Accounting Firm, either Party may request the American
Arbitration Association to appoint a nationally recognized independent
accounting firm, and such appointment shall be final, binding and conclusive on
Buyer and Seller. Resolution of any disagreements shall be made by the
Independent Accounting Firm in a writing addressed to all Parties within thirty
(30) days following referral to it by the Parties of such disagreements in
accordance with this Agreement. The findings of such Independent Accounting Firm
shall be final, binding and conclusive on the Parties. All costs, fees and
expenses of the Independent Accounting Firm in resolving the disagreement shall
be split equally between Seller and Buyer.
(c) No later than the fifth (5th) Business Day following the determination of
the Closing Adjustment Amount pursuant to Section 3.3(b), either (i) Seller
shall pay Buyer the amount, if any, by which the Closing Payment exceeds the
Purchase Price, or (ii) Buyer shall pay Seller the amount, if any, by which the
Purchase Price exceeds the Closing Payment, in either case, together with simple
interest accruing on such payment at the Prime Rate from and after the Closing
Date through but not including the date of payment, by wire transfer of
immediately available funds to an account designated by the receiving Party. As
used herein, “Prime Rate” means, as of any date, the prime rate as published in
The Wall Street Journal on such date or, if not published on such date, on the
most recent date of publication.
3.4. Tax Reporting and Allocation of Purchase Price.
(a) Buyer and Seller hereby acknowledge and agree that: (i) $110,600,000 of the
Initial Amount shall be attributable to the Purchased Assets relating to the
Conemaugh Station, including the Emission Allowances relating thereto and the
membership interests in Conemaugh Fuels, LLC; and (ii) $62,500,000 of the
Keystone Station, including the Emission Allowances relating thereto and the
membership interests in Keystone Fuels, LLC, it being understood that each of
the attributions set forth in clauses (i) and (ii) of this Section 3.4(a) shall
be adjusted in a manner consistent with the determination of the Purchase Price
pursuant to Section 3.3.
(b) Buyer and Seller shall use their respective reasonable best efforts to agree
in good faith upon an allocation among the Purchased Assets of the sum of the
Purchase Price and the Assumed Liabilities consistent with Section 1060 of the
Code and the Treasury Regulations thereunder within sixty (60) days after the
determination of the Closing Adjustment Amount pursuant to Section 3.3(b). In
the event that the Parties cannot agree on a mutually satisfactory allocation
within such sixty (60) day period, the Parties shall appoint an Independent
Accounting Firm that shall, at Seller’s and Buyer’s joint expense, determine the
appropriate allocation. In the event that Buyer and Seller cannot promptly agree
on the selection of an accounting firm to act as the Independent Accounting
Firm, either Party may request the American Arbitration Association to appoint a
nationally recognized independent accounting firm, and such appointment shall be
final, binding and conclusive on Buyer and Seller. Resolution of any
disagreements shall be made by the Independent Accounting Firm in a writing
addressed to all Parties within thirty (30) days following referral to it by the
Parties of such disagreements in accordance with this Agreement. The finding of
such Independent Accounting
20
Firm shall be final, binding and conclusive on the Parties. After determination
of the allocation by agreement of the Parties or by binding determination of the
Independent Accounting Firm, Buyer and Seller shall file, for the tax year in
which the Closing occurs, Internal Revenue Service Form 8594, and all Tax
Returns, in accordance with such allocation. Buyer and Seller shall report the
transactions contemplated by this Agreement for U.S. federal Income Tax and all
other Tax purposes in a manner consistent with the allocation determined
pursuant to this Section 3.4. Buyer and Seller shall provide the other promptly
with any information required to complete Form 8594. Buyer and Seller shall
notify and provide the other with reasonable assistance in the event of an
examination, audit or other proceeding regarding the agreed-upon allocation of
the Purchase Price and the Assumed Liabilities.
3.5. Prorations.
(a) Except as otherwise provided in this Agreement, all of the items customarily
prorated relating to the ownership, lease, maintenance or operation of the
Purchased Assets, including those listed below (but expressly excluding Income
Taxes), shall be prorated as of the Closing Date, with Seller liable to the
extent such items relate to any period prior to the Closing Date, and Buyer
liable to the extent such items relate to any period on or after the Closing
Date (measured in the same units used to compute the item in question, and
otherwise measured by calendar days):
(i) Personal property, real estate and occupancy Taxes, assessments and other
charges, if any, on or with respect to the ownership, lease, maintenance or
(ii) Rent, Taxes (other than those governed by clause (i) above) and all other
items (including prepaid services and goods not included in Inventory), in each
case, payable by or to Seller under any of the Seller’s Agreements;
(iii) Any permit, license, registration, compliance assurance fees or other fees
with respect to any Seller’s Permit;
(iv) Sewer rents and charges for water, telephone, electricity and other
utilities;
(v) Insurance premiums paid on or with respect to the ownership, lease,
maintenance or operation of the Purchased Assets to the extent payable under any
policy or other arrangement included among the Seller’s Agreements; and
(vi) Prepaid operating and maintenance expenses, whether arising under the
Jointly Owned Stations Operating Agreements or otherwise.
(b) Seller or Buyer, as the case may be, shall promptly reimburse the other
Party that portion of any amount paid by such other Party to the extent relating
to the period for which Seller or Buyer, as the case may be, is liable under
Section 3.5(a), in each case, upon presentation of a statement setting forth in
reasonable detail the nature and amount of any such payment. In connection with
the prorations set forth in Section 3.5(a), if actual figures are not available
on the Closing Date, the proration shall be calculated based upon the respective
21
amounts accrued through the Closing Date or paid for the most recent year or
other appropriate period for which such amounts paid are available. All prorated
amounts shall be recalculated and paid to the appropriate Party within sixty
(60) days after the date that the previously unavailable actual figures become
available. Seller and Buyer shall furnish each other with such documents and
other records as may be reasonably requested in order to confirm all proration
calculations made pursuant to this Section 3.5. Notwithstanding anything to the
contrary herein, no proration shall be made under this Section 3.5 with respect
to (i) real property Tax refunds that are Excluded Assets under Section 2.2(g)
or (ii) Taxes payable by Buyer pursuant to Section 6.5(a).
3.6. Deliveries by Seller. At the Closing, Seller shall deliver, or cause to be
(a) One or more Special Warranty Deeds, duly executed by Seller and in
recordable form;
(b) The Bills of Sale, duly executed by Seller;
(c) The Assignment and Assumption Agreements, duly executed by Seller;
(d) Evidence, in form and substance reasonably satisfactory to Buyer,
Approvals set forth on Schedule 7.2(c);
(e) A FIRPTA Affidavit, duly executed by Seller;
(f) Copies, certified by the Secretary or Assistant Secretary of Seller, of
resolutions authorizing the execution, delivery and performance of this
Agreement, each Additional Agreement to which Seller is a party and all of the
other agreements and instruments, in each case, to be executed, delivered and
performed by Seller in connection herewith;
(g) A certificate of the Secretary or Assistant Secretary of Seller identifying
the name and title and bearing the signatures of the officers of Seller
authorized to execute and deliver this Agreement, each Additional Agreement to
which Seller is a party and the other agreements and instruments contemplated
hereby;
(h) All such other agreements, documents, instruments and writings as shall, in
the reasonable opinion of Buyer and its counsel, be necessary to sell, assign,
convey, transfer and deliver to Buyer the Purchased Assets, in accordance with
this Agreement and, where necessary or desirable, in recordable form, provided
that Seller shall not be required to prepare or obtain any survey, abstract,
title opinion or title insurance policy with respect to the Real Property; and
(i) Such other agreements, documents, instruments and writings as are reasonably
required to be delivered by Seller at or prior to the Closing Date pursuant to
this Agreement or otherwise reasonably required in connection herewith.
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3.7. Deliveries by Buyer. At the Closing, Buyer shall deliver, or cause to be
delivered, the following to Seller:
(a) The Closing Payment, by wire transfer of immediately available funds in
accordance with Seller’s instructions to the account of Seller as designated by
Seller at least two (2) Business Days prior to the Closing Date;
(b) Cash in an amount equal to the lesser of (i) $100,000 and (ii) the amount of
all out-of-pocket costs and expenses incurred by Seller for the title reports
and surveys in connection with the transactions contemplated hereby or surveys
relating to the Real Property, by wire transfer of immediately available funds
in accordance with Seller’s instructions to the account of Seller to be
designated by Seller at least two (2) Business Days prior to the Closing Date;
(c) Cash in an amount equal to the sum of (i) the Station Working Funds and
(ii) the Fuels Working Funds, by wire transfer of immediately available funds in
accordance with Seller’s instructions to the account of Seller to be designated
(d) The Assignment and Assumption Agreements, duly executed by Buyer;
(e) Evidence, in form and substance reasonably satisfactory to Seller,
demonstrating that Buyer has obtained the Buyer’s Required Regulatory Approvals
set forth on Schedule 7.1(c);
(f) Copies certified by the Secretary or Assistant Secretary of Buyer, of
Agreement, each Additional Agreement to which Buyer is a party, and all of the
performed by Buyer in connection herewith;
(g) A certificate of the Secretary or Assistant Secretary of Buyer identifying
the name and title and bearing the signatures of the officers of Buyer
which Buyer is a party and the other agreements contemplated hereby;
(h) All such other permits, agreements, documents, instruments and writings as
shall, in the reasonable opinion of Seller and its counsel, be necessary for
Buyer to purchase and acquire the Purchased Assets, and to assume the Assumed
Liabilities, in each case, in accordance with this Agreement and, where
necessary or desirable, in recordable form; and
(i) Such other permits, agreements, documents, instruments and writings as are
reasonably required to be delivered by Buyer at or prior to the Closing Date
pursuant to this Agreement or otherwise reasonably required in connection
herewith.
3.8. Post-Closing Excluded Asset Deliveries. In the event that Seller or Buyer,
or any of their respective Representatives, shall determine after the Closing
that any Excluded Asset is in the possession of Buyer or any of its
Representatives, Buyer shall, or shall cause any such
23
Representative to, promptly, but in no event later than five (5) Business Days
following such determination, pay or deliver, or cause to be paid or delivered,
to Seller such Excluded Asset, at Seller’s sole cost and expense.
ARTICLE IV
As an inducement to Buyer to enter into this Agreement and consummate the
transactions contemplated hereby, Seller hereby represents and warrants to Buyer
as follows (all such representations and warranties, except those set forth in
Sections 4.1, 4.2 and 4.5, being made to the Knowledge of the Seller):
4.1. Organization; Qualification. Seller is a corporation validly existing and
in good standing under the laws of the State of New Jersey and has all requisite
carry on its business as it is now being conducted. Seller is duly qualified to
do business as a foreign corporation and is in good standing under the laws of
each jurisdiction in which its business as now being conducted requires it to be
so qualified, except to the extent that the failure to be so qualified would
4.2. Authority. Seller has full corporate power and authority to execute and
deliver this Agreement and each Additional Agreement to which it is a party and
to consummate the transactions contemplated hereby and thereby. The execution
and delivery by Seller of this Agreement and each Additional Agreement to which
it is a party and the consummation by Seller of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate action
required on the part of Seller. This Agreement has been duly executed and
delivered by Seller; and this Agreement constitutes, and upon the execution and
delivery by Seller of each Additional Agreement to which it is a party, each
such Additional Agreement will constitute, the valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms, except that
(a) such enforceability may be subject to any bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other Laws now or hereafter
in effect affecting or relating to enforcement of creditors’ rights generally
and (b) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
4.3. Consents and Approvals; No Violation.
(a) Except as set forth on Schedule 4.3(a), subject to obtaining or making all
Seller’s Required Regulatory Approvals, neither the execution and delivery by
Seller of this Agreement and the Additional Agreements to which it is a party
nor the consummation by Seller of the transactions contemplated hereby and
thereby will (i) conflict with or result in any breach of any provision of the
certificate of incorporation or bylaws of Seller; (ii) result in a default (or
give rise to any right of termination, cancellation or acceleration) under any
of the terms, conditions or provisions of any note, bond, mortgage, indenture,
material agreement or other instrument or obligation to which Seller is a party
or by which it, or any of the Purchased Assets,
24
may be bound, except for such defaults (or rights of termination, cancellation
or acceleration) as to which requisite consents, approvals or waivers have been,
or will be prior to the Closing obtained, or which would not, individually or in
the aggregate, have a Material Adverse Effect; or (iii) constitute a violation
of any Law, order, judgment or decree applicable to Seller which violation,
(b) Except for consents, approvals, filings and notices (i) required under the
HSR Act or (ii) set forth on Schedule 4.3(b) (the consents, approvals, filings
and notices referred to in clause (ii) of this sentence are collectively
referred to herein as the “Seller’s Required Regulatory Approvals”), no consent
or approval of, filing with, or notice to, any Governmental Authority is
necessary for the execution and delivery by Seller of this Agreement and the
Additional Agreements to which it is a party or the consummation by Seller of
the transactions contemplated hereby or thereby, other than (i) such consents,
approvals, filings and notices which, if not obtained or made, would not
materially impair Seller’s ability to perform its material obligations under
this Agreement or such Additional Agreements or to own the Purchased Assets;
(ii) such consents, approvals, filings and notices which become applicable to
Seller or the Purchased Assets as a result of the status of Buyer (or any of its
Affiliates) or as a result of any other facts that specifically relate to the
business or activities in which Buyer (or any of its Affiliates) is or proposes
to be engaged; and (iii) such consents, approvals, filings and notices, the
4.4. Insurance. All material policies of fire, liability, workers’ compensation
and other forms of insurance owned or held by, or on behalf of, Seller and
insuring any Purchased Assets are in full force and effect, all premiums with
respect thereto covering all periods up to and including the date hereof have
been paid (other than retroactive premiums which may be payable with respect to
comprehensive general liability and workers’ compensation insurance policies),
and no written notice of cancellation or termination has been received by Seller
with respect to any such policy which was not replaced on substantially similar
terms prior to the date of such cancellation or termination. Since January 1,
2003, Seller has not been refused any such insurance with respect to any
Purchased Assets.
4.5. Title and Related Matters. Except for Permitted Encumbrances, Seller has
good, valid and marketable title to the Real Property included in the Purchased
Assets and has good and valid title to all other Purchased Assets, free and
clear of all Encumbrances.
4.6. Environmental Matters. Except as set forth on Schedule 4.6:
(a) All Environmental Permits that Seller requires in order to own, lease,
maintain and operate the Purchased Assets are held by or on behalf of Seller,
and Seller is otherwise in compliance with applicable Environmental Laws with
respect to the ownership, lease, maintenance or operation of the Purchased
Assets, except for such failures to hold or comply with required Environmental
Permits, and such failures to be in compliance with applicable Environmental
Laws, as would not, individually or in the aggregate, have a Material Adverse
Effect.
25
(b) Since January 1, 2003, Seller has not received any written request for
information, or been notified in writing that it is a potentially responsible
party under CERCLA or any similar state law, with respect to any of the Sites,
or any written notice relating to any Governmental Authority’s allegation or
investigation of any violations by Seller of any Environmental Laws relating to
the Purchased Assets or the Jointly Owned Stations.
(c) Since January 1, 2003, Seller has not entered into or agreed to any decree,
order or judgment under any Environmental Law relating to the Purchased Assets
or the Jointly Owned Stations, and Seller is not subject to any outstanding
decrees, orders or judgments relating to compliance with any Environmental Law
or to the Remediation of Hazardous Substances under any Environmental Law, in
each case, relating to the Purchased Assets or the Jointly Owned Stations.
(d) Notwithstanding any provision to the contrary in this Agreement, including
Sections 4.6(a), (b) and (c) hereof, Seller makes no representation or warranty
with respect to Seller’s compliance with Environmental Laws relating to the
construction of new, or modification of existing, sources of air emissions.
4.7. Real Property. Schedule 4.7 sets forth a description of the Real Property.
True and correct copies of all current surveys, abstracts, title opinions and
policies of title insurance currently in force, in each case, in Seller’s
possession and relating to the Real Property, have been previously delivered or
otherwise made available to Buyer.
4.8. Condemnation. Since January 1, 2003, Seller has not received any written
notice of any pending or threatened proceedings or actions by any Governmental
Authority to condemn or take by power of eminent domain all or any material part
of the Purchased Assets.
4.9. Contracts and Leases.
(a) Schedule 4.9(a) sets forth a list of all written Seller’s Agreements, other
than such contracts, licenses, agreements, arrangements and leases as
(i) constitute Excluded Assets or Excluded Liabilities, (ii) may be terminated
after the Closing by Buyer upon notice of no more than ninety (90) days,
(iii) involve future annual expenditures by Buyer after the Closing of $50,000
or less, (iv) are expected to expire or terminate prior to the Closing or
(v) are entered into by or on behalf of Seller after the date hereof consistent
(b) Except as set forth on Schedule 4.9(b), each Seller’s Agreement set forth on
Schedule 4.9(a) constitutes the valid and binding obligation of Seller and the
other parties thereto.
(c) Except as set forth on Schedule 4.9(c), there is not under any Seller’s
Agreement set forth on Schedule 4.9(a) any default or event which, with notice
or lapse of time or both, would constitute a material default on the part of
Seller or any other party thereto.
4.10. Legal Proceedings. There are no suits, actions or proceedings pending or
threatened against Seller by or before any Governmental Authority, which would,
individually or in the aggregate, impair Seller’s ability to consummate the
transactions contemplated hereby or
26
by any Additional Agreement to which it is a party. Seller is not subject to any
judgment, order or decree of any Governmental Authority which would,
transactions contemplated hereby or by any Additional Agreement to which it is a
party. Except as set forth on Schedule 4.10, there are no suits, actions or
proceedings pending or threatened as of the date hereof against Seller by or
before any Governmental Authority relating to the Purchased Assets or the
Jointly Owned Stations, other than such as would not, individually or in the
aggregate, have a Material Adverse Effect if adversely determined.
4.11. Seller’s Permits. All material permits, certificates, licenses and other
authorizations of all Governmental Authorities (collectively, “Seller’s
Permits”) that Seller requires in order to own, lease, maintain and operate the
Purchased Assets, are held by or on behalf of Seller except for Environmental
Permits (which are governed by Section 4.6).
4.12. Brokers; Finders. Except as set forth on Schedule 4.12, Seller has not,
and none of Seller’s Affiliates have, retained any financial advisor, broker,
agent, or finder or paid or agreed to pay any financial advisor, broker, agent,
or finder on account of this Agreement or the transactions contemplated hereby.
Buyer shall not have any responsibility or liability with respect to any Person
set forth on Schedule 4.12.
4.13. Special Purpose Financial Statements. The audited Special Purpose
Financial Statements present fairly, in all material respects, (i) in the case
of Conemaugh Fuels, LLC and Keystone Fuels, LLC, the financial position of such
entities as of the dates of the respective balance sheets included therein, and
the results of operations and cash flows of such entities for the respective
periods ended on such dates in conformity with accounting principles generally
accepted in the U.S. and (ii) in the case of the Jointly Owned Stations, the
owners’ assets, liabilities, and investment in such Jointly Owned Stations as of
the dates of such statements included therein, and the charges to such Jointly
Owned Stations’ operations for the periods ended on such dates, on the basis of
accounting described in note 1 to each thereof. Seller has provided or made
available to Buyer true and correct copies of the Special Purpose Financial
Statements.
4.14. Employees. Seller has no employees employed at either the Conemaugh
Station or the Keystone Station, and the Seller is not transferring to Buyer any
employees of the Conemaugh Station or the Keystone Station.
4.15. Disclosures. To the extent relating to Seller’s Interests in the
respective membership interests of Keystone Fuels, LLC and Conemaugh Fuels, LLC,
none of the representations and warranties of Seller contained herein and none
of the information contained in the Schedules hereto is false or misleading in
any material respect or omits to state a fact herein or therein necessary to
make the statements herein or therein not misleading in any material respect.
4.16. Taxes. Seller has timely filed all Tax Returns required to be filed by
Seller with respect to the conduct of the Jointly Owned Stations and ownership
of the Purchased Assets, including Tax Returns for all applicable federal, state
and local income, franchise, sales, use, property, excise and other Taxes, and
such Tax Returns are accurate, complete and correct. The
27
Seller has paid all Taxes required to be paid pursuant to such Tax Returns or
otherwise required by Law to be paid by it, and there are no other Taxes payable
on account of the ownership of the Purchased Assets from the date of the
inception of the Seller’s investment in the Purchased Assets to the date hereof,
except for Taxes not yet due in the ordinary course of business (for which
adequate reserves have been established). All other federal, state and local
Taxes which the Seller was or is required by Law to withhold or collect have
been and are being withheld or collected by it and have been and are being paid
over to the proper Governmental Authorities or are being held by the Seller in
accordance with Law for such payment.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
As an inducement to Seller to enter into this Agreement and consummate the
transactions contemplated hereby, Buyer hereby represents and warrants to Seller
as follows: all such representations and warranties, except those set forth in
Sections 5.1, 5.2 and 5.5, being made to the actual knowledge of the Buyer.
5.1. Organization; Qualification. Buyer is a corporation, validly existing and
in good standing under the laws of the Commonwealth of Pennsylvania and has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as it is now being conducted. Buyer has heretofore
delivered to Seller true and correct copies of its articles of incorporation and
bylaws as currently in effect.
5.2. Authority. Buyer has full corporate power and authority to execute and
and delivery of this Agreement and each such Additional Agreement by Buyer and
the consummation by Buyer of the transactions contemplated hereby and thereby
have been duly authorized by all necessary corporate action required on the part
of Buyer. This Agreement has been duly executed and delivered by Buyer; and this
Agreement constitutes, and upon the execution and delivery by Buyer of each
Additional Agreement to which it is a party, each such Additional Agreement will
constitute, the valid and binding obligation of Buyer, enforceable against Buyer
in accordance with its terms, except that (a) such enforceability may be subject
to any bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium
or other Laws now or hereafter in effect affecting or relating to enforcement of
creditors’ rights generally and (b) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
5.3. Consents and Approvals; No Violation.
(a) Except as set forth on Schedule 5.3(a), and subject to obtaining or making
all Buyer’s Required Regulatory Approvals, neither the execution and delivery by
Buyer of this Agreement and the Additional Agreements to which it is a party nor
will (i) conflict with or result in any breach of any provision of the articles
of incorporation or bylaws of Buyer or any of its Subsidiaries; (ii) result in a
default (or give rise to any right of termination, cancellation or acceleration)
under any
28
material agreement or other instrument or obligation to which Buyer or any of
its Subsidiaries is a party or by which Buyer, any such Subsidiary or any of
their respective properties and assets may be bound, except for such defaults
(or rights of termination, cancellation or acceleration) as to which requisite
consents, approvals or waivers have been or will be prior to the Closing
obtained, or which would not, individually or in the aggregate, have a Material
Adverse Effect or materially impair Buyer’s ability to consummate the
transactions contemplated hereby or by any Additional Agreement, or to perform
its material obligations hereunder or thereunder (a “Buyer Material Adverse
Effect”); or (iii) constitute a violation of any Law, order, judgment or decree
applicable to Buyer or any of its Subsidiaries, which violation, individually or
in the aggregate, would have a Material Adverse Effect or a Buyer Material
Adverse Effect.
HSR Act or (ii) set forth on Schedule 5.3(b) (the consents, approvals, filings
referred to herein as the “Buyer’s Required Regulatory Approvals”), no consent
necessary for the execution and delivery by Buyer of this Agreement and the
Additional Agreements to which it is a party or the consummation by Buyer of the
transactions contemplated hereby or thereby, other than such consents,
approvals, filings or notices, which, if not obtained or made, would not have a
Material Adverse Effect or a Buyer Material Adverse Effect.
5.4. Buyer’s Permits. All permits, certificates, licenses and other
authorizations of all Governmental Authorities that Buyer requires in order to
own, lease, maintain and operate the Purchased Assets (collectively, “Buyer’s
Permits”) are, or will be at or prior to the Closing, held by or on behalf of
Buyer. Buyer is qualified to obtain and, after the Closing, shall retain all
Buyer Permits, including Environmental Permits, necessary for Buyer to own,
lease, maintain and operate the Purchased Assets.
5.5. Availability of Funds. Buyer has sufficient funds on hand or available to
it pursuant to existing lines of credit to permit Buyer on the Closing Date to
pay the Purchase Price, all other amounts payable by Buyer hereunder or under
any Additional Agreement, and all fees and expenses incurred by Buyer in
connection with the transactions contemplated hereby and by the Additional
Agreements, and to permit Buyer to timely pay or perform all of its other
obligations under this Agreement and the Additional Agreements.
5.6. Financial Statements. Buyer has provided Seller with true and correct
copies of its balance sheet, income statement and statement of changes in cash
flows for each of its fiscal years ended December 31, 2004 and 2003, together
with the related reports of its independent accountants, Deloitte & Touche, LLP,
and for its most recently completed fiscal quarter (collectively, “Buyer’s
Financial Statements”). Buyer’s Financial Statements have been prepared in
accordance with U.S. generally accepted accounting principles consistently
applied and fairly reflect, in all material respects, the financial position,
results of operations and cash flows of Buyer at and for the periods stated
therein.
5.7. Legal Proceedings. There are no suits, actions or proceedings pending or
threatened against Buyer by or before any Governmental Authority, which would,
individually or
29
in the aggregate, have a Buyer Material Adverse Effect or would materially
impair Buyer’s ability to consummate the transactions contemplated hereby or by
any Additional Agreement to which it is a party. Buyer is not subject to any
judgments, orders or decrees of any Governmental Authority which would,
individually or in the aggregate, have a Material Adverse Effect or a Buyer
Material Adverse Effect.
5.8. No Knowledge of Seller’s Breach. On the date hereof, Buyer has no actual
knowledge, without duty of inquiry, of any breach by Seller of any
representation or warranty made by Seller in this Agreement or in any form of
Additional Agreement attached hereto as an Exhibit that would excuse Buyer from
the timely performance of its obligations hereunder or under the Additional
Agreements.
5.9. Inspections. Buyer has, prior to the execution and delivery of this
Agreement, (a) reviewed the environmental site assessments prepared for Seller
and set forth on Schedule 5.9, (b) had full opportunity to conduct to its
satisfaction Inspections of the Purchased Assets, including the Sites, and
(c) fully completed and approved the results of all Inspections of the Purchased
Assets. Buyer acknowledges, after such review and Inspections, that no further
investigation of the Sites is necessary for purposes of acquiring the Purchased
Assets for Buyer’s intended use, and Buyer hereby irrevocably and
unconditionally waives any and all objections to or claims with respect to all
physical characteristics and existing conditions at the Sites, including
existing Environmental Conditions and the presence of any Hazardous Substances
at the Sites.
5.10. Regulation as a Utility. Buyer is not subject to regulation as a public
utility or public service company (or similar designation) by any Governmental
Authority. Buyer is a holding company exempt from registration under PUHCA.
5.11. Brokers; Finders. Buyer has not, and none of Buyer’s Affiliates have,
retained any financial advisor, broker, agent, or finder or paid or agreed to
pay any financial advisor, broker, agent, or finder on account of this Agreement
or the transactions contemplated hereby.
ARTICLE VI
COVENANTS OF THE PARTIES
6.1. Access to Information.
(a) Between the date of this Agreement and the Closing Date, Seller shall:
(i) give Buyer and its Representatives, during normal business hours and upon
reasonable notice, reasonable access to all books, records, plans, offices and
other facilities and properties in the possession of Seller included in the
Purchased Assets (it being understood that Seller shall have the right to have a
Representative present at all times during any such access); (ii) furnish Buyer
with such financial and operating data and other information in the possession
of Seller with respect to the Purchased Assets as Buyer may from time to time
reasonably request; and (iii) furnish Buyer with all such other information in
the possession of Seller as shall be reasonably necessary to enable Buyer, at
its request, to verify the accuracy of the representations and warranties of
Seller contained in this Agreement; provided, however, that (A) any such
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access or requests shall be conducted in such manner as not to interfere
unreasonably with the operation of the Purchased Assets, (B) Seller shall not be
required to take any action which would constitute a waiver of the
attorney-client or other privilege, (C) Seller need not supply Buyer with any
information which Seller is under a legal or contractual obligation not to
supply, and (D) Seller shall not be required to supply Buyer with any
information with respect to the Jointly Owned Stations to which Seller is not
entitled pursuant to the terms of the Jointly Owned Stations Operating
Agreements. Notwithstanding anything herein to the contrary, prior to the
Closing Date, Buyer shall not have the right to perform or conduct, or cause to
be performed or conducted, any environmental sampling or testing at, in, on or
underneath the Jointly Owned Stations.
(b) All information furnished to or obtained by Buyer and Buyer’s
Representatives pursuant to this Section 6.1 shall be Proprietary Information
and shall be kept confidential in accordance with the terms of the
Confidentiality Agreement. Nothing in this Section 6.1 is intended to or shall
be deemed to amend, supplement or otherwise modify the obligations of Buyer, its
Representatives or its Affiliates under the Confidentiality Agreement, all of
which remain in effect until termination of such agreement in accordance with
its terms. Buyer shall be subject to and bound by all obligations of Duquesne
Power, LP under the Confidentiality Agreement as though Buyer were a party
thereto.
(c) For a period of seven (7) years from and after the Closing Date, each Party
and its Representatives shall have reasonable access during normal business
hours to all of the books and records of the Purchased Assets in the possession
of the other Party to the extent that such access may reasonably be required by
such Party in connection with the Assumed Liabilities or the Excluded
Liabilities, or other matters relating to or affected by the ownership, lease,
maintenance or operation of the Purchased Assets or the Excluded Assets. Such
access shall be afforded by the Party in possession of any such books and
records upon receipt of reasonable advance notice and during normal business
hours. The Party exercising this right of access shall be solely responsible for
any costs or expenses incurred by it or the other Party with respect to such
access pursuant to this Section 6.1(c). If the Party in possession of such books
and records shall desire to dispose of any books and records upon or prior to
the expiration of such seven-year period, such Party shall, prior to such
disposition, give the other Party a reasonable opportunity, at such other
Party’s cost and expense, to segregate and remove such books and records as such
other Party may select.
(d) Buyer shall not, prior to the Closing Date, contact any customer, vendor,
supplier of, or director, officer, partner, member or employee of (other than as
contemplated by Section 6.10(c)), or any other Person having business dealings
with, Seller or its Affiliates with respect to any aspect of the Purchased
Assets or the transactions contemplated hereby or by any Additional Agreement,
including any Governmental Authority, without the prior written consent of
Seller, which shall not be unreasonably withheld or delayed. Other than the
NJBPU and PaPUC, Seller shall not, prior to the Closing Date, contact any
director, officer, partner, member or employee of (other than as contemplated by
Section 6.10(c)), or any other Person having business dealings with, Buyer or
its Affiliates with respect to any aspect of the transactions contemplated
hereby or by any Additional Agreement, including any Governmental Authority,
without the prior written consent of Buyer, which shall not be unreasonably
withheld or delayed. Without limiting the generality of the foregoing, (i) prior
to Closing, Buyer shall not investigate
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or inquire as to any matter with any Governmental Authority having jurisdiction
over any aspect of the Purchased Assets, unless and until the written consent of
Seller (not to be unreasonably withheld or delayed) to the making of such
investigation or inquiry has been received by Buyer and after consultation with
Seller as to the scope and manner of the investigation or inquiry, and
(ii) Buyer’s right of examination and access pending the Closing with respect to
environmental matters relating to the Purchased Assets shall be limited to an
examination of existing records and interviews with personnel as authorized in
writing by Seller, and in no event shall include physical testing of or
collection of samples from the Real Property or the Purchased Assets or
contacting staff or officials of any Governmental Authority or any other third
party.
6.2. Public Statements. Subject to Section 6.1(d), except as required by
applicable Law or by applicable rules of any national securities exchange, the
Parties shall consult with each other in advance, in the manner contemplated by
Section 10.8, prior to the Closing Date, with respect to any press release or
other public announcement, statement or comment relating to the transactions
contemplated by this Agreement; provided, however, that, notwithstanding the
provisions of Section 6.1(d) relating to any other Person having business
dealings with any Party, the Parties shall be permitted, subject to applicable
Law and the Confidentiality Agreement, to discuss with members of the investment
and financing community the transactions contemplated hereby, and the financial
and operational effects of consummating such transactions, in connection with
bona fide financing and credit-related endeavors.
6.3. Further Assurances.
(a) Subject to the terms and conditions of this Agreement, each of the Parties
hereto shall use its reasonable best efforts to take, or cause to be taken, all
advisable under applicable Laws to consummate and make effective the purchase
and sale of the Purchased Assets pursuant to this Agreement and the assumption
of the Assumed Liabilities, including using its reasonable best efforts to
ensure satisfaction of the conditions precedent to each Party’s obligations
hereunder, including obtaining all necessary consents, approvals and
authorizations of, and making all required notices or filings with, third
parties required to be obtained or made in order to consummate the transactions
hereunder. Without limiting the generality of the foregoing, Seller shall use
its reasonable best efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, all things necessary, proper or advisable under
applicable Laws to release the Purchased Assets from the Encumbrance under the
Indenture, dated January 15, 1937, by and between ACE and The Bank of New York,
as Trustee, as amended. Seller shall use Commercially Reasonable Efforts to
cooperate with Buyer in its efforts to obtain all Buyer’s Permits, Environmental
Permits and Buyer’s Required Regulatory Approvals necessary for Buyer to operate
the Purchased Assets substantially in the manner operated by Seller prior to the
Closing Date. Buyer shall use Commercially Reasonable Efforts to cooperate with
Seller in its efforts to obtain all of Seller’s Required Regulatory Approvals.
No Party shall, without prior written consent of the other Party, take or fail
to take any action which might reasonably be expected to prevent or materially
impede, interfere with or delay the transactions contemplated by this Agreement
or any Additional Agreement.
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(b) Without limiting the generality of Section 6.3(a):
(i) In the event that any Purchased Asset shall not have been conveyed to Buyer
at the Closing, Seller shall, subject to Section 6.3(b)(ii), use Commercially
Reasonable Efforts after the Closing to convey such asset to Buyer as promptly
as practicable.
(ii) To the extent that Seller’s right, title and interest in, to and under any
material Seller’s Agreement may not be assigned without the consent, approval or
authorization of any third party which consent, approval or authorization has
not been obtained by the Closing Date, this Agreement shall not constitute an
agreement to assign such right, title and interest if an attempted assignment
would constitute a breach of such Seller’s Agreement or violate any applicable
Law. If any consent, approval or authorization to such assignment of any
material Seller’s Agreement shall not be obtained, or if any attempted
assignment would be ineffective or would materially impair Buyer’s rights and
obligations under such Seller’s Agreement, such that Buyer would not acquire and
assume the benefit and detriment of all such rights and obligations, Seller, at
its option and to the fullest extent permitted by applicable Law and such
Seller’s Agreement, shall, from and after the Closing Date, appoint Buyer to be
Seller’s agent with respect to such Seller’s Agreement, or, to the fullest
extent permitted by applicable Law and such Seller’s Agreement, enter into such
reasonable arrangements with Buyer or take such other actions as are necessary
to provide Buyer with the same or substantially similar rights and obligations
under such Seller’s Agreement.
6.4. Consents and Approvals. Without limiting the generality of Section 6.3(a):
(a) As promptly as practicable, but in no event later than forty-five (45) days
after the date of this Agreement, Seller and Buyer shall each file or cause to
be filed with the Federal Trade Commission and the U.S. Department of Justice
all notifications required to be filed under the HSR Act and the rules and
regulations promulgated thereunder, as amended, with respect to the transactions
contemplated hereby and by the Additional Agreements. The Parties shall use
their respective Commercially Reasonable Efforts to respond promptly to any
requests for additional information made by such agencies, and to cause the
applicable waiting period under the HSR Act to terminate or expire at the
earliest possible date after the date of filing. Buyer shall pay all filing fees
payable under the HSR Act but each Party shall bear its own costs and expenses
of the preparation of any such filing and any such response.
(b) As promptly as practicable, but in no event later than forty-five (45) days
after the date of this Agreement, Seller and Buyer shall take, or cause to be
taken, all actions, and do, or cause to be done, all things necessary, proper or
advisable under applicable Laws to obtain all required consents and approvals of
all other Governmental Authorities, including the NJBPU and the PaPUC, and make
all other filings and give all other notices required to be made prior to the
Closing with respect to the transactions contemplated hereby and by the
Additional Agreements, including with respect to the Seller’s Required
Regulatory Approvals and Buyer’s Required Regulatory Approvals. The Parties
shall respond promptly to any requests for additional information made by such
Persons, and use their respective Commercially Reasonable Efforts to cause all
such consents and approvals, without conditions, to be obtained or waived at the
earliest possible date after the date of filing. Each Party shall bear its own
costs and expenses of the preparation of any such filing or notice.
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(c) Without limiting the generality of Section 6.4(b), as promptly as
practicable, but in no event later than forty-five (45) days after the date of
this Agreement, each Party shall make all filings required by such Party under
the Federal Power Act. Prior to filing any application with the FERC, both
Parties shall prepare such application and shall incorporate into such
application all revisions reasonably requested by the other Party. Each Party
shall be solely responsible for its own cost of preparing and filing such
application, as well as all petitions for rehearing and all reapplications,
provided, however, that Buyer shall bear all costs and expenses associated with
experts and consultants reasonably necessary for the preparation of any required
market power study or report. If any filing is rejected by the FERC, the Parties
shall petition the FERC for rehearing or permission to re-submit an application
with the FERC.
6.5. Certain Tax Matters.
(a) All transfer, sales and similar Taxes (“Transfer Taxes”) incurred in
connection with this Agreement and the Additional Agreements, and the
transactions contemplated hereby and thereby (including (i) sales and use Tax on
the sale or purchase of the Purchased Assets imposed by Pennsylvania and
(ii) transfer Tax on conveyances of interests in real property imposed by
Pennsylvania or any political subdivision thereof) shall be borne by Buyer (and,
to the extent paid by Seller, Buyer shall reimburse Seller upon request). Buyer,
at its expense, shall prepare and file, to the extent required by, or
permissible under, applicable Law, all necessary Tax Returns and other
documentation with respect to all such Transfer Taxes, and, if required by
applicable Law, Seller shall join in the execution of all such Tax Returns and
other documentation; provided, however, that prior to the Closing Date, to the
extent applicable, Buyer shall provide to Seller appropriate certificates of Tax
exemption from each applicable Governmental Authority.
(b) With respect to Taxes to be prorated in accordance with Section 3.5, Buyer
shall prepare and timely file all Tax Returns required to be filed after the
Closing Date with respect to the Purchased Assets, if any, and shall timely pay
all Taxes shown to be due on such Tax Returns. Buyer’s preparation of such Tax
Returns shall be subject to Seller’s approval, which approval shall not be
unreasonably withheld or delayed. Buyer shall make each such Tax Return
available for Seller’s review and approval no later than fifteen (15) Business
Days prior to the due date for filing such Tax Return, it being understood that
Seller’s failure to approve any such Tax Return shall not limit Buyer’s
obligation to timely file such Tax Return and timely pay all Taxes shown to be
due thereon.
(c) Buyer and Seller shall provide the other with such assistance as may
reasonably be requested by the other Party in connection with the preparation of
any Tax Return, audit or other examination, or any proceeding, by or before any
Governmental Authority relating to Liability for Taxes, and each Party shall
retain and provide the requesting Party with all books and records or other
information which may be relevant to such Tax Return, audit, examination or
proceeding. All books, records and information obtained pursuant to this
Section 6.5(c) or pursuant to any other Section that provides for the sharing of
books, records and information or review of any Tax Return or other instrument
relating to Taxes shall be kept confidential by the parties hereto in accordance
with the terms and conditions set forth in the Confidentiality Agreement.
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(d) In the event that a dispute arises between Seller and Buyer regarding Taxes
or any amount due under this Section 6.5, the Parties shall attempt in good
faith to resolve such dispute and any agreed-upon amount shall be promptly paid
to the appropriate Party. If any such dispute is not resolved within thirty
(30) days after notice thereof is given to any Party, the Parties shall submit
the dispute to an Independent Accounting Firm for resolution, which resolution
shall be final, binding and conclusive on the Parties. In the event that Buyer
Buyer and Seller. Notwithstanding anything in this Agreement to the contrary,
the costs, fees and expenses of the Independent Accounting Firm in resolving the
dispute shall be borne equally by Seller and Buyer. Any payment required to be
made as a result of the resolution by the Independent Accounting Firm of any
such dispute shall be made within five (5) Business Days after such resolution,
together with any interest determined by the Independent Accounting Firm to be
appropriate.
(e) To the extent that any Party receives a Tax refund or credit with respect to
a Tax that was paid or incurred, in whole or in part, by the other Party, such
receiving Party shall promptly pay the allocable portion of the amount of such
Tax refund or credit to the other Party.
6.6. Advice of Changes. Prior to the Closing, each Party shall advise the other
in writing with respect to any matter arising after the date of this Agreement
of which that Party obtains Knowledge and which, if existing or occurring on or
prior to the date of this Agreement, would have been required to be set forth in
this Agreement, including any of the Schedules hereto. Seller shall promptly
notify Buyer of any fact, event, circumstance or condition that constitutes or
results in a breach of any of its representations and warranties in Article IV.
Seller may, from time to time prior to the Closing, promptly supplement or amend
the Schedules to this Agreement with respect to (a) any matter that existed as
of the date of this Agreement and should have been set forth in any of the
Schedules hereto and (b) any matter hereafter arising which, if existing as of
the date of this Agreement, would have been required to be set forth in any of
the Schedules hereto in order to make any representation or warranty set forth
in this Agreement true and correct as of such date; provided, however, that,
with respect to clause (a) above, any such supplemental or amended disclosure
shall not be deemed to have been disclosed as of the date of this Agreement
unless expressly consented to in writing by Buyer in Buyer’s sole and absolute
discretion; and provided further, that, with respect to clause (b) above, any
such supplemental or amended disclosure shall be deemed to have been disclosed
as of the date of this Agreement other than for purposes of Section 7.1(f) or
(g). Buyer shall promptly notify Seller of (i) any breach by Seller of any
representation or warranty of Seller, and (ii) any other event, fact,
circumstance or condition that would excuse Buyer from the timely performance of
its obligations hereunder. In the event that Buyer fails to so notify Seller
within ninety (90) days of such information coming to Buyer’s attention, then
Buyer shall be deemed to have irrevocably and unconditionally waived the breach
of such representation and warranty or the performance of such obligations, as
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6.7. Risk of Loss.
(a) From the date hereof to but not including the Closing Date, all risk of loss
or damage to the Tangible Personal Property included in the Purchased Assets
shall be borne by Seller, other than loss or damage caused by the negligent acts
or omissions of Buyer or any Buyer Representative, which loss or damage shall be
the responsibility of Buyer.
(b) Notwithstanding any provision hereof to the contrary, subject to
Section 9.1(g), if, before the Closing Date, all or any portion of the Purchased
Assets at any Jointly Owned Station is (i) condemned or taken by eminent domain
or is the subject of a pending or threatened condemnation or taking which has
not been consummated, or (ii) materially damaged or destroyed by fire or other
casualty, Seller shall notify Buyer promptly in writing of such fact, and (x) in
the case of a condemnation or taking, Seller shall assign or pay, as the case
may be, any net proceeds thereof to Buyer at the Closing relating to such
Purchased Assets and (y) in the case of a fire or other casualty, Seller shall
either restore such damage or assign the insurance proceeds therefor to Buyer at
such Closing. Notwithstanding the foregoing, if such condemnation, taking,
damage or destruction results in a Material Adverse Effect, Buyer and Seller
shall negotiate to resolve the loss resulting from such condemnation, taking,
damage or destruction (and such negotiation shall include the negotiation of a
fair and equitable adjustment to the Purchase Price for such Purchased Assets).
If no such resolution can be agreed upon prior to the earlier to occur of
(i) the date that is ninety (90) days after Seller has notified Buyer of such
loss, and (ii) the date on which the Closing, pursuant to Section 3.1, would
otherwise occur, then Buyer, on the one hand, or Seller, on the other hand, may
terminate this Agreement with respect to such Purchased Assets pursuant to
Section 9.1(g).
6.8. PJM; MAAC. From and after the Closing Date, Buyer shall maintain membership
in good standing in PJM and MAAC, and shall submit to the governance of the
independent system operator established and administered under the PJM Agreement
and related agreements entered into among PJM and its members. Seller and Buyer
shall cooperate to prepare applications to PJM to obtain PJM approval of the
establishment of all settlement accounts and other authorizations necessary for
Buyer to become a member of PJM. Such applications shall be filed with PJM as
promptly as practicable, but in no event later than sixty (60) days after the
6.9. Emission Allowances.
(a) Prior to, on and after the Closing Date, Buyer and Seller shall take all
necessary actions, including executing any required forms or providing
appropriate notices to Governmental Authorities, in a timely fashion, to ensure
that (i) Buyer will obtain all, or the rights to all, Emission Allowances that
are to be transferred to it pursuant to Section 2.1(f) and as set forth on
Schedule 2.1(f), including the right to receive such Emission Allowances that
are to be allocated or issued by any Governmental Authority in the future and
(ii) Seller will retain or obtain all, or the rights to all, Emission Allowances
that are defined as Excluded Assets pursuant to Section 2.2(n), including the
right to receive such Emission Allowances that are to be allocated or issued by
any Governmental Authority in the future.
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(b) For purposes of compliance with the NOx Budget Program and SO2 Budget
Program during the year in which the Closing Date occurs, the Party owning the
Seller’s Interests as of the date that an owner of the Seller’s Interests is
obligated to transfer additional NOx Allowances or SO2 Allowances (which date
shall be as set forth in any requests for Emissions Allowances by the authorized
representative or the designated representative of the Keystone Station and the
Conemaugh Station) shall be responsible for transferring such Emission
Allowances to the authorized representative or the designated representative.
6.10. Certain Covenants.
(a) From and after the date hereof and until the Closing Date, unless Buyer
shall otherwise consent in writing (which consent shall not be unreasonably
withheld or delayed), other than the periodic revision and adoption of
Keystone-Conemaugh Owners Committee Administrative Procedures in the ordinary
course of business consistent with past practice, Seller shall not enter into
any contract, agreement, commitment or arrangement relating to the Purchased
Assets or the Jointly Owned Stations that provides for future annual payments by
Seller in excess of $50,000 unless such contract, agreement, commitment or
arrangement is (i) terminable by Seller prior to the Closing or by Buyer at or
after the Closing, without payment of penalty or premium, upon no more than
ninety (90) days’ notice, (ii) constitutes an Excluded Asset and Excluded
Liability or (iii) has been executed by all co-owners of any Jointly Owned
Station (other than Seller), it being understood that this Section 6.10(a) is
not intended to, and shall not, restrict in any manner the ability of Keystone
Fuels, LLC, Conemaugh Fuels, LLC or the operator of any Jointly Owned Station
from entering into any contract, agreement, commitment or arrangement without
such consent.
(b) From and after the date hereof and until the Closing Date, except to the
extent prohibited by applicable Law or any contract, agreement, commitment or
arrangement relating to the Purchased Assets to which Seller is a party or by or
to which the Purchased Assets are bound or subject, Seller shall (i) keep Buyer
reasonably informed of the status and progress of meetings and actions by the
Keystone-Conemaugh Owners, Operations and Administrative Committees, including
providing to Buyer, if practicable in advance of any such meeting, copies of
agendas for such meetings, and (ii) prior to casting its vote with respect to
any action of any such Keystone-Conemaugh Committee, use Commercially Reasonable
Efforts to inform Buyer of the pendency of such action, consult with Buyer with
respect to such action and take into account the views of Buyer stated during
such consultation in determining whether to approve such action, it being
understood that, subject to Section 6.10(a), Seller may make such determination
in its sole and absolute discretion.
(c) All communications and consultations contemplated by Sections 6.1(a), 6.3,
6.4 and 6.10(b) shall take place between the respective designated
representatives of Seller and Buyer, as may be designated from time to time by
Seller and Buyer in the manner contemplated by Section 10.8. Seller’s initial
designated representatives shall be James P. Becker and Leslie Zimberg, and
Buyer’s initial designated representatives shall be James E. Wilson and Gary A.
Jack.
6.11. Exclusivity. From the date hereof through the earlier to occur of the
Closing and the termination of this Agreement pursuant to Article IX, Seller
shall immediately cease, and
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shall take such actions, if any, necessary to terminate, any existing
solicitation, initiation, encouragement, activity, discussion or negotiation
with any parties conducted heretofore by Seller or its Representatives with
respect to the sale of the Jointly Owned Stations and the Purchased Assets, and
Seller shall not accept any proposed acquisition of the Jointly Owned Stations
and the Purchased Assets.
ARTICLE VII
CONDITIONS
7.1. Conditions to Obligation of Buyer. The obligation of Buyer to effect the
transactions contemplated by this Agreement with respect to the Purchased Assets
at any Jointly Owned Station shall be subject to the satisfaction (or the
waiver, to the extent permitted by applicable Law, by Buyer) at or prior to the
Closing of the following conditions:
(a) The waiting period with respect to such Purchased Assets under the HSR Act
applicable to the consummation of the transactions contemplated hereby shall
have expired or been terminated;
(b) No preliminary or permanent injunction, order or decree by any Governmental
Authority which prevents the consummation of the transactions contemplated
hereby or by the Additional Agreements with respect to such Purchased Assets
shall have been issued and remain in effect (Buyer agreeing to use Commercially
Reasonable Efforts to have any such injunction, order or decree lifted), and no
applicable Law shall be in effect which prohibits the consummation of the
transactions contemplated hereby or thereby with respect to such Purchased
Assets;
(c) Buyer shall have obtained the Buyer’s Required Regulatory Approvals set
forth on Schedule 7.1(c) to the extent relating to such Purchased Assets, which
shall be final and non-appealable, and Buyer shall have received evidence
thereof, in form and substance reasonably satisfactory to Buyer, and all
conditions to the effectiveness thereof prescribed therein or otherwise by Law
shall have been satisfied or waived, it being understood that the imposition by
any Governmental Authority of any such condition to the grant or issuance of any
such consent or approval requiring any action or omission by Buyer shall not
affect Buyer’s obligation to consummate the transactions contemplated hereby or
by the Additional Agreements unless such condition would, individually or in the
aggregate, have a Regulatory Material Adverse Effect on Buyer;
(d) Seller shall have obtained the Seller’s Required Regulatory Approvals set
forth in Schedule 7.2(c) to the extent relating to such Purchased Assets, which
shall be final and non-appealable, and which shall not include any condition
requiring any action or omission by Buyer which condition would, individually or
in the aggregate, have a Regulatory Material Adverse Effect on Buyer; and Buyer
shall have received evidence thereof;
(e) Seller shall have performed and complied with the covenants and agreements
contained in this Agreement which are required to be performed and complied with
by Seller at or prior to the Closing and which relate to such Purchased Assets;
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(f) The representations and warranties of Seller set forth in this Agreement
which relate to such Purchased Assets shall be true and correct in all material
respects as though made at and as of the Closing Date (other than such
(i) representations and warranties that are made as of a specific date which
shall have been true and correct as of such date and (ii) representations and
warranties that are qualified by reference to materiality or Material Adverse
Effect which shall be true and correct in all respects);
(g) Between the date hereof and the Closing Date, no Material Adverse Effect
with respect to such Purchased Assets or such Jointly Owned Station shall have
occurred and be continuing;
(h) Buyer shall have received a certificate from an authorized officer of
Seller, dated the Closing Date, to the effect that, to Seller’s Knowledge, the
conditions set forth in Sections 7.1(e), (f) and (g) have been satisfied; and
(i) Buyer shall have received an opinion from Seller’s counsel, which counsel
shall be reasonably acceptable to Buyer, dated the Closing Date, substantially
in the form of Exhibit F hereto.
7.2. Conditions to Obligation of Seller. The obligation of Seller to effect the
waiver, to the extent permitted by applicable Law, by Seller) at or prior to the
(b) No preliminary or permanent injunction or other order or decree by any
Governmental Authority which prevents the consummation of the transactions
contemplated hereby or by the Additional Agreements with respect to such
Purchased Assets shall have been issued and remain in effect (Seller agreeing to
use its reasonable best efforts to have any such injunction, order or decree
lifted), and no applicable Law shall be in effect which prohibits the
consummation of the transactions contemplated hereby or thereby with respect to
such Purchased Assets;
(c) Seller shall have obtained the Seller’s Required Regulatory Approvals set
forth on Schedule 7.2(c) to the extent relating to such Purchased Assets, which
shall be final and non-appealable, and Seller shall have received evidence
thereof, in form and substance reasonably satisfactory to Seller, and all
such consent or approval requiring any action or omission by Seller shall not
affect Seller’s obligation to consummate the transactions contemplated hereby or
aggregate, have a Regulatory Material Adverse Effect on Seller;
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(d) Buyer shall have obtained the Buyer’s Required Regulatory Approvals set
forth in Schedule 7.1(c) to the extent relating to such Purchased Assets, which
requiring any action or omission by Seller which condition would, individually
or in the aggregate, have a Regulatory Material Adverse Effect on Seller; and
Seller shall have received evidence thereof;
(e) Buyer shall have performed and complied with the covenants and agreements
by Buyer at or prior to the Closing and which relate to such Purchased Assets;
(f) The representations and warranties of Buyer set forth in this Agreement
warranties that are qualified by reference to materiality, Material Adverse
Effect or Buyer Material Adverse Effect which shall be true and correct in all
respects);
(g) Seller shall have received a certificate from an authorized officer of
Buyer, dated the Closing Date, to the effect that, to Buyer’s knowledge, the
conditions set forth in Sections 7.2(e) and (f) have been satisfied;
(h) Buyer shall have executed and delivered to Seller a joinder to the Jointly
Owned Stations Operating Agreement relating to such Purchased Assets;
(i) Seller shall have received an opinion from Buyer’s counsel, which counsel
shall be reasonably acceptable to Seller, dated the Closing Date, substantially
in the form of Exhibit G hereto; and
(j) Seller shall have received a certificate of the Chief Financial Officer of
Buyer to the effect that (i) after giving effect to the consummation of the
transactions contemplated by this Agreement and the Additional Agreements,
including any assignment by Buyer to any of its direct or indirect wholly owned
subsidiaries of all or any portion of its rights, interests, obligations or
remedies hereunder pursuant to Section 10.9, (A) the debts of Buyer, and of each
such wholly owned subsidiary of Buyer, will not be greater than the assets of
such Person, at a fair valuation, and (B) Buyer and each such subsidiary will be
able to pay its debts as they become due, and (ii) no such transaction was
effected with the intent to hinder, delay or defraud current or future creditors
of Buyer.
7.3. Separate Closings. For the avoidance of doubt, it is the intention of the
Parties that, notwithstanding any provision hereof to the contrary, provided
that the conditions to the obligations of both Parties to effect the
transactions contemplated by this Agreement are satisfied or waived with respect
to all of the Purchased Assets at any Jointly Owned Station, Seller shall sell,
assign, convey, transfer and deliver such Purchased Assets to Buyer, Buyer shall
purchase, assume and acquire such Purchased Assets, and Buyer shall assume and
agree to pay, perform or otherwise discharge when due the Assumed Liabilities
relating to such Purchased Assets, all in the manner contemplated by Articles II
and III.
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ARTICLE VIII
INDEMNIFICATION AND ARBITRATION
8.1. Indemnification.
(a) From and after the Closing Date, Buyer shall indemnify, defend and hold
harmless Seller and its Representatives (each, a “Seller’s Indemnitee”), from
and against any and all claims, demands, suits, losses, liabilities, penalties,
damages, obligations, payments, costs and expenses (including reasonable
attorneys’ fees and expenses in connection therewith) (each, an “Indemnifiable
Loss”), asserted against or suffered by any Seller’s Indemnitee relating to,
resulting from or arising out of (i) any breach by Buyer of any
(A) representation and warranty set forth in Article V, or (B) covenant or
agreement of Buyer contained in this Agreement, (ii) the Assumed Liabilities,
(iii) any Inspection, (iv) the failure by Buyer to comply with any Law, with
respect to the Purchased Assets that are subject thereto or (v) any Third-Party
Claim against any Seller’s Indemnitee in connection with Buyer’s ownership,
lease, maintenance, construction, modification or operation of any of the
Purchased Assets on or after the Closing Date (other than to the extent such
Third-Party Claim constitutes an Excluded Liability); provided, however, that
Buyer shall be liable to the Seller’s Indemnitees pursuant to clause (i) of this
Section 8.1(a) only for Indemnifiable Losses for which any Seller’s Indemnitee
gives written notice to Buyer (setting forth with reasonable specificity the
nature and amount of the Indemnifiable Loss) during the period for which such
representations, warranties, covenants or agreements survive the Closing in
accordance with Section 10.6; and provided further that Buyer shall be liable to
the Seller’s Indemnitees pursuant to clause (i)(A) of this Section 8.1(a) for
breaches of representations and warranties (y) only after Indemnifiable Losses
for such breaches, in the aggregate, exceed $2,000,000 (provided, however, that
once such threshold amount is exceeded, Seller’s Indemnitees may recover all
Indemnifiable Losses for such breaches incurred from and after the Closing Date
without regard to such threshold amount), and (z) only for Indemnifiable Losses
for such breaches, in the aggregate, up to, but not in excess of, $17,500,000
(other than for breaches of the representations and warranties set forth in
Sections 5.1, 5.2 and 5.5, as to which no such limitations shall be applicable).
(b) From and after the Closing, Seller shall indemnify, defend and hold harmless
Buyer and its Representatives (each, a “Buyer’s Indemnitee” and, together with
Seller’s Indemnitees, an “Indemnitee”), from and against any and all
Indemnifiable Losses asserted against or suffered by any Buyer’s Indemnitee
relating to, resulting from or arising out of (i) any breach by Seller of any
(A) representation and warranty set forth in Article IV, or (B) covenant or
agreement of Seller set forth in this Agreement, (ii) the Excluded Assets and
the Excluded Liabilities or (iii) any Third-Party Claim against any Buyer’s
Indemnitee in connection with Seller’s ownership, lease, maintenance,
construction, modification or operation of any of the Purchased Assets prior to
the Closing Date (other than to the extent such Third-Party Claim constitutes an
Assumed Liability); provided, however, that Seller shall be liable to the
Buyer’s Indemnitees pursuant to clause (i) of this Section 8.1(b) only for
Indemnifiable Losses for which any Buyer’s Indemnitee gives written notice to
Seller (setting forth with reasonable specificity the nature and amount of the
Indemnifiable Loss) during the period for which such representations,
warranties, covenants or agreements survive the Closing in accordance with
Section 10.6; and provided further that Seller shall be liable to the Buyer’s
Indemnitees pursuant
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to clause (i)(A) of this Section 8.1(b) for breaches of representations and
warranties (y) only after Indemnifiable Losses for such breaches, in the
aggregate, exceed $2,000,000 (provided, however, that once such threshold amount
is exceeded, Buyer’s Indemnitees may recover all Indemnifiable Losses for such
breaches incurred from and after the Closing Date without regard to such
threshold amount), and (z) only for Indemnifiable Losses for such breaches, in
the aggregate, up to, but not in excess of, $17,500,000 (other than for breaches
of the representations and warranties set forth in Sections 4.1, 4.2 and 4.5, as
to which no such limitations shall be applicable).
(c) In furtherance, and not in limitation, of the provisions set forth in
Section 8.1(a), Buyer, for itself and on behalf of its Representatives, hereby
irrevocably releases, holds harmless and forever discharges Seller from any and
all Indemnifiable Losses of any kind or character, whether known or unknown,
contingent or accrued, arising under or relating to Environmental Laws, or
relating to any claim in respect of any Environmental Condition or Hazardous
Substance, whether based on common law or Environmental Laws, relating to the
Purchased Assets, other than Excluded Liabilities (collectively, “Environmental
Claims”). In furtherance of the foregoing, Buyer, for itself and on behalf of
its Representatives, hereby irrevocably waives any and all rights and benefits
with respect to such Environmental Claims that it now has, or in the future may
have conferred upon it by virtue of any Law or common law principle, which
provides that a general release does not extend to claims which a party does not
know or suspect to exist in its favor at the time of executing the release, if
knowledge of such claims would have materially affected such party’s settlement
with the obligor. In this connection, Buyer hereby acknowledges that it is aware
that factual matters now unknown to it may have given, or hereafter may give,
rise to Environmental Claims that have not been made prior to the date of this
Agreement, and will not be made prior to the Closing Date, and Buyer further
agrees that this release set forth in this Section 8.1(c) has been negotiated
and agreed upon in light of that awareness, and Buyer, for itself and on behalf
of its Representatives, nevertheless hereby intends irrevocably to release, hold
harmless and forever discharge Seller from all such Environmental Claims.
(d) The rights and remedies of Seller and Buyer set forth in this Article VIII
are exclusive and in lieu of any and all other rights and remedies which Seller
and Buyer may have under this Agreement, under applicable Law, whether at common
law or in equity, including for declaratory, injunctive or monetary relief, in
each case, with respect to any Indemnifiable Loss.
(e) Notwithstanding anything to the contrary herein, no Person (including an
Indemnitee) shall be entitled to recover from any other Person (including any
Party required to provide indemnification under this Agreement (an “Indemnifying
Party”)) any amount in excess of the actual compensatory damages, court costs
and reasonable attorneys’ fees suffered by such Party. In furtherance of the
foregoing, Buyer and Seller hereby irrevocably waive any right to recover
punitive, indirect, special, exemplary and consequential damages arising in
connection with or with respect to this Agreement (other than with respect to
indemnification for a Third- Party Claim).
(f) Any Indemnitee shall use Commercially Reasonable Efforts to mitigate all
losses, damages and the like relating to a claim under the indemnification
provisions in this
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Section 8.1, including availing itself of any defenses, limitations, rights of
contribution, claims against third Persons and other rights at law or equity.
For purposes of this Section 8.1(f), the Indemnitee’s Commercially Reasonable
Efforts shall include the reasonable expenditure of money to mitigate or
otherwise reduce or eliminate any Indemnifiable Loss for which indemnification
would otherwise be due, and, in addition to its other obligations hereunder,
provided that the Indemnifying Party shall reimburse the Indemnitee for the
Indemnitee’s reasonable costs and expenses incurred in undertaking such
mitigation, reduction or elimination.
8.2. Defense of Claims.
(a) If any Indemnitee receives notice of the assertion of any Indemnifiable Loss
or of the commencement of any suit, action or proceeding made or brought by any
Person who is not an Indemnitee (a “Third-Party Claim”) with respect to which
indemnification is to be sought from an Indemnifying Party, the Indemnitee shall
give such Indemnifying Party reasonably prompt written notice thereof, but in no
event later than twenty (20) Business Days after the Indemnitee’s receipt of
notice of such Third-Party Claim. Such notice shall describe the nature of the
Third-Party Claim in reasonable detail and shall indicate the estimated amount,
if practicable, of the Indemnifiable Loss that has been or may be incurred by
the Indemnitee. The Indemnifying Party shall have the right to participate in
or, by giving written notice to the Indemnitee, to elect to assume the defense
of any Third-Party Claim at such Indemnifying Party’s expense and by such
Indemnifying Party’s own counsel. If an Indemnifying Party elects not to assume
the defense of any Third-Party Claim, the Indemnitee may defend, compromise or
settle such Third-Party Claim with counsel selected by it, provided that,
without the prior written consent of the Indemnifying Party, the Indemnitee
shall not agree to the entry of any judgment with respect to, or any compromise
or settlement of, any Third-Party Claim.
(b) If the Indemnifying Party undertakes, conducts and controls the conduct and
settlement of such action or suit, (i) the Indemnifying Party shall not thereby
permit to exist any Encumbrance upon any asset of the Indemnitee; (ii) the
Indemnifying Party shall not consent to any settlement that does not include as
an unconditional term thereof the giving of a complete release from Liability
with respect to such action or suit to the Indemnitee; and (iii) the
Indemnifying Party shall permit the Indemnitee to participate in such conduct or
settlement at such Indemnitee’s expense and by such Indemnitee’s counsel.
(c) Subject to Section 8.3, any claim by an Indemnitee on account of an
Indemnifiable Loss which does not constitute a Third-Party Claim (a “Direct
Claim”) shall be asserted by giving the Indemnifying Party reasonably prompt
written notice thereof, in no event later than forty (40) Business Days after
the Indemnitee becomes aware of such Direct Claim, stating the nature of such
claim in reasonable detail and indicating the estimated amount, if practicable,
of such Indemnifiable Loss. The Indemnifying Party shall have a period of forty
(40) Business Days within which to respond to such Direct Claim. If the
Indemnifying Party fails to respond during such forty (40) Business Day period,
the Indemnifying Party shall be deemed to have accepted such claim and, subject
to this Article VIII, shall promptly reimburse the Indemnitee for the
Indemnifiable Losses set forth in the Indemnitee’s notice.
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(d) A failure to give timely notice as provided in this Section 8.2 shall not
affect the rights or obligations of any Party hereunder except to the extent
that the Party which was entitled to receive such notice was actually prejudiced
as a result of such failure.
8.3. Arbitration.
(a) Notwithstanding any provision hereof to the contrary, in the event of any
dispute between Seller and Buyer arising after the Closing (whether relating to
facts, events or circumstances occurring or existing prior to, on or after the
Closing Date) and relating to, resulting from or arising out of any provision of
this Agreement (other than disputes arising under Article II or Section 3.2,
3.3, 3.4, 6.5, 8.1(a)(ii) or 8.1(b)(ii)), including with respect to Direct
Claims and Third Party Claims, the Party asserting such dispute shall give
written notice to the other of the fact that a dispute has arisen pursuant
hereto. Such notice shall include (i) a statement setting forth in reasonable
detail the facts, events, circumstances, evidence and arguments underlying such
dispute and (ii) proposed arrangements for a meeting to attempt to resolve the
dispute to be held within sixty (60) days after such notice is given. Within
thirty (30) days after such notice is given, the other Party hereto shall submit
to the Party giving such notice a written summary responding to such statement
of facts, events, circumstances, evidence and arguments contained in the notice
and an acceptance of or proposed alternative to the meeting arrangements set
forth in the initial notice.
(b) The chief executive officers (or any other executive officer or officers
directly reporting to, or duly designated by, such chief executive officers) of
each of the Parties shall meet at a mutually acceptable time and place to
attempt to settle any dispute in good faith; provided, however, that such
meeting shall be held at the principal offices of the Party receiving the notice
of dispute unless otherwise agreed; and provided further, that any such meeting
shall be held no later than sixty (60) days after the written notice of dispute
is given pursuant to Section 8.3(a). Each Party shall bear its own costs and
expenses with respect to preparation for, attendance at and participation in
such meeting.
(c) In the event that (i) a meeting has been held in accordance with
Section 8.3(b), (ii) any such dispute of the kind referred to in Section 8.3(a)
shall not have been resolved at such meeting and (iii) the aggregate amount in
dispute exceeds $100,000, then either Party may submit such dispute to binding
arbitration pursuant to the Commercial Arbitration Rules of the American
Arbitration Association (the “Commercial Arbitration Rules”). In the event that
such dispute is submitted to arbitration pursuant to the Commercial Arbitration
Rules, then the arbitration tribunal shall be composed of three arbitrators (one
arbitrator selected by each Party within thirty (30) days after the meeting held
in accordance with Section 8.3(b) with the third selected by the other two
arbitrators or, in the absence of agreement between them, the American
Arbitration Association), the venue of the arbitration shall be Wilmington,
Delaware, the language of the arbitration shall be English and the arbitration
shall commence no later than sixty (60) days after the meeting held in
accordance with Section 8.3(b). The decision, judgment and order of the
arbitration tribunal shall be final, binding and conclusive as to the Parties
and their respective Representatives, and may be entered in any court of
competent jurisdiction. Other than the fees and expenses of the arbitrators,
which shall be shared equally by the Parties, each Party shall bear its own
costs and expenses (including attorneys’ fees and expenses) relating to the
arbitration.
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ARTICLE IX
TERMINATION
9.1. Termination.
(a) This Agreement may be terminated at any time prior to the Closing by mutual
written consent of the Parties.
(b) This Agreement may be terminated by Seller, on the one hand, or Buyer, on
the other hand, with respect to the Purchased Assets at any Jointly Owned
Station upon written notice to the other Party, (i) at any time prior to the
Closing if any court of competent jurisdiction shall have issued an order,
judgment or decree permanently restraining, enjoining or otherwise prohibiting
the Closing with respect to such Purchased Assets, and such order, judgment or
decree shall have become final and non-appealable; provided that the Party
seeking to terminate this Agreement pursuant to this Section 9.1(b)(i) shall
have used its Commercially Reasonable Efforts to seek relief from such order,
judgment or decree; (ii) at any time prior to the Closing if any Law shall have
been enacted or issued by any Governmental Authority which prohibits the
consummation of the transactions contemplated by this Agreement or by any
Additional Agreement with respect to such Purchased Assets; or (iii) at any time
after the first anniversary of the date of this Agreement if the Closing with
respect to such Purchased Assets shall not have occurred on or before such date;
provided, however, that the right to so terminate this Agreement under this
Section 9.1(b)(iii) shall not be available to any Party whose breach of this
Agreement has caused, or resulted in, the failure of the Closing to occur on or
before such date; and provided, further, that if on such date, any Buyer’s
Required Regulatory Approval set forth in Schedule 7.1(c) or any Seller’s
Required Regulatory Approval set forth in Schedule 7.2(c), in each case, with
respect to such Purchased Assets shall not have been obtained, or shall not be
then final and non-appealable, but all other conditions to the Closing with
respect to such Purchased Assets shall be satisfied or shall be capable of being
satisfied, then no Party shall be entitled to terminate this Agreement pursuant
to this Section 9.1(b)(iii) prior to the date that is 180 days after such date.
(c) This Agreement may be terminated by Buyer with respect to the Purchased
Assets at any Jointly Owned Station, upon written notice to Seller, if any of
Buyer’s Required Regulatory Approvals to the extent relating to such Purchased
Assets , the receipt of which is a condition to the obligation of Buyer to
consummate the Closing with respect to such Purchased Assets as set forth in
Section 7.1(c), shall have been denied and a petition for rehearing or refiling
of an application initially denied without prejudice shall also have been
denied, and such denial was not caused by or the result of a breach of this
Agreement by Buyer.
(d) This Agreement may be terminated by Seller with respect to the Purchased
Assets at any Jointly Owned Station, upon written notice to Buyer, if any of the
Seller’s Required Regulatory Approvals to the extent relating to such Purchased
Assets, the receipt of which is a condition to the obligation of Seller to
consummate the Closing as set forth in Section 7.2(c) with respect to such
Purchased Assets, shall have been denied and a petition for rehearing or
refiling of an application initially denied without prejudice shall also have
Agreement by Seller.
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(e) This Agreement may be terminated by Buyer with respect to the Purchased
Assets at any Jointly Owned Station, upon written notice to Seller, if there has
been a material breach by Seller of any covenant, agreement, representation or
warranty contained in this Agreement which relates to such Purchased Assets,
which breach has had a Material Adverse Effect and such breach is not cured by
the earlier of the Closing Date or the date that is thirty (30) days after
receipt by Seller of notice specifying in reasonable detail the nature of such
breach, unless Buyer shall have previously waived such breach.
(f) This Agreement may be terminated by Seller with respect to the Purchased
Assets at any Jointly Owned Station, upon written notice to Buyer, if there has
been a material breach by Buyer of any covenant, agreement, representation or
which breach has had a Material Adverse Effect or a Buyer Material Adverse
Effect, and such breach is not cured by the earlier of the Closing Date or the
date that is thirty (30) days after receipt by Buyer of notice specifying in
reasonable detail the nature of such breach, unless Seller shall have previously
waived such breach.
(g) This Agreement may be terminated by Seller, on the one hand, or Buyer, on
Station upon written notice to the other Party, in accordance with the
provisions of Section 6.7(b), provided that the Party seeking to so terminate
shall have complied with its obligations under Section 6.7.
(h) This Agreement may be terminated by either Party with respect to the
Purchased Assets at any Jointly Owned Station, upon written notice to the other
Party, if any final and non-appealable injunction, order or decree by any
Governmental Authority, which prohibits the consummation of the transactions
contemplated hereby or by the Additional Agreements to the extent relating to
such Purchased Assets, shall have been issued and remain in effect, provided
that the Party seeking to terminate this Agreement pursuant to this
Section 9.1(h) shall have used its Commercially Reasonable Efforts to have any
such injunction, order or decree lifted.
9.2. Effect of Termination.
(a) Upon termination of this Agreement prior to the Closing in accordance with
and pursuant to Section 9.1 with respect to the Purchased Assets at any Jointly
Owned Station, this Agreement shall be of no further force or effect with
respect to such Purchased Assets (except that the provisions set forth in
Section 6.1(b), Section 6.2, this Section 9.2 and Article X, and the
Confidentiality Agreement, shall remain in full force and effect in accordance
with their respective terms); and no Party shall have any further Liability
under this Agreement (other than for any breach of any of its covenants and
agreements set forth herein).
(b) In the event that Buyer terminates this Agreement pursuant to
Section 9.1(b)(iii) solely by reason of Seller’s inability to obtain the release
of the Purchased Assets from the Encumbrance under the Indenture, dated
January 15, 1937, by and between ACE and the Bank of New York, as Trustee, as
amended, then, upon delivery by Buyer of statements setting forth with
reasonable specificity the nature and amount of out-of-pocket costs and expenses
(including reasonable attorneys’ fees and expenses) actually incurred by Buyer
in connection
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with the transactions contemplated by this Agreement, Seller shall promptly
reimburse the amount of such costs and expenses up to, but not in excess of,
$500,000.
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1. Amendment and Modification. This Agreement may be amended, supplemented or
otherwise modified only by written agreement entered into by both Parties.
10.2. Expenses. Except to the extent provided herein, whether or not the
transactions contemplated hereby are consummated, all costs, fees and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be borne by the Party incurring such costs, fees and expenses,
including the fees and commissions referred to in Section 10.3.
10.3. Fees and Commissions. Seller, on the one hand, and Buyer, on the other
hand, represent and warrant to the other that, except for Concentric Energy
Advisors, Inc., which is acting for and at the expense of Seller, no broker,
finder or other Person is entitled to any brokerage fees, commissions or
finder’s fees in connection with the transactions contemplated hereby by reason
of any action taken by such Party or its Representatives. Seller shall pay or
otherwise discharge all such brokerage fees.
10.4. Bulk Sales Laws. Notwithstanding any provision in this Agreement to the
contrary, neither Buyer nor Seller shall have any obligation to comply with the
provisions of the bulk sales laws of any jurisdiction in connection with the
transactions contemplated by this Agreement; and Buyer hereby irrevocably waives
compliance by Seller with the provisions of the bulk sales laws of all
applicable jurisdictions.
10.5. Waiver of Compliance; Consents. To the extent permitted by applicable Law,
any failure of any of the Parties to comply with any representation, warranty,
covenant, agreement or condition set forth herein may be waived by the Party
entitled to the benefit thereof only by a written instrument signed by such
Party, but any such waiver shall not operate as a waiver of, or estoppel with
respect to, any prior or subsequent failure to comply therewith or of any other
provision set forth herein.
10.6. Survival. Other than (a) the representations and warranties of Seller set
forth in Sections 4.1, 4.2 and 4.5, and the representations and warranties of
Buyer set forth in Sections 5.1, 5.2 and 5.5, each of which shall survive the
delivery of the Special Warranty Deeds and the Closing indefinitely, and (b) the
representations and warranties of Seller set forth in Section 4.16, each of
which shall survive the delivery of the Special Warranty Deeds and the Closing
until expiration of the applicable statutes of limitations, the representations
and warranties of Seller set forth in Article IV and the representations and
warranties of Buyer set forth in Article V shall survive the delivery of the
Special Warranty Deeds and the Closing until the first anniversary of the
Closing Date. The covenants and agreements of the Parties set forth in this
Agreement shall survive the Closing in accordance with their respective terms.
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10.7. Disclaimers. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES, COVENANTS AND
AGREEMENTS SET FORTH HEREIN AND IN THE ADDITIONAL AGREEMENTS, THE PURCHASED
ASSETS ARE SOLD “AS IS, WHERE IS”, AND SELLER EXPRESSLY DISCLAIMS ALL OTHER
REPRESENTATIONS AND WARRANTIES OF ANY KIND OR NATURE, EXPRESS OR IMPLIED, AS TO
SELLER AND THE PURCHASED ASSETS. WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS
AGREEMENT AND IN THE ADDITIONAL AGREEMENTS: SELLER EXPRESSLY DISCLAIMS ALL OTHER
REPRESENTATIONS AND WARRANTIES REGARDING LIABILITIES, OWNERSHIP, LEASE,
MAINTENANCE OR OPERATION OF THE PURCHASED ASSETS, THE TITLE, CONDITION, VALUE OR
QUALITY OF THE PURCHASED ASSETS OR THE PROSPECTS (FINANCIAL AND OTHERWISE),
RISKS AND OTHER INCIDENTS OF THE PURCHASED ASSETS; AND SELLER EXPRESSLY
DISCLAIMS ALL REPRESENTATIONS AND WARRANTIES OF MERCHANTABILITY, USAGE,
SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE WITH RESPECT TO THE PURCHASED
ASSETS, OR ANY PART THEREOF, OR AS TO THE WORKMANSHIP THEREOF, OR THE ABSENCE OF
ANY DEFECTS THEREIN, WHETHER LATENT OR PATENT, OR COMPLIANCE WITH ENVIRONMENTAL
REQUIREMENTS, OR THE APPLICABILITY OF ANY GOVERNMENTAL AUTHORITY, INCLUDING ANY
ENVIRONMENTAL LAWS, OR WHETHER SELLER POSSESSES SUFFICIENT REAL PROPERTY OR
PERSONAL PROPERTY TO OPERATE THE PURCHASED ASSETS. EXCEPT AS OTHERWISE EXPRESSLY
PROVIDED HEREIN AND IN THE ADDITIONAL AGREEMENTS, SELLER FURTHER EXPRESSLY
DISCLAIMS ALL REPRESENTATIONS AND WARRANTIES REGARDING THE ABSENCE OF HAZARDOUS
SUBSTANCES OR LIABILITY OR POTENTIAL LIABILITY ARISING UNDER ENVIRONMENTAL LAWS
WITH RESPECT TO THE PURCHASED ASSETS. WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN AND IN THE ADDITIONAL
AGREEMENTS, SELLER EXPRESSLY DISCLAIMS ALL REPRESENTATIONS AND WARRANTIES OF ANY
KIND REGARDING THE CONDITION OF THE PURCHASED ASSETS OR THE SUITABILITY OF THE
PURCHASED ASSETS FOR OPERATION AS A POWER PLANT OR AS A FUEL PROCESSING
FACILITY, AS APPLICABLE, AND NO SCHEDULE OR EXHIBIT TO THIS AGREEMENT, NOR ANY
OTHER MATERIAL OR INFORMATION PROVIDED, OR COMMUNICATIONS MADE, BY SELLER OR ITS
REPRESENTATIVES, INCLUDING ANY BROKER OR INVESTMENT BANKER, SHALL CONSTITUTE OR
CREATE ANY SUCH REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE,
CONDITION, VALUE OR QUALITY OF THE PURCHASED ASSETS.
SELLER EXPRESSLY DISCLAIMS ALL REPRESENTATIONS AND WARRANTIES WITH RESPECT TO
THE NAMES “CONEMAUGH STATION” AND “KEYSTONE STATION”, INCLUDING ALL
REPRESENTATIONS AND WARRANTIES OF (1) TITLE; (2) LENGTH, NATURE, EXCLUSIVITY AND
CONTINUITY OF USE; (3) STRENGTH OR FAME; AND (4) NONINFRINGEMENT AND NONDILUTION
OF TRADEMARK, SERVICE MARK, TRADE NAME OR OTHER PROPRIETARY RIGHTS OF ANY THIRD
PARTY. BUYER HEREBY ACKNOWLEDGES THAT THE NAMES
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“CONEMAUGH STATION” AND “KEYSTONE STATION” EACH HAS A GEOGRAPHIC CONNOTATION
ASSOCIATED WITH THE LOCATION OF THE PURCHASED ASSETS.
10.8. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given on the day when delivered personally or by
facsimile transmission (with confirmation), on the next Business Day when
delivered to a nationally recognized overnight courier or five (5) Business Days
after deposited as registered or certified U.S. mail (return receipt requested),
in each case, postage prepaid, addressed to the recipient Party at its address
set forth below (or at such other address or facsimile number for a Party as
shall be specified by like notice; provided, however, that any such notice of a
change of address or facsimile number shall be effective only upon receipt
thereof):
(a) If to Seller, to:
Atlantic City Electric Company
800 King Street
P.O. Box 231
Wilmington, Delaware 19899
Attention: President
Facsimile: (302) 429-3367
Pepco Holdings, Inc.
Suite 1100, 10th Floor
701 Ninth Street, NW
Washington, D.C. 20068
Attention: Vice President, Legal Services
Facsimile: (202) 872-3281
and a copy (which shall not constitute notice) to:
Blank Rome LLP
One Logan Square
Philadelphia, Pennsylvania 19103
Attention: Ronald Fisher, Esquire
Facsimile: (215) 832-5479
(b) If to Buyer, to:
Duquesne Light Holdings, Inc.
411 Seventh Avenue
Pittsburgh, PA 15219
Attention: James E. Wilson, Vice President
Facsimile: 412-393-1070
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Duquesne Light Company
411 Seventh Avenue
Pittsburgh, PA 15219
Attention: Gary A. Jack, Assistant General Counsel
Facsimile: 412-393-1418
10.9. Assignment. This Agreement shall be binding upon and inure solely to the
benefit of the Parties and their respective successors and permitted assigns,
but neither this Agreement nor any of the rights, interests, obligations or
remedies hereunder shall be assigned by any Party hereto, including by operation
of law, without the prior written consent of the other Party, nor is this
Agreement intended to confer upon any other Person any rights, interests,
obligations or remedies hereunder. Without limiting the generality of the
foregoing, no provision of this Agreement shall create any third-party
beneficiary rights in any Employee or former employee of Seller (including any
beneficiary or dependent thereof), including with respect to continued
employment or resumed employment, and no provision of this Agreement shall
create any rights in any such Persons in respect of any benefits that may be
provided, directly or indirectly, under any employee benefit plan or arrangement
except as expressly provided for thereunder. Notwithstanding the foregoing,
either Party may, without the prior written consent of the other Party, assign
all or any portion of its rights, interests, obligations and remedies hereunder,
pursuant to instruments of transfer in form and substance reasonably
satisfactory to the other Party, to one or more direct or indirect wholly owned
subsidiaries of such Party; provided, however, that (i) no such assignment shall
relieve such Party of any of its Liabilities hereunder, (ii) Buyer shall
guarantee the obligations of its assignee, which guarantee shall be in form and
substance reasonably satisfactory to Seller, (iii) no such assignment shall
result in any Party requiring any additional consent, approval, filing, or
notice of, with or to, any third party, including any Governmental Authority, to
consummate the transactions contemplated by this Agreement or any Additional
Agreement, and (iv) such assignment does not otherwise prevent or materially
10.10. Governing Law; Forum; Service of Process. This Agreement shall be
(without giving effect to conflicts of law principles) as to all matters,
including validity, construction, effect, performance and remedies. Venue in any
and all suits, actions and proceedings related to the subject matter of this
Agreement shall be in the state and federal courts located in and for the State
of Delaware (the “Courts”), which shall have exclusive jurisdiction for such
purpose, and the Parties hereby irrevocably submit to the exclusive jurisdiction
of such courts and irrevocably waive the defense of an inconvenient forum to the
maintenance of any such suit, action or proceeding. Service of process may be
made in any manner recognized by such Courts. Each of the Parties hereby
irrevocably waives its right to a jury trial arising out of any dispute in
connection with this Agreement or the transactions contemplated hereby. Buyer
has irrevocably appointed Corporation Service Company, 2711 Centerville Road,
Suite 400, Wilmington, DE 19808, as its authorized agent (the “Authorized
Agent”) upon which process may be served in any suit, action or proceeding based
on this Agreement which may be instituted in the Courts by Seller, and Buyer
expressly accepts the jurisdiction of any such Court in respect of any such
suit, action or
50
proceeding. Buyer represents and warrants that the Authorized Agent has agreed
to act as such agent for service of process, and Buyer shall take any and all
actions, including the filing of any and all documents and instruments, which
may be necessary or appropriate to continue such appointment in full force and
effect. Service of process upon the Authorized Agent and written notice of such
service to Buyer shall be deemed, in every respect, effective service of process
upon Buyer.
10.11. Counterparts. This Agreement may be executed by facsimile transmission
(with confirmation) and in counterparts, each of which shall be deemed an
instrument.
10.12. Interpretation. The Article and Section headings contained in this
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not in any way affect the meaning or construction of
this Agreement. Ambiguities and uncertainties in the wording of this Agreement
shall not be construed for or against any Party, but shall be construed in the
manner that most accurately reflects the Parties’ intent as of the date of this
Agreement. Each Party acknowledges that it has been represented by counsel in
connection with the review and execution of this Agreement, and, accordingly,
there shall be no presumption that this Agreement or any provision hereof be
construed against the Party that drafted this Agreement. Notwithstanding any
provision of any Additional Agreement to the contrary, the provisions of this
Agreement shall govern and control any conflict or inconsistency between or
among the provisions of this Agreement and the provisions of any such Additional
Agreement.
10.13. Schedules and Exhibits. Except as otherwise provided in this Agreement,
all Exhibits and Schedules referred to herein are intended to be and hereby are
made a part of this Agreement.
10.14. Disclosure. Each Schedule to this Agreement shall be deemed to include
and incorporate all information set forth on the other Schedules. Information
disclosed in documents set forth on a Schedule shall be deemed to be disclosed
on the Schedules. Certain information set forth on the Schedules is included
solely for informational purposes, is not an admission of liability or
materiality with respect to the matters covered by the information, and may not
be required to be disclosed pursuant to this Agreement. The specification of any
Dollar amount in the representations and warranties contained in this Agreement
or the inclusion of any specific item in the Schedules is not intended to imply
that such amounts (or higher or lower amounts) or such items are or are not
material, and no Party shall use the fact of the setting of such amounts or the
fact of the inclusion of any such item in the Schedules in any dispute or
controversy among the Parties as to whether any obligation, item or matter not
described herein or included in a Schedule is or is not material for purposes of
this Agreement.
10.15. Entire Agreement. This Agreement (including the Schedules and Exhibits),
together with the Additional Agreements (when executed and delivered by the
Parties) and the Confidentiality Agreement, constitute a single integrated
agreement between the Parties and, together, embody the entire agreement and
understanding of the Parties hereto in respect of the transactions contemplated
hereby and thereby, and supersede all prior agreements and understandings
between the Parties with respect to such transactions. There are no
representations, warranties, covenants or agreements between the Parties with
respect to the
51
subject matter set forth in such agreements, other than those expressly set
forth or referred to herein or therein. Without limiting the generality of the
foregoing, Buyer hereby acknowledges and agrees that there are no
respect to the subject matter set forth in such agreements contained in any
material made available to Buyer pursuant to the terms of the Confidentiality
Agreement (including the Offering Memorandum dated June 15, 2005, previously
provided to Buyer by or on behalf of Seller and Concentric Energy Advisors,
Inc.).
SIGNATURE PAGE FOLLOWS
52
IN WITNESS WHEREOF, Seller and Buyer have caused this Purchase and Sale
Agreement to be duly executed and delivered by their respective duly authorized
officers as of the date first above written.
ATLANTIC CITY ELECTRIC COMPANY
By:
/s/ JOSEPH M. RIGBY
Name:
Joseph M. Rigby
Title:
Chief Financial Officer
By:
/s/ JAMES E. WILSON
Name:
James E. Wilson
Title:
Vice President
|
Name: Council Regulation (EC) Noà 1911/2006 of 19 December 2006 imposing a definitive anti-dumping duty on imports of solutions of urea and ammonium nitrate originating in Algeria, Belarus, Russia and Ukraine following an expiry review pursuant to Article 11(2) of Regulation (EC) Noà 384/96
Type: Regulation
Subject Matter: Europe; trade; means of agricultural production; chemistry; Africa; international trade; competition
Date Published: nan
21.12.2006 EN Official Journal of the European Union L 365/26 COUNCIL REGULATION (EC) No 1911/2006 of 19 December 2006 imposing a definitive anti-dumping duty on imports of solutions of urea and ammonium nitrate originating in Algeria, Belarus, Russia and Ukraine following an expiry review pursuant to Article 11(2) of Regulation (EC) No 384/96 THE COUNCIL OF THE EUROPEAN UNION, Having regard to the Treaty establishing the European Community, Having regard to Council Regulation (EC) No 384/96 of 22 December 1995 on protection against dumped imports from countries not members of the European Community (1) (the basic Regulation) and in particular Article 11(2) thereof, Having regard to the proposal submitted by the Commission after consulting the Advisory Committee, Whereas: A. PROCEDURE 1. Measures in force (1) On 23 September 2000 the Council imposed, by Regulation (EC) No 1995/2000 (2), definitive anti-dumping measures on imports of solutions of urea and ammonium nitrate (UAN) originating in Algeria, Belarus, Russia, Ukraine and Lithuania. The measures imposed on imports of UAN originating in Lithuania lapsed after enlargement of the European Union on 1 May 2004. The investigation that led to these measures will be referred to as the original investigation. (2) The measures applying to these imports consisted of specific duties, except for imports from one Algerian exporting producer from which an undertaking was accepted. 2. Request for a review (3) On 20 June 2005, a request for an expiry review pursuant to Article 11(2) of the basic Regulation, was lodged following the publication of a notice of impending expiry on 17 December 2004 (3). This request was lodged by the European Fertiliser Manufacturers Association (EFMA) (the applicant) on behalf of producers representing a major proportion, in this case more than 50 % of the total Community production of UAN. (4) The applicant alleged and provided sufficient prima facie evidence that there is a likelihood of continuation or recurrence of dumping and injury to the Community industry with regard to imports of UAN originating in Algeria, Belarus, Russia and Ukraine (the countries concerned). (5) Having determined, after consulting the Advisory Committee, that sufficient evidence existed for the initiation of an expiry review, the Commission announced on 22 September 2005, by a notice of initiation published in the Official Journal of the European Union (4), the initiation of an expiry review pursuant to Article 11(2) of the basic Regulation. 3. Investigation 3.1. Investigation period (6) The investigation of continuation or recurrence of dumping covered the period from 1 July 2004 to 30 June 2005 (review investigation period or RIP). The examination of the trends relevant for the assessment of a likelihood of a continuation or recurrence of injury covered the period from 2002 to the end of the review investigation period (period considered). 3.2. Parties concerned by the investigation (7) The Commission officially advised the exporting producers, importers and users known to be concerned and their associations, the representatives of the exporting countries, the complainant and the Community producers of the initiation of the expiry review. Interested parties were given the opportunity to make their views known in writing and to request a hearing within the time limit set out in the notice of initiation. (8) All interested parties, who so requested and showed that there were particular reasons why they should be heard, were granted a hearing. (9) In view of the large number of Community producers and of importers in the Community not related to an exporting producer in one of the countries concerned, it was considered appropriate, in conformity with Article 17 of the basic Regulation, to examine whether sampling should be used. In order to enable the Commission to decide whether sampling would indeed be necessary and, if so, to select a sample, the above parties were requested, pursuant to Article 17(2) of the basic Regulation, to make themselves known within 15 days of the initiation of the investigation and to provide the Commission with the information requested in the notice of initiation. (10) After examination of the information submitted, and given the high number of Community producers which indicated their willingness to cooperate, it was decided that sampling was necessary with regard to Community producers. Given the fact that only one importer provided the information requested in the notice of initiation and expressed its willingness to further cooperate with the Commission services, it was decided that sampling was not necessary with regard to importers. (11) Questionnaires were sent to the four sampled Community producers and to all known exporting producers. (12) Replies to the questionnaires were received from the four sampled Community producers and six exporting producers in the countries concerned, as well as from their related traders. (13) One producer in the analogue country provided a complete questionnaire reply. (14) The Commission sought and verified all the information it deemed necessary for a determination of the likely continuation or recurrence of dumping and resulting injury and of the Community interest. Verification visits were carried out at the premises of the following companies: (a) Exporting producer in Russia JSC Mineral and Chemical Company (Eurochem), Moscow, Russia, and its two related manufacturing companies: PJSC Azot (NAK Azot), Novomoskovsk, Russia, and PJSC Nevinnomyssky Azot (Nevinka Azot), Nevinnomyssk, Russia; (b) Related trader to Eurochem Eurochem Trading GmbH, Zug, Switzerland (Eurochem Trading); (c) Related trader to the Ukrainian producer Stirol IBE Trading, New York, New York, USA; (d) Producer in the analogue country Terra Industries, Sioux City, Iowa, USA; (e) Sampled Community producers Achema AB, Jonava, Lithuania, Grande Paroisse SA, Paris, France, SKW Stickstoffwerke Piesteritz GmbH, Wittenberg, Germany, Yara SA, Brussels, Belgium and its related producer Yara Sluiskil BV, Sluiskil, The Netherlands. 3.3. Sampling (15) Ten Community producers properly completed the sampling form within the deadline and formally agreed to cooperate further in the investigation. With regard to those 10 Community producers, the Commission selected, in accordance with Article 17 of the basic Regulation, a sample based on the largest representative volume of production and sales of UAN in the Community which can reasonably be investigated within the time available. The four sampled Community producers accounted for 63 % of the total Community industry production during the RIP, whilst the above 10 Community producers accounted for 75 % of the total Community production during the RIP. (16) In accordance with Article 17(2) of the basic Regulation, the parties concerned were consulted on the sample chosen and raised no objection thereto. B. PRODUCT CONCERNED AND LIKE PRODUCT 1. Product concerned (17) The product concerned is the same as in the original investigation, i.e. a solution of urea and ammonium nitrate, a liquid fertiliser commonly used in agriculture, originating in the countries concerned. It consists of a mixture of urea, ammonium nitrate and water. The nitrogen (N) content is the most significant feature of the product, and it can vary between 28 % and 32 %. Such variation can be obtained by adding more or less water to the solution. Most of the imported UAN was 32 % N, which is more concentrated, and therefore cheaper to ship. However, whatever their nitrogen content, all solutions of urea and ammonium nitrate are considered to have the same basic physical and chemical characteristics and therefore constitute a single product for the purpose of this investigation. The product concerned falls within CN code 3102 80 00. 2. Like product (18) As established in the original investigation, this review investigation confirmed that UAN is a pure commodity product, and its quality and basic physical characteristics are identical whatever the country of origin. The product concerned and the products manufactured and sold by the exporting producers on the domestic market in the countries concerned, as well as those manufactured and sold by the Community producers on the Community market and by the producer in the analogue country on the domestic market of the analogue country have thus been found to have the same basic physical and chemical characteristics and essentially the same uses and are therefore considered to be like products within the meaning of Article 1(4) of the basic Regulation. C. LIKELIHOOD OF CONTINUATION OR RECURRENCE OF DUMPING 1. Dumping of imports during the RIP (19) In accordance with Article 11(2) of the basic Regulation, it was examined whether the expiry of the measures would be likely to lead to a continuation or recurrence of dumping. (20) During the RIP, exports to the Community of UAN originating in the countries concerned only took place from Algeria. Thus, a dumping calculation to examine whether there was likelihood of continuation of dumping was carried out for the two cooperating Algerian exporting producers. For the other cooperating exporting producers in Belarus, Russia and Ukraine, the investigation focused on the likelihood of recurrence of dumping. (21) The only two Algerian producers of UAN, Fertalge and Fertial, cooperated in the investigation. These two producers represented the totality of exports of UAN originating in Algeria to the Community during the RIP, which corresponded to 177 383 tonnes. Imports into the Community of the product concerned originating in Algeria represented 4,8 % of Community consumption which was 3 694 531 tonnes in the RIP. Imports from Algeria thus went up from 116 461 tonnes by 52 % in comparison to the original investigation period. (22) Therefore, the examination of dumping based on the information provided by these two cooperating exporting producers was considered to also be representative for the country as a whole. (23) It was first established for each of the two cooperating exporting producers whether its total domestic sales of UAN were representative in accordance with Article 2(2) of the basic Regulation, i.e. whether they accounted for 5 % or more of the total sales volume of the product concerned exported to the Community. The investigation showed that both companies only sold one type of UAN to the Community and that this type was not sold in representative quantities on the domestic market. (24) Therefore, for both exporting producers normal value could not be based on domestic sales and had to be constructed pursuant to Article 2(3) of the basic Regulation by adding to each exporter's cost of manufacturing of the product exported to the Community a reasonable amount for selling, general and administrative costs (SG&A costs) and a reasonable profit margin. (25) Regarding the cost of manufacturing, it should be noted that energy costs, such as electricity and gas, represent a major proportion of the manufacturing cost and a significant proportion of the total cost of production. In accordance with Article 2(5) of the basic Regulation, it was examined whether the costs associated with the production and sales of the product under consideration were reasonably reflected in the records of the parties concerned. (26) The investigation showed no indication that the electricity would not be reasonably reflected in the records of the exporting producers. In this context, it is inter alia noted that electricity prices paid by the Algerian producers during the RIP were in line with international market prices, when compared to other countries, such as Canada and Norway. However, the same could not be said with regard to gas prices. (27) As concerns gas supplies, in fact, it was established on the basis of data published by internationally recognised sources specialised in energy markets, that the price paid by the Algerian producer was less than one fifth of the export price of natural gas from Algeria. In addition, all available data indicates that domestic gas prices in Algeria were regulated prices, which are far below market prices paid for natural gas, for example in the USA, Canada, Japan and the EU. These four markets account for a total of 46 % of worldwide gas consumption, and the prevailing domestic price levels in these four markets appear to reasonably reflect costs. Moreover, the price of gas paid by the companies concerned was significantly lower than the gas price paid by the Community producers. (28) In view of the above, it was considered that the gas prices paid in Algeria during the review investigation period could not reasonably reflect the costs associated with the production and distribution of gas. Therefore, as provided for in Article 2(5) of the basic Regulation, the gas costs borne by one cooperating exporting producer, Fertial, were adjusted on the basis of information from other representative markets. The adjusted price was based on the average price during the RIP of Algerian liquefied natural gas (LNG) when sold for export at the French border, net of sea freight and liquefaction costs, since this was considered to be the most appropriate basis, as this public information refers exclusively to gas of Algerian origin. France, being both the largest market for Algerian gas and having prices reasonably reflecting costs, can be considered a representative market within the meaning of Article 2(5) of the basic Regulation. The other cooperating company, Fertalge, did not use natural gas as a raw material, since it produces UAN from ammonium nitrate (AN), that is produced locally, and urea. Since the cost of AN produced locally reflected Algerian domestic gas price mentioned in recital 27, the costs of AN borne by this company were adjusted accordingly. (29) The manufacturing costs provided by the cooperating exporting producers were therefore recalculated in order to take account of the adjusted gas prices, using equally the prices of gas when sold at the French border, net of sea freight and liquefaction costs. To the manufacturing cost so recalculated, a reasonable amount for SG&A and a reasonable profit margin were added, in accordance with Article 2(3) and Article 2(6) of the basic Regulation. (30) SG&A costs and profit could not be established on the basis of the chapeau of Article 2(6) of the basic Regulation because the two cooperating companies did not have representative domestic sales of the product concerned in the ordinary course of trade. Article 2(6)(a) of the basic Regulation could not be applied, since the two cooperating producers are the only two producers of UAN in Algeria. Article 2(6)(b) was not applicable either, since the manufacturing cost for products belonging to the same general category of goods would also need to be adjusted in respect of gas costs, for the reasons indicated in recital 28 above. As it was found to be impossible to establish the magnitude of the necessary adjustment for all products belonging to the same general category of goods sold domestically, it was equally impossible to establish the profit margins after such adjustment. Therefore, SG&A costs and profit were established pursuant to Article 2(6)(c) of the basic Regulation. (31) In accordance with Article 2(6)(c) of the basic Regulation, the SG&A costs and profit were determined on the basis of a reasonable method. As the Algerian domestic market of products of the same general category is extremely small, information had to be obtained from other representative markets. In this respect, consideration was given to publicly available information relating to major companies operating in the nitrogen fertilisers business sector. It was found that the corresponding data from North American (USA and Canada) producers would be the most appropriate for the purpose of the investigation, given the large availability of reliable and complete public financial information from listed companies in this region of the world. Moreover, the North American market showed a significant volume of domestic sales and a considerable level of competition from both domestic and foreign companies. Therefore, SG&A costs and profit were established on the basis of the weighted average SG&A costs and profit from three North American producers, which were found to be amongst the largest companies in the fertilisers sector, with regard to their north American sales of the same general category of products (nitrogen fertilisers). These three producers were considered to be representative of the nitrogen fertilisers business (on average over 80 % of the turnover of the company/business segment) and their SG&A costs and profit as representative of the same type of costs normally incurred by companies operating successfully in that business segment. The percentage for SG&A costs was 6,9 % of turnover. The calculated average profit margin was 9,1 % of turnover. Furthermore, there is no indication suggesting that the amount for profit so established exceeds the profit normally realised by Algerian producers on sales of products of the same general category in the Algerian market. (32) In accordance with Article 2(8) of the basic Regulation, the export price was established on the basis of the price actually paid or payable for the product concerned when sold for export to the Community. (33) The normal value and export price were compared on an ex-works basis. For the purpose of ensuring a fair comparison between the normal value and the export price, due allowance in the form of adjustments was made for differences affecting price and price comparability in accordance with Article 2(10) of the basic Regulation. Accordingly, adjustments were made for differences in transport, handling, loading and ancillary costs, where applicable and supported by verified evidence. (34) The dumping margin for each exporting producer was established on the basis of a comparison of a weighted average normal value with a weighted average export price, in accordance with Article 2(11) and (12) of the basic Regulation. (35) The investigation showed that dumping took place during the RIP even at a higher level than in the original investigation. The dumping margins expressed as a percentage of the cif Community frontier price, are in the range of 50 % to 60 %. 2. Development of imports should measures be repealed 2.1. Algeria (36) The two Algerian cooperating exporting producers represent the totality of imports of the product concerned from this country into the Community. Therefore, the examination of whether it would be likely that dumping continues should measures for Algeria be repealed was based on the information provided by these two cooperating exporting producers. (37) Algerian cooperating producers managed to double their production capacity while they increased their production by around 20 % during the period considered. Therefore, their spare capacity has significantly increased from less than 100 000 tonnes to 300 000 to 350 000 tonnes. (38) Since the Algerian domestic market is insignificant and this is not likely to change in the future, any increase in production will be export-oriented. By activating their spare capacity, the two cooperating exporting producers could supply 10 % to 20 % of the Community consumption. (39) Given that dumping continued during the RIP and on the basis of the spare capacity that the Algerian cooperating producers have built up, it is likely that the volume of Algerian exports into the Community will increase at dumped prices should measures lapse. (40) In the light of the above, there is likelihood of continuation of dumped exports to the Community should measures be repealed. (41) The normal value established for both companies significantly exceeded EU market prices during the RIP. It cannot be excluded that Algerian exporting producers would continue to sell to the Community at dumped prices, whether they have to pay duties or not. 2.2. Relationship between the constructed normal value in Belarus, Russia and Ukraine and export prices to third countries 2.2.1. Belarus and Ukraine: domestic sales prices based on the analogue country (42) A comparison of domestic sales prices of UAN in Belarus and Ukraine and export prices to third countries was carried out. In this respect it should be noted that since Belarus is considered a non-market economy country and Ukraine was not yet considered a market economy country at the time of the lodging of the request for the expiry review (5), the normal value for these two countries had to be determined on the basis of data obtained from producers in a market economy third country, in accordance with Article 2(7) of the basic Regulation. In the notice of initiation, the USA was envisaged as an appropriate analogue country, being an open competitive market, where producers face a considerable level of competition from foreign imports. (43) All interested parties were given the opportunity to comment on the choice of the analogue country. (44) The European Fertilisers Importers Association, EFIA, proposed Algeria or Russia as better options, given their privileged access to the main raw material, namely gas, and since they were market economy countries subject to the same investigation. In this respect, it should be pointed out that Article 2(7)(a) requires, before any further considerations, an appropriate market economy third country. While access to raw materials is an important factor as regards the choice of the analogue country, it should also be noted that the existence of dual pricing in relation to gas in these two countries made in fact these two countries an inappropriate choice. Indeed, the gas prices charged in these two countries to their domestic customers do not reflect the market value. (45) Some interested parties alleged, although without substantiating their claim, that Russian and Algerian production processes are more similar to the ones in Belarus and Ukraine. Algeria was also suggested as having a more similar level of production to Ukraine. In this respect, it must be stressed that Belarus, Ukraine and the USA have all fully vertically integrated producers, which is definitely not the case for Algeria. (46) A Ukrainian cooperating producer proposed Bulgaria or Romania rather than the USA. However, its proposal was not substantiated. In addition, an important factor against Bulgaria or Romania is that their domestic markets are small with a limited number of manufacturers, contrary to the USA. (47) Therefore, the investigation confirmed that the USA was an appropriate analogue country. Various producers and producers associations in the USA were contacted and invited to cooperate through the completion of a questionnaire. One producer in the USA fully cooperated in the investigation. Consequently, calculations were based on the verified information from the sole USA cooperating producer, which provided a complete questionnaire reply. 2.2.2. Belarus (48) The sole cooperating producer in Belarus was the only exporting producer from that country, but it had no export sales to the Community in the RIP. (49) Since there were no exports to the Community for a representative dumping finding in the RIP, and in order to establish whether dumping would be likely to recur should measures be repealed, the pricing behaviour of the cooperating exporting producer to the USA, its sole export market, and its production capacity and stocks were examined. The analysis was based on the information provided by the cooperating exporting producer mentioned in recital 48. (50) Data from the cooperating exporting producer showed that export prices to third countries (USA) were lower than the constructed normal value for Belarus. In fact, the investigation established that overall this price difference ranged in the RIP between 10 % and 15 %. This may indicate a likelihood of recurrence of dumping on exports to the Community should measures be repealed. Stocks and production capacity, as well as a comparison of these export prices with the prevailing price level in the Community, are examined below. 2.2.3. Ukraine (51) Two exporting producers cooperated in the investigation, but none of them had export sales to the Community in the RIP. There are no indications that there were more exporting producers in Ukraine. (52) Since there were no exports to the Community for a representative dumping finding in the RIP, and in order to establish whether dumping would be likely to recur should measures be repealed, the pricing behaviour of the cooperating exporting producer to the USA, its sole export market, and its production capacity and stocks were examined. The analysis was based on the information provided by the two cooperating exporting producer mentioned in recital 51. (53) The two cooperating exporting producers represented 48 % of imports into the USA of the product concerned originating in Ukraine during the RIP. The remainder of the imports in the USA originating in Ukraine were also produced by one of the cooperating producers, but exported by an unrelated Ukrainian company, which does not produce UAN. (54) Data from the cooperating exporting producers showed that export prices to third countries were lower than the constructed normal value for Ukraine. In fact, the investigation established that overall this price difference ranged in the RIP between 20 % and 30 %. This may indicate a likelihood of recurrence of dumping on exports to the Community should measures be repealed. Stocks and production capacity, as well as a comparison of these export prices with the prevailing price level in the Community, are examined below. 2.2.4. Russia (55) Two exporting producers belonging to the same group of companies cooperated in the investigation, but no exporting producer had export sales to the Community in the RIP. (56) It is known that there was one producer in Russia in the RIP which did not cooperate in the investigation. For those non-cooperating exporting producer(s), the information available from Eurostat and other sources was analysed. On that basis it was found that exports of UAN to the Community from other than the cooperating producers were also non-existent. However, no reliable information as to the production capacity and production volumes, stocks and sales was available for the non-cooperating company. In this respect, and in the absence of any indication of the contrary, it was considered that findings for the non-cooperating company would be in line with those established for cooperating companies. (57) Since there were no exports to the Community for a representative dumping finding in the RIP, and in order to establish whether dumping would be likely to recur should the measures be repealed, the pricing behaviour of the cooperating exporting producers to other export markets and their production capacity and stocks were examined. The analysis was based on the information provided by the cooperating exporting producers mentioned in recital 55. (58) It was examined whether the costs associated with the production and sales of the product under consideration were reasonably reflected in the records of the parties concerned. As regards gas costs, it was found that the domestic gas price paid by the Russian producers was around one fifth of the export price of natural gas from Russia. In this regard, all available data indicates that domestic gas prices in Russia were regulated prices, which are far below market prices paid in unregulated markets for natural gas. Therefore, as provided for in Article 2(5) of the basic Regulation, the gas costs borne by the Russian producers were adjusted on the basis of information from other representative markets. The adjusted price was based on the average price of Russian gas when sold for export at the German/Czech border (Waidhaus), net of transport costs. Waidhaus, being the main hub for Russian gas sales to the EU, which is both the largest market for Russian gas and has prices reasonably reflecting costs, can be considered a representative market within the meaning of Article 2(5) of the basic Regulation. (59) The construction of the normal value was done on the basis of the manufacturing costs of the product type exported, after the adjustment for the gas cost mentioned in recital 58, plus a reasonable amount SG&A costs and for profits, in accordance with Article 2(3) and Article 2(6) of the basic Regulation. (60) As for Algeria, SG&A costs and profit could not be established on the basis of the chapeau of Article 2(6), first sentence, of the basic Regulation because the related manufacturers did not have representative domestic sales of the product concerned in the ordinary course of trade. Article 2(6)(a) of the basic Regulation could not be applied, since there are only these two producers subject to the investigation. Article 2(6)(b) was not applicable either, since the manufacturing costs for products belonging to the same general category of goods would also need to be adjusted in respect of gas costs, for the reasons indicated in recital 58 above. As it was found to be impossible to establish the magnitude of the necessary adjustment for all products belonging to the same general category of goods sold domestically, it is equally impossible to establish the profit margins after such adjustment. Therefore, SG&A costs and profit were established pursuant to Article 2(6)(c) of the basic Regulation. (61) As in the case of Algeria and for the same reasons as explained in recital 31, SG&A costs and profit were established on the basis of the weighted average SG&A costs and profit from the same three North American producers. It should be noted that the amount for profit so established did not exceed the profit realised by the Russian producers on sales of products of the same general category on their domestic market. (62) It was found that the export sales of the two cooperating producers were made on the basis of an agent agreement through two related traders, one located in Switzerland and the other one on the British Virgin Islands. The latter ceased to operate at the beginning of 2005. The export price was established on the basis of export prices actually paid or payable to the first independent customer in the USA, their major export market. (63) Data from the two related traders showed that export prices to third countries were lower than the constructed normal value in Russia. In fact, the investigation established that overall this price difference ranged in the RIP between 2 % and 6 %. This may indicate a likelihood of recurrence of dumping on exports to the Community should measures be repealed. 2.3. Spare capacity in Belarus, Russia and Ukraine (64) The possible effects of existing spare capacity were also examined. Neither Russia nor Ukraine has a relevant domestic market for UAN. On the contrary, Belarus is considered to have a considerable domestic market for this product. (65) The Belarusian sole producer managed to increase its production by 14 % during the period considered, and was producing close to full capacity during the RIP. Its production capacity during the same period remained stable. It sold around 60 % of its production domestically, the remainder being exported to the USA. It therefore appears that this producer does not have any spare production capacity readily available. (66) The Russian sole cooperating producer increased its production by 78 % during the period considered. Its production capacity during the same period remained stable. However, according to the information submitted, this producer still has significant available capacity of around 600 000 to 700 000 tonnes to increase its production of UAN, and could, should measures be repealed, use this spare capacity to increase exports to the Community market. Investment made by the company during the period considered suggests a potential further increase in production capacity. It is estimated that Russian overall spare capacity is at least the known 600 000 to 700 000 tonnes, which constitutes around 20 % of Community consumption. Exports to third countries grew by 79 % during the period considered. (67) At the same time, the domestic sales of the sole cooperating Russian producer remained at a low level, representing on average less than 5 % of total sales. Since the domestic market cannot absorb the increase in production, any increase in production is likely to be exported. (68) As to Ukraine, the two cooperating producers managed to increase production twelvefold during the period considered. Production capacity during the same period increased almost fivefold. In addition, they have considerable spare capacity to increase exports to the Community market in significant volumes should measures be repealed. It is estimated that Ukrainian overall spare capacity amounts to 700 000 to 800 000 tonnes, which constitutes around 20 % of Community consumption. Exports to third countries increased by eightfold during the period considered. (69) Ukrainian domestic sales remained at a low level during the period considered, representing on average less than 2 % of total sales. It should be noted that growth of the domestic market cannot absorb the increase in production and therefore any increase in production is likely to be exported. (70) On the basis of the above, it can be concluded that the cooperating producers, with the exception of Belarus, have substantial spare capacity to increase their exports to the Community market should measures be repealed. 2.4. Relationship between export prices to third countries and the prevailing price level in the Community (71) It should be noted that the generally prevailing price level of the Community producers in the Community was lower than the average export price level of the exporting producers to third countries during the RIP, especially to the USA. This is explained by the fact that gas prices, which constitute more than 50 % of the manufacturing costs, and thus UAN prices, were higher in the USA than in Europe, and that accordingly UAN traded at a higher price in the USA. (72) It should be noted that the export prices from the countries concerned to the USA were on average lower than the respective normal values, even though the prevailing price level in the USA was higher than prices in the Community. It can therefore be concluded that any sales to the EC market would most probably be at dumped prices. 2.5. Incentive to shift sales from other markets to the Community (73) With regard to Belarus, there is a rapidly growing domestic market on which the sole producer sells two thirds of its production. Given that the domestic price is less than a half of the prevailing price in the Community during the RIP, there is likelihood that a rational economic decision leads the Belarusian producer to redirect significant quantities currently sold on the domestic market to the Community market at dumped prices. (74) In this respect, it should also be noted that the Belarusian producer who is currently exporting the remaining third to other markets would have considerable transport cost advantages when exporting to the Community instead, given its proximity to the Community border compared to other potential export markets for the Belarusian producer such as the USA, Argentina or Australia. (75) In the light of the above, there is likelihood that the Belarusian producer would redirect significant parts of its sales to the Community at dumped prices, should measures be repealed, as there are strong economic incentives. (76) As already explained in recital 20, in the absence of exports to the Community during the RIP by Belarus, Russia and Ukraine, dumping from these countries could not be established in respect of exports to the Community. However, as explained in section 2, the investigation has shown that on the basis of calculations carried out by using data relating to actual exports from these countries to their major export market, the USA, that there was a likelihood of recurrence of dumping. 3. Conclusion on the likelihood of continuation or recurrence of dumping (77) On the basis of the analysis carried out in sections 1 to 5, it is concluded that should measures be repealed, there is likelihood that additional production would be exported to the Community, or sales currently exported to countries outside the Community or sold on the domestic markets would be redirected towards the Community market in significant quantities. It is likely that these exports to the Community will be made at dumped prices, in particular to regain lost market shares in the Community. It can therefore be concluded that, should measures be repealed, future exports to the Community would be made in increased quantities at dumped prices. Moreover, it should be noted that overseas markets are subject to higher transportation costs than the Community market, namely when considering sales from neighbouring countries, such as Belarus and Ukraine to Eastern Europe or Algeria to Southern Europe. (78) As regards imports into the Community originating in Algeria, since they are still made at dumped prices, and also on the above analysis of spare capacities and the comparison of price levels, dumping from Algeria is likely to continue in the future. Given that the Community was the only export market for Algeria during the RIP, it is highly likely that Algerian exporters would direct their increased export volumes mainly to this market. (79) In the light of the above, it is concluded that there is likelihood of continuation (from Algeria) and recurrence (from Russia, Belarus and Ukraine) of dumping should measures be repealed. D. INJURY 1. Definition of the Community industry (80) Within the Community, the product concerned is manufactured by 12 producers whose output constitutes the total Community production within the meaning of Article 4(1) of the basic Regulation. (81) It should be noted that as compared to the original investigation, the Hydro Agri companies have been renamed Yara. Five companies have become part of the Community industry due to the enlargement of the European Union in 2004. (82) Out of the 12 Community producers, 10 companies cooperated with the investigation out of which nine were mentioned in the review request. The remaining two producers (other Community producers) remained silent. Accordingly, the following 10 producers agreed to cooperate: Achema AB (Lithuania), AMI Agrolinz Melamine International GmbH (Austria), DSM Agro (The Netherlands), Duslo AS (Slovakia), Fertiberia SA (Spain), Grande Paroisse SA (France), Lovochemie AS (Czech Republic), Nitrogà ©nmà ±vek Rt (Hungary), SKW Stickstoffwerke Piesteritz GmbH (Germany), Yara (The Netherlands, Germany, Italy and the United Kingdom). (83) As these 10 Community producers accounted for 75 % of the total Community production during the RIP, it is therefore considered that the above 10 Community producers account for a major proportion of the total Community production of the like product. They are therefore deemed to constitute the Community industry within the meaning of Article 4(1) and Article 5(4) of the basic Regulation and will hereinafter be referred to as the Community industry. (84) As indicated under recitals 10, 15 and 16, a sample consisting of four companies was selected. All sampled Community producers cooperated and sent questionnaire replies within the deadlines. In addition, the remaining complainant producers and producers supporting the investigation duly provided certain general data for the injury analysis. 2. Situation on the Community market 2.1. Consumption in the Community market (85) The apparent Community consumption was established on the basis of the sales volumes of the Community industry on the Community market, the sales volumes of the other Community producers on the Community market, and Eurostat data for all EU imports. Given the enlargement of the European Union in 2004, for the sake of clarity and consistency of the analysis, the consumption was established on the basis of the EU-25 market throughout the period considered. (86) Between 2002 and the RIP, Community consumption increased moderately by 8 %. The increase recorded in 2004 is mainly attributed to the implementation of the common agricultural policy in the new Members States after their accession to the European Union. From 2004, farmers in the new Member States had additional funding available to them which led to increased usage of fertilisers. 2002 2003 2004 RIP Total EC consumption in tonnes 3 425 381 3 579 487 3 740 087 3 694 532 Index (2002 = 100) 100 104 109 108 2.2. Imports from the countries concerned 2.2.1. Cumulation (87) In the original investigation imports of the product concerned originating in Algeria, Belarus, Russia and Ukraine were assessed cumulatively in accordance with Article 3(4) of the basic Regulation. It was examined whether a cumulative assessment was also appropriate in the current investigation. (88) In this respect, it was found that there were no imports of the product concerned from Ukraine throughout the period considered and no imports from Belarus and Russia in 2004 and the RIP. Therefore, the conditions set out in Article 3(4) of the basic Regulation to assess cumulatively imports of the product concerned from these countries with imports of the product concerned from Algeria were not fulfilled. (89) In the light of the above, it was considered that all four countries should be examined separately. 2.2.2. Volume, market share and prices of imports from each of the countries concerned (90) With respect to the three countries concerned with exports to the Community during the period considered, the volumes, market shares and average prices per country developed as set out below. The following quantity and price trends are based on Eurostat. 2002 2003 2004 RIP Volume of imports from Algeria (tonnes) 97 378 239 348 219 680 177 383 Market share 2,8 % 6,7 % 5,9 % 4,8 % Prices of imports from Algeria (EUR/tonne) 96 99 117 131 Volume of imports from Belarus (tonnes) 101 479 44 438 Market share 3,0 % 1,2 % Prices of imports from Belarus (EUR/tonne) 74 64 Volume of imports from Russia (tonnes) 81 901 81 809 Market share 2,4 % 2,3 % Prices of imports from Russia (EUR/tonne) 64 70 (91) The volume of imports from Algeria, although decreasing slightly as from 2003 onwards, gained a further 2 percentage points of market share during the period considered, whereas the prices evolved positively from 96 to 131 EUR/tonne. Regarding Belarus and Russia, their respective import volumes decreased substantially and completely ceased from 2004 onwards. (92) The investigation showed that imports from Algeria were not undercutting the Community industry prices during the RIP. As for the remaining countries, in the absence of imports during the RIP, a comparison of their export prices to third countries during the RIP with the Community industry prices on the Community market has equally shown no undercutting. 2.3. Imports from other countries (93) The volume of imports from other third countries during the period considered are shown in the table below. The following quantity and price trends are also based on Eurostat. 2002 2003 2004 RIP Volume of imports from Romania (tonnes) 69 733 79 137 257 113 142 288 Market share 2 % 2,2 % 6,9 % 3,9 % Prices of imports from Romania (EUR/tonne) 94 102 112 123 Volume of imports from USA (tonnes) 26 024 57 20 6 Market share 0,7 % 0,0 % 0,0 % 0,0 % Prices of imports from USA (EUR/tonne) 86 289 (6) 1 101 (6) 1 664 (6) (94) In the case of Romania, a substantial increase of imports was recorded in 2004 gaining a market share of 6,9 %, which nevertheless dropped down to 3,9 % during the RIP in spite of favourable Community market conditions. This development should be seen against the background of the sharp increase of Romanian exports to the USA market, which, in terms of volume, represented more than three times the volumes of Romanian exports to the Community during the RIP. As regards the prices, they have increased steadily throughout the period considered and were consistently higher than the sampled Community industrys prices in 2004 and the RIP. On this basis, it is not considered that Romanian exporting producers can constitute a threat of material injury to the Community industry. Import from the USA, which only had a market share of 0,7 % in 2002, decreased dramatically to 6 tonnes in the RIP. This trend reflects the fact that sales prices in the USA were higher than sales prices to the EC until the end of the RIP so that there was no incentive for USA producers to export to the EC. (95) The European Fertiliser Import Association (EFIA) argued that since the Romanian exports to the Community market do not constitute a threat of material injury although their increase in volume is higher than that of Algerian exports and their prices lower than those charged by Algerian exporters, equally the Algerian exports should not constitute a threat of material injury. In this respect, it should be noted that indeed for Algeria, as indicated in recital 92, no undercutting was found and Algeria was not found to have caused material injury to the Community industry during the period considered. However, the analysis for that country developed in section 4 showed that there is a likelihood of recurrence of injury. In contrast, as anti-dumping duties were not applicable to imports of UAN originating in Romania, this country was not subject to an injury recurrence test pursuant to Article 11(2) of the basic Regulation. On this basis, the argument was rejected. 3. Economic situation of the Community industry (96) Pursuant to Article 3(5) of the basic Regulation, the Commission examined all relevant economic factors and indices having a bearing on the state of the Community industry. 3.1. Preliminary remarks (97) In view of the fact that sampling had been used with regard to the Community industry, the injury has been assessed both on the basis of information collected at the level of the entire Community industry (C.I. in the enclosed tables) and on the basis of information collected at the level of the sampled Community producers (S.P. in the enclosed tables). (98) Where recourse is made to sampling, in accordance with established practice, certain injury indicators (production, production capacity, stocks, sales, market share, growth and employment) are analysed for the Community industry as a whole, while those injury indicators relating to the performances of individual companies, i.e. prices, costs of production, profitability, wages, investments, return on investment, cash flow and ability to raise capital are examined on the basis of information collected at the level of the sampled Community producers. 3.2. Data relating to the Community industry as a whole (a) Production (99) The Community industrys production increased by 5 % between 2002 and the RIP, i.e. from a level of around 2,8 million tonnes in 2002 to a level of around 3 million tonnes in the RIP. Specifically, production decreased by 3 % in 2003, before increasing by 2 percentage points in 2004 and by a further 7 percentage points in the RIP. 2002 2003 2004 RIP C.I. production (tonnes) 2 843 529 2 768 258 2 823 972 3 003 918 Index (2002 = 100) 100 97 99 106 Source: Complainants, sampling questionnaire replies and verified questionnaire replies. (b) Capacity and capacity utilisation rates (100) Production capacity remained practically stable throughout the period considered. In view of the growth in production, the resulting capacity utilisation increased, from a level of 57 % in 2002 to a level of 60 % in the RIP. As already noted in the original investigation, capacity utilisation for this type of production and industry can be affected by the production of other products which can be produced on the same production equipment. 2002 2003 2004 RIP C.I. production capacity (tonnes) 4 984 375 4 944 575 4 941 975 4 955 075 Index (2002 = 100) 100 99 99 99 C.I. capacity utilisation 57 % 56 % 57 % 61 % Index (2002 = 100) 100 98 100 106 (c) Stocks (101) The level of closing stocks of the Community industry increased progressively throughout the period considered. At the end of the RIP (30 June 2005), the stock level was relatively low but this is due to the fact that for this type of product, always, the stock levels are much lower in summer than in winter as the sales peak is in spring and early summer. By the end of 2004, the level of stocks was 13 % higher than by the end of 2002. 2002 2003 2004 RIP C.I. closing stocks (tonnes) 276 689 291 085 313 770 159 926 Index (2002 = 100) 100 105 113 58 (d) Sales volume (102) The sales by the Community industry on the Community market decreased by 3 % between 2002 and the RIP. This development is opposite to the evolution of consumption on the Community market, which increased by 8 % during the same period (see recital 86). The overall increase in production volumes is explained by the strong export performance of the Community industry during the same period. The table below shows the export volumes of the sampled Community producers whose main destination was the USA market. 2002 2003 2004 RIP C.I. EC sales volume (tonnes) 2 800 226 2 641 000 2 604 215 2 722 174 Index (2002 = 100) 100 94 93 97 S.P. sales volume to third countries (tonnes) 176 269 194 543 228 937 328 796 Index (2002 = 100) 100 110 130 187 (e) Market share (103) The market share held by the Community industry decreased substantially between 2002 and the RIP. Specifically, the Community industry lost 8 percentage points of market share during the period considered, while the Algerian producers increased their market share from 2,8 % to 4,8 % during the same period. 2002 2003 2004 RIP Market share of Community industry 81,7 % 73,8 % 69,6 % 73,7 % Index (2002 = 100) 100 90 85 90 (f) Growth (104) The Community industry lost a significant part of its market share, to the benefit of the Algerian, Romanian and other Community producers who gained market share during the same period. (105) The loss of market share can also be attributed to the rational decision made by the Community industry to increase its exports to the USA market in order to benefit from the much higher UAN prices prevailing on that market. However, in view of its large spare production capacity, the Community industry could not benefit from the growth of the Community market which was observed during the period considered. (g) Employment (106) The level of employment of the Community industry increased by 5 % between 2002 and the RIP. This relatively small increase should be mainly attributed to the improved export performance of the Community industry. 2002 2003 2004 RIP C.I. employment product concerned 827 819 790 867 Index (2002 = 100) 100 99 96 105 (h) Productivity (107) Productivity of the Community industrys workforce, measured as output per person employed per year, remained fairly stable between 2002 and the RIP. 2002 2003 2004 RIP C.I. productivity (tonnes per employee) 3 437 3 380 3 573 3 463 Index (2002 = 100) 100 98 104 101 (i) Magnitude of dumping margin (108) As concerns the impact on the Community industry of the magnitude of the actual margin of dumping, given the volume of the imports from Algeria (accounting for up to 6,7 % of the Community market during the period considered), this impact cannot be considered to be negligible, especially in a highly volatile market in terms of prices like the one of the product concerned. No conclusion can be drawn with regard to Belarus, Russia and Ukraine as imports from these countries ceased in 2003. 3.3. Data relating to the sampled Community producers (a) Sales prices and factors affecting domestic prices (109) The sampled Community industry producers average net sales price increased substantially in 2004 and the RIP reflecting thus the prevailing favourable international market conditions of the product concerned during the same period. This growing trend should be seen in conjunction with the similar evolution of the cost of the principal raw material, i.e. gas, as the below table illustrates. 2002 2003 2004 RIP S.P. unit price EC market (EUR/tonne) 85 89 109 114 Index (2002 = 100) 100 105 128 134 S.P. gas price/MBTU (indexed) 100 107 111 126 (b) Wages (110) Between 2002 and the RIP, the average wage per employee increased by 9 %, as the table below shows. 2002 2003 2004 RIP S.P. annual labour cost per employee (000 EUR) 23,4 25,4 27,0 25,6 Index (2002 = 100) 100 108 115 109 (c) Investments (111) The annual flow of investments in the product concerned made by the four sampled producers developed positively during the period considered. These investments referred mainly to replacement of old machines. This shows the efforts of the Community industry to continuously improve its productivity and competitiveness. However, the results are not apparent in the evolution of productivity which remained rather stable (see recital 107) during the same period reflecting thus the difficulties of the Community industry to boost its production output. 2002 2003 2004 RIP S.P. net investments (000 EUR) 12 512 20 087 12 611 17 047 Index (2002 = 100) 100 161 101 136 (d) Profitability and return on investments (112) Profitability of the sampled producers shows a gradual improvement notably since 2003 and reached the level of 13,8 % during the RIP. At the end of the period considered the profitability reached its peak on this price-cyclical market. Indeed, numerous factors, including external ones, can affect world markets prices for UAN and other nitrogenous fertilisers. Such factors can result in either additional supply or reduced demand for these products, thereby influencing product pricing. During the period considered, due to tight supply the world market prices moved upwards. In 2002 and 2003, the profit levels found were, however, moderate and below the levels considered reasonable by the Community industry in view of the fact that this industry is highly capital-intensive. The return on investments (ROI), expressed as the profit in percent of the net book value of investments, broadly followed the above profitability trend over the whole period considered. 2002 2003 2004 RIP S.P. profitability of EC sales to unrelated customers (% of net sales) 8,1 % 6,0 % 12,3 % 13,8 % Index (2002 = 100) 100 74 151 170 S.P. ROI (profit in % of net book value of investment) 22 % 24 % 50 % 58 % Index (2002 = 100) 100 111 229 265 (e) Cash flow and ability to raise capital (113) Cash flow has increased significantly during the period considered. This development is in line with the development of the overall profitability during the period considered. 2002 2003 2004 RIP S.P. cash flow (000 EUR) 23 532 19 625 39 767 50 823 Index (2002 = 100) 100 83 169 216 (114) The investigation did not reveal any difficulties encountered by the sampled Community producers in raising capital. In this respect, it should be noted that as several of these companies are part of large groups, they finance their activities within the group to which they belong either through cash-pooling schemes or through intra-group loans granted by the mother companies. 3.4. Conclusion (115) Between 2002 and the RIP, the following indicators developed positively: production volume of the Community industry increased, unit sales prices of the Community industry increased and profitability improved substantially in line with the prices. Exports to third countries increased and return on investment and cash flow evolved positively as well. Wages developed moderately and the Community industry continued to invest. (116) Conversely, the following indicators developed negatively: sales volumes on the Community market decreased by 3 % as opposed to a growing market. Accordingly, the market share of the Community industry decreased substantially by 8 percentage points during the period considered. The productivity remained rather stable despite the efforts of the Community industry to improve it through investments. (117) Overall, the situation of the Community industry has improved significantly as compared to its situation prior to the imposition of the anti-dumping measures on imports of UAN from the countries concerned in 2000. It is therefore clear that these measures had a positive impact on the economic situation of the Community industry. Nevertheless, it should be stressed that the positive development of certain indicators can also be partly attributed to the market of the like product, which was, due to the tight worldwide supply, very favourable during the two last years of the period considered. Furthermore, the positive development of the Community industrys export performance has also contributed to the overall positive evolution of the Community industry counterbalancing to a certain extent the shrinking market share within the Community. (118) It is therefore concluded that the situation of the Community industry has improved, as compared to the period preceding the imposition of measures, but is still fragile. 4. Likelihood of recurrence of injury 4.1. General (119) Since there is no continuation of material injury caused by imports from the four countries concerned, the analysis focused on the likelihood of recurrence of injury. In this respect, two main parameters were analysed: (i) the gas cost in the countries concerned and its impact on the UAN production cost, and (ii) the effect of the projected export volumes from the countries concerned to the Community on the Community industry, taking into account the conditions of competition. 4.2. Likely evolution of sales prices: Gas prices and cost of production in the countries concerned (120) The likelihood of the recurrence of injury will depend strongly on the likely price evolution of UAN. As gas is by far the most important cost element representing more than 50 % of the UAN cost of production when purchased at world market prices, and is therefore a determining factor in the selling price of UAN. The gas cost in the UAN production depends on the gas efficiency use and the unit price. An analysis of these two parameters in the production cost of UAN for the Community industry, on one side, and for Russia and Algeria, on the other side, has been conducted. (121) From this analysis it was firstly shown that gas efficiency is an important factor in establishing the cost of gas per tonne of UAN produced. In this respect, it was found that the gas efficiency of the Community industry was relatively high, reaching up to 15 % lower consumption of gas per tonne of UAN produced than that of the producers in Russia and Algeria. This is the result of the Community industrys efforts to continuously improve its productivity and competitiveness through appropriate investments requiring a yearly capital inflow approximating in average one third of its total net book-value assets. This comparative advantage should benefit the Community industry and result in a lower cost of production of UAN. (122) Despite this efficiency, the Community industry ends with a gas cost per tonne of UAN produced around threefold higher than that of Russia and Algeria because of the gas price difference. The artificially low gas prices in these two countries fully explain the difference. The consequent price difference of UAN in these two countries as compared to producers purchasing gas at world market prices, like those in the Community, is unlikely to be reduced in the near future. On the contrary, should the current pattern in the development of the world market gas prices in the forthcoming years be maintained, this gap may be further broadened. On this basis, it is considered that producers in Russia and Algeria will continue to have this artificial cost advantage, which overcomes largely the high transport costs due to the weight of UAN. This renders the Community market attractive to producers even located in remote areas in these countries bearing transport costs higher than 20 % of the price. (123) In the light of those low gas prices, the exporting producers in Russia and Algeria will thus very likely have the possibility to export the product concerned to the Community at lower prices than the Community industrys cost of production. Therefore, it is very likely that those imports would undercut the C.I.'s prices substantially. (124) As for Belarus and Ukraine, they are not included in this analysis since for the purpose of this investigation both were considered to be non-market economy countries and therefore their data on cost of production were not requested. However, specific data concerning gas prices in these two countries were acquired and the investigation has shown that the producers in these countries were being supplied with gas in the RIP at substantially lower prices than the prices charged to the Community industry. It is therefore considered that both countries will equally have the possibility to export the product concerned at lower prices than the Community industrys cost of production and it can also be concluded that there is likelihood that those prices would undercut the C.I.'s prices. (125) Should measures lapse, the fact that the Belarusian, Russian and Ukrainian exporters would need to re-establish themselves on the Community market and the Algerian exporters would need to strengthen their market position may also support the view that there is a likelihood that those producers would charge lower prices than the C.I. in order to regain lost market share or broaden their customer base. (126) EFIA and certain exporting producers argued that lower costs of production could not be considered as a valid reason to justify the likelihood of recurrence of injury. It was further submitted that the possibility to undercut is not the legal standard to establish whether injury is likely to recur. Moreover, Algeria charged prices above the Community industrys prices and Belarus, Russia and Ukraine did not export to the Community at all in 2004 and the RIP and their prices to third countries were above the Community industrys prices, which are considered to be non-injurious. This evidence would demonstrate, according to EFIA, that the exporting producers are not relying on their lower gas cost by setting lower prices, but on the contrary charge higher prices and rather aim to maximise their profit margin. (127) The rationale behind the establishment of likelihood of recurrence of injury is indeed whether the expiry of the measures would create conditions that would encourage the recurrence of injury. In this respect, it should be firstly noted that, as the parties acknowledge, the exporting producers in the countries concerned benefit from low gas prices, which offer them the discretion to undercut the Community industrys prices. On the other side, the investigation showed that their exports during the RIP were dumped. This pricing behaviour was seen in the light of (i) the exporters significant spare export capacity, and (ii) their substantially lower cost of production. The first indicates their strong incentive to find the markets for selling their production. The second shows their capability to undercut severely the Community industry prices, in order to meet their sales requirements in volume. (128) With regard to the prices, it should be recalled that during the last two years of the period considered, favourable market conditions kept the prices at a very high level irrespective of the applicable anti-dumping measures. Indeed, during that period, a tight worldwide supply demand balance resulted in high prices for all nitrogen fertilisers. UAN is like the other nitrogen fertilisers a commodity whose pricing is influenced by numerous factors, going from the volatile gas price having a considerable impact on the supply as being the most important costing element to the weather conditions, crops and grain stock levels resulting in reduced or increased demand. With particular regard to the Community market, the demand for nitrogen fertilisers is expected to slightly decrease in the forthcoming years (7). The maintenance of such high prices depends therefore on a tight supply, which is nevertheless very unlikely, as the investigation showed, given the spare export capacity of the countries concerned and the likelihood of redirection of part of their exports to third countries during the RIP, should the measures be lapsed. This scenario will very likely lead the exporting producers to lower their prices undercutting the prices of the Community industry, in order to gain market share and meet their requirements in export volumes. Under such circumstances, the Community industry would be forced either to lower its prices to a level close to or below the cost of production given the maintained high cost of gas or to lose significant market share and thus revenue, or both. An increase of exports to the USA market is highly unlikely due to the reasons set out in recital 135. Therefore, a deterioration of the Community industrys overall performance would be the inevitable consequence of the repeal of the measures. (129) With regard to the profit-maximising argument, it should be noted that this is based on the positive price differential observed during the period considered between the USA and the Community market, which nevertheless cannot be considered as an appreciation element for the future prices of a highly volatile commodity such as UAN. On the basis of the above, it was established that there is a high risk of recurrence of injury, should the measures be repealed, and therefore the argument was rejected. 4.3. Impact on the Community industry of the projected export volumes and price effects in case of repeal of measures 4.3.1. Preliminary remarks Conditions of competition (130) UAN is a liquid fertiliser supplying nitrogen to crops. It is mainly used as a pre-planting fertiliser for arable crops, which require UAN usually in the spring time. UAN has a limited interchangeability with the other nitrogen fertilisers as farmers use different equipment for applying UAN and it can be mixed with other solutions, such as pesticides, for a single application. Demand is therefore characterised by seasonal peaks and is relatively inelastic. (131) Although UAN is generally consumed seasonally, it is produced throughout the year as this is more efficient than ceasing production. As a result, Community producers are found with peak inventories during autumn and winter. Massive imports of the product concerned at depressed prices during spring and summer will very likely have a significant adverse effect on the Community industrys prices for such a highly volatile commodity as the product concerned, for which prices are set on a weekly basis. 4.3.2. Exports from the countries concerned (132) Given the absence of exports from the countries concerned except Algeria during the RIP, the analysis is focused on the likelihood of redirection of exports made to other countries during the RIP towards the Community market in the imminent future. In addition, the likely evolution of sales prices of UAN has to be analysed. (133) Regarding the likely evolution of exports to the Community market, it should be noted that imports of UAN into the USA market originating in Belarus, Russia and Ukraine were subject to anti-dumping measures until their repeal in April 2003. The table below shows the export development of these three countries to the USA market as of 2003: Exports to the USA market from: 2003 (8) 2004 RIP (9) Belarus in tonnes 156 596 244 526 227 772 Russia in tonnes 179 993 614 395 699 100 Ukraine in tonnes 111 321 103 440 145 828 Total in tonnes 447 910 962 361 1 072 700 Source: Foreign Trade Statistics, published by the US Census Bureau. (134) On this basis, it is shown that these countries increased significantly their exported volume from 2003 to 2004. In the case of Russia, in particular, the export volume rose from 180 000 tonnes in 2003 to about 600 000 tonnes in 2004, representing a more than threefold increase. The above trade statistics also show that the sharp and sudden increase in export volumes from these countries to the USA came to a halt during the RIP, where the increase in comparison to 2004 was less profound (11 %). The stabilisation of their collective exports volumes to the USA market to around 1 million tonnes was confirmed by these countries post-RIP export performance to the USA. (135) In the final report of the USA anti-dumping investigation on UAN imports from Belarus, Russia and Ukraine, the reason for this stabilisation is described in detail (10). In this report, it is specifically stated that the high ratio of inland transportation costs means that the market for imports is virtually limited to the coastal areas and that these costs make final sales of imported UAN to many areas of the USA, including the important UAN consumption States in the so-called farm belt area, far too expensive as compared to locally produced UAN. In other words, there is a limit on the size of the USA market with regard to imports, and the most significant areas in terms of consumption remain shielded from imports due to their location. In view of the observed stabilisation of imports from Belarus, Russia and Ukraine, as described in recital 134 above, it is therefore concluded that the USA market cannot absorb import volumes significantly higher than those registered in the RIP. (136) In the above context, and in view of the relative proximity of the Community market, it can be concluded that significant sales or spare capacity in the countries concerned, will be very likely directed toward the Community market, should the measures be allowed to lapse. Given the lower level of transport costs as compared to exports to the USA market, their export prices can be substantially lower than those prevailing in the USA market. Furthermore, as shown in recitals 50, 54 and 63, it was found that the sales of the cooperating exporting producers on the USA market were made at prices lower than the respective normal values. 4.3.3. Impact of spare capacities (137) It is recalled that the domestic market of the product concerned in Algeria is insignificant and that virtually all production capacity is export oriented. Furthermore, the investigation showed that the current spare capacity of the Algerian producers represent 10 % to 20 % of the consumption on the Community market The total current spare capacity is estimated to be around 300 000 to 350 000 tonnes. (138) In particular in view of the proximity of the Community market, it is very likely that, if the measures were allowed to lapse, this spare production capacity would be used for production of the product concerned for export to the Community (Algeria only has 4,8 % market share). The expected high volumes would likely be at dumped prices and likely cause injury to the Community producers. (139) It was found that there is a rapidly growing domestic market, on which the sole producer sold two thirds of its production during the RIP. Moreover, there were no exports to the Community in 2004 and the RIP and the exports to USA market have decreased despite the absence of anti-dumping measures and favourable market conditions. (140) If the measures were allowed to lapse, the situation with regard to Belarus would most likely change dramatically. In view of the fact that the domestic price was less than half of the prevailing market price in the Community during the RIP, a rational economic decision would lead the Belarusian producer to redirect significant quantities currently sold on the domestic market to the Community market at dumped prices. A recurrence of injury caused by high volumes of low prices imports from Belarus would likely be the result. (141) The Russian domestic market is relatively small as compared to the spare capacity which, as already mentioned in recital 66, amounts to 600 000 to 700 000 tonnes and which may be substantially increased if the capacities of the non-cooperators or capacities utilised currently in producing and exporting urea and ammonium nitrate, the two other nitrogen fertilisers, are added. (142) In this respect, it is also worth noting that there are currently trade defence measures imposed by the Community on imports of upstream products, namely solid urea and ammonium nitrate, from Russia (11). Regarding the measures on urea, an expiry review investigation is currently being carried out (12). Moreover, an interim review investigation limited to one major Russian exporting producer is currently being carried out with regard to the measures on ammonium nitrate (13). Therefore, depending on the final outcome of these review investigations, there is a risk of shifting of production from those products to UAN, which could then result in an additional substantial increase of the estimated spare capacity of the Russian producers. (143) In view of the above there is a strong likelihood that exports to the Community will resume if measures were allowed to lapse. The volumes of such imports can conservatively be estimated to represent close to 20 % of the Community market, considering the consumption on that market (see recital 86) and the actual spare capacities in Russia. In view of the extremely low gas prices being paid by the Russian producers and the consequent pricing advantage for the product concerned, such imports would likely cause severe injury to the Community industry. (144) Among the countries concerned, Ukraine is at this moment the country with the largest spare capacity which is estimated in the range of 700 000 to 800 000 tonnes. The current spare capacity alone accounts for around 20 % of the Community consumption. (145) In the absence of a significant domestic market and in view of the proximity of the Community market, it is likely that, should the measures lapse, massive exports will be directed to the Community market. These exports will as shown above probably be at dumped levels and thereby cause major injury to the Community industry. 4.4. Conclusion on likelihood of recurrence of injury (146) In view of the artificially low prices the producers in the countries concerned pay for the basic raw material gas, and the impact this has on the production cost of UAN, it is likely that, if the measures were allowed to lapse, the producers in the countries concerned will have the possibility to export the product concerned at lower prices than the Community industry's production cost. (147) All countries concerned but Belarus have a surplus capacity which could be turned towards the Community market, should the measures lapse. As concerns Belarus, given the high sales volumes on the domestic market at much lower prices than those prevailing on the Community market during the RIP, it is very likely that at least part of them would be redirected to the Community market, should the measures lapse. The lower transport costs for sales to the Community as compared to the USA could also stimulate a redirection of sales to the Community market. In addition, for all four countries a redirection of part of their current exports from other countries to the Community is likely if the current measures were repealed as was demonstrated in recitals 132 to 136. (148) EFIA and certain exporting producers submitted that the assumption of shifting from urea and ammonium nitrate production to UAN ignores the basic economic fact that producers can not simply switch production without additional investments. Furthermore, they claimed that producers will not give up more profitable products just because anti-dumping measures on a less profitable product are removed. (149) With regard to the additional investments required, it should be noted that most of the major producing exporters of nitrogen fertilisers are integrated producers and therefore the decision on producing/exporting one or the other product depends mainly on the market conditions. As for the profitable products, the producers will indeed look for the most profitable products. In this respect, the anti-dumping measures play a major role in their decision, as this is demonstrated by the significant increase in dumped exports of UAN to the USA market during 2004 and the RIP, once the USA anti-dumping measures were repealed in 2003. Therefore, sound economic decisions made by the exporting producers will in all likelihood lead them to switch from one product to the other for maintaining or increasing their overall sales of nitrogen fertilisers and profits thereof. On this basis, the above arguments were rejected. (150) The above leads to the conclusion that should measures lapse, exports from the countries concerned would very likely occur in significant volumes and at prices that undercut the Community industrys prices in view of their distorted and artificially low cost of production. This would in all likelihood have the effect of reinforcing the price-depressive trend on the market, with an expected negative impact on the economic situation of the Community industry. This would, in particular, impede the financial recovery that was achieved in 2004 and the RIP, leading to a likely recurrence of injury. In other words, the more the market conditions turn bearish, the sharper the price depression that can be expected from the countries concerned, account being taken of their significant difference in cost of production and their spare capacity. E. COMMUNITY INTEREST 1. Introduction (151) According to Article 21 of the basic Regulation, it was examined whether maintenance of the existing anti-dumping measures would be against the interest of the Community as a whole. The determination of the Community interest was based on an appreciation of all the various interests involved. (152) It should be recalled that, in the original investigation, the adoption of measures was considered not to be against the interest of the Community. Furthermore, the fact that the present investigation is a review, thus analysing a situation in which anti-dumping measures have already been in place, allows the assessment of any undue negative impact on the parties concerned by the current anti-dumping measures. (153) On this basis, it was examined whether, despite the conclusions on the likelihood of recurrence of injurious dumping, compelling reasons existed which would lead to the conclusion that it is not in the Community interest to maintain measures in this particular case. 2. Interest of the Community industry (154) The Community industry has proven to be a structurally viable industry. This was confirmed by the positive development of its economic situation observed after the imposition of anti-dumping measures in 2000. In particular, the Community industry improved its profit situation between 2002 and the RIP. (155) It can reasonably be expected that the Community industry will continue to benefit from the measures currently imposed and further recover by reversing the downward trend in market share and improving further its profitability. Should the measures not be maintained, it is likely that increased imports at dumped prices from the countries concerned will occur thereby causing injury to the Community industry by exerting a downward pressure on the sales prices which will endanger its currently positive but still fragile financial situation. 3. Interest of importers (156) As mentioned in recital 10, only one importer indicated its willingness to be included in the sample and provided the basic information required in the sampling form. However, after sending the full questionnaire to the said importer, it informed the Commission that it did not wish to further cooperate with the investigation. (157) It is recalled that in the original investigation it was found that the impact of the imposition of measures would not be significant to the extent that the imports would continue to take place albeit at non-injurious prices and that as a rule, importers do not only deal in UAN but also, to a significant extent, in other fertilisers. Regarding the presumption that imports would continue to take place, this was only confirmed by imports from Algeria where an undertaking is in place for one exporting producer. This leads to the conclusion that some importers may indeed have had negative consequences from the imposition of measures, as indicated in recital 66 of Commission Regulation (EC) No 617/2000 (14). However, the investigation did not show that some of the importers completely ceased their activities, but rather appeared to have focused on different fertilisers as projected. Thus, the imposition of measures appears to have had an overall limited impact on the majority of importers/traders. (158) In the absence of cooperation from importers, there is no reliable information available indicating that the maintenance of the measures will have a significant negative effect on importers or traders. (159) EFIA submitted that the non-cooperation of importers should not be considered as a lack of interest from their side but as a reflection of the unfair situation given the significant resources required by an anti-dumping investigation as opposed to their limited resources due to their small or medium size enterprises. Furthermore, they claimed that the investigation ignored the cumulative effect of the numerous anti-dumping measures on fertilisers on importers, and thus failed to apply a fair analysis of the effects on importers and farmers. (160) In this respect, it should be noted that for importers dealing with a wide range of fertilisers, UAN being one of them, there is the possibility of supplying with the different nitrogen fertilisers from other sources not presently subject to anti-dumping measures. On this basis, it was concluded that any negative impact from the continuation of measures on importers would not be a compelling reason against the continuation of measures. 4. Interest of users (161) Users of UAN are farmers in the Community. Demand for nitrogen fertilisers appears to be relatively inelastic and farmers tend to buy from the cheapest source. In examining the possible effect of the imposition of measures on users, it was concluded in the original investigation that given the small incidence of the cost of UAN on the farmers, any increase in these costs was unlikely to have a significant adverse effect on them. The fact that no users or user association provided any information contradicting the above finding in the framework of the current review investigation seems to confirm that: (i) UAN represents a very small part of total production costs for these farmers; (ii) the measures currently in force did not have any substantial negative effect on their economic situation; and (iii) the continuation of measures would not adversely affect the financial interests of the users. 5. Conclusion on Community interest (162) Given the above, it is concluded that there are no compelling reasons against the maintenance of the current anti-dumping measures. F. ANTI-DUMPING MEASURES (163) All parties were informed of the essential facts and considerations on the basis of which it is intended to recommend that the existing measures be maintained. They were also granted a period to make representations subsequent to this disclosure. (164) It follows from the above that, as provided for by Article 11(2) of the basic Regulation, the anti-dumping measures applicable to imports of UAN, originating in Algeria, Belarus, Russia and Ukraine should be maintained. It is recalled that these measures consist of specific duties, with the exception of the imports of the product concerned which are manufactured and sold for export to the Community by one Algerian company from which an undertaking has been accepted, HAS ADOPTED THIS REGULATION: Article 1 1. A definitive anti-dumping duty is hereby imposed on imports of mixtures of urea and ammonium nitrate in aqueous or ammoniacal solution falling within CN code 3102 80 00 and originating in Algeria, Belarus, Russia and Ukraine. 2. The amount of duty in euro per tonne shall be as follows: Country Manufacturer Amount of duty (per tonne) TARIC additional code Algeria All companies EUR 6,88 A999 Belarus All companies EUR 17,86 Russia JSC Nevinnomyssky Azot 357030 Russian Federation Stavropol region Nevinnomyssk, Nizyaev st. 1 EUR 17,80 A176 All other companies EUR 20,11 A999 Ukraine All companies EUR 26,17 3. In cases where goods have been damaged before entry into free circulation and, therefore, the price actually paid or payable is apportioned for the determination of the customs value pursuant to Article 145 of Commission Regulation (EEC) No 2454/93 (15), the amount of anti-dumping duty, calculated on the amounts set above, shall be reduced by a percentage which corresponds to the apportioning of the price actually paid or payable. 4. Notwithstanding paragraph 1, the definitive anti-dumping duty shall not apply to imports released into free circulation in accordance with Article 2. 5. Unless otherwise specified, the provisions in force concerning customs duties shall apply. Article 2 1. Imports declared for release into free circulation under the following TARIC additional codes which are produced and directly exported (i.e. shipped and invoiced) by the company named below to a company in the Community acting as an importer shall be exempt from the anti-dumping duty imposed by Article 1 provided that such imports are imported in conformity with paragraph 2 of this Article. Country Company TARIC additional code Algeria Fertalge Industries spa 12, Chemin AEK Gadouche Hydra, Alger A107 2. The exemption shall be conditional upon presentation to the relevant Member States customs services of a valid undertaking invoice issued by the exporting company containing the essential elements listed in the Annex to this Regulation. Article 3 This Regulation shall enter into force on the day following its publication in the Official Journal of the European Union. This Regulation shall be binding in its entirety and directly applicable in all Member States. Done at Brussels, 19 December 2006. For the Council The President J. KORKEAOJA (1) OJ L 56, 6.3.1996, p. 1. Regulation as last amended by Regulation (EC) No 2117/2005 (OJ L 340, 23.12.2005, p. 17). (2) OJ L 238, 22.9.2000, p. 15. Regulation as amended by Regulation (EC) No 1675/2003 (OJ L 238, 25.9.2003, p. 4). (3) OJ C 312, 17.12.2004, p. 5. (4) OJ C 233, 22.9.2005, p. 14. (5) Regulation (EC) No 2117/2005, Article 2. (6) Given the given the negligible quantities, these prices cannot be considered reliable. (7) Source: Global fertilisers and raw materials supply and supply/demand balances: 2005-2009, A05/71b, June 2005, International Fertiliser Industry Association. (8) The figures include the first three months of 2003, i.e. the period within which the measures were still in place. (9) The RIP is considered for the sake of comparison with the overall analysis. Source: Foreign Trade Statistics, published by the US Census Bureau. (10) Urea Ammonium Nitrate Solutions from Belarus, Russia, and Ukraine Investigations Nos. 731-TA-1006, 1008 and 1009 (Final), Publication 3591, April 2003, US International Trade Commission, p. 25, V-4, V-5. (11) Urea: Regulation (EC) No 901/2001 (OJ L 127, 8.5.2001, p. 11). Ammonium nitrate: Regulation (EC) No 658/2002 (OJ L 102, 18.4.2002, p. 1), as last amended by Regulation (EC) No 945/2005 (OJ L 160, 23.6.2005, p. 1). (12) OJ C 105, 4.5.2006, p. 12. (13) OJ C 300, 30.11.2005, p. 8. (14) OJ L 75, 24.3.2000, p. 3. (15) OJ L 253, 11.10.1993, p. 40. ANNEX Elements to be indicated in the undertaking invoice referred to in Article 2(2): 1. The TARIC additional code under which the goods on the invoice may be customs cleared at Community borders (as specified in the Regulation). 2. The exact description of the goods, including: CN code, The nitrogen (N) content of the product (in percentages), quantity (to be given in tonnes). 3. The description of the terms of the sale, including: price per tonne, the applicable payment terms, the applicable delivery terms, total discounts and rebates. 4. The name of the unrelated importer to which the invoice is issued directly by the company. 5. The name of the official of the company that has issued the undertaking invoice and the following signed declaration: I, the undersigned, certify that the sale for direct export to the European Community of the goods covered by this invoice is being made within the scope and under the terms of the undertaking offered by [company], and accepted by the European Commission through Regulation (EC) No 617/2000. I declare that the information provided in this invoice is complete and correct.
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EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the “Agreement”) is effective as of November 11, 2014
(“the Effective Date”), by and between WINDSTREAM TECHNOLOGIES, INC., a Wyoming
Corporation, (the “Company”), and Wanda Ferguson (“Executive”).
WHEREAS, the Company is engaged in the business of designing, prototyping and
manufacturing affordable and scalable renewable energy technologies for the
global marketplace (the “Company Business”);
WHEREAS, the Company desires to employ Executive and Executive desires to be
employed by the Company; and
WHEREAS, the Company and Executive desire to enter into this Agreement to set
forth the rights, duties, benefits and obligations with respect to the
employment of Executive by the Company under the terms and conditions herein
provided.
NOW, THEREFORE, in consideration of Executive’s employment with the Company, and
the mutual and respective covenants and agreements of the parties herein
contained, and other good and valuable consideration present but not
specifically set forth, the parties hereto agree as follows:
1. Employment. The Company hereby agrees to employ Executive as Secretary and
Executive hereby agrees to be employed by the Company, on the terms and
conditions set forth herein. This Agreement and Executive’s employment hereunder
shall commence on the date hereof (the “Start Date”), and shall continue for a
period of two years, unless sooner terminated in accordance with the provisions
of Section 6 hereof (the “Term”). The Term will thereafter automatically extend
for successive one-year periods, but Executive’s employment may at any time be
terminated in accordance with the provisions of Section 6 hereof.
2. Duties and Responsibilities. Executive shall serve as Secretary for the
Company and shall report to the Board of Directors (the “Board”) and its
designees. Executive shall have the duties and responsibilities that are
commensurate with that position, as well as such other duties as may be assigned
to Executive by the Board from time to time. Executive shall devote all of her
working time and best efforts to the business and affairs of the Company except
for such time as shall reasonably be required to serve in connection with civic
or charitable activities, or manage Executive’s financial matters, provided that
such activities, in the aggregate, do not interfere with Executive’s ability to
perform the duties and responsibilities of her employment hereunder. Executive
shall follow the direction of the Board and their designees, and shall perform
all duties and responsibilities of the position that she holds, as those duties
and responsibilities may change from time to time. Executive shall comply with
the Company’s standards, policies and procedures in effect on the date of this
Agreement and as they may change from time to time.
Executive: _____
Company: _____
1
3. Compensation and Related Matters.
(a) Base Salary. Executive shall receive an initial annual base salary of one
hundred twenty thousand dollars ($120,000) less required and authorized
withholding and deductions. Executive’s salary shall increase by ten percent
(10%) each year, subject to board approval, or as otherwise provided by the
Company’s Compensation Committee of the Board of Directors, and paid in
accordance with the Company’s regular payroll schedule as it applies to salaried
employees (“Base Salary”). Notwithstanding the preceding sentence, in no event
shall Executive’s Base Salary be reduced by the Company without Executive’s
consent.
(b) Stock. Executive shall be eligible to participate in the Company’s common
stock incentive plan as in effect from time to time. The Compensation Committee
of the Board of Directors has granted Executive, effective as of the Effective
Date, One Million (1,000,000) stock options at purchase price of $.15 per share
which shall vest immediately upon the Effective Date. The Company may grant
Executive additional stock options, restricted stock units or other awards under
the Company’s common stock incentive plan based on individual and Company
performance criteria to be established by the Board.
(c) Benefits. Executive shall be entitled to all rights and benefits for which
she is eligible under the terms and conditions of the Company’s standard
benefits and compensation practices that may be in effect from time to time and
provided by the Company to its employees generally. In addition to, and not in
limitation of, the foregoing, during the Term, Executive shall be eligible to
accrue up to four weeks (20 business days) of paid time off (PTO) per
anniversary year exclusive of any business day with respect to which the Company
is closed for business due to any federal, state or local holiday or any day off
generally granted by the Company to its employees, subject to the Company’s
then-current paid time off policy (which shall not have the effect of reducing
said four weeks (20 business days) of paid vacation). In addition to, and not in
limitation of the foregoing, during the Term, Executive shall receive any
additional benefits generally provided by the Company to executive employees of
the Company, including group health insurance for Executive and dependents, all
in accordance with applicable plan documents.
(d) Expense Reimbursement. The Company will reimburse Executive for reasonable
business expenses in accordance with the Company’s standard expense account and
reimbursement policies.
4. Representations and Warranties of Executive. In order to induce the Company
to employ Executive, Executive hereby represents and warrants to the Company as
follows:
(a) Binding Agreement. This Agreement has been duly executed and delivered by
Executive and constitutes a legal, valid and binding obligation of Executive and
is enforceable against Executive in accordance with its terms.
(b) No Violations of Law. The execution and delivery of this Agreement and the
other agreements contemplated hereby by Executive do not, and the performance by
Executive of her obligations under this Agreement and the other agreements
contemplated hereby will not, violate any term or provision of any law, or any
writ, judgment, decree, injunction, or similar order applicable to Executive.
Executive: _____
Company: _____
2
(c) Litigation. Executive is not involved in any proceeding, claim, lawsuit, or
investigation alleging wrongdoing by Executive before any court or public or
private arbitration board or panel or governmental department, commission,
board, bureau, agency or instrumentality.
(d) No Conflicting Obligations. Executive is not under, or bound to be under in
the future, any obligation to any person or entity that is or would be
inconsistent or in conflict with this Agreement or would prevent, limit, or
impair in any way the performance by her of her obligations hereunder, including
but not limited to any duties owed to any former employers not to compete or use
or disclose confidential information. Executive represents and agrees that she
will not disclose to the Company or use on behalf of the Company any
confidential information or trade secrets belonging to a third party, including
any former employer. Executive further represents and agrees that she has
returned, or will return before her last day of employment with her current
employer, all property belonging to Executive’s current and previous employers,
including but not limited to any and all confidential information.
5. Restrictive Covenants.
(a) Confidentiality Critical. The parties agree that the business in which the
Company is engaged is highly sales-oriented and the goodwill established between
Executive and the Company’s customers and potential customers is a valuable and
legitimate business interest worthy of protection under this Agreement.
Executive acknowledges and agrees that developing and maintaining business
relationships is an important and essential business interest of the Company.
Executive further recognizes that, by virtue of her employment by the Company,
she will be granted otherwise prohibited access to confidential and proprietary
data of the Company which is not known to its competitors and which has
independent economic value to the Company and that she will gain an intimate
knowledge of the Company’s business and its policies, customers, employees and
trade secrets, and of other confidential, proprietary, privileged, or secret
information of the Company and its customers (“Customers”) (collectively, all
such nonpublic information is referred to as “Confidential Information”).
This Confidential Information includes, but is not limited to data relating to
the Company’s marketing and servicing programs, procedures and techniques;
business, management and personnel strategies; the criteria and formulae used by
the Company in pricing its products, loss control and information management
services; the Company’s products and services; the Company’s computer system and
software; lists of prospects; customer lists; the identity, authority and
responsibilities of key contacts at accounts of Customers; and the composition
and organization of Customers’ business. Executive recognizes and admits that
this Confidential Information constitutes valuable property of the Company,
developed over a long period of time and at substantial expense, and worthy of
protection. Executive acknowledges and agrees that only through her employment
with the Company could she have the opportunity to learn this Confidential
Information.
Executive: _____
Company: _____
3
(b) Confidential Information. Executive shall not at any time (for any reason),
directly or indirectly, for herself or on behalf of any other person or entity,
(A) disclose to any person or entity (except to employees or other
representatives of the Company who need to know such Confidential Information to
the extent reasonably necessary for Executive to perform her duties under this
Agreement or such employees or representatives to perform their duties on behalf
of the Company, and except as required by law) any Confidential Information,
including, without limitation, business or trade secrets of, or products or
methods or techniques used by, the Company, or any Confidential Information
whatsoever concerning the Customers, (B) use, directly or indirectly, for her
own benefit or for the benefit of another (other than a Customer) any of such
Confidential Information, or (C) assist any other person or entity in connection
with any action described in either of the foregoing clauses (A) and (B).
(c) Noninterference with Employees. Executive further agrees that the Company
has expended considerable time, energy and resources into training its other
employees (“Co-Workers”). As a result, during her employment with the Company
and for a period of eighteen (18) months thereafter, Executive shall not, for
any reason, directly or indirectly, for herself or on behalf of any other person
or entity, (A) induce or attempt to induce any Co-Worker to terminate employment
with the Company, (B) interfere with or disrupt the Company’s relationship with
any of the Co-Workers, (C) solicit, entice, hire, cause to hire, or take away
any person employed by the Company at that time or during the eighteen (18)
month period preceding Executive’s last day of employment with the Company, or
(D) assist any other person or entity in connection with any action described in
any of the foregoing clauses (A) through (C).
(d) Non-competition. Executive further agrees with the Company to the following
provisions, all of which Executive acknowledges and agrees are necessary to
protect the Company’s legitimate business interests. Executive covenants and
agrees with the Company that:
(i) Unless otherwise agreed between the parties, Executive shall not, during her
employment with the Company and for a period of eighteen (18) months thereafter,
either directly or indirectly, engage in, render service or other assistance to,
or sell products or services, or provide resources of any kind, whether as an
owner, partner, shareholder, officer, director, employee, consultant or in any
other capacity, whether or not for consideration, to any person, corporation, or
any entity, whatsoever, that owns, operates or conducts a business that
competes, in any way, with the Company Business (as defined at the start of this
Agreement), other than the ownership of 5% or less of the shares of a public
company where Executive is not active in the day-to-day management of such
company. With respect to the post employment application of this Section
5(d)(i), the restrictions shall extend only to those specific countries or
provinces where the Company conducts business on the day that Executive’s
employment with the Company terminates.
(ii) Executive shall not, during her employment with the Company and for a
period of eighteen (18) months thereafter, either directly or indirectly, (A)
solicit, call on or contact any Customer of the Company with whom Executive has
had material contact during her employment with the Company for the purpose or
with the effect of offering any products or services of any kind offered by the
Company at that time or during her employment with the Company, (B) request or
advise any present or future vendors or suppliers to the Company to cancel any
contracts, or curtail their dealings, with the Company, or (C) assist any other
person or entity in connection with any action described in any of the foregoing
clauses (A) through (B).
Executive: _____
Company: _____
4
(iii) During her employment with the Company, Executive shall not own, or permit
ownership by Executive’s spouse or any minor children under the parental control
of Executive, directly or indirectly, an amount in excess of five percent (5%)
of the outstanding shares of stock of a corporation, or five percent (5%) of any
business venture of any kind, which operates or conducts a business that
competes, in any way, with the Company.
(e) Non-disparagement. At any time during or after Executive’s employment with
the Company, Executive shall not disparage the Company or any shareholders,
directors, officers, employees, or agents of the Company. During and after
Executive’s employment with the Company, neither the Company nor its directors
or officers shall disparage Executive to third parties.
(f) Understandings.
(i) The provisions of this Section 5 shall be construed as an agreement
independent of any other claim. The existence of any claim or cause of action of
Executive against the Company, whether predicated on Executive’s employment or
otherwise, shall not constitute a defense to the enforcement by the Company of
the terms of Section 5 of this Agreement. Executive waives any right to a jury
trial in any litigation relating to or arising from this Section 5.
(ii) Executive acknowledges and agrees that the covenants and agreements
contained herein are necessary for the protection of the Company’s legitimate
business interests and are reasonable in scope and content. Executive agrees
that the restrictions contained in this Section 5 are reasonable and will not
unduly restrict her in securing other employment or income in the event her
employment with the Company ends. Executive acknowledges and agrees that she
executed this Agreement on or before her first day of employment with the
Company.
(g) Injunctive Relief. Executive acknowledges and agrees that any breach by her
of any of the covenants or agreements contained in this Section 5 would give
rise to irreparable injury and would not be adequately compensable in damages.
Accordingly, Executive agrees that the Company may seek and obtain injunctive
relief against the breach or threatened breach of any of the provisions of this
Agreement in addition to any other legal or equitable remedies available.
Executive: _____
Company: _____
5
(h) Reformation and Survival. The Company and Executive agree and stipulate that
the agreements and covenants contained in this Agreement and specifically of
this Section 5 are fair and reasonable in light of all of the facts and
circumstances of the relationship between them. The Company and Executive agree
and stipulate that Executive has hereby agreed to be bound to the obligations,
restrictions and covenants of this Section 5 as a condition to her employment
and in consideration of her compensation, stock option grant, restricted stock
unit grant, severance terms, and all other terms and provisions of this
Agreement. The Company and Executive acknowledge their awareness, however, that
in certain circumstances courts have refused to enforce certain agreements not
to compete. The Company and Executive agree that, if any term, clause, subpart,
or provision of this Agreement is for any reason adjudged by a Court of
competent jurisdiction to be invalid, unreasonable, unenforceable or void, the
same will be treated as severable, and shall be modified to the extent necessary
to be legally enforceable to the fullest extent permitted by applicable law, and
that such modification will not impair or invalidate any of the other provisions
of this Agreement, all of which will be performed in accordance with their
respective terms. Thus, in furtherance of, and not in derogation of, the
provisions of this Section 5, the Company and Executive agree that in such
event, this Section 5 shall be deemed to be modified or reformed to restrict
Executive’s conduct to the maximum extent (in terms of time, geography, and
business scope) that the court shall determine to be enforceable. The provisions
of this Section 5 shall survive the termination of this Agreement and
Executive’s resignation or termination of employment, regardless of the reason
and whether voluntary or involuntary.
6. Termination.
(a) Termination By The Company With Cause. The Company has the right, in its
reasonable determination at any time during the Term, to terminate Executive’s
employment with the Company for Cause (as defined below) by giving written
notice to Executive as described in this Section 6(a). Prior to the
effectiveness of termination for Cause under clause (i), (ii), (iii) or (iv) in
the next-following paragraph, Executive shall be given thirty (30) calendar
days’ prior written notice from the Company, specifically identifying the
reasons which are alleged to constitute Cause for any termination pursuant to
the aforementioned clauses, and an opportunity to cure in the event Executive
disputes such allegations; provided, however, that the Company shall have no
obligation to continue to employ Executive following such thirty (30) calendar
day notice period unless Executive has cured the condition giving rise to the
Cause. The Company’s termination of Executive’s employment for Cause under
clause (v) or (vi) of the next-following paragraph shall be effective
immediately upon the Company’s written notice to Executive. If the Company
terminates Executive’s employment for Cause, the Company’s obligation to
Executive shall be limited solely to the payment of unpaid Base Salary accrued
up to the effective date of termination plus any accrued but unpaid benefits to
the effective date of termination, and any unpaid bonus earned in accordance
with the then applicable bonus plan or program to the effective date of
termination.
As used in this Agreement, the term “Cause” shall mean and include (i)
Executive’s abuse of alcohol that materially affects Executive’s performance of
Executive’s duties under this Agreement, or use of any controlled substance;
(ii) a willful act of fraud, dishonesty or breach of fiduciary duty on the part
of Executive with respect to the business or affairs of the Company; (iii)
material failure by Executive to comply with applicable laws and regulations or
professional standards relating to the business of the Company; (iv) material
failure by Executive to satisfactorily perform her duties hereunder, a material
breach by Executive of this Agreement, or Executive engaging in conduct that
materially conflicts with the best interests of the Company or that may
materially harm the Company’s reputation; (v) Executive being subject to an
inquiry or investigation by a governmental authority or self-regulatory
organization such that the existence of such inquiry or investigation is
reasonably likely to result in damage to the Company’s business interests,
licenses, reputation or prospects; or (vi) Executive’s being convicted of a
felony or a misdemeanor involving moral turpitude.
Executive: _____
Company: _____
6
(b) Termination By The Company Without Cause. The Company shall have the right,
at any time during the Term, to terminate Executive’s employment with the
Company without Cause by giving written notice to Executive, which termination
shall be effective thirty (30) calendar days from the date of such written
notice. The Company may provide thirty (30) days pay in lieu of notice. If the
Company terminates Executive’s employment without Cause, the Company’s
obligation to Executive shall be limited solely to (i) unpaid Base Salary plus
any accrued but unpaid benefits to the effective date of termination, any unpaid
bonus earned in accordance with the then applicable bonus plan or program to the
effective date of termination; (ii) if there is no unpaid bonus earned for the
year of termination, an amount equal to the product of 100% of Executive’s Base
Salary multiplied by a fraction, the numerator of which is the number of days he
is employed by the Company during the year in which the termination occurs and
the denominator of which is 365 and, if the date of termination occurs prior to
the date on which the annual bonus, if any, for the immediately preceding year
would otherwise be paid, an amount equal to the annual bonus that would have
been paid to Executive for such immediately preceding year, based on the actual
achievement of applicable performance goals and without regard to whether
Executive is employed on the date the bonus otherwise would have been paid;
(iii) severance in an amount equal to Executive’s then-current Base Salary for a
period of eighteen (18) months; and (iv) if Executive is eligible for and timely
elects COBRA coverage for health insurance coverage, payment of Executive’s
COBRA premiums for the health insurance coverage for herself and her eligible
dependents for a period of up to eighteen (18) months, payments to be made on a
monthly basis when the premiums are due, and in the event of the death of
Executive before the expiration of such eighteen (18)-month period, the Company
shall, for the remainder of such period, continue to pay the COBRA premiums for
the Executive’s dependents (including her spouse, if any) who were receiving
COBRA coverage at the time of her death. Executive’s rights with regard to
equity incentive awards, including stock options and restricted stock units,
shall be governed by separate applicable agreements entered into between
Executive and the Company; provided, however, any stock options awarded to
Executive under this Agreement shall immediately vest upon termination of
Executive by the Company without Cause. As a condition to her receipt of the
post-employment payments and benefits under clauses (ii), (iii) and (iv) of the
third sentence of this Section 6(b), Executive must be in compliance with
Section 5 of this Agreement, and must execute, return, not rescind and comply
with a general release of claims agreement in favor of the Company and related
entities and individuals, within the timeframe and in a form to be prescribed by
the Company. The amount described in clause (ii) of the third sentence of this
paragraph shall be paid on the ninetieth (90th) calendar day after the date of
Executive’s termination of employment, and the severance described in clause
(iii) of the third sentence of this paragraph shall be paid in equal
installments according to the normal payroll schedule, the first payment to
Executive to be made on the next scheduled payroll date that occurs on or after
the ninetieth (90th) day after the date of Executive’s termination of
employment, provided that, in the case of amounts described in clauses (ii) and
(iii) of the third sentence of this Section 6(b), the Company has received the
signed general release of claims agreement and Executive has not rescinded such
agreement within the rescission period set forth in such agreement. Executive
shall have no duty to mitigate damages under this Section 6(b) during the
applicable severance period and, in the event Executive shall subsequently
receive income from providing Executive’s services to any person or entity,
including self employment income, or otherwise, then no such income shall in any
manner offset or otherwise reduce the payment obligations of the Company
hereunder.
Executive: _____
Company: _____
7
Notwithstanding anything herein to the contrary, this Section 6(b) shall not
apply if Executive’s employment is terminated by the Company or a succeeding
entity without Cause upon or within one year of a Change of Control at any time
during the Term as described in Section 7 hereof. In such case, Section 7 of
this Agreement shall control.
(c) Termination By Executive for Good Reason. Executive has the right, in her
reasonable determination at any time during the Term, to terminate her
employment with the Company for Good Reason (as defined in this Section 6(c)
below) by giving written notice to the Company as described in this Section 6(c)
below. Prior to the effectiveness of termination for Good Reason, within thirty
(30) calendar days following the existence of a condition constituting Good
Reason, Executive shall provide written notice to the Company specifically
identifying the reason or reasons which are alleged to constitute Good Reason,
and an opportunity to cure within a period of not less than thirty (30) days;
provided, however, that Executive shall have no obligation to continue her
employment with the Company following such thirty (30) calendar day notice
period unless the Company cures the event(s) giving rise to Executive’s Good
Reason notice. As used in this Section 6(c), the term “Good Reason” shall mean
(i) a material diminution in Executive’s authority, duties or responsibilities;
(ii) requiring Executive to move her place of employment more than 75 miles from
her place of employment prior to such move; or (iii) a material breach by the
Company of this Agreement; provided that in any such case Executive has not
consented thereto. In addition to the foregoing requirements, in no event shall
an Executive’s termination of her employment be considered for Good Reason
unless such termination occurs within two (2) years following the initial
existence of one of the conditions specified in clauses (i), (ii) and (iii) of
the preceding sentence.
If Executive terminates her employment for Good Reason, the Company’s obligation
to Executive shall be limited solely to (i) unpaid Base Salary plus any accrued
but unpaid benefits to the effective date of termination, any unpaid bonus
Executive and the Company. As a condition to her receipt of the post-employment
payments and benefits under clauses (ii), (iii) and (iv) of the first sentence
of this Section 6(c), Executive must be in compliance with Section 5 of this
Agreement, and must execute, return, not rescind and comply with a general
release of claims agreement in favor of the Company and related entities and
individuals, within the timeframe and in a form to be prescribed by the Company.
The amount described in clause (ii) of the first sentence of this paragraph
shall be paid on the ninetieth (90th) calendar day after the date of Executive’s
termination of employment, and the severance described in clause (iii) of the
first sentence of this paragraph shall be paid in equal installments according
to the normal payroll schedule, the first payment to Executive to be made on the
next scheduled payroll date that occurs on or after the ninetieth (90th) day
after the date of Executive’s termination of employment, provided that, in the
case of amounts described in clauses (ii) and (iii) of the first sentence of
this Section 6(c), the Company has received the signed general release of claims
agreement and Executive has not rescinded such agreement within the rescission
period set forth in such agreement. Executive shall have no duty to mitigate
damages under this Section 6(c) during the applicable severance period and, in
the event Executive shall subsequently receive income from providing Executive’s
services to any person or entity, including self employment income, or
otherwise, then no such income shall in any manner offset or otherwise reduce
the payment obligations of the Company hereunder.
Executive: _____
Company: _____
8
Notwithstanding anything herein to the contrary, this Section 6(c) shall not
apply if Executive terminates her employment with the Company or a succeeding
entity for Good Reason upon or within one year of a Change of Control at any
time during the Term as described in Section 7 hereof. In such case, Section 7
Executive has the right, at any time during the Term, to terminate her
employment with the Company without Good Reason (as defined above) by giving
written notice to the Company, which termination shall be effective sixty (60)
calendar days from the date of such written notice. If Executive terminates her
employment without Good Reason, the Company’s obligation to Executive shall be
limited solely to the payment of unpaid Base Salary accrued up to the effective
date of termination plus any accrued but unpaid bonus and benefits.
(d) Termination Upon Disability. The Company shall have the right, at any time
during the Term, to terminate Executive’s employment if, during the term hereof,
Executive becomes physically or mentally disabled, whether totally or partially,
as evidenced by the written statement of a competent physician licensed to
practice medicine in the United States who is mutually acceptable to the Company
and Executive, so that Executive is unable to perform the essential functions of
her job duties hereunder, with or without reasonable accommodation, for (i) a
period of three (3) consecutive months; or (ii) for shorter periods aggregating
ninety (90) calendar days during any twelve-month period. If the Company
terminates Executive’s employment under this Section 6(d), the Company’s
obligation to Executive shall be limited solely to the payment of unpaid Base
Salary to the effective date of termination, plus any accrued but unpaid
benefits to the effective date of termination, any unpaid bonus earned in
accordance with the then applicable bonus plan or program to the effective date
of termination and, if there is no unpaid, earned bonus for the year in which
the termination occurs, an amount equal to the product of 100% of Executive’s
Base Salary multiplied by a fraction, the numerator of which is the number of
days he is employed by the Company during the year in which the termination
occurs and the denominator of which is 365.
Executive: _____
Company: _____
9
(e) Termination upon Death. If Executive dies during the Term, this Agreement
shall terminate, except that Executive’s surviving spouse (or if there is no
surviving spouse, her estate) shall be entitled to receive the Base Salary and
other accrued benefits earned up to the date of Executive’s death.
7. Change of Control.
(a) Anything in this Agreement to the contrary notwithstanding, if, upon or
within one year of a Change of Control (as defined below) occurring at any time
during the Term, the Company or a succeeding entity terminates Executive without
Cause (as defined above) or Executive terminates her employment for Good Reason
(as defined in Section 6(c) above), the Company or the succeeding entity’s
obligation to Executive shall be (i) unpaid Base Salary, bonus and benefits
accrued up to the effective date of termination, (ii) if there is no unpaid
bonus earned for the year of termination, an amount equal to the product of 100%
of Executive’s Base Salary multiplied by a fraction, the numerator of which is
the number of days he is employed by the Company during the year in which the
termination occurs and the denominator of which is 365 and, if the date of
termination occurs prior to the date on which the annual bonus, if any, for the
immediately preceding year would otherwise be paid, an amount equal to the
annual bonus that would have been paid to Executive for such immediately
preceding year, based on the actual achievement of applicable performance goals
and without regard to whether Executive is employed on the date the bonus
otherwise would have been paid, (iii) a lump sum payment equal to Executive’s
then-current Base Salary for a period of thirty-six (36) months, and (iv) if
Executive is eligible for and timely elects COBRA coverage for health insurance
coverage, payment of Executive’s COBRA premiums for health insurance coverage
for himself and her eligible dependents for a period of up to eighteen (18)
months, payments to be made on a monthly basis when the premiums are due, and in
the event of the death of Executive before the expiration of such eighteen
(18)-month period, the Company shall, for the remainder of such period, continue
to pay the COBRA premiums for the Executive’s dependents (including her spouse,
if any) who were receiving COBRA coverage at the time of her death. In the event
of a without Cause Change of Control termination or a without Good Reason Change
of Control termination, each as described herein, the payments in this Section
7(a) shall be in lieu of, and not in addition to, any severance pay or benefits
set forth in Sections 6(b) or 6(c), whichever may apply. Notwithstanding
anything to the contrary contained herein or in any award agreement between
Executive and the Company, in the event of a Change of Control (as defined
below), (i) all unvested stock awards held by Executive, including stock options
described in Section 3(b) and any other subsequent awards, shall become fully
vested upon the Change of Control and, if applicable, immediately exercisable;
(ii) each such award, and each already vested award described in Section 3(b),
which is a stock option shall continue to be exercisable for the remainder of
its term; and (iii) with respect to any award that is subject to the attainment
of performance objectives or specified performance criteria, such performance
objectives and criteria shall be deemed satisfied at the target level and any
performance period shall be deemed to end as of the date of the Change of
Control. As a condition to her receipt of the post-employment payments and
benefits under this Section 7(a), other than the vesting of awards described in
the preceding sentence, Executive must be in compliance with Section 5 of this
Agreement, and must execute, return, not rescind and comply with a release of
claims agreement in favor of the Company, related entities and individuals and
the succeeding entity, within the timeframe and in a form to be prescribed by
the Company or a succeeding entity. The severance amount described in clauses
(ii) and (iii) of the first sentence of this paragraph shall be paid in a lump
sum on the ninetieth (90th) day after the date of Executive’s termination of
employment (but in any event not later than March 15 of the year following the
year in which Executive’s employment terminates), provided that the Company has
received the signed general release of claims agreement and Executive has not
rescinded such agreement within the rescission period set forth in such
agreement.
Executive: _____
Company: _____
10
(b) Change of Control Defined. For purposes of this Agreement, a “Change of
Control” shall mean the occurrence of a “change in the ownership,” a “change in
the effective control” or a “change in the ownership of a substantial portion of
the assets” of the Company during the Term, as determined in accordance with
this Section 7(b). In determining whether an event shall be considered a “change
in the ownership,” a “change in the effective control” or a “change in the
ownership of a substantial portion of the assets” of the Company, the following
provisions shall apply:
(i) A “change in the ownership” of the Company shall occur on the date on which
any one person, or more than one person acting as a group, acquires ownership of
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, as determined in accordance with Treasury
Regulation § 1.409A-3(i)(5)(v). If a person or group is considered either to own
of the Company, or to have effective control of the Company within the meaning
of clause (ii) of this Section 7(b), and such person or group acquires
additional stock of the Company, the acquisition of additional stock by such
person or group shall not be considered to cause a “change in the ownership” of
the Company.
(ii) A “change in the effective control” of the Company shall occur on either of
the following dates:
(A) The date on which any one person, or more than one person acting as a group,
acquires (or has acquired during the 12-month period ending on the date of the
most recent acquisition by such person or persons) ownership of stock of the
Company possessing 40% or more of the total voting power of the stock of the
Company, as determined in accordance with Treasury Regulation §
1.409A-3(i)(5)(vi). If a person or group is considered to possess 40% or more of
the total voting power of the stock of the Company, and such person or group
acquires additional stock of the Company, the acquisition of additional stock by
such person or group shall not be considered to cause a “change in the effective
control” of the Company; or
Executive: _____
Company: _____
11
(B) The date on which a majority of the members of the Board 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 before the date of the appointment or
election, as determined in accordance with Treasury Regulation §
(iii) A “change in the ownership of a substantial portion of the assets” of the
Company shall occur on the date on which any one person, or more than one person
acting as a group, acquires (or has acquired during the 12-month period ending
on the date of the most recent acquisition by such person or persons) 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, as determined in accordance
with Treasury Regulation § 1.409A-3(i)(5)(vii). A transfer of assets shall not
be treated as a “change in the ownership of a substantial portion of the assets”
when such transfer is made to an entity that is controlled by the shareholders
of the Company, as determined in accordance with Treasury Regulation §
1.409A-3(i)(5)(vii)(B).
In all cases, the determination of whether a Change of Control has occurred
shall be made in accordance with Section 409A of the Internal Revenue Code of
1986, as amended (the “Code”), and the regulations, notices and other guidance
of general applicability issued thereunder.
8. Code Section 409A. Notwithstanding anything herein to the contrary, if any
payments to be made, or benefits to be provided, to Executive hereunder are
subject to the requirements of Code Section 409A and the Company determines that
Executive is a “specified employee” as defined in Code Section 409A as of the
date of the termination, then, to the extent such payments or benefits do not
satisfy the separation pay exemption described in Treasury Regulation §
1.409A-1(b)(9)(iii) or any other exemption available under Section 409A of the
Code (the “Non-Exempt Payments”), the amount of such Non-Exempt Payments shall
not be paid or commence earlier than the date that is six months after the
termination. Any Non-Exempt Payment not made during the six-month period shall
be paid in a lump sum payment on the first day of the seventh month following
termination. For purposes of Code Section 409A, any reference to Executive’s
termination of employment in this Agreement shall be deemed to be a reference to
Executive’s “separation from service” (within the meaning of Treasury Regulation
§ 1.409-1(h), applying the default terms thereof), and any installment payments
provided to Executive pursuant to this Agreement shall be treated as a series of
separate payments.
Executive: _____
Company: _____
12
9. Successors; Assignment, Etc.; Third Party Beneficiaries.
(a) Executive consents to and the Company shall have the right to assign this
Agreement to its successors or assigns. All covenants or agreements hereunder
shall inure to the benefit of and be enforceable by or against its successors or
assigns. The terms “successors” and “assigns” shall include, but not be limited
to, any succeeding entity upon a Change of Control.
(b) Neither this Agreement nor any of the rights or obligations of Executive
under this Agreement may be assigned or delegated except as provided in the last
sentence of this Section 9(b). This Agreement and all rights of Executive
hereunder shall inure to the benefit of and be enforceable by, and shall be
binding upon, Executive’s personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees, and legatees. If
Executive should die while any amounts would still be payable to her hereunder
had she continued to live, then all such amounts (unless otherwise provided
herein) shall be paid in accordance with the terms of this Agreement to her
surviving spouse, or if there is no surviving spouse, to Executive’s estate.
10. Notice. For purposes of this Agreement, all notices and other communications
provided for in this Agreement shall be in writing and shall be deemed to have
been duly given when delivered in person or when mailed by United States
registered or certified mail, return receipt requested, first-class postage
If to Executive: If to the Company:
Ms. Wanda Ferguson
1140 East County Road, 800 North
North Vernon, IN 47265
WindStream Technologies, Inc.
819 Buckeye Street
Attn: Corporate Secretary
or to such other address as any party may have furnished to the other in writing
in accordance with this Section 10, except that notices of any change of address
shall be effective only upon actual receipt.
11. Indemnification. The Company shall indemnify the Executive, to the maximum
extent permitted by applicable law and by its certificate of incorporation,
against all costs, charges and expenses incurred or sustained by the Executive
in connection with any action, suit or proceeding to which he may be made a
party by reason of being an officer, director or employee of the Company or of
any subsidiary or affiliate of the Company or any other corporation for which
the Executive serves [in good faith] as an officer, director, or employee at the
Company’s request. The Executive shall be entitled to the full protection of any
insurance policies, which the Company may elect to maintain generally for the
benefit of its officers. The Executive agrees promptly to notify the Company of
any actual or threatened claim arising out of or as a result of the Executive’s
employment with the Company. The Company agrees to maintain Directors and
Officers Liability Insurance for the benefit of Executive having coverage and
policy limits no less favorable to directors and officers than those in effect
at the Effective Date.
Executive: _____
Company: _____
13
12. Miscellaneous. No provision of this Agreement may be modified, waived, or
discharged unless such waiver, modification, or discharge is agreed to in
writing signed by Executive and such officers as may be specifically designated
by the Board. No waiver by either party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of any similar or dissimilar condition or provision at
the same or any other time. No agreements or representations (whether oral or
otherwise, express or implied) with respect to the subject matter of this
Agreement have been made by either party which are not set forth expressly in
this Agreement or which are not specifically referred to in this Agreement. If
any term, clause, subpart, or provision of this Agreement is for any reason
adjudged to be invalid, unreasonable, unenforceable or void, the same will be
treated as severable, shall be modified to the extent necessary to be legally
enforceable to the fullest extent permitted by applicable law, and will not
impair or invalidate any of the other provisions of this Agreement, all of which
will be performed in accordance with their respective terms. The validity,
interpretation, construction, and performance of this Agreement shall be
governed by the laws of the State of Indiana.
13. Validity. If any provision of this Agreement is held to be illegal, invalid,
or unenforceable under any present or future law or court decision, and if the
rights or obligations of the Company and Executive will not be materially and
adversely affected thereby, (a) such provision shall be fully severable from
this Agreement, (b) this Agreement shall be construed and enforced as if such
illegal, invalid, or unenforceable provision had never comprised a part hereof,
(c) the remaining provisions of this Agreement shall remain in full force and
provision or by its severance herefrom, and (d) in lieu of such illegal,
invalid, or unenforceable provision, there shall be added automatically as a
part of this Agreement a legal, valid, and enforceable provision as similar to
the terms and intent of such illegal, invalid, or unenforceable provision as may
be possible.
14. Counterparts. This Agreement may be executed in several counterparts, each
of which shall be deemed to be an original but all of which together shall
15. Litigation. The parties agree that the exclusive venue for any litigation
commenced by the Company or Executive relating to this Agreement shall be the
state courts located in Jennings County, Indiana or the United States District
Court, Southern District of Indiana. The parties waive any rights to object to
venue as set forth herein, including any argument of inconvenience for any
reason.
16. Entire Agreement. This Agreement constitutes (i) the binding agreement
between the parties and (ii) represents the entire agreement between the parties
and supersedes all prior agreements relating to the subject matter contained
herein. All prior negotiations concerning Executive’s employment with the
Company have been merged into this Agreement and are reflected in the terms
herein.
Executive: _____
Company: _____
14
IN WITNESS WHEREOF, the parties have duly executed and delivered this Agreement
as of The Effective Date.
EXECUTIVE: By: Name: Wanda Ferguson COMPANY:
WINDSTREAM TECHNOLOGIES, INC. By: Name: Daniel Bates Title: Chief
Executive Officer
Executive: _____
Company: _____
15
|
Exhibit 10.9
SUNOCO, INC.
SPECIAL EXECUTIVE SEVERANCE PLAN
(Amended and Restated as of December 1, 2010 )
ARTICLE I
DEFINITIONS
Section 1.1 “Accounting Firm” shall have the meaning provided herein at
Section 4.7(b).
Section 1.2 “Annual Compensation” shall mean a Participant’s annual base salary
as in effect immediately prior to the Change in Control, or, if greater,
immediately prior to the Employment Termination Date, plus the greater of
(x) the Participant’s annual guideline (target) bonus as in effect immediately
before the Change in Control or, if higher, the Employment Termination Date, or
(y) the average annual bonus awarded to the Participant with respect to the
three years ending before the Change in Control or, if higher, with respect to
the three years ending before the Employment Termination Date.
Section 1.3 “Affiliate” shall mean any entity that directly, or indirectly
through one or more intermediaries, controls, is controlled by, or is under
common control with Sunoco, Inc.
Section 1.4 “Benefit” or “Benefits” shall mean any or all of the benefits that a
Participant is entitled to receive pursuant to Article IV of the Plan.
Section 1.5 “Benefit Extension Period” shall mean:
(a) for a Participant in Grade 18 or above, three years; and
(b) for each other Participant, two years.
Section 1.6 “Board of Directors” shall mean the Board of Directors of Sunoco,
Inc.
Section 1.7 “Business Combination” shall have the meaning provided herein at
Section 1.8(c).
Section 1.8 “Change in Control” shall mean the occurrence of any of the
following events:
of 20% or more of either (1) the then-outstanding shares of common stock of
Sunoco, Inc. (the “Outstanding Company Common Stock”) or (2) the combined voting
power of the then-outstanding voting securities of Sunoco, Inc. entitled to vote
generally in the election of directors (the “Outstanding Company Voting
Securities”); provided, however, that, for purposes of this Section 1.8(a), the
following acquisitions shall not constitute a Change in Control: (A) any
acquisition directly from Sunoco, Inc., (B) any acquisition by Sunoco, Inc.,
(C) any acquisition by any employee benefit plan (or related trust) sponsored or
maintained by Sunoco, Inc. or any company controlled by, controlling or under
common control with Sunoco, Inc., or (D) any acquisition by any entity pursuant
to a transaction that complies with Sections 1.8(c)(1), (c)(2) and (c)(3) of
this definition;
(b) Individuals who, as of September 6, 2001, constitute the Board of Directors
of the Board of Directors; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or nomination for
election by the shareholders of Sunoco, Inc., was approved by a vote of at least
a majority of the directors then comprising the Incumbent Board shall be
Board of Directors;
consolidation or similar corporate transaction involving Sunoco, Inc. or any of
its subsidiaries, a sale or other disposition of all or substantially all of the
assets of Sunoco, Inc., or the acquisition of assets or stock of another entity
by Sunoco, Inc. or any of its subsidiaries (each, a “Business Combination”), in
each case unless, following such Business Combination, (1) all or substantially
all of the individuals and entities that were the beneficial owners of the
Outstanding Company Common Stock and the Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 60% of the then-outstanding shares of common stock and the
combined voting power of the then-outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
corporation that, as a result of such transaction, owns Sunoco, Inc. or all or
substantially all of the assets of Sunoco, Inc., either directly or through one
Stock and the Outstanding Company Voting Securities, as the case may be, (2) no
Person (excluding any corporation resulting from such Business Combination or
any employee benefit plan (or related trust) of Sunoco, Inc. or such corporation
resulting from such Business Combination or any of their respective
subsidiaries) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then-outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined
1
voting power of the then-outstanding voting securities of such corporation,
except to the extent that such ownership existed prior to the Business
Combination, and (3) at least a majority of the members of the board of
directors of the corporation resulting from such Business Combination were
agreement or of the action of the Board of Directors providing for such Business
Combination; or
(d) Approval by the shareholders of Sunoco, Inc. of a complete liquidation or
dissolution of Sunoco, Inc.
Section 1.9 “Chief Executive Officer” shall mean the individual serving as the
Chief Executive Officer of Sunoco, Inc. as of the date of reference.
Section 1.10 “Code” shall mean the Internal Revenue Code of 1986, as amended.
Section 1.11 “Committee” shall mean the administrative committee designated
pursuant to Article VI of the Plan to administer the Plan in accordance with its
terms.
Section 1.12 “Company” shall mean Sunoco, Inc., and any Affiliate.
Section 1.13 “Company Service” shall mean, for purposes of determining Benefits
available to any Participant in this Plan, the total aggregate recorded length
of such Participant’s service with Sunoco, Inc. or any Affiliate (while it is an
Affiliate).
Company Service shall commence with the Participant’s initial date of employment
with the Company, and shall end with such Participant’s death, retirement, or
termination for any reason. Company Service also shall include:
(a) all periods of approved leave of absence (civil, family, medical, military,
or Olympic); provided, however, that the Participant returns to work within the
prescribed time following the leave;
(b) any break in service of thirty (30) days or less; and
(c) any service credited under applicable Company policies with respect to the
length of a Participant’s employment by any non-affiliated entity that
subsequently becomes an Affiliate or part of the operations of the Company.
Section 1.14 “Disability” shall mean any illness, injury or incapacity of such
duration and type as to render a Participant eligible to receive long-term
disability benefits under the applicable broad-based long-term disability
program of the Company.
Section 1.15 “Compensation Committee” shall mean the compensation committee of
Section 1.16 “Employment Termination Date” shall mean the date on which a
Participant separates from service as defined in Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”) and the regulations issued
thereunder.
Section 1.17 “ERISA” shall mean the Employee Retirement Income Security Act of
1974, as amended.
Section 1.18 “Exchange Act” shall mean the Securities Exchange Act of 1934, as
amended.
Section 1.19 “Excise Tax” shall have the meaning provided herein at
Section 4.7(f).
Section 1.20 “Executive Resource Employee” shall mean any individual employed by
the Company who is a Grade 14 or above.
Section 1.21 “Gross-Up Payment” shall have the meaning provided herein at
Section 4.7(a).
Section 1.22 “Incumbent Board” shall have the meaning provided herein at
Section 1.8(b).
Section 1.23 “Involuntary Plan” shall mean the Sunoco, Inc. Executive
Involuntary Severance Plan.
Section 1.24 “Just Cause” shall mean:
(a) the willful and continued failure of the Participant to perform
failure resulting from incapacity due to physical or mental illness or following
notice of employment termination by the Participant pursuant to Section 1.32(b)
or (c)), after a written demand for substantial performance is delivered to the
Participant by the Board of Directors or the Chief Executive Officer that
specifically identifies the manner in which the Board of Directors or the Chief
Executive Officer believes that the Participant has not substantially performed
the Participant’s duties, or
(b) the willful engaging by the Participant in illegal conduct or gross
2
For purposes of this Section 1.24, no act, or failure to act, on the part of the
Participant’s action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief Executive Officer or
a senior officer of the Company or based upon the advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done, by the
Participant in good faith and in the best interests of the Company. The
cessation of employment of the Participant shall not be deemed to be for Just
Cause unless and until there shall have been delivered to the Participant a copy
of a resolution duly adopted by the affirmative vote of not less than
three-quarters of the entire membership of the Board of Directors (excluding the
Participant, if the Participant is a member of the Board of Directors) at a
meeting of the Board of Directors (after reasonable notice is provided to the
Participant and the Participant is given an opportunity, together with counsel
for the Participant, to be heard before the Board of Directors), finding that,
in the good faith opinion of the Board of Directors, the Participant is guilty
of the conduct described in Section 1.24(a) or 1.24(b), and specifying the
particulars thereof in detail.
Section 1.25 “Outstanding Company Common Stock” shall have the meaning provided
herein at Section 1.8(a).
Section 1.26 “Outstanding Company Voting Stock” shall have the meaning provided
Section 1.27 “Parachute Value” shall have the meaning provided herein at
Section 1.28 “Participant” shall mean:
(a) any employee who is an Executive Resource Employee on December 1, 2010; and
(b) any employee who is an Executive Resource Employee after December 1, 2010
who is designated as a Participant after that date by the Chief Executive
Officer, and in the case of a new chief executive officer, designated as a
Participant by the Compensation Committee, who is employed by the Company on or
before the occurrence of any Change in Control. In addition, for purposes of
Sections 4.6 and 4.7 of this Plan, each such former Executive Resource Employee
shall be a Participant, as applicable.
Section 1.29 “Payment” shall have the meaning provided herein at Section 4.7(f)
Section 1.30 “Person” shall have the meaning provided herein at Section 1.8(a).
Section 1.31 “Plan” shall mean the Sunoco, Inc. Special Executive Severance
Plan, as set forth herein, and as the same may from time to time be amended.
Section 1.32 “Qualifying Termination” of the employment of a Participant shall
mean any of the following:
(a) a termination of employment by the Company within two (2) years after a
Change in Control, other than for Just Cause, death or Disability;
(b) a termination of employment by the Participant within two (2) years after a
Change in Control for one or more of the following reasons:
(1) the assignment to such Participant of any duties inconsistent in a way
adverse to such Participant, with such Participant’s positions, duties,
responsibilities and status with the Company immediately prior to the Change in
Control, or a reduction in the duties and responsibilities held by the
Participant immediately prior to the Change in Control; or a change in the
Participant’s reporting responsibilities, title or offices as in effect
immediately prior to the Change in Control that is adverse to the Participant;
in each case except in connection with such Participant’s termination of
employment by the Company for Just Cause; or
(2) with respect to any Participant who is a member of the Board of Directors
immediately prior to the Change in Control, any failure of the shareholders of
Sunoco, Inc. to elect or reelect, or of Sunoco, Inc. to appoint or reappoint,
the Participant as a member of the Board of Directors;
(3) a reduction by the Company in either the Participant’s annual base salary or
guideline (target) bonus as in effect immediately prior to the Change in
Control; the failure of the Company to provide the Participant with employee
benefits and incentive compensation opportunities that (i) are not less
favorable than those provided to other executives who occupy the same grade
level at the Company as the Participant, or if the Company’s grade levels are no
longer applicable, to a similar peer group of the executives of the Company, and
(ii) provide the Participant with benefits that are at least as favorable,
measured separately for (A) incentive compensation opportunities, (B) savings
and retirement benefits, (C) welfare benefits, and (D) fringe benefits and
vacation, as the most favorable of each such category of benefit in effect for
the Participant at any time during the 120-day period immediately preceding the
(4) The Company requires the Participant to be based anywhere other than the
Participant’s present work location or a location within thirty-five (35) miles
from the present location; or the Company requires
3
the Participant to travel on Company business to an extent substantially more
burdensome than such Participant’s travel obligations during the period of
twelve (12) consecutive months immediately preceding the Change in Control;
provided, however, that in the case of any such termination of employment by the
Participant under this subparagraph (b), such termination shall not be deemed to
be a Qualifying Termination unless the termination occurs within 120 days after
the occurrence of the event or events constituting the reason for the
termination; or
(c) before a Change in Control, a termination of employment by the Company
(other than a termination for Just Cause) or a termination of employment by the
Participant for one of the reasons set forth in (b) above, if the affected
Participant can demonstrate that such termination or circumstance in (b) above
leading to the termination:
(1) was at the request of a third party with which the Company had entered into
negotiations or an agreement with regard to a Change in Control; or
(2) otherwise occurred in connection with a Change in Control.
Any good faith determination made by the Participant that the Participant has
experienced a Qualifying Termination pursuant to Section 1.32(b) shall be
conclusive. A Participant’s mental or physical incapacity following the
occurrence of an event described above in (b) above shall not affect the
Participant’s ability to have a Qualifying Termination. As used in this
Section 1.32, a “termination of employment” means a separation from service as
defined in Code Section 409A and the regulations issued thereunder.
Section 1.33 “Retirement Plan” shall have the meaning provided herein at
Section 1.34 “SERP” shall have the meaning provided herein at Section 4.1(c).
Section 1.35 “Sunoco, Inc.” shall mean Sunoco, Inc., a Pennsylvania corporation,
and any successor thereto by merger, consolidation, liquidation or purchase of
assets or stock or similar transaction.
Section 1.36 “Underpayment” shall have the meaning provided herein at
ARTICLE II
BACKGROUND, PURPOSE AND TERM OF PLAN
Section 2.1 Background. Sunoco, Inc. maintains this Plan for the purpose of
providing severance allowances to Participants whose employment is terminated in
connection with or following a Change in Control. The Plan has been amended and
restated as of September 6, 2001, February 6, 2003, November 1, 2007 and
December 1, 2010. The Plan, as amended and restated herein, shall be effective
as of December 1, 2010.
Section 2.2 Purpose of the Plan. The Plan, as set forth herein, has been adopted
by the Board of Directors, or a committee thereof, delegated such
responsibility, acting in its sole discretion, in recognition that the
possibility of a major transaction or a Change in Control exists and that such
possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of key management
personnel to the detriment of the Company. The Board of Directors has determined
that appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of Participants, as key members of Company’s
management, to their assigned duties without distraction. The Plan is not
intended to be included in the definitions of “employee pension benefit plan”
and “pension plan” set forth under Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”). Rather, this Plan is intended
to meet the descriptive requirements of a plan constituting a “severance pay
plan” within the meaning of regulations published by the Secretary of Labor at
Title 29, Code of Federal Regulations, § 2510.3-2(b).
Section 2.3 Term of the Plan. The Plan will continue until such time as the
Board of Directors, or a committee thereof, delegated such responsibility,
acting in its sole discretion, elects to modify, supersede or terminate it;
provided, however, that no such action taken after a Change in Control, or
before, but in connection with, a Change in Control, may terminate or reduce the
benefits or prospective benefits of any individual who is a Participant on the
date of the action without the express written consent of the Participant.
ARTICLE III
PARTICIPATION AND ELIGIBILITY FOR BENEFITS
Section 3.1 General Requirements. Participants shall be designated in accordance
with Section 1.28. Except with respect to the benefits and payments under
Sections 4.7 and 4.8, in order to receive a Benefit under this Plan, a
Participant’s employment must have been terminated as a result of a Qualifying
Termination.
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Section 3.2 Qualifying Termination. The Committee shall determine whether any
termination of a Participant is a Qualifying Termination. The Participant shall
follow the procedures described in Article IX for presenting his or her claim
for Benefits under this Plan.
ARTICLE IV
BENEFITS
Section 4.1 Amount of Immediate Cash Benefit; Qualifying Termination. In the
event of a termination of employment that would qualify the Participant for
Benefits that is a Qualifying Termination, the cash amount to be paid to a
Participant eligible to receive Benefits under Section 3.1 hereof shall be paid
as provided in Section 5.1 hereof and shall equal the sum of the following:
(a) An amount equal to the Participant’s earned vacation (as determined under
the Company’s applicable vacation policy as in effect at the time of the Change
in Control) through his or her Employment Termination Date;
(b)(1) for a Participant in Grade 18 or above, Annual Compensation multiplied by
three (3);
(2) for each other Participant, Annual Compensation multiplied by two (2);
(c) An amount equal to the excess of (x) the actuarial equivalent of the benefit
under the Sunoco, Inc. Retirement Plan or any successor defined benefit pension
plan (the “Retirement Plan”) (utilizing actuarial assumptions no less favorable
to the Participant than those in effect under the Retirement Plan immediately
prior to the Change in Control) and any excess or supplemental retirement plan,
including, without limitation, the Sunoco, Inc. Executive Retirement Plan and
the Sunoco, Inc. Pension Restoration Plan, in which the Participant participates
(collectively, the “SERP”) that the Participant would receive if the
Participant’s employment continued throughout his/her Benefit Extension Period,
assuming for this purpose that all accrued benefits are fully vested and
assuming that the Participant’s compensation in each year of his/her Benefit
Extension Period is the Annual Compensation, over (y) the actuarial equivalent
of the Participant’s actual benefit (paid or payable), if any, under the
Retirement Plan and the SERP as of the Employment Termination Date (including
any additional benefit to which the Participant is entitled under the Retirement
Plan or the SERP in connection with the Change in Control).
Section 4.2 Executive Severance Benefits. In the event that Benefits are paid
under Section 4.1, the Participant shall continue to be entitled, through the
end of his/her Benefit Extension Period, to those employee benefits, based upon
the amount of coverage or benefits provided at the Change in Control, listed
below:
(a) Death benefits in an amount equal to one (1) times the Participant’s annual
base salary at the Employment Termination Date (provided, however, that any
supplemental coverages elected under the Sunoco, Inc. Death Benefits Plan (or
any similar plan of any of the following: a subsidiary or affiliate which has
adopted this Plan; a corporation succeeding to the business of Sunoco, Inc.;
and/or any subsidiary or affiliate, by merger, consolidation or liquidation or
purchase of assets or stock or similar transaction) will be discontinued under
the terms of such plan or plans); and
(b) Medical plan benefits (including dental coverage), with COBRA continuation
eligibility beginning as of the end of the Benefit Extension Period, except as
provided hereinbelow at Section 4.3.
In each case, when contributions are required of all Executive Resource
Employees at the time of the Participant’s Employment Termination Date, or
thereafter, if required of all other active Executive Resource Employees, the
Participant shall continue to be responsible for making the required
contributions during the Benefit Extension Period in order to be eligible for
the coverage. The Participant also shall be entitled to reasonable outplacement
services during the Benefit Extension Period, at no cost to the Participant (but
only to the extent such services are provided no later than the end of the
second calendar year following the year of the Participant’s Employment
Termination Date and are paid for directly by the Company no later than the end
of the third calendar year following the year of the Participant’s Employment
Termination Date), from an experienced third-party vendor selected by the
Committee and consistent with vendors used in connection with the Sunoco, Inc.
Involuntary Termination Plan immediately before the Change in Control.
Section 4.3 Special Medical Benefit. In the event Benefits are paid to the
Participant under Section 4.1:
(a) A Participant who was employed by the Company on January 1, 2008, and who
was fifty (50) or more years of age on January 1, 2008, with a minimum of ten
(10) years of Company Service on the Employment Termination Date, shall have
medical (but not dental) benefits available under the same terms and conditions
as other employees not yet eligible for Medicare coverage who retire under the
terms of a Company retirement plan.
(b) Participant who (i) was fifty (50) or more years of age on the Employment
Termination Date, and (ii) was not employed by the Company on January 1, 2008,
or was not fifty (50) or more years of age on January 1, 2008, or has fewer than
ten (10) years of Company Service on the Employment Termination Date, shall be
eligible to receive
5
Company medical plan benefits (excluding dental coverage) following the Benefit
Extension Period, at a cost to any such Participant that is equal to the full
premium cost of such coverage.
Subject to modification or termination of such medical benefits as generally
provided to other employees not yet eligible for Medicare coverage who retire
under the terms of the Company’s retirement plan(s), such benefits shall
continue until such time as the Participant becomes first eligible for Medicare,
or the Participant voluntarily cancels coverage, whichever is earlier.
Section 4.4 Retirement and Savings Plans. This Plan shall not govern and shall
in no way affect the Participant’s interest in, or entitlement to benefits
under, any of the Company’s “qualified” or supplemental retirement plans, and,
except to the extent specifically provided in Section 4.1(c), payments received
under any such plans shall not affect a Participant’s right to any Benefit
hereunder.
Section 4.5 Relationship to Involuntary Plan. If a Participant becomes entitled
to receive severance benefits under this Plan, Participant shall not be entitled
to any benefits under the Involuntary Plan.
Section 4.6 Effect on Other Benefits. There shall not be drawn from the
continued provision by the Company of any of the aforementioned Benefits any
implication of continued employment or of continued right to accrual of
retirement benefits under the Company’s qualified or supplemental retirement
plans, nor shall a terminated employee, except as otherwise provided under the
terms of the Plan, accrue vacation days, paid holidays, paid sick days or other
similar benefits normally associated with employment for any part of the Benefit
Extension Period during which benefits are payable under this Plan. A
Participant shall have no duty to mitigate with respect to Benefits under this
Plan by seeking or accepting alternative employment. Further, the amount of any
payment or benefit provided for in this Plan shall not be reduced by any
compensation earned by the Participant as the result of employment by another
employer, by retirement benefits, by offset against any amount claimed to be
owed by the Participant to the Company, or otherwise.
Section 4.7 Parachute Payments. The following provisions apply to a Participant
who was a Participant on or before November 25, 2008.
(a) Anything in this Plan to the contrary notwithstanding and except as set
forth below, in the event it shall be determined that any Payment would be
subject to the Excise Tax, then the Participant shall be entitled to receive an
by the Participant of all taxes (including any interest or penalties imposed
with respect to such taxes), including, without limitation, any income taxes
(and any interest and penalties imposed with respect thereto) and Excise Tax
imposed upon the Gross-Up Payment, but excluding any income taxes and penalties
imposed pursuant to Section 409A of the Code, the Participant retains an amount
of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
Notwithstanding the foregoing provisions of this Section 4.7(a), if it shall be
determined that any Participant is entitled to a Gross-Up Payment, but that the
Parachute Value of all Payments does not exceed 110% of the Safe Harbor Amount,
then no Gross-Up Payment shall be made to the Participant and the amounts
payable under this Plan shall be reduced so that the Parachute Value of all
Payments, in the aggregate, equals the Safe Harbor Amount. The reduction of the
amounts payable hereunder, if applicable, shall be made by reducing the payments
and benefits under the following sections in the following order:
(i) Section 4.1(b) and 4.1(c). For purposes of reducing the Payments to the Safe
Harbor Amount, only amounts payable under this Plan (and no other Payments)
shall be reduced. If the reduction of the amount payable under this Plan would
not result in a reduction of the Parachute Value of all Payments to the Safe
Harbor Amount, no amounts payable under the Plan shall be reduced pursuant to
this Section 4.7(a). Sunoco, Inc.’s obligation to make Gross-Up Payments under
this Section 4.7 shall not be conditioned upon the Participant’s termination of
employment.
(b) Subject to the provisions of Section 4.7(c), all determinations required to
be made under this Section 4.7, including whether and when a Gross-Up Payment is
required and the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by Ernst & Young LLP
or such other nationally recognized certified public accounting firm as may be
designated by the Participant (the “Accounting Firm”) which shall provide
detailed supporting calculations both to Sunoco, Inc. and the Participant within
15 business days of the receipt of notice from the Participant that there has
been a Payment, or such earlier time as is requested by Sunoco, Inc. All fees
and expenses of the Accounting Firm shall be borne solely by Sunoco, Inc. Any
determination by the Accounting Firm shall be binding upon Sunoco, Inc. and the
Participant. As a result of the uncertainty in the application of Section 4999
of the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments which will not have been made
by Sunoco, Inc. should have been made (“Underpayment”), consistent with the
calculations required to be made hereunder. In the event that Sunoco, Inc.
exhausts its remedies pursuant to Section 4.7(c) and the Participant thereafter
Underpayment shall be promptly paid by Sunoco, Inc. to or for the benefit of the
Participant.
6
(c) The Participant shall notify Sunoco, Inc. in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by
Sunoco, Inc. of the Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than ten business days after the Participant is
informed in writing of such claim and shall apprise Sunoco, Inc. of the nature
of such claim and the date on which such claim is requested to be paid. The
Participant shall not pay such claim prior to the expiration of the 30-day
period following the date on which it gives such notice to Sunoco, Inc. (or such
shorter period ending on the date that any payment of taxes with respect to such
claim is due). If Sunoco, Inc. notifies the Participant in writing prior to the
expiration of such period that it desires to contest such claim, the Participant
shall:
(i) give Sunoco, Inc. any information reasonably requested by Sunoco, Inc.
relating to such claim,
(ii) take such action in connection with contesting such claim as Sunoco, Inc.
attorney reasonably selected by Sunoco, Inc.,
(iii) cooperate with Sunoco, Inc. in good faith in order effectively to contest
such claim, and
(iv) permit Sunoco, Inc. to participate in any proceedings relating to such
claim;
provided, however, that Sunoco, Inc. shall bear and pay directly all costs and
with such contest and shall indemnify and hold the Participant harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 4.7(c), Sunoco, Inc. shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
pay the tax claimed to the appropriate taxing authority on behalf of the
Participant and direct the Participant to sue for a refund or contest the claim
in any permissible manner, and the Participant agrees to prosecute such contest
to a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as Sunoco, Inc. shall
determine; provided, however, that if Sunoco, Inc. pays such claim and directs
the Participant to sue for a refund, Sunoco, Inc. shall indemnify and hold the
Participant harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such payment or with respect to any imputed income in connection with such
payment; and further provided that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Participant with
respect to which such contested amount is claimed to be due is limited solely to
such contested amount. Furthermore, Sunoco, Inc.’s control of the contest shall
be limited to issues with respect to which a Gross-Up Payment would be payable
hereunder and the Participant shall be entitled to settle or contest, as the
case may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.
(d) If, after the receipt by the Participant of a Gross-Up Payment or payment by
Sunoco, Inc. of an amount on any Participant’s behalf pursuant to
Section 4.7(c), the Participant becomes entitled to receive any refund with
respect to the Excise Tax to which such Gross-Up Payment relates or with respect
to such claim, the Participant shall (subject to Sunoco, Inc.’s complying with
the requirements of Section 4.7(c) to the extent applicable) promptly pay to
Sunoco, Inc. the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after payment by Sunoco,
Inc. of an amount on any Participant’s behalf pursuant to Section 4.7(c), a
determination is made that the Participant shall not be entitled to any refund
with respect to such claim and Sunoco, Inc. does not notify the Participant in
writing of its intent to contest such denial of refund prior to the expiration
of 30 days after such determination, then the amount of such payment shall
offset, to the extent thereof, the amount of any Gross-Up Payment required to be
paid.
(e) Any Gross-Up Payment, as determined pursuant to this Section 4.7, shall be
paid by Sunoco, Inc. to a Participant within five days of the receipt of the
Accounting Firm’s determination; provided that, the Gross-Up Payment shall in
all events be paid no later than the end of a Participant’s taxable year next
following the Participant’s taxable year in which the Excise Tax (and any income
or other related taxes or interest or penalties thereon) on a Payment are
remitted to the Internal Revenue Service or any other applicable taxing
authority or, in the case of amounts relating to a claim described in
Section 4.7(c) that does not result in the remittance of any federal, state,
local and foreign income, excise, social security and other taxes, the calendar
year in which the claim is finally settled or otherwise resolved.
Notwithstanding any other provision of this Section 4.7, Sunoco, Inc. may
withhold and pay over to the Internal Revenue Service or any other applicable
taxing authority for the benefit of the Participant all or any portion of the
Gross-Up Payment that it determines in good faith that it is or may be in the
future required to withhold, and the Participant hereby consents to such
withholding.
(f) Definitions. The following terms shall have the following meanings for
purposes of this Section 4.7.
7
(i) “Excise Tax” shall mean the excise tax imposed by Section 4999 of the Code,
together with any interest or penalties imposed with respect to such excise tax.
(ii) “Parachute Value” of a Payment shall mean the present value as of the date
of the change of control for purposes of Section 280G of the Code of the portion
of such Payment that constitutes a “parachute payment” under Section 280G(b)(2),
as determined by the Accounting Firm for purposes of determining whether and to
what extent the Excise Tax will apply to such Payment.
(iii) A “Payment” shall mean any payment or distribution in the nature of
compensation (within the meaning of Section 280G(b)(2) of the Code) to or for
the benefit of the Participant, whether paid or payable pursuant to this Plan or
otherwise.
(iv) The “Safe Harbor Amount” means 2.99 times the Participant’s “base amount,”
within the meaning of Section 280G(b)(3) of the Code. (v) “Value” of a Payment
shall mean the economic present value of a Payment as of the date of the change
of control for purposes of Section 280G of the Code, as determined by the
Accounting Firm using the discount rate required by Section 280G(d)(4) of the
Code.
Section 4.8 Legal Fees and Expenses. The Company also shall pay to the
Participant (or the Participant’s representative) all legal fees and expenses
incurred by or with respect to the Participant during his lifetime or within ten
(ten) years after his death:
(a) in disputing in good faith any issue relating to the termination of the
Participant’s employment in connection with a Change in Control as a result of a
Qualifying Termination entitling the Participant to Benefits under this Plan
(including a termination of employment if the Participant alleges in good faith
that such termination will be or is a Qualifying Termination pursuant to
Section 1.31(c)); or
(b) in seeking in good faith to obtain or enforce any benefit or right provided
by this Plan (or the payment of any Benefits through any trust established to
fund Benefits under this Plan).
Such payments shall be made as such fees and expenses are incurred by the
Participant (or the Participant’s representative), but in no event later than
five (5) business days after delivery of the Participant’s (or Participant’s
representative’s) written requests for payment accompanied with such evidence of
fees and expenses incurred as the Company reasonably may require.
Notwithstanding the forgoing sentence, all such payments shall be made on or
before the close of the calendar year following the calendar year in which the
expense was incurred. The amount of expenses eligible for reimbursement under
this provision in one calendar year may not affect the amount of expenses
eligible for reimbursement under this provision in any other calendar year. The
Participant (or Participant’s representative) shall reimburse the Company for
such fees and expenses at such time as a court of competent jurisdiction, or
another independent third party having similar authority, determines that the
Participant’s claim was frivolously brought without reasonable expectation of
success on the merits thereof.
ARTICLE V
METHOD AND DURATION OF BENEFIT PAYMENTS
Section 5.1 Method of Payment. Subject to the last sentence of Section 5.1, the
cash Benefits to which a Participant is entitled, as determined pursuant to
Article IV hereof, shall be paid in a lump sum. Payment shall be made by mailing
to the last address provided by the Participant to the Company. In general,
subject to the last sentence of this Section 5.1, payment shall be made within
fifteen (15) days after the Participant’s Employment Termination Date but in no
event later than thirty (30) days thereafter; provided, however, that payment of
any Benefits under any provision of the Plan that are deferred compensation for
purposes of Code Section 409A to any Participant who is a specified employee
(specified employees being those Participants who are Executive Resource
Employees, pursuant to the election of an alternative method specified in
Treasury Regulation Sections 1.409A-1(i)(5) and 1.409A-1(i)(8)) (a “Specified
Employee”) shall be paid in a lump sum on the later of the date such payments
are due or the date six months after the Participant’s Employee Termination
Date. In the event the Company should fail to pay when due the amounts described
in Article IV (determined without regard to the payment delay to Specified
Employees required by Code Section 409A), the Participant shall also be entitled
to receive from the Company an amount representing interest on any unpaid or
untimely amounts from the due date (determined without regard to the payment
delay to Specified Employees required by Code Section 409A) to the date of
payment at a rate equal to the prime rate of Citibank, N.A. as in effect from
time to time after such due date. Notwithstanding anything to the contrary
contained in this Plan, if (x) a Participant also participates in the
Involuntary Plan and (y) (1) the Change in Control does not constitute a “change
in the ownership of the corporation,” a “change in effective control of the
corporation” or a “change in the ownership of a substantial portion of the
assets of the corporation” within the meaning of Section 409A(a)(2)(A)(v) of the
Code, or (2) the Qualifying Termination occurs prior to a Change in Control,
then payment of the cash Benefits provided under Section 4.1(b) of the Plan
shall be made in equal monthly
8
installments in accordance with Section 5.1 of the Involuntary Plan and during a
number of months equal to the number of months that would apply to such
Participant based on Section 1.16(b) of the Involuntary Plan.
Section 5.2 Payments to Beneficiary(ies). Each Participant shall designate a
beneficiary(ies) to receive any Benefits due hereunder in the event of the
Participant’s death prior to the receipt of all such Benefits. Such beneficiary
designation shall be made in the manner, and at the time, prescribed by the
Company in its sole discretion. In the absence of an effective beneficiary
designation hereunder, the Participant’s estate shall be deemed to be his or her
designated beneficiary.
ARTICLE VI
ADMINISTRATION
Section 6.1 Appointment of the Committee. The Committee shall consist of three
(3) or more persons appointed by the Compensation Committee. Committee members
may be, but need not be, employees of Sunoco, Inc. Following a Change in
Control, the individuals most recently so appointed to serve as members of the
Committee before the Change in Control, or successors whom they approve, shall
continue to serve as the Committee.
Section 6.2 Tenure of the Committee. Before a Change in Control, Committee
members shall serve at the pleasure of the Compensation Committee and may be
discharged, with or without cause, by the Compensation Committee. Committee
members may resign at any time on ten (10) days’ written notice.
Section 6.3 Authority and Duties. It shall be the duty of the Committee, on the
basis of information supplied to it by the Company, to determine the eligibility
of each Participant for Benefits under the Plan, to determine the amount of
Benefit to which each such Participant may be entitled, and to determine the
manner and time of payment of the Benefit consistent with the provisions hereof.
In addition, the exercise of discretion by the Committee need not be uniformly
applied to similarly situated Participants. The Company shall make such payments
as are certified to it by the Committee to be due to Participants. The Committee
shall have the full power and authority to construe, interpret and administer
the Plan, to correct deficiencies therein, and to supply omissions. Except as
provided in Section 9.2, all decisions, actions and interpretations of the
Committee shall be final, binding and conclusive upon the parties.
Section 6.4 Action by the Committee. A majority of the members of the Committee
shall constitute a quorum for the transaction of business at a meeting of the
Committee. Any action of the Committee may be taken upon the affirmative vote of
a majority of the members of the Committee at a meeting, or at the direction of
the chairperson, without a meeting by mail, telegraph, telephone or electronic
communication device; provided that all of the members of the Committee are
informed of their right to vote on the matter before the Committee and of the
outcome of the vote thereon.
Section 6.5 Officers of the Committee. The Compensation Committee shall
designate one of the members of the Committee to serve as chairperson thereof.
The Compensation Committee shall also designate a person to serve as Secretary
of the Committee, which person may be, but need not be, a member of the
Committee.
Section 6.6 Compensation of the Committee. Members of the Committee shall
receive no compensation for their services as such. However, all reasonable
expenses of the Committee shall be paid or reimbursed by the Company upon proper
documentation. The Company shall indemnify members of the Committee against
personal liability for actions taken in good faith in the discharge of their
respective duties as members of the Committee and shall provide coverage to them
under the Company’s Liability Insurance program(s).
Section 6.7 Records, Reporting and Disclosure. The Committee shall keep all
individual and group records relating to Participants and former Participants
and all other records necessary for the proper operation of the Plan. Such
records shall be made available to the Company and to each Participant for
examination during business hours except that a Participant shall examine only
such records as pertain exclusively to the examining Participant and to the
Plan. The Committee shall prepare and shall file as required by law or
regulation all reports, forms, documents and other items required by ERISA, the
Internal Revenue Code, and every other relevant statute, each as amended, and
all regulations thereunder (except that the Company, as payor of the Benefits,
shall prepare and distribute to the proper recipients all forms relating to
withholding of income or wage taxes, Social Security taxes, and other amounts
which may be similarly reportable).
Section 6.8 Actions of the Chief Executive Officer. Whenever a determination is
required of the Chief Executive Officer under the Plan, such determination shall
be made solely at the discretion of the Chief Executive Officer. In addition,
the exercise of discretion by the Chief Executive Officer need not be uniformly
applied to similarly situated Participants and shall be final and binding on
each Participant or beneficiary(ies) to whom the determination is directed.
Section 6.9 Bonding. The Committee shall arrange any bonding that may be
required by law, but no amount in excess of the amount required by law (if any)
shall be required by the Plan.
9
ARTICLE VII
AMENDMENT AND TERMINATION
Section 7.1 Amendment, Suspension and Termination. The Company, acting through
the Board of Directors, retains the right, at any time and from time to time, to
amend, suspend or terminate the Plan in whole or in part, for any reason, and
without either the consent of or the prior notification to any Participant.
Notwithstanding the foregoing, no such action that is taken after a Change in
Control or before, but in connection with, a Change in Control, may terminate or
reduce the benefits or prospective benefits of any Participant on the date of
such action without the express written consent of the Participant. No
amendment, suspension or termination shall give the Company the right to recover
any amount paid to a Participant prior to the date of such action or to cause
the cessation and discontinuance of payments of Benefits to any person or
persons under the Plan already receiving Benefits. The Board of Directors shall
have the right to delegate its authority and powers hereunder, or any portion
thereof, to any committee of the Board of Directors, and shall have the right to
rescind any such delegation in whole or in part.
ARTICLE VIII
DUTIES OF THE COMPANY
Section 8.1 Records. The Company shall supply to the Committee all records and
information necessary to the performance of the Committee’s duties.
Section 8.2 Payment. The Company shall make payments from its general assets to
Participants and shall provide the Benefits described in Article IV hereof in
accordance with the terms of the Plan, as directed by the Committee.
ARTICLE IX
CLAIMS PROCEDURES
Section 9.1 Application for Benefits. Benefits shall be paid by the Company
following an event that qualifies the Participant for Benefits. In the event a
Participant believes himself/herself eligible for Benefits under this Plan and
Benefit payments have not been initiated by the Company, the Participant may
apply for such Benefits by requesting payment of Benefits in writing from the
Committee.
Section 9.2 Appeals of Denied Claims for Benefits. In the event that any claim
for benefits is denied in whole or in part, the Participant (or beneficiary, if
applicable) whose claim has been so denied shall be notified of such denial in
writing by the Committee, within thirty (30) days following submission by the
Participant (or beneficiary, if applicable) of such claim to the Committee. The
notice advising of the denial shall specify the reason or reasons for denial,
make specific reference to pertinent Plan provisions, describe any additional
material or information necessary for the claimant to perfect the claim
(explaining why such material or information is needed), and shall advise the
Participant of the procedure for the appeal of such denial. All appeals shall be
made by the following procedure:
(a) The Participant whose claim has been denied shall file with the Committee a
notice of desire to appeal the denial. Such notice shall be filed within sixty
(60) days of notification by the Committee of the claim denial, shall be made in
writing, and shall set forth all of the facts upon which the appeal is based.
Appeals not timely filed shall be barred.
(b) The Committee shall, within thirty (30) days of receipt of the Participant’s
notice of appeal, establish a hearing date on which the Participant may make an
oral presentation to the Committee in support of his/her appeal. The Participant
shall be given not less than ten (10) days’ notice of the date set for the
hearing.
(c) The Committee shall consider the merits of the claimant’s written and oral
presentations, the merits of any facts or evidence in support of the denial of
benefits, and such other facts and circumstances as the Committee shall deem
relevant. If the claimant elects not to make an oral presentation, such election
shall not be deemed adverse to his/her interest, and the Committee shall proceed
as set forth below as though an oral presentation of the contents of the
claimant’s written presentation had been made.
(d) The Committee shall render a determination upon the appealed claim, within
sixty (60) days of the hearing date, which determination shall be accompanied by
a written statement as to the reasons therefor.
ARTICLE X
MISCELLANEOUS
Section 10.1 Nonalienation of Benefits. None of the payments, benefits or rights
of any Participant shall be subject to any claim of any creditor, and, in
particular, to the fullest extent permitted by law, all such payments, benefits
and rights shall be free from attachment, garnishment, trustee’s process, or any
other legal or equitable process available to any
10
creditor of such Participant. No Participant shall have the right to alienate,
anticipate, commute, pledge, encumber or assign any of the benefits or payments
which he/she may expect to receive, contingently or otherwise, under this Plan.
Section 10.2 No Contract of Employment. Neither the establishment of the Plan,
nor any modification thereof, nor the creation of any fund, trust or account,
nor the payment of any benefits shall be construed as giving any Participant, or
any person whosoever, the right to be retained in the service of the Company,
and all Participants shall remain subject to discharge to the same extent as if
the Plan had never been adopted.
Section 10.3 Severability of Provisions. If any provision of this Plan shall be
held invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions hereof, and this Plan shall be construed and
enforced as if such provisions had not been included.
Section 10.4 Successors, Heirs, Assigns, and Personal Representatives. This Plan
shall be binding upon the heirs, executors, administrators, successors and
assigns of the parties, including each Participant, present and future.
Section 10.5 Headings and Captions. The headings and captions herein are
provided for reference and convenience only, shall not be considered part of the
Plan, and shall not be employed in the construction of the Plan.
Section 10.6 Gender and Number. Except where otherwise clearly indicated by
context, the masculine and the neuter shall include the feminine and the neuter,
the singular shall include the plural, and vice-versa.
Section 10.7 Unfunded Plan. The Plan shall not be funded. A Participant’s right
to receive payment of Benefits hereunder shall be no greater than the right of
any unsecured creditor of the Company. The Company may, but shall not be
required to, set aside or earmark an amount necessary to provide the Benefits
specified herein (including the establishment of trusts). In any event, no
Participant shall have any right to, or interest in, any assets of the Company
which may be applied by the Company to the payment of Benefits except as may be
provided pursuant to the terms of any trust established by the Company to
provide Benefits.
Section 10.8 Payments to Incompetent Persons, Etc. Any Benefit payable to or for
the benefit of a minor, an incompetent person or other person incapable of
receipting therefor shall be deemed paid when paid to such person’s guardian or
to the party providing or reasonably appearing to provide for the care of such
person, and such payment shall fully discharge the Company, the Committee and
all other parties with respect thereto.
Section 10.9 Lost Payees. A Benefit shall be deemed forfeited if the Committee
is unable to locate a Participant to whom a Benefit is due. Such Benefit shall
be reinstated if application is made by the Participant for the forfeited
Benefit while this Plan is in operation.
Section 10.10 Controlling Law. This Plan shall be construed and enforced
according to the laws of the Commonwealth of Pennsylvania to the extent not
preempted by federal law.
Section 10.11 Successor Employer. The Company shall require any successor or
assignee, whether direct or indirect, by purchase, merger, consolidation or
otherwise, to all or substantially all the business or assets of the Company,
expressly and unconditionally to assume and agree to perform the Company’s
Company would be required to perform if no such succession or assignment had
taken place. In such event, the term “Company” shall mean the Company and any
successor or assignee to the business or assets which by reason hereof becomes
bound by the terms and provisions of this Plan.
Section 10.12 In-Kind Benefits and Reimbursements. Notwithstanding anything to
the contrary in this Plan, all reimbursements and in-kind benefits provided
under this Plan shall be made or provided in accordance with the requirements of
Section 409A of the Code, including, where applicable, the requirement that
(i) any reimbursement is for expenses incurred during the Participant’s lifetime
(or during a shorter period of time specified in this Plan); (ii) the amount of
expenses eligible for reimbursement, or in-kind benefits provided, during a
calendar year may not affect the expenses eligible for reimbursement, or in-kind
benefits to be provided, in any other calendar year, except, if such benefits
consist of the reimbursement of expenses referred to in Section 105(b) of the
Code, a maximum, if provided under the terms of the plan providing such medical
benefit, may be imposed on the amount of such reimbursements over some or all of
the period in which such benefit is to be provided to the Participant as
described in Treasury Regulation Section 1.409A-3(i)(iv)(B); (c) the
reimbursement of an eligible expense will be made no later than the last day of
the calendar year following the year in which the expense is incurred, provided
that the Participant shall have submitted an invoice for such fees and expenses
at least ten (10) days before the end of the calendar year next following the
calendar year in which such fees and expenses were incurred; and (d) the right
to reimbursement or in-kind benefits is not subject to liquidation or exchange
for another benefit.
11
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Exhibit E , 2013 Dear Shareholder: Global Equity Long/Short Master Fund (the “Fund”) has received your tender of all or some, as the case may be, of your shares of beneficial interest in the Fund (the “Shares”). The Fund accepts your tender in its entirety, subject to the following sentence. In the event that the amount of Shares collectively tendered by all Shareholders pursuant to the tender offer which commenced on June 7, 2013 (the “Offer”) exceeds the maximum number of Shares which may be purchased by the Fund under the terms of the Offer (determined in accordance with the terms of the Offer, as of September 30, 2013) (the “Maximum Purchasable Amount”), the Fund will proportionately reduce the amount of each tendering Shareholder’s tender such that no more than the Maximum Purchasable Amount will be purchased by the Fund, and the Fund accepts your tender as so proportionately reduced. If you tender an amount that would cause your capital account balance to fall below the required minimum, the Fund reserves the right to reduce the amount to be purchased from you so that the required minimum balance is maintained. You have been paid % of the purchase price based on the unaudited net asset value of the Fund as of , 2013, in accordance with the terms of the tender offer.This payment has been made in cash wired directly to the account in which you held your Shares, valued at net asset value in accordance with the Prospectus of the Fund dated July 27, 2012. The balance of the purchase price, if any, will be paid to you no later than immediately after the completion of the Fund’s next annual audit according to the terms of the tender offer. We expect that the annual audit of the Fund’s financial statements will be completed by the end of May 2014. You remain a Shareholder of the Fund with respect to any of Shares which the Fund is not purchasing pursuant to this Offer. Should you have any questions, please feel free to Morgan Creek Capital Management, LLC, acting in its capacity as the investor support services agent for the Fund, at (919) 933-4004. Sincerely, Global Equity Long/Short Master Fund Enclosure 1
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC20549 FORM 10-Q (MARK ONE) x QUARTERLYREPORTUNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly periodendedSeptember 30, 2011 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT For the transition period from to Commission File No.001-33531 AEROGROW INTERNATIONAL, INC. (Exact Name of Registrant as specified in its charter) NEVADA 46-0510685 (State or other jurisdiction of incorporation or organization) (IRS Employer Identification Number) 6075 Longbow Drive, Suite 200, Boulder, Colorado (Address of principal executive offices) (Zip Code) (303) 444-7755 (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 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 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). Yesx No 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 filero Non-accelerated filero (Do not check if smaller reporting company) Smaller reporting company x 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 Number of shares of issuer's common stock outstanding as of October 31, 2011:19,244,160 Table of Contents AeroGrow International, Inc. TABLE OF CONTENTS FORM 10-Q REPORT September 30, 2011 PART I Financial Information Item 1. Financial Statements 3 Condensed Balance Sheets as of September 30, 2011 (Unaudited) and March 31, 2011 3 Condensed Statements of Operations for the Three and Six Months Ended September 30, 2011and September 30, 2010 (Unaudited) 4 Condensed Statements of Cash Flows for the Three and Six Months Ended September 30, 2011and September30, 2010 (Unaudited) 5 Notes to theCondensed Financial Statements (Unaudited) 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 17 Item 3. Quantitative and Qualitative Disclosures about Market Risk 30 Item 4. Controls and Procedures 30 PART II Other Information Item 1. Legal Proceedings 31 Item 1A. Risk Factors 31 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 31 Item 3. Defaults Upon Senior Securities 31 Item 4. Reserved 31 Item 5. Other Information 31 Item 6. Exhibits 32 Signatures 33 Table of Contents Item 1. Condensed Financial Statements AEROGROW INTERNATIONAL, INC. CONDENSED BALANCE SHEETS September 30, 2011 March 31, 2011 ASSETS (Unaudited) (Derived from Audited Statements) Current assets Cash $ $ Restricted cash Accounts receivable, net of allowance for doubtful accounts of $2,077 and $17,791 at September 30, 2011 and March 31, 2011,respectively Other receivables Inventory Financed inventory Prepaid expenses and other Total current assets Property and equipment, net of accumulated depreciation of $2,685,605 and $2,525,853 at September 30, 2011 and March 31, 2011,respectively Other assets Intangible assets, net of $34,537 and $24,834 of accumulated amortization at September 30, 2011 and March 31, 2011, respectively Deposits Deferred debt issuance costs, net of accumulated amortization of $1,076,226 and $737,531 at September 30, 2011 and March 31,2011,respectively 1,488, 491 Total other assets Total Assets $ $ LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities Notes payable $ $ Notes payable – related party Current portion – long term debt – related party Current portion – long term debt Accounts payable Accrued expenses Customer deposits Deferred rent Total current liabilities Long term debt Long term debt – related party Stockholders' equity Preferred stock, $.001 par value, 20,000,000 shares authorized, 7,576 and 7,576 shares issued and outstanding at September 30, 2011and March 31, 2011 8 8 Common stock, $.001 par value, 500,000,000 shares authorized, 19,244,160 and 19,244,160 shares issued and outstanding at September 30, 2011 and March 31, 2011, respectively Additional paid-in capital Accumulated (deficit) ) ) Total Stockholders' Equity (Deficit) ) ) Total Liabilities and Stockholders' Equity (Deficit) $ $ See accompanying notes to the condensed financial statements. 3 Table of Contents AEROGROW INTERNATIONAL, INC. CONDENSED STATEMENTS OF OPERATIONS (Unaudited) Three Months ended September 30, Six Months ended September 30, Revenue Product sales $ Operating expenses Cost of revenue Research and development Sales and marketing General and administrative Total operating expenses Loss from operations ) Other (income) expense, net Interest (income) (2
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Exhibit 10.1
BETWEEN
FLOTEK INDUSTRIES, INC.
AND
Dated as of August 31, 2007
TABLE OF CONTENTS
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS
1
SECTION 1.01
Certain Defined Terms 1
SECTION 1.02
Accounting Terms 13
SECTION 1.03
Interpretation 13
ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES
14
SECTION 2.01
The Advances 14
SECTION 2.02
Making the Advances 15
SECTION 2.03
Reduction and Changes in the Commitment 16
ARTICLE III NOTES, INTEREST AND PAYMENT
16
SECTION 3.01
The Notes 16
SECTION 3.02
Interest Elections 17
SECTION 3.03
Interest 18
SECTION 3.04
Principal Payments 19
SECTION 3.05
Voluntary Prepayments 19
SECTION 3.06
Mandatory Prepayments 19
SECTION 3.07
Fees 20
SECTION 3.08
Payments and Computations 20
SECTION 3.09
The Borrower Unconditionally Liable 21
SECTION 3.10
Reserve Requirements; Change in Circumstances 21
SECTION 3.11
Indemnity 22
ARTICLE IV LETTERS OF CREDIT
23
SECTION 4.01
General 23
SECTION 4.02
Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions 23
SECTION 4.03
Expiration Date 23
SECTION 4.04
Reimbursement 24
SECTION 4.05
Obligations Absolute 24
SECTION 4.06
Disbursement Procedures 25
SECTION 4.07
Interim Interest 25
SECTION 4.08
Cash Collateralization 25
ARTICLE V CONDITIONS OF LENDING
26
SECTION 5.01
Condition Precedent to Initial Credit Extension 26
SECTION 5.02
Conditions Precedent to All Advances 27
ARTICLE VI REPRESENTATIONS AND WARRANTIES
28
SECTION 6.01
Organization, Standing and Qualification 28
SECTION 6.02
Authority 28
SECTION 6.03
Financial Condition 28
SECTION 6.04
Litigation 28
-i-
SECTION 6.05
Regulation U 29
SECTION 6.06
Compliance with Law 29
SECTION 6.07
Other Instruments 29
SECTION 6.08
Title to Properties 29
SECTION 6.09
Taxes 29
SECTION 6.10
Environmental Compliance 29
SECTION 6.11
No Default 30
SECTION 6.12
Subsidiaries 30
SECTION 6.13
ERISA 30
SECTION 6.14
Acceptable Security Interest 31
ARTICLE VII AFFIRMATIVE COVENANTS
31
SECTION 7.01
Compliance with Laws, Etc. 31
SECTION 7.02
Reporting Requirements 32
SECTION 7.03
Visitation Rights 33
SECTION 7.04
Maintenance of Insurance 33
SECTION 7.05
Maintenance of Properties, Etc. 33
SECTION 7.06
Keeping of Records and Books of Account 33
SECTION 7.07
Preservation of Existence, Etc. 33
SECTION 7.08
Notification of Adverse Events 34
SECTION 7.09
ERISA Compliance 34
SECTION 7.10
Additional Security 34
SECTION 7.11
Borrowing Base Audits 35
SECTION 7.12
Treasury Management Services 35
SECTION 7.13
Use of Proceeds 35
ARTICLE VIII NEGATIVE COVENANTS
35
SECTION 8.01
Liens 35
SECTION 8.02
Indebtedness 35
SECTION 8.03
Change in Nature of Business 36
SECTION 8.04
Transactions with Affiliates 36
SECTION 8.05
Investments 36
SECTION 8.06
Distributions 36
SECTION 8.07
Subordinated Debt 36
SECTION 8.08
Leverage Ratio 37
SECTION 8.09
Fixed Charge Coverage Ratio 37
SECTION 8.10
Consolidated Net Income 37
SECTION 8.11
Prohibition of Fundamental Changes 37
SECTION 8.12
Asset Sales 37
SECTION 8.13
Capital Expenditures 37
SECTION 8.14
Restrictions on CAVO 37
ARTICLE IX EVENTS OF DEFAULT AND REMEDIES
38
SECTION 9.01
Events of Default 38
ARTICLE X MISCELLANEOUS
40
SECTION 10.01
Amendments, Etc. 40
-ii-
SECTION 10.02
Notices, Etc. 40
SECTION 10.03
No Waiver; Remedies 40
SECTION 10.04
Costs, Expenses and Taxes 40
SECTION 10.05
Right of Set-off 41
SECTION 10.06
Interest 41
SECTION 10.07
Indemnification 42
SECTION 10.08
Binding Effect 42
SECTION 10.09
Governing Law 42
SECTION 10.10
Execution in Counterparts 42
SECTION 10.11
Assignment 42
SECTION 10.12
Separability 42
SECTION 10.13
Limitation by Law 42
SECTION 10.14
Waiver of DTPA Actions 43
SECTION 10.15
Agreement for Binding Arbitration 43
SECTION 10.16
Final Agreement of the Parties 44
Exhibits
Exhibit A
Compliance Certificate
Exhibit B
Working Capital Loan Borrowing Base Certificate
Exhibit C
Form of Request for Advance
Exhibit D
Form of Joinder Agreement
Schedules
Schedule 1.01
Real Property
Schedule 6.12
Subsidiaries
Schedule 8.02
Existing Indebtedness
Schedule 8.08
Existing Investments
-iii-
This Amended and Restated Credit Agreement dated as of August 31, 2007, is
between FLOTEK INDUSTRIES, INC., a Delaware corporation (the “Borrower”), and
WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association (the
“Bank”).
A. The Borrower and the Bank are parties to the Amended and Restated Credit
Agreement (as the same has been amended, supplemented and modified, the
“Existing Credit Agreement”) dated as of January 4, 2007 (the “Original
Effective Date”).
B. The Borrower has requested that the Existing Credit Agreement be amended and
restated in its entirety as more fully set forth herein.
C. The Bank is willing to so amend and restate the Existing Credit Agreement on
the terms and subject to the conditions set forth in this Agreement.
of which are hereby acknowledged by the parties hereto, the parties hereby agree
as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01 Certain Defined Terms. As used in this Agreement, the following
terms have the following meanings:
“Acceptable Security Interest” means with respect to any Property, a Lien that
(i) exists in favor of the Bank, (ii) is superior to all other Liens (except
Permitted Liens), (iii) secures the Obligations, and (iv) is perfected and
enforceable against all Persons.
“Accounts Receivable” has the same meaning as the term “Accounts” as defined in
the Security Agreement to the extent there exists an Acceptable Security
Interest on same.
“Acquisition” means the purchase by the Borrower or a Subsidiary of Borrower of
100% of the Equity Interests in SES from the Sellers pursuant to the terms and
conditions of the Acquisition Documents.
“Acquisition Documents” means (i) the Stock Purchase Agreement dated as of
August 31, 2007, between the Sellers and Flotek Industries, Inc. and (ii) all
assignments, agreements and other documents executed and delivered in connection
therewith.
“Adjusted LIBO Rate” means, with respect to any Eurodollar Advance for any
the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period
“Advance” means an advance by the Bank to the Borrower pursuant to Article II.
“Advance Date” means, with respect to each Advance, the Business Day upon which
the proceeds of such Advance are to be made available to the Borrower.
“Advance Request” means a request by the Borrower for an Advance in accordance
with Section 2.02.
“Affiliate” of any Person means any other Person directly or indirectly
controlled by, controlling or under common control with such Person, and also
includes all general partners in such Person. A Person shall be deemed to
control an entity if such Person (i) possesses, directly or indirectly, the
entity, whether through the ownership of voting securities, by contract or
otherwise or (ii) owns directly or indirectly 10% or more of the outstanding
Equity Interests of such Person.
“Agreement” means this Credit Agreement, as the same may be amended,
supplemented, restated or modified from time to time.
of (a) the Prime Rate in effect on such day and (b) the Federal Funds Effective
Rate in effect on such day plus 1/2 of 1%. Any change in the Alternate Base
Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall
be effective from and including the effective date of such change in the Prime
Rate or the Federal Funds Effective Rate, respectively.
“Bank” has the meaning specified in the introduction to this Agreement.
“Base Rate”, when used in reference to any Advance, refers to whether such
Advance bears interest at a rate determined by reference to the Alternate Base
Rate.
“Borrower” has the meaning specified in the introduction to this Agreement.
which commercial banks in New York City and Houston, Texas are authorized or
required by Law to remain closed; provided that, when used in connection with a
Eurodollar Loan, the term “Business Day” shall also exclude any day on which
banks are not open for dealings in dollar deposits in the London interbank
eurodollar market.
“Capital Expenditures” means expenditures for plant, property and equipment less
the sum of (i) any such expenditures incurred with the proceeds of Indebtedness
plus (ii) any reimbursement from customers of “lost in-hole” rental tools.
“CAVO” means Cavo Drilling Motors, Ltd. Co., a Texas limited liability company.
“CAVO Regulations” means the letter agreement between B.L. Perez and Turbeco,
Inc. setting forth certain matters relating to the operations of CAVO.
“Change of Control” means (i) any Person or “group” of Persons (within the
meaning of Rules 13d-3 and 13d-5 under the Exchange Act) shall have
(A) acquired, directly or indirectly, beneficial ownership (within the meaning
of Rule 13d-3 under the Exchange Act) of securities representing 50% or more of
the combined voting power of all outstanding voting securities of
-2-
the Borrower or (B) obtained the power (whether or not exercised) to elect a
majority of the Borrower’s directors or (ii) a majority of the members of the
Board of Directors of the Borrower shall not be Continuing Directors.
“Collateral” has the meaning set forth in the Security Agreement.
“Commitments” means the obligations of the Bank under the terms and conditions
set forth in the Loan Documents to make Advances under the Equipment Loan
Commitment and the Working Capital Commitment.
“Compliance Certificate” means, as of any date, a certification of the chief
financial officer of the Borrower demonstrating compliance by the Borrower and
its Subsidiaries with the provisions of Section 8.01 through Section 8.12 and
“Consolidated Net Income” means, for any period, the consolidated net income (or
loss) of the Borrower and its Subsidiaries for such period determined in
accordance with GAAP; provided, however, that there shall be excluded:
(i) the income (or loss) of any Person (other than a Subsidiary) in which any
Credit Party has an ownership interest, except to the extent that any such
income has been actually received by such Credit Party in the form of cash
dividends or similar cash distributions,
(ii) any restoration to income of any contingency reserve, except to the extent
that provision for such reserve was made out of income accrued during such
period,
(iii) any aggregate net gain (but not any aggregate net loss) during such period
arising from the sale, conversion, exchange or other disposition of capital
assets,
(iv) any gains resulting from the write-up of assets (but not any loss resulting
from any write-down of assets), and
(v) any net income or gain (but not any loss) during such period from (A) any
change in accounting principles in accordance with GAAP, (B) any prior period
adjustments resulting from any change in accounting principles in accordance
with GAAP, (C) any extraordinary items or (D) any discontinued operations or the
disposition thereof.
“Continuing Directors” means the directors of the Borrower on the date hereof
and each other director if such director’s nomination for election to the Board
of Directors of the Borrower is recommended by a majority of the then Continuing
Directors.
“Credit Extension” means, at the date of such determination, the aggregate
amount of all outstanding Advances.
“Credit Parties” means the Borrower and the Guarantors.
-3-
“Current Maturities” as of any date means the Indebtedness scheduled to be paid
during the twelve month period beginning on such date.
“Deed of Trust” means each mortgage, deed of trust, security agreement, fixture
financing statement and assignment of rent executed by the applicable Credit
Party to the Bank or the trustee named therein granting Liens on the tracts of
real property owned or leased by such Credit Party located in the counties and
states shown on Schedule 1.1 or as otherwise required by Section 7.10(b).
“Default” means an Event of Default or any event or condition that, with notice
or lapse of time or both would, unless cured or waived, become an Event of
Default.
“Dollars” and the sign “$” mean lawful money of the United States of America.
“Domestic Subsidiary” means any Subsidiary of the Borrower organized under the
laws of the United States, any state thereof, the District of Columbia or Puerto
Rico.
“EBITDA” means, with respect to any period, the sum of (i) the Borrower’s
Consolidated Net Income for such period plus (ii) to the extent deducted in
determining the Borrower’s Consolidated Net Income, interest expense, taxes,
depreciation, amortization and other non-cash charges for such period; provided,
however, that EBITDA shall be subject to pro forma adjustments approved by the
Bank for acquisitions and dispositions of lines of businesses.
“Effective Date” means the date on which the conditions set forth in
Section 5.01 are satisfied.
“Eligible Accounts Receivable” means, as to the Borrower and its Subsidiaries on
a consolidated basis at any time of determination, all Accounts Receivable of
such Persons, each of which meets all of the following criteria on the date of
any determination:
(a) the payment of such Account Receivable is not more than 90 days past the
invoice date;
(b) such Account Receivable was created in the ordinary course of business of
the Borrower or any Subsidiary;
(c) such Account Receivable represents a legal, valid and binding payment
obligation of the account debtor enforceable in accordance with its terms and
arises from an enforceable contract, the performance of which, insofar as it
relates to such Account Receivable, has been completed by the Borrower or such
Subsidiary;
(d) the Borrower or such Subsidiary has good and indefeasible title to such
Account Receivable, and the Bank holds an Acceptable Security Interest in such
Account Receivable;
(e) such Account Receivable is not evidenced by a promissory note, chattel paper
or other instrument that is not in the actual possession of the Borrower;
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(f) such Account Receivable is not subject to any set-off, counterclaim,
defense, allowance or adjustment and there has been no dispute, objection or
complaint by the account debtor concerning its liability for such Account
Receivable, and the Inventory, the sale of which gave rise to such Account
Receivable, has not been returned, rejected, lost or damaged;
(g) the account debtor with respect to such Account Receivable is domiciled in
and organized under the laws of the United States and such Account Receivable is
denominated in dollars;
(h) such Account Receivable, together with all other Accounts Receivable due
from the same account debtor, does not comprise more than 25% of the aggregate
Eligible Accounts Receivable;
(i) such Account Receivable is not due from the United States government, any
state or municipal government or any agency of any of same;
(j) unless otherwise approved by the Bank, such Account Receivable is not due
from an account debtor that (i) has at any time more than 20% of its aggregate
Accounts Receivable owed to the Borrower more than 90 days past due, (ii) is the
subject of a proceeding under the United States Bankruptcy Code or any similar
proceeding or (iii) the Bank has notified the Borrower does not have a
satisfactory credit standing (as determined in the sole discretion of the Bank);
(k) such Account Receivable is not due from any Affiliate of a Credit Party;
(l) such Account Receivable is not the result of a credit balance relating to an
Account Receivable more than 90 days past the invoice date; and
(m) such Account Receivable does not relate to work-in-progress or finance or
service charges.
“Eligible Inventory” means inventories of products located in the United States
that are not in transit, work in progress, damaged, defective, obsolete,
unmerchantable and/or aged more than one year. In addition to the above,
Inventory will be deemed Eligible by the Bank subject to inventory test counts
conducted during initial and subsequent working capital collateral audits.
“Environmental Laws” means any laws, statutes, regulations, rules, orders or
determinations of any governmental authority pertaining to health or the
environment in effect in any and all jurisdictions in which the Borrower and its
Subsidiaries are or at any time have done business or where the Property of the
Borrower or any Subsidiary of the Borrower is located, including the Clean Air
Act; the Comprehensive Environmental Response, Compensation and Liability Act;
the Federal Water Pollution Control Act; the Resource Conservation and Recovery
Act; the Safe Drinking Water Act; the Superfund Amendments and Reauthorization
Act of 1986; the Toxic Substances Control Act; the Occupational Safety and
Health Act; the Federal Insecticide, Fungicide and Rodenticide Act and other
environmental conservation and environmental protection laws.
-5-
“Equipment” means equipment that is the subject of the appraisal described in
Section 5.01(h) and similar equipment acquired by the Borrower or any Subsidiary
after the date hereof.
“Equipment Loan” has the meaning specified in Section 2.01(b).
“Equipment Loan Commitment” means the Bank’s Commitment to make Advances in the
aggregate amount of $36,000,000.
“Equipment Note” means a promissory note payable to the order of the Bank
evidencing the Equipment Loan, together with all modifications, extensions,
renewals and rearrangements thereof.
“Equity Interests” means (i) any capital stock, partnership, joint venture,
member or limited liability or unlimited liability interest, beneficial interest
in a trust or similar entity, or other equity interest in another Person of
whatever nature, and (ii) any warrants, options or other rights to acquire such
stock or interests.
“ERISA” means the Employee Retirement Income Security Act of 1974 and the
regulations promulgated and rulings issued thereunder.
that, together with the Borrower, is treated as a single employer under
Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of
ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
event for which the 30-day notice period is waived); (b) the existence with
respect to any Plan of an “accumulated funding deficiency” (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or to
appoint a trustee to administer any Plan; (f) the incurrence by the Borrower or
any of its ERISA Affiliates of any liability with respect to the withdrawal or
partial withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by
the Borrower or any ERISA Affiliate of any notice, or the receipt by any
Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of withdrawal liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.
“Eurodollar”, when used in reference to any Advance, refers to whether such
Advance bears interest at a rate determined by reference to the Adjusted LIBO
Rate.
“Event of Default” means the occurrence of any one or more of the events
referred to in Section 9.1 hereof.
-6-
“Excess Cash Flow” means, with respect to any fiscal year of the Borrower, an
amount equal to (a) the Borrower’s EBITDA for such fiscal year minus (b) without
duplication, the sum of (i) taxes actually paid by the Borrower and its
Subsidiaries during such fiscal year, (ii) Capital Expenditures of the Borrower
and its Subsidiaries actually paid during such fiscal year, (iii) the
consolidated interest expense of the Borrower and its Subsidiaries actually paid
during such fiscal year, and (iv) scheduled principal payments of Indebtedness
of the Borrower and its Subsidiaries during such fiscal year.
“Existing Letters of Credit” means the Letters of Credit (as such term is
defined under the Existing Credit Agreement) outstanding as of the Effective
Date under the Existing Credit Agreement.
“Final Payment Date” means the date on which all Advances, interest, fees and
other amounts payable under any Loan Document (other than obligations for taxes,
costs, indemnifications, reimbursements and similar amounts for which no claim
or demand for payment has been made) have been paid, the Commitments have
terminated and all outstanding Letters of Credit have expired or been
terminated.
“Fixed Charge Coverage Ratio” means, at any date of determination, the ratio of
(i) EBITDA for the 12 month period ending on such date to (ii) Fixed Charges for
such period.
“Fixed Charges” means, with respect to any period, the sum of (i) interest
expense, (ii) Current Maturities of Indebtedness, (iii) taxes paid in cash and
(iv) Maintenance Capital Expenditures, in each case for such period.
“GAAP” means generally accepted accounting principles as in effect from time to
time as set forth in the opinions, statements and pronouncements of the
Accounting Principles Board of American Institute of Certified Public
Accounting, the Financial Accounting Standards Board and such other Persons who
shall be approved by a significant segment of the accounting profession.
“Guarantor” means (i) subject to the release of any of the following as a
Guarantor in accordance with the terms of this Agreement, each Subsidiary of the
Company listed on Schedule 6.12 that it is a Domestic Subsidiary and (ii) each
other Subsidiary of the Borrower that executes a Joinder Agreement in accordance
with Section 7.10.
“Guaranty” means the Guaranty dated as of February 11, 2005, executed and
delivered by the Subsidiaries of the Borrower party thereto in favor of the
Bank.
“Hazardous Substances” means any pollutants, contaminants, toxic or hazardous
materials, substances, or wastes, or flammable, explosive or radioactive
materials, or material otherwise regulated under any Environmental Law.
“Hedging Arrangement” means a hedge, call, swap, collar, floor, cap, option,
forward sale or purchase or other contract or similar arrangement (including any
obligations to purchase or sell any security at a future date for a specific
price) that is entered into to reduce or eliminate or otherwise protect against
the risk of fluctuations in interest rates, foreign exchange rates or commodity
prices.
-7-
“Highest Lawful Rate” means at any date the maximum nonusurious interest rate
that may under applicable law then be contracted for, charged, received, taken,
collected or reserved by the Bank on the Notes or the Obligations.
“Indebtedness” means, for any Person, (i) indebtedness for borrowed money of
such Person, (ii) obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments, (iii) obligations of such Person to pay the
deferred purchase price of property or services, other than trade payables
incurred in the ordinary course of business and not more than 120 days past due,
(iv) obligations of such Person as lessee under leases that are or should be, in
accordance with GAAP, recorded as capital leases, (v) obligations of such Person
under direct or indirect guaranties in respect of, and obligations (contingent
or otherwise) to purchase or otherwise acquire, or otherwise to assure a
creditor against loss in respect of, Indebtedness or obligations of others,
(vi) all Indebtedness (as defined in the other clauses of this definition) of
others secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) a Lien on any Property of such
Person, whether or not such Indebtedness is assumed by such Person, and
(vii) any Debt of a partnership for which such Person is liable either by
agreement or by operation of law but only to the extent of such liability.
continue a Borrowing in accordance with Section 3.02.
“Interest Payment Date” means (a) with respect to any Base Rate Advance, the
last day of each calendar month, and (b) with respect to any Eurodollar Advance,
the last day of the Interest Period applicable to such Advance and, in the case
of a Eurodollar Advance with an Interest Period of more than three months’
duration, each day prior to the last day of such Interest Period that occurs at
intervals of three months’ duration after the first day of such Interest Period.
“Interest Period” means with respect to any Eurodollar Advance, the period
commencing on the date of such Advance and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter, as the Borrower may elect; provided, that (i) if any Interest Period
Period shall end on the next preceding Business Day, and (ii) any Interest
Period pertaining to a Eurodollar Advance that commences on the last Business
corresponding day in the last calendar month of such Interest Period) shall end
on the last Business Day of the last calendar month of such Interest Period. For
purposes hereof, the date of a Borrowing initially shall be the date on which
such Borrowing is made and thereafter shall be the effective date of the most
recent conversion or continuation of such Borrowing.
“Inventory” has the meaning of such term as defined in the Security Agreement to
the extent that there exists an Acceptable Security Interest on same.
“Investment” means any investment so classified under GAAP made by stock
purchase, capital contribution, loan or advance or by purchase of property or
otherwise, but in any event shall include as an investment in any Person that
amount of all Indebtedness owed by such Person and all accounts receivable from
such Person that are not current assets and did not arise from services rendered
or sales to such Person in the ordinary course of business.
-8-
“Joinder Agreement” means a Joinder Agreement in the form of Exhibit D or such
other form as the Bank shall approve executed by any new Domestic Subsidiary
making such Subsidiary a Guarantor and a party to the Security Agreement.
“LC Disbursement” means a payment made by the Bank pursuant to a Letter of
Credit.
all outstanding Letters of Credit at such time plus (b) the aggregate amount of
all LC Disbursements that have not yet been reimbursed by or on behalf of the
Borrower or converted into an Advance pursuant to Section 4.04 at such time.
“Leverage Ratio” means, as of any date of determination, the ratio of
(a) Indebtedness of the Borrower at such date [less any Indebtedness of CAVO
guaranteed by the Borrower] to (b) EBITDA for the 12 month period ending on such
date.
“LIBO Rate” means, with respect to any Eurodollar Advance for any Interest
Period, the rate appearing at Reuters Reference Screen LIBOR01 (or on any
provided on such page of such service, as determined by the Bank from time to
time for purposes of providing quotations of interest rates applicable to dollar
deposits in the London interbank market) at approximately 11:00 a.m., London
time, two Business Days prior to the commencement of such Interest Period, as
the rate for dollar deposits with a maturity comparable to such Interest Period.
In the event that such rate is not available at such time for any reason, then
the “LIBO Rate” with respect to such Eurodollar Advance for such Interest Period
shall be the rate at which dollar deposits of $1,000,000 and for a maturity
comparable to such Interest Period are offered by the principal London office of
the Bank in immediately available funds in the London interbank market at
“Lien” means with respect to any asset (i) any mortgage, lien, pledge, charge,
security interest or encumbrance or any other type of preferential arrangement
of any kind in respect of such asset, whether arising by contract, operation of
law or otherwise, or (ii) 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, the Notes, the Guaranty, the Security
Agreement, the Deeds of Trust and any other documents executed by any Person in
connection with, as evidence of or as security for, the obligations of any
Person hereunder.
“Maintenance Capital Expenditures” means an amount equal to $2,000,000 for each
12 month period.
-9-
“Material Adverse Effect” means a material adverse effect (a) on the business,
condition (financial or otherwise), results of operations or prospects of the
Borrower and its Subsidiaries, taken as a whole; (b) on the legality, validity
or enforceability of any Loan Document; (c) on any Credit Party’s ability to
perform its obligations under any Loan Document; or (d) the rights and remedies
of or benefits available to the Bank under any Loan Document.
“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3)
of ERISA.
“Net Proceeds” means with respect to any disposition of assets by the Borrower
or any Subsidiary, an amount equal to the gross proceeds in cash (including cash
equivalents and any cash payments received by way of deferred payment of
principal pursuant to a note or installment receivable or purchase price
adjustment receivable or otherwise, but only as and when received) of such
disposition, net of attorneys’ fees, accountants’ fees, brokerage, consultant
fees, underwriting commissions and other fees and expenses actually incurred in
connection with such disposition and reserves for taxes and other liabilities
established in connection with such disposition.
“Notes” means the Working Capital Note, the Equipment Note and the Real Estate
Note.
“Obligations” means (a) all principal, interest (including post-petition
interest), fees, reimbursements, indemnifications, and other amounts now or
hereafter owed by any of the Credit Parties to the Bank under the Loan Documents
and any increases, extensions, and rearrangements of those obligations under any
amendments, supplements, and other modifications of the documents and agreements
creating those obligations and (b) all obligations of any Credit Party owing to
the Bank or an Affiliate of the Bank under any Hedging Arrangements that are
permitted by the terms hereof.
“Other Instruments” means as to any Person the certificate or articles of
incorporation, bylaws, or partnership agreement of such Person and all
agreements, loan or credit agreements (other than the Loan Documents),
instruments, documents, judgments, orders, writs, injunctions, decrees,
determinations, awards, ordinances, laws, rules, statutes, regulations, rulings,
franchises, permits or the like to which such Person is a party or by which such
Person or any assets of such person may be bound or affected.
“PBGC” means the Pension Benefit Guaranty Corporation and any successor to all
or any of its functions under ERISA.
“Permits” means any and all registrations, notifications, licenses,
authorizations, permits, certificates, approvals and consents required by any
governmental agency or authority.
“Permitted Investments” means (a) readily marketable direct obligations of the
United States of America, (b) certificates of time deposit with the Bank,
(c) demand deposits with the Bank, (d) securities issued or guaranteed by an
agency of the government of the United States of America or repurchase
agreements collateralized by such securities, (e) prime commercial paper with a
credit rating of A-1 or better as published by Standard & Poor’s Ratings Group
in its most recent applicable rating publication or a rating of P-1 or better as
published by Moody’s Investors Service, Inc. in its most recent applicable
rating publication and (f) commercial paper of the Bank.
-10-
“Permitted Liens” means (i) Liens granted to the Bank to secure the Obligations,
(ii) Liens for taxes, assessments or other governmental charges which are not
yet due or which are being actively contested in good faith by appropriate
proceedings diligently conducted, (iii) Liens securing Indebtedness permitted
pursuant to Section 8.02(c) but only on the Property acquired and improvements
and accessions thereto and (iv) landlord’s, materialmen’s, mechanics’,
carriers’, workmen’s, warehouseman’s and repairmen’s liens, and other similar
liens imposed by Law arising in the ordinary course of business securing
obligations that are not overdue for a period of more than 30 days or are being
contested in good faith by appropriate procedures or proceedings and for which
adequate reserves have been established.
“Person” (whether or not capitalized) means an individual, corporation, limited
liability company, partnership, joint venture, trust, association,
unincorporated organization, receiver, custodian or similar official or any
other juridical entity, or a government or any agency or political subdivision
thereof.
“Plan” has the meaning set forth in Section 6.13.
“Prime Rate” means a fluctuating interest rate per annum (computed on the basis
of a year of 365 (or 366) days for the actual number of days elapsed, including
the first day but excluding the last day) as shall be in effect from time to
time, which rate per annum shall at all times be equal to the rate of interest
announced publicly by the Bank from time to time as the Bank’s prime commercial
rate, each change in such fluctuating interest rate to take effect
simultaneously with the corresponding change in the Bank’s prime commercial
rate. The Prime Rate may not represent the lowest or best rate actually charged
to customers of the Bank.
“Pro Forma Fixed Charge Coverage Ratio” means, at any time, the ratio of
(i) EBITDA for the 12 month period most recently ended prior to such time for
which financial statements are available to (ii) the sum of Fixed Charges for
such period plus the payments of principal of the Subordinated Debt from the
last day of such 12 month period through such time.
“Property” of any Person means any and all property or assets (real, personal or
mixed, tangible or intangible) of such Person.
“Real Estate Loan” has the meaning specified in Section 2.01(c).
“Real Estate Note” means the promissory note payable to the order of the Bank
evidencing the Real Estate Loan, together with all modifications, extensions,
renewals and rearrangements thereof, delivered to the Bank prior to the
Effective Date.
“Real Property” means the real property described on Schedule 1.01 and any
additional real property that is subject to the Lien of any Deed of Trust
delivered after the date hereof pursuant to Section 7.10(b).
“Request for Advance” has the meaning specified in Section 2.02.
-11-
“Restricted Payment” means (a) any payment, dividend or other distribution,
direct or indirect, in respect of any Equity Interest in the Borrower or any
Subsidiary, except a distribution payable solely in additional Equity Interests
in the Borrower, and (b) any payment, direct or indirect, on account of the
redemption, retirement, purchase or other acquisition of any Equity Interest in
the Borrower or any Subsidiary.
“Security Agreement” means the Security Agreement dated as of February 11, 2005,
granting to the Bank a Lien on certain of the assets of the Credit Parties.
“SES” means SES Holdings, Inc., an Oklahoma corporation.
“Sellers” means Owen Richman, Antony Dyakowski and Gwen Bristow.
established by the Federal Reserve Board to which the Bank is subject with
respect to the Adjusted LIBO Rate, for Eurocurrency funding (currently referred
to as “Eurocurrency Liabilities” in Regulation D of the Federal Reserve Board).
Such reserve percentages shall include those imposed pursuant to such Regulation
D. Eurodollar Advances shall be deemed to constitute Eurocurrency funding and to
be subject to such reserve requirements without benefit of or credit for
proration, exemptions or offsets that may be available from time to time to the
Bank under such Regulation D or any comparable regulation. The Statutory Reserve
Rate shall be adjusted automatically on and as of the effective date of any
change in any reserve percentage.
“Subordinated Debt” means the Indebtedness of the Borrower and its Subsidiaries,
calculated in accordance with GAAP, heretofore or hereafter incurred, that is
subordinate and subject in right to payment on terms satisfactory to the Bank in
its sole discretion and, with respect to the Borrower and its Subsidiaries,
includes as of the Effective Date the subordinated indebtedness described on
Schedule 8.02 hereto.
“Subsidiary” means, as to any Person (the “parent”), any corporation,
partnership or other entity, a majority of the outstanding Equity Interests
having by the terms thereof ordinary voting power to elect a majority of the
board of directors or similar body of such entity (irrespective of whether or
not at the time Equity Interests of any other class or classes of such entity
have or might have voting power by reason of the happening of any contingency)
is at the time directly or indirectly owned or controlled by the parent or one
or more of the Subsidiaries of the parent.
“Termination Date” means January 31, 2010.
“Type”, when used in reference to any Advance, refers to whether the rate of
interest on such Advance is determined by reference to the Adjusted LIBO Rate or
the Alternate Base Rate.
“Wells Fargo” means Wells Fargo Bank, National Association.
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“Working Capital Commitment” means the Bank’s Commitment to make Advances in the
aggregate amount of $25,000,000 pursuant to Section 2.01(a) as reduced from time
to time pursuant to Section 2.03.
“Working Capital Exposure” means, with respect to the Bank at any time, the sum
of the outstanding principal amount of the Working Capital Loan and the LC
“Working Capital Loan” has the meaning specified in Section 2.01(a).
“Working Capital Loan Borrowing Base” means, at any time such determination is
made, an amount calculated in accordance with the Working Capital Loan Borrowing
Base Certificate equal to the sum of (i) 85% of Eligible Accounts Receivables
and (ii) the least of (A) 50% of the Eligible Inventory, (B) $10,000,000 and
(C) the amount in clause (i).
“Working Capital Loan Borrowing Base Certificate” means as of any date, a
certification to the Working Capital Loan Borrowing Base as of such date
substantially in the form of Exhibit B.
“Working Capital Loan Maturity Date” means August 8, 2009.
“Working Capital Note” means a promissory note payable to the order of the Bank
evidencing the Working Capital Loan, together with all modifications,
extensions, renewals and rearrangements thereof.
SECTION 1.02 Accounting Terms. All accounting terms not otherwise defined herein
have the meanings assigned to them in accordance with GAAP in the preparation of
the financial statements referred to in Section 7.02.
SECTION 1.03 Interpretation.
(a) In this Agreement, unless a clear contrary intention appears:
(i) the singular number includes the plural number and vice versa;
(ii) reference to any gender includes each other gender;
(iii) the words “herein,” “hereof” and “hereunder” and other words of similar
import refer to this Agreement as a whole and not to any particular Article,
Section or other subdivision;
(iv) reference to any Person includes such Person’s successors and assigns but,
if applicable, only if such successors and assigns are permitted by this
Agreement, and reference to a Person in a particular capacity excludes such
Person in any other capacity or individually, provided that nothing in this
clause (iv) is intended to authorize any assignment not otherwise permitted by
this Agreement;
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(v) reference to any agreement, document or instrument means such agreement,
document or instrument as amended, supplemented or modified and in effect from
time to time in accordance with the terms thereof and, if applicable, the terms
hereof, and reference to any Note includes any note issued pursuant hereto in
extension or renewal thereof and in substitution or replacement therefor;
(vi) unless the context indicates otherwise, reference to any Article, Section,
Schedule or Exhibit means such Article or Section hereof or such Schedule or
Exhibit hereto;
(vii) the word “including” (and with correlative meaning “include”) means
including, without limiting the generality of any description preceding such
term;
(viii) with respect to the determination of any period of time, the word “from”
means “from and including” and the word “to” means “to but excluding”;
(ix) reference to any law means such as amended, modified, codified or
reenacted, in whole or in part, and in effect from time to time; and
(x) whenever the character or amount of any asset or liability or item of income
or expense is required to be determined, such determination shall be made in
accordance with GAAP.
(b) The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
(c) No provision of this Agreement shall be interpreted or construed against any
Person solely because that Person or its legal representative drafted such
provision.
ARTICLE II
SECTION 2.01 The Advances.
(a) Subject to the terms and conditions of this Agreement, including those in
Article V, the Bank shall make Advances (the “Working Capital Loan”) to the
Borrower from time to time on any Business Day during the period from the date
hereof until the Working Capital Loan Maturity Date in an aggregate amount not
to exceed at any time outstanding the Working Capital Commitment; provided,
however, that the Working Capital Exposure shall at no time exceed the lesser of
(y) the Working Capital Commitment or (z) the Working Capital Loan Borrowing
Base. Within the foregoing limits, the Borrower may borrow, prepay and reborrow
(b) Subject to the terms and conditions of this Agreement, including those in
Article V, the Bank shall make an Advance (the “Equipment Loan”) to the Borrower
on the date hereof in an aggregate amount not to exceed the Equipment Loan
Commitment.
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The Borrower may not reborrow amounts repaid with respect to the Equipment Loan.
The Equipment Loan Commitment shall terminate at the close of business on the
Effective Date.
(c) Prior to the date hereof, the Bank has made Advances to the Borrower having
an aggregate principal amount currently outstanding of $932,731 that have been
designated as Real Estate Loans under the Existing Credit Agreement. Such
Advances shall remain outstanding following the effectiveness of this Agreement
and are hereinafter referred to collectively as the “Real Estate Loan”. The
Borrower may not reborrow amounts repaid with respect to the Real Estate Loan.
(d) Each Advance shall be either a Base Rate Advance or a Eurodollar Advance as
the Borrower may request in accordance herewith. The Bank at its option may make
any Eurodollar Advance by causing any domestic or foreign branch or Affiliate of
the Bank to make such Advance; provided that any exercise of such option shall
not affect the obligation of the Borrower to repay such Advance in accordance
(e) At the commencement of each Interest Period for any Eurodollar Advance, such
Advance shall be in an aggregate amount that is an integral multiple of $500,000
and not less than $1,000,000. At the time that each Base Rate Advance is made,
such Base Rate Advance shall be in an aggregate amount that is an integral
multiple of $500,000 and not less than $1,000,000; provided that a Base Rate
Advance may be in an aggregate amount that is equal to the entire unused balance
of the total Working Capital Commitment or that is required to finance the
reimbursement of an LC Disbursement as contemplated by Section 4.04. Advances of
more than one Type may be outstanding at the same time, provided that there
shall not at any time be more than a total of four Eurodollar Advances
outstanding. Notwithstanding any other provision of this Agreement, the Borrower
shall not be entitled to request, or to elect to convert or continue, any
Advance if the Interest Period requested with respect thereto would end after
the maturity date for such Advance.
SECTION 2.02 Making the Advances.
(a) To request an Advance, the Borrower shall notify the Bank of such request
(i) in the case of a Eurodollar Advance, not later than 11:00 a.m., New York
City time, three Business Days before the date of the proposed Advance or
(ii) in the case of a Base Rate Advance, not later than 11:00 a.m., New York
City time, on the date of the proposed Advance. The Borrower shall make each
such request by delivery to the Bank of a written Request for Advance in
substantially the form of Exhibit C and signed by the Borrower (a “Request for
Advance”), and each Request for Advance shall be irrevocable. Each Request for
Advance shall specify the following information in compliance with Section 2.01:
(i) the aggregate amount of the requested Advance;
(ii) the date of such Advance, which shall be a Business Day;
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(iii) whether such Advance is to be a Base Rate Advance or a Eurodollar Advance;
(iv) in the case of a Eurodollar Advance, the initial Interest Period to be
applicable thereto, which shall be a period contemplated by the definition of
the term “Interest Period”;
(v) the amount of the then effective Working Capital Loan Borrowing Base, the
current total Working Capital Exposure (without regard to the requested Advance)
and the pro forma total Working Capital Exposure (giving effect to the requested
Advance); and
(vi) the location and number of the Borrower’s account to which funds are to be
disbursed.
If no election as to the Type of Advance is specified, then the requested
Advance shall be a Base Rate Advance. If no Interest Period is specified with
respect to any requested Eurodollar Advance, then the Borrower shall be deemed
to have selected an Interest Period of one month’s duration. Each Request for
Advance shall constitute a representation that the amount of the requested
Borrowing shall not cause the Working Capital Exposure to exceed the Working
Capital Commitment.
SECTION 2.03 Reduction and Changes in the Commitment.
(a) The Borrower shall have the right, upon at least three Business Days’ prior
written notice to the Bank, to terminate in whole or reduce in part, the unused
portion of the Working Capital Commitment; provided, however, that the Borrower
may not terminate or partially reduce such Commitment at any time to an amount
less than the sum of all Credit Extensions then outstanding under such
Commitment; and provided further, that any such partial reduction shall be in
amounts of not less than $500,000 and shall be an integral multiple of $25,000.
Such notice shall specify the date and the amount of the termination or
reduction of the Commitment.
(b) On the Working Capital Loan Maturity Date the Working Capital Commitment
shall terminate.
ARTICLE III
NOTES, INTEREST AND PAYMENT
SECTION 3.01 The Notes.
(a) The aggregate amount of all Advances made by the Bank under the Working
Capital Loan shall be evidenced by the Working Capital Note. The aggregate
amount of all Advances made by the Bank under the Equipment Loan shall be
evidenced by the Equipment Note. The aggregate amount of all Advances made by
the Bank under the Real Estate Loan shall be evidenced by the Real Estate Notes.
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(b) The Borrower shall pay interest and shall pay principal on the Advances as
provided herein. The Bank shall use its best efforts to keep a record of the
Advances made by it and the payments received by it with respect to each Note,
and the aggregate unpaid principal amount so recorded shall be rebuttable
presumptive evidence of the principal amount owing and unpaid on each Note. The
failure so to record any such amount or any error in so recording any such
amount shall not, however, limit or otherwise affect the obligations of the
Borrower hereunder or under each Note to repay the outstanding principal amount
of the Advances together with all interest accruing thereon.
SECTION 3.02 Interest Elections.
(a) Each Advance initially shall be of the Type specified in the applicable
Advance Request and, in the case of a Eurodollar Advance, shall have an initial
Interest Period as specified in such Advance Request. Thereafter, the Borrower
may elect to convert such Advance to a different Type or to continue such
Advance and, in the case of a Eurodollar Advance, may elect Interest Periods
therefor, all as provided in this Section. The Borrower may elect different
options with respect to different portions of the affected Advance, in which
event each such portion shall be treated as a separate Advance.
Bank of such election by the time that a Request for Advance would be required
under Section 2.02 if the Borrower were requesting an Advance of the Type
resulting from such election to be made on the effective date of such election.
Each such Interest Election Request shall be irrevocable and shall be made by
delivery to the Bank of a written Interest Election Request in a form approved
by the Bank and signed by the Borrower.
(c) Each Interest Election Request shall specify the following information in
compliance with Section 2.01:
(i) the Advance to which such Interest Election Request applies and, if
the portions thereof to be allocated to each resulting Advance (in which case
be specified for each resulting Advance);
(iii) whether the resulting Advance is to be a Base Rate Advance or a Eurodollar
Advance; and
(iv) if the resulting Advance is a Eurodollar Advance, the Interest Period to be
applicable thereto after giving effect to such election, which shall be a period
contemplated by the definition of the term “Interest Period”.
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If any such Interest Election Request requests a Eurodollar Advance but does not
(d) If the Borrower fails to deliver a timely Interest Election Request with
respect to a Eurodollar Advance prior to the end of the Interest Period
applicable thereto, then, unless such Advance is repaid as provided herein, at
the end of such Interest Period such Advance shall be converted to a Base Rate
Advance. Notwithstanding any contrary provision hereof, if an Event of Default
has occurred and is continuing and the Bank so notifies the Borrower, then, so
long as an Event of Default is continuing (i) no outstanding Advance may be
converted to or continued as a Eurodollar Advance and (ii) unless repaid, each
Eurodollar Advance shall be converted to a Base Rate Advance at the end of the
Interest Period applicable thereto.
SECTION 3.03 Interest.
(a) Each Base Rate Advance shall bear interest on the unpaid principal amount
thereof at a rate per annum equal to the lesser of (i) the Alternate Base Rate
minus 0.25% and (ii) the Highest Lawful Rate.
(b) Each Eurodollar Advance shall bear interest on the unpaid principal amount
thereof at a rate per annum equal to the lesser of (i) the Adjusted LIBO Rate
for the Interest Period in effect for such Advance plus 1.75% and (ii) the
Highest Lawful Rate.
(c) Notwithstanding the foregoing, if any principal of or interest on any
Advance or any fee or other amount payable by the Borrower hereunder is not paid
when due, whether at stated maturity, upon acceleration or otherwise, or any
other Event of Default shall occur and be continuing, the Advance shall bear
interest on the unpaid principal amount thereof, after, as well as before
judgment, at a rate per annum equal to the lesser of (i) 4% plus the rate
applicable to Base Rate Advances as provided in paragraph (a) of this Section
and (ii) the Highest Lawful Rate.
(d) Accrued interest on each Loan shall be payable in arrears on each Interest
Payment Date for such Loan and, in the case of Working Capital Loans, upon
termination of the Working Capital Loan Commitment; provided that (i) interest
accrued pursuant to paragraph (c) of this Section shall be payable on demand,
(ii) in the event of any repayment or prepayment of any Advance, accrued
interest on the principal amount repaid or prepaid shall be payable on the date
of such repayment or prepayment and (iii) in the event of any conversion of any
Eurodollar Loan prior to the end of the current Interest Period therefor,
accrued interest on such Loan shall be payable on the effective date of such
conversion.
(e) All interest hereunder shall be computed on the basis of a year of 360 days,
be payable for the
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day). The applicable Alternate Base Rate, Adjusted LIBO Rate or LIBO Rate shall
be determined by the Bank, and such determination shall be conclusive absent
manifest error.
SECTION 3.04 Principal Payments.
(a) Subject to the mandatory prepayment and acceleration provisions of this
Agreement, the Borrower hereby promises to pay the unpaid principal balance of
the Working Capital Note on the Working Capital Loan Maturity Date.
(b) The Borrower hereby promises to pay the Equipment Loan in 52 installments of
$428,571.43 payable on the last day of each month and a final installment of $
14,142,857.14 payable on December 31, 2011.
(c) The Borrower hereby promises to pay the Real Estate Loan in 52 installments
of $6,002.43 payable on the last day of each calendar month and a final
installment of $733,793.63 payable on December 31, 2011.
SECTION 3.05 Voluntary Prepayments.
(a) The Borrower may prepay the outstanding principal amount of any Advance in
whole or in part, together with accrued unpaid interest to the date of such
prepayment on the principal amount prepaid. All such prepayments shall be
applied first to accrued, but unpaid, interest on such Advance, then to the
principal amount of such Advance. Payments of principal on the Equipment Loan
and the Real Estate Loan shall be applied to the remaining installments thereof
in inverse order of maturity. If the Borrower prepays all or part of the
Equipment Loan or the Real Estate Loan prior to February 11, 2008, the Borrower
shall pay the Bank a prepayment fee equal to 1% of the then outstanding balance
of the Equipment Loan and the Real Estate Loan.
(b) The Borrower shall provide to the Bank written notice of any prepayment
hereunder (i) in the case of prepayment of a Eurodollar Advance, not later than
11:00 a.m., Houston time, three Business Days before the date of prepayment, or
(ii) in the case of prepayment of a Base Rate Advance, not later than 11:00
a.m., Houston time, one Business Day before the date of prepayment. Each such
notice shall be irrevocable and shall specify the prepayment date and the
principal amount of each Advance or portion thereof to be prepaid. Each partial
prepayment of any Advance shall be in an amount that would be permitted in the
case of an Advance of the same Type as provided in Section 2.02.
SECTION 3.06 Mandatory Prepayments.
(a) In the event any Working Capital Loan Borrowing Base Certificate submitted
pursuant to Section 7.02 reflects that the Working Capital Exposure exceeds the
Working Capital Loan Borrowing Base, the Borrower shall promptly make a
prepayment in an aggregate principal amount equal to such excess.
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(b) Within 15 days after the delivery of annual financial statements of the
Borrower and its Subsidiaries for the fiscal year ending December 31, 2007, and
each fiscal year thereafter, as contemplated by Section 7.02(a), the Borrower
shall repay the Equipment Loan, without premium or penalty, in an amount equal
to 50% of Excess Cash Flow for such fiscal year.
(c) Within 90 days after the last day of each fiscal quarter, the Borrower shall
prepay the Equipment Loan from the Net Proceeds of any Equipment sold during
such quarter that have not been reinvested in similar equipment prior to such
90th day.
(d) Any prepayment of the Equipment Loan shall be applied to the remaining
installments of the Equipment Loan in inverse order of maturity.
SECTION 3.07 Fees.
(a) The Borrower shall pay to the Bank a commitment fee equal to 0.25% per annum
on the average daily amount by which the Working Capital Loan Commitment exceeds
the outstanding Working Capital Exposure. Such fee is due quarterly in arrears
on each March 31, June 30, September 30 and December 31 and on the Working
Capital Loan Maturity Date.
(b) The Borrower shall pay to the Bank the following fees with respect to
Letters of Credit:
(i) a letter of credit fee for each Letter of Credit issued hereunder in an
amount equal to the 1.75% per annum (calculated on the basis of a 360 day year)
on the face amount of such Letter of Credit for the period such Letter of Credit
is outstanding. Such fee shall be due and payable quarterly in arrears on
March 31, June 30, September 30, and December 31 of each year, and on the
Working Capital Loan Maturity Date; and
(ii) Such other usual and customary fees associated with any transfers,
amendments, drawings, negotiations or reissuances of any Letters of Credit. Such
fees shall be due and payable as requested by the Bank in accordance with the
Bank’s then current fee policy.
SECTION 3.08 Payments and Computations.
(a) The Borrower shall make each payment or prepayment hereunder and under the
Notes not later than 12:00 Noon (Houston, Texas time) on the day when due in
Dollars to the Bank at its address referred to in Section 10.02 in same day
funds.
(b) Each determination by the Bank of an interest rate hereunder shall be
(c) 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
included in the computation of payment of interest.
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SECTION 3.09 The Borrower Unconditionally Liable. The Borrower shall be
unconditionally liable to the Bank for the principal amount of all Credit
Extensions, interest due thereon, and all other amounts due to the Bank
hereunder or under any other agreement or security document executed in
connection herewith, and shall make prompt and punctual payment when due of such
amounts.
SECTION 3.10 Reserve Requirements; Change in Circumstances.
(a) It is understood that the cost to the Bank of making or maintaining any of
the Advances may fluctuate as a result of the applicability of, or changes in,
reserve requirements imposed by the Board of Governors of the Federal Reserve
System. The Borrower agrees to pay to the Bank from time to time, as provided in
paragraph (d) below, such amounts as shall be necessary to compensate the Bank
for the portion of the cost of making or maintaining Advances resulting from any
such reserve requirements to the extent set forth in this Section.
(b) Notwithstanding any other provision herein, if after the date of this
Agreement the introduction of any applicable law or regulation or any change in
applicable law or regulation or in the interpretation or administration thereof
by any governmental authority charged with the interpretation or administration
thereof, or compliance by the Bank with any applicable guideline or request from
any central bank or governmental authority (whether or not having the force of
law) (i) shall change the basis of taxation of payments to the Bank of the
principal of or interest on any Advance made by the Bank or any other fees or
amounts payable hereunder, other than (x) taxes imposed on the overall net
income or franchise taxes with respect to the Bank or its lending office by the
jurisdiction in which the Bank or its lending office has its principal office or
by any political subdivision or taxing authority therein (or any tax which is
enacted or adopted by such jurisdiction, political subdivision or taxing
authority as a direct substitute for any such taxes) or (y) any tax, assessment
or other governmental charge that would not have been imposed but for the
failure of the Bank to comply with any certification, information, documentation
or other reporting requirement, or (ii) shall 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 the Bank, and the result of
any of the foregoing shall be to increase the cost to the Bank of maintaining
its Commitment or to reduce the amount of any sum received or receivable by the
Bank hereunder (whether of principal, interest or otherwise) in respect thereof
by an amount deemed in good faith by the Bank to be material, then the Borrower
shall pay to the Bank such additional amount as will compensate the Bank for
such increase or reduction upon demand by the Bank. Notwithstanding the
foregoing, in no event shall the Bank be permitted to receive any compensation
hereunder constituting interest in excess of the Highest Lawful Rate.
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(c) If the Bank shall have determined in good faith that the adoption of any
applicable law, rule, regulation or guideline regarding capital adequacy, or any
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by the Bank (or any
lending office of the Bank) with any request or directive regarding capital
bank or comparable agency (including any capital adequacy guidelines under
consideration as of the date of this Agreement by the Board of Governors of the
Federal Reserve System and the Comptroller of the Currency) (except any such
adoption or change reflected in the Adjusted LIBO Rate), has or would have the
effect of reducing the rate of return on the Bank’s capital or any corporation
controlling the Bank’s capital as a consequence of its obligations hereunder to
a level below that which the Bank could have achieved but for such adoption,
change or compliance (taking into consideration the Bank’s policies with respect
to capital adequacy) by an amount deemed by the Bank to be material, then from
time to time the Borrower shall pay to the Bank such additional amount or
amounts as will compensate the Bank for such reduction upon demand by the Bank.
Notwithstanding the foregoing, in no event shall the Bank be permitted to
receive any compensation hereunder constituting interest in excess of the
Highest Lawful Rate.
(d) If the Bank seeks compensation under this Agreement it will notify the
Borrower of any event occurring after the date of this Agreement which will
entitle the Bank to compensation pursuant to this Section, as promptly as
practicable, and in any event within 180 days after it becomes aware thereof and
determines to request compensation. A certificate of the Bank setting forth in
reasonable detail (i) such amount or amounts as shall be necessary to compensate
the Bank as specified in paragraph (a) or (b) above, as the case may be, and
(ii) the calculation of such amount or amounts shall be delivered to the
Borrower and shall be prima facie evidence of such amount or amounts. The
Borrower shall pay to the Bank the amount shown as due on any such certificate
within ten days after its receipt of the same.
(e) Failure on the part of the Bank to demand compensation for any increased
costs or reduction in amounts received or receivable or reduction in return on
capital with respect to any Advance shall not constitute a waiver of the Bank’s
rights to demand compensation for any increased costs or reduction in amounts
received or receivable or reduction in return on capital with respect to such
Advance, provided that Borrower’s obligation to pay the Bank shall be limited to
the increased costs or reduced amount that is attributable to the period
commencing 180 days prior to the date on which the Bank gives the Borrower
notice under subsection (d) hereof. The protection of this Section shall be
available to the Bank regardless of any possible contention of invalidity or
inapplicability of law, regulation or condition that has been imposed.
SECTION 3.11 Indemnity. The Borrower shall indemnify the Bank against any loss
or reasonable expense which the Bank may sustain or incur as a consequence of
(a) any failure by the Borrower to fulfill on the date of any Advance hereunder
the applicable conditions set forth in Article V, (b) any failure by the
Borrower to borrow hereunder after a Request for Advance pursuant to Article II
has been given, (c) any default in the payment or prepayment of the principal
amount of any Advance or any part thereof or interest accrued thereon, as and
when due and payable (at the due date thereof, by notice of prepayment or
otherwise) or (d) the
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occurrence of any Event of Default. A certificate of the Bank setting forth any
amount or amounts which the Bank is entitled to receive pursuant to this Section
shall be delivered to the Borrower and shall be conclusive, if made in good
faith, absent demonstrable error. The Borrower shall pay to the Bank the amount
shown as due on any certificate within 30 days after its receipt of the same.
Highest Lawful Rate. Without prejudice to the survival of any other obligations
of the Borrower hereunder, the obligations of the Borrower as to any claim under
this Section shall survive the termination of this Agreement, the payment or
assignment of any of the Notes or any combination of the foregoing provided
notice of such claim shall have been given to the Borrower within 180 days after
such termination or assignment.
ARTICLE IV
LETTERS OF CREDIT
SECTION 4.01 General. Subject to the terms and conditions set forth herein, the
Borrower may request the issuance of Letters of Credit for its own account, in a
form reasonably acceptable to the Bank, at any time and from time to time prior
to the Working Capital Loan Maturity Date. In the event of any inconsistency
between the terms and conditions of this Agreement and the terms and conditions
of any form of letter of credit application or other agreement submitted by the
Borrower to, or entered into by the Borrower with, the Bank relating to any
Letter of Credit, the terms and conditions of this Agreement shall control. On
and after the Effective Date, each Existing Letter of Credit shall be a Letter
of Credit issued hereunder.
SECTION 4.02 Notice of Issuance, Amendment, Renewal, Extension; Certain
arrangements for doing so have been approved by the Bank) to the Bank
identifying the Letter of Credit to be amended, renewed or extended, and
specifying the date of issuance, amendment, renewal or extension (which shall be
a Business Day), the date on which such Letter of Credit is to expire (which
shall comply with Section 4.03), the amount (in Dollars) of such Letter of
information as shall be necessary to prepare, amend, renew or extend such Letter
of Credit. If requested by the Bank, the Borrower also shall submit a letter of
credit application on the Bank’s standard form in connection with any request
for a Letter of Credit. 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, the Borrower shall be deemed to represent and warrant that)
after giving effect to such issuance, amendment, renewal or extension (i) the LC
Exposure shall not exceed $1,000,000 and (ii) the total Working Capital Exposure
shall not exceed the total Working Capital Loan Commitment.
SECTION 4.03 Expiration Date. Each Letter of Credit shall expire at or prior to
the issuance of such Letter of Credit (or, in the case of any renewal or
extension thereof, one year after such renewal
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or extension) and (ii) the date that is 30 Business Days prior to the Working
Capital Loan Maturity Date; provided, however, that any Letter of Credit with a
one-year tenor may provide for the renewal thereof for additional one-year
periods (which shall in no event extend beyond the date referred to in clause
(ii) above).
SECTION 4.04 Reimbursement. If the Bank makes any LC Disbursement in respect of
a Letter of Credit, the Borrower shall reimburse such LC Disbursement by paying
to the Bank an amount equal to such LC Disbursement not later than 12:00 noon,
Houston, Texas time, on (i) the Business Day that the Borrower receives notice
of such LC Disbursement, if such notice is received prior to 11:00 a.m.,
Houston, Texas time, on the day of receipt, or (ii) the Business Day immediately
following the day that the Borrower receives such notice, if such notice is not
received prior to such time on the day of receipt; provided, however, that, if
no Default has occurred and is continuing, the Borrower may, subject to the
conditions to borrowing set forth herein, request in accordance with
Section 2.01(a) an Advance to finance such reimbursement and, to the extent so
financed, the Borrower’s obligation to make such payment shall be discharged and
replaced by the resulting Working Capital Advance.
SECTION 4.05 Obligations Absolute. The Borrower’s obligation to reimburse LC
Disbursements as provided in Section 4.04 shall be absolute, unconditional and
(i) any lack of validity or enforceability of any Letter of Credit or this
Agreement, or any term or provision therein, (ii) any draft or other document
presented under a 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 the 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, or (iv) 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, or provide a right of
setoff against, the Borrower’s obligations hereunder. Neither the Bank nor any
of its Affiliates shall 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 preceding sentence), or 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), any error in interpretation of
technical terms or any consequence arising from causes beyond the control of the
Bank; provided, however, that the foregoing shall not be construed to excuse the
Bank from liability to the Borrower to the extent of any direct damages (as
opposed to consequential damages, claims in respect of which are hereby waived
by the Borrower to the extent permitted by applicable law) suffered by the
Borrower that are caused by the Bank’s failure to exercise care when determining
with the terms thereof. In the absence of gross negligence or willful misconduct
on the part of the Bank (as finally determined by a court of competent
jurisdiction), the Bank shall be deemed to have exercised care in each such
generality thereof, with respect to documents presented that appear on their
face to be in substantial compliance with the terms of a Letter of Credit, the
Bank may, in its sole discretion, either accept and make payment upon such
documents without responsibility for further investigation, regardless of any
such documents if such documents are not in strict compliance with the terms of
such Letter of Credit.
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SECTION 4.06 Disbursement Procedures. The Bank shall, promptly following its
receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit. The Bank shall promptly notify the Borrower by
telephone (confirmed by telecopy) of such demand for payment and whether the
Bank has made or will make an LC Disbursement thereunder; provided, however,
that any failure to give or delay in giving such notice shall not relieve the
Borrower of its obligation to reimburse the Bank with respect to any such LC
Disbursement.
SECTION 4.07 Interim Interest. If the Bank shall make any LC Disbursement, then,
unless the Borrower shall reimburse such LC Disbursement in full on the date
such LC Disbursement is made, the unpaid 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, at the
rate per annum then applicable to the Working Capital Loan; provided, however,
that, if the Borrower fails to reimburse such LC Disbursement when due pursuant
to Section 4.04, then Section 3.03(c) shall apply.
SECTION 4.08 Cash Collateralization. If any Event of Default shall occur and be
continuing, on the Business Day that the Borrower receives notice from the Bank
Borrower shall deposit in an account with the Bank, in the name of the Bank, an
amount in cash equal to 105% of the LC Exposure as of such date plus any accrued
and unpaid interest thereon; provided, however, that the obligation to deposit
such cash collateral shall become effective immediately, and such deposit shall
upon the occurrence of any Event of Default with respect to the Borrower
described in clause (d) or (e) of Section 9.01. Such deposit shall be held by
the Bank as collateral for the payment and performance of the obligations of the
Borrower under this Agreement. The Bank shall have exclusive dominion and
than any interest earned on the investment of such deposits, which investments
shall be made at the option and sole discretion of the Bank and at the
Borrower’s risk and expense, such deposits shall not bear interest. Interest or
profits, if any, on such investments shall accumulate in such account. The Bank
shall apply moneys in such account to reimburse itself for LC Disbursements for
which it has not been reimbursed and, to the extent not so applied, shall be
held for the satisfaction of the reimbursement obligations of the Borrower for
the LC Exposure at such time or, if the maturity of the Loans has been
accelerated, be applied to satisfy other obligations of the Borrower under this
Agreement. If the Borrower 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 the Borrower within
three Business Days after all Events of Default have been cured or waived.
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ARTICLE V
CONDITIONS OF LENDING
SECTION 5.01 Condition Precedent to Initial Credit Extension. The obligations of
the Bank under this Agreement shall not become effective until the date on which
each of the following conditions is satisfied (or waived in accordance with
Section 10.01):
(a) The Bank shall have received the Working Capital Note and the Equipment
Note, each duly executed and delivered by the Borrower to the order of the Bank.
(b) The Bank shall have received certified copies of all documents evidencing
necessary governmental approvals, if any, with respect to the Loan Documents.
(c) The Bank shall have received a certificate of the Secretary of each Credit
Party certifying inter alia, (i) true and correct copies of the organizational
documents of such Credit Party, (ii) true and correct copies of resolutions
adopted by the Board of Directors (or comparable body) of each Credit Party
(A) authorizing the execution, delivery and performance by each Credit Party of
the Loan Documents to which it is a party and the incurrence of its obligations
thereunder, (B) approving the forms of the Loan Documents that will be delivered
at or prior to the Effective Date and (C) authorizing the officers of such
Credit Party to execute and deliver the Loan Documents to which it is a party
and any related documents, including any agreement or security document
contemplated by this Agreement, and (iii) the incumbency and specimen signatures
of the officers of such Credit Party executing any documents on behalf of such
Credit Party.
(d) The Bank shall have received a certificate of the chief financial officer of
the Borrower certifying inter alia, (i) the truth of the representations and
warranties made by the Borrower in any Loan Document that will be delivered at
or prior to the Effective Date, (ii) the absence of any proceedings for the
dissolution or liquidation of the Borrower and (iii) the absence of the
occurrence and continuance of any Default.
(e) The Bank shall have received certificates as to existence, qualification and
good standing issued by the Secretary of State of each state wherein any Credit
Party is or should be qualified to do business as a foreign entity.
(f) The Bank shall have received the written opinion of Doherty & Doherty LLP,
counsel for the Borrower, dated the Effective Date, in form and substance
satisfactory to the Bank.
(g) The Bank shall have received the payment of all fees required to be paid,
and all expenses for which invoices have been presented.
(h) The Bank shall have received an executed payoff letter from the Sellers and
BancFirst with accompanying releases in regard to the Indebtedness owing to said
parties by SES or the Sellers;
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(i) The Bank shall have received a Working Capital Loan Borrowing Base
Certificate certified by the chief financial officer of the Borrower.
(j) The Bank shall have received certificates of insurance covering the
properties of the Borrower and its Subsidiaries with such insurance carriers,
for such amounts and covering such risks as are acceptable to the Bank;
(k) The Equipment Loan and the Working Capital Loan outstanding under the
Existing Credit Agreement shall have been prepaid (or prepaid simultaneously
with the closing hereunder) together with accrued interest and fees and all
other amounts thereunder.
(l) The Bank shall be satisfied with the form and substance of the Acquisition
Documents, the total financing requirements for the Acquisition of SES shall not
exceed $8,200,000, the Acquisition shall have been consummated or shall be
consummated simultaneously on the Effective Date in accordance with the terms of
the Acquisition Documents (without any waiver or amendment of any such terms not
approved by the Bank), and the Bank shall have received a certificate to such
effect;
(m) Each Guarantor shall have executed and delivered to the Bank an agreement
confirming the continued effectiveness of the Guaranty, the Security Agreement
and the Deeds of Trust in a form satisfactory to the Bank; and
(n) The Bank shall have received all other documents that it may reasonably
request relating to any other matters relevant hereto.
SECTION 5.02 Conditions Precedent to All Advances. The obligation of the Bank to
make an Advance or issue, amend, renew or extend a Letter of Credit shall be
subject to the satisfaction or waiver of the following conditions precedent on
the date of such Advance or issuance:
(a) The Bank shall have received the Request for Advance required by
Section 2.02 or a request for the issuance, amendment, renewal or extension of a
Letter of Credit pursuant to Section 4.02.
(b) No Default has occurred and is continuing or will result from the making of
such Advance.
(c) The representations and warranties of the Credit Parties contained in the
Loan Documents shall be true and correct as of the date of such Advance, with
the same effect as though made on such date.
(d) With respect to Advances under the Working Capital Loan, immediately after
giving effect to such Advance, the Working Capital Exposure shall not exceed the
lesser of (i) the Working Capital Loan Commitment or (ii) the Working Capital
Loan Borrowing Base as set forth in the most current certificate required to be
delivered pursuant to Section 7.02.
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(e) No Material Adverse Effect shall have occurred since the Effective Date.
Each Advance hereunder shall be deemed to be a representation and warranty by
the Borrower on the date of such Advance as to the facts specified in clauses
(a) through (e) of this Section 5.02.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
The Borrower as to itself and its Subsidiaries represents and warrants to the
Bank as follows:
SECTION 6.01 Organization, Standing and Qualification. Each Credit Party is a
of the state of its organization and is duly qualified and licensed to do
business and in good standing in each jurisdiction where the failure to be so
qualified, licensed and in good standing would reasonably be likely to result in
SECTION 6.02 Authority. The execution, delivery and performance by each Credit
Party of the Loan Documents to which it is a party are within such Credit
Party’s corporate powers, have been duly authorized by all necessary corporate
action, and do not contravene (i) its Other Instruments, or (ii) any applicable
law, regulation, ruling or order of any government or governmental entity or any
contract to which any Credit Party is a party or by which the property of any
Credit Party is bound. This Agreement, the other Loan Documents and the
Acquisition Documents constitute the legal, valid and binding obligations of the
Credit Parties party thereto enforceable in accordance with their respective
moratorium or similar laws at the time in effect affecting the rights of
creditors generally and subject to general principles of equity, regardless of
whether considered in a proceeding in equity or at law.
SECTION 6.03 Financial Condition. The consolidated balance sheets of the
Borrower and its Subsidiaries at December 31, 2006 and June 30, 2007, and the
related consolidated statements of income, retained earnings and cash flows of
the Borrower and its Subsidiaries for the fiscal year and six month periods then
ended, copies of which have been furnished to the Bank and certified by the
chief financial officer of the Borrower, fairly present the consolidated
financial condition of the Borrower and its Subsidiaries as at such dates and
the results of the operations of the Borrower and its Subsidiaries for the
periods ended on such dates, all in accordance with GAAP. Since December 31,
2006, there has been no Material Adverse Effect.
SECTION 6.04 Litigation. There is no pending or, to the best knowledge of the
Borrower, threatened action or proceeding against or affecting the Borrower or
any Subsidiary of the Borrower before any court, governmental agency or
arbitrator (i) in which an adverse decision may have a Material Adverse Effect,
(ii) that involve any Loan Document, Acquisition Document or the Acquisition, or
(iii) that could impair the consummation of the Acquisition within the time and
in the manner contemplated by the Acquisition Documents.
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SECTION 6.05 Regulation U. The proceeds of the Credit Extensions will be used by
the Borrower only for general corporate purposes and without limiting the
foregoing, in no event will any proceeds of the Credit Extensions be used to
acquire any security in any transaction that is subject to Sections 13 and 14 of
the Securities Exchange Act of 1934 or to purchase or carry any margin stock
(within the meaning of Regulation U issued by the Board of Governors of the
Federal Reserve System) or to extend credit to others for the purpose of
purchasing or carrying any such margin stock. The Borrower is not engaged in the
business of extending credit for the purpose of purchasing or carrying such
margin stock.
SECTION 6.06 Compliance with Law. Each of the Borrower and its Subsidiaries is,
and at all times since January 1, 2007, has been, in compliance with each law
that is or was applicable to it or to the conduct or operation of its business
or the ownership or use of any of its assets where the failure to be in
compliance could reasonably be expected to result in a Material Adverse Effect;
and neither the Borrower nor any of its Subsidiaries has received any notice of,
nor does any of them have knowledge of, the assertion by any governmental
authority of any such violation or of any obligation of the Borrower or any
Subsidiary to undertake any remedial action under any law.
SECTION 6.07 Other Instruments. No Credit Party is a party to any indenture,
loan or credit agreement or any lease or other agreement or instrument or
subject to any restriction which would have a Material Adverse Effect.
SECTION 6.08 Title to Properties. Borrower and each of its Subsidiaries has
good, indefeasible and insurable title to all its material properties, including
all property reflected in the consolidated balance sheet of the Borrower (except
for such property as has been sold or otherwise disposed of in the ordinary
course of business since the date thereof), free from any Liens except Permitted
Liens.
SECTION 6.09 Taxes. Except as disclosed in writing by the Borrower to the Bank
prior to the Effective Date, the federal tax returns of each Credit Party and
such other tax returns and reports required to be filed with the appropriate
governmental agencies in all jurisdictions in which such returns or reports are
required to be filed have been filed and all of the foregoing are in all
material respects, true and correct and complete. Each Credit Party has filed
all federal, state and local tax returns and other reports required by law to be
filed and have paid all taxes and other similar charges that are due and payable
by it.
SECTION 6.10 Environmental Compliance.
(a) The Borrower and each of its Subsidiaries has been and is currently in
compliance in all respects with all applicable Environmental Laws, except where
such noncompliance is unlikely to have a Material Adverse Effect;
(b) Neither the Borrower nor any of its Subsidiaries has received notice that it
is or may be a potentially responsible party for removal or remediation of any
Hazardous Substance or petroleum product, or that any Person has or may exert a
claim for contribution or reimbursement for such removal or remediation;
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(c) To the best of the Borrower’s knowledge, there has been no release of any
Hazardous Substance or petroleum product from, onto or under the Property of
Borrower or any Subsidiary of the Borrower which release would have a Material
Adverse Effect; and
(d) without limiting the foregoing:
(i) There is no existing or, to the best of the Borrower’s knowledge,
anticipated order requiring the Borrower or any Subsidiary of the Borrower to
clean up or remediate any Hazardous Substance or petroleum product on any
property presently or formerly owned, leased or used by the Borrower or any
Subsidiary of the Borrower;
(ii) All underground and above ground storage tanks located on the Property of
the Borrower or any Subsidiary of the Borrower (“Tanks”) have been registered
and all fees required by any Environmental Law have been paid;
(iii) The Borrower and Borrower’s Subsidiaries and all Tanks are in compliance
with Chapter 26 of the Texas Water Code, Chapter 334 of the Texas Administrative
Code, the Resource Conservation and Recovery Act and 40 C.F.R. Part 280, as
supplemented and amended, including without limitation, requirements for
financial assurance, tank replacement, and monitoring.
SECTION 6.11 No Default. Neither the Borrower nor any Subsidiary of the Borrower
is in default under any instrument evidencing Indebtedness, and the execution,
delivery and performance of this Agreement and the Loan Documents by the Credit
Parties will not result in a default in the payment or performance of any
obligations or in the performance of any mortgage, lease, contract or other
agreement to which the Borrower or such Subsidiary is a party or by which the
Borrower or such Subsidiary is or any of the Borrower’s or such Subsidiary’s
properties or assets may be bound and no default thereunder has occurred and is
continuing.
SECTION 6.12 Subsidiaries. Except as listed on Schedule 6.12, the Borrower has
no Subsidiaries.
SECTION 6.13 ERISA. The Borrower and its Subsidiaries and each member of such
parties’ “Controlled Group”, within the meaning of Section 414 of the Code or
Section 4001(a) of ERISA, have timely fulfilled all their obligations under the
minimum funding standards of ERISA and the Code with respect to each “Employee
Benefit Plan” (within the meaning of Section 3(3) of ERISA), whether or not
terminated, to or with respect to which either the Borrower, any Subsidiary of
the Borrower and/or a member of its Controlled Group is making or accruing an
obligation to make contributions or within the preceding six years has made or
had an obligation to make contributions (a “Plan”) and are (and have been) in
compliance in all material respects with the applicable provisions of ERISA, the
Code and other law with respect to each Plan. Each Plan is (and/or has been)
maintained and operated in compliance in all material respects with the
applicable provisions of ERISA, the Code and other law. Neither the Borrower,
any of its Subsidiaries nor any member of their Controlled Group:
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(a) has sought (or is seeking) a waiver of the minimum funding standard under
Section 412 of the Code in respect of any Plan;
(b) has failed to timely make any contribution or payment to or in respect of
any Plan, or made any amendment to any Plan that has resulted or could result in
the imposition of a Lien or the posting of a bond or other security under ERISA
or the Code; or
(c) has incurred (and no event exists which could result in) any liability under
Title IV of ERISA (other than a liability to the PBGC for premiums under
Section 4007 of ERISA). No litigation, investigation or claim (other than a
routine claim for benefits) is pending or, to the knowledge of the Borrower,
threatened or anticipated concerning any Plan and no unfunded liability (whether
or not current or contingent) exists under or with respect to any Plan.
SECTION 6.14 Acceptable Security Interest. The Security Agreement is effective
to create in favor of the Bank a valid Lien on all right, title and interest of
each Credit Party, as applicable, in the Collateral, as security for the
Obligations, prior and superior in right to any other Lien (except for Liens
permitted by Section 8.01). All financing statements have been filed that are
necessary to perfect any security interest created pursuant to the Security
Agreement that can be perfected by the filing of such financing statements and
all actions necessary to provide control to the Bank, with respect to any
Collateral for which control can be established in favor of the Bank, have been
taken, including delivery of such Collateral to the Bank to the extent such
Collateral is certificated or for which possession can provide perfection with
respect thereto.
ARTICLE VII
AFFIRMATIVE COVENANTS
Until the Final Payment Date the Borrower as to itself and its Subsidiaries
covenants as follows:
SECTION 7.01 Compliance with Laws, Etc.
(a) The Borrower shall, and shall 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, paying before the same become
delinquent all taxes, assessments and governmental charges imposed upon it or
upon its property except to the extent contested in good faith by appropriate
proceedings diligently conducted and shall comply with and perform and observe
all material covenants, provisions and conditions to be performed and observed
on the part of the Borrower or such Subsidiary in connection with all of its
Other Instruments.
(b) Notwithstanding the foregoing, each of the Borrower and its Subsidiaries
shall (i) comply in a timely fashion with, or operate pursuant to valid waivers
of, the provisions of all Environmental Laws unless the failure to do so will
not have a Material Adverse Effect, (ii) notify each Bank promptly in the event
of any actual or alleged
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material noncompliance with any Environmental Laws or any notice of any actual
or alleged obligation to take corrective action with respect to any Hazardous
Substance or petroleum product and (iii) promptly forward to the Bank a copy of
any claim, judgment, order, notice, civil or criminal complaint, actual or
threatened Lien, request for injunction, threatened or actual withdrawal of any
Permit or other communication or report in connection with any material matter
relating to Environmental Laws, Hazardous Substances or petroleum products as it
may adversely affect the Borrower or such Subsidiary or any Property of the
Borrower or such Subsidiary.
SECTION 7.02 Reporting Requirements. The Borrower will furnish or will cause to
be furnished at its expense to the Bank:
(a) as soon as available and in any event within 120 days after the end of each
fiscal year of the Borrower, a copy of the consolidated and consolidating
balance sheets of the Borrower and its Subsidiaries as of the end of such year
and the related consolidated and consolidating statements of income and cash
flows for such year, audited and bearing an unqualified opinion by independent
certified public accountants acceptable to the Bank and certified by the chief
financial officer of the Borrower as fairly presenting the financial position of
the Borrower and its Subsidiaries as at the dates indicated and in accordance
with GAAP together with a statement of such accountants stating that, in making
the examination necessary for their report, they obtained no knowledge of any
Default, or, if such accountants shall have obtained knowledge of any such
Default, specifying the details and the nature and status thereof;
(b) as soon as available and in any event within 25 days after the end of each
calendar month of the Borrower, the consolidated and consolidating balance
sheets of the Borrower as of the end of such month and the related consolidated
and consolidating statements of income and cash flows of the Borrower for such
month all in reasonable detail, certified by the chief financial officer of the
Borrower as fairly presenting the financial position of the Borrower as at the
dates indicated and in accordance with GAAP;
(c) as soon as available and in any event within 25 days after the end of each
calendar month, a completed Working Capital Loan Borrowing Base Certificate as
of the end of such month;
(d) as soon as available and in any event within 25 days after the end of the
first three fiscal quarters of each fiscal year of the Borrower and within 120
days after the end of each fiscal year of the Borrower, a Compliance Certificate
from the Borrower as of the end of such period;
(e) as soon as available and in any event within 25 days after the end of each
calendar month of the Borrower, a monthly Accounts Receivable aging, accounts
payables aging and inventory listing and aging report of Borrower, in form
satisfactory to the Bank;
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(f) as soon as available and in any event within ten days after the end of each
fiscal year of the Borrower, a listing of all Accounts Receivable debtors
including physical addresses, contact names and phone numbers;
(g) Within 30 days after the end of each fiscal year of the Borrower, annual
operating and capital budgets for the current fiscal year;
(h) Promptly after the commencement thereof, notice of all actions, suits,
investigations and proceedings before any court , tribunal, agency or other
governmental authority, affecting the Borrower or any of its Subsidiaries;
(i) As soon as available and in any event within 25 days after the end of each
fiscal quarter of the Borrower, an Equipment sales report from the Borrower as
of the end of such period; and
(j) such other information as the Bank may from time to time reasonably request.
SECTION 7.03 Visitation Rights. At any reasonable time and from time to time
upon prior notice to the Borrower, the Borrower shall permit the Bank or any
agents or representatives thereof to examine and make copies of and abstracts
from the records and books of account of, and visit and inspect the Properties,
Inventory and chattel paper of, the Borrower or any Subsidiary of the Borrower
and to discuss the affairs, finances and accounts of the Borrower or such
Subsidiary with any officer of the Borrower or such Subsidiary and their
independent public accountants.
SECTION 7.04 Maintenance of Insurance. The Borrower shall, and shall cause each
Subsidiary of the Borrower to, maintain insurance with responsible and reputable
insurance companies in such amounts and covering such risks as are usually
carried by companies engaged in similar businesses and owning similar properties
in the same trade and general areas in which the Borrower or such Subsidiaries
operate. Each liability insurance policy shall name the Bank as an additional
insured and each property insurance policy shall name the Bank as loss payee.
The Borrower will, and will cause each Subsidiary of the Borrower to, furnish
evidence of any such insurance referred to in this Section upon request by the
Bank.
SECTION 7.05 Maintenance of Properties, Etc. The Borrower shall, and shall cause
each Subsidiary of the Borrower to, maintain and preserve all of its Properties,
necessary or useful in the proper conduct of its business in good working order
and condition, ordinary wear and tear excepted.
SECTION 7.06 Keeping of Records and Books of Account. The Borrower shall, and
shall cause each Subsidiary of the Borrower to, keep adequate records and books
of account in accordance with GAAP.
SECTION 7.07 Preservation of Existence, Etc. The Borrower shall, and shall cause
each Subsidiary of the Borrower to, preserve and maintain its existence, rights,
franchises and privileges in the state of its formation and qualify and remain
qualified in each jurisdiction in which such qualification is necessary or
desirable in view of its business and operations and the ownership of its
Properties.
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SECTION 7.08 Notification of Adverse Events. The Borrower shall notify the Bank
of all Events of Default within five days of the occurrence thereof.
SECTION 7.09 ERISA Compliance. The Borrower shall, and shall cause each ERISA
Affiliate to, comply in all material respects with the provisions of ERISA, the
Internal Revenue Code of 1986, as amended, and all other applicable laws and the
regulations and interpretations thereunder.
SECTION 7.10 Additional Security.
(a) No later than ten days after any Person becomes a Subsidiary, the Borrower
shall, and shall cause such Subsidiary (unless it is not a Domestic Subsidiary)
and its parent to, execute and deliver a Joinder Agreement under which (i) such
Domestic Subsidiary shall grant a security interest in its assets described in
the Security Agreement as security for the Obligations and become a Guarantor,
and (ii) such parent pledges to the Bank 100% of the common stock or other
ownership interests of such Domestic Subsidiary (or 65% of the common stock or
other ownership interests of such Subsidiary if it is not a Domestic Subsidiary)
and to deliver to the Bank such other documents relating to such Subsidiary as
the Bank may reasonably request.
(b) From and after the Closing Date, if (i) the Borrower or any Guarantor
acquires any fee interest in real property having a book value in excess of
$100,000 or (ii) at the time any Person becomes a Guarantor, such Person owns or
holds any such fee interest in real property of such value, such Credit Party
shall deliver to the Bank, at its request after such acquisition of such
property or such Person becomes a Guarantor, as the case may be, the following:
(i) A fully executed and notarized mortgage or deed of trust (an “Additional
Mortgage”), duly recorded in all appropriate places in all applicable
jurisdictions, encumbering the interest of such Credit Party in such property;
(ii) If requested by the Bank, a title report issued by a title company
acceptable to the Bank with respect thereto, dated not more than 30 days prior
to the date such Additional Mortgage is to be recorded and satisfactory in form
and substance to the Administrative Agent, together with copies of any documents
listed as exceptions to such title and, to the extent the Borrower or any
Subsidiary obtains an owner’s title policy on said property, a mortgagee’s
policy in an equal amount insuring the Lien in subsection (i) above; and
(iii) If requested by the Bank, evidence that said property is not in an area
designated as prone to flooding or, if so, evidence of flood insurance
reasonably satisfactory to the Bank.
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SECTION 7.11 Borrowing Base Audits. The Borrower shall, and shall cause each of
its Subsidiaries to, permit the Bank, at any reasonable time, and upon
reasonable notice, to perform one collateral audit of the assets of the Borrower
and its Subsidiaries that comprise the Borrowing Base during each fiscal year;
provided, however, that, if an Event of Default has occurred and is continuing,
the Bank shall be permitted to conduct additional audits as it determines.
Regardless of whether an Event of Default has occurred and is continuing, all
such audits shall be performed at the Borrower’s sole cost and expense.
SECTION 7.12 Treasury Management Services. The Borrower shall maintain in effect
the existing depositing services provided by the Bank on an exclusive basis from
the Effective Date through the Final Payment Date.
SECTION 7.13 Use of Proceeds. The Borrower shall use the proceeds of the
Advances (i) to finance the working capital requirements of the Borrower and its
Subsidiaries and for general corporate purposes, (ii) to finance the Acquisition
and (iii) to refinance the Working Capital Loan and the Equipment Loan
outstanding under the Existing Credit Agreement.
ARTICLE VIII
NEGATIVE COVENANTS
Until the Final Payment Date, the Borrower shall not and shall not permit any
Subsidiary of the Borrower to:
SECTION 8.01 Liens. Create, incur, assume or suffer to exist any Lien upon or
with respect to any of its Properties, now owned or hereafter acquired, or
assign or otherwise convey any right to receive income or sell any accounts or
notes receivable except Permitted Liens. Notwithstanding the foregoing, the
parties acknowledge that they do not intend to subordinate the Lien granted to
the Bank to any Permitted Lien that may arise in the future.
SECTION 8.02 Indebtedness. Create, incur, assume or suffer to exist any
Indebtedness without the written consent of the Bank except for:
(a) Indebtedness of the Borrower under the Loan Documents;
(b) Indebtedness shown on Schedule 8.02;
(c) Indebtedness in the amount of $1,000,000 or less incurred to finance the
purchase price for assets necessary in Borrower’s ordinary course of business;
(d) A guarantee of Indebtedness of CAVO owed to the Bank and outstanding on the
date hereof not to exceed $2,200,000 and any extensions, renewals, refinancings
and replacements thereof; and
(e) Subordinated Indebtedness owing or to be owing by Turbeco, Inc. to Preston
Phenes, in the approximate original principal amount of One Million Five Hundred
Forty-Five Thousand Three Hundred Ninety-One and No/100 Dollars ($1,545,391.00),
with a maturity date of September 1, 2009.
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SECTION 8.03 Change in Nature of Business. Make any material change in the
nature of the business of the Borrower or any Subsidiary of the Borrower as
carried on at the date hereof.
SECTION 8.04 Transactions with Affiliates. Make any sale to, make any purchase
from, extend credit to, make payment for services rendered by, or enter into any
other transaction with any Affiliate unless, in each case, such sale, purchase
or extension of credit is made or such services are rendered or such other
transaction is entered into in the ordinary course of business and on terms and
conditions at least as favorable to the Borrower or any Subsidiary of the
Borrower as the terms and conditions that would apply in a similar transaction
on an arms-length basis with a Person other than such Affiliate.
SECTION 8.05 Investments. Make any Investments in any Person except:
(a) Investments made to officers, employees or shareholders of the Borrower not
in excess of $250,000 at any time outstanding;
(b) Investments by the Borrower in its Subsidiaries existing on the date hereof
and as set forth in Schedule 6.12;
(c) Permitted Investments; and
(d) the Acquisition.
SECTION 8.06 Distributions. Directly or indirectly declare, order, pay, make or
set apart any sum for any Restricted Payment except for dividends by a
Subsidiary to the Borrower or another Subsidiary.
SECTION 8.07 Subordinated Debt. Prepay any Subordinated Debt without the written
consent of the Bank, or amend, modify, or change in any way any of the
Subordinated Debt so as to change the stated maturity date of the principal of
such debt, or any installment of interest thereon, to an earlier date, increase
the rate of interest thereon or any premium payable on the redemption thereof,
change any of the redemption or subordination provisions thereof (or the
definitions of any defined terms contained therein) or otherwise change in any
respect materially adverse to the interests of the Bank any of the terms
thereof, in each case, without the written consent of the Bank; provided,
however, the Borrower may make scheduled principal payments of the Subordinated
Debt as they become due if (A) on the due date no Default exists, (B) the Bank
has not notified either the Borrower or any holder of Subordinated Debt that a
Default then exists or would be created by such payment, (C) the Pro Forma Fixed
Charge Coverage Ratio at the time of such scheduled principal payment shall not
be less than 1.5 to 1.0 and (D) immediately following such payment the lesser of
the Working Capital Loan Borrowing Base and the Working Capital Commitment shall
exceed the Working Capital Exposure by at least $500,000.
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SECTION 8.08 Leverage Ratio. Permit the Leverage Ratio on the last day of any
month to be more than (i) 3.0 to 1.0 for any month ending prior to January 1,
2008, and (ii) 2.5 to 1.0 thereafter.
SECTION 8.09 Fixed Charge Coverage Ratio. Permit the Fixed Charge Coverage Ratio
on the last day of any month to be less than 1.3 to 1.0.
SECTION 8.10 Consolidated Net Income. Permit its Consolidated Net Income to be
less than zero (i) for any fiscal quarter or (ii) for any Fiscal Year.
SECTION 8.11 Prohibition of Fundamental Changes. The Borrower shall not, nor
shall it permit any of its Subsidiaries to, merge or consolidate with, or
acquire all or any substantial part of the assets or class of stock or other
ownership interests of, any other Person without the prior written consent of
the Bank, except as follows:
(i) any wholly-owned Subsidiary may merge with any other wholly-owned
Subsidiary; and
(ii) the Borrower may merge with any wholly-owned Subsidiary so long as the
Borrower is the surviving entity.
SECTION 8.12 Asset Sales. The Borrower shall not, nor shall it permit any of its
Subsidiaries to, sell, convey, lease, transfer or otherwise dispose of, in one
transaction or a series of transactions, any assets except for:
(a) Sales of inventory in the ordinary course of business;
(b) Sales of Equipment provided that the proceeds of such sales are either
reinvested in similar equipment and value or used to prepay the Equipment Loan
within 90 days after the end of the fiscal quarter in which such sales were
made; and
(c) Sales of assets other than Equipment that do not exceed $250,000 since the
Effective Date.
SECTION 8.13 Capital Expenditures. The Borrower shall not permit the aggregate
Capital Expenditures by the Borrower and its Subsidiaries in any fiscal year to
exceed $15,000,000.
SECTION 8.14 Restrictions on CAVO. The Borrower will not, and will not permit
any of its Subsidiaries to, vote for any amendment or termination of the CAVO
Regulations, or any other agreement material to CAVO’s operations, except, in
each case, for amendments that would not reduce CAVO’s cash flow and with
respect to which the Borrower has provided to the Bank a copy of the proposed
amendment at least five days prior to the effective date of such amendment.
-37-
ARTICLE IX
SECTION 9.01 Events of Default. The occurrence of any one or more of the
following events shall constitute an Event of Default hereunder:
(a) Any opinion, certification, representation or warranty to the Bank set forth
in this Agreement or any other Loan Document or in any certificate required to
be delivered herewith or therewith (including any Request for Advance) at any
time (whether made or delivered on the date of this Agreement or prior to or
after such date) shall be false when made or delivered in any material respect;
(b) Any Credit Party shall fail to comply with any of the provisions of any Loan
Document other than those obligations referenced in Section 9.01(c) and such
event continues for a period of 30 days after the Bank has sent the Borrower
notice thereof or the Borrower has actual notice thereof;
(c) The Borrower shall fail to pay any principal or interest of any Note when
due, whether by acceleration or otherwise, or any Credit Party shall fail to pay
any Obligations owed under any Loan Document when due, in each case within three
Business Days from the date when due;
(d) The Borrower or any Subsidiary of the Borrower (i) admits in writing its
inability to pay its debts generally as they become due; (ii) is generally not
paying its debts as they become due, except if contested in good faith by
appropriate proceedings; (iii) files a petition under any bankruptcy law or any
insolvency law or similar laws (including, without limitation, the Federal
Bankruptcy Code of 1978 or any amendment thereto); (iv) makes a general
assignment for the benefit of its creditors; or (v) files a petition or answer
seeking for itself, or consenting to or acquiescing in any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any law referred to in clause (iii) of this paragraph (d) or fails
to deny the material allegations of or to contest any such petition filed
against it within 60 days;
(e) There is appointed a receiver, custodian, liquidator, fiscal agent or
trustee of the Borrower or any Subsidiary of the Borrower or of the whole or any
substantial part of the properties or assets of the Borrower or any Subsidiary
of the Borrower or any court enters an order, judgment or decree approving a
petition filed against the Borrower or any Subsidiary of the Borrower seeking
or similar relief under any law referred to in clause (iii) of paragraph (d) of
this Section or an order of relief is entered pursuant to any such law with
respect to the Borrower or any Subsidiary of the Borrower and such order,
judgment, decree or appointment shall not be dismissed within a period of 60
days;
(f) The Borrower or any Subsidiary of the Borrower fails to pay at maturity or
renew any Indebtedness of the Borrower or Subsidiary of the Borrower or the
default by the Borrower or any Subsidiary of the Borrower under any note,
indenture, mortgage or
-38-
obligation incurred pursuant thereto, the effect of which default (assuming the
giving of notice or the passage of time or both) accelerates, or entitles any
Person to accelerate, any maturity thereof or results in the forfeiture by
Borrower or such Subsidiary of any of its rights under any such note, indenture
or mortgage and the amount of any such Indebtedness (other than Subordinated
Debt) individually or in the aggregate exceeds $100,000;
(g) The Borrower or any Subsidiary of the Borrower suffers a final judgment
against it which, within 60 days from the date such judgment is entered, shall
not have been discharged or execution thereof stayed pending appeal unless
(i) such judgment is adequately covered by insurance; or (ii) adequate accruals
with respect to such judgment have been established in accordance with GAAP and
the aggregate amount of all such judgments not adequately covered by insurance
is not at any time in excess of $200,000;
(h) The Borrower or any Subsidiary of the Borrower suffers to exist any order,
judgment, claim, notice, injunction or decree of any governmental agency in
connection with any Environmental Law requiring Borrower to (1) pay any penalty,
(2) take corrective action or reimburse any Person for corrective action or
(3) correct any violation, if the potential cost to the Borrower and its
Subsidiaries of any of same exceeds individually or in the aggregate $200,000
and such order, judgment, claim or notice is not dismissed or continuously
stayed or enjoined within a period of five days from the date the Borrower’s
payment or corrective action is required;
(i) A Change of Control shall have occurred;
(j) Any material adverse change shall have occurred to the business, condition
(financial or otherwise), results of operation or prospects of the Borrower and
its Subsidiaries, taken as a whole, since the Effective Date;
(k) Any Loan Document shall at any time and for any reason cease to be in full
force and effect and binding on the Credit Party party thereto or shall be
contested by any party thereto or any Credit Party shall deny it has any
liability under any Loan Document to which it is a party, or any Loan Document
shall at any time and for any reason cease to create an Acceptable Security
Interest in the Property purported to be subject to such agreement in accordance
with the terms of such agreement; or
(l) An ERISA Event shall have occurred.
Upon the occurrence and during the continuance of an Event of Default, the Bank
may (i) declare the Bank’s obligation to make Advances to be terminated,
whereupon the same shall forthwith terminate, and (ii) may take any and all
actions, including to declare the Notes or any one of them, all interest thereon
and all other amounts payable under this Agreement to be forthwith due and
payable, whereupon said Note, all such interest and all such amounts shall
become and be forthwith due and payable, without grace, demand, presentment for
payment, notice of dishonor, default, acceleration of the maturity thereof and
of the intent to accelerate the maturity thereof, protest and notice of protest
and notice of any kind, filing of suit, diligence in collecting the Note and
bringing suit and enforcing of the security rights of the Bank, all of
-39-
which, except for the notices referred to in Sections 9.01(b), are hereby
expressly waived by the Borrower, and thereafter the Bank may pursue any remedy
or take any action that it may have hereunder, at law, in equity, or otherwise
(including, but not limited to, reducing any claim to judgment) if the Note is
not paid at maturity (on demand, by acceleration or otherwise); provided,
however, that in the event of an Event of Default described in either clause
(d) or (e) above, (A) the obligation of the Bank to make Advances shall
automatically be terminated and (B) the Notes, all such interest and all such
ARTICLE X
MISCELLANEOUS
SECTION 10.01 Amendments, Etc. No amendment or waiver of any provision of this
Agreement or the Notes, nor consent to any departure by the Borrower therefrom,
by the Bank and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
SECTION 10.02 Notices, Etc. All notices and other communications provided for
hereunder shall be in writing (including telecopy or electronic communication)
and mailed, telecopied or delivered as follows:
(a) if to the Borrower, at its address at 7030 Empire Central Drive, Houston,
Texas 77040, Attention: Chief Financial Officer;
(b) if to the Bank, at its address at 1000 Louisiana, 3rd Floor, T5001-031,
Houston, Texas 77002, Attention: Chad Johnson.
All such notices and communications shall when be effective when received.
SECTION 10.03 No Waiver; Remedies. No failure on the part of the Bank to
exercise, and no delay in exercising, any right hereunder or under the Notes
any other right. The remedies herein provided are cumulative and not exclusive
of any remedies provided by law.
SECTION 10.04 Costs, Expenses and Taxes. The Borrower shall pay on demand all
reasonable out-of-pocket costs and expenses of the Bank in connection with the
preparation, execution, delivery, administration, modification, and amendment of
this Agreement, the Notes, and the other Loan Documents, including costs
associated with field examinations, appraisals and collateral reviews, the
reasonable fees and out-of-pocket expenses of counsel for the Bank with respect
to advising the Bank as to its rights and responsibilities under this Agreement,
and all out-of-pocket costs and expenses, if any, of the Bank in connection with
the enforcement (whether through negotiations, legal proceedings, or otherwise)
of this Agreement, the Notes, and the other Loan Documents. If the Borrower
fails to perform any agreement contained herein, the Bank may itself perform, or
cause performance of, such agreement, and the costs and expenses of the Bank
incurred in connection therewith shall be payable and the Borrower hereby
promises to pay same, on demand.
-40-
SECTION 10.05 Right of Set-off. Upon the occurrence and during the continuance
of any Event of Default the Bank is hereby authorized at any time and from time
time held and other Indebtedness at any time owing by the Bank 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 this Agreement, the Note and the
other Loan Documents, whether or not the Bank shall have made any demand under
this Agreement or any such Note and although such obligations may be unmatured.
The Bank shall apply any amounts set off as herein described first to the
Indebtedness of the Borrower owing under the Notes and the Loan Documents. The
Bank shall promptly notify the Borrower after any such set-off and application
made by the Bank, provided that the failure to give such notice shall not affect
the validity of such set-off and application. The rights of the Bank under this
set-off) that the Bank may have.
SECTION 10.06 Interest. Anything in this agreement or the other Loan Documents
to the contrary notwithstanding, the Borrower shall never be required to pay
unearned interest on any Note and shall never be required to pay interest on
such Note at a rate in excess of the Highest Lawful Rate, and if the effective
rate of interest that would otherwise be payable under this Agreement, the other
Loan Documents and such Note would exceed the Highest Lawful Rate, or if the
holder of such Note shall receive any unearned interest or shall receive monies
that are deemed to constitute interest that would increase the effective rate of
interest payable by the Borrower under this Agreement and the other Loan
Documents to a rate in excess of the Highest Lawful Rate, then (a) the amount of
interest that would otherwise be payable by the Borrower under this Agreement,
such Note and the other Loan Documents shall be reduced to the highest
nonusurious amount allowed under applicable law; and (b) any unearned interest
paid by the Borrower or any interest paid by the Borrower in excess of the
Highest Lawful Rate shall be credited on the principal of such Note and, to the
extent any funds remain, refunded to the Borrower. Without limitation of the
foregoing, all calculations of the rate of interest contracted for, charged or
received by the Bank under the Note, or under this Agreement, are made for the
purpose of determining whether such rate exceeds the Highest Lawful Rate
applicable to the Bank (such Highest Lawful Rate being the Bank’s “Maximum
Permissible Rate”) and shall be made, to the extent permitted by usury laws
applicable to the Bank (now or hereafter enacted), by amortizing, prorating and
spreading in equal parts during the period of the full stated term of the
Advances evidenced by said Note all interest at any time contracted for, charged
or received by the Bank in connection therewith. If at any time and from time to
time (i) the amount of interest payable to the Bank on any date shall be
computed at the Bank’s Maximum Permissible Rate pursuant to this Section and
interest otherwise payable to the Bank would be less than the amount of interest
payable to the Bank computed at the Bank’s Maximum Permissible Rate, then the
amount of interest payable to the Bank in respect of such subsequent interest
computation period shall continue to be computed at the Bank’s Maximum
Permissible Rate until the total amount of interest payable to the Bank shall
equal the total amount of interest that would have been payable to the Bank if
the total amount of interest had been computed without giving effect to this
Section.
-41-
SECTION 10.07 Indemnification. The Borrower shall indemnify the Bank, the
Affiliates of the Bank, and their respective directors, officers, employees,
agents, representatives and attorneys of each of them (the “Indemnified
Parties”) from, and hold each of them harmless against, any and all liabilities,
obligations, losses, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever to which any of them may become
subject arising out of or based on the Loan Documents but excluding any such
liabilities, obligations, losses, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever incurred by reason of
the gross negligence or willful misconduct of the Indemnified Party. The
obligations of the Borrower under this Section shall survive the termination of
this Agreement and/or the payment or assignment of the Notes. IT IS THE EXPRESS
INTENTION OF THE BORROWER THAT THE INDEMNIFIED PARTIES SHALL BE INDEMNIFIED AND
HELD HARMLESS AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, PENALTIES,
ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS OF ANY KIND OR
NATURE WHATSOEVER ARISING OUT OF THE SOLE OR CONTRIBUTORY NEGLIGENCE OR STRICT
LIABILITY OF THE INDEMNIFIED PARTY OR EACH OF THEM.
SECTION 10.08 Binding Effect. This Agreement shall become effective when it
shall have been executed by the Borrower and the Bank and thereafter shall be
binding upon and inure to the benefit of the Borrower, the Bank 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 Bank.
SECTION 10.09 Governing Law. This Agreement and the Notes shall be governed by,
and construed in accordance with, the laws of the State of Texas without regard
to its choice of law principles.
SECTION 10.10 Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed shall be deemed to be an
original.
SECTION 10.11 Assignment. The Bank may assign, transfer, convey or sell a
participation or otherwise share its respective obligations and benefits
hereunder; provided, however, that without the express written consent of the
Borrower (which consent shall not be unreasonably withheld) no such assignment,
transfer, conveyance or sale shall affect the rights and obligations of the Bank
vis-a-vis the Borrower.
SECTION 10.12 Separability. Should any clause, sentence, paragraph or Section of
this Agreement be judicially declared to be invalid, unenforceable or void, such
decision shall not have the effect of invalidating or voiding the remainder of
this Agreement, and the parties hereto agree that the part or parts of this
Agreement so held to be invalid, unenforceable or void shall be deemed to have
been stricken herefrom and the remainder shall have the same force and
effectiveness as if such part or parts had never been included herein.
SECTION 10.13 Limitation by Law. All rights, remedies and powers provided in
this Agreement and the other Loan Documents may be exercised only to the extent
that the exercise thereof does not violate any applicable provision of law, and
all the provisions of this Agreement and the other Loan Documents are intended
to be subject to all applicable mandatory
-42-
provisions of law that may be controlling and to be limited to the extent
necessary so that they will not render this Agreement or any other Loan Document
invalid, unenforceable, in whole or in part, or not entitled to be recorded,
registered or filed under the provisions of any applicable law.
SECTION 10.14 Waiver of DTPA Actions. THE BORROWER HEREBY WAIVES ALL PROVISIONS
OF THE TEXAS DECEPTIVE TRADE PRACTICES-CONSUMER PROTECTION ACT (AS AMENDED FROM
TIME TO TIME, THE “DTPA”) AND EXPRESSLY RECOGNIZES THAT IT (i) HAS ASSETS OF $5
MILLION OR MORE, (ii) HAS KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND BUSINESS
MATTERS THAT ENABLES IT TO EVALUATE THE MERITS AND RISKS OF THIS TRANSACTION AND
(iii) IS NOT IN A SIGNIFICANTLY DISPARATE BARGAINING POSITION RELATIVE TO THE
PARTIES TO THIS CREDIT AGREEMENT.
SECTION 10.15 Agreement for Binding Arbitration.
(a) Any controversy or claim between or among the parties hereto, including but
not limited to those arising out of or relating to this Agreement or the Loan
Documents, including any claim based on or arising from an alleged tort, shall
be determined by binding arbitration in accordance with the Federal Arbitration
Act (or if not applicable, the applicable state law), the rules of practice and
procedure for the arbitration of commercial disputes of the American Arbitration
Association (“AAA”), and the “special rules” set forth in paragraph (b) below.
In the event of any inconsistency, the special rules shall control. Judgment
upon any arbitration award may be entered in any court having jurisdiction. Any
party to this Agreement may bring an action, including a summary or expedited
proceeding, to compel arbitration of any controversy or claim to which this
Agreement or any of the Loan Documents applies in any court having jurisdiction
over such action.
(b) The arbitration shall be conducted in Houston, Texas and administered by
AAA, who shall appoint an arbitrator; if AAA is unable or legally precluded from
administering the arbitration, then the Judicial Arbitration and Mediation
Services, Inc. shall serve. All arbitration hearings shall be commenced within
90 days of the demand for arbitration; further, the arbitrator shall only, upon
a showing of cause, be permitted to extend the commencement of such hearing for
up to an additional 60 days.
(c) Nothing in this Agreement shall be deemed to (i) limit the applicability of
any otherwise applicable statutes of limitation or repose and any waivers
contained in this Agreement or the Loan Documents; or (ii) be a waiver by the
Bank of the protection afforded to it by 12 U.S.C. §91 or any substantially
equivalent state law; or (iii) limit the rights of the Bank hereto (A) to
exercise self help remedies such as (but not limited to) set-off, or (B) to
foreclose against any real or personal property collateral, or (C) to obtain
from a court provisional or ancillary remedies such as (but not limited to)
injunctive relief, writ of possession or the appointment of a receiver. The Bank
may exercise such self help rights, foreclose upon such Property, or obtain such
provisional or ancillary remedies before, during, or after the pendency of any
arbitration proceeding brought pursuant to this Agreement. Neither this exercise
of self help remedies nor the
-43-
institution or maintenance of an action for foreclosure or provisional or
ancillary remedies shall constitute a waiver of the right of any party,
including the claimant in any such action, to arbitrate the merits of the
controversy or claim occasioning resort to such remedies.
SECTION 10.16 Final Agreement of the Parties. THIS AGREEMENT, THE NOTES, THE
SECURITY AGREEMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE A “LOAN AGREEMENT” AS
DEFINED IN SECTION 26.02(A) OF THE TEXAS BUSINESS AND COMMERCE CODE, AND
REPRESENTS THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO ORAL AGREEMENTS BETWEEN THE PARTIES.
-44-
by their respective officers thereunto duly authorized, effective as of the
Effective Date.
FLOTEK INDUSTRIES, INC. By: /s/ Lisa Bromiley Meier Lisa Bromiley Meier
Chief Financial Officer
-45-
WELLS FARGO BANK, NATIONAL ASSOCIATION By: /s/ Chad Johnson Chad Johnson
Vice President
-46-
Exhibit A
COMPLIANCE CERTIFICATE
AS OF [ ]
The undersigned Lisa B. Meier, Chief Financial Officer of Flotek Industries,
Inc. (the “Borrower”) hereby certifies that the following, in accordance with
the current information on the books and records of the Borrower and its
Subsidiaries, sets forth the results of the calculations necessary to establish
compliance with the provisions of Section 8.01 through Section 8.13 of the
Amended and Restated Credit Agreement (the “Credit Agreement”) dated as of
August , 2007 between the Borrower and Wells Fargo Bank, National
Association, and accurately reflects (i) the amounts required or permitted, as
applicable under each of referenced provisions of the Credit Agreement and
(ii) the actual amounts as they exist with respect to each of such provisions,
as of the date of this certificate. All capitalized terms used herein without
definition have the respective meaning specified therefore in the Credit
Agreement. The details of such calculations are attached.
1. Section 8.02 - Indebtedness
The Borrower shall not, and shall not permit any subsidiary to, create, incur,
assume or suffer to exist any Indebtedness without the written consent of the
Bank except for (a) Indebtedness of the Borrower under the Loan Documents,
(b) Indebtedness shown on Schedule 8.02, (c) Indebtedness in the amount of
$1,000,000 or less incurred to finance the purchase price for assets necessary
in Borrower’s ordinary course of business, (d) a guarantee of Indebtedness of
CAVO owed to the Bank not to exceed $2,200,000 and any extensions, renewals,
refinancings and replacements thereof, and (e) Subordinated Indebtedness owing
by Turbeco, Inc. to Preston Phenes, evidenced by that one certain promissory
note dated , 200 in the original principal
amount of One Million Five Hundred Forty-Five Thousand Three Hundred Ninety-One
and No/100 Dollars ($1,545,391), bearing interest and due and payable as therein
provided.
Trade payables more than 120 days past due
$
Purchase money Indebtedness
$
2. Section 8.05 - Investments
Borrower shall not make any Investments except (a) Investments made to officers,
employees, shareholders of the Borrower not in excess of $250,000,
(b) Investments in Subsidiaries listed on Schedule 6.12 and (c) Permitted
Investments.
Investments made during the quarter ended [ ]
$
Investments made to officers, employees, and shareholders of the Borrower during
the quarter ended [ ]
$
Investments in Subsidiaries
$
Investments in Permitted Investments
$
A-1
3. Section 8.06 - Distributions
Borrower shall not directly or indirectly declare, order, pay, make or set apart
any sum for any Restricted Payment except for dividends by a Subsidiary to the
Borrower or another Subsidiary.
Restricted Payments made during the quarter ended [ ] $
________________
4. Section 8.07 - Subordinated Debt
Borrower may not prepay any Subordinated Debt, provided however, that the
Borrower may make scheduled principal payments as they come due if (A) on the
due date no Default exists, (B) the Bank has not notified either the Borrower or
any holder of Subordinated Debt that a Default then exists or would be created
by such payment, (C) the Pro Forma Fixed Charge Coverage Ratio at the time of
such scheduled principal payment shall not be less than 1.5 to 1.0 and
(D) immediately following such payment the lesser of the working Capital Loan
Borrowing Base and the Working Capital Commitment shall exceed the Working
Capital Exposure by at least $500,000.
(1)
Prepayment made during the quarter ended [ ]
As of the date of such prepayments:
$ (2) Working Capital Loan
Borrowing Base $ (3) Working Capital Commitment $
(4) Lesser of (2) and (3) $ (5) Working
Capital Exposure $ (6) Working Capital Exposure plus
$500,000 $
5. Section 8.08 - Leverage Ratio
Borrower shall not permit the Leverage Ratio on the last day of any month to be
more than (a) 3.0 to 1.0 for any month ending prior to January 1, 2008, and
(ii) 2.5 to 1.0 for periods ending thereafter.
(1 ) Indebtedness outstanding as of [ ] $
(2 ) Less: CAVO Debt guaranteed as of
[ ] $ (3 ) Net Indebtedness as of
[ ] [(1)-(2)] $ (4 ) EBITDA for the 12
month period ended [ ] $ (5 ) Leverage
Ratio [(3) ÷ (4)] [ ] to 1.0
6. Section 8.09 - Fixed Charge Coverage Ratio
Borrower shall not permit the Fixed Charge Coverage Ratio to be less than 1.3 to
1.0.
(1 ) EBITDA for the 12 month period ended [ ] $
(2 ) Fixed Charges for the 12 month
period ended [ ] $ (3 ) Fixed Charge
Coverage Ratio [(1) ÷ (2)] [ ] to 1.0
A-2
7. Section 8.10 - Consolidated Net Income
Borrower shall not permit its Consolidated Net Income to be less than zero
Consolidated Net Income for the quarter ended [ ]
$
Consolidated Net Income for the Fiscal Year ended [ ]
$
8. Section 8.12 - Asset Sales
The Borrower shall not, nor shall it permit any of its Subsidiaries to, sell,
convey, lease, transfer or otherwise dispose of, in one transaction or a series
of transactions, any assets except for (a) sales of Inventory in the ordinary
course of business; (b) sales of Equipment provided that the proceeds of such
sales are either reinvested in similar equipment and value or used to prepay the
Equipment Loan within 90 days after the end of the fiscal quarter in which such
sales were made; and (c) sales of assets other than Equipment that do not exceed
$250,000 since the Effective Date.
(1)
Net Proceeds from sales of Equipment during the quarter ended
[ ] $
(2)
Net Proceeds reinvested in similar Equipment $
(3)
Net Proceeds used to prepay the Equipment Loan $
(4)
Total reinvested in similar Equipment and used for prepayments [(2) + (3)]
$
9. Section 8.13 - Capital Expenditures
The Borrower shall not permit the aggregate Capital Expenditures by the Borrower
and its Subsidiaries to exceed $10,000,000 in any Fiscal Year.
Capital Expenditures from January 1, [ ], through
[ ]
$
10. The undersigned further certifies that:
(a) She is familiar with and knowledgeable of all other terms, agreements, and
provisions, warranties, representations and covenants contained in the Credit
Agreement and the other Loan Documents;
(b) Her name appears on the specimen of signatures and incumbency certificate
delivered to the Bank by the Borrower and now in effect, and she is authorized
to execute this Compliance Certificate on behalf of the Borrower;
(c) No Default or Event of Default has occurred and is continuing except as
follows:
[Describe any Default or Event of Default]
A-3
(d) The representations and warranties of the Borrower made or referred to in
the Credit Agreement and the other Loan Documents (other than those
representations and warranties that are by their express terms limited to the
date of the instrument in which they are initially made or in respect to which
each such change shall be and has been communicated, in writing, to the Bank and
approved, in writing by the Bank) are true and correct in all material respects
as of and on the date of this Compliance Certificate, except as follows:
[Describe any exceptions]
(e) There has been no material adverse change in the condition, financial or
otherwise, of the Borrower since the date of the financial statements (audited
or unaudited, as the case may be) of the Borrower most recently prepared and
delivered to the Bank, except as follows:
[Describe any material adverse change]
Dated the day of .
FLOTEK INDUSTRIES, INC. By: Name: Lisa Meier Title:
Chief Financial Officer
Flotek Industries, Inc.
A-4
Exhibit B
WORKING CAPITAL LOAN
BORROWING BASE CERTIFICATE
FOR THE MONTH OF
The capitalized terms used herein have the meanings and are used as set forth in
that certain Consolidated Financial Statement of Borrower dated as of
.
I.
Eligible Accounts Receivables Amount - Accounts Receivable
generated in ordinary course of business under a completed contract (gross) $
- Less those more than 90 days past due $
- Less those evidenced by note, etc. $
- Less those subject to set-off $
- Less foreign Accounts Receivable $ - Less those
due from debtor having concentration of greater than 25% of the Accounts
Receivable $ - Less those due from debtor having more
than 20% of its total Accounts Receivable more than 90 days past due $
- Less those due from debtor in bankruptcy or
uncreditworthy debtor $ - Less those due from an
Affiliate $ - Less those subject to credit balances
relating to Account Receivable more than 90 days past due $ $
- Less those relating to work-in-progress, finance charges or service
charge
TOTAL LINE 1
$
II.
Eligible Inventory $
TOTAL LINE 2 (Eligible Inventory)
$
III.
Working Capital Loan Borrowing Base Line 1 x 80% $
Line 2 x 50% may not exceed $10,000,000 $
TOTAL LINE 3
$
Availability
$
- Total available under Borrowing Base
$
- Available under line (Not to exceed $25,000,000.00 total borrowings)
$
- Less Advances outstanding
$
- Excess available under Line (Not to exceed $25,000,000.00 total
borrowings)
$
TOTAL
$
B-1
The undersigned certifies that (i) the above calculations are true and correct
as of the date of this Borrowing Base Certificate and (ii) there are no assets
represented in this Borrowing Base which serve as security for any lender other
than the Bank.
FLOTEK INDUSTRIES, INC.,
a Delaware corporation
B-2
Exhibit C
FORM OF REQUEST FOR ADVANCE
1000 Louisiana, 3rd Floor
Houston, Texas 77002
Attention: Chad Johnson
Gentlemen:
Reference is made to the Amended and Restated Credit Agreement dated as of
August , 2007 (the “Credit Agreement”), between Flotek Industries, Inc. (the
“Borrower”), and Wells Fargo Bank, National Association. Capitalized terms used
herein and not otherwise defined herein have the meanings assigned to such terms
in the Credit Agreement. The Borrower hereby gives you notice pursuant to
Section 2.02 of the Credit Agreement that it requests an Advance under the
Credit Agreement, and in that connection sets forth below the terms on which
such Advance is requested to be made:
(A)
Proposed Date of
Advance (which is a
Business Day)
(B)
Working Capital Loan Advance $
(C)
Requested Advance is to be a [Base Rate Advance] [Eurodollar Advance];
(D)
In the case of a Eurodollar Advance, the initial Interest Period applicable
thereto is [ ];
(E)
Amount of Borrowing Base in effect on the date hereof is $[ ];
(F)
Working Capital Exposure on the date hereof (i.e., outstanding principal
amount of Working Capital Loan and the LC Exposure) is $[ ];
(G)
Pro forma total Working Capital Exposure (giving effect to the requested
Advance) is $[ ]; and
(H)
Location and number of the Borrower’s account to which funds are to be
disbursed is as follows: [ ]
[ ]
[ ]
[ ]
[ ]
C-1
By the delivery of this Request for Advance and the acceptance of the Advance
made by the Bank in response to this Request for Advance, the Borrower is deemed
to have represented and warranted that the conditions to lending specified in
Section 5.02 of the Credit Agreement have been satisfied with respect to the
Advance requested hereby.
Very truly yours,
a Delaware corporation
By:
C-2
Exhibit D
FORM OF JOINDER AGREEMENT
This JOINDER AGREEMENT (this “Agreement”) dated as of [ ], is among
Flotek Industries, Inc. (the “Borrower”), [[ ] (“Parent”)], and
[ ] (“New Subsidiary”), for the benefit of Wells Fargo Bank, National
Association (the “Bank”), as the lender under the Credit Agreement (as defined
below). All capitalized terms used herein without definition have the meanings
assigned to such terms in the Credit Agreement.
PRELIMINARY STATEMENT
A. The Borrower and the Bank are parties to that certain Amended and Restated
Credit Agreement dated as of August __, 2007 (the “Credit Agreement”), relating
to the extension of credit by the Bank to the Borrower and, in exchange,
imposing obligations on the Borrower and its Subsidiaries in accordance with the
terms and conditions thereof. Pursuant to a Guaranty dated as of February 11,
2005 (the “Guaranty”), Subsidiaries of the Borrower guaranteed the Obligations
(as defined in the Credit Agreement).
B. In connection with the Credit Agreement, the Borrower and the Guarantors
executed a Security Agreement dated as of February 11, 2005 (the “Security
Agreement”), in favor of the Bank. Under the terms of the Security Agreement,
the Borrower and the Guarantors, as debtors, granted to the Bank, as secured
party, Liens on substantially all of their respective personal property, as more
fully described therein as security for the payment and performance of the
Obligations.
C. The Security Agreement provides that the Liens granted therein are given as
security for the obligations described in the Credit Agreement as the same may
be amended and in effect from time to time.
D. Pursuant to Section 7.10 of the Credit Agreement, the Bank (as defined in the
Security Agreement) is requiring New Subsidiary to execute this Agreement in
order to become a party to the Guaranty and the Security Agreement and agree to
perform the obligations of a Guarantor and Debtor thereunder and to grant and
confirm the Liens of the Security Agreement, acknowledging that the Liens
granted under the terms thereof serve as security for the Obligations.
E. The Borrower, Parent, and New Subsidiary have agreed to this and execute this
Agreement for the purpose of evidencing such agreement.
NOW THEREFORE, in consideration of the premises and the mutual covenants herein
contained, the Borrower, Parent and New Subsidiary hereby agree for the benefit
of the Bank as follows:
Section 1. Joinder to and Ratification of Guaranty and Security Agreement. New
Subsidiary hereby approves and adopts the Guaranty and the Security Agreement,
assumes the obligations of a Guarantor under the Guaranty and the Obligations of
a Debtor under the Security
D-1
Agreement and agrees to be bound thereby. The Borrower [and Parent] hereby
agree[s] that all of the Obligations of the Credit Parties contained in the
Guaranty and the Security Agreement and all of the rights, privileges and
interests of the Bank arising therefrom (except to the extent any of same may
have been previously released by the Bank) are hereby adopted, agreed to,
ratified, renewed, confirmed and brought forward in all respects and the
Security Agreement shall continue to serve as security for the Obligations, as
same may be amended, renewed or restated from time to time, as well as any
renewals or extensions thereof or any substitutions or replacements therefor.
Section 2. Grant of Security Interest. To induce the Bank to continue to extend
credit to the Borrower pursuant to the Credit Agreement, and as security for the
Obligations, New Subsidiary hereby grants to the Bank, to the maximum extent
allowed by applicable law, a Lien on all of the assets of New Subsidiary of the
kind described in the Security Agreement, whether now held or hereafter
acquired, pursuant to and in accordance with the terms of the Security
Agreement. Notwithstanding anything to the contrary contained in the Security
Agreement or this Agreement, all references to “first priority liens” intended
to be created hereby shall be deemed to mean “first priority liens, subject to
the Permitted Liens”.
Section 3. Pledge of Equity Interests. In accordance with Section 7.10 of the
Credit Agreement, [Borrower] [Parent] hereby confirms its grant to the Bank,
pursuant to the Security Agreement, of a Lien on all of its right, title and
interest in the ownership interests of New Subsidiary and, if such ownership
interests are certificated securities, as defined in the Uniform Commercial
Code, shall forthwith deliver to the Bank certificates evidencing such ownership
interests.
Section 4. Representations. New Subsidiary represents and warrants to the Bank
that this Joinder Agreement has been duly authorized, executed and delivered by
it by all requisite corporate, limited liability company or partnership action
and constitutes its legal, valid and binding obligation, enforceable against it
in accordance with its terms (subject to applicable bankruptcy, reorganization,
insolvency, moratorium or similar laws affecting creditors’ rights generally and
subject, as to enforceability, to equitable principles of general application
(regardless of whether enforcement is sought in a proceeding in equity or at
law)).
Section 5. Authorization to Take Further Action. The Borrower, New Subsidiary
and Parent hereby authorize the Bank to file such financing statements and any
perfect the Liens under the Security Agreement or any modification, extension or
ratification thereof.
Section 6. Reliance. All parties hereto acknowledge that the Bank is relying on
this Agreement, the accuracy of the statements herein contained and the
performance of the conditions placed upon the Borrower, New Subsidiary and
Parent hereunder, and that, but for the execution of this Agreement by said
parties, the Bank would not enter into, and perform its duties under, the Credit
Agreement. Each of the Borrower, New Subsidiary and Parent shall execute such
further documents and undertake any such measure as may be reasonably necessary
to effect and carry out the terms of this Agreement and the implementation
thereof.
D-2
Section 7. Credit Agreement Controls. In the event of a conflict between or
among the terms of this Agreement, the Guaranty, the Security Agreement and the
Credit Agreement, the Credit Agreement shall control.
Section 8. Multiple Counterparts and Delivery. This Agreement may be executed in
multiple counterparts and may be delivered in original or facsimile form, each
of which shall be considered an original but which together shall constitute but
one document.
Section 9. Notice. Any notice delivered hereunder shall be delivered in the
manner described for the delivery of notices in the Credit Agreement. All
communications and notices hereunder to New Subsidiary shall be given to it at
the address set forth under its signature below.
Section 10. Headings. All section headings herein contained are for convenience
only and shall not be considered substantive in any interpretation of this
Agreement.
Section 11. Entire Agreement. This Agreement represents the full agreement of
the parties in regard to this matter and may not be modified or amended except
by written agreement signed by the Borrower, New Subsidiary, Parent and the
Bank. There are no other oral or written agreements among the parties hereto in
regard to the matters herein described.
Section 12. Choice of Law. This Agreement shall be governed by and construed
under the laws of the State of Texas, without regard to any choice of law
provision that would require the application of the law of another jurisdiction.
D-3
EXECUTED to be effective as of the date first written above.
FLOTEK INDUSTRIES, INC. By: Name: Title:
[ ] By: Name: Title:
[ ] By: Name: Title: Address for Notices:
D-4
D-5
SCHEDULE 1.01
REAL PROPERTY
1. Three tracts of land known as 1004 South Plainsman Road, Marlow, Oklahoma
(Stephens County)
2. Tract of land comprising approximately 5.18 acres, known as 1402 Fort
McKavitt Street, Mason, Texas (Mason County)
3. Two tracts of land each comprising approximately 2.5 acres, known as 1377 and
1357 East 1500 South, Naples, Utah (Uintah County)
4. Tract of land comprising approximately 5.5 acres, known as 105 Pasture Drive,
Evanston, Wyoming (Uinta County)
5. Tract of land comprising approximately 5.889 acres, known as 101 and 103
Pasture Drive, Evanston, Wyoming (Uinta County) [acquired from Halliburton]
6. Two tracts of land comprising 3.69 and 3.0 acres, respectively, in Midland,
Texas (Midland County) [acquired in Harmon acquisition]
7. Tract of land comprising approximately 5.0 acres located on the west line of
Highway 80 S, north of US 277, south of Chicasha, OK (Grady County) [acquired
from Can-OK Oil Field Services, Inc.]
8. Tract of land in Wilson Acreage Tracts near Corpus Christi, Texas (Nueces
County) [acquired from H&W Construction Inc.]
10. Lot 16 Hammun Rd Industrial Park (1540 Business Circle, Campbell County,
Gillette WY.
Schedule 1.1-1
SCHEDULE 6.12
SUBSIDIARIES
CESI Chemical, Inc.
Flotek Paymaster Inc.
Material Translogistics, Inc.
Padko International Inc.
Petrovalve International, Inc.
Petrovalve, Inc.
Spidle Sales & Service, Inc.
Trinity Tool, Inc.
Turbeco, Inc.
USA Petrovalve, Inc.
Schedule 6.12-1
SCHEDULE 8.02
EXISTING INDEBTEDNESS
1. Promissory Note dated February 14, 2005, payable to Agee Spidle having a
current principal amount of $328,086.
2. Promissory Note dated February 14, 2005, payable to Rick Fladeland having a
current principal amount of $36,497.
3. Promissory Note dated February 14, 2005, payable to Agee Spidle, as Escrow
Agent, having a current principal amount of $400,000.
4. The following automobile leases:
FMC - #38946403 (2004 CrownVic)
$ 9,710
FMC - #38801151 (2005 F350)
17,971
FMC - VIN2005 (2004 Lincoln.Nav)
17,148
FMC - VIN7929 (2005 Ford Taurus)
10,141
FMC - VIN1204 (2005 Ford Taurus)
7,385
FMC - VIN0474 (2005 Crown Vic)
12,388
WELLS - Chevy PU2500
31,445
FMC - VIN8884 (05 F150)
18,400
Enterprise Fleet Service
394,689
Auto Loans / Leases
$ 519,277
Schedule 8.02-1
SCHEDULE 8.08
EXISTING INVESTMENTS
NONE
Schedule 8.08-1
|
Exhibit 10.1
NOVATION AGREEMENT
Dated as of June 30, 2011 among:
Jieming Huang, an individual with a legal address at Room 102, Bing Suite, No.
65 Qingtanxincun, Changzhou, China 213000 (the "Remaining Party"),
and
Baby Fox International, Inc., a company incorporated under the laws of the State
of Nevada, United States of America, with an address at Minhan District, 89
Xinband Road, Suite 305-B5, Shanghai, P.R. China (the "Transferor")
and
BBFX Holding Corp., a company incorporated under the laws of the State of
Nevada, United States of America, with an address at Minhan District, 89 Xinband
Road, Suite 305-B5, Shanghai, P.R. China (the "Transferee").
The Transferor and the Remaining Party have entered into a Loan Agreement dated
February 18, 2008 (“Original Agreement"), pursuant to which the Remaining Party
provided a loan with a principal amount of US$810,160.25 and with a five percent
annual interest rate to Transferor.
With effect from and including June __, 2011 (the "Novation Date"), the
Transferor wishes to transfer by novation to the Transferee, and the Transferee
wishes to accept the transfer by novation of, all the rights, liabilities,
duties and obligations of the Transferor under and in respect of all terms and
conditions set out in the Original Agreement, with the effect that the Remaining
Party and the Transferee enter into a new loan agreement ("New Agreement")
between them having terms identical to those set out in the Original Agreement,
as more particularly described below.
The Remaining Party wishes to accept the Transferee as its sole counterparty
with respect to the New Agreement.
The Transferor and the Remaining Party wish to have released and discharged, as
a result and to the extent of the transfer described above, their respective
obligations under and in respect of the Original Agreement.
1.
Transfer, Release, Discharge and Undertakings.
With effect from and including the Novation Date and in consideration of the
mutual representations, warranties and covenants contained in this Novation
Agreement and other good and valuable consideration (the receipt and sufficiency
of which are hereby acknowledged by each of the parties):
(a)
The Remaining Party and the Transferor are each released and discharged from
further obligations to each other with respect to the Original Agreement and
their respective rights against each other thereunder are cancelled.
(b)
In respect of the Original Agreement, the Remaining Party and the Transferee
each undertake liabilities and obligations towards the other and acquire rights
against each otheridentical in their terms to the corresponding Original
Agreement (and, for the avoidance of doubt, as if the Transferee were the
Transferor and with the Remaining Party remaining the Remaining Party).
2.
Representations and Warranties.
The Transferor makes no representation or warranty and does not assume any
responsibility with respect to the legality, validity, effectiveness, adequacy
or enforceability of the Novation Agreement or Original Agreement or any
documents relating thereto and assumes no responsibility for the condition,
financial or otherwise, of the Remaining Party, the Transferee or any other
person or for the performance and observance by the Remaining Party, the
Transferee or any other person of any of its obligations under the Novation
Agreement or Original Agreement or any document relating thereto and any and all
such conditions and warranties, whether express or implied by law or otherwise,
are hereby excluded.
3.
Counterparts.
This Novation Agreement (and each amendment, modification and waiver in respect
of it) may be executed and delivered in counterparts (including by facsimile
transmission), each of which will be deemed an original.
4.
Costs and Expenses.
The parties will each pay their own costs and expenses (including legal fees)
incurred in connection with this Novation Agreement and as a result of the
negotiation, preparation and execution of this Novation Agreement.
5.
Amendments.
No amendment, modification or waiver in respect of this Novation Agreement will
be effective unless in writing (including a writing evidenced by a facsimile
transmission) and executed by each of the parties or confirmed by an exchange of
telexes or electronic messages on an electronic messaging system.
6.
Governing Law.
This Agreement and the rights of the Parties hereunder shall be governed by an
interpreted in accordance with the laws of the People’s Republic of China,
without regard to any choice of law provisions thereunder. The Parties agree
that China International Economic and Trade Arbitration Commission (the
“CIETAC”), located in Shanghai, People’s Republic of China, shall have exclusive
jurisdiction over any case or controversy arising hereunder, and shall be the
proper forum in which to adjudicate such case or controversy.
2
IN WITNESS WHEREOF the parties have executed this Novation Agreement as of the
date first specified above with effect from and including the Novation Date.
Remaining Party: Jieming Huang
/s/ Jieming Huang________________
Jieming Huang
Transferor: Baby Fox International, Inc.
By: /s/ Jieming Huang______________
Jieming Huang
Chief Executive Officer
Transferee: BBFX Holding Corp.
Jieming Huang
Chief Executive Officer
3
|
EXHIBIT 12.1 STATEMENT OF COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES (dollars in millions, except ratio information) Fiscal Years Ended December 31, Nine Months Ended September 30, Adjusted (b) Adjusted (a) Income from continuing operations before income taxes Fixed Charges: Interest on long-term and short-term debt including amortization of debt expense Portion of rental expense as can be demonstrated to be representative of the interest factor Total fixed charges Earnings before income taxes and fixed charges Ratio of earnings to fixed charges (a) In accordance with authoritative guidance in connection with noncontrolling interests in subsidiaries that became effective January 1, 2009, the amounts reported for 2008 have been retrospectively adjusted. Retrospective adoption was required as discussed in Note 12, "New Accounting Pronouncements," in Notes to Unaudited Condensed Consolidated Financial Statements. (b) In accordance with authoritative guidance in connection with accounting for convertible debt instruments that may be settled in cash upon conversion that became effective January 1, 2009, the amounts reported for 2004 have been retrospectively adjusted. Retrospective adoption was required as discussed in Note 12, "New Accounting Pronouncements," in Notes to Unaudited Condensed Consolidated Financial Statements.
|
Exhibit 10.10
February 20, 2018
CONFIDENTIAL
Michael I. Schaffer, Ph.D.
5832 Uplander Way
Culver City, CA 90230-6608
Dear Mike:
This letter sets forth the agreements we have made regarding your employment
with Psychemedics Corporation (the “Company”). Definitions not defined in the
text below shall have the meanings set forth in Paragraph 14.
1.If at any time after the effective date hereof and prior to the date which is
five (5) years following the date hereof, your employment is terminated by the
Company without Cause, or you voluntarily terminate your employment for Good
Reason, in either case at the time of, or within twelve (12) months following, a
Change of Control of the Company, then you will continue to be paid monthly an
amount equal to your Average Monthly Total Compensation for the twelve full
months preceding the date of such termination (“Termination Pay”) for a period
of twelve (12) months from the date of such termination. Your Termination Pay
will be subject to normal deductions for taxes, benefit plan contributions,
other payroll deductions and any amount due the Company as a result of cash
advances. The Company agrees to continue to make health insurance available to
you, under such health insurance plan as the Company has in effect, for so long
as you are receiving Termination Pay and so long as you contribute such portion
of the premiums for such insurance as is required of employees under such plan.
You agree, however, that if you obtain health insurance coverage through another
employer while you are eligible to receive health insurance under this
Agreement, the Company shall no longer be required to make health insurance
available to you under this Agreement. You agree to give the Company at least
fourteen (14) days prior written notice of the termination of your employment in
the event of your voluntary termination without Good Reason. You shall not be
or Disability following a Change of Control of the Company.
your employment or the termination thereof, or any other claim.
Michael I. Schaffer, Ph.D.February 20, 2018Page 2
3.You acknowledge that as the Company’s Vice President – Laboratory Operations,
you are in possession of specialized information concerning the total
operations, conduct, management, and strategy of the Company, as well as
proprietary information concerning the Company’s products and services and that
the applicability of your knowledge of these matters is applicable to all
geographic areas in which the Company does business. You further acknowledge
that the Company has a legitimate business interest in protecting its hair
testing business from unfair competition.
4.In addition to any other confidentiality obligations you may have as an
employee of the Company, you shall not, without the prior and express written
shall survive termination of your employment.
5.You agree that in addition to any other covenant not to compete with the
Company following termination of your employment to which you may be bound, if
you or the Company shall terminate your employment in such a manner as to
entitle you to Termination Pay under paragraph 1 above, you shall not, for so
long as you are entitled to receive such Termination Pay:
(a) directly or indirectly own, manage, operate or control, or participate
in the ownership, management, operation or control of, or become associated in
any capacity with any business enterprise, firm, corporation or company related
to the field of testing for the detection of drug use, which is in competition
with the business of the Company, or directly or indirectly accept employment
with or render services on behalf of a competitor of the Company, or any other
third party, in any capacity which may reasonably be considered to be useful to
the competitor or such other third party to become a competitor, without
receiving the Company’s prior written approval; or
Michael I. Schaffer, Ph.D.February 20, 2018Page 3
(b) induce or attempt to induce any employee, officer, consultant, or agent of
the Company to leave the employ thereof or in any way interfere with the
relationship between the Company and any employee, officer, consultant, or agent
thereof; hire directly or through another entity any person who was an employee
of the Company at any time during the six (6) months prior to the date such
person is to be so hired; or induce or attempt to induce any customer, client,
supplier, licensee, or other business relation of the Company to cease doing
any such customer, client, supplier, licensee, or business relation and the
Company (including, without limitation, making any negative statements or
communications concerning the Company).
6.You agree that your obligations under paragraphs 4 and 5 are special, unique,
and extraordinary and that any breach by you of such obligations shall be deemed
Company under paragraphs 4 and 5 may, therefore, be enforced both at law and in
equity, by injunction or otherwise. For purposes of paragraphs 4 and 5, the term
"Company" shall include any and all subsidiaries or divisions of the Company.
7.The five year period set forth in paragraph 1 above may be extended only with
the mutual written agreement of the parties.
8.If at any time a controversy between you and the Company arises as to the
meaning or operation of this Agreement, such controversy shall be submitted to
costs.
Michael I. Schaffer, Ph.D.February 20, 2018Page 4
9.This Agreement shall be governed by and interpreted in accordance with the
laws of the Commonwealth of Massachusetts without reference to principles of
conflict of laws.
your employment by the Company, other than any existing nondisclosure or
confidentiality agreement s you may have with the Company and any prior stock
unit award agreements with the Company. No amendment or modification of any
provision of this Agreement will be valid unless in writing signed by both
parties. Any waiver must be in writing and signed by you or an authorized
officer of the Company, as the case may be.
11.This Agreement shall be binding upon and inure to the benefit of:
(a) the Company, and any successors or assigns of the Company, whether by way of
a merger or consolidation, or liquidation of the Company, or by way of the
Company selling all or substantially all of the assets and business of the
Company to a successor entity; and, subject to the Company's right to terminate
your employment at any time, the Company agrees to require any successor entity
to expressly assume or unconditionally guarantee the Company's obligations under
this Agreement (unless such obligations are assumed by operation of law); and
(b) you and your heirs, executors and administrators.
12.Any notice or other communication required hereunder shall be in writing,
shall be deemed to have been given and received when delivered in person, or, if
mailed, shall be deemed to have been given when deposited in the United States
mail, first class, registered or certified, return receipt requested, with
proper postage prepaid, and shall be deemed to have been received on the third
business day thereafter, and shall be addressed as follows:
Psychemedics Corporation
125 Nagog Park
Suite 200
Acton, MA 01720
Attn: President
Michael I. Schaffer, Ph.D.February 20, 2018Page 5
5832 Uplander Way
or such other address as to which any party hereto may have notified the other
in writing.
13. Section 409A.
(a) Anything in this Agreement to the contrary notwithstanding, if at the time
of your separation from service within the meaning of Section 409A of the
Internal Revenue Code of 1986, as amended, and the regulations thereunder (the
“Code”), following a Change in Control of the Company, you are a “specified
Agreement would be considered deferred compensation subject to the twenty
percent (20%) additional tax imposed pursuant to Section 409A(a) of the Code as
a result of the application of Section 409A(a)(2)(B)(i) of the Code, such
payment shall not be payable and such benefit shall not be provided until the
date that is the earlier of (i) six (6) months and one (1) day after your
separation from service, or (ii) your death.
(b) This Agreement is intended to be in compliance with the provisions of
shall be read in such a manner so that all payments hereunder comply with said
Section. The parties agree that this Agreement may be amended, as reasonably
requested by either party, and as may be necessary to fully comply with Section
409A of the Code and all related rules and regulations in order to preserve the
payments and benefits provided hereunder without additional cost to either
party.
(c) Solely for the purposes of Section 409A of the Code, each installment
payment of Termination Pay shall be considered a separate payment.
(d) The Company makes no representation or warranty and shall have no liability
to you or any other person if any provisions of this Agreement are determined to
satisfy an exemption from, or the conditions of, said Section.
Michael I. Schaffer, Ph.D.February 20, 2018Page 6
14.Definitions.
(a) “Average Monthly Total Compensation” for any period shall mean one
twelfth of the aggregate base salary earned by you during such period, plus
one-twelfth of the most recent annual cash bonus paid to you during such period.
(b) "Cause" shall mean: (i) theft or embezzlement, or attempted theft or
embezzlement, by you of money or property of the Company, your perpetration or
attempted perpetration of fraud, or your participation in a fraud or attempted
fraud upon the Company; (ii) your unauthorized appropriation of, or attempt to
misappropriate, any tangible or intangible assets or property of the Company, or
your appropriation of, or attempt to appropriate, a business opportunity of the
Company, including but not limited to attempting to secure or securing any
profit for yourself or any of your family members or personal associates in
connection with any transaction entered into on behalf of the Company; (iii) any
act or acts of disloyalty, misconduct, or moral turpitude by you, including but
not limited to violation of the Company’s sexual harassment or non-harassment
policy, any of which the Board of Directors of the Company determines in good
faith has been or is likely to be materially injurious to the interest,
property, operations, business, or reputation of the Company, or its directors,
employees or shareholders; (iv) any act or omission constituting gross
negligence in connection with the performance of your duties on behalf of the
Company which is materially injurious to the interest, property, operations,
business, or reputation of the Company; (v) your conviction of a crime other
than minor traffic violations or other similar minor offenses (including
pleading guilty or entering a plea of no contest), or your indictment for a
felony or its equivalent, or your being charged with a violent crime, a crime
involving moral turpitude, or any other crime for which imprisonment is a
possible punishment; (vi) your willful refusal or material failure (other than
by reason of Disability) to carry out reasonable and lawful instructions and
directives from the Board of Directors and your failure to cure or correct such
refusal or failure within ten (10) days after receiving written notice from the
Board of Directors describing such refusal or failure; or (vii) the material
breach by you of your obligations under paragraphs 4 or 5 hereof or under any
other confidentiality, non-compete, non-solicitation, non-disparagement or
similar agreement with the Company.
(c) “Change in Control of the Company” shall mean
(i) any person or group as defined in Rule 13d-3 under the Securities Exchange
Act of 1934 (the “Exchange Act”) shall own more than 30% of the then outstanding
shares of the outstanding Common Stock of the Company; or
Michael I. Schaffer, Ph.D.February 20, 2018Page 7
(ii) the consummation of a reorganization, merger or consolidation or sale or
from the Business Combination) beneficially owns, directly or indirectly, more
than 30% of the then outstanding shares of the common stock of the corporation
resulting from the Business Combination or of the combined voting power of the
then outstanding voting securities of the corporation; or
(iii) Individuals who, as of the date of this Agreement, constitute the Board of
Directors of the Company (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board of Directors of the Company,
provided, however, that any individual's becoming a director after the date of
this Agreement whose election, or nomination for election by the stockholders of
the Company, was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board will be considered as though the individual were
a member of the Incumbent Board, but excluding, for this purpose, any individual
Person other than the Board.
Michael I. Schaffer, Ph.D.February 20, 2018Page 8
(d) "Disability" shall mean your inability because of physical or mental
(e) "Good Reason" shall mean: (i) reduction in your base salary below
$271,300 or such higher base salary as is in effect immediately prior to such
reduction; or (ii) a material decrease in your duties or responsibilities.
Michael I. Schaffer, Ph.D.February 20, 2018Page 9
copy.
Very truly yours, PSYCHEMEDICS CORPORATION
By /s/ Raymond C. Kubacki Raymond C. Kubacki, President
Agreed to: February 20, 2018
/s/ Michael I. Schaffer
Michael I. Schaffer
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FIRST AMENDMENT TO CREDIT AGREEMENT AND CONSENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT AND CONSENT (this “Agreement”)
is entered into as of November 6, 2015 (the “Effective Date”) among LIFELOCK,
INC., a Delaware corporation (the “Borrower”), the Guarantors, the Lenders party
hereto and BANK OF AMERICA, N.A., as Administrative Agent. All capitalized terms
used herein and not otherwise defined herein shall have the meanings given to
such terms in the Credit Agreement (as defined below).
RECITALS
WHEREAS, the parties have entered into that certain Credit Agreement dated as of
January 9, 2013 among the Borrower, the Guarantors from time to time party
thereto, the Lenders from time to time party thereto and Bank of America, N.A.,
as Administrative Agent, Swing Line Lender and L/C Issuer (as amended or
modified from time to time, the “Credit Agreement”); and
WHEREAS, the Borrower has requested that the Lenders amend the Credit Agreement
contained herein, and for other good and valuable consideration, the receipt and
follows:
1.Amendments. The Credit Agreement is hereby amended as follows:
(a)Clause (c) in the definition of “Base Rate” in Section 1.01 of the Credit
Agreement is hereby amended to read as follows:
(c) the Eurodollar Rate plus 1.00%; and if the Base Rate shall be less than
zero, such rate shall be deemed zero for purposes of this Agreement.
(b)The definition of “Change of Control” in Section 1.01 of the Credit Agreement
“Change of Control” means the occurrence of any of the following events:
the right to acquire (such right, an “option right”), whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of 35% or more of the Equity Interests of the Borrower entitled to
vote for members of the board of directors or equivalent governing body of the
Borrower on a fully diluted basis (and taking into account all such securities
right); or
(b)during any period of 24 consecutive months, a majority of the members of the
governing
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body on the first day of such period, (ii) whose election or nomination to that
board or equivalent governing body was approved by individuals referred to in
clause (i) above constituting at the time of such election or nomination at
least a majority of that board or equivalent governing body or (iii) whose
election or nomination to that board or other equivalent governing body was
approved by individuals referred to in clauses (i) and (ii) above constituting
at the time of such election or nomination at least a majority of that board or
equivalent governing body.
(c)Clause (a) in the definition of “Consolidated Cash EBITDA” in Section 1.01 of
the Credit Agreement is hereby amended to delete the “and” after subsection
(viii), replace the “;” at the end of subsection (ix) with “; and” and to add a
new subsection (x) to read as follows:
(x) beginning with the quarter ending December 30, 2014, settlement payments,
legal expenses, administration fees and other third party costs actually
incurred or expensed and related to the litigation and settlement of the Ebarle
Class Action Lawsuit, the FTC Contempt Action and the States’ Attorneys General
Matters; provided, that, the aggregate amount that may be added back pursuant to
this clause (a)(x) shall not exceed $130,000,000 during the term of this
Agreement;
(d)The definition of “Eurodollar Base Rate” in Section 1.01 of the Credit
“Eurodollar Base Rate” means:
(a)for any Interest Period with respect to a Eurodollar Rate Loan, the rate per
annum equal to the London Interbank Offered Rate (“LIBOR”) or a comparable or
successor rate, which rate is approved by the Administrative Agent, as published
by Bloomberg (or such other commercially available source providing such
quotations as may be designated by the Administrative Agent from time to time)
(in such case, the “LIBOR Rate”) at approximately 11:00 a.m., London time, two
Business Days prior to the commencement of such Interest Period, for Dollar
deposits (for delivery on the first day of such Interest Period) with a term
equivalent to such Interest Period; and
(b)for any interest calculation with respect to a Base Rate Loan on any date,
the rate per annum equal to the LIBOR Rate, at approximately 11:00 a.m., London
time determined two Business Days prior to such date for Dollar deposits with a
term of one month commencing that day;
provided that (i) to the extent a comparable or successor rate is approved by
the Administrative Agent in connection herewith, the approved rate shall be
applied in a manner consistent with market practice; provided, further that to
the extent such market practice is not administratively feasible for the
Administrative Agent, such approved rate shall be applied as otherwise
reasonably determined by the Administrative Agent and (ii) if the Eurodollar
Base Rate shall be less than zero, such rate shall be deemed zero for purposes
of this Agreement.
(e)The definition of “Guarantors” in Section 1.01 of the Credit Agreement is
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“Guarantors” means (a) each Domestic Subsidiary of the Borrower identified as a
“Guarantor” on the signature pages hereto, (b) each other Person that joins as a
Guarantor pursuant to Section 7.12, (c) with respect to (i) Obligations under
any Swap Contract between any Loan Party and any Swap Bank that is permitted to
be incurred pursuant to Section 8.03(d), (ii) Obligations under any Treasury
Management Agreement between any Loan Party and any Treasury Management Bank and
(iii) any Swap Obligation of a Specified Loan Party (determined before giving
effect to Sections 4.01 and 4.08) under the Guaranty, the Borrower, and (d) the
successors and permitted assigns of the foregoing.
(f)The definition of “Letter of Credit Sublimit” in Section 1.01 of the Credit
“Letter of Credit Sublimit” means an amount equal to the lesser of (a) the
Aggregate Revolving Commitments and (b) (i) $2,000,000, until the later of (x)
the one
(1) year anniversary of the Litigation Matters Settlement Date, and (y) the date
the Loan Parties have obtained court approval of settlements with at least 50%
of the States with States’ Attorneys General Matters, and (ii) thereafter,
$10,000,000. The Letter of Credit Sublimit is part of, and not in addition to,
the Aggregate Revolving Commitments.
(g)The definition of “Loan Documents” in Section 1.01 of the Credit Agreement is
“Loan Documents” means this Agreement, each Note, each Issuer Document, each
Joinder Agreement, any agreement creating or perfecting rights in Cash
Collateral pursuant to the provisions of Section 2.14 of this Agreement, the
Collateral Documents, the Fee Letter and any other document or agreement which
the Loan Parties and the applicable counterparties thereto designate to be a
“Loan Document.”
(h)The definition of “Obligations” in Section 1.01 of the Credit Agreement is
otherwise with respect to any Loan or Letter of Credit, whether direct or
indirect (including those acquired by assumption), absolute or contingent, due
or to become due, now existing or hereafter arising and including interest and
fees that accrue after the commencement by or against any Loan Party or any
Affiliate thereof of any proceeding under any Debtor Relief Laws naming such
Person as the debtor in such proceeding, regardless of whether such interest and
fees are allowed claims in such proceeding. The foregoing shall also include (a)
all obligations under any Swap Contract between any Loan Party and any Swap Bank
that is permitted to be incurred pursuant to Section 8.03(d) and (b) all
obligations under any Treasury Management Agreement between any Loan Party and
any Treasury Management Bank; provided, however, that the “Obligations” of a
Guarantor shall exclude any Excluded Swap Obligations with respect to such
Guarantor.
(h) The following definitions are hereby added to Section 1.01 of the Credit
Agreement in appropriate alphabetical order to read as follows:
et seq.).
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“Ebarle Class Action Lawsuit” means the lawsuit styled Napoleon Ebarle and
Jeanne Stamm, on behalf of themselves and all others similarly situation v.
Lifelock, Inc., 3:15-cv-00258-HSG currently pending in the United States
District Court for the Northern District of California.
“Excluded Swap Obligation” means, with respect to any Guarantor, any Swap
Obligation if, and to the extent that, all or a portion of the Guaranty of such
Guarantor of, or the grant under a Loan Document by such Guarantor of a security
interest to secure, such Swap Obligation (or any Guarantee thereof) is or
becomes illegal under the Commodity Exchange Act (or the application or official
interpretation thereof) by virtue of such Guarantor’s failure for any reason to
constitute an “eligible contract participant” as defined in the Commodity
Exchange Act (determined after giving effect to Section 4.08 and any and all
guarantees of such Guarantor’s Swap Obligations by other Loan Parties) at the
time the Guaranty of such Guarantor, or grant by such Guarantor of a security
interest, becomes effective with respect to such Swap Obligation. If a Swap
Obligation arises under a Master Agreement governing more than one Swap
Contract, such exclusion shall apply to only the portion of such Swap Obligation
that is attributable to Swap Contracts for which such Guaranty or security
interest is or becomes illegal.
“FTC Contempt Action” means the contempt motion filed in the lawsuit styled
Federal Trade Commission v. Lifelock, Inc., 2:10-cv-00530-MHM currently pending
in the United States District Court for the District of Arizona.
“First Amendment Effective Date” means November 6, 2015.
“Litigation Matters” means the FTC Contempt Action, the Ebarle Class Action
Lawsuit, the States’ Attorneys General Matters and that certain lawsuit styled
Avila v. Lifelock, Inc., Case No. 2:15-cv-01398-SRB currently pending in the
United States District Court for the District of Arizona.
“Litigation Matters Escrow Date” means the date the settlement in principal in
each of the FTC Contempt Action and Ebarle Class Action Lawsuit has been
reached, settlement documentation has been executed by the applicable parties
(provided that such settlements may still be subject to approval by the
applicable courts) and cash sufficient to pay such settlements in full upon
applicable court approval has been escrowed in a manner satisfactory to the
Administrative Agent.
“Litigation Matters Settlement Date” means the date on which the applicable
courts have approved the settlement agreements for both the FTC Contempt Action
(after approval by the Federal Trade Commission but excluding, for the avoidance
of doubt, resolution of any potential States’ Attorneys General Matters) and the
Ebarle Class Action.
“Master Agreement” has the meaning specified in the definition of “Swap
Contract.”
“Qualified ECP Guarantor” means, at any time, each Loan Party with total assets
exceeding $10,000,000 or that qualifies at such time as an “eligible contract
participant” under the Commodity Exchange Act and can cause another Person to
qualify as an
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“eligible contract participant” at such time under Section 1a(18)(A)(v)(II) of
the Commodity Exchange Act.
“Specified Loan Party” has the meaning specified in Section 4.08.
“ States’ Attorneys General Matters” means any proceedings currently pending or
initiated on or before November 6, 2016 by states’ attorneys general related to
the issues presented in the FTC Contempt Action.
“Supermajority Lenders” means, at any time, Lenders having Total Credit
Exposures representing more than 66 and 2/3% of the Total Credit Exposures of
all Lenders. The Total Credit Exposure of any Defaulting Lender shall be
disregarded in determining Supermajority Lenders at any time; provided that, the
amount of any participation in any Swing Line Loan and Unreimbursed Amounts that
such Defaulting Lender has failed to fund that have not been reallocated to and
funded by another Lender shall be deemed to be held by the Lender that is the
Swing Line Lender or L/C Issuer, as the case may be, in making such
determination.
“Swap Obligations” means with respect to any Guarantor any obligation to pay or
(i)A new Section 4.08 is hereby added to the Credit Agreement to read as
follows:
4.08 Keepwell.
Each Loan Party that is a Qualified ECP Guarantor at the time the Guaranty in
this Article IV by any Loan Party that is not then an “eligible contract
participant” under the Commodity Exchange Act (a “Specified Loan Party”) or the
grant of a security interest under the Loan Documents by any such Specified Loan
Party, in either case, becomes effective with respect to any Swap Obligation,
hereby jointly and severally, absolutely, unconditionally and irrevocably
undertakes to provide such funds or other support to each Specified Loan Party
with respect to such Swap Obligation as may be needed by such Specified Loan
Party from time to time to honor all of its obligations under this Guaranty and
the other Loan Documents in respect of such Swap Obligation (but, in each case,
only up to the maximum amount of such liability that can be hereby incurred
without rendering such Qualified ECP Guarantor’s obligations and undertakings
under this Article IV voidable under applicable Debtor Relief Laws, and not for
any greater amount). The obligations and undertakings of each Qualified ECP
Guarantor under this Section 4.08 shall remain in full force and effect until
the Obligations have been indefeasibly paid and performed in full. Each Loan
Party intends this Section 4.08 to constitute, and this Section 4.08 shall be
deemed to constitute, a “keepwell, support, or other agreement” for the benefit
of each Specified Loan Party for all purposes of the Commodity Exchange Act.
(j)The following sentence is added to the end of Section 5.02 to the Credit
Agreement:
Notwithstanding anything to the contrary set forth in the Loan Documents, from
and after the First Amendment Effective Date, until the later to occur of (i)
the one (1) year anniversary of the Litigation Matters Settlement Date, or (ii)
the date the Loan Parties
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have obtained court approval of settlements with at least 50% of the States with
States’ Attorneys General Matters, after giving effect to any Request for Credit
Extension, the Total Revolving Outstandings may not exceed $25,000,000 (unless
the Supermajority Lenders have consented in writing to a higher amount), the
proceeds of all Revolving Loans and Swing Line Loans advanced during such period
must be used to consummate Permitted Acquisitions and, in conjunction with any
Request for Credit Extension, the Borrower must deliver to the Administrative
Agent a certificate of a Responsible Officer certifying the applicable Loan
Parties’ intended use of all such Revolving Loans and Swing Line Loans.
(k)Section 7.02 of the Credit Agreement is hereby amended by removing the word
“and” at the end of subsection (i), replacing the “.” at the end of subsection
(j) with the words “; and” and adding the following subsection (k):
(k)from the First Amendment Effective Date until the later of (i) one (1) year
after the Litigation Matters Settlement Date or (ii) such time as the Loan
Parties have obtained court approval of settlements with at least 50% of the
States with States’ Attorneys General Matters, monthly reports on the status of
the Litigation Matters, including material non-compliance with any settlement
entered into in connection with any of the Litigation Matters.
(l)Section 7.03 of the Credit Agreement is amended to add the following new
subsections (f), (g), (h) and (i):
(f)From and after the First Amendment Effective Date until the occurrence of the
Litigation Matters Settlement Date, participate in update calls with Lenders,
the Administrative Agent, the chief financial officer of the Borrower and other
necessary officers of the Borrower, upon the reasonable request of the
Administrative Agent, to discuss the Litigation Matters and any issues
concerning the Borrower’s subscriber base or financial performance.
(g)From and after the First Amendment Effective Date until the later of (i) one
(1) year after the Litigation Matters Settlement Date or (ii) such time as the
the States with States’ Attorneys General Matters, promptly (but in no event
later than five (5) Business Days after receipt) provide copies of any material
written communication from any court, government agency or regulator regarding
any material non-compliance with any settlement entered into in connection with
any of the Litigation Matters.
(h)From and after the First Amendment Effective Date until the later of (i) one
written communications from the Securities Exchange Commission or the Federal
Trade Commission.
(i)Upon the reasonable written request of the Administrative Agent, provide the
Administrative Agent (for subsequent delivery by it to the Lenders and their
agents) with such access to information and management of the Loan Parties as
may be reasonably requested from time to time, including, without limitation,
information
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requests relating to the status and Loan Parties’ progress in resolving the
Litigation Matters.
(m)The first sentence of Section 7.12 of the Credit Agreement is hereby amended
and restated to read as follows:
Within thirty (30) days after the acquisition or formation of any Subsidiary, or
such other later time as agreed to in writing by the Administrative Agent:
(n)Section 8.02(g) of the Credit Agreement is hereby amended and restated in its
(g) Permitted Acquisitions, so long as, for any Permitted Acquisition occurring
after October 1, 2015 and prior to the Litigation Matters Escrow Date, after
consummation of any such acquisition the Loan Parties’ cash reserves and
marketable securities would exceed $150,000,000 unless the Supermajority Lenders
have consented in writing to a lower amount of cash reserves and marketable
securities.
(o)Section 8.06(c) of the Credit Agreement is hereby amended and restated in its
(c) the Borrower may make any additional Restricted Payments; provided, that,
(w) no Default or Event of Default exists immediately prior to and after giving
effect to any such Restricted Payment, (x) immediately after giving effect to
any such Restricted Payment, the Borrower has at least $10,000,000 of cash, Cash
Equivalents and availability under the Aggregate Revolving Commitments; (y)
after giving effect to any such Restricted Payment on a Pro Forma Basis, the
Consolidated Leverage Ratio is less than 1.0 to 1.0 as of the most recent fiscal
period end for which the Borrower was required to deliver financial statements
pursuant to Section 7.01(a) or (b); and (z) if such Restricted Payment is made
after October 1, 2015 but prior to the occurrence of the Litigation Matters
Escrow Date, the Loan Parties’ cash reserves and marketable securities after
making such Restricted Payment would exceed $150,000,000, unless the
Supermajority Lenders have consented in writing to a lower amount of cash
reserves and marketable securities.
(p)A new Section 8.11(c) is hereby added to the Credit Agreement to read as
follows:
(c) Minimum Consolidated Cash EBITDA. From and after the First Amendment
Effective Date until the end of the fourth full fiscal quarter ending after the
Litigation Matters Settlement Date, permit Consolidated Cash EBITDA as of the
end of any fiscal quarter of the Borrower to be less than $60,000,000 for the
period of four fiscal quarters of the Borrower ended on such date.
(q)Section 9.03 of the Credit Agreement is hereby amended to add the following
sentence at the end thereof to read as follows:
Excluded Swap Obligations with respect to any Guarantor shall not be paid with
amounts received from such Guarantor or such Guarantor’s assets, but appropriate
adjustments shall be made with respect to payments from other Guarantors to
preserve the allocation to Obligations otherwise set forth above in this
Section.
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(r)Section 11.01(a) of the Credit Agreement is amended to delete the “or” at the
end of subsection (v), replace the “;” at the end of subsection (vi) with “; or”
and adding the following subsection (vii) to read as follows:
(vii) change any provision of the Credit Agreement requiring consent of the
Supermajority Lenders or change the definition of “Supermajority Lenders”
without the written consent of the Supermajority Lenders;
(s)Section 11.04(a)(i) of the Credit Agreement is hereby amended and restated in
its entirety as follows:
and its Affiliates (including the reasonable fees, charges and disbursements of
counsel for the Administrative Agent), 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, the
Litigation Matters (including the costs incurred in retention of any advisors to
analyze the Litigation Matters or the impact of any proposed settlements or
compromises proposed that relate to the Litigation Matters), or any amendments,
transactions contemplated hereby or thereby shall be consummated),
2.
LifeLock Consumer Development LLC Consent. Notwithstanding the terms of Section
7.12 of the Credit Agreement, the Administrative Agent and the Lenders hereby
agree, effective as of September 5, 2015, that the Loan Parties shall have until
November 15, 2015 to deliver to the Administrative Agent all documentation
necessary to satisfy the requirements of Sections 7.12(a) and (b) of the Credit
Agreement as they relate to the joinder of LifeLock Consumer Development LLC.
The above consent shall not modify or affect the Loan Parties’ obligations to
comply fully with the terms of Section 7.12 of the Credit Agreement or any other
duty, term, condition or covenant contained in the Credit Agreement or any other
Loan Document in the future. The consent is limited solely to the specific
consent identified above and nothing contained in this Agreement shall be deemed
to constitute a waiver of any other rights or remedies the Administrative Agent
or any Lender may have under the Credit Agreement or any other Loan Document or
under applicable law.
3.Conditions Precedent. This Agreement shall be effective upon satisfaction
(a)receipt by the Administrative Agent of counterparts of this Agreement duly
executed by (i) a Responsible Officer of the Borrower and each Guarantor, (ii)
the Required Lenders and (iii) the Administrative Agent;
(b)receipt by the Administrative Agent’s of such certificates of resolutions or
other action and incumbency certificates of Responsible Officers of each Loan
Party as the Administrative Agent may require evidencing the identity, authority
and capacity of each Responsible Officer thereof authorized to act as a
Responsible Officer in connection with this Agreement and the other Loan
Documents to which such Loan Party is a party; and
(c)payment of all reasonable out-of-pocket costs and expenses of the
Administrative Agent and the Lenders (including reasonable fees and expenses of
legal counsel) in connection with this Agreement to the extent invoiced as of
the date hereof (paid directly to such counsel if
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requested by the Administrative Agent or Lenders (as applicable)), without
prejudice to a final settling of accounts between the Administrative Agent and
the Loan Parties.
4.
Post-Closing Covenants. On or before November 6, 2015, the Borrower shall:
(a)pay to the Administrative Agent, for the account of each Lender that delivers
a signature page to this Agreement, an amendment fee in an amount equal to 0.10%
of such Lender’s Revolving Commitment as of the Effective Date (collectively,
the “Amendment Fees”) which Amendment Fees will be fully earned on the Effective
Date and due and payable on November 6, 2015; and
(b)pay to the Administrative Agent, for its own account, a work fee in an amount
equal to 0.10% of the Aggregate Revolving Commitments as of the Effective Date
(the “Work Fee”), which Work Fee will be fully earned on the Effective Date and
due and payable on November 6, 2015.
5.FATCA. For purposes of determining withholding Taxes imposed under FATCA, from
and after the Effective Date, the Borrower and the Administrative Agent shall
treat (and the Lenders hereby authorize the Administrative Agent to treat) the
Credit Agreement as not qualifying as a “grandfathered obligation” within the
meaning of Treasury Regulation Section 1.1471-2(b)(2)(i).
6.Reaffirmation of Credit Agreement. The Credit Agreement and the obligations of
the Loan Parties thereunder and under the other Loan Documents, are hereby
ratified and confirmed and shall remain in full force and effect according to
their terms.
7.
Reaffirmation of Guaranties. Except as expressly provided herein, each Guarantor
hereby
(a) acknowledges and consents to all of the terms and conditions of this
Agreement, (b) affirms all of its obligations under the Loan Documents to which
it is a party and (c) agrees that this Agreement and all documents executed in
connection herewith do not operate to reduce or discharge such Guarantor's
obligations under the Loan Documents to which it is a party.
8.
Reaffirmation of Security Interests. Except as expressly provided herein, each
Loan Party
(a) affirms that each of the Liens granted in or pursuant to the Loan Documents
are valid and subsisting and (b) agrees that this Agreement shall in no manner
impair or otherwise adversely affect any of the Liens granted in or pursuant to
the Loan Documents.
9.Release. Each of the Loan Parties hereby releases and forever discharges the
Administrative Agent, the Lenders and each of the Administrative Agent’s and the
Lenders’ predecessors, successors, assigns, officers, managers, directors,
employees, agents, attorneys, representatives, and affiliates (hereinafter all
of the above collectively referred to as the “Lender Group”), from any and all
claims, counterclaims, demands, damages, debts, suits, liabilities, actions and
causes of action of any nature whatsoever, in each case to the extent arising in
connection with the Loan Documents, this Agreement or any of the negotiations,
activities, events or circumstances arising out of or related to the Loan
Documents or this Agreement through the Effective Date, whether arising at law
or in equity, whether known or unknown, whether liability be direct or indirect,
liquidated or unliquidated, whether absolute or contingent, foreseen or
unforeseen, and whether or not heretofore asserted, which any of the Loan
Parties may have or claim to have against any of the Lender Group; provided,
that nothing will constitute a release or discharge of the Credit Agreement or
of the effectiveness of the Loan Documents or this Agreement from and after the
Effective Date.
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10.
Miscellaneous.
(a)The Credit Agreement (as amended hereby) and the obligations of the Loan
Parties thereunder and under the other Loan Documents are hereby ratified and
confirmed and shall remain in full force and effect according to their terms.
reinstatement, novation or release of any Loan Document or a waiver by the
Administrative Agent or any Lender of any rights and remedies under the Loan
Documents, at law or in equity.
(b)Each Guarantor (i) acknowledges and consents to all of the terms and
conditions of this Agreement, (ii) affirms all of its obligations under the Loan
Documents and (iii) agrees that this Agreement and all documents executed in
connection herewith do not operate to reduce or discharge its obligations under
the Credit Agreement or the other Loan Documents.
(c)The Borrower and the Guarantors hereby represent and warrant to the
Administrative Agent and the Lenders as follows:
(i)Each of the Borrower and the Guarantors has taken all necessary corporate or
other organizational action to authorize the execution, delivery and performance
of this Agreement. This Agreement and the execution, delivery and performance
hereof by the Borrower and the Guarantors do not contravene the terms of any
such Person’s Organization Documents or conflict with or result in any breach or
contravention of any law, agreement or obligation by which the Borrower or any
Guarantor is bound.
(ii)This Agreement has been duly executed and delivered by each of the Borrower
and the Guarantors and constitutes a legal, valid and binding obligation of each
of the Borrower and the Guarantors, enforceable against each such Person in
accordance with its terms, subject to the effect of any applicable bankruptcy,
insolvency or other similar laws affecting creditors’ rights generally or by
principles of equity pertaining to the availability of equitable remedies.
(iii)No approval, consent, exemption, authorization or other action by, or
notice to, or filing with, any Governmental Authority or any other Person is
necessary or required in connection with the execution, delivery or performance
by any Loan Party of this Agreement, other than those that have already been
obtained and are in full force and effect.
(d)The Borrower and the Guarantors represent and warrant to the Administrative
Agent and the Lenders that (i) after giving effect to this Agreement, the
contained in Article VI of the Credit Agreement or any other Loan Document, or
which are contained in any document furnished at any time under or in connection
therewith, are true and correct in all material respects (and in all respects if
any such representation or warranty is already qualified by materiality or
reference to Material Adverse Effect) on and as of the date hereof, except to
the extent that such representations and warranties specifically refer to an
earlier date, in which case they are true and correct in all material respects
(and in all respects if any such representation or warranty is already qualified
by materiality or reference to Material Adverse Effect) as of such earlier date,
and except that for purposes of this Section 3(d)(i), the representations and
warranties contained in Section 6.05(a) of the Credit Agreement shall be deemed
to refer to the most recent statements
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furnished pursuant to Section 7.01(a) of the Credit Agreement, and (ii) no
Default has occurred and is continuing.
(e)This Agreement shall constitute a Loan Document for all purposes. This
Agreement may be executed in counterparts (and by different parties hereto in
which when taken together shall constitute a single contract. Delivery of an
executed counterpart of a signature page of this Agreement by facsimile or other
electronic imaging means (e.g. “pdf” or “tif”) shall be effective as delivery of
a manually executed counterpart of this Agreement. This Agreement constitutes
the entire contract among the parties relating to the subject matter hereof and
relating to the subject matter hereof. This Agreement will inure to the benefit
of and bind the respective successors and permitted assigns of the parties
hereto.
(f)THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL
BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK. THE TERMS OF SECTIONS 11.14 AND 11.15 OF THE CREDIT AGREEMENT
ARE INCORPORATED HEREIN BY REFERENCE, MUTATIS MUTANDIS.
(g)This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns.
(h)
If any provision of this Agreement is held to be illegal, invalid or
unenforceable,
(i) the legality, validity and enforceability of the remaining provisions of
this Agreement shall not be affected or impaired thereby and (ii) the parties
shall endeavor in good faith negotiations to replace the illegal, invalid or
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BORROWER: LIFELOCK, INC.,
a Delaware corporation
By: /s/ Chris Power
Name: Chris Power
GUARANTORS: ID ANALYTICS, LLC,
Name: Chris Power
SAGESTREAM, LLC,
Name: Chris Power
LEMON, LLC,
Name: Chris Power
LAVENDER HOLDING, LLC,
Name: Chris Power
LIFELOCK , INC.
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ADMINISTRATIVE
AGENT: BANK OF AMERICA, N.A.,
as Administrative Agent
By:/s/ Mollie S. Canup
Name: Mollie S. Canup
Title: Vice President
LIFELOCK, INC. FIRST AMENDMENT TO CREDIT AGREEMENT
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LENDERS: BANK OF AMERICA, N .A.,
as a Lender, Swing Line Lender and L/C Issuer
By: /s/ Julie Yamauchi
Name: Julie Yamauchi
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SILICON VALLEY BANK,
as a Lender
By: /s/ Kurt Nichols
Name; Kurt Nichols
Title: Director
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as a Lender
By: /s/ Nicholas Heslip
Name: Nicholas Heslip
Title: Authorized Signatory
16
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Name: COMMISSION REGULATION (EC) No 348/95 of 21 February 1995 determining the quantities of certain categories of milk and milk products available for the second quarter of 1995 under the arrangements provided for in the European Agreements concluded by the Community with the Republic of Poland, the Republic of Hungary, the Czech Republic and Slovak Republic
Type: Regulation
Subject Matter: political geography; processed agricultural produce; Europe; international trade
Date Published: nan
No L 40/4 EN Official Journal of the European Communities 22. 2. 95 COMMISSION REGULATION (EC) No 348/95 of 21 February 1995 determining the quantities of certain categories of milk and milk products available for the second quarter of 1995 under the arrangements provided for in the European Agreements concluded by the Community with the Republic of Poland, the Republic of Hungary, the Czech Republic and Slovak Republic be accepted, applications for import licences for certain of the products referred to in Regulation (EEC) No 584/92 were for quantities exceeding those available ; whereas, therefore the quantity of each product available for the period from 1 April to 30 June 1995 should be fixed, HAS ADOPTED THIS REGULATION : THE COMMISSION OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Community, Having regard to Commission Regulation (EEC) No 584/92 of 6 March 1992 laying down detailed rules for the application to milk and milk products of the arrangements provided for in the Interim Agreements between the Community and the Republic of Poland, the Republic of Hungary and the Czech and Slovak Federal Republic ('), as last amended by Regulation (EC) No 3337/94 (2), and in particular Article 4 (5) thereof, Whereas, pursuant to Commission Regulation (EC) No 2524/94 (3) determining the extent to which applications lodged in January 1995 for import licences for certain milk products and products covered by the arrangements provided for in the Interim Agreements concluded by the Community with the Republic of Poland, the Republic of Hungary and the Czech and Slovak Federal Republic can Article 1 The quantity available pursuant to Regulation (EEC) No 584/92 for the period from 1 April to 31 June 1995 shall be as indicated in the Annex hereto . Article 2 This Regulation shall enter into force on 22 February 1995. This Regulation shall be binding in its entirety and directly applicable in all Member States . Done at Brussels, 21 February 1995. For the Commission Franz FISCHLER Member of the Commission ( ¢) OJ No L 62, 7. 3 . 1992, p . 34. 0 OJ No L 350, 31 . 12. 1994, p . 66. (3) OJ No L 269, 20 . 10 . 1994, p . 5. A N N E X 22. 2. 95 To ta l qu an tit y av ai la bl e fo r th e pe rio d 1 A pr il to 30 Ju ne 19 95 (% ) EN Co un try P ol an d Cz ec h Re pu bl ic Sl ov ak Re pu bl ic H un ga ry C N co de 04 02 10 19 04 05 00 11 04 06 04 02 10 19 04 05 00 1 1 ex 04 06 40 -N iv a 04 02 10 19 04 05 00 11 ex 04 06 40 -N iv a ex 04 06 90 86 an d pr od uc t 04 02 21 19 04 05 00 19 ch ee se 04 02 21 19 04 05 00 19 ex 04 06 90 04 02 21 19 04 05 00 19 ex 04 06 90 ex 04 06 90 87 04 02 21 99 bu tt er 04 02 21 91 bu tt er M or av sk y bl oc k (') 04 02 21 91 bu tt er M or av sk y bl oc k (') ex 04 06 90 88 \ Ba la to n (2) Q ua nt ity av ai la bl e 96 4, 01 6 41 8, 44 0 73 5, 58 9 53 1, 39 1 23 7, 19 8 18 6, 53 7 27 6, 30 2 11 5, 25 3, 07 7 32 5, (l) Pr im at or , O ta va ,J av or , U ze ny bl oc k, K as kh av al ,A ka wi , Is ta m bu l, Ja de l H er m el in , O ste pe k, K ol ib a, In ov ec . (*) Cr ea m -w hi te , H aj du ,M ar va ny ,O va ri, Pa nn on ia ,T ra pp ist a, Ba ko ny , Ba cs ka i, Ba n, D el ic ac y ch ee se 'M os on , De lic ac y ch ee se 'P els o ,G oy a, H am -s ha pe d, Ka ra va n, La jta ,P ar en yi ca ,S ed ,T ih an y. Official Journal of the European Communities No L 40/5
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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):July 29, 2015 State or Other Jurisdiction of Incorporation Exact Name of Registrant as specified in its Charter, Address of Principal Executive Offices, Zip Code and Telephone Number (Including Area Code) Commission File Number IRS Employer Identification No. Delaware PEPCO HOLDINGS, INC. 701 Ninth Street, N.W. Washington, D.C. 20068 Telephone: (202) 872-2000 001-31403 52-2297449 New Jersey ATLANTIC CITY ELECTRIC COMPANY 500 North Wakefield Drive Newark, DE 19702 Telephone: (202) 872-2000 001-03559 21-0398280 District of Columbia and Virginia POTOMAC ELECTRIC POWER COMPANY 701 Ninth Street, N.W. Washington, D.C. 20068 Telephone: (202) 872-2000 001-01072 53-0127880 Delaware and Virginia DELMARVA POWER & LIGHT COMPANY 500 North Wakefield Drive Newark, DE 19702 Telephone: (202) 872-2000 001-01405 51-0084283 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 (17CFR240.14d-2(b)) ¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17CFR240.13e-4(c)) THIS COMBINED FORM 8-K IS BEING SEPARATELY FILED BY EACH OF PEPCO HOLDINGS, INC., ATLANTIC CITY ELECTRIC COMPANY, POTOMAC ELECTRIC POWER COMPANY AND DELMARVA POWER & LIGHT COMPANY.INFORMATION CONTAINED HEREIN RELATING TO ANY INDIVIDUAL REGISTRANT IS FILED BY SUCH REGISTRANT ON ITS OWN BEHALF.NO REGISTRANT MAKES ANY REPRESENTATION AS TO INFORMATION RELATING TO ANY OTHER REGISTRANT. Item 8.01.Other Events. As previously disclosed, on April 29, 2014, Pepco Holdings, Inc., a Delaware corporation (Pepco Holdings), entered into an Agreement and Plan of Merger with Exelon Corporation, a Pennsylvania corporation (Exelon), and Purple Acquisition Corp., a Delaware corporation and an indirect, wholly owned subsidiary of Exelon (Merger Sub), which was amended and restated on July 18, 2014 (the Merger Agreement), providing for the merger of Merger Sub with and into Pepco Holdings (the Merger), with Pepco Holdings surviving the Merger as a wholly owned subsidiary of Exelon. On July 29, 2015, Exelon elected to extend the termination date of the Merger Agreement from July 29, 2015 until October 29, 2015 pursuant to Section 8.2(a) of the Merger Agreement.No other provisions of the Merger Agreement were otherwise amended or waived, and the Merger Agreement remains in full force and effect. A copy of the notice that Exelon provided to Pepco Holdings concerning the extension is attached as Exhibit 2.1 hereto. The Merger remains subject to approval by the public service commission of the District of Columbia.Pepco Holdings expects to complete the Merger with Exelon in the third quarter of 2015. Cautionary Statements Regarding Forward-Looking Information Certain of the matters discussed in this Current Report on Form 8-K constitute “forward-looking statements” within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, both as amended by the Private Securities Litigation Reform Act of 1995. Words such as “may,” “might,” “will,” “should,” “could,” “anticipate,” “estimate,” “expect,” “predict,” “project,” “future”, “potential,” “intend,” “seek to,” “plan,” “assume,” “believe,” “target,” “forecast,” “goal,” “objective,” “continue” or the negative of such terms or other variations thereof and words and terms of similar substance used in connection with any discussion of future plans, actions, or events identify forward-looking statements. These forward-looking statements include, but are not limited to, statements regarding benefits of the proposed Merger, integration plans and expected synergies, the expected timing of completion of the Merger, anticipated future financial and operating performance and results, including estimates for growth. These statements are based on the current expectations of management of Pepco Holdings and its utility subsidiaries. There are a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements included in this Current Report on Form 8-K. For example, (1) Pepco Holdings or Exelon may be unable to obtain regulatory approvals required for the Merger, or required regulatory approvals may delay the Merger or cause the companies to abandon the Merger; (2) conditions to the closing of the Merger may not be satisfied; (3) an unsolicited offer of another company to acquire assets or capital stock of Pepco Holdings could interfere with the Merger; (4) problems may arise in successfully integrating the businesses of the companies, which may result in the combined company not operating as effectively and efficiently as expected; (5) the combined company may be unable to achieve cost-cutting synergies or it may take longer than expected to achieve those synergies; (6) the Merger may involve unexpected costs, unexpected liabilities or unexpected delays, or the effects of purchase accounting may be different from the companies’ expectations; (7) the credit ratings of the combined company or its subsidiaries may be different from what the companies expect; (8) the businesses of Pepco Holdings and its utility subsidiaries may suffer as a result of uncertainty surrounding the Merger; (9) Pepco Holdings and its utility subsidiaries may not realize the values expected to be obtained for properties expected or required to be sold; (10) the industry may be subject to future regulatory or legislative actions that could adversely affect Pepco Holdings and its utility subsidiaries; and (11) Pepco Holdings and its utility subsidiaries 2 may be adversely affected by other economic, business, and/or competitive factors. Other unknown or unpredictable factors could also have material adverse effects on future results, performance or achievements of the combined company. Therefore, forward-looking statements are not guarantees or assurances of future performance, and actual results could differ materially from those indicated by the forward-looking statements. Discussions of some of these other important factors and assumptions are contained in Pepco Holdings’ and its utility subsidiaries’ filings with the Securities and Exchange Commission (SEC), and available at the SEC’s website at www.sec.gov, including: (1) the definitive proxy statement that Pepco Holdings filed with the SEC on August 12, 2014 and mailed to its stockholders in connection with the proposed Merger; (2) Pepco Holdings’ Current Report on Form 8-K filed with the SEC on September 12, 2014, which provides supplemental disclosures to the definitive proxy statement; (3) Pepco Holdings’ and its utility subsidiaries’ Annual Report on Form 10-K for the year ended December 31, 2014 in (a) Part I, Item 1A. “Risk Factors,” (b) Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and (c) Note (16), “Commitments and Contingencies” to the consolidated financial statements of Pepco Holdings included in Part II, Item 8. “Financial Statements and Supplementary Data; and (4) Pepco Holdings’ and its utility subsidiaries’ Quarterly Report on Form 10-Q for the quarter ended March 31, 2015 in (a) Part I, Item 1. “Financial Statements” and (b) Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”In light of these risks, uncertainties, assumptions and factors, the forward-looking events discussed in this communication may not occur. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this communication. Pepco Holdings and its utility subsidiaries do not undertake any obligation to publicly release any revision to these forward-looking statements to reflect events or circumstances after the date of this communication. New factors emerge from time to time, and it is not possible for Pepco Holdings or its utility subsidiaries to predict all such factors. Furthermore, it may not be possible to assess the impact of any such factor on Pepco Holdings’ or its utility subsidiaries’ businesses or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. Any specific factors that may be provided should not be construed as exhaustive. Item 9.01. Financial Statements and Exhibits. (d) Exhibits Exhibit No. Description of Exhibit Extension letter dated July 29, 2015 3 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. PEPCO HOLDINGS, INC. DELMARVA POWER & LIGHT COMPANY POTOMAC ELECTRIC POWER COMPANY ATLANTIC CITY ELECTRIC COMPANY Date: July 29, 2015 /s/ JOSEPH M. RIGBY Name: Joseph M. Rigby Title: Chairman of the Board, President and Chief Executive Officer of Pepco Holdings, Inc., Delmarva Power & Light Company and Potomac Electric Power Company and Chairman of the Board of Atlantic City Electric Company 4 INDEX TO EXHIBIT FILED HEREWITH ExhibitNo. Description of Exhibit Extension letter dated July 29, 2015 5
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Filed with the U.S. Securities and Exchange Commission on November 16, 2012 1940 Act Registration No.811-08270 1933 Act File No. 33-73792 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. 44 [ X ] and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ] Amendment No. 47 [ X ] (Check appropriate box or boxes.) RAINIER INVESTMENT MANAGEMENT MUTUAL FUNDS (Exact Name of Registrant as Specified in Charter) 601 Union Street, Suite 2801 Seattle, WA 98101 (Address of Principal Executive Office) (206) 518-6600 (Registrant’s Telephone Number, Including Area Code) Melodie B. Zakaluk Rainier Investment Management, Inc. 601 Union Street, Suite 2801 Seattle, WA 98101 (Name and address of agent for Service) copies to: David A. Hearth Paul Hastings LLP 55 Second Street, 24th Floor San Francisco, CA 94105 It is proposed that this filing will become effective (check appropriate box) [ ] immediately upon filing pursuant to paragraph (b) [ X ] On November 30, 2012 pursuant to paragraph (b) [ ] 60 days after filing pursuant to paragraph (a)(1) [ ] on (date) pursuant to paragraph (a)(1) [ ] 75 days after filing pursuant to paragraph (a)(2) [ ] on (date) pursuant to paragraph (a)(2) of Rule 485. If appropriate, check the following box: [ X ] This post-effective amendment designates a new effective date for a previously filed post- effective amendment. EXPLANATORY NOTE Designation of New Effective Date for Previously Filed Amendment Post-Effective Amendment No. 43 (the “Amendment”) was filed pursuant to Rule 485(a)(1) under the Securities Act of 1933 on September 20, 2012, and pursuant to Rule 485(a)(1) would become effective on November 19, 2012. This Post-Effective Amendment No. 44 is being filed pursuant to Rule 485(b)(1)(iii) for the sole purpose of designating November 30, 2012 as the new date upon which the Amendment shall become effective. This Post-Effective Amendment No. 44 incorporates by reference the information contained in Parts A, B and C of the Amendment. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended (the “Securities Act”) and the Investment Company Act of 1940, as amended, the Registrant certifies that it has duly caused Post-Effective Amendment No. 44 to this registration statement to be signed on its behalf by the undersigned, duly authorized, in the City of Seattle, State of Washington, on the 16th day of November, 2012. RAINIER INVESTMENT MANAGEMENT MUTUAL FUNDS /s/ Melodie B. Zakaluk Melodie B. Zakaluk Chief Executive Officer, President, Chief Financial Officer and Treasurer Pursuant to the requirements of the Securities Act of 1933, this Amendment to the Registration Statement on Form N-1A has been signed below by the following person in the capacities and on the date indicated. Signature Title Date /s/ Melodie B. Zakaluk Trustee, Chief Executive Officer, President, Chief Financial Officer and Treasurer November 16, 2012 Melodie B. Zakaluk /s/ Gary L. Sundem* Trustee November 16, 2012 Gary L. Sundem /s/ James E. Diamond, Jr.* Trustee November 16, 2012 James E. Diamond, Jr. Trustee Joan L. Enticknap * By /s/ Melodie B. Zakaluk Melodie B. Zakaluk Chief Executive Officer, President, Chief Financial Officer and Treasurer, Attorney-in-fact pursuant to the power of attorney filed on July 29, 2011.
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Exhibit 10.03
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Highly Confidential
Reed Smith Draft – September 25, 2017
ASSIGNMENT AND PURCHASE AGREEMENT
by and among
SOUTH CAROLINA ELECTRIC & GAS COMPANY,
THE SOUTH CAROLINA PUBLIC SERVICE AUTHORITY,
as Owners
and
as Buyer
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS
1
Section 1.1 Definitions
1
ARTICLE II SALE AND PURCHASE OF THE INTEREST
6
Section 2.1 Agreement to Sell and Purchase of the Interest
6
Section 2.2 Toshiba Payment Obligation
6
Section 2.3 WEC Rights
7
Section 2.4 Retained Rights
7
Section 2.5 Assumed Obligations
8
ARTICLE III THE CLOSING
9
Section 3.1 Time and Location of the Closing; Transfer of Interest
9
Section 3.2 Payment of Purchase Price
9
Section 3.3 Buyer's Closing Documents
9
Section 3.4 Owners' Closing Documents
9
Section 3.5 Conditions to Closing
10
ARTICLE IV BUYER'S REPRESENTATIONS AND WARRANTIES
11
Section 4.1 Organization; Qualification; Authority and Non-contravention;
Brokers; Ownership
11
Section 4.2 Investment
11
Section 4.3 Anti-Money Laundering and OFAC Compliance
12
Section 4.4 No Reliance
12
ARTICLE V OWNERS' REPRESENTATIONS AND WARRANTIES
13
Section 5.1 Owners' Representations and Warranties
13
Section 5.2 No Implied Representations or Warranties
15
ARTICLE VI COVENANTS
15
Section 6.1 Settlement Agreement
15
Section 6.2 Waiver of Securities Claim
16
Section 6.3 Proxy and Attorney-in-fact
16
Section 6.4 Confidentiality Obligations of the Parties
17
Section 6.5 Release of Owners under this Agreement
17
Section 6.6 True Sale
18
Section 6.7 Cooperation; Further Assurances
18
ARTICLE VII INDEMNIFICATION
20
Section 7.1 Buyer Indemnification
20
Section 7.2 Owners Indemnification
20
Section 7.3 Notice of Claims
21
Section 7.4 Exclusive Remedy
21
ARTICLE VIII MISCELLANEOUS
21
Section 8.1 Notices
21
Section 8.2 Applicable Law
22
Section 8.3 Discretion
22
Section 8.4 Severability
23
Section 8.5 [Reserved]
23
Section 8.6 Entire Agreement
23
Section 8.7 No Oral Amendment
23
Section 8.8 Time of the Essence
23
Section 8.9 Successors and Assigns
23
Section 8.10 Duplicates and Counterparts
23
i
Section 8.11 Rights Cumulative; Waivers
23
Section 8.12 Assignment
24
Section 8.13 Fees and Expenses
24
Section 8.14 Agreement Not Binding
24
Section 8.15 Waiver of Jury Trial
24
Section 8.16 No Third Party Beneficiaries
24
Section 8.17 Headings; Construction
24
Section 8.18 Jurisdiction; Venue; Consent to Service of Process
25
Section 8.19 Waiver of Conflict
25
EXHIBITS & SCHEDULES
Exhibit A Settlement Agreement
Exhibit B-1 Disclosure Schedule
Exhibit B-2 Disclosure Schedule
Exhibit C Notice of Transfer of Claim Pursuant to Rule
3001(e)
Schedule 1 Purchase Price Terms
Schedule 2 Wire Instructions
ii
ASSIGNMENT AND PURCHASE AGREEMENT
THIS ASSIGNMENT AND PURCHASE AGREEMENT (this “Agreement”) made as of
September 27, 2017 (the “Closing Date”) by and among South Carolina Electric and
Gas Company, a
South Carolina corporation (“SCE&G”) and the South Carolina Public Service
Authority, a body
corporate and politic created by the Laws of South Carolina (“Santee Cooper”
and, together with
SCE&G, “Owners”), and Citibank, N.A., a National Banking Association organized
and existing under
the laws of the United States of America (“Buyer”).
RECITALS
A. Owners and Westinghouse Electric Company LLC, a Delaware limited liability
company (“WEC”) are parties to that certain Engineering, Procurement and
Construction Agreement, dated May 23, 2008, by and among SCE&G, acting for
itself and as agent for Santee Cooper, WEC and the other parties thereto, as
amended (the “EPC Agreement”);
B. Toshiba Corporation (“Toshiba”) has guaranteed certain obligations of WEC
under the EPC Agreement pursuant to the terms of the Toshiba Guaranty;
C. WEC has filed for protection under chapter 11 of the Bankruptcy Code;
D. In respect of Toshiba’s guaranty obligations under the Toshiba Guaranty and
to set forth agreements with respect to certain other related matters, Owners
and Toshiba entered into that certain Settlement Agreement, dated as of July 27,
2017, by and among Toshiba and Owners, attached hereto as Exhibit A (the
“Settlement Agreement”), and pursuant to the Settlement Agreement, Toshiba owes
certain payments to the Owners as more particularly described therein;
E. Owners have filed the Claims in Bankruptcy Court; and
F. Owners wish to sell and assign their rights to receive payment from Toshiba
arising under the Settlement Agreement and certain of their rights, duties and
obligations arising under the
WEC Rights, and Buyer, having conducted its own due diligence review of the
Toshiba Payment
Obligation and the WEC Rights (together, the “Interest”), wishes to purchase the
Interest, subject to the terms and conditions more particularly described
herein.
AGREEMENT
conditions set forth in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are expressly acknowledged,
and intending to be legally bound, Owners and Buyer hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. For purposes of this Agreement, the following terms and
variations thereof have the meanings specified or referred to in this Section
1.1:
“Affiliate” means, with respect to any Person, any other Person that (a) owns or
controls, directly or indirectly, such Person, (b) is owned or controlled by
such Person, or (c) is under common control with such Person, where “control”
means the power to unilaterally direct the management or policies of, or
unilaterally prevent any actions by, such Person, whether through the ownership
of voting securities, by contract, or otherwise; provided, that in no event
shall an Owner (or any of its subsidiaries) be deemed to be an Affiliate of
another Owner (or any of its subsidiaries); provided, further, that in no event
shall Buyer be deemed to be an Affiliate of any Owner (or any of its
subsidiaries).
“Agreement” has the meaning set forth in the preamble.
“Anti-Money Laundering Laws” means any Laws relating to money laundering or
terrorist financing, including, without limitation, the Bank Secrecy Act, 31
U.S.C. sections 5301 et seq.; the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub.
L. 107-56 (a/k/a the USA PATRIOT Act); Laundering of Monetary Instruments, 18
U.S.C. section 1956; Engaging in Monetary Transactions in Property Derived from
Specified Unlawful Activity, 18 U.S.C. section 1957; the Financial Recordkeeping
and Reporting of Currency and Foreign Transaction Regulations, 31 C.F.R. Part
103; and any similar Laws currently in force or hereafter enacted.
“Assumed Obligations” has the meaning set forth in Section 2.5.
“Bankruptcy Code” means the Bankruptcy Reform Act of 1978, as amended and
codified in title 11 of the United States Code, 11 U.S.C. §§ 101-1532, as in
“Bankruptcy Court” has the meaning set forth in Section 2.3(a)(i).
“Bankruptcy Rules” has the meaning set forth in Section 5.1(k).
“Beneficial Rights” has the meaning set forth in Section 6.7(d).
“Business Day” means any day, other than a Saturday, a Sunday, a federal holiday
or any day on which banking institutions in New York City are not generally open
for business.
“Buyer Closing Documents” has the meaning set forth in Section 3.3.
“Buyer Indemnified Persons” has the meaning set forth in Section 7.2.
“Buyer Releasing Parties” has the meaning set forth in Section 6.5(a).
“Claim Documents” has the meaning set forth in Section 2.3(a)(iv).
“Claim Dispute” has the meaning set forth in Section 6.3.
“Claims” has the meaning set forth in Section 2.3(a)(i).
“Closing” means delivery of the Closing Documents, payment of the Purchase Price
and sale and purchase of the Interest in accordance with this Agreement.
“Closing Date” has the meaning set forth in the preamble.
2
“Closing Documents” means all documents that are required to be delivered by
Owners and/or Buyer at the Closing in accordance with this Agreement.
“Confidential Information” means any and all confidential, proprietary or
non-public information relating to the Interest, including (i) discussions,
disclosures, investigations or negotiations that take place between the parties
in relation to the transactions contemplated hereby, (ii) technical data and/or
technical interpretations, and (iii) business and financial data, and other
commercial information of any Owner.
“Deal Communications” has the meaning set forth in Section 8.19.
“Disclosure Schedule” means those certain disclosures set forth on Exhibit B-1
and Exhibit B-2.
“Distribution Order” has the meaning set forth in Section 2.3(a)(ii).
“Distribution Order Notice Letter” means a letter to WEC Debtors, Toshiba and
each of its Affiliates that are party to the Distribution Order, in a form
reasonably satisfactory to Buyer, pursuant to which Toshiba and such Affiliates
will be notified of the assignment of the Distribution Order, and will be
directed to make any payments owed to Owners pursuant to the terms thereof as
directed by Buyer.
“Draw Demand” has the meaning set forth in the Settlement Agreement.
“EPC Agreement” has the meaning set forth in the recitals.
“ERISA” has the meaning set forth in Section 5.1(n).
“Excluded Documents” means (a) attorney/client correspondence, (b) attorney work
product, (c) confidential or privileged information, (d) internal or informal
valuations and opinions regarding the Interest, (e) internal analyses and
memoranda, (f) regulatory reports and internal assessments of valuation of the
Interest, (g) legal conclusions of non-lawyers or summaries prepared by
non-lawyers related to legal conclusions reached or expressed by lawyers, (h)
communications between Owners and any prospective purchaser of the Interest
(other than Buyer) or their legal counsel, advisors or agents, (i) non-public
information relating to Toshiba, any WEC Debtor or any Affiliate or related
entity thereof, whether learned by any Owner or any advisor, agent or
representative of any Owner, in whatever capacity, including as a result of
SCE&G’s membership on the UCC, (j) other non-public information, the disclosure
of which, in Owners’ good faith and reasonable discretion and opinion of legal
counsel, would be in violation of any legal requirement or existing agreements
applicable to or binding upon Owners, and (k) any other agreements,
documentation and materials that pertain to all or a portion of the Interest
that have been deemed legally privileged.
“First Installment” has the meaning set forth in Section 2.4(b).
“Government List” means (a) the OFAC SDN List, (b) any other list of terrorists,
terrorist organizations or narcotics traffickers maintained pursuant to any of
the Rules and Regulations of OFAC that Owners notified Buyer, in writing is now
included in “Government Lists” or (c) any similar lists maintained by the United
States Department of State, the United States Department of Commerce or any
other government authority or pursuant to any Executive Order of the President
of the United States of America that Owners notified Buyer in writing is now
included in “Government Lists”.
3
“Governmental Authority” means any federal, state, local or foreign government
or political subdivision thereof, or any agency or instrumentality of such
government or political subdivision, or any self-regulated organization or other
non-governmental regulatory authority or quasigovernmental authority (to the
extent that the rules, regulations or orders of such organization or authority
have the force of law), or any arbitrator, court or tribunal of competent
jurisdiction.
“Indemnified Persons” has the meaning set forth in Section 7.2.
“Interest” has the meaning set forth in the recitals.
“Interim Assessment Agreement” means that certain Interim Assessment Agreement,
dated March 28, 2017, by and among Owners, WEC and WECTEC, as amended.
“Law” means any statute, law, ordinance, regulation, rule, code, order,
constitution, treaty, common law, judgment, decree, other requirement or rule of
law of any Governmental Authority.
“Letters of Credit” has the meaning set forth in the Settlement Agreement.
“Mechanics’ Liens” has the meaning set forth in the Settlement Agreement.
“Notice” means any and all acceptances, approvals, consents, demands, notices,
requests and other communications required or permitted to be given under this
Agreement.
“OFAC” means the United States Department of Treasury Office of Foreign Assets
Control.
“OFAC Laws” means any Laws relating to the economic sanctions programs
administered by OFAC, including without limitation, the International Emergency
Economic Powers Act, 50 U.S.C. sections 1701 et seq.; the Trading with the Enemy
Act, 50 App. U.S.C. sections 1 et seq.; and the Office of Foreign Assets
Control, Department of the Treasury Regulations, 31 C.F.R. Parts 500 et seq.
(implementing the economic sanctions programs administered by OFAC).
“OFAC SDN List” means the list of “Specially Designated Nationals and Blocked
Persons” maintained by OFAC.
“Owner Released Parties” has the meaning set forth in Section 6.5(a).
“Owner’s Knowledge” means: (a) with respect to SCE&G, the actual knowledge of
Jimmy Addison, Executive Vice President and Chief Financial Officer of SCANA
Corporation; and (b) with respect to Santee Cooper, the actual knowledge of
Jeffrey D. Armfield, Senior Vice President and Chief Financial Officer.
“Owners” has the meaning set forth in the preamble.
“Owners Closing Documents” has the meaning set forth in Section 3.4.
“Owners Counsel” has the meaning set forth in Section 8.19.
“Patriot Act Offense” means any violation of the criminal Laws of the United
States of America or of any of the several states, or that would be a criminal
violation if committed within the jurisdiction of the United States of America
or any of the several states, relating to terrorism or the laundering of
monetary instruments, including any offense under (a) any criminal Law against
terrorism
4
or (b) any Anti-Money Laundering Law. “Patriot Act Offense” also includes the
crimes of conspiracy to commit, or aiding and abetting another to commit, a
Patriot Act Offense.
“Payment Obligation Suspension Notice” has the meaning set forth in the
Settlement Agreement.
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or Governmental Authority.
“Privileged Deal Communications” has the meaning set forth in Section 8.19.
“Pro Rata Share” means, with respect to SCE&G, fifty-five percent (55%), and
with respect to Santee Cooper, forty-five percent (45%).
“Proofs of Claim” has the meaning set forth in Section 5.1(f).
“Public Stock Ownership” has the meaning set forth in Section 4.1(d).
“Retained Rights” has the meaning set forth in Section 2.4.
“Santee Cooper” has the meaning set forth in the preamble.
“Satisfied Mechanics’ Liens Amount” has the meaning set forth in the Settlement
Agreement.
“SCE&G” has the meaning set forth in the preamble.
“Settlement Agreement” has the meaning set forth in the recitals.
“Summer Facility” has the meaning set forth in the Settlement Agreement.
“Toshiba” has the meaning set forth in the recitals.
“Toshiba Affiliate Amounts” has the meaning set forth in the Settlement
Agreement.
“Toshiba Amount” has the meaning set forth in Section 2.2(a)(i).
“Toshiba Guaranty” means that certain Toshiba Corporation Guaranty, dated and
effective as of May 23, 2008 and restated in October 2015, and made and entered
into by Toshiba in favor of SCE&G, acting for itself and as agent for Santee
Cooper, as amended from time to time.
“Toshiba Notice Letter” means a letter to Toshiba, in a form reasonably
satisfactory to Buyer, pursuant to which Toshiba will be notified of the
assignment of the Toshiba Payment Obligation by Owners to Buyer, and will be
directed to make any such payments as directed by Buyer.
“Toshiba Payment Obligation” has the meaning set forth in Section 2.2(a).
5
“Transfer of Claims Forms” means a Form 2100A under the Bankruptcy Rules
(Transfer of Claim other than for Security) evidencing the transfer of each of
the (a) WEC Claim, and (b) WECTEC Claim.
“UCC” has the meaning set forth in Section 2.4(l).
“WEC” has the meaning set forth in the recitals.
“WEC Claim” has the meaning set forth in Section 2.3(a)(i).
“WEC Debtors” has the meaning set forth in the Settlement Agreement.
“WEC Proceedings” has the meaning set forth in Section 2.3(a)(i).
“WEC Rights” has the meaning set forth in Section 2.3(a).
“WECTEC” has the meaning set forth in Section 2.3(a)(i).
“WECTEC Claim” has the meaning set forth in Section 2.3(a)(i).
ARTICLE II
SALE AND PURCHASE OF THE INTEREST
Section 2.1 Agreement to Sell and Purchase of the Interest.
(a) Owners agree to sell, assign, transfer and convey all of Owners’
respective rights, title and interest in and to the Interest, and Buyer agrees
to purchase such rights, title and interest in and to the Interest and to assume
the Assumed Obligations, in accordance with and subject to the terms and
(b) From and after the Closing Date, Buyer shall be deemed to be the owner
of the Interest and shall be entitled to identify itself as the owner of the
Interest on the records of each of Toshiba, the WEC Debtors and their respective
Affiliates and the Bankruptcy Court, as applicable; provided, that nothing in
this Agreement does or shall be deemed to restrict the rights of Owners to take
any action in furtherance of any of Owners’ rights under the Retained Rights.
Section 2.2 Toshiba Payment Obligation.
(a) As used herein, the “Toshiba Payment Obligation” means, other than the
Retained Rights:
(i) any and all rights (but not obligations) of the Owners related to the
Owners’ right to receive payment of $2,168,000,000 (the “Toshiba Amount”) from
Toshiba, subject to (1) the terms set forth herein, (2) the payment schedule set
forth in Schedule 2.2 of the Settlement Agreement (and for the avoidance of
doubt, any prepayment by Toshiba in accordance with Section 2.3 of the
Settlement Agreement), and (3) the related terms set forth in the Settlement
Agreement, including all applicable offsets, reductions and credits thereof; and
(ii) any and all rights of Owners arising under the Settlement Agreement.
6
Section 2.3 WEC Rights.
(a) As used herein, the “WEC Rights” means, other than the Retained Rights,
all rights, title and interest in and to the following:
(i) the claim, designated as proof of claim number 2440 (the “WEC Claim”)
asserted against WEC, and the claim, designated as proof of claim number 2444
(the “WECTEC Claim”, together with the WEC Claim, the “Claims”) asserted against
WECTEC Global Project Services Inc., a Louisiana corporation (“WECTEC”), in the
Chapter 11 bankruptcy case pending in the United States Bankruptcy Court for the
Southern District of New York (the “Bankruptcy Court”) as In re Westinghouse
Electric Company LLC, et al., Chapter 11 Case No. 17-10751-MEW (Jointly
Administered) (the “WEC Proceedings”); and
(ii) that certain Order Regarding Distributions in respect of Claims and
Interests of Toshiba Corporation and Affiliates, entered in the WEC Proceedings
on July 20, 2017 in the Bankruptcy Court (the “Distribution Order”);
(iii) any and all proofs of claim filed or to be filed in the WEC
Proceedings in respect of the Claims, including any proof of claim identified
herein and any supplements, modifications or amendments thereto;
(iv) the enforcement of all monetary rights arising under all agreements
(including the EPC Agreement and the Toshiba Guaranty), instruments, invoices,
proofs of claim (including the Proofs of Claim), purchase orders, proofs of
delivery, correspondences between Owners and any WEC Debtor with respect to the
EPC Agreement, and all other documents evidencing, creating, relating or
referred to in, the Claims, but, in each case, only to the extent necessary for
the purpose of prosecuting or enforcing the Claims, and other than the Excluded
Documents (collectively, the “Claim Documents”);
(v) all interests, fees, payments, proceeds and any other distributions in
any form whatsoever made or to be made on account or in respect of the Claims or
distributions issued in satisfaction of the Claims;
(vi) all other claims, including “claims” as defined in Section 101(5) of
the Bankruptcy Code, suits, causes of action, any other right of any Owner or
any of their Affiliates, whether known or unknown, against any WEC Debtor, any
of their respective Affiliates, any guarantor or any other third party relating
to arising from or in connection with the Claims or the Claim Documents,
together with all voting and other rights, property and benefits which may be
paid, refunded or reclaimed with respect to the Claims; and
(vii) all rights to receive any payment, including principal, interest,
fees, expenses, indemnities, damages, penalties, proceeds and other amounts, or
distribution in respect of, or in connection with, any of the foregoing.
Section 2.4 Retained Rights. Notwithstanding the foregoing, the WEC Rights
do not include, and Owners shall retain, all rights, title and interest in and
to the following (collectively, the “Retained Rights”):
(a) the Excluded Documents;
7
(b) a beneficial interest in the first payment owed by Toshiba pursuant to
the Settlement Agreement, the amount of which is $150,000,000 (the “First
Installment”), which Buyer will remit to Owners in accordance with Section
6.1(a);
(c) the Letters of Credit and the right to be named as beneficiary under the
Letters of Credit; provided, that the Letters of Credit will be administered by
Owners in accordance with Section 6.1(b);
(d) the right to contest, settle, pay, control or otherwise administer the
Toshiba Affiliate Amounts; provided, that the Toshiba Affiliate Amounts will be
administered by Owners in accordance with Section 6.1(c);
(e) the right to contest, settle, pay, control or otherwise administer the
Mechanics’ Liens; provided, that the Mechanics’ Liens will be administered by
Owners in accordance with Section 6.1(d);
(f) the EPC Agreement, except to the extent necessary for the purpose of
prosecuting or enforcing the Claims;
(g) the Toshiba Guaranty, except to the extent necessary for the purpose of
enforcing the Toshiba Payment Obligation;
(h) the Summer Facility;
(i) the Interim Assessment Agreement;
(j) the right of each Owner, on behalf of themselves and the other Owner
Released Parties, to be released by the Toshiba Releasing Parties (as defined in
the Settlement Agreement) pursuant to Section 5.7(b) of the Settlement
Agreement;
(k) the right of each Owner to enforce any breach by Toshiba of Section 4.2
or Section 4.3 of the Settlement Agreement;
(l) SCE&G’s membership on the Unsecured Creditors Committee under the WEC
Proceedings (the “UCC”), which SCE&G shall resign at Closing; and
(m) any other agreements, instruments, invoices, purchase orders, proofs of
delivery, correspondences, and all other documents (whether now or hereafter
arising) to the extent not necessary for the purpose of prosecuting or enforcing
any part of the Interest.
Section 2.5 Assumed Obligations. In connection with the WEC Rights, Buyer
shall assume only the following obligations of Owners (collectively, the
“Assumed Obligations”):
(a) Owners’ obligations to Toshiba under Section 3.2(c) of the Settlement
Agreement, as specifically set forth in Section 6.1(e) of this Agreement; and
(b) Owners’ obligations to Toshiba under Section 5.6 of the Settlement
Agreement, as specifically set forth in Section 6.1(f) of this Agreement.
8
Except as expressly set forth in this Section 2.5, Buyer shall not assume, and
shall have no liability whatsoever to Toshiba or the WEC Debtors or any other
person in connection with, any of either Owner’s obligations under the EPC
Agreement, the Toshiba Guaranty, the Interim Assessment Agreement, the
Settlement Agreement, the Distribution Order, or any documents or relationships
directly or indirectly underlying the foregoing.
ARTICLE III
THE CLOSING
Section 3.1 Time and Location of the Closing; Transfer of Interest. The
Closing shall occur at 10:00 A.M. (New York City time) on the Closing Date. The
Closing will take place at Owners’ attorney’s offices at Reed Smith LLP, 225
Fifth Avenue, Pittsburgh, Pennsylvania or at such other time or location as
Owners and Buyer may agree. Upon the satisfaction of the conditions set forth in
Section 3.5, Owners irrevocably sell, transfer, assign, grant and convey the
Interest to Buyer, and Buyer irrevocably assumes the Assumed Obligations, with
effect from and after the Closing Date
Section 3.2 Payment of Purchase Price.
(a) The consideration paid by Buyer to Owners is the product of the Purchase
Rate multiplied by the Purchased Amount (each as specified in the purchase price
terms contained in Schedule 1 hereto) (the “Purchase Price”).
(b) Upon the satisfaction of the conditions set forth in Section 3.5, the
Purchase Price shall be paid by Buyer to Owners on the Closing Date by delivery
of such amount to Owners by wire transfer of immediately available funds to the
accounts specified on Schedule 2 in accordance with each Owner’s Pro Rata Share.
Section 3.3 Buyer’s Closing Documents. Buyer will deliver the following
documents (collectively, the “Buyer Closing Documents”) to Owners on or prior to
the Closing Date:
(a) the Toshiba Notice Letter, executed by Buyer;
(b) the Distribution Order Notice Letter, executed by Buyer;
(c) a completed and executed IRS Form W-9 or W-8, as applicable; and
(d) such other instruments as may reasonably be requested by Owners to
effect the transactions contemplated hereby.
Section 3.4 Owners’ Closing Documents. Owners will deliver the following
documents (collectively, the “Owners Closing Documents”) to Buyer on or prior to
the Closing Date:
(a) a certificate of each Owner, executed by a duly authorized officer of
such Owner in such capacity and not in an individual capacity, certifying as to
resolutions or written consent duly adopted by the board of directors (or
equivalent thereof) of such Owner authorizing the execution and delivery of this
Agreement and the performance by such Owner of the transactions contemplated
hereby;
(b) the Toshiba Notice Letter, executed by Owners;
9
(c) the Distribution Order Notice Letter, executed by Owners;
(d) a completed and executed IRS Form W-9 or W-8, as applicable;
(e) the Transfer of Claims Forms substantially in the form attached hereto
as Exhibit C, duly executed by Owners; and
(f) such other instruments as may reasonably be requested by Buyer to effect
Section 3.5 Conditions to Closing.
(a) Buyer’s obligations to pay the Purchase Price to the Owners and to
purchase the Interest hereunder is conditioned on the occurrence of each of the
following conditions precedent:
(i) Owners shall have delivered the Owners Closing Documents to Buyer;
(ii) Owners’ representations and warranties in this Agreement shall be true
and correct as of the Closing Date; and
(iii) Owners shall have complied with all covenants, agreements and
conditions required to be performed, observed or complied with by Owners as of
or prior to the Closing Date pursuant to this Agreement.
If any of the foregoing conditions are not satisfied, Buyer may elect, at its
sole option and in its sole and absolute discretion, to waive non-compliance in
whole or in part with respect to such condition.
(b) Owners’ obligation to sell the Interest hereunder is conditioned on the
occurrence of each of the following conditions precedent:
(i) Buyer shall have delivered the Purchase Price;
(ii) Buyer shall have delivered the Buyer Closing Documents to Owners;
(iii) Buyer’s representations and warranties in this Agreement shall be true
(iv) Buyer shall have complied with all covenants, agreements and conditions
required to be performed, observed or complied with by Buyer as of or prior to
the Closing pursuant to this Agreement.
If any of the foregoing conditions are not satisfied, Owners may elect, at their
sole option and in their sole and absolute discretion, to waive non-compliance
in whole or in part with respect to such condition.
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ARTICLE IV
BUYER’S REPRESENTATIONS AND WARRANTIES
Without implication that Buyer’s acquisition of the Interest constitutes a
purchase of securities within the meaning of federal or state securities Laws,
Buyer hereby represents and warrants to Owners as of the Closing Date that:
Brokers; Ownership.
(a) Buyer is a National Banking Association duly organized, validly existing
and in good standing under the Laws of the United States of America. Buyer has
all necessary approvals, whether governmental or otherwise, and full right,
power and authority, to (i) execute and deliver this Agreement and the Buyer
Closing Documents and (ii) perform its obligations under this Agreement and the
Buyer Closing Documents and consummate the Closing in accordance with this
Agreement.
(b) Buyer’s execution and delivery of this Agreement and the Buyer Closing
Documents, Buyer’s performance of its obligations under this Agreement and the
Buyer Closing Documents do not violate any Law, agreement or controlling
document to which Buyer is a party or by which Buyer is bound.
(c) This Agreement and the Buyer Closing Documents have been duly executed by
Buyer, and assuming due execution by each of the other parties thereto, this
Agreement constitutes the legal, valid and binding obligation of Buyer,
enforceable in accordance with its terms, except to the extent that
enforceability of such obligation may be subject to bankruptcy, insolvency,
moratorium and other similar Laws affecting the rights of creditors generally
and to general principles of equity (regardless of whether enforcement is sought
in a proceeding in equity or at law).
(d) Except for any direct or indirect legal or beneficial ownership interest
held in the form of public stock (“Public Stock Ownership”), none of Toshiba,
any WEC Debtor, or any Affiliate of Toshiba or any WEC Debtor owns any direct or
indirect legal or beneficial equity ownership interest in Buyer.
Section 4.2 Investment.
(a) Buyer is an “accredited investor” as such term is defined in the
Securities Act, and the rules and regulations promulgated thereunder, including
Regulation D.
(b) Buyer is aware that Buyer may be unable to liquidate its investment
readily in case of an emergency and that the Interest being purchased may have
to be held for an indefinite period of time. Buyer’s overall commitment to
investments which are not readily marketable is not excessive in view of Buyer’s
net worth and financial circumstances and the purchase of the Interest will not
cause such commitment to become excessive. In view of such facts, Buyer
acknowledges that Buyer has adequate means of providing for Buyer’s respective
current needs, anticipated future needs and possible contingencies and
emergencies and has no need for liquidity in the investment in the Interest.
Buyer is able to bear the economic risk of the investment in the Interest.
(c) Buyer understands that Buyer is urged to seek independent advice from
Buyer’s professional advisors relating to the suitability for Buyer of the
purchase of the Interest in view of Buyer’s overall financial needs and with
respect to the legal and tax implications of such purchase. Buyer has
11
independently evaluated the risks of purchasing the Interest, and Buyer is
satisfied that Buyer has received information with respect to all matters which
Buyer considers material to its decision to purchase the Interest.
(d) Buyer is aware that no public market exists for the Interest and that
the Interest may not be sold without compliance with applicable federal and
state securities Laws. Buyer understands that Owners have made no assurance that
a public market will ever exist for the Interest, and that, even if a public
market exists in the future, Buyer may not readily be able to sell the Interest.
(e) Buyer understands that the Interest have not been registered under the
Securities Act or the securities Laws of any state. Buyer understands that it
may not make any sale, transfer or other disposition of any portion of Interest
unless, to the extent applicable, either (i) the Interest first shall have been
registered under the Securities Act and all applicable state securities Laws, or
(ii) an exemption from such registration is available.
Section 4.3 Anti-Money Laundering and OFAC Compliance. Buyer is in material
compliance with all Anti-Money Laundering Laws and OFAC Laws. To the best of
Buyer’s knowledge, without any further inquiry, neither Buyer nor any Person
holding any legal or beneficial ownership interest in Buyer (whether directly or
indirectly) other than in the form of Public Stock Ownership (i)appears on any
Government List, (ii) is included in, owned by, controlled by, acting for or on
behalf of, providing assistance, support, sponsorship, or services of any kind
to, or otherwise associated with any of the Persons referred to or described in
any Government List, (iii) has conducted business with or engaged in any
transaction with any Person named on any Government List or any Person included
in, owned by ,controlled by, acting for or on behalf of, providing assistance,
support, sponsorship, or services of any kind to, or otherwise associated with
any of the Persons referred to or described in any Government List,(iv) is a
Person who has been determined by competent authority to be subject to the
prohibitions contained in United States Executive Order 13224, Blocking Property
and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or
Support Terrorism or any other similar prohibitions contained in the rules and
regulations of OFAC or in any enabling legislation or other Presidential
Executive Orders in respect thereof, (v) has been previously indicted for or
convicted of any felony involving a crime or crimes of moral turpitude or for
any Patriot Act Offense or (vi) is currently under investigation by any
Governmental Authority for alleged criminal activity.
Section 4.4 No Reliance.
(a) Buyer has conducted adequate due diligence of the Interest and (i) has
adequate information concerning the business and financial condition of Toshiba
and the WEC Debtors, the Interest and the status of the WEC Proceedings in order
to make an informed decision regarding the purchase and sale under this
Agreement, (ii) is able to bear the economic risk associated with the sale and
purchase of the Interest and the assumption of the Assumed Obligations and has
such knowledge and experience so as to be aware of the risks and uncertainties
inherent in the purchase of rights and assumption of liabilities of the type
contemplated in this Agreement; and (iii) has independently and without reliance
on the Owners, any Affiliate of any Owner, or any advisor, agent or
representative of any of the foregoing, and based on such information as it has
deemed appropriate, made its own analysis and decision to enter into this
Agreement.
(b) Buyer acknowledges that no Owner, Affiliate of any Owner, or any
advisor, agent or representative of any of the foregoing has been authorized to
make, and Buyer has not relied on, any statements other than those expressly set
forth in Article V. Buyer is not relying on any continued actions or efforts on
the part of any Owner, any Affiliate of any Owner, or any advisor, agent or
representative of any of the foregoing with respect to the Interest, except as
expressly set forth herein or
12
in the Closing Documents. Buyer acknowledges that Owners have not guaranteed and
do not guaranteed payment of the Toshiba Payment Obligation or in respect of the
WEC Rights, and Owners have not guaranteed and do not guarantee the performance,
rate of return, value or yield of the Interest. Buyer acknowledges that the
Interest is being sold on an “AS-IS”, “WHERE-IS” basis and “WITH ALLFAULTS”, and
subject to any and all claims and/or defenses of all types, except as expressly
set forth in Article V or Article VI.
ARTICLE V
OWNERS’ REPRESENTATIONS AND WARRANTIES
Section 5.1 Owners’ Representations and Warranties. Each Owner, as to itself
only, hereby represents and warrants to Buyer as of the Closing Date as follows:
(a) Such Owner is duly organized, validly existing and in good standing
under the Laws of the State of South Carolina. Such Owner has all necessary
approvals, whether governmental or otherwise, and full right, power and
authority, to (i) execute and deliver this Agreement and the Owners Closing
Documents and (ii) perform its obligations under this Agreement and the Owners
Closing Documents and consummate the transaction contemplated by this Agreement
and the Owners Closing Documents.
(b) Such Owner’s execution and delivery of this Agreement and the Owners
Closing Documents, such Owner’s performance of its obligations under this
Agreement and the Owners Closing Documents and the execution and performance
hereof does not violate any Law, injunction, agreement or controlling document
to which such Owner is a party or by which such Owner is bound.
(c) This Agreement and the Owners Closing Documents, have been duly executed
and delivered by such Owner, and assuming due execution by each of the other
parties thereto, this Agreement constitutes the legal, valid and binding
obligation of such Owner, enforceable in accordance with its terms, except to
the extent that enforceability of such obligation may be subject to bankruptcy
,insolvency, moratorium and other similar Laws affecting the rights of creditors
generally and to general principles of equity (regardless of whether enforcement
is sought in a proceeding in equity or at law).
(d) Such Owner (i) has adequate information concerning the business and
financial condition of the WEC Debtors, the Interest and the status of the WEC
Proceedings in order to make an informed decision regarding the purchase and
sale under this Agreement, (ii) is able to bear the economic risk associated
with the sale and purchase of the Interest and has such knowledge and experience
so as to be aware of the risks and uncertainties inherent in the purchase of
rights and assumption of liabilities of the type contemplated in this Agreement;
and (iii) has independently and without reliance on the Buyer ,and based on such
information as it has deemed appropriate, made its own analysis and decision to
enter into this Agreement.
(e) Such Owner has complied with and has performed, in all material
respects, all obligations required to be complied with or performed by it in
respect of the Toshiba Guaranty, the Settlement Agreement, the Claims and the
Distribution Order. The Settlement Agreement has not been modified, and no
rights thereunder have been waived or modified, by such Owner. To such Owner’s
Knowledge, (i) the Settlement Agreement was negotiated at arms’ length and in
good faith and is a valid and enforceable agreement and (ii) the Settlement
Agreement and the Distribution Order are not subject to any pending objection,
avoidance, rescission or modification, and there has been no Forbearance
Termination Event (as defined in the Settlement Agreement).
13
(f) Proof of claim number 2440 has been duly and timely filed for the WEC
Claim in the WEC Proceedings on August 31, 2017, and proof of claim number 2444
has been duly and timely filed for the WECTEC Claim in the WEC Proceedings on
August 31, 2017 (such proofs of claim, together, the “Proofs of Claim”), and the
Proofs of Claim are accurate, valid and complete in all material respects as of
the date of such filings. To such Owner’s Knowledge, the Claims are not subject
to any claim or counterclaim or setoff filed by any WEC Debtor against such
Owner that will impair Buyer’s recovery (with respect to amount or timing or
otherwise) thereunder.
(g) Such Owner is not and has never been an “insider” (within the meaning of
Section 101(31) of the Bankruptcy Code) of the WEC Debtors or any of their
respective Affiliates or an “affiliate” (within the meaning of Section 101(2) of
the Bankruptcy Code or Rule 144 of the Securities Act) of the WEC Debtors.
(h) To such Owner’s Knowledge, (i) Toshiba has not been, and is not, in
breach of the Settlement Agreement or the Toshiba Guaranty, and (ii) none of
Toshiba nor any of its Affiliates party thereto, have been, or are, in violation
of the Distribution Order.
(i) There has been no payment or other distribution received by such Owner
by any Affiliate or other third party on behalf of such Owner or otherwise in
respect of the Interest, in full or partial satisfaction of, or otherwise in
connection with the Interest.
(j) The Interest has not been sold, assigned, pledged, factored,
hypothecated, participated, encumbered or otherwise transferred to any third
party (or is subject to an agreement for the same), in whole or in part, and
such Owner is the sole legal and beneficial owner of its respective portion of
the Interest and has good legal and marketable title to such portion of the
Interest, free and clear of any and all liens, security interests, encumbrances,
rights of set off, netting rights or claims of any kind or nature whatsoever,
except for claims asserted in the proceedings set forth on the Disclosure
Schedule, none of which has resulted in an attachment, lien or encumbrance upon
(k) Except for any notice requirement under Rule 3001 of the Federal Rules
of Bankruptcy Procedure (the “Bankruptcy Rules”), no consent of, registration
with, or approval of, or any other action by, any relevant Person is or will be
required for Owners to execute, deliver and perform their obligations under this
Agreement or for the transactions contemplated herein to become effective.
(l) Such Owner has not engaged in any act, conduct or omission or had any
relationship with Toshiba that will reduce the value of the Toshiba Payment
Obligation or impair Buyer’s recovery (with respect to amount or timing or
otherwise) thereunder or otherwise adversely affect Buyer’s rights in relation
thereto.
(m) Except to the extent as may be provided in the Interim Assessment
Agreement or in connection with the suspension of operations at the Summer
Facility (units 2 and 3) on or about July31, 2017, (i) the EPC Agreement has not
been modified since October 27, 2015 and (ii) no rights under the EPC Agreement
have been waived or modified, by such Owner.
(n) No interest in the Interest is being sold by or on behalf of one or more
Benefit Plans (as defined under Employee Retirement Income Security Act of 1974,
as amended, and the rules and regulations promulgated under it (“ERISA”)) and
the transaction contemplated hereby is not a Prohibited Transaction (as defined
under ERISA).
14
Section 5.2 No Implied Representations or Warranties. No Owner, Affiliate of
any Owner, or any advisor, agent or representative of any of the foregoing has
made, nor will be deemed to have made, and each Owner, Affiliate of each Owner,
and each advisor, agent or representative of each of the foregoing specifically
disclaim, any implied warranties or representations and any statutory warranties
or representations under this Agreement, any Closing Document or any other
document delivered by any Owner, any Affiliate of any Owner, or any advisor,
agent or representative of any of the foregoing to Buyer at the Closing. Except
as expressly provided in this Article V, but without limiting the foregoing,
neither Owner makes any representations or warranties with respect to (a) the
Interest, Toshiba, the WEC Debtors, or any other Person, (b) the enforceability
of the EPC Agreement or the Settlement Agreement,(c) the presence or absence of
defaults under, defenses to or offsets against the Toshiba Amount (other than
expressly described herein), (d) the status or financial condition of Toshiba,
the WEC Debtors, or any other Person, (e) any fact or condition respecting the
Interest, Toshiba, the WEC Debtors, or any other Person, including the
collectability of any amounts under the Claims, or (f) any of the matters
referred to in Section 4.4.
ARTICLE VI
COVENANTS
Section 6.1 Settlement Agreement.
(a) First Installment. Buyer agrees that in the event Buyer receives any
portion of the First Installment, Buyer shall accept the same as Owners’ agent
and hold the same in trust on behalf of and for the sole benefit of Owners, and
shall promptly deliver the same forthwith to Owners in the same form received as
soon as reasonably practicable (and in any event within five (5) Business Days
following receipt thereof). Any payments by Buyer pursuant to this Section
6.1(a) shall be paid to Owners in accordance with each Owner’s Pro Rata Share.
(b) Letters of Credit. For the avoidance of doubt, the right to receive
proceeds under the Letters of Credit has not been assigned to Buyer. To the
extent (i) the Toshiba Amount is reduced by a Draw Demand made by Owners, or
(ii) Toshiba’s payment obligations under the Settlement Agreement are suspended
as a result of the delivery by Toshiba of a Payment Obligation Suspension
Notice, Owners will remit to Buyer the amount of such reduction in the Toshiba
Amount, in the case of clause (i), and will remit to Buyer the amount then
remaining available to be drawn under the Letters of Credit in the case of
clause (ii), in each case, in accordance with each Owner’s Pro Rata Share,
within five (5) Business Days following the time such payment would have been
made by Toshiba to Buyer but for such reduction of the Toshiba Amount or within
five (5) Business Days following receipt of the proceeds of the Letters of
Credit, as applicable.
(c) Toshiba Affiliate Amounts. The Toshiba Affiliate Amounts will not be
paid by Owners. To the extent the Toshiba Amount is reduced by the Toshiba
Affiliate Amounts, Owners will remit to Buyer the amount of such reduction in
the Toshiba Amount, in accordance with each Owner’s Pro Rata Share, within five
(5) Business Days following the time such payment would have been made by
Toshiba to Buyer but for such reduction of the Toshiba Amount.
(d) Mechanics’ Liens. Owners will maintain post-Closing control of the
process regarding the Mechanics’ Liens (as more fully described in the
Settlement Agreement, including Section3.4 and Section 5.8 thereof), and to the
extent the Toshiba Amount is reduced by the Satisfied Mechanics’ Liens Amount,
Owners will remit to Buyer the amount of such reduction in the Toshiba Amount,
in accordance with each Owner’s Pro Rata Share, within five (5) Business Days
following the time such payment would have been made by Toshiba to Buyer but for
such reduction of the Toshiba Amount.
15
(e) Non-Cash WEC Receipts. Subject to the conditions applicable to Toshiba
pursuant to Section 3.2(c) of the Settlement Agreement, upon receipt of a
written demand by Toshiba in accordance with Section 3.2(c) of the Settlement
Agreement, Buyer shall transfer to Toshiba any cash received by it on account of
a non-cash distribution or interest therein that has not, pursuant to the
Settlement Agreement, been applied to monthly payment amounts on Schedule 2.2
thereof. Any such transfer of cash to Toshiba will be accompanied by a
reasonably detailed accounting of (i) the non-cash distributions received by
such Owner in exchange for, on account of, or in connection with any claims of
for a breach by WEC of the EPC Agreement (including any rejection thereof under
section 365 of the Bankruptcy Code) and (ii) any cash received in respect
thereof.
(f) Support of Sale of Westinghouse’s Assets and Plan Support Agreement.
Buyer agrees that it will support a prompt sale of the assets of WEC and the
other WEC Debtors pursuant to a plan of reorganization or a motion under section
363 of the Bankruptcy Code that is, in each case, acceptable to Toshiba and
Buyer in their respective sole discretion. Buyer agrees that it will negotiate
in good faith regarding the terms of an acceptable, in its sole discretion, plan
support agreement that will set forth terms of an acceptable, in its sole
discretion, chapter 11 plan for WEC and the other WEC Debtors. Such plan support
agreement shall include plan provisions which (i) provide for a third party
release, exculpation and plan injunction substantially in the form attached to
the Settlement Agreement as Exhibit B, and (ii) set forth an allocation,
acceptable to Buyer in its sole discretion, of distributions to Buyer on account
of its respective claims.
(g) Other Settlement Agreement Covenants. For the avoidance of doubt, Owners
acknowledge and agree to comply with all covenants applicable to them under the
Settlement Agreement, including, but not limited to the covenants set forth in
Section 5.2 (Southern), Section 5.3 (Services Agreements), Section 5.4
(Consideration of Cost Reduction Proposals), Section 5.5 (Refund of Toshiba
Payments), and Section 7.5 (Nuclear Indemnity and Insurance) of the Settlement
Agreement, and Buyer agrees that it has no right to interfere with or otherwise
abridge or amend such provisions or otherwise abridge, amend or waive Toshiba’s
obligations with respect to Section 4.2 (Southern) or Section 4.3(Services
Agreements) of the Settlement Agreement.
(h) Each Owner shall (i) promptly provide Buyer with a copy of any notice
provided to Toshiba with respect to any Toshiba Affiliate Amount; (ii) promptly
provide Buyer with a copy of any notice provided to Toshiba with respect to any
Satisfied Mechanics’ Liens Amount; (iii) deliver to Buyer a copy of any notice
provided to Toshiba under Section 5.8(a) of the Settlement Agreement
concurrently with the delivery of such notice to Toshiba, and (iv) promptly
provide Buyer copies of all notices or communications received from Toshiba
under the Settlement Agreement, including any Payment Obligation Suspension
Notice, and all notices or communications received from the issuers of the
Letters of Credit.
Section 6.2 Waiver of Securities Claims. Without implication that Buyer’s
acquisition of the Interest constitutes a purchase of securities within the
meaning of federal or state securities Laws, in light of the representations,
warranties, covenants and acknowledgments contained in this Agreement and in the
Closing Documents, the parties hereto waive all rights, if any, to make any
claim against any other party hereto in connection with this Agreement under any
federal or state securities Law.
Section 6.3 Proxy and Attorney-in-fact. Each Owner irrevocably appoints
Buyer as its true and lawful attorney-in-fact and authorizes Buyer to act in
such Owner’s name, place and stead, to demand, sue for, compromise and recover
all such amounts as now are, or may hereafter become, due and payable for or on
account of the Interest and to do all lawful things necessary to enforce Buyer’s
right, title and interest in and to the Interest or any portion thereof and such
Owners’ rights thereunder or related
16
thereto. Each Owner hereby acknowledges and agrees that the powers granted to
Buyer in this paragraph include the right to (a) do all things necessary to
enforce the Interest including to prosecute the Interest and/or to defend the
Interest against any objection, dispute or litigation that may be filed or
commenced in respect thereof or take any actions against Toshiba (referred to in
this Section 6.3 as a “Claim Dispute”), (b) agree to less favorable treatment
for the WEC Rights than other similarly situated claims, (c) agree with the WEC
Debtors to allow the Claims at an amount less than amounts claimed in the Proofs
of Claim, (d) agree with Toshiba to reduce the Toshiba Amount owed by Toshiba
and (e) amend the Settlement Agreement in its sole discretion; provided, that
none of the foregoing shall have a material adverse effect on any Owner. Each
Owner agrees that the powers granted by this Section 6.3 are discretionary and
that Buyer may exercise or decline to exercise such powers in Buyer’s sole
discretion. Buyer shall have no obligation to take any action to prove or defend
the validity or amount of the Claims in the WEC Proceedings. Buyer shall have
sole authority to negotiate a settlement of the Claims with the WEC Debtors, to
appear in the WEC Proceedings, defend against or oppose any Claim Dispute and
file pleadings and documents and otherwise take steps to defend against and
oppose such Claim Dispute. Each Owner agrees that it shall take no action in
respect of or in connection with the Interest or any portion thereof without
Buyer’s express consent; provided, that nothing in this Agreement does or shall
be deemed to restrict the rights of either Owner to take any action in
furtherance of such Owner’s rights under the Retained Rights. In the event that
an Owner receives notice of a Claim Dispute, then such Owner shall immediately,
and in any event within five (5) Business Days after its receipt of notice of
such Claim Dispute, notify Buyer in writing of such Claim Dispute.
Section 6.4 Confidentiality Obligations of the Parties. Each item of
Confidential Information to the extent provided and regardless of whether such
information is identified as “Confidential” shall be held in the strictest
confidence by the parties hereto and all of their respective Affiliates. The
parties hereto covenant and agree not to, and to cause their Affiliates not to,
use or disclose any Confidential Information. The parties hereto shall, and
shall cause their Affiliates, to protect any Confidential Information in their
possession by using the same degree of care, but no less than a reasonable
degree of care, to prevent the unauthorized use, dissemination, or publication
of the Confidential Information as such party uses to protect its own
confidential information of like nature. Notwithstanding the foregoing, each
party hereto may share Confidential Information (a) with its respective
representatives who need to know such information, provided, that each such
representative has agreed to keep such information confidential or is otherwise
subject to a duty or policy of Buyer or such Owner to keep such information
confidential; (b) with the prior written consent of the Buyer on one hand, in
the case of disclosure by an Owner, or the Owners on the other hand, in the case
of disclosure by Buyer; (c) as requested or required by Law or in connection
with any legal process; (d) in connection with the enforcement of such parties’
rights hereunder; or (e) to the extent that any such information is or becomes
public other than as a result of a breach by such party. Notwithstanding
anything herein to the contrary, Buyer may disclose the Confidential Information
(but not the Purchase Price) to any prospective purchaser, transferee or
participant of all or any portion of the Interest; provided, that such
prospective purchaser, transferee or participant shall be advised of and agree
to be bound by either the provisions of this Section 6.4 or other provisions at
least as restrictive as this Section 6.4.
Section 6.5 Release of Owners under this Agreement.
(a) Effective immediately upon the Closing, Buyer on behalf of itself and
its present and former agents, Affiliates, principals, shareholders,
stakeholders, predecessors, subsidiaries, successors and assigns (collectively,
the “Buyer Releasing Parties”), hereby fully, finally and forever releases,
acquits and discharges each of the Owners and each of their respective agents,
Affiliates, executives, employees, attorneys, advisors, accountants, auditors,
representatives, associates, directors, officers, partners, principals,
insurers, predecessors, subsidiaries, successors, estates, heirs, executors,
trusts, trustees, administrators, licensees and assigns (collectively, the
“Owner Released Parties”) from any and
17
all manner of action, causes of action, claims, demands, lawsuits, attorneys’
fees and costs, losses, expenses, damages, right to equitable remedy if such
breach gives rise to a right of payment, or liabilities of whatever kind and
suspected or unsuspected, whether arising under federal, state, local,
statutory, common, foreign or administrative Law, or any other Law, whether
fixed or contingent, accrued or unaccrued, liquidated or unliquidated, matured
or unmatured, disputed or undisputed, at law or in equity, secured or unsecured
that any of the Buyer Releasing Parties heretofore had, or now or hereafter
have, own or hold, or could assert directly or indirectly, against Owner in any
forum, arising out of or related to (i) the Interest, and (ii) this Agreement;
provided, that nothing in this Section 6.5 shall release Owners or any of the
other Owner Released Parties from any obligation under this Article VI and
Article VII.
(b) The Buyer Releasing Parties are fully aware of the provisions of California
Civil Code Section 1542, which provides as follows:
if
known by him or her must have materially affected his or her settlement with the
debtor.
Each of the Buyer Releasing Parties agrees to voluntarily waive the provisions
of California Civil Code Section 1542 (or under any Law of any state or
territory of the United States, or principle of common law, or under the Law of
any foreign country, that is similar, comparable or equivalent to section1542 of
the California Civil Code) with respect to the claims released in Section
6.5(a). The Buyer Releasing Parties acknowledge and agree that the foregoing
waivers were separately bargained for and a key element of this Agreement of
which this release is a part.
(c) Covenants Not to Sue.
(i) The Buyer Releasing Parties promise not to sue or proceed in any manner, in
court, agency or any other proceedings, whether at law, in equity, by way of
administrative hearing, or otherwise, or to solicit others to institute any such
actions or proceedings, against the Owner Released Parties concerning any of the
claims in this Section 6.5.
(ii) The releases and covenants not to sue contained in this Section 6.5 maybe
pleaded as a full and complete defense to, and may be used as the basis for an
injunction against, any action, suit or other proceeding which may be instituted
in breach of the releases or covenants not to sue.
Section 6.6 True Sale. The parties hereto agree that the sale, assignment,
transfer and conveyance of the Interest contemplated herein is intended to be an
absolute and irrevocable transfer constituting a “true sale” for purposes of the
Bankruptcy Code, any other applicable Law and accounting principle without
recourse by Buyer to any Owner, except as expressly set forth in Article VII.
Each party hereto agrees to treat each such transaction as a “true sale” for all
purposes under applicable Law and accounting principles, including in their
respective books, records, computer files, tax returns(federal, state and
local), regulatory and governmental filings, and shall reflect such sale in
their respective financial statements. Each Owner shall advise all Persons
inquiring about the ownership of the Interest (or any part thereof) that the
Interest (or such part thereof) has been sold to Buyer.
Section 6.7 Cooperation; Further Assurances.
(a) Each Owner hereby agrees to use commercially reasonable efforts to cooperate
with Buyer and provide reasonable support to Buyer necessary for Buyer’s
enforcement of the WEC
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Rights and its rights arising under the Settlement Agreement, including for the
avoidance of doubt, (i)providing Buyer with all information, correspondence,
notices or other documents, and take all reasonable actions requested by Buyer
necessary for Buyer to file claims against the WEC Debtors for all possible
damages and claims arising from or related to the WEC Debtors’ rejection of the
EPC Agreement, (ii)take reasonable steps necessary for the recognition of Buyer
as the holder of the Interest through the Distribution Order Notice Letter and
the Toshiba Notice Letter, and (iii) prosecution of the Claims and with respect
to any actions against Toshiba; provided, that all of the foregoing will be at
Buyer’s sole cost and expense, and no Owner will be required to provide copies
of any of the Excluded Documents or operate its respective business in any
manner other than the ordinary course as determined in the sole discretion of
such Owner.
(b) Each of Owners and Buyer hereby agrees to execute and deliver such other
instruments as may be reasonably requested by the other party to consummate
and/or evidence the transactions contemplated herein, including copies of any
Claim Document to the extent reasonably available.
(c) Without limiting the generality of the foregoing, each Owner agrees that
in the event such Owner receives any payment, distribution or notice with
respect to or relating to the Interest from and after the Closing Date
(including any distributions under the Distribution Order), whether in the form
of cash, securities, instruments or any other property, the aforementioned shall
constitute property of the Buyer to which the Buyer has an absolute right. Such
Owner shall accept the same as Buyer’s agent and shall hold the same in trust on
behalf of and for the sole benefit of Buyer, and shall promptly deliver the same
forthwith to Buyer in the same form received as soon as reasonably practicable
(and in any event within five (5) Business Days following receipt thereof),
together with (i) any endorsements or documents necessary to transfer such
property to Buyer and (ii) any statements received by such Owner from the WEC
Debtors describing such payment or distribution.
(d) Each Owner shall use commercially reasonable efforts to cooperate with
Buyer, at Buyer’s sole cost and expense, in any attempt by Buyer to (i) comply
with Rule 3001(e) of the Bankruptcy Rules and any additional rules, statutes, or
orders applicable to the transfer of the Interest and (ii) file any additional
proofs of claim or any amendments to the Proofs of Claim. Owners hereby waive
any notice or hearing requirements imposed by Rule 3001(e) of the Bankruptcy
Rules, and consents to the substitution of Owners by Buyer for all purposes in
the WEC Proceedings, including for voting and distribution purposes with respect
to the WEC Rights. Each Owner acknowledges and consents to all terms set forth
in this Agreement and, upon timely payment of the Purchase Price as provided
herein, waives its right to raise any objection thereto and its right to receive
notice pursuant to Bankruptcy Rule 3001(e), and consents to the substitution of
Owner by Buyer for purposes of enforcing the WEC Rights in the WEC Proceedings.
Owners further stipulate that an order may be entered recognizing the Buyer as
the valid owner of the Interest. Buyer shall file the Transfer of Claims Forms
within five (5) Business Days of the Closing Date. From the Closing Date until
the date on which the Buyer is, or is deemed to be, substituted for Owners
pursuant to Rule 3001 of the Bankruptcy Rules, this Agreement shall be deemed to
grant Buyer an undivided one hundred percent (100%) participation interest in
the WEC Rights.
To the extent the sale, assignment, transfer, or conveyance of all or any
portion of the Interest is deemed invalid or otherwise prevented by applicable
Law or otherwise, then with respect to such portion of the Interest: (a) the
beneficial interest in or to such portion of the Interest (collectively, the
“Beneficial Rights”) shall in any event pass as of the Closing Date to Buyer;
and (b) pending the effectiveness of such sale, assignment, transfer, or
conveyance, and so long as the applicable Owner transfers and turns over all
Beneficial Rights with respect to such portion of the Interest, Buyer shall
assume or discharge any Assumed Obligations of such Owner under such Beneficial
Rights as agent for such Owner, and such
19
Owner shall act as Buyer’s agent in the receipt of any benefits, rights or
interest received from the Beneficial Rights.
(e) Each Owner agrees that it shall not take any action under, omit to take
any action under, amend, or assign the Settlement Agreement without the written
consent of Buyer, such consent not to be unreasonably withheld or delayed if
such action would not reasonably be expected to adversely affect the Toshiba
Payment Obligation or any of Buyer’s rights or obligations under this Agreement
or the Settlement Agreement.
(f) Concurrently with the resignation of SCE&G from the UCC, SCE&G shall (i)
advise the United States Trustee of its resignation and (ii) notify the United
States Trustee that the WEC Claims have been assigned to the Buyer.
(g) Owners and Buyer agree that with respect to all matters described in
this Section 6.7, (i) Owners shall deal directly with Buyer (or its Affiliates)
only and (ii) Owners shall take instruction from Buyer (or its Affiliates) only.
(h) Notwithstanding anything to the contrary set forth in this Section 6.7,
in no event will Santee Cooper be obligated to take any action, or refuse to
take any action, if such action or failure to act would be materially adverse to
the holders of Santee Cooper’s debt obligations issued pursuant to its Master
Revenue Obligation Resolution, adopted April 26, 1999.
ARTICLE VII
INDEMNIFICATION
Section 7.1 Buyer Indemnification. Buyer agrees to indemnify, hold harmless
and defend the Owner Released Parties for, from and against any and all claims,
liabilities, losses, damages, penalties, judgments, costs and expenses, actually
incurred by any of them, including reasonable attorney’s fees, on account of,
arising out of or related to:
(a) any claim for a finder’s fee or broker’s commission asserted against any
Owner by a Person which alleges to have dealt with Buyer of any Affiliate of
Buyer with respect to the transaction contemplated by this Agreement; or
(b) any breach or non-fulfilment of any representation, warranty, covenant,
agreement or obligation to be performed by Buyer pursuant to this Agreement.
Section 7.2 Owners Indemnification. Subject to Section 7.4(b) and to the
extent permitted by Law, each Owner agrees, severally (each in accordance with
its Pro Rata Share) and not jointly, to indemnify, hold harmless and defend
Buyer and each of its agents, Affiliates, executives, employees, attorneys,
advisors, accountants, auditors, representatives, associates, directors,
officers, partners, principals, insurers, predecessors, subsidiaries,
successors, estates, heirs, executors, trusts, trustees, administrators,
licensees and assigns (collectively, the “Buyer Indemnified Persons”, and
together with Owner Released Parties, “Indemnified Persons”) for, from and
against any and all claims, liabilities, losses, damages, penalties, judgments,
costs and expenses, actually incurred by any of them, including reasonably
attorney’s fees, on account of, arising out of or related to:
Buyer by a Person which alleges to have dealt with Owners or any Affiliate of
Owners with respect to the transaction contemplated by this Agreement; or
20
agreement or obligation to be performed by such Owner pursuant to this
Agreement.
Section 7.3 Notice of Claims. Promptly after an Indemnified Person receives
notice of a claim (whether received from Buyer, Owners or otherwise) to which
this Article VII applies in the Indemnified Person’s opinion, the Indemnified
Person will deliver Notice to Buyer or Owners, as applicable, of the claim,
provided, that any failure by the Indemnified Person to deliver the Notice to
Buyer or Owners, as applicable, will not relieve Buyer or Owners, as applicable,
of liability under this Agreement to the extent it is not prejudiced by such
failure. The Indemnified Persons shall have the right to select their own
counsel to defend any indemnified claim at Buyer’s expense, with respect to any
Owner Released Party, or at Owners’ expense, with respect to any Buyer
Indemnified Person, or at the Indemnified Person’s request, Buyer or Owners, as
applicable, shall defend, and assume the defense of, such claim using counsel
reasonably acceptable to the Indemnified Persons. Buyer or Owners, as
applicable, will be entitled to defend such claim and will (if required by the
Indemnified Person) assume the defense of the claim, using counsel selected by
Buyer, with respect to any Owner Released Party, or Owners, with respect to any
Buyer Indemnified Person, and reasonably approved by the Indemnified Person.
Section 7.4 Exclusive Remedy.
(a) Following the Closing, the respective rights of the Indemnified Persons
to indemnification pursuant to this Article VII shall be the sole and exclusive
remedies available to such parties with respect to any and all claims with
respect to the subject matter of this Agreement and the transactions
contemplated hereby. Notwithstanding the foregoing, (i) nothing herein shall
limit or impair any party’s right to obtain specific performance or other
equitable relief with respect to any breach or threatened breach of this
Agreement or limit any dispute or claim hereunder in respect of fraud with
respect to the subject matter of this Agreement or the transactions contemplated
hereby, and (ii) nothing herein or in any other document delivered pursuant to
this Agreement will prejudice Owners from seeking the benefit of any indemnity,
hold harmless agreements and similar agreements by any Person to Owners under
any Claim Document, provided the same does not detract from the benefits
afforded Buyer under such indemnity. In no event shall any party hereto have any
liability under this Agreement for any consequential, indirect, incidental,
special, exemplary, punitive, or enhanced damages, including loss of future
revenue or income relating to a breach or alleged breach of this Agreement, or
diminution of value or any damages based on any type of multiple, whether based
on statute, contract, tort, or otherwise.
(b) In no event shall an Owner’s aggregate liability pursuant to its
indemnification obligations set forth in Section 7.2 exceed its Pro Rata Share
of the Purchase Price, less any amounts actually received by Buyer with respect
to the Interest.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Notices. All Notices shall be in writing and (a) mailed
(registered or certified mail, return receipt requested, and postage prepaid),
(b) hand-delivered, with signed receipt, or(c) sent by a nationally-recognized
overnight courier, addressed to the appropriate party at its address asset forth
below. Owners and Buyer each may change from time to time the address to which
Notices must be sent, by Notice given in accordance with this Section 8.1.
Subject to the foregoing sentence, all Notices given in accordance with this
Section 8.1 shall be effective when received (or delivery is refused) at
following address:
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If to Buyer:
Attention: __________
with a copy to (which shall not constitute Notice):
Attention: __________
If to either Owner:
South Carolina Electric & Gas Company
Mail Code D304
220 Operation Way
Cayce, SC 29033
and to:
South Carolina Public Service Authority
One Riverwood Drive
P.O. Box 2946101
Moncks Corner, SC 29461-6101
with copies to (which shall not constitute Notice):
Mail Code D308
220 Operation Way
Cayce, SC 29033
Attention: General Counsel
and to:
One Riverwood Drive
P.O. Box 2946101
Attention: General Counsel (M603)
Section 8.2 Applicable Law. This Agreement is governed by and will be
construed in accordance with the Laws of the State of New York (without regard
to any conflict of Law provision that would result in the application of the
Laws of another jurisdiction).
Section 8.3 Discretion. Wherever under this Agreement Owners or Buyer has the
right to approve or determine any matter, Owners’ or Buyer’s approval or
determination will be in such party’s sole discretion unless expressly provided
to the contrary in this Agreement. Wherever under this Agreement any matter is
required to be satisfactory to Owners or Buyer, such party’s determination that
the matter is satisfactory will be in its sole discretion unless expressly
provided to the contrary in this Agreement.
22
Section 8.4 Severability. In the event that any provision of this Agreement
is invalid or unenforceable under any applicable Law, then such provision shall
be deemed inoperative to the extent that it may conflict therewith and shall be
deemed modified to conform to such Law. Any provision hereof which may prove
invalid or unenforceable under any Law shall not affect the validity or
enforceability of any other provision hereof.
Section 8.5 [Reserved].
Section 8.6 Entire Agreement. This Agreement (including all exhibits,
schedules and any other attachments) and the Closing Documents constitute the
entire understanding between the parties hereto regarding the subject matter of
this Agreement, and supersede any and all previous communications and
understandings between the parties (including any bid, indication of interest,
commitment letter, or letter of interest) regarding the subject matter of this
Agreement.
Section 8.7 No Oral Amendment. This Agreement may not be amended, waived or
terminated orally or by any act or omission made individually by Owners or Buyer
but may be amended, waived or terminated only by a written document signed by
the party against which enforcement of the amendment, waiver or termination is
sought.
Section 8.8 Time of the Essence. Time is of the essence with respect to the
parties’ performance of their obligations under this Agreement.
Section 8.9 Successors and Assigns. This Agreement binds Owners and Buyer
and their respective successors and assigns and inures to the benefit of Owners
and Buyer and their respective successors and permitted assigns. Article VII
also inures to the benefit of all Indemnified Persons pursuant to Article VII.
Section 8.10 Duplicates and Counterparts. This Agreement may be executed in
of which together shall constitute one and the same instrument. This Agreement,
any and all agreements and instruments executed and delivered in accordance
herewith, along with any amendments hereto or thereto, to the extent signed and
delivered by means of a facsimile machine or email delivery of a “.pdf” or
similar format data file, shall be treated in all manner and respects and for
all purposes as an original signature, agreement or instrument and shall be
considered to have the same binding legal effect as if it were the original
signed version thereof delivered in person. No party hereto shall raise the use
of a facsimile machine or e-mail delivery of a “.pdf” or similar format data
file to deliver a signature to this Agreement or any amendment hereto or the
fact that such signature was transmitted or communicated through the use of a
facsimile machine or e-mail delivery of a “.pdf” or similar format data file as
a defense to the formation or enforceability of a contract and each party
forever waives any such defense.
Section 8.11 Rights Cumulative; Waivers. The rights of each of Owners and
Buyer under this Agreement are cumulative and may be exercised as often as such
party considers appropriate. The rights of each of Owners and Buyer under this
Agreement will not be capable of being waived or varied otherwise than by an
express waiver or variation in writing. Any failure to exercise or any delay in
exercising any of such rights will not operate as a waiver or variation of that
or any other such right. Any defective or partial exercise of any of such rights
will not preclude any other or further exercise of that or any other such right.
No act or course of conduct or negotiation on the part of any party will in any
way preclude such party from exercising any such right or constitute a
suspension or any variation of any such right.
23
Section 8.12 Assignment.
(a) No party to this Agreement may assign its rights or delegate its
obligations under this Agreement without the written consent of each of the
other parties hereto, such consent not to be unreasonably withheld.
(b) Notwithstanding Section 8.12(a), Buyer may assign, participate or otherwise
transfer any interest in any or all of Buyer’s rights under this Agreement
without the consent of Owners; provided, that:
(i)
Buyer shall provide Notice of such assignment, participation or transfer
to each Owner promptly, but in any event within five (5) Business Days after,
such assignment, participation or transfer; and
(ii)
in no event shall such assignment, participation or transfer result in either
Owner having any obligation (whether for purposes of payment, Notice,
cooperation or otherwise) arising under Section 6.1(b), Section 6.1(c), Section
6.1(d) or Section 6.7 to more than one Person at any time, and Buyer (and any of
its successor and assigns) shall appoint, or shall be appointed as, an agent,
representative or other designee as necessary for such purposes.
Section 8.13 Fees and Expenses. Owners and Buyer each will bear the fees and
expenses of its respective accountants, appraisers, attorneys and other
consultants and other costs and expenses in connection with the preparation of
this Agreement and the consummation of the transaction contemplated by this
Agreement. Notwithstanding the foregoing, Buyer shall pay all transfer, filing
and recording fees, stamp taxes, costs and expenses, if any, including with
respect to any document or instrument to be executed and delivered hereunder.
Section 8.14 Agreement Not Binding. Nothing contained in this Agreement will
create any obligation on the part of Owners under this Agreement unless and
until Owners have executed and delivered to Buyer a counterpart copy of this
Agreement.
Section 8.15 Waiver of Jury Trial. Owners and Buyer waive trial by jury in any
proceeding brought or Claim asserted in connection with the transaction
Section 8.16 No Third Party Beneficiaries. Except for Indemnified Persons,
nothing expressed or mentioned in this Agreement is intended or will be
construed to give any other Person any legal or equitable right, remedy or claim
under or in respect of this Agreement, or any provisions herein contained, this
Agreement and all conditions and provisions hereof being intended to be and
being for the sole and exclusive benefit of Owners and Buyer and for the benefit
of no other Person.
Section 8.17 Headings; Construction. The headings in this Agreement are for
purposes of reference only and will not limit or otherwise affect the meaning
hereof. References in this Agreement to numbered Articles or Sections are
references to the Articles and Sections of this Agreement. References in this
Agreement to lettered Exhibits and numbered Schedules are references to the
Exhibits and Schedules attached to this Agreement, all of which are incorporated
in and constitute a part of this Agreement. Article, Section, Exhibit and
Schedule captions used in this Agreement are for reference only and do not
describe or limit the substance, scope or intent of this Agreement or the
individual Articles, Sections, Exhibits or Schedules of this Agreement. The
terms “include”, “including” and similar terms are construed as if followed by
the phase “without limitation.” The singular of any word includes the plural and
the plural includes the singular. The use of any gender includes all genders.
The
24
term “provisions” includes terms, covenants, conditions, agreements and
requirements. The term “amend” includes modify, supplement, renew, extend,
replace, restate and substitute and the term amendment” includes modification,
supplement, renewal, extension, replacement, restatement and substitution.
Reference to any specific Law or to any document or agreement includes any
future amendments to or replacements of the Law, document or agreement, as the
case may be. No inference in favor of or against a party with respect to this
Agreement may be drawn from the fact that the party drafted this Agreement. All
obligations, rights, remedies and waivers contained in this Agreement will be
construed as being limited only to the extent required to be enforceable under
the Law.
Section 8.18 Jurisdiction; Venue; Consent to Service of Process.
(a) Each of Owners and Buyer hereby irrevocably and unconditionally submits,
for itself and its property, to the exclusive jurisdiction of and agrees that
venue shall be proper in the courts of the United States of America located in
the Southern District of New York or in a state court of record in New York
County, New York, and any appellate court therefrom, in any action or proceeding
arising out of or relating to or connected with this Agreement, or for
recognition or enforcement of any judgment. Each of Owners and Buyer hereby
irrevocably and unconditionally agrees that all claims in respect of any such
action or proceeding shall be heard and determined in such court. Each of Owners
and Buyer agrees that a final judgment in any such action or proceeding will be
in any other manner provided by Law.
(b) Each of Owners and Buyer hereby irrevocably and unconditionally waives,
proceeding arising out of or relating to this Agreement in the above identified
court. Each of Owners and Buyer 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 8.19 Waiver of Conflict. It is acknowledged by each of the parties
hereto that Owners and each of their respective Affiliates have retained Reed
Smith LLP (collectively, “Owners Counsel”) to act as their counsel in connection
with the transactions contemplated hereby and that Owners Counsel has not acted
as counsel for any other Person in connection with the transactions contemplated
hereby and that no other Person has the status of a client of the Owners Counsel
for conflict of interest or any other purposes as a result thereof. Owners and
Buyer hereby agree that, in the event that a dispute arises between Owners and
Buyer or any of their respective Affiliates, Owners Counsel may represent Owners
or any of their Affiliates in such dispute even though the interests of Owners
or any of its Affiliates may be directly adverse to Buyer or any of its
respective Affiliates and even though Owners Counsel may have represented Buyer
in a matter substantially related to such dispute, and Buyer and the
irrespective Affiliates hereby waive, on behalf of itself and each of its
Affiliates, any conflict of interest in connection with such representation by
Owners Counsel and agree not to seek to have Owners Counsel disqualified from
representing Owners or any of their Affiliates in connection with such dispute.
Each of Owners and Buyer further agrees that, as to all pre-Closing
communications between or among any of Owners Counsel, Owners and any of their
respective Affiliates or advisors, agents or representatives to the extent
related to the transactions contemplated by this Agreement, the attorney-client
privilege, the expectation of client confidence and all other rights to any
evidentiary privilege belong to Owners and their Affiliates, as applicable, and
may be controlled by Owners and their Affiliates and shall not pass to or be
claimed by Buyer or any of its respective Affiliates. Each of Buyer and Owners
further agrees, on behalf of itself and its Affiliates, that all communications
that occurred prior to the Closing in any form or format whatsoever between or
among any of Owners Counsel, Owners and any of their respective Affiliates,
advisors, agents or representatives that relate to the negotiation,
documentation and consummation of the transactions contemplated by this
Agreement or any dispute arising under this
25
Agreement (collectively, the “Deal Communications”) shall be deemed to be
retained and owned collectively by Owners, shall be controlled by Owners and
shall not pass to or be claimed by Buyer or its Affiliates. All Deal
Communications that are attorney-client privileged (the “Privileged Deal
Communications”) shall remain privileged after the Closing. To the extent that
files in respect of any Privileged Deal Communications constitute property of
the client, the privilege and the expectation of client confidence relating
thereto shall belong solely to Owners and their Affiliates, shall be controlled
by Owners and their Affiliates and shall not pass to or be claimed by Buyer or
its Affiliates.
[Signature Pages Follow.]
26
BUYER:
CITIBANK, N.A.
By:__________________________________________
Name:
Title:
OWNERS:
SOUTH CAROLINA ELECTRIC & GAS COMPANY
By:__________________________________________
Name:
Title:
SOUTH CAROLINA PUBLIC SERVICE AUTHORITY
By:__________________________________________
Name:
Title:
[Signature Page to Assignment and Purchase Agreement]
27
EXHIBIT A
SETTLEMENT AGREEMENT
(Attached.)
SKADDEN, ARPS, SLATE, MEAGHER &
FLOM LLP Van C. Durrer II
Paul D. Leake Annie Z. Li (admitted pro hac vice)
Four Times Square 300 South Grand Avenue, Suite 3400
New York, New York 10036-6522 Los Angeles, California 90071
Telephone: (212) 735-3000 Telephone: (213) 687-5000
Fax: (212) 735-2000 Fax: (213) 687-5600
-and-
FLOM (UK) LLP
Chris Mallon
40 Bank Street, Canary Wharf
London E14 5DS United Kingdom
Counsel to Toshiba Corporation
UNITED STATES BANKRUPTCY COURT
FOR THE SOUTHERN DISTRICT OF NEWYORK
In re Chapter 11
WESTINGHOUSE ELECTRIC Case No. 17-10751
COMPANY LLC, et al.,
(MEW) (Jointly
Debtors. 1
Administered)
1 The debtors in these chapter 11 cases, along with the last four digits of each
Debtor 's federal tax identification number, if any, are: Westinghouse Electric
Company LLC (0933), CE Nuclear Power International, Inc. (8833), Fauske and
Associates LLC (8538), Field Services, LLC (2550), Nuclear Technology Solutions
LLC (1921), Nuclear Holding Co., Inc. (7944), PaR Nuclear, Inc. (6586), PCI
Energy Services LLC (9100), Shaw Global Services, LLC (0436), Shaw Nuclear
Services, Inc. (6250), Stone & Webster Asia Inc. (1348), Stone & Webster
Construction Inc. (1673), Stone & Webster International Inc. (1586), Stone &
Webster Services LLC (5448), Toshiba Nuclear Energy Holdings (UK) Limited
(2348), TSB Nuclear Energy Services Inc. (2348), WEC Carolina Energy Solutions,
Inc. (8735), WEC Carolina Energy Solutions, LLC (2002), WEC Engineering Services
Inc. (6759), WEC Equipment & Machining Solutions, LLC (3135), WEC Specialty LLC
(N/A), WEC Welding and Machining, LLC (8771), WECTEC Contractors Inc. (4168),
WECTEC Global Project Services Inc. (8572), WECTEC LLC (6222), WECTEC Staffing
Services LLC (4135), Westinghouse Energy Systems LLC (0328), Westinghouse
Industry Products International Company LLC (3909), Westinghouse International
Technology LLC (N/A), and Westinghouse Technology Licensing Company LLC (5961).
The Debtors' principal offices are located at 1000 Westinghouse Drive, Cranberry
Township, Pennsylvania 16066.
NOTICE OF FILING OF SETTLEMENT AGREEMENT AMONG TOSHIBA CORPORATION, SOUTH
CAROLINA ELECTRIC & GAS COMPANY, AND THE SOUTH CAROLINA PUBLIC SERVICE AUTHORITY
PLEASE TAKE NOTICE that on July 27, 2017, Toshiba Corporation
("Toshiba"), South Carolina Electric & Gas Company ("SCE&G"), and the South
Carolina
Public Service Authority ("Santee Cooper") (with SCE&G and Santee Cooper,
collectively, the "VC Summer Owners") entered into a Settlement Agreement (the
"Settlement Agreement") dated as of July 27, 2017 to resolve Toshiba's guaranty
liability pursuant to the Engineering, Procurement and Construction Agreement
Between South Carolina Electric & Gas Company, For Itself and as Agent For the
South Carolina Public Service Authority, as Owner and a Consortium Consisting of
Westinghouse Electric Company LLC and Stone & Webster, Inc., as Contractor For
AP1000 Nuclear Power Plants (the "EPC Contract") dated as of May 23, 2008 and as
amended from time to time. A true and correct copy of the Settlement Agreement
is attached hereto as Exhibit A.
PLEASE TAKE FURTHER NOTICE that on July 20, 2017, this Court entered the Order
Regarding Distributions in Respect of Claims and Interests of Toshiba
Corporation and Affiliates (the "Distribution Order") [D.I. 953]. The
Distribution Order contemplated this Settlement Agreement now entered into by
Toshiba and the VC Summer Owners. Therefore, the VC Summer Owners are now
"Owners" that are parties to a "Settlement," as those terms are defined in the
Distribution Order, with all rights and obligations as set forth in the
Distribution Order. Accordingly, Toshiba's rights and obligations as set forth
in the Distribution Order now extend to the VC Summer Owners in addition to the
other "Owners" defined in the Distribution Order.
2
DATED: July 28, 2017
SKADDEN, ARPS, SLATE, MEAGHER
& FLOM LLP
IsI Paul D. Leake
Paul D. Leake
Four Times Square
New York, New York 10036-6522
Telephone: (212) 735-3000
Facsimile: (212) 735-2000
Paul.Leake@skadden.com
-and-
Van C. Durrer, II Annie Z. Li
300 South Grand Avenue
Telephone: (213) 687-5000
Facsimile: (213) 687-5600
Van.Durrer@skadden.com
Counsel to Toshiba Corporation
REED SMITH LLP
IsI Paul M. Singer
Paul M. Singer
Reed Smith Centre
225 Fifth Avenue
Pittsburgh, PA 15222
Telephone: (412) 288-3131
Facsimile: (213) 288-3063
PSinger@reedsmith.com
Counsel to South Carolina Electric & Gas Company and the South Carolina Public
Service Authority
3
EXHIBIT A
SETTLEMENT AGREEMENT
EXECUTION COPY
SETTLEMENT AGREEMENT
This SETTLEMENT AGREEMENT (this “Agreement”) is entered into as of the 27th day
of July, 2017 (the “Effective Date”), by and among Toshiba Corporation, a
Japanese corporation (“Toshiba”), South Carolina Electric & Gas Company, a South
Carolina corporation (“SCE&G”) and the South Carolina Public Service Authority,
a body corporate and politic created by the laws of South Carolina (“Santee
Cooper”). Each of Toshiba, SCE&G and Santee Cooper may be referred to herein as
a “Party” and collectively as the “Parties”.
WHEREAS, the Owners (as defined in the EPC Agreement (as defined below)) and
Westinghouse (as defined below) are parties to the EPC Agreement;
WHEREAS, Toshiba has guaranteed certain obligations of Westinghouse under the
EPC Agreement pursuant to the terms of the Toshiba Guaranty (as defined below);
WHEREAS, the Owners contend that they have been damaged by Westinghouse’s
failure to perform its obligations under the EPC Agreement, and Westinghouse
disputes the Owners’ contentions;
WHEREAS, Westinghouse has filed for protection under chapter 11 of the
Bankruptcy Code (as defined below);
WHEREAS, the Owners contend that as a result of, among other things,
Westinghouse’s chapter 11 filing and Westinghouse’s alleged failure to perform
its obligations under the EPC Agreement, Toshiba’s obligations under the Toshiba
Guaranty are due;
WHEREAS, Toshiba and the Owners have been engaged in discussions about Toshiba’s
aforementioned guaranty obligations; and
WHEREAS, Toshiba and the Owners desire, through this Agreement, to resolve and
set forth the amount and manner of payments to be made by Toshiba (directly or,
as contemplated by Article III, indirectly) to SCE&G on behalf of the Owners (as
defined below) in respect of Toshiba’s guaranty obligations and to set forth
agreements with respect to certain other related matters.
NOW, THEREFORE, in consideration of the recitals, the mutual promises in this
Agreement and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties to this Agreement, intending to be
ARTICLE I
DEFINED TERMS
Section 1.1 Defined Terms
hereby ascribed to them, except where the context clearly indicates a different
meaning is intended.
1
“Affiliate” means, with respect to any Party, any other Person that (a) owns or
controls, directly or indirectly, the Party, (b) is owned or controlled by the
Party, or (c) is under common control with the Party, where “control” means the
power to unilaterally direct the management or policies of, or unilaterally
prevent any actions by, the Person, whether through the ownership of voting
securities, by contract, or otherwise; provided, however, that in no event shall
an Owner (or any of its subsidiaries) be deemed to be an Affiliate of another
Owner (or any of its subsidiaries).
“Agreed Amount” means $2,168,000,000.
“Agreement” has the meaning set forth in the first paragraph of this Agreement.
“Bankruptcy Case” means Case No. 17-10751-MEW filed in the Bankruptcy Court, or
any case that now is or in the future becomes jointly administered with such
case.
“Beneficiary” means SCE&G and Santee Cooper.
“Covenant Release Date” means the earlier to occur of the date on which
(a) Toshiba properly delivers a Payment Obligation Suspension Notice to
Beneficiary in accordance with Section 2.4 and (b) Toshiba is rated by Standard
& Poor’s or Moody’s Investor Service at or above the Minimum Rating.
“Distribution Order” means an order, in the form of Exhibit C, entered in the
Bankruptcy Case by the Bankruptcy Court, with only such changes thereto as are
acceptable to each of the Parties in their respective sole discretion.
“Draw Demand” has the meaning set forth in Section 3.1.
“Draw Instruction Notice” has the meaning set forth in Section 3.1.
“Effective Date” has the meaning set forth in the first paragraph of this
Agreement.
“EPC Agreement” means that certain Engineering, Procurement and Construction
Agreement entered into as of May 23, 2008, by and among SCE&G, acting for itself
and as agent for Santee Cooper, and a consortium consisting of Westinghouse and
WECTEC, as amended by (a) the July 2012 Agreement entered into as of July 11,
2012, and (b) the October 2015 Amendment entered into as of October 27, 2015, by
and among SCE&G, acting for itself and as agent for Santee Cooper, and a
consortium consisting of Westinghouse and WECTEC, in each case as amended from
time to time.
2
“Excluded Affiliates” means the WEC Debtors and any other Affiliates of Toshiba
that, taken as a whole, are not material to the consolidated financial position,
results of operations, cash flows, or the ability to conduct business in the
ordinary course, of Toshiba and its Affiliates (other than the WEC Debtors),
“External Payments” means the payments received by Beneficiary described in
Section 3.1, Section 3.2, Section 3.3 and Section 3.4 other than any of such
payments that are rescinded or returned, in whole or in part, as contemplated by
Section 2.5.
“Final Completion” means when:
(a) all systems, structures and components needed for the commencement of
Start-Up Tests for both Units (or one Unit, if the Owners elect to cease
construction of the other Unit) are operational in accordance with the terms of
the AP1000 Facility Information;
(b) the U.S. Nuclear Regulatory Commission has made the findings required by
10 CFR 52.103(g) authorizing operation of each Unit;
(c) each Unit has produced a Net Unit Electrical Output acceptable to the
Owners; and
(d) all AP1000 intellectual property and all warranties and documentation
required to be delivered to the Owners pursuant to the EPC Agreement or any
services agreement between Westinghouse and any other required WEC Debtors (if
any) and the Owners, shall have been delivered to the Owners in satisfaction of
the applicable requirements of either the EPC Agreement or such services
agreement (if any);
provided however, all such conditions have been satisfied on or before September
30, 2025.
“Forbearance Date” means September 30, 2022.
“Financial Institutions” has the meaning set forth in clause(s) of the
definition of “Standard Permitted Lien.”
“Forbearance Termination Event” means the occurrence of any of the following:
(a) any payment contemplated in Section 2.2 has not been received by
Beneficiary on or by the payment date therefor set forth on Schedule 2.2;
(b) a Toshiba Insolvency Proceeding;
(c) Toshiba has failed to perform, or has violated or breached, in any
material respect, any covenant or obligation of Toshiba in Section 4.1;
(d) Toshiba has failed to perform, or has violated or breached, in any
material respect, any other covenant or obligation of Toshiba in this Agreement,
or any
3
representation or warranty of Toshiba in this Agreement was inaccurate in
material respect when made, and such failure, violation, breach or inaccuracy
has not been cured by Toshiba within thirty (30) days of Beneficiary delivering
to Toshiba a notice of such failure, violation, breach or inaccuracy (it being
understood and agreed that there shall be no such cure period or cure
opportunity for the items described in clauses (a), (b), (c), (e) and (f) of
this definition of Forbearance Termination Event);
(e) Toshiba has failed to deliver a reasonably acceptable certificate from
its internal legal team confirming the authorization by the Board of Directors
(or similar governing body) of Toshiba of the execution, delivery and
performance of this Agreement on or before August 10, 2017;
(f) counsel for each of the Parties has failed to deliver reasonably
acceptable legal opinions regarding the authorization, execution, and delivery
of this Agreement by such Party and the enforceability of this Agreement against
such Party on or before August 10, 2017; or
(g) the Distribution Order has been entered by the Bankruptcy Court and has
not been reversed, withdrawn, reconsidered, vacated or otherwise amended in any
manner not acceptable to any Owner in its sole discretion, or Toshiba or any
Person bound thereby or subject thereto has breached or otherwise not complied
with, in any material respect, any provision of the Distribution Order.
“Governmental Unit” shall have the meaning set forth in section 101(27) of the
Bankruptcy Code, including the U.S. Department of Energy and the Public Service
Commission of the South Carolina.
“Guaranteed Obligations” has the meaning set forth in the Toshiba Guaranty.
“IAA” means that certain Interim Assessment Agreement, dated as of March 28,
2017, entered into by and among SCE&G, Santee Cooper, and Westinghouse and
WECTEC, as amended from time to time.
“Law” means any law (statutory or common), statute, regulation, rule, code or
ordinance enacted, adopted, issued, or promulgated by any Governmental Unit.
“Letters of Credit” means the letters of credit described on Exhibit A to this
Agreement, as such letters of credit may be renewed or replaced in a manner that
is acceptable to the Owners in their sole discretion.
“Lien” means any mortgage, pledge, security interest, hypothecation,
encumbrance, lien or charge of any kind (including any agreement to give any of
the foregoing, any conditional sale or other title retention agreement or any
lease in the nature thereof).
“Mechanics’ Liens” means mechanics’ liens, as they are defined under Section
29-5-10, et seq. of Title 29 of the South Carolina Code of Laws, against any of
the property at the Summer Facility.
4
“Minimum Rating” means an issuer rating of BB+ by Standard & Poor’s or a rating
of Ba1 by Moody’s Investor Service.
“NDA” means a Nondisclosure Agreement by and among Toshiba and the Owners;
provided, however, that Toshiba shall not be required to provide any information
absent the execution of a Nondisclosure Agreement acceptable to Toshiba and to
the Owners, each in their sole discretion.
“Owner Released Parties” has the meaning set forth in Section 5.8(b).
“Owner Releasing Parties” has the meaning set forth in Section 5.8(a).
“Party” has the meaning set forth in the first paragraph of this Agreement.
“Payment Obligation Suspension Notice” has the meaning set forth in Section 2.4.
“Person” means any individual, partnership, joint venture, firm, corporation,
limited liability company, association, central bank, trust or other enterprise
or any governmental or political subdivision or any agency, department or
instrumentality thereof.
“Pro Rata Share” means, for each Owner, the percentage set forth next to such
Owner’s name on Schedule 1.1(a) hereto.
“Released Parties” has the meaning set forth in Section 5.8(b).
“Releasing Parties” has the meaning set forth in Section 5.8(b).
“Satisfied Mechanics’ Liens Amount” means the aggregate amount of distribution
of cash proceeds and/or other forms of consideration which have the effect of
reducing the subject Mechanics’ Lien, in each case actually paid or distributed
from the estates of the WEC Debtors in connection with the pending Bankruptcy
Case to any and all holders of Mechanics’ Liens.
“SCE&G” has the meaning set forth in the first paragraph of this Agreement.
“Southern” means collectively Georgia Power Company, a Georgia corporation,
Oglethorpe Power Corporation (An Electric Membership Corporation), an electric
membership corporation formed under the Laws of the State of Georgia, Municipal
Electric Authority of Georgia, a public body corporation and politic and an
instrumentality of the State of Georgia, and The City of Dalton, Georgia, an
incorporated municipality in the State of Georgia acting by and through its
Board of Water, Light and Sinking Fund Commissioners and any other owner or
operator of the facility commonly referred to as Units 3 and 4 of the Vogtle
Electric Generating Plant in Waynesboro, Georgia.
“Standard Permitted Lien” means any of the following:
(a) Liens for taxes not yet delinquent or Liens for taxes being contested in
good faith and by appropriate proceedings for which adequate reserves in
accordance with generally accepted accounting principles have been established;
5
(b) Liens in respect of property or assets imposed by Law that were incurred
in the ordinary course of business, such as carriers’, suppliers’,
warehousemen’s, materialmen’s and mechanics’ Liens and other similar Liens
arising in the ordinary course of business, that do not in the aggregate
materially detract from the value of such property or assets or materially
impair the use thereof in the operation of the business of Toshiba or any of its
Affiliates and do not secure any indebtedness;
(c) any modification, renewal or extension of any Lien in existence as of the
date hereof, any Lien granted as a replacement or substitute therefor and any
Lien granted to secure any refinancing of obligations secured by the foregoing;
provided that any such refinancing, refunding, modification, renewal, extension,
replacement or substitute Lien (i) does not secure any indebtedness other than
the indebtedness secured on date hereof and permitted refinancings, refundings,
renewals, exchanges or extensions thereof, and (ii) does not encumber any
property other than the property subject thereto on the Effective Date other
than (x) after-acquired property covered by the original grant and (y)
improvements thereon, accessions thereto or proceeds from the disposition of
such property;
(d) Liens incurred or deposits made in the ordinary course of business in
connection with workers compensation, unemployment insurance and other types of
social security, and other Liens to secure the performance of tenders, statutory
obligations, contract bids, government contracts, surety, appeal, customs,
performance and return-of-money bonds and other similar obligations, incurred in
the ordinary course of business (exclusive of obligations in respect of the
payment for borrowed money), whether pursuant to statutory requirements, common
law or consensual arrangements;
(e) Liens arising out of judgments, attachments or awards of not more than
$200 million in the aggregate and not resulting in a Forbearance Termination
Event;
(f) leases or subleases granted in the ordinary course of business to others
not interfering in any material respect with the business of Toshiba or any of
its Toshiba Affiliates and any interest or title of a lessor under any lease;
(g) easements, rights-of-way, zoning or other restrictions, charges,
encumbrances, defects in title, prior rights of other Persons, and obligations
contained in similar instruments, in each case that do not secure indebtedness
and do not involve, and are not likely to involve at any future time, either
individually or in the aggregate, a substantial and prolonged interruption or
disruption of the business activities of Toshiba or any of its Toshiba
Affiliates;
(h) Liens arising from the rights of lessors under leases (including
financing statements regarding property subject to lease), provided that such
Liens are only in respect of the property subject to, and secure only, the
respective lease (and any other lease with the same or an affiliated lessor);
and Liens arising out of conditional sale, title retention, consignment or
similar arrangements for the sale of goods entered into by Toshiba or its
Toshiba Affiliates in the ordinary course of business;
(i) Liens securing indebtedness in respect of purchase money obligations and
capital lease obligations (and refinancings thereof); provided that any such
Liens attach only to the
6
property being financed pursuant to, or subject to a sale and leaseback
transaction relating to, such indebtedness and do not encumber any other
property of Toshiba or any of its Toshiba Affiliates (other than improvements on
and accessions to the property being financed);
(j) bankers’ Liens, rights of setoff and other Liens existing solely with
respect to cash and cash equivalents on deposit in one or more accounts
maintained by Toshiba or its Toshiba Affiliates, in each case granted in the
ordinary course of business or arising by operation of Law in favor of the bank
or banks with which such accounts are maintained, securing amounts owing to such
bank with respect to cash management, credit card, overdraft and operating
account arrangements, including those involving pooled accounts and netting
arrangements;
(k) Liens on property of a Person existing at the time such Person is
acquired or merged with or into or consolidated with Toshiba or its Toshiba
Affiliates to the extent such acquisition, merger or consolidation is permitted
hereunder (and such Liens are not created in anticipation or contemplation
thereof); provided that such Liens do not extend to property not subject to such
Liens at the time of acquisition other than (x) after-acquired property covered
by the original grant and (y) improvements thereon, accessions thereto or
proceeds from the disposition of such property;
(l) Licenses or sublicenses of intellectual property granted by Toshiba or
its Toshiba Affiliates and not interfering in any material respect with the
ordinary conduct of business of Toshiba or its Toshiba Affiliates;
(m) Liens attached to cash earnest money deposits made by Toshiba or its
Toshiba Affiliates in connection with any letter of intent or purchase agreement
entered into by Toshiba or its Toshiba Affiliates;
(n) Liens on insurance policies and the proceeds thereof securing the
financing of the premiums with respect thereto to the extent indebtedness in
connection with such financing of the payment of insurance premiums;
(o) Liens in favor of customs and revenue authorities arising as a matter of
Law to secure payment of customs duties in connection with the importation of
goods;
(p) Liens upon specific items of inventory or other goods and proceeds of any
Person securing such Person’s obligations in respect of bankers’ acceptances
issued or created for the account of such Person to facilitate the purchase,
shipment or storage of such inventory or other goods in the ordinary course of
business;
(q) (i) contractual or statutory Liens of landlords to the extent relating to
the property and assets relating to any lease agreements with such landlord,
(ii) contractual Liens of suppliers (including sellers of goods) to the extent
limited to property or assets relating to such contract, (iii) contractual or
statutory Liens of governmental or other customers to the extent limited to the
property or assets relating to such contract, and (iv) Liens in favor of
governmental bodies to secure advance or progress payments pursuant to any
contract or statute;
7
(r) any (i) customary restriction on the transfer of licensed intellectual
property rights and (ii) customary provision in any agreement that restricts the
assignment of such agreement or any intellectual property rights thereunder;
(s) Liens on cash, securities or other property in deposit or securities
accounts in connection with the redemption, defeasance, repurchase or other
discharge of debt issued by Toshiba or its Toshiba Affiliates in favor of
financial institutions, lenders, note holders, sureties and/or letter of credit
issuers (and including any agents or trustees for any of the foregoing) that are
not affiliated with, or Affiliates of, Toshiba (collectively "Financial
Institutions"), in each case, in connection with debt financing arrangements or
other financial accommodations provided to Toshiba or any of its Affiliates; and
(t) rights of consignors of goods.
“Summer Costs” means the sum of all costs and expenses, as reflected in filings
by one or more of the Owners (and any of their predecessors, successors and
assigns) with Governmental Units, paid, accrued, or incurred by the Owners (and
any of their predecessors, successors and assigns) before or after the date of
this Agreement for engineering, procurement and construction costs, and for any
other items that would have constituted Work if such items had been performed
under the EPC Agreement, with respect to the Summer Facility through the date
the Summer Facility achieves Final Completion.
“Summer Facility” means the two-unit, nuclear-fueled electricity generation
facility that is defined as the “Facility” in the EPC Agreement and that is to
be located at the Virgil C. Summer Nuclear Station near Columbia, South
Carolina.
“Survival Action” has the meaning set forth in Section 7.3(a).
“Third Parties” shall mean with respect to any Person, its respective agents,
Affiliates, members, shareholders, executives, employees, attorneys, advisors,
accountants, auditors, representatives, associates, directors, officers,
partners, principals, insurers, predecessors, subsidiaries, successors, estates,
heirs, executors, trusts, trustees, administrators, licensees and assigns, each
in their specific capacity as such.
“Toshiba” has the meaning set forth in the first paragraph of this Agreement.
“Toshiba Affiliates” means the Affiliates of Toshiba other than Excluded
Affiliates.
“Toshiba Affiliate Amounts” means the unpaid portion of amounts due to Toshiba
Affiliates from the Owners from the Effective Date through the pendency of the
IAA.
“Toshiba Financial Information” means such financial information relating to
Toshiba as reasonably requested from time to time by either Owner of the type
and in the form provided by Toshiba to (a) any financial institutions, lenders,
noteholders, sureties, and/or letter of credit issuers (and including any agents
or trustees for any of the foregoing), in each case in connection with debt
financing arrangements or other financial accommodations, or (b) Standard &
Poor’s or Moody’s Investor Service.
8
“Toshiba Guaranty” means that certain Toshiba Corporation Guaranty dated and
“Toshiba Insolvency Proceeding” means the occurrence of any of the following:
(a) (i) Toshiba or any of its Affiliates (other than the Excluded Affiliates)
shall (A) admit in writing or demonstrate its inability to pay its debts
generally as they become due, (B) make an assignment for the benefit of its
creditors, (C) file a petition or application, or an answer, or otherwise
commence a proceeding (including a bankruptcy proceeding (hasan tetsuzuki),
civil rehabilitation proceeding (minji saisei tetsuzuki), corporate
reorganization (kaisha kosei tetsuzuki) or special liquidation (tokubetsu seisan
tetsuzuki) under Japanese Laws) under any applicable Law of any country or any
political subdivision thereof or of any other Governmental Authority, seeking
rehabilitation, reorganization, liquidation or arrangement or similar relief or
otherwise to take advantage of any bankruptcy, insolvency or other similar Law,
or for the appointment of a receiver, trustee, liquidator, custodian,
sequestrator, conservator or other similar agent of Toshiba or any of its
Affiliates (other than the Excluded Affiliates) of the whole or any material
part of the property or assets of Toshiba or such Affiliate (other than the
Excluded Affiliates), or (D) become subject to any kind of out-of-court
procedures for rehabilitation, reorganization, liquidation or arrangement or
similar relief (other than any restructure of debt financing arrangements
existing on the Effective Date in a manner that has no material adverse effect
on either Owner or on the ability of Toshiba to perform its obligations under
this Agreement); (ii) there is commenced against Toshiba or any of its
Affiliates (other than the Excluded Affiliates) any proceeding for any of the
relief described in clause (i)(C) or clause (i)(D) above and such proceeding
shall remain undismissed for a sixty (60) day period; (iii) there is filed
against Toshiba or any of its Affiliates (other than the Excluded Affiliates)
any petition for commencement of proceeding for any of the relief described in
clause (i)(C) or (i)(D) above and such petition for commencement of proceeding
or proceeding shall remain undismissed for a sixty (60) day period; or
(iv) Toshiba or any of its Affiliates (other than the Excluded Affiliates), by
any act in any such proceeding, indicates its consent to or approval of or
acquiescence in such relief;
(b) (i) a court of competent jurisdiction shall enter an order, judgment or
decree appointing a receiver, trustee, (special) liquidator, custodian,
Affiliates (other than the Excluded Affiliates) for the whole or any substantial
part of its property or assets, or (ii) under the provisions of any Law for the
relief or aid of debtors, a court of competent jurisdiction shall assume custody
or control of Toshiba or any of its Affiliates (other than the Excluded
Affiliates) or of the whole or any substantial part of its property or assets;
or
(c) Toshiba or any of its Affiliates (other than the Excluded Affiliates)
shall file a certificate or other instrument of liquidation or dissolution or
shall be liquidated, dissolved or wound-up or shall commence any action or
proceeding for liquidation, dissolution, or winding-up, or shall take any
corporate action in furtherance thereof; or Toshiba or any of its Affiliates
(other than the Excluded Affiliates) shall have
9
commenced against it any action or proceeding for liquidation, dissolution, or
winding-up or shall have filed any petition for commencement of any action or
proceeding for liquidation, dissolution, or winding-up.
“Toshiba Obligation Amount” means the Agreed Amount (a) minus any amounts paid
to, and received by, Beneficiary under Section 2.2 or Section 2.3, (b) minus any
External Payments properly paid to, and received by, Beneficiary, (c) minus the
Toshiba Affiliate Amount, (d) minus the Satisfied Mechanics’ Liens Amount, and
(d) plus any amounts paid or returned by Beneficiary as contemplated by Section
2.5.
“Toshiba Released Parties” has the meaning set forth in Section 5.8(a).
“Toshiba Releasing Parties” has the meaning set forth in Section 5.8(b).
“WEC Debtors” means, collectively, Westinghouse and any of the other entities
listed on Schedule 1.1(b).
“WECTEC” means WECTEC Global Project Services Inc., a Louisiana corporation
formerly named CB&I Stone & Webster, Inc., and, prior thereto, named Stone &
Webster, Inc.
“Westinghouse” means Westinghouse Electric Company LLC, a Delaware limited
liability company.
Section 1.2 Other Defined Terms
Unless otherwise defined or specified in this Agreement, capitalized terms shall
have the meanings ascribed to them in the EPC Agreement.
ARTICLE II
SETTLEMENT AMOUNT AND TOSHIBA PAYMENTS
Section 2.1 Establishment of Amount of Toshiba Obligation Under the Toshiba
Guaranty
The Parties agree that, notwithstanding (a) any term of or condition in the
Toshiba Guaranty, the EPC Agreement, or any other agreement (including, but not
limited to, any such term or condition relating to any alleged breach of
warranty of title), (b) the performance, termination, breach, amendment,
modification, assignment, rejection, assumption, unenforceability, or invalidity
of the Toshiba Guaranty, the EPC Agreement, or any other agreement, or (c) the
cessation or continuation of work on all or any portion of the Summer Facility
or the completion, suspension or abandonment of all or any portion of the Summer
Facility, the amount of Toshiba’s payment obligations under the Toshiba Guaranty
is fully accrued and irrevocably deemed and agreed to be an amount equal to the
Agreed Amount. In no event will Toshiba claim or assert that Toshiba’s payment
obligations under the Toshiba Guaranty are for an amount less than the Agreed
Amount, and each Owner agrees that in no event will it claim or assert Toshiba’s
payment obligations under the Toshiba Guaranty or the EPC Agreement are for an
amount in excess of the Agreed Amount. For the avoidance of doubt, the Owners
acknowledge that the Agreed Amount is not subject to any further increase.
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Section 2.2 Toshiba Payment Obligations
Notwithstanding (a) any term of or condition in the Toshiba Guaranty, the EPC
Agreement, or any other agreement, (b) the performance, termination, breach,
amendment, modification, assignment, rejection, assumption, unenforceability or
invalidity of the Toshiba Guaranty, the EPC Agreement, or any other Agreement
(including, but not limited to, any such term or condition relating to any
alleged breach of warranty of title), or (c) the cessation or continuation of
work on all or any portion of the Summer Facility or the completion, suspension
or abandonment of all or any portion of the Summer Facility, except to the
extent adjustments are made by application of an External Payment, Toshiba
Affiliate Amount and the Satisfied Mechanics’ Liens Amount pursuant to Article
III, Toshiba shall pay the Agreed Amount to Beneficiary. Except to the extent
paid by application of an External Payment pursuant to Article III, Toshiba
shall make such payment to Beneficiary in the monthly payment amounts and on the
payment dates set forth on Schedule 2.2. Toshiba shall make each such payment in
United States dollars by wire transfer of immediately available funds to an
account as may be designated from time to time by Beneficiary, provided that
such designation shall have been delivered to Toshiba at least thirty (30) days
prior to the applicable payment date.
Section 2.3 Optional Prepayments
Toshiba, without premium or penalty, may prepay any of the monthly payment
amounts set forth on Schedule 2.2. Beneficiary will apply such prepayments pro
rata (based on the respective unpaid amounts set forth on Schedule 2.2) against
all remaining monthly payment amounts set forth on Schedule 2.2 that are not
past due. External Payments shall not constitute optional prepayments hereunder.
Section 2.4 Suspension of Payment Obligations Based on Letters of Credit
Notwithstanding anything to the contrary in Section 2.2, if the aggregate amount
of Toshiba’s remaining payment obligations under Section 2.2 (determined
disregarding any External Payments that have not already been applied pursuant
to Article III against monthly payment amounts set forth on Schedule 2.2) is
less than the remaining amount then available to be drawn under the Letters of
Credit by SCE&G prior to expiration of any of the Letters of Credit (after
taking into account any required notice and cure periods, Draw Instruction
Notices and any outstanding demands for payment under the Letters of Credit)
without restriction, Toshiba may deliver a written notice (a “Payment Obligation
Suspension Notice”) to the Owners stating that the aggregate amount of Toshiba’s
remaining payment obligations under Section 2.2 (determined disregarding any
External Payments that have not already been applied pursuant to Article III
against monthly payment amounts set forth on Schedule 2.2) is, and on the
suspension date specified by Toshiba in the Payment Obligation Suspension Notice
will be, less than the remaining amount then available to be drawn under the
Letters of Credit by Beneficiary prior to expiration of any of the Letters of
Credit (after taking into account any required notice and cure periods, Draw
Instruction Notices and any outstanding demands for payment under the Letters of
Credit) without restriction (provided, however, that Toshiba may not deliver a
Payment Obligation Suspension Notice at any time (a) in which there exists a
Forbearance Termination Event (disregarding, for the purpose of this Section
2.4, the cure period and cure opportunity provisions of clause (d) of the
definition of Forbearance Termination Event), (b) either Owner is
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not permitted to make demand for such payment under the Letters of Credit or (c)
with a specified suspension date in the sixty (60) day period before the
expiration date of any of the Letters of Credit or at any time thereafter).
Following delivery of the Payment Obligation Suspension Notice to the Owners,
upon the suspension date specified by Toshiba in the Payment Obligation
Suspension Notice, which date shall be at least forty five (45) days after the
date of such delivery, Toshiba’s direct payment obligations under Section 2.2
(but not under Section 2.5) will be suspended and Beneficiary shall be permitted
to demand payments under the Letters of Credit in an aggregate amount equal to
the amount of the Toshiba payment obligations that were so suspended; provided,
however, that if Beneficiary makes any such demand for payment under the Letters
of Credit and, for any reason, such payment is not received by Beneficiary
within five (5) business days in the United States of America of the making of
such demand, the suspension of Toshiba’s direct payment obligations under
Section 2.2 shall be lifted, Toshiba’s payment obligations shall be reinstated
effective as of the time of the original suspension (and any Covenant Release
Date contemplated by clause (a) of the definition of “Covenant Release Date”
shall be deemed voided and not to have occurred), and Toshiba shall make all
payments as and when contemplated by Section 2.2. Beneficiary, in connection
with making a demand, as contemplated by this Section 2.4, for payment under the
Letters of Credit, shall provide Toshiba with a copy of such demand
substantially contemporaneously with delivery of such demand to the applicable
issuer.
Section 2.5 Reinstatement for Rescinded or Returned Payments
If, at any time, any payment or distribution or portion thereof contemplated by
this Agreement (including any External Payments and any payments under this
Article II) is rescinded or otherwise returned by Beneficiary or any other
Person, whether upon or in connection with a Toshiba Insolvency Proceeding or
the insolvency, bankruptcy, or reorganization of Toshiba, or otherwise, the
original payment obligation of Toshiba under this Agreement shall be reinstated
as of the date of such rescission or return and, to the extent such rescission
or return relates to any payments as to which the payment dates therefor were
prior to the date of such rescission or return, Toshiba shall make a payment to
Beneficiary in the aggregate amount of such payments that were due on such
payment dates within ten (10) Japanese business days following the delivery by
Beneficiary to Toshiba of a written notice of such rescission or other return,
accompanied by reasonable supporting documentation of such rescission or return.
Section 2.6 Preservation of Claims Against WEC Debtors and Third Parties
Nothing contained herein shall impact or limit the claims asserted by the Owners
against any WEC Debtor or any third party (other than a Toshiba Released Party).
ARTICLE III
EXTERNAL PAYMENTS AND CREDITS
Section 3.1 Payment through Draw on Letters of Credit
Notwithstanding anything to the contrary in Section 5.1, Beneficiary may draw on
any Letter of Credit prior to the Forbearance Termination Date on the following
conditions. Beneficiary may deliver a written notice (a “Draw Instruction
Notice”) to Toshiba advising Toshiba that the
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Owners intend to make a demand for payment (“Draw Demand”) under the Letters of
Credit after all applicable notices have been delivered to Westinghouse and all
notice, grace or cure periods have ended permitting the Owners to draw under
such Letters of Credit; provided, however, that (a) Owners shall not make a draw
prior to October 1, 2017; (b) the amount of the Draw Demand shall not exceed
$45,000,000, and (c) the amount of any Draw Demand shall not exceed the
remaining amount then available to be drawn under the Letters of Credit by the
Owners prior to expiration of any of the Letters of Credit (after taking into
account any required notice and cure periods, and any other demands for payment
under the Letters of Credit) without restriction. In the event Beneficiary
elects to draw on a Letter of Credit as set forth in this section, Beneficiary
shall specify in the Draw Instruction Notice (a) the amount to be demanded in
the Draw Demand and (b) instructions as to which monthly payment amount shall be
reduced by Beneficiary by application of the proceeds of the Draw Demand (it
being understood that, except as set forth below, the Owners shall apply the
proceeds of any Demand Draw first to any past due monthly payments and then to
any next due monthly payments). If Beneficiary receives the proceeds of the Draw
Demand from the issuer(s) of the Letters of Credit within ten (10) business days
in the United States of America of the Owners’ presentation of the Draw Demand,
Beneficiary will apply such proceeds to reduce monthly payment amounts as
specified in the Draw Instruction Notice. If Beneficiary does not receive the
proceeds of the Draw Demand from the issuer(s) of the Letters of Credit within
ten (10) business days in the United States of America of the Owners’
presentation of the Draw Demand, (a) Toshiba shall be obligated to pay to
Beneficiary as and when contemplated by Section 2.2 the monthly payment amounts
that were to be reduced by Beneficiary by application of the proceeds of such
Draw Demand and (b) Beneficiary will apply such proceeds of the Draw Demand, if
and when received from the issuer(s) of the Letters of Credit, first to any past
due monthly payments and then to any next due monthly payments.
Section 3.2 Westinghouse Proceeds
(a) Beneficiary will apply the first $853,000,000 of all cash distributions
received by it (i) pursuant to the Distribution Order or as contemplated by
Section 4.6, or (ii) in respect of claims of the Owners for a breach by
Westinghouse of the EPC Agreement (including any rejection thereof under section
365 of the Bankruptcy Code), including any distributions from Westinghouse in
exchange for, on account of, or in connection with such claims, against the
monthly payment obligations of Toshiba under Section 2.2. Beneficiary will apply
such cash distributions received by it to the monthly payment amounts on
Schedule 2.2 in inverse order of their specified payment dates (i.e., starting
with payment dates that are the farthest in the future).
(b) Beneficiary will apply all cash distributions in excess of $853,000,000
monthly payment obligations of Toshiba under Section 2.2 Beneficiary will apply
such distributions pro rata (based on the respective unpaid amounts set forth on
Schedule 2.2) (a) first against all remaining monthly payment amounts set forth
on Schedule 2.2 that have payment dates on or after March, 1 2019 and that are
not past due, (b) second against all remaining monthly payment amounts set forth
on Schedule 2.2 that have payment dates before March 1,
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2019 and that are not past due and (c) third, if there are monthly payment
amounts that are past due, against any such payment amounts.
(c) For the avoidance of doubt, no non-cash distribution received by either
Owner shall be applied to reduce the monthly payment obligations of Toshiba
under Section 2.2, unless and until such distribution is reduced to cash. In the
event that, as of the time (i) Toshiba is entitled to exercise subrogation
rights as contemplated by Section 8.3 and (ii) the proviso in Section 8.3 is no
longer applicable, any Owner continues to own or have any interest in any
non-cash distributions received by such Owner in exchange for, on account of, or
in connection with any claims of such Owner for a breach by Westinghouse of the
EPC Agreement (including any rejection thereof under section 365 of the
Bankruptcy Code), Toshiba shall have the right, at any time thereafter, to
demand in writing that such Owner, if and when any such non-cash distribution or
interest therein is thereafter reduced to cash, transfer to Toshiba such cash.
Following its receipt of such written demand such Owner shall so transfer to
Toshiba any such cash received by it on account of such non-cash distribution or
interest therein that has not, pursuant to this Agreement, been applied to
monthly payment amounts on Schedule 2.2, but only to the extent the aggregate
amount of all cash transferred to Toshiba pursuant to this Section 3.2(c) does
not exceed such Owner’s Pro Rata Share of the Agreed Amount. Any such transfer
of cash to Toshiba will be accompanied by a reasonably detailed accounting of
(a) the non-cash distributions received by such Owner in exchange for, on
account of, or in connection with any claims of such Owner for a breach by
365 of the Bankruptcy Code) and (b) any cash received in respect thereof.
Section 3.3 Toshiba Affiliate Amounts
The Owners shall have no obligation to pay the Toshiba Affiliate Amounts,
provided, however, that any such Toshiba Affiliate Amounts withheld by the
Owners shall reduce the Agreed Amount on a dollar-for-dollar basis. Beneficiary
will apply such cash distributions received by it to the monthly payment amounts
on Schedule 2.2 in inverse order of their specified payment dates (i.e.,
starting with payment dates that are the farthest in the future). For the
avoidance of doubt, any Toshiba Affiliate Amounts paid by the Owners to or on
account of Toshiba Affiliates shall not reduce the Agreed Amount.
Section 3.4 Satisfied Mechanics’ Liens Amount
The Satisfied Mechanics’ Liens Amount shall reduce the Agreed Amount as follows:
(i) the first $100 million of Satisfied Mechanic’s Liens Amounts shall reduce
the Agreed Amount on a dollar for dollar basis; (ii) the next $41 million of
Satisfied Mechanic’s Liens Amounts shall not reduce the Agreed Amount and (iii)
all remaining Satisfied Mechanic’s Liens Amounts in excess of $141 million shall
reduce the Agreed Amount on a dollar for dollar basis. Beneficiary will apply
the Satisfied Mechanic’s Liens Amounts to the monthly payment amounts on
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ARTICLE IV
COVENANTS OF TOSHIBA
Section 4.1 Restrictive Covenants. At all times prior to the Covenant Release
Date (and thereafter if the Covenant Release Date is voided pursuant to Section
2.4), Toshiba shall not, and shall cause each of its Affiliates (other than (i)
the WEC Debtors and (ii) Affiliates of Toshiba that have their common equity
securities listed on the New York Stock Exchange, The NASDAQ Stock Market, the
Japan Stock Exchange, the London Stock Exchange, the Shanghai Stock Exchange,
the Hong Kong Stock Exchange, Euronext or any other stock exchange acceptable to
the Owners) not to, (a) create, incur, assume or suffer to exist any Lien upon
or with respect to any assets of Toshiba or any of its Affiliates (other than
(i) the WEC Debtors and (ii) Affiliates that have their common equity securities
listed on the New York Stock Exchange, The NASDAQ Stock Market, the Japan Stock
Exchange, the London Stock Exchange, the Shanghai Stock Exchange, the Hong Kong
Stock Exchange, Euronext or any other stock exchange acceptable to the Owners),
whether now owned or hereafter acquired, or (b) take any other action (including
in connection with merger, spin or consolidation, deconsolidation or
amalgamation) that, in each case, would have the effect of subordinating the
claims of Beneficiary under the Toshiba Guaranty or the claims of either Owner
under this Agreement to any other claims. The foregoing provisions of this
Section 4.1 shall not apply to:
(i) the transactions described in the press release issued by Toshiba on
April 24, 2017, a copy of which is attached as Schedule 4.1(b), as well as the
other ancillary transactions described in Schedule 4.1(b);
(ii) Liens in favor of Financial Institutions, in each case, in connection
with debt financing arrangements or other financial accommodations provided to
Toshiba or any of its Affiliates;
(iii) any Standard Permitted Lien arising in the ordinary course of business
of Toshiba and its Affiliates; and
(iv) guaranties by Toshiba for existing and new ordinary course projects of
Toshiba or its Affiliates so long as such guaranties are subordinate to or pari
passu with Toshiba’s obligations under the Toshiba Guaranty and under this
Agreement.
Section 4.2 Southern
Toshiba will negotiate in good faith with the Owners regarding, and to minimize
any adverse effects on the Owners or the construction, maintenance or operation
of the Summer Facility (whether such facility is completed under the EPC
Agreement or otherwise) of, any agreements or arrangements Toshiba or any of its
Affiliates may enter into or contemplate entering into with Southern or any
successors or assigns thereof; provided, however, that in no event will Toshiba
or its Affiliates be required, by reason of this Section 4.2, to release, amend,
waive, or otherwise modify any of their rights under this Agreement or any other
agreement.
Section 4.3 Services Agreements
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Toshiba will negotiate in good faith with the Owners regarding a potential
services agreement under which Toshiba would provide parts and services relating
to the Summer Facility; provided, however, that in no event will Toshiba, by
reason of this Section 4.3, have any obligation to enter into such services
agreement; and provided further, however, that this Section 4.3 shall not
require Toshiba to offer any extension of defect liability periods for the
equipment and services it has supplied pursuant to previous agreements.
Section 4.4 Financial Information
Until the full and irrevocable payment by Toshiba of all amounts contemplated by
Section 2.2 (determined disregarding any External Payments that have not already
been applied pursuant to Article III against monthly payment amounts set forth
on Schedule 2.2), and provided that the NDA remains effective (or, if the NDA is
not effective, provided that each of the requesting Owners is willing to enter
into a new agreement with Toshiba with confidentiality terms substantially
comparable to those in the NDA), Toshiba will provide to Beneficiary the Toshiba
Financial Information promptly following the request therefor by any Owner.
Notwithstanding the foregoing, Toshiba shall be under no obligation to provide
information to the Beneficiary relating to asset sales that have not been
completed.
Section 4.5 Amendment, Modification and Waiver of the Distribution Order.
Without the prior written consent of each Owner, which consent may be granted or
withheld in its sole discretion, Toshiba will not seek to reverse, withdraw,
have reconsidered, vacate or otherwise amend the Distribution Order. Toshiba
shall comply with all of its obligations under the Distribution Order.
Section 4.6 Pay Over. Until the full and irrevocable payment to Beneficiary
of the Toshiba Obligation Amount pursuant to this Agreement, after taking into
account the effect of any amounts that have been or in the future may be
required to be paid or returned by Beneficiary or any other Person as
contemplated by Section 2.5, any of the following that are received by Toshiba
or any of its Affiliates (other than the WEC Debtors) shall be segregated and
held in trust by Toshiba for Beneficiary and promptly paid over by Toshiba to
Beneficiary for the benefit of SCE&G and Santee Cooper to be applied by
Beneficiary as provided in Section 3.2(a) and Section 3.2(b): (i) any payment or
distribution from Westinghouse (or any of its subsidiaries) or Toshiba Nuclear
Energy Holdings (UK) Limited (or any of its subsidiaries); (ii) any proceeds
from the sale, by asset sale, stock sale, merger or otherwise, of Westinghouse
(or any of its subsidiaries) or Toshiba Nuclear Energy Holdings (UK) Limited (or
any of its subsidiaries; or (iii) any proceeds from the sale of any claim
against Westinghouse (or any of its subsidiaries) or Toshiba Nuclear Energy
Holdings (UK) Limited (or any of its subsidiaries) (any of the items described
in the foregoing clauses (i), (ii) and (iii), the “Pay Over Property”);
provided, however, that, with respect to any Pay Over Property in respect of the
equity securities of Toshiba Nuclear Energy Holdings (UK) Limited, this Section
4.6 shall not apply to the portion of such Pay Over Property allocable to any
minority owner of Toshiba Nuclear Energy Holdings (UK) Limited that is not an
Affiliate of Toshiba under the governing documents of Toshiba Nuclear Energy
Holdings (UK) Limited, so long as such allocated portion does not exceed 10% of
such Pay Over Property. Notwithstanding any provision of this Section 4.6, in
lieu of complying with the foregoing provisions of this Section 4.6 Toshiba
shall be entitled to
16
return to Westinghouse (or any of its subsidiaries) or Toshiba Nuclear Energy
Holdings (UK) Limited (or any of its subsidiaries) any Pay Over Property paid or
distributed by such Person or such Person's agent or designee to Toshiba or any
of its Affiliates. Toshiba further agrees that it (i) will not sell or transfer,
or permit any of its Affiliates (other than the WEC Debtors) to sell or transfer
(other than any sale or transfer to any Affiliate other than the WEC Debtors),
any rights in respect of intercompany loans to Westinghouse (or any of its
subsidiaries) or Toshiba Nuclear Energy Holdings (UK) Limited (or any of its
subsidiaries) or any claims Toshiba or any of its Affiliates (other than the WEC
Debtors) may have against Westinghouse (or any of its subsidiaries) or Toshiba
Nuclear Energy Holdings (UK) Limited (or any of its subsidiaries) (and that
Toshiba has sole authority to control) arising from Beneficiary or Owners’ draws
under the Letters of Credit until the full and irrevocable payment to
Beneficiary of the Toshiba Obligation Amount pursuant to this Agreement, after
taking into account the effect of any amounts that have been or in the future
may be required to be paid or returned by Beneficiary or any other Person as
contemplated by Section 2.5 and (ii) will not sell or transfer any of its equity
interest in Toshiba Nuclear Energy Holdings (UK) Limited until after a sale of
all or substantially all of the assets of the WEC Debtors, including all or
substantially all of the assets of Toshiba Nuclear Energy Holdings (UK) Limited.
Section 4.7 Payments Free and Clear
(a) All payments under this Agreement shall be made in U.S. Dollars and
without any deductions or withholding for or on account of any tax imposed upon
any Owner, Beneficiary or Toshiba unless such deduction or withholding is
required by any applicable Law, as modified by the practice of any relevant
governmental revenue authority, then in effect. If Toshiba is so required to
deduct or withhold, then Toshiba will (i) pay to the relevant authorities the
full amount required to be deducted or withheld (including the full amount of
tax required to be deducted or withheld from any additional amount paid by
Toshiba to any Owner or Beneficiary under this Section 4.7) promptly upon the
earlier of determining that such deduction or withholding is required or
receiving notice that such an amount has been assessed against any Owner or
Beneficiary, and in any event before penalties attach thereto or interest
accrues thereon, (ii) promptly forward to the Owners an official receipt (or
certified copy), or other documentation reasonably acceptable to the Owners,
evidencing such payment to such authorities and (iii) in addition to the payment
which any Owner or Beneficiary is otherwise entitled under this Agreement, if
such deduction or withholding is on account of any tax imposed upon Toshiba, pay
to the Owners and Beneficiary such additional amount as is necessary to ensure
that the net amount actually received by the Owners and Beneficiary (free and
clear of taxes assessed against Toshiba) will equal the full amount the Owners
and Beneficiary would have received had no such deduction or withholding been
required.
(b) If (i) Toshiba is required to make any deduction or withholding on
account of any tax from any payment made by it under this Agreement,
(ii) Toshiba does not make the deduction or withholding, and (iii) a liability
for or on account of the tax is therefore assessed directly against any Owner or
Beneficiary, Toshiba shall pay to the Owners and Beneficiary, promptly after
deemed, the amount of the liability (including any related liability for
interest or penalties).
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ARTICLE V
COVENANTS OF BENEFICIARY AND OWNERS
Section 5.1 Forbearance
Beneficiary will not, prior to the Forbearance Date, enforce any rights under
the Toshiba Guaranty unless a Forbearance Termination Event has occurred
(inclusive of the expiration without cure of any applicable cure period set
forth in clause (d) of the definition of Forbearance Termination Event). Unless
a Forbearance Termination Event has occurred, Beneficiary will not, prior to the
Forbearance Date, make any demand for payment under any of the Letters of Credit
except (a) as contemplated by Section 2.4 or Section 3.1, (b) from and after the
delivery by Toshiba of a Payment Obligation Suspension Notice, and (c) in the
sixty (60) day period before the expiration thereof.
Section 5.2 Southern
Each of the Owners agrees that it will negotiate in good faith with Toshiba
regarding, and to minimize any adverse effects on the Owners or the
construction, maintenance or operation of the Summer Facility (whether such
facility is completed under the EPC Agreement or otherwise) of, any agreement or
arrangements Toshiba or any of its Affiliates may enter into or contemplate
entering into with Southern or any successors or assigns thereof; provided,
however, that in no event will any of the Owners be required, by reason of this
Section 5.2, to release, amend, waive, or otherwise modify any of their rights
under this Agreement or any other agreement.
Section 5.3 Services Agreements
Beneficiary will negotiate in good faith with Toshiba regarding a potential
services agreement under which Toshiba may provide parts and services relating
to the Summer Facility; provided, however, that in no event will any of the
Owners be required, by reason of this Section 5.3, to release, amend, waive, or
otherwise modify any of their rights under this Agreement or any other
agreement; and provided further, however, that in no event will any of the
Owners, by reason of this Section 5.3, have any obligation to enter into such
services agreement or to consider, or to undertake, any work or obligation with
respect to the Summer Facility or the completion thereof.
Section 5.4 Consideration of Cost Reduction Proposals
Beneficiary will consider any good faith proposals it may receive from Toshiba
for arrangements for incentives benefitting both Toshiba and the Owners that are
intended to reduce costs to achieve Final Completion; provided, however, that in
no event will any of the Owners be required, by reason of this Section 5.4, to
release, amend, waive, or otherwise modify any of their rights under this
Agreement or any other agreement; and provided, further, however, that in no
event will any of the Owners, by reason of this Section 5.4, have any obligation
to enter into any arrangements with respect to any such incentives or to
consider, or to undertake, any work or obligation with respect to the Summer
Facility or Final Completion. Each Owner acknowledges and agrees that Toshiba is
not required to provide any proposals pursuant to this Section 5.4. Toshiba
makes no representations or warranties in respect of any such proposal. Except
to the extent it otherwise agrees in writing, Toshiba will have no
responsibility for the implementation and operation of any such proposal.
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Section 5.5 Refund of Toshiba Payments
If, and only if, the Summer Facility achieves Final Completion, Beneficiary and
each of the Owners agrees that it will promptly provide Toshiba with a statement
(the “Summer Cost Statement”), in a form reasonably acceptable to Toshiba, of
all Summer Costs. If (a) the amount of (i) Summer Costs as shown on the Summer
Cost Statement minus (ii) the Contract Price (as adjusted as provided by the EPC
Agreement) is less than (b) the Agreed Amount, then, if all payment obligations
of Toshiba in this Agreement has been fully and irrevocably paid (whether or not
then due), each Owner shall pay Toshiba its Pro Rata Share of 50% of the
resulting difference. For the avoidance of doubt, the Parties acknowledge that
the Owners shall have no obligation to minimize or reduce the Summer Costs, and
Toshiba shall have no right to assert any right to payment under this Section
5.5 based on an assertion that the Summer Costs should have been lower.
Section 5.6 Support of Sale of Westinghouse’s Assets and Plan Support
Agreement
Toshiba and each of the Owners agrees that it will support a prompt sale of the
assets of Westinghouse and the other WEC Debtors pursuant to a plan of
reorganization or a motion under section 363 of the Bankruptcy Code that is, in
each case, acceptable to Toshiba and the Owners in their respective sole
discretion. Toshiba and each of the Owners agrees that it will negotiate in good
faith regarding the terms of an acceptable, in their respective sole discretion,
plan support agreement that will set forth terms of an acceptable, in their
respective sole discretion, chapter 11 plan for Westinghouse and the other WEC
Debtors. Such plan support agreement shall include plan provisions which (i)
provide for a third party release, exculpation and plan injunction substantially
in the form of Exhibit B, and (ii) set forth an allocation, acceptable to each
of the Owners in their respective sole discretion, of distributions to the
Owners on account of their respective claims.
Section 5.7 Release
(a) Effective immediately upon the full payment to Beneficiary, and receipt
by the Owners, of the Toshiba Obligation Amount, each of the Owners on behalf of
itself and its present and former agents, Affiliates, principals, shareholders,
the “Owner Releasing Parties”) hereby fully, finally and forever releases,
acquits and discharges Toshiba, the Toshiba Affiliates, and any Toshiba Third
Parties (but in no event including the WEC Debtors, any subsidiaries or any WEC
Third Parties thereof (such parties collectively, the “Toshiba Released
Parties”)) from any and all manner of action, causes of action, claims, demands,
lawsuits, attorneys’ fees and costs, losses, expenses, damages, right to
equitable remedy if such breach gives rise to a right of payment, or liabilities
of whatever kind and nature whatsoever, whether now known or unknown, asserted
or unasserted, suspected or unsuspected, whether arising under federal, state,
local, statutory, common, foreign or administrative Law, or any other Law, rule
or regulation, whether fixed or contingent, accrued or unaccrued, liquidated or
unliquidated, matured or unmatured, disputed or undisputed, at law or in equity,
secured or unsecured that any of the Owner Releasing Parties heretofore had, or
now or hereafter have, own or hold, or could assert directly or indirectly,
against Toshiba in any forum, arising out of or related to (a) the EPC Agreement
and any and all related documents, and (b) the Toshiba Guaranty; provided,
however, that nothing in
19
this Section 5.7(a) shall release Toshiba or any of the other Toshiba Released
Parties from any obligation under any contract or agreement to which it is a
party (other than the Toshiba Guaranty), including this Agreement (including
under Section 2.5), any other contract in connection with Toshiba’s or any other
Toshiba Released Party’s role as supplier to the Summer Facility, and any
services agreements entered into by Toshiba and the Owners. For the avoidance of
doubt, if a Third Party is both a Toshiba Third Party and a WEC Third Party, the
release contained herein only pertains to such Third Party in its capacity as a
Toshiba Third Party.
(b) Effective immediately upon the effectiveness of the release contemplated
by Section 5.7(a), Toshiba, on behalf of itself and its present and former
agents, Affiliates, principals, shareholders, stakeholders, predecessors,
subsidiaries, successors and assigns, excluding the WEC Debtors and any
subsidiaries thereof (collectively, the “Toshiba Releasing Parties”, together
with the Owner Releasing Parties, the “Releasing Parties”) hereby fully, finally
and forever releases, acquits and discharges each of the Owners and each of
their respective agents, Affiliates, executives, employees, attorneys, advisors,
(collectively, the “Owner Released Parties”, together with the Toshiba Released
Parties, the “Released Parties”) from any and all manner of action, causes of
action, claims, demands, lawsuits, attorneys’ fees and costs, losses, expenses,
damages, right to equitable remedy if such breach gives rise to a right of
payment, or liabilities of whatever kind and nature whatsoever, whether now
known or unknown, asserted or unasserted, suspected or unsuspected, whether
arising under federal, state, local, statutory, common, foreign or
administrative Law, or any other Law, rule or regulation, whether fixed or
contingent, accrued or unaccrued, liquidated or unliquidated, matured or
that any of the Toshiba Releasing Parties heretofore had, or now or hereafter
have, own or hold, or could assert directly or indirectly, against Toshiba in
any forum, arising out of or related to (a) the EPC Agreement and any and all
related documents, and (b) the Toshiba Guaranty; provided however, that nothing
in this Section 5.7(b) shall release any of the Owner Released Parties from any
obligation under any other contract or agreement to which it is a party (other
than the Toshiba Guaranty), including this Agreement, any other contract in
connection with Toshiba’s or any other Toshiba Released Party’s role as supplier
to the Summer Facility, and any services agreements entered into by Toshiba and
the Owners.
(c) The Releasing Parties are fully aware of the provisions of California
the debtor.
Each of the Releasing Parties agrees to voluntarily waive the provisions of
California Civil Code Section 1542 (or under any Law of any state or territory
of the United States, or principle of common law, or under the Law of any
foreign country, that is similar, comparable or equivalent to section 1542 of
the California Civil Code) with respect to the claims released in Section 5.7(a)
20
and Section 5.7(b). The Releasing Parties acknowledge and agree that the
foregoing waiver was separately bargained for and a key element of the Agreement
of which this release is a part.
(d) Covenants Not To Sue
(i) The Releasing Parties promise not to sue or proceed in any manner, in
actions or proceedings, against the Released Parties concerning any of the
claims released in this Section 5.7.
(ii) The releases and covenants not to sue contained in this Section 5.7 may
an injunction against, any action, suit or other proceeding which may be
instituted in breach of the releases or covenants not to sue.
Section 5.8 Mechanics’ Liens
(a) The Beneficiary shall, from time to time, provide information reasonably
requested by Toshiba regarding settlements or satisfactions of the Mechanics’
Liens claims, including an accounting of the Satisfied Mechanics Liens Amount
and documentation to support the same, with copies of all lien release
certificates pursuant to such lien claim resolutions to be provided to Toshiba
following receipt of the same in accordance with Section 8.1 of this Agreement.
(b) In the event that, as of the time (i) Toshiba is entitled to exercise
subrogation rights as contemplated by Section 8.3 and (ii) the proviso in
Section 8.3 is no longer applicable, any Owner continues to own or have any
interest in any Mechanics’ Liens claims, Toshiba shall have the right, at any
time thereafter, to demand in writing that such Owner, if and when any such
Any such transfer of cash to Toshiba will be accompanied by a reasonably
detailed accounting of any cash received by such Owner in respect of such
Mechanics’ Liens claims.
Section 5.9 Resolutions; Legal Opinions. Beneficiary shall deliver reasonably
acceptable, certified English translation of the resolutions approved by the
Board of Directors (or similar governing body) of Beneficiary authorizing the
execution, delivery and performance of this Agreement on or before August 10,
2017. Additionally, counsel for the Beneficiary shall deliver reasonably
of this Agreement by such Beneficiary and the enforceability of this Agreement
against such Beneficiary on or before August 10, 2017
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
Section 6.1 Representations and Warranties of Toshiba
Toshiba represents and warrants to the Owners as of the date of this Agreement
that:
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(a) Due Organization. Toshiba is a corporation duly organized and validly
existing under the Laws of Japan. Toshiba has the requisite power and authority
to own and operate its business and properties and to carry on its business as
such business is now being conducted and is duly qualified to do business in any
other jurisdiction in which the transaction of its business makes such
qualification necessary.
(b) Due Authorization; Binding Obligation. Toshiba has full power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder, and the execution, delivery and performance of this Agreement by
Toshiba, and the consummation by Toshiba of the transactions contemplated
hereby, have been duly authorized by the necessary action on the part of
Toshiba; this Agreement has been duly executed and delivered by Toshiba and is
the valid and binding obligation of Toshiba enforceable in accordance with its
liquidation, and other similar Laws and principles of equity affecting
creditors’ rights and remedies generally.
(c) Non-Contravention. The execution, delivery and performance of this
Agreement by Toshiba and the consummation of the transactions contemplated
hereby do not and will not (i) violate or conflict with (A) the organizational
documents of Toshiba or (B) any Law or any order of any Governmental Unit,
(ii) violate, conflict with or result in a breach or termination of, or
otherwise give any Person additional rights or compensation under, or the right
to terminate or accelerate, or the loss of a material benefit under, or
constitute (with notice or lapse of time, or both) a default under the terms of
any indenture, mortgage, lease, agreement, instrument, judgment, decree, order
or ruling to which Toshiba is a party or by which it or any of its properties is
bound or affected or (iii) result in the creation or imposition of any Lien with
respect to, or otherwise have an adverse effect upon, the properties or assets
of Toshiba or any of its Affiliates.
(d) Approvals. There are no approvals or consents of Governmental Units or
other Persons not yet obtained, the absence of which would materially impair
Toshiba’s ability to execute, deliver and perform its obligations under this
Agreement.
(e) Litigation. There are no proceedings, claims or lawsuits pending or, to
the knowledge of Toshiba, threatened against Toshiba that question the legality,
validity or enforceability of this Agreement or any of the transactions
contemplated hereby.
Section 6.2 Representation and Warranties of Owners
Each Owner hereby severally represents and warrants to Toshiba as of the date of
this Agreement that:
(a) Validity and Enforceability. Such Owner has the corporate power and
under this Agreement. The execution, delivery and performance of this Agreement
by such Owner, and the consummation by such Owner of the transactions
contemplated hereby, have been duly authorized and approved by all required
action on the part of such Owner. This Agreement has been duly executed and
delivered by such Owner and, assuming due authorization, execution and delivery
by Toshiba, represents the legal, valid and binding obligation of such Owner
22
enforceable against such Owner in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation, and
other similar Laws and principles of equity affecting creditors’ rights and
remedies generally.
(b) Existence and Good Standing. Such Owner is duly organized, validly
existing and in good standing under the Laws of the State of South Carolina.
(c) No Conflict; Required Filings and Consents. Neither the execution of this
Agreement by such Owner nor the performance by such Owner of its obligations
hereunder will violate or conflict with the charter or any other organizational
document of such Owner and such execution and performance do not and will not
conflict with or result in a breach of or default under any indenture, mortgage,
lease, agreement, instrument, judgment, decree, order or ruling to which such
Owner is a party or by which it or any of its properties is bound or affected.
such Owner’s ability to execute, deliver and perform its obligations under this
Agreement.
the knowledge of such Owner, threatened against such Owner that question the
legality, validity or enforceability of this Agreement or any of the
transactions contemplated hereby.
ARTICLE VII
REMEDIES, NUCLEAR INDEMNITY AND INSURANCE
Section 7.1 Beneficiary Remedies. From and after the earlier of (a) any
Forbearance Termination Event (including the expiration without cure of any
applicable cure period set forth in clause (d) of the definition of Forbearance
Termination Event) and (b) the Forbearance Date, Beneficiary may pursue all of
its legal and equitable rights and remedies under the Toshiba Guaranty and
Toshiba shall not argue that the terms or existence of this Agreement constitute
a defense thereunder; provided, however, that each of the Owners agrees that it
shall not, in any event, pursue, assert, or claim any amounts under the Toshiba
Guaranty in excess of the Toshiba Obligation Amount and Toshiba agrees that it
shall not, in any event, assert or claim that under the Toshiba Guaranty it owes
Beneficiary an amount less than the Toshiba Obligation Amount.
Section 7.2 Owner Remedies. From and after a Forbearance Termination Event,
in addition to Beneficiary’s rights under Section 7.1, each Owner may (a) by
notice to Toshiba, declare all payment obligations of Toshiba under this
Agreement to be immediately due and payable, whereupon all such obligations
shall accelerate and be immediately due and payable; provided, however, that if
a Toshiba Insolvency Proceeding has occurred, no such declaration shall be
required and, upon the occurrence of such Toshiba Insolvency Proceeding, all of
such obligations shall automatically accelerate and be immediately due and
payable, (b) make draws under the Letters of Credit and apply the proceeds
thereof to reduce amounts due under this Agreement (including amounts due as a
result of the acceleration described in the foregoing clause (a)) or under the
Toshiba Guaranty and (c) pursue all of legal and equitable rights and remedies
available to it.
Section 7.3 Specific Performance; Remedies Not Exclusive.
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(a) Toshiba agrees that irreparable damage will result if this Agreement is
not performed by Toshiba in accordance with its terms, and any damages available
at law for a breach of this Agreement would not be an adequate remedy.
Therefore, this Agreement and the obligations of Toshiba hereunder shall be
enforceable in a court of equity, or other tribunal with jurisdiction, by a
decree of specific performance, and appropriate preliminary or permanent
injunctive relief may be applied for and granted in connection therewith (and
any requirement to post any bond in connection therewith is hereby waived).
Notwithstanding the foregoing, neither the Beneficiary nor any of the Owners may
seek a decree of specific performance, or any related preliminary or permanent
injunctive relief, with respect to any action (a “Survival Action”) taken by
Toshiba that violates Section 4.1 if (i) such action has been approved in
advance by Toshiba’s board of directors and (ii) in connection with such
approval, Toshiba’s board of directors has determined, in good faith, after
consultation with, and receiving the advice of, outside legal counsel, that (A)
the failure to take the Survival Action will (x) violate the directors’
fiduciary duties under applicable Law and (y) result in the failure of Toshiba
to continue as a going concern and (B) such Survival Action will have the
minimum adverse consequence to Beneficiary and the Owners that can be reasonably
achieved while also allowing Toshiba to continue as a going concern (it being
understood, for the avoidance of doubt, that notwithstanding anything to the
contrary herein, Beneficiary and Owners reserve all rights to pursue all of its
legal and equitable rights and remedies under the Toshiba Guaranty; provided,
however, that each of the Owners agrees that it shall not, in any event, pursue,
assert, or claim any amounts under the Toshiba Guaranty in excess of the Toshiba
Obligation Amount). Subject to the limitations set forth in this Section 7.3(a),
if an action is brought by either Owner to enforce this Agreement, Toshiba shall
waive the defense that there is adequate remedy at Law. The limitations set
forth in this Section 7.3(a) on seeking a decree of specific performance, or any
related preliminary or permanent injunctive relief, shall not mean, and shall
not imply, that a violation of Section 4.1 is not a breach of this Agreement and
a Forbearance Termination Event triggering the rights and remedies arising
therefrom as set forth in this Agreement and at law, which rights and remedies
shall be available.
(b) Each of Beneficiary and the Owners agree that irreparable damage will
result if this Agreement is not performed in accordance with its terms, and any
damages available at law for a breach of this Agreement would not be an adequate
remedy. Therefore, this Agreement and the obligations of each of the Beneficiary
and the Owners hereunder shall be enforceable in a court of equity, or other
tribunal with jurisdiction, by a decree of specific performance, and appropriate
preliminary or permanent injunctive relief may be applied for and granted in
connection therewith (and any requirement to post any bond in connection
therewith is hereby waived). If an action is brought by Toshiba to enforce this
Agreement, Beneficiary and each of the Owners shall waive the defense that there
is adequate remedy at Law.
(c) All remedies provided for in this Agreement or otherwise available at law
or in equity shall be cumulative and not exclusive and shall be in addition to
any other remedies that a Party may have under this Agreement.
Section 7.4 Attorneys’ Fees
The prevailing Party in any action to enforce this Agreement against any other
Party or to recover damages or obtain other remedies for a breach of this
Agreement by any other Party shall
24
be entitled to receive from the losing Party any and all costs (including
reasonable attorneys’ fees and related expenses) incurred in connection with
such action.
Section 7.5 Nuclear Indemnity and Insurance
Subject to Section 7.5(f), while they are owners of the Summer Facility and all
required authorizations from the U.S. Nuclear Regulatory Commission authorizing
operation of the Summer Facility have been issued and are in effect:
(a) Owners shall maintain insurance to cover Public Liability Claims as
defined in 42 U.S.C. § 2014(w) in such form and in such amount to meet the
financial protection requirements of the Atomic Energy Act of 1954, as amended,
and regulations promulgated pursuant thereto.
(b) Owners shall maintain a governmental indemnity agreement pursuant to the
Atomic Energy Act of 1954, as amended, and regulations promulgated pursuant
thereto.
(c) In the event that the financial protection system contemplated by Section
170 of the Atomic Energy Act of 1954, as amended, is repealed or changed, Owners
will maintain in effect liability protection through governmental indemnity,
limitation of liability to third parties and/or insurance of comparable coverage
which will not result in a material impairment of the protection afforded
Toshiba and its Affiliates set forth on Schedule 7.5 hereto by such nuclear
liability protection system which is in effect as of the Effective Date (as
defined in the EPC Agreement), subject to (i) the availability of insurance,
(ii) customary practice in the United States nuclear electric utility industry,
and (iii) other relevant factors in light of the then existing conditions.
Subject to the foregoing subsections (i), (ii), and (iii) of the immediately
preceding sentence, Owners shall ensure that Toshiba and its Affiliates set
forth on Schedule 7.5 hereto is included in the omnibus definition of “insured”
under such alternate insurance coverage or are otherwise included as additional
insureds at no cost to Toshiba or its Affiliates set forth on Schedule 7.5
hereto.
(d) In no event shall Toshiba or its Affiliates set forth on Schedule 7.5
hereto be responsible to Owners (or any of the owners of Unit 1) for personal or
bodily injury (including death), property damage, loss or damage to any property
at the Summer Facility and Unit 1, or for any indirect, special, incidental,
punitive or consequential loss, damage or injury, whether or not based on any
claim of fault, negligence or strict liability, where any of the foregoing
arises out of or results from a Nuclear Incident and Owners hereby release
Toshiba and its Affiliates from any such liability.
(e) Nuclear Property Insurance. Owners shall take reasonable steps to
maintain property insurance in reasonable amounts and at reasonable costs with
respect to the Facility and the Summer Facility and the Unit 1 (and associated
structures) as may be available from the existing nuclear property insurance
pools (e.g., Nuclear Electric Insurance Limited – NEIL), or other sources and
consistent with the then current industry practice, providing protection against
physical loss or damage to the Summer Facility. The limits of insurance shall
also be maintained in accordance with the requirements of the U.S. Nuclear
Regulatory Commission and in a manner and to the extent that property of similar
character is usually
25
insured by companies similarly situated to the Owners with like properties. Such
insurance shall cover Toshiba and its Affiliates set forth on Schedule 7.5
hereto to the extent of their interest in any loss paid thereunder, and as
between Owners and Toshiba and its Affiliates set forth on Schedule 7.5 hereto,
Owners hereby waive all rights to proceeds from such insurance and rights of
subrogation on behalf of themselves and their insurers for any loss or damage
covered by such insurance to the extent of Toshiba’s and its Affiliates’ (such
Affiliates set forth on Schedule 7.5 hereto) loss during the Work and thereafter
whether liability for such loss or damage arises in contract, tort or otherwise,
and irrespective of fault, negligence, strict liability or otherwise.
(f) Duration. The protection provided pursuant to this Section 7.5 shall be
taken out prior to the first delivery of Nuclear Fuel at the Summer Facility,
and shall remain in effect until the permanent decommissioning of the Summer
Facility; provided, however, that upon permanent cessation of operation, the
coverages and limits of insurance may be reduced to the extent permitted by the
U.S. Nuclear Regulatory Commission.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Notices
All notices, requests, demands and other communications under this Agreement
shall be in writing and shall be deemed to have been duly given or made as
follows: (a) if sent designated for overnight delivery by an internationally
recognized overnight air courier (such as Federal Express), one (1) business day
after mailing; (b) if sent by facsimile transmission before 5:00 p.m. on a
business day local time of recipient, when transmitted and receipt is confirmed;
(c) if sent by electronic mail, when transmitted; and (d) if otherwise actually
personally delivered, when delivered, provided that such notices, requests,
demands and other communications are delivered to the address set forth below,
or to such other address as any Party shall provide by like notice to the other
Party:
if to Toshiba:
Toshiba Corporation
1-1, Shibaura 1-chome, Minato-ku
Tokyo 105-8001, Japan
Attention: Ayumi Wada
General Manager, Legal Affairs Division
Facsimile: +81-3-5444-9214
Email: ayumi.wada@toshiba.co.jp
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with a copies (which shall not constitute notice) to:
Skadden, Arps, Slate, Meagher & Flom LLP
300 S Grand Ave, Suite 3400
Attention: Van C. Durrer, II
Facsimile: (213) 687-5200
Email: van.durrer@skadden.com
and to:
1-6-1 Rappongi, Minato-ku
Tokyo 106-6021, Japan
Attention: Mitsuhiro Kamiya
Facsimile: +81-3-3568-2626
Email: mitsuhiro.kamiya@skadden.com
if to either Owner:
Attn: President
Mail Code D302
220 Operation Way
Cayce, SC 29033
Telephone No.: 803-217-8097
Facsimile No.: 804-933-7043
and to:
Attn: Chief Operating Officer (M602)
One Riverwood Drive
P.O. Box 2946101
Telephone No.: 843-761-4087
Facsimile No.: 843-761-7037
Attn: General Counsel
Mail Code D308
220 Operation Way
Cayce, SC 29033
Telephone No.: 803-217-8634
Facsimile No.: 804-933-7676
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And to:
Attn: General Counsel (M603)
One Riverwood Drive
P.O. Box 2946101
Telephone No.: 843-761-7007
Section 8.2 Waiver
The failure at any time of a Party to require performance by the other Party of
any responsibility or obligation required by this Agreement shall in no way
affect a Party’s right to require such performance at any time thereafter, nor
shall the waiver by a Party of a breach of any provision of this Agreement by
any other Party constitute a waiver of any other breach of the same or any other
provision or constitute a waiver of the responsibility or obligation itself.
Section 8.3 Subrogation
Effective upon the full and irrevocable payment to Beneficiary, and receipt by
the Owners, of the Toshiba Obligation Amount pursuant to this Agreement, after
contemplated by Section 2.5, Toshiba shall be entitled to exercise any and all
subrogation rights (including, without limitation, any such rights pursuant to
Section 509 of the Bankruptcy Code) it may have against Westinghouse arising
from a breach by Westinghouse of the EPC Agreement (including rejection thereof
pursuant to Section 365 of the Bankruptcy Code); provided, however, that
Toshiba's claims by way of such subrogation shall be subordinated to all claims
of the Owners against Westinghouse and the other WEC Debtors until all such
claims of the Owners have been paid in full in cash.
Section 8.4 Assignment
and permitted assigns of each Party under this Agreement. Except as otherwise
specifically provided in this Agreement, neither this Agreement nor any right or
obligation hereunder may be assigned or delegated in whole or in part to any
other Person except that Beneficiary and each of the Owners may assign its
rights hereunder.
Section 8.5 Third Party Rights
Nothing in this Agreement, whether express or implied, is intended or shall be
construed to confer, directly or indirectly, upon or give to any Person, other
than the Parties, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any covenant, condition or other provision
contained herein.
Section 8.6 Choice of Law
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This Agreement shall be construed and enforced in accordance with and governed
by the Laws of the State of New York, without giving effect to the principles of
conflict of laws thereof.
Section 8.7 Headings
The headings of the Articles and Sections in this Agreement are provided for
convenience of reference only and shall not be deemed to constitute a part
hereof.
Section 8.8 Entire Agreement
This Agreement, together with the Exhibits and Schedules hereto, constitutes the
entire agreement of the Parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings, oral and written, between
the Parties with respect to the subject matter hereof. For the avoidance of
doubt, nothing in this Agreement (a) alters or otherwise affects the Letters of
Credit (except as provided in Section 5.1 hereof) or the EPC Agreement or any
rights or obligations thereunder or (b) alters, amends, or otherwise affects, or
constitutes a novation, accord or satisfaction of, the Toshiba Guaranty except
as provided in Article II, Article III, Section 5.1 and Section 8.11 hereof.
Section 8.9 Severability
Should any term, provision, covenant or restriction of this Agreement be deemed
invalid, illegal, void by any rule of Law of any jurisdiction in which it is to
be performed or unenforceable for any reason, such term, provision, covenant or
restriction shall be deemed null and void, but the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force in all other respects and shall in no way be affected, impaired or
invalidated so long as the intended economic and legal substance of this
Agreement, taken as a whole, is not affected in any manner materially adverse to
any Party. Should any provision of this Agreement be or become ineffective
because of changes in Law or interpretations thereof, or should this Agreement
fail to include a provision that is required as a matter of Law, the validity of
the other terms, provisions, covenants and restrictions of this Agreement shall
not be affected thereby so long as the intended economic and legal substance of
this Agreement, taken as a whole, is not affected in any manner materially
adverse to any Party. Upon such a determination that any term or other provision
is invalid, illegal, void, omitted or unenforceable or upon such provision being
or becoming ineffective, the Parties shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the Parties as closely as
possible to the fullest extent permitted by Law and in an acceptable manner in
order that the matters contemplated hereby be addressed as originally
contemplated to the fullest extent possible.
Section 8.10 Counterparts
instrument.
Section 8.11 Further Assurances
Each Party shall execute such instruments and documents and shall give such
further assurances as shall be necessary to perform such Party’s obligations
hereunder.
29
Section 8.12 Jurisdiction; Venue
Either Party may submit the dispute to arbitration in accordance with the terms
of Exhibit D hereto. Except as provided below in this Section 8.12 with respect
to arbitration, any suit, action or proceeding seeking to enforce any provision
of, or based on any matter arising out of or in connection with, this Agreement
shall be brought in a federal court or, if jurisdiction cannot lie therein, a
state court, in either case located in New York, and each of the Parties hereby
consents and submits to the exclusive jurisdiction of such courts (and of the
appropriate appellate courts therefrom) in any such suit, action or proceeding
and irrevocably waives, to the fullest extent permitted by Law, any objection
action or proceeding in any such court or that any such suit, action or
proceeding which is brought in any such court has been brought in an
inconvenient forum; provided, however, that no Party may bring such a suit,
action or proceeding with respect to any dispute that is already the subject of
an arbitration proceeding that has been commenced as provided below in this
Section 8.12. Process in any such suit, action or proceeding may be served on
any Party anywhere in the world, whether within or without the jurisdiction of
any such court. Notwithstanding anything to the contrary in this Section 8.12, a
provisional attachment, provisional injunction or any other provisional legal
remedies to secure a Party’s right or benefit may be brought in a court of
competent jurisdiction in a state or federal court located in New York or in a
district court located in Japan, wherever located. For the avoidance of doubt,
nothing in this Section 8.12 shall permit Beneficiary or the Owners to seek a
decree of specific performance or any related preliminary or permanent
injunctive relief that would violate Section 7.3(a) of this Agreement.
Section 8.13 Certain Interpretive Matters
(a) Unless the context requires otherwise, (i) all references to Sections,
Articles, Exhibits, or Schedules are to Sections, Articles, Exhibits, or
Schedules of or to this Agreement, (ii) words in the singular include the plural
and vice versa, (iii) the term “including” means “including without limitation,”
and (iv) the terms “herein,” “hereof,” “hereunder” and words of similar import
shall mean references to this Agreement as a whole and not to any individual
section or portion hereof. All references to “$” or dollar amounts will be to
lawful currency of the United States of America. All references to “$” or dollar
amounts, or “%” or percent or percentages, shall be to precise amounts and not
rounded up or down. All references to “day” or “days” will mean calendar days.
(b) No provision of this Agreement will be interpreted in favor of, or
against, either of the Parties by reason of the extent to which such Party or
its counsel participated in the drafting thereof or by reason of the extent to
which any such provision is inconsistent with any prior draft of this Agreement
or such provision.
Section 8.14 Waiver of Right to Jury Trial. EACH OF THE OWNERS AND TOSHIBA
HEREBY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE,
WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG TOSHIBA AND ANY OWNER
ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS SETTLEMENT
AGREEMENT OR ANY OTHER
30
INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION WITH THIS
SETTLEMENT AGREEMENT OR THE TRANSACTIONS RELATED HERETO. EACH OF THE OWNERS AND
TOSHIBA HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, AND
(B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS SETTLEMENT
AGREEMENT, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS OF EACH OF
THE OWNERS AND TOSHIBA UNDER THIS SETTLEMENT AGREEMENT.
Section 8.15 Obligations of the Owners are Several. Notwithstanding anything
to the contrary in this Agreement, the obligations of the Owners hereunder are
several and not joint.
Section 8.16 Amendment, Modification, and Waiver of the Agreement. This
Agreement may not be amended or modified without the prior written consent of
each Party, which consent may be granted or withheld by such Party in its sole
discretion. The provisions and covenants set forth in this Agreement may not be
waived without the prior written consent of each affected Party, which consent
may be granted or withheld by such Party in its sole discretion.
Section 8.17 Counterparts. This Agreement may be executed in any number of
parts, all of which taken together shall be considered to comprise one and the
same document, and this Agreement shall become binding on all Parties when each
Party has completed delivery of an executed counterpart copy to the other
Parties. Delivery may be effected by actual delivery or by electronic
transmission of an executed counterpart copy to the other Parties.
Section 8.18 Confidentiality. Prior to the approval of the Parties’
respective Boards of Directors (or other applicable governing bodies) and the
delivery and release of fully executed signature pages thereto, no Party will
disclose to any person (a) any terms or other facts with respect to the
transaction contemplated herein, including the status thereof or (b) the prior
execution of any Party to this Agreement.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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first above written.
TOSHIBA CORPORATION
By: /s/Mamoru Hatazawa
Its: Executive Officer Corporate VP
By: /s/Kevin B. Marsh
By: /s/Lonnie N. Carter
[Signature Page to Settlement Agreement]
EXHIBIT A
Letters of Credit
Standby Letter of Credit No. 00606948 in the amount of US $22,500,000.00 issued
by Mizuho Bank, Ltd for the benefit of South Carolina Electric and Gas Company,
for itself and as agent for South Carolina Public Service Authority.
Standby Letter of Credit No. LG/MIS/NY-095396 in the amount of US $22,500,000.00
issued by Sumitomo Mitsui Banking Corporation for the benefit of South Carolina
Electric and Gas Company, for itself and as agent for South Carolina Public
Service Authority.
EXHIBIT B
Form of Plan Injunction, Release, and Exculpation
For the avoidance of doubt, the Parties and their respective Affiliates shall be
included in “Released Parties,” “Exculpated Parties,” or similar defined terms
as necessary and appropriate.
Injunction.
AS OF THE EFFECTIVE DATE, EXCEPT WITH RESPECT TO THE OBLIGATIONS OF THE
REORGANIZED DEBTORS UNDER THE PLAN OR THE CONFIRMATION ORDER, ALL ENTITIES WHO
HAVE HELD, CURRENTLY HOLD OR MAY HOLD ANY CLAIMS OR INTERESTS, OBLIGATIONS,
SUITS, JUDGMENTS, DAMAGES, DEMANDS, DEBTS, RIGHTS, CAUSES OF ACTION OR
LIABILITIES THAT ARE WAIVED, DISCHARGED OR RELEASED UNDER THIS PLAN SHALL BE
PERMANENTLY ENJOINED FROM TAKING ANY OF THE FOLLOWING ENFORCEMENT ACTIONS
AGAINST THE DEBTORS, THE REORGANIZED DEBTORS, THE RELEASED PARTIES (TO THE
EXTENT THE RELEASED PARTIES ARE RELEASED BY A RELEASING PARTY) OR ANY OF THEIR
RESPECTIVE ASSETS OR PROPERTY ON ACCOUNT OF ANY SUCH WAIVED, DISCHARGED OR
RELEASED CLAIMS, OBLIGATIONS, SUITS, JUDGMENTS, DAMAGES, DEMANDS, DEBTS, RIGHTS,
CAUSES OF ACTION OR LIABILITIES: (1) COMMENCING OR CONTINUING IN ANY MANNER ANY
ACTION OR OTHER PROCEEDING; (2) ENFORCING, LEVYING, ATTACHING, COLLECTING OR
RECOVERING IN ANY MANNER ANY JUDGMENT, AWARD, DECREE OR ORDER; (3) CREATING,
PERFECTING OR ENFORCING ANY LIEN OR ENCUMBRANCE; (4) ASSERTING ANY RIGHT OF
SETOFF, SUBROGATION OR RECOUPMENT OF ANY KIND AGAINST ANY DEBT, LIABILITY OR
OBLIGATION DUE TO ANY DEBTOR, REORGANIZED DEBTOR OR RELEASED PARTY; AND (5)
COMMENCING OR CONTINUING ANY ACTION, IN ANY MANNER, IN ANY PLACE TO ASSERT ANY
CLAIM WAIVED, DISCHARGED OR RELEASED UNDER THIS PLAN OR THAT DOES NOT OTHERWISE
COMPLY WITH OR IS INCONSISTENT WITH THE PROVISIONS OF THIS PLAN.
Exculpation.
FROM AND AFTER THE EFFECTIVE DATE, THE EXCULPATED PARTIES, THE DEBTORS AND THE
REORGANIZED DEBTORS SHALL NEITHER HAVE NOR INCUR ANY LIABILITY TO ANY ENTITY,
AND NO HOLDER OF A CLAIM OR INTEREST, NO OTHER PARTY IN INTEREST AND NONE OF
THEIR RESPECTIVE REPRESENTATIVES SHALL HAVE ANY RIGHT OF ACTION AGAINST ANY
DEBTOR, REORGANIZED DEBTOR, EXCULPATED PARTY OR ANY OF THEIR RESPECTIVE
REPRESENTATIVES FOR ANY ACT TAKEN OR OMITTED TO BE TAKEN BEFORE THE EFFECTIVE
DATE IN CONNECTION WITH, RELATED TO OR ARISING OUT OF THE CHAPTER 11 CASES, THE
DEBTORS IN POSSESSION OR THE NEGOTIATION, CONSIDERATION, FORMULATION,
PREPARATION,
DISSEMINATION, IMPLEMENTATION, CONFIRMATION OR CONSUMMATION OF THIS PLAN, THE
EXHIBITS, THE DISCLOSURE STATEMENT, ANY AMENDMENTS TO ANY OF THE FOREGOING OR
ANY OTHER TRANSACTIONS PROPOSED IN CONNECTION WITH THE CHAPTER 11 CASES OR ANY
CONTRACT, INSTRUMENT, RELEASE OR OTHER AGREEMENT OR DOCUMENT CREATED OR ENTERED
INTO OR ANY OTHER ACT TAKEN OR OMITTED TO BE TAKEN IN CONNECTION THEREWITH
DURING THE CHAPTER 11 CASES OR IN CONNECTION WITH ANY OTHER OBLIGATIONS ARISING
UNDER THIS PLAN OR THE OBLIGATIONS ASSUMED HEREUNDER; PROVIDED, HOWEVER, THAT
THE FOREGOING PROVISIONS OF THIS SECTION SHALL HAVE NO EFFECT ON: (1) THE
LIABILITY OF ANY ENTITY THAT WOULD OTHERWISE RESULT FROM THE FAILURE TO PERFORM
OR PAY ANY OBLIGATION OR LIABILITY UNDER THIS PLAN OR ANY CONTRACT, INSTRUMENT,
RELEASE OR OTHER AGREEMENT OR DOCUMENT (i) PREVIOUSLY ASSUMED, (ii) ENTERED INTO
DURING THE CHAPTER 11 CASES, OR (iii) TO BE ENTERED INTO OR DELIVERED IN
CONNECTION WITH THIS PLAN OR (2) THE LIABILITY OF ANY EXCULPATED PARTY THAT
WOULD OTHERWISE RESULT FROM ANY ACT OR OMISSION OF SUCH EXCULPATED PARTY TO THE
EXTENT THAT SUCH ACT OR OMISSION IS DETERMINED IN A FINAL ORDER TO HAVE
CONSTITUTED GROSS NEGLIGENCE OR WILLFUL MISCONDUCT (INCLUDING FRAUD). FOR THE
AVOIDANCE OF DOUBT, NOTHING IN THIS PROVISION SHALL RELIEVE ANY EXCULPATED PARTY
FROM ANY OBLIGATION OR LIABILITY UNDER [THIS AGREEMENT OR THE TOSHIBA GUARANTY.]
Third Party Release.
WITHOUT LIMITING ANY OTHER APPLICABLE PROVISIONS OF, OR RELEASES CONTAINED IN,
THIS PLAN, AS OF THE EFFECTIVE DATE, IN CONSIDERATION FOR THE OBLIGATIONS OF THE
DEBTORS AND THE REORGANIZED DEBTORS UNDER THIS PLAN AND THE CONSIDERATION AND
OTHER CONTRACTS, INSTRUMENTS, RELEASES, AGREEMENTS OR DOCUMENTS TO BE ENTERED
INTO OR DELIVERED IN CONNECTION WITH THIS PLAN, EACH RELEASING PARTY SHALL BE
DEEMED TO HAVE FOREVER RELEASED AND COVENANTED WITH THE RELEASED PARTIES TO
FOREVER RELEASE, WAIVE AND DISCHARGE ALL LIABILITIES IN ANY WAY THAT SUCH ENTITY
HAS, HAD OR MAY HAVE AGAINST ANY RELEASED PARTY (WHICH RELEASE SHALL BE IN
ADDITION TO THE DISCHARGE OF CLAIMS AND TERMINATION OF INTERESTS PROVIDED HEREIN
AND UNDER THE CONFIRMATION ORDER AND THE BANKRUPTCY CODE), IN EACH CASE,
RELATING TO A DEBTOR, THE ESTATES, THE CHAPTER 11 CASES, THE NEGOTIATION,
CONSIDERATION, FORMULATION, PREPARATION, DISSEMINATION, IMPLEMENTATION,
CONFIRMATION OR CONSUMMATION OF THIS PLAN, THE EXHIBITS, THE DISCLOSURE
STATEMENT, ANY AMENDMENTS THERETO, THE DIP CREDIT AGREEMENT, THE DIP ORDER, ANY
OF THE NEW SECURITIES AND DOCUMENTS, THE RESTRUCTURING TRANSACTIONS OR ANY OTHER
TRANSACTIONS IN CONNECTION WITH THE CHAPTER 11 CASES OR ANY CONTRACT,
INSTRUMENT, RELEASE OR OTHER
AGREEMENT OR DOCUMENT CREATED OR ENTERED INTO OR ANY OTHER ACT TAKEN OR OMITTED
TO BE TAKEN IN CONNECTION THEREWITH OR IN CONNECTION WITH ANY OTHER OBLIGATIONS
ARISING UNDER THIS PLAN OR THE OBLIGATIONS ASSUMED HEREUNDER;
THE FOREGOING PROVISION OF THIS SECTION SHALL HAVE NO EFFECT ON:
(A) THE LIABILITY OF ANY ENTITY THAT WOULD OTHERWISE RESULT FROM THE FAILURE TO
PERFORM OR PAY ANY OBLIGATION OR LIABILITY UNDER THIS PLAN OR ANY CONTRACT,
INSTRUMENT, RELEASE OR OTHER AGREEMENT OR DOCUMENT (i) PREVIOUSLY ASSUMED, (ii)
ENTERED INTO DURING THE CHAPTER 11 CASES, OR (iii) TO BE TO BE ENTERED INTO OR
DELIVERED IN CONNECTION WITH THIS PLAN;
(B) THE LIABILITY OF ANY RELEASED PARTY THAT WOULD OTHERWISE RESULT FROM ANY ACT
OR OMISSION OF SUCH RELEASED PARTY TO THE EXTENT THAT SUCH ACT OR OMISSION IS
DETERMINED IN A FINAL ORDER TO HAVE CONSTITUTED GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT (INCLUDING FRAUD);
(C) ANY NON-RELEASING PARTY;
FOR THE AVOIDANCE OF DOUBT, NOTHING IN THIS PROVISION SHALL RELIEVE ANY RELEASED
PARTY FROM ANY OBLIGATION OR LIABILITY UNDER [THIS AGREEMENT OR THE TOSHIBA
GUARANTY.]
ENTRY OF THE CONFIRMATION ORDER BY THE BANKRUPTCY COURT SHALL CONSTITUTE AN
ORDER APPROVING THE THIRD PARTY RELEASE PURSUANT TO BANKRUPTCY RULE 9019, AND
FURTHER, SHALL CONSTITUTE THE BANKRUPTCY COURT’S FINDING THAT THE THIRD PARTY
RELEASE IS: (1) IN EXCHANGE FOR THE GOOD AND VALUABLE CONSIDERATION PROVIDED BY
THE RELEASED PARTIES; (2) A GOOD FAITH SETTLEMENT AND COMPROMISE OF THE CLAIMS
RELEASED BY THE THIRD PARTY RELEASE; (3) IN THE BEST INTERESTS OF THE DEBTORS
AND ALL HOLDERS OF CLAIMS AND INTERESTS; (4) FAIR, EQUITABLE AND REASONABLE; (5)
GIVEN AND MADE AFTER DUE NOTICE AND OPPORTUNITY FOR HEARING; AND (6) A BAR TO
ANY OF THE RELEASING PARTIES ASSERTING ANY CLAIM OR CAUSES OF ACTION RELEASED
PURSUANT TO THE THIRD PARTY RELEASE. NOTHING HEREIN SHALL ABROGATE APPLICABLE
ATTORNEY DISCIPLINARY RULES.
EXHIBIT C
Distribution Order
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
In re : Chapter 11
WESTINGHOUSE ELECTRIC : Case No. 17-10751 (MEW)
COMPANY LLC, et al., :
: (Jointly Administered)
Debtors1 :
ORDER REGARDING DISTRIBUTIONS IN RESPECT OF
CLAIMS AND INTERESTS OF TOSHIBA CORPORATION AND AFFILIATES
Upon consideration of this Order Regarding Distributions of Claims and Interests
of Toshiba Corporation and Affiliates (this “Order”); the terms of this Order
having been approved in form and substance by the above-captioned debtors
(collectively, the “Debtors”),Georgia Power Company (“Georgia Power”),
Oglethorpe Power Corporation (“OPC”),Municipal Electric Authority of Georgia
(“MEAG”), and the City of Dalton, Georgia (“Dalton”),as joint owners (Georgia
Power, OPC, MEAG and Dalton, collectively, the “Vogtle Owners”) of the Vogtle
Electric Generating Plant (the “Vogtle Plant”), and Toshiba Corporation
(“Toshiba” and, together with the Debtors and the Vogtle Owners, the “Parties”);
and upon the Amended Declaration of Kei Nishida In Support of Entry of the
Stipulated Order Regarding Distributions.
1The debtors in these chapter 11 cases, along with the last four digits of each
Debtor’s federal tax identification number, if any, are: Westinghouse Electric
The Debtors’ principal offices are located at 1000 Westinghouse Drive, Cranberry
In Respect of Claims and Interests of Toshiba Corporation and Affiliates (the
“Nishida Declaration”); and the Parties having agreed and the Court having found
that:
A.The Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and
1334;
B.This is a core proceeding pursuant to 28 U.S.C. § 157(b);
C. Notice of the relief granted herein was sufficient under the circumstances
and consistent with the Bankruptcy Rules, the Local Rules and the Order Pursuant
to 11 U.S.C. § 105(a) and Fed. R. Bankr. P. 1015(c), 2002(m), and 9007
Implementing Certain Notice and Case Management Procedures (D.I. 101);
D. Toshiba and the Vogtle Owners have entered into a settlement (the “Vogtle
Settlement”), a copy of which has been separately filed at Docket No. 764 and
attached to the Nishida Declaration as Exhibit A thereto, pursuant to which
Toshiba and the Vogtle Owners have resolved, among other things, the timing,
amount and manner of payments to be made by Toshiba, directly or indirectly, to
the Vogtle Owners in respect of Toshiba’s guaranty obligations to the Vogtle
Owners;
E. Toshiba, and South Carolina Electric & Gas Company and South Carolina
Public Service Authority (collectively, the “VC Summer Owners”) as owners of the
VC Summer Electric Generating Plant are engaged in negotiations regarding a
potential settlement to resolve the timing, amount, and manner of payments to be
made by Toshiba, directly or indirectly, to the VC Summer Owners in respect of
Toshiba’s guaranty obligations to the VC Summer Owners (any VC Summer settlement
that is ultimately entered into by those parties, being referred to as the “VC
Summer Settlement” and, together with the Vogtle Settlement, the “Settlements”);
2
F. The Vogtle Settlement requires and, if and when entered into by the
parties thereto, the VC Summer Settlement will require the entry of an Order by
this Court that provides that the Vogtle Owners and the VC Summer Owners (the
Vogtle Owners and VC Summer Owners, collectively the “Owners”) shall receive all
distributions from the Debtors’ estates in respect of (i) any rights of Toshiba
or any other entity (other than each of the Debtors and any of the Debtors’
subsidiaries) that (a) owns or controls, directly or indirectly, Toshiba, (b) is
owned or controlled by Toshiba, or (c) is under common control with Toshiba,
where “control” means the power to unilaterally direct the management or
policies of, or unilaterally prevent any actions by, the other entity, whether
through the ownership of voting securities, by contract, or otherwise (any
entity set forth in (a), (b), or (c) other than each of the Debtors and any of
the Debtors’ subsidiaries, an “Affiliate”, and Toshiba and such Affiliates
collectively, the “Toshiba Entities”) in respect of intercompany loans made by
any Toshiba Entity to any of the Debtors or any Debtor’s subsidiaries, (ii) any
claims, if any, the Toshiba Entities may have (and that Toshiba has sole
authority to control) against any of the Debtors or any of the Debtors’
subsidiaries arising from draws by any of the Owners under any letters of credit
(the rights and claims set forth in subsections (i) and (ii) collectively, the
“Toshiba Claims”), and (iii) Toshiba’s 90% equity interest in Debtor Toshiba
Nuclear Energy Holdings (UK) Limited (“TNEH” and such equity interest, the “TNEH
Interest”);
G. Based on the Nishida Declaration:
(i) Toshiba owns the TNEH Interest free and clear of liens, and the assets
held by TNEH (and wholly-owned subsidiaries thereof) together with the assets of
the Debtors (and wholly-owned subsidiaries thereof), constitute all of the
rights, properties and assets owned, used or held for use by Toshiba and its
Affiliates in the Core Businesses described in the Declaration of Lisa J.
Donohue filed on the petition date [Docket No. 4];
(ii) Aside from the TNEH Interest and the equity interest of National Atomic
Company Kazatomprom JSC in TNEH, there are no other shares, capital stock,
3
equity interests or other securities of TNEH issued and outstanding; and the
TNEH Interest represents at least 90% of the shares of TNEH and is held of
record and beneficially by Toshiba;
(iii) There are no subscriptions, options, “phantom” stock rights, stock
appreciation rights, warrants or other legally binding rights, agreements or
commitments entitling any person to acquire or otherwise receive from TNEH any
shares, capital stock, equity interests and other securities of TNEH;
(iv) Toshiba, Toshiba Nuclear Energy Holdings (US) Inc., an Affiliate of
Toshiba, and TSB Nuclear Energy USA Group Inc., an Affiliate of Toshiba,
collectively own, and, subject to any sale, transfer or encumbrance permitted by
paragraph 8 of this Order, will own, all Toshiba Claims (and all interests in
the Toshiba Claims) free and clear of liens; and
(v) Since the date the Debtors filed for relief under chapter 11 of the
Bankruptcy Code, no Toshiba Entity has transferred, assigned or encumbered any
claims against the Debtors (or any interest in such claims).
A.After due deliberation, the Court has determined that good and adequate cause
exists for approval of this Order;
NOW, THEREFORE, IT IS HEREBY ORDERED THAT:
1. Subject to further Order of the Court solely to establish procedures to
implement this paragraph and without limiting the terms hereof, any and all
Distributions (as defined below) made in these cases on account of the Toshiba
Claims or the TNEH Interest shall be made directly to designated representatives
of the Vogtle Owners and the VC Summer Owners, and not to any of the Toshiba
Entities listed or described on Exhibit A hereto, any subsequent transferee of
the Toshiba Claims or the TNEH Interest, any successor or assign of any Toshiba
Entity listed or described on Exhibit A hereto, or any person or entity claiming
through or on behalf of a Toshiba Entity listed or described on Exhibit A hereto
(each such entity, a “Transferee”) until Toshiba’s obligations under each of the
Settlements are fully satisfied in accordance with their terms (the “Settlement
Completion Date”); provided, however, that no Distribution shall be made to any
Toshiba Entity that is not listed or described on Exhibit A
4
hereto (each, a “Non-Consenting Toshiba Entity”), until the date that is 30 days
after the Debtors have provided each of Toshiba, the Vogtle Owners and the VC
Summer Owners with prior written notice of such Distribution (the “Distribution
Notice”), indicating in the Distribution Notice the identity of any
Non-Consenting Toshiba Entity entitled to such Distribution; provided further,
however, that, in the event that prior to such date any of the Vogtle Owners or
VC Summer Owners file a motion requesting that the Court order Toshiba to cause
each such Non- Consenting Toshiba Entity to file with the Court a written notice
confirming such Non- Consenting Toshiba Entity’s consent to be bound by the
provisions of this Order as if listed on Exhibit A hereto on the date hereof, no
such Distribution shall be made to any Non-Consenting Toshiba Entity until the
date that is 14 days after the date the Court enters an order adjudicating such
motion filed by the Vogtle Owners or VC Summer Owners on the merits. Following
the occurrence of a Settlement Completion Date, the parties to the applicable
Settlement shall provide notice to the Debtors or a designated representative of
the Debtors.
2. In accordance with the terms, conditions and limitations in the
Settlements, Toshiba shall receive a dollar for dollar credit against its
obligations to the Owners under each Settlement for any Distributions made to
such Owners on account of the Toshiba Claims or the TNEH Interest.
3. All Distributions on account of the Toshiba Claims and the TNEH Interest
made to the Owners shall be free and clear of any and all rights, claims liens
or other interests of the Toshiba Entities listed or described on Exhibit A
hereto or the Transferees, and this Order shall be binding on any Transferees;
for the avoidance of doubt, nothing in this paragraph 3 shall affect any rights,
claims or interests of the DIP Lenders under the Debtors’ postpetition financing
facility and the final order approving same [Docket No. 565].
5
4. As used herein, “Distribution” means any payment or distribution from or
through any of the Debtors, whether in the form of cash, securities or other
consideration, whether in the ordinary course, pursuant to a plan of
reorganization or liquidation (a “Plan”), as proceeds of a sale, by an order of
the Court or otherwise, it being recognized that the amount of any such payment
or distribution may have been reduced as a result of setoff or claims,
counterclaims, defenses, causes of action or any other rights the Debtors may
hold or otherwise be able to assert with respect to any Plan, proof of claim or
interest, or any other matters, against the party receiving the payment or
distribution. Any reinstatement of an equity interest under a Plan shall be
deemed a Distribution and such reinstated interest prior to the Settlement
Completion Date shall be deemed reissued to respective designated
representatives on behalf of the Vogtle Owners and the VC Summer Owners.
5. In the event that, notwithstanding the foregoing, the Toshiba Entities
listed or described on Exhibit A hereto or any Transferee receives a
Distribution on account of the Toshiba Claims or the TNEH Interest, such
Distribution shall be segregated and deemed held in trust by the applicable
Toshiba Entity listed or described on Exhibit A hereto for the Owners that are
parties to a Settlement, and promptly paid to such Owners as mandated by this
Order.
6. In the event that any of the Toshiba Entities listed or described on
Exhibit A hereto fails to file a proof of claim in respect of any of the Toshiba
Claims, the Owners that are parties to a Settlement shall have the right to file
a proof of claim in respect of such Toshiba Claims, and Toshiba shall provide
such Owners with any information the Owners reasonably require to prepare such
proof of claim within 30 days after a written request for such information by
the Owners, provided, however, that nothing in this paragraph 6 shall constitute
an exception from or otherwise vary any deadlines set forth in any bar date
order entered by the Court.
6
7. Until the Settlement Completion Date, the Owners that are parties to a
Settlement shall have the right to vote, and participate in and defend against
any objection or other request for relief filed in respect of, the Toshiba
Claims, subject to any applicable deadlines pursuant to the Federal Rules of
Bankruptcy Procedure, the Local Bankruptcy Rules for the Southern District of
New York, the Order Pursuant to 11 U.S.C. § 1059(a) and Fed. R. Bankr. P.
1015(c), 2002(m), and 9007 Implementing Certain Notice and Case Management
Procedures [Docket No. 101], or any other applicable order of this Court.
8. Toshiba will not sell, transfer or encumber, or permit any Toshiba Entity
listed or described on Exhibit A hereto (each, a “Consenting Toshiba Entity”) to
sell, transfer or encumber, any of the Toshiba Claims (other than any sale or
transfer to any other Consenting Toshiba Entity) until a Settlement Completion
Date has occurred with respect to both of the Settlements. The Consenting
Toshiba Entities shall not consummate any sale or transfer of any of the Toshiba
Claims to any other Toshiba Entity (other than any sale or transfer to any other
Consenting Toshiba Entity) unless and until the Toshiba Entity which is the
intended transferee or recipient of such transferred Toshiba Claim confirms, by
written notice filed with the Court, its consent to be bound by the provisions
of this Order as if named on Exhibit A hereto as of the date hereof and thereby
becomes a Consenting Toshiba Entity hereunder. Toshiba will not sell, transfer
or encumber the TNEH Interest until after a sale of all or substantially all of
the assets of the Debtors, including all or substantially all of the assets of
TNEH.
9. None of the Toshiba Entities listed or described on Exhibit A shall file a
motion seeking to dismiss or convert any of the Debtors’ (including TNEH’s)
chapter 11 cases without the written consent of the Owners that are parties to a
Settlement. For the avoidance of
7
doubt, nothing in this paragraph shall impede, interfere with, or otherwise
impair any action or determination by the Debtors with respect to any such
dismissal or conversion.
10. Nothing herein shall be deemed to limit or otherwise modify any of the
terms of the Vogtle Settlement, which shall remain in full force and effect, or
any VC Summer Settlement.
11. The Debtors are hereby authorized and directed to take all actions
necessary or appropriate to comply with the terms of this Order.
12. Nothing herein shall limit or otherwise modify the rights of any Owner to
file or pursue any claims against any of the Debtors or any of their respective
subsidiaries.
13. Nothing herein shall affect the Debtors’ claims, counterclaims, defenses,
causes of action or any other rights the Debtors may hold or otherwise be able
to assert with respect to any Plan, proof of claim or interest, or any other
matters, against the Parties to this Order.
14. Nothing contained in this Order shall be deemed an admission as to the
validity of any claim against the Debtors, including, without limitation, any
claim of any of the Owners or Toshiba against any of the Debtors.
15. The terms and conditions of this Order shall be immediately effective and
enforceable upon its entry.
16. The Court shall retain jurisdiction with respect to all matters arising
from or related to the implementation, enforcement or interpretation of this
Order.
8
17. In the event of any sale or other disposition of any assets of a Debtor
or any subsidiary of such Debtor, this Court shall have exclusive jurisdiction
over and adjudicate any dispute regarding the allocation of the sale proceeds
among the assets sold.
Dated: July 20, 2017
s/Michael E. Wiles
THE HONORABLE MICHAEL E. WILES
UNITED STATES BANKRUPTCY JUDGE
ACCEPTED AND AGREED BY:
DEBTORS WESTINGHOUSE ELECTRIC COMPANY, LLC, et al. (other than TNEH)
By: /s/ Gary Holtzer
Their: Attorney of record
DEBTOR TOSHIBA NUCLEAR ENERGY HOLDINGS (UK) LIMITED
By: /s/ Kyle Ortiz
Its: Attorney of record
TOSHIBA CORPORATION, TOSHIBA NUCLEAR ENERGY HOLDINGS (US) INC.
By: /s/ Van C. Durrer, II
GEORGIA POWER COMPANY
By: /s/ Gregory M. Gordon
9
OGLETHORPE POWER CORPORATION (AN ELECTRIC MEMBERSHIP CORPORATION)
MUNICIPAL ELECTRIC AUTHORITY OF GEORGIA
THE CITY OF DALTON, GEORGIA
10
Exhibit A
Toshiba Corporation
Toshiba Nuclear Energy Holdings (US) Inc.
Each of the other Toshiba Entities (as defined in this Order) that subsequently
files a notice in the above-captioned chapter 11 cases confirming such Toshiba
Entity’s consent to be bound by the provisions in this Order.
EXHIBIT D
Arbitration
(a) Arbitration Rules and Administering Body. Either Party may submit the
dispute to the International Chamber of Commerce (the "Administrators") for
arbitration under and in accordance with the Rules of Arbitration of the
International Chamber of Commerce as in force at the time such arbitration is
commenced (the "Rules"), for final and binding resolution, provided, however,
that to the extent the Rules conflict with the provisions of this Exhibit D, the
provisions of this Exhibit D shall prevail. The Party electing arbitration shall
so notify the other Party in accordance with the Rules.
(b) Appointment of Arbitrator. The dispute shall be settled by a panel
consisting of a three arbitrators. The Parties agree that one arbitrator shall
be appointed by each party within twenty (20) days of the date of a request to
initiate arbitration. The third presiding arbitrator shall be appointed by
agreement of the two Party-appointed arbitrators within fourteen (14) days of
the appointment of the second arbitrator or, if no such agreement can be
reached, by the Administrator.
(c) Location. The site of the arbitration shall be New York City. Each Party
waives any objection it may now or hereafter have to the above venue and
specifically waives any objection that any dispute resolved under this Exhibit D
was brought in any inconvenient forum and agrees not to plead or claim the same.
(d) Monetary Awards. Any monetary award of the arbitration panel shall be
made and payable in U.S. Dollars. Any such monetary award shall accrue interest
at the maximum rate allowed under the law of which governs this Agreement, from
the date of the notification of the dispute in accordance with Exhibit D to the
date when the award is paid in full.
(e) Arbitration Costs. Each Party shall pay for its own costs and expenses
(including attorneys' fees and expenses) incurred in order to participate in the
arbitration; provided, however, that the Parties shall share equally the fees
and expenses of the arbitration panel and any other general hearing expenses
from which both Parties benefit.
(f) Description of Award. The arbitral award rendered by the arbitration
panel shall be in writing and shall set forth in reasonable detail the facts of
the dispute and the reasons for the arbitration panel's decision.
(g) International Arbitration. It is the Parties' intention that any
arbitration pursuant to this Exhibit D shall be an "international arbitration,"
conducted under the Convention on the Recognition and Enforcement of Foreign
Arbitral Awards (New York, 10 June 1958) (the "New York Convention"). If at any
time the United States or Japan ceases to be a signatory to the New York
Convention, the Parties agree to execute an amendment to this Agreement which
shall ensure, to the fullest extent allowed by law, that the provisions and
intent of the New York Convention applicable to this Exhibit D are thereby
incorporated into this Exhibit D and become binding upon the Parties.
Pro Rata Shares
SCE&G
55%
Santee Cooper
45%
WEC Debtors
Westinghouse Electric Company LLC
Toshiba Nuclear Energy Holdings (UK) Limited
TSB Nuclear Energy Services Inc.
Westinghouse Technology Licensing Company LLC
Westinghouse International Technology LLC
Fauske and Associates LLC
PaR Nuclear Holding Co., Inc.
PaR Nuclear, Inc.
WEC Welding and Machining, LLC
WEC Equipment & Machining Solutions, LLC
CE Nuclear Power International, Inc.
WEC Engineering Services Inc.
Westinghouse Energy Systems LLC
Westinghouse Industry Products International Company LLC
WEC Carolina Energy Solutions, LLC
WEC Carolina Energy Solutions, Inc.
PCI Energy Services LLC
WEC Specialty LLC
WECTEC LLC
WECTEC Staffing Services LLC
WECTEC Global Project Services Inc.
Field Services, LLC
Stone & Webster International, Inc.
Stone & Webster Services LLC
Stone & Webster Asia Inc
Nuclear Technology Solutions LLC
Shaw Global Services, LLC
Shaw Nuclear Services, Inc.
Stone & Webster Construction Inc.
WECTEC Contractors Inc.
SCHEDULE 2.2
Payment Schedule
Payment Date
If any below date is a bank holiday in the United States or Japan, the next
business day shall be the payment date for such payment.
Monthly
Payment Amounts
(in millions)
October 1, 2017
$
150.00
November 1, 2017
32.50
December 1, 2017
32.50
January 1, 2018
32.50
February 1, 2018
32.50
March 1, 2018
32.50
April 1, 2018
23.50
May 1, 2018
23.50
June 1, 2018
23.50
July 1, 2018
23.50
August 1, 2018
23.50
September 1, 2018
23.50
October 1, 2018
23.50
November 1, 2018
23.50
December 1, 2018
23.50
January 1, 2019
23.50
February 1, 2019
23.50
March 1, 2019
37.50
April 1, 2019
37.50
May 1, 2019
37.50
June 1, 2019
37.50
July 1, 2019
37.50
August 1, 2019
37.50
September 1, 2019
37.50
October 1, 2019
37.50
November 1, 2019
37.50
December 1, 2019
37.50
January 1, 2020
37.50
February 1, 2020
37.50
March 1, 2020
37.50
April 1, 2020
37.50
May 1, 2020
37.50
June 1, 2020
37.50
July 1, 2020
37.50
August 1, 2020
37.50
September 1, 2020
37.50
October 1, 2020
37.50
November 1, 2020
37.50
December 1, 2020
37.50
January 1, 2021
37.50
February 1, 2021
37.50
March 1, 2021
37.50
April 1, 2021
37.50
May 1, 2021
37.50
June 1, 2021
37.50
July 1, 2021
37.50
August 1, 2021
37.50
September 1, 2021
37.50
October 1, 2021
37.50
November 1, 2021
37.50
December 1, 2021
37.50
January 1, 2022
37.50
February 1, 2022
37.50
March 1, 2022
37.50
April 1, 2022
37.50
May 1, 2022
37.50
June 1, 2022
37.50
July 1, 2022
37.50
August 1, 2022
37.50
September 1, 2022
22.0
SCHEDULE 4.1(b)
Toshiba Corporate Reorganization Transaction
Business Line
Type of Transaction
Energy Systems & Solutions Company:
Power and Industrial Systems Research and Development Center
Potential transfer of the Power and Industrial Systems Research and Development
Center to new subsidiary entity which succeeds to the ESS business, or inclusion
of the Power and Industrial Systems Research and Development Center in the split
transaction
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SCHEDULE 7.5
Specified Affiliates
Each of the following entities shall be deemed to be on Schedule 7.5 for
purposes of Section 7.5(c) and Section 7.5(d) of the Settlement Agreement. Each
of the following entities shall be deemed to be on Schedule 7.5 for purposes of
Section 7.5(e) to the extent such entity has performed any activities connected
in any way with the EPC Agreement and are also either performing Work as defined
in the EPC Agreement or are Subcontractors or Vendors as defined in the EPC
Agreement; provided that Owners will use commercially reasonable efforts to
extend such coverage to entities on Schedule 7.5 that are not performing Work.
1.
Toshiba Corporation
2.
Toshiba America, Inc.
3.
4.
Toshiba America Nuclear Energy Corporation
5.
Toshiba America Energy Systems Corporation
6.
Toshiba International Corporation
7.
Toshiba of Europe Limited
8.
Toshiba International (Europe) Ltd.
9.
Toshiba Plant Systems & Services Corporation
10.
TPSC US Corporation
11.
Toshiba Technical Services International Corporation
12.
Toshiba Electric Service Corporation
13.
Toshiba Electronic Devices & Storage Corporation
14.
Toshiba Solutions Corporation
15.
Toshiba Energy Systems & Solutions Corporation
Exhibit B-1
DISCLOSURE SCHEDULE
CASE NAME
C/A Number
DATE
Foreclosure Actions
SCE&G v. Structural Preservation
Systems, et al.
2017-CP-20-117 (Fairfield Cty.)
4/27/2017
Baker Concrete Construction, Inc.
v. SCE&G
2017-CP-20-151 (Fairfield Cty.)
5/22/2017
Structural Preservation Systems,
LLC v. SCE&G and SC Public
Service Authority and Baker
Concrete Construction, Inc.
2017-CP-20-190 (Fairfield Cty.)
6/20/2017
Specialty Maintenance &
Construction v. SCE&G
2017-CP-20-233 (Fairfield Cty.)
7/25/2017
Tindall Corporation v. SCE&G,
SC Public Service Authority, et al.
2017-CP-20-269 (Fairfield Cty.)
8/10/2017
Bagwell Fence Co, Inc. v.
SCE&G
2017-CP-20-272 (Fairfield Cty.)
8/16/2017
Electrical Equipment Company v.
SCE&G, SC Public Service Authority, et al.
2017-CP-20-273 (Fairfield Cty.)
DuBose National Energy
Services, Inc. v. SCE&G
2017-CP-20-274 (Fairfield Cty.)
Bridgewell Resources, Inc. v.
SCE&G and SC Public Service
Authority
2017-CP-10-278 (Fairfield Cty.)
8/17/2017
United Rentals (North America)
2017-CP-20-00284 (Fairfield
Cty.)
CASE NAME
C/A Number
DATE
Fluor Enterprises, Inc. v. SCE&G
and SC Public Service Authority,
et al.
2017-CP-20-288 (Fairfield Cty.)
8/21/2017
Intertech Security, LLC v.
SCE&G
2017-CP-20-00308 (Fairfield
Cty.)
S&ME Inc. v. SCE&G
2017-CP-20-313 (Fairfield Cty.)
General Supply & Services, Inc.
2017-CP-20-00314 (Fairfield Cty.)
Cannon Sline, Inc. v. SCE&G and
SC Public Service Authority
2017-CP-20-00309 (Fairfield
Cty.)
CB&I Laurens, Inc. and CBI
Services, LLC v. SCE&G and SC
Public Service Authority
2017-CP-20-00320 (Fairfield
Cty.)
Newport News Industrial Corp. v.
Authority
2017-CP-20-323
May Heavy Equipment, LLC v.
Authority
2017-CP-20-328
Gregory Electric Co., Inc. v.
Authority
2017-CP-20-331
Calvert Company, Inc. v. SCE&G
and SC Public Service Authority
2017-CP-20-333
Airtool Equipment Rental Inc.v. SCE&G and SC Public Service Authority
2017-CP-20-334 (Fairfield Cty.)
N.W. White & Co. v. SCE&G
2017-CP-20-335 (Fairfield Cty.)
Sargent & Lundy, LLC v. SCE&G, et al.
2017-CP-20-346
9/21/2017
Garney Companies, Inc. v.
SCE&G, et al.
2017-CP-20-347
Ed Waters and Sons Contracting Co., Inc. v. SCE&G, et al
2017-CP-20-349 (Fairfield Cty.)
9/22/17
HD Supply Construction Supply, Ltd. v. SCE&G, et al.
2017-CP-20-350 (Fairfield Cty.)
Harris Acquisition III, LLC v. SCE&G
2017-CP-20-359 (Fairfield Cty.)
9/26/2017
SteelFab, Inc. v. SCE&G
2017-CP-20-360 (Fairfield Cty.)
CASE NAME
C/A Number
DATE
Class Actions/ Individual Law Suits
Pennington v. Fluor Corp., Fluor
Enterprises, Inc., and SCANA
Corp
0:17-cv-2094 (U.S. Dist. Ct.)
8/8/2017
Hope Brown and Thomas Lott, on
behalf of themselves and all
others similarly situated, v. SC
Public Service Authority (also
known as Santee Cooper) and
SCANA Corporation,
2017-CP-40-05409 (Richland
Cty.)
Jessica S. Cook v. South Carolina
known as Santee Cooper),
SCE&G and Palmetto Electric
Cooperative, Inc.
2017-CP-25-348 (Hampton
Cty.)
Edwinda Goodman, et al. v.
SCANA Corporation and SCE&G
2017-CP-20-300 (Fairfield Cty.)
8/28/2017
Doza Rizen On Wheels, LLC v.
SCANA Corp.
2017-CV-2010100547 (Fairfield
Cty.)
Richard Lightsey v. SCE&G
2017-CP-25-335 (Hampton
Cty.)
8/14/2017
Crangle v. Marsh, et al.
2017-CP-40-5791 (Richland
Cty.)
Lebrian Cleckley, on behalf of
himself and all others similarly
situated, v. SCE&G
2017-CP-40-04833 (Richland
Cty.)
8/11/2017
Christine Delmater, Stephanie
Speicher on behalf of
themselves and all other
similarly situated
No. 3:17-cv-02563 (U.S. Dist.
Ct.)
Friends of the Earth and Sierra
Club v. SCE&G
No. 2017-207-E (Public Service
Commission)
6/22/2017
CASE NAME
C/A Number
DATE
In re Request of the S.C. Office
of Regulatory Staff for Relief
to SCE&G Rates Pursuant to
S.C. Code § 58-27-290
No. 2017-___-E (Public Service
Commission)
Exhibit B-2
DISCLOSURE SCHEDULE
CASE NAME
C/A Number
DATE
Foreclosure Actions
Specialty Maintenance &
Construction, Inc.
v.
South Carolina Public Service
Authority, a/k/a Santee Cooper
2017-CP-20-00298 (Fairfield
Cty)
EvapTech, Inc. v. SCE&G and SC
Public Service Authority
2017-CP-20-00332 (Fairfield
Cty.)
Airtool Equipment Rental, Inc. v.
SCE&G and South Carolina
Public Service Authority
2017-CP-20-00334 (Fairfield,
Cty.)
Border States Industries, Inc.
d/b/a Shealy Electrical
Wholesalers, Inc. v. SCE&G and
South Carolina Public Service
Authority
2017-CP-20-00342 (Fairfield
Cty.)
9/20/2017
CASE NAME
C/A Number
DATE
Chris Kolbe and Ruth Ann Keffer,
on behalf of themselves and all
others similarly situated
v.
South Carolina Public Service
Authority, an agency of the State
of South Carolina; W. Leighton
Lord, III, in his capacity as
chairman and director of the
South Carolina Public Service
Authority; William A. Finn, in his
capacity as director of the South
Carolina Public Service
Authority; Barry Wynn, in his
Carolina Public Service
Authority; Kristofer Clark, in his
Carolina Public Service
Authority; Merrell W. Floyd, in
his capacity as director of the
South Carolina Public Service
Authority; J. Calhoun Land, IV, in
South Carolina Public Service
Authority; Stephen H. Mudge, in
South Carolina Public Service
Authority; Peggy H. Pinnell, in
her capacity as director of the
South Carolina Public Service
Authority; Dan J. Ray, in his
Carolina Public Service
Authority; David F. Singleton, in
South Carolina Public Service
Authority; and Jack F. Wolfe, in
South Carolina Public Service
Authority
2017-CP-08-02009 (Berkeley Cty)
8/23/2017
EXHIBIT C
UNITED STATES BANKRUPTCY COURT
In re:
Case No. 17-10751 (MEW)
WESTINGHOUSE ELECTRIC
COMPANY, LLC, et al.,
Chapter 11
Debtors.
Jointly Administered
NOTICE OF TRANSFER OF
CLAIM PURSUANT TO RULE 3001(e)
PLEASE TAKE NOTICE that [●] of or an undivided [ ] ownership interest in the
claim set forth below
(the “Transferred Claim”), of [ ] (“Assignor”) filed as an original or amended
Proof of Claim against
the Debtor(s):
Proof of Claim Amount Proof of Claim No.
[●] [●]
has been transferred and assigned to Citibank, N.A. (“Assignee”). The signature
of Assignor on this
document is evidence of the transfer of [●] of or an undivided [ ] ownership
interest in the claim and all
rights thereto.
Assignor hereby waives any notice or hearing requirements imposed by Rule 3001
of the Bankruptcy
Rules, and stipulates that an order may be entered recognizing this assignment
as an unconditional
assignment and the Assignee herein as the valid owner of the Transferred Claim.
You are hereby
requested to make all future payments and distributions, and to give all notices
and other
communications, in respect of the Transferred Claim to the Assignee.
ASSIGNEE: CITIBANK, N.A. ASSIGNOR: [●]
Address: Address:
Signature: Signature:
Name: Name:
Title: Title:
Date: Date:
SCHEDULE 1
PURCHASE PRICE TERMS
AGGREGATE PURCHASE PRICE PAID TO OWNERS
Immediately upon settlement of this transaction, payment of the Purchase Price
shall be made as follows:
Purchased Amount: $2,018,000,000.00
multiplied by Purchase Rate: 91.5300%
Purchase Price: $1,847,075,400.00
Pro Rata Share:
South Carolina Electric & Gas Company (55%): $1,015,891,470.00
The South Carolina Public Service Authority (45%): $831,183,930.00
Total: $1,847,075,400.00
SCHEDULE 2
WIRE INSTRUCTIONS
SOUTH CAROLINA ELECTRIC & GAS COMPANY WIRE INSTRUCTIONS:
Financial Institution: Wells Fargo Bank, NA
Address: 420 Montgomery Street
Account Name: SCE&G Master Account
Routing Number / ABA: 121000248
Account Number: #############
Bank Contact: #############
SCE&G Contact: #############
SOUTH CAROLINA PUBLIC SERVICE AUTHORITY WIRE INSTRUCTIONS:
Financial Institution: Wells Fargo Bank, N.A.
ABA: 121000248
Credit Account: #############
Tax ID: #############
Santee Cooper Contact: #############
Santee Cooper Fax: #############
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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):July 19, 2016 INTERACTIVE BROKERS GROUP, INC. (Exact Name of Registrant as Specified in its Charter) Delaware 001-33440 30-0390693 (State or Other Jurisdiction of Incorporation) (Commission File Number) (I.R.S. Employer Identification Number) One Pickwick Plaza, Greenwich, CT 06830 (Address of Principal Executive Offices) (Zip Code) (203) 618-5800 (Registrant’s Telephone Number, Including Area Code) Not Applicable (Former Name or Former Address, if Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02. Results of Operations and Financial Condition. On July 19, 2016, the Registrant issued a press release reporting its financial results for the second quarter ended June 30, 2016.A copy of the press release is furnished as Exhibit 99.1 to this report and incorporated herein by reference. All of the information furnished in this report (including Exhibit 99.1 hereto) shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and unless expressly set forth by specific reference in such filings, shall not be incorporated by reference in any filing under the Securities Act of 1933, as amended, whether made before or after the date hereof and regardless of any general incorporation language in such filings. Item 8.02. Other Events. On July 19, 2016, Interactive Brokers Group, Inc. (the “Company”) declared a quarterly cash dividend of $0.10 per share on the Company’s common stock.The Company’s Board of Directors has declared that the dividend will be paid on September 14,2016 to shareholders of record as of September 1, 2016. Item 9.01. Financial Statements and Exhibits. (d) Exhibits. Press Release dated July 19, 2016. 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. Dated: July 19, 2016 INTERACTIVE BROKERS GROUP, INC. By: /s/ Paul J. Brody Name: Paul J. Brody Title: Chief Financial Officer, Treasurer and Secretary EXHIBIT INDEX Press Release dated July 19, 2016.
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Exhibit 32.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350 In connection with the Quarterly Report on Form 10-Q of UTG, Inc. (the “Company”) for the period ended September 30, 2011, as filed with the Securities and Exchange Commission on the date hereof (the “Report”) I, Jesse T. Correll, Chairman of the Board and Chief Executive Officer of the Company, certify pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge: The Report fully complies with the requirements of section 13(a) 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 Date: November 11, 2011 By: /s/ Jesse T. Correll Jesse T. Correll Chairman of the Board and Chief Executive Officer
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Title: My late MIL had an very old insurance policy and named her estranged sister as the beneficiary
Question:We are in GA.
My mother in law pasted away 2 months ago after battling an extended illness. As far as we knew at the time, she had no insurance and we ending up paying for her final expenses out of pocket. My husband is her only child and has no other living relatives other than our children and her sister whom she has not spoken with in over 10 years.
He came across some old insurance policy information on a piece of mail that was $10,000. He contacted the insurance company and they were unable to find a beneficiary listed due to the policy being inactive for such an extended period of time(30 + years) for over a week and they had to go into an old storage room filing cabinet to locate the original policy.
He felt confident that he would be the beneficiary since he was her only child but was slightly concerned because he was only an infant when the policy was purchased. But not overly concerned.
Well, it turned out that her sister was listed as the beneficiary. He is confident that his mother would have wanted either he or his children be the beneficiary and doesn’t understand how she never changed it or even mentioned it before she passed. He’s not sure that her sister will do the ethical thing and turn the money over to him.
Is there any legal recourse that he can navigate? She passed away in our home and her estate is more of a financial burden that any type of monetary gain at this point. When he found the policy we were both thinking about how much this would help us through so many things and now it seems the burden is even more and leaving a bitter taste in our mouths to boot.
Side note: they were estranged due to an inheritance dispute. She (my MIL)basically sacrificed her adult life to care for her mother after her mother had a stroke. She moved into her mother’s house and spend 12 years being the sole caretaker of her mother who was essentially complete catatonic. She was single with a young boy and never dated or remarried and completely committed to caring for her mother. After her mother’s death her sister wanted the house my mil had been living in for the last 12 years to be sold and the money be split with her even though she had exactly zero hand in helping my mil care for her mother for all of those years. They weren’t close before because her sister basically peaced out after their mother’s stroke.
Answer #1: Nothing you can do to force the insurance company to give your husband the money.
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Exhibit 10.2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT made as of April 9, 2007 (“Effective Date”) by and
between BioMarin Pharmaceutical Inc., a Delaware corporation (the “Company”) and
Emil D. Kakkis, M.D., Ph.D. (“Employee”).
WHEREAS, Company and Employee wish to amend and restate the current terms of
Employee’s terms of employment by the Company.
NOW THEREFORE, for good and valuable consideration (the receipt and adequacy of
which are hereby acknowledged and agreed) the parties hereby covenant and agree
as follows:
1. Title; Duties. The Company hereby employs the Employee as Chief Medical
Officer to perform such duties consistent with his title and position as may be
determined and assigned to him by the Company’s Chief Executive Officer (“CEO”).
The Employee shall be based in Novato, California, provided that Employee
acknowledges that his job duties may require significant travel.
2. Time and Effort. The Employee agrees to devote substantially all of his
professional employment time and effort to the performance of his duties as
Chief Medical Officer for the Company and to perform such other duties
consistent with his title and position as are reasonably assigned him from time
to time by the CEO.
3. Term. The Company agrees to employ the Employee in accordance with the terms
of this Agreement, which terms shall be effective commencing on the Effective
Date and continuing thereafter until terminated pursuant to Section 6 or 7
hereof (the “Term” of this Agreement). A review of the Employee’s total
compensation will be made by the Board of Directors of the Company (“Board”) at
least annually in or about December of each year based on the overall
performance of the Company and the Company’s assessment of the Employee’s
contributions to the Company’s performance, although the Board shall not be
under any obligation to make adjustments other than pursuant to its discretion.
4. Compensation; Benefits.
(a) Base Salary. For all the services to be rendered by the Employee in any
capacity hereunder, including services as an executive officer, the Company
agrees to pay the Employee a base salary (“Base Salary”) of not less than three
hundred fifteen thousand U.S. Dollars ($315,000) per annum. Base Salary shall be
payable in approximately equal installments in accordance with the Company’s
customary payroll practices. The foregoing annual compensation amount may be,
from time to time, adjusted above the Base Salary specified above by action of
the Board or appropriate Committee of the Board. In the event the Base Salary is
adjusted upward by the Board, such adjusted amount will be deemed to be the new
Base Salary.
(b) Bonus. The Employee shall be entitled to participate in the Company’s
generally applicable employee bonus program, with such targets and metrics as
may be approved by the Board from time to time. Additionally, on the successful
filing of any Investigational New Drug Application for any molecule intended for
the treatment of a genetic disorder, the Company will pay Employee an additional
bonus of $50,000. On the approval of any New Drug Application by the FDA for any
molecule for the treatment of a genetic disorder, Company will pay Employee a
bonus of $100,000. Only one IND filing and one NDA approval bonus will be
payable for each molecule.
(c) Benefits Plans. The Employee also shall participate fully in all insurance,
pension, retirement, deferred compensation, stock and stock option, stock
purchase or similar compensation and benefit plans and programs pursuant to the
terms of such plans or programs.
(d) Vacation. The Employee shall be entitled to annual paid vacation time of
four (4) weeks, accruing ratably over the course of each year of employment, to
be taken at such time or times as the Employee may select, consistent with his
obligations hereunder. Vacation days not taken during an applicable fiscal year
may be carried over to the extent permitted under the Company’s vacation policy
to the following fiscal year pursuant such policy.
(e) Expenses. The Company shall reimburse the Employee for all reasonable and
customary travel, business and entertainment expenses incurred in connection
with the Employee’s performance of his services hereunder in accordance with the
policies and procedures established by the Company.
(f) Withholding. The amounts payable pursuant to this Agreement shall be subject
to withholding for appropriate taxes, assessments or withholdings as required by
applicable law.
5. Other Plans. The Company and the Employee hereby agree that nothing contained
herein is intended to or shall be deemed to affect any of the Employee’s rights
as a participant under any retirement, stock option, stock purchase, pension,
insurance, profit-sharing or similar plans of the Company now or hereafter
declared to be in effect. The Company recognizes that the Employee is induced to
execute this Agreement and to accept compensation at the rate set forth herein
in part because he expects to be a participant under such plans as are, from
time to time, in effect for the Company’s executives and/or employees in
general.
6. Termination for Cause; Resignation Without Good Reason.
(a) Termination for Cause. This Agreement may be terminated for Cause (as
defined below) by the Company before the expiration of the Term provided for
herein if, during the Term of this Agreement, the Employee (i) materially
violates the provisions of the Non-Competition Agreement or the Confidentiality
Agreements between the Company and Employee, (ii) is convicted of, or pleads
nolo contendere to, any crime involving misuse or misappropriation of money or
other property of the Company or any felony; (iii) exhibits repeated willful or
wanton failure or refusal to perform his duties in furtherance of the Company’s
business interest or in accordance with this Agreement, which failure or refusal
is not remedied by the Employee within thirty (30) days after notice from the
Company; (iv) commits an intentional tort against the Company, which materially
adversely affects the business of the Company; (v) commits any flagrant act of
dishonesty or disloyalty or any act involving gross moral turpitude, which
materially adversely affects the business of the Company; or (vi) exhibits
immoderate use of alcohol or drugs which, in the opinion of an independent
physician selected by the Company, impairs the Employee’s ability to perform his
duties hereunder (all of the foregoing clauses (i) through (vi) constituting
reasons for termination for “Cause”), provided that unsatisfactory business
performance of the Company, or mere inefficiency, or good faith errors in
judgment or discretion by the Employee shall not constitute grounds for
termination for Cause hereunder. In the event of a termination for Cause, the
Company may by written notice immediately terminate his employment and, in that
event, the Company shall be obligated only to pay the Employee the compensation
due him up to the date of termination, all accrued, vested or earned benefits
under any applicable benefit plan and any other compensation to which the
Employee is entitled under Section 4 up to and ending on the date of the
Employee’s termination.
(b) Resignation Without Good Reason. The benefits and compensation set forth in
Section 6(a) are the only compensation and benefits that the Employee will
receive in the event that Employee resigns without Good Reason (as defined
below). If the Employee resigns without Good Reason prior to a Change in Control
(as defined in the Company’s Change of Control Policy), the Employee agrees to
give the Company at least four (4) weeks’ prior notice and in exchange the
entitled to pursuant to Section 4 for such four (4)-week period as if Employee
had not resigned without Good Reason. Any resignation of the Employee hereunder,
whether for Good Reason or otherwise, shall be deemed to include a resignation
from all positions and in all capacities with the Company and its subsidiaries,
including, without limitation, membership on the boards of directors (and
committees thereof) of subsidiaries of the Company, and the Employee shall
execute such documentation as requested by the Company with respect thereto.
7. Termination Without Cause; Resignation For Good Reason; Disability; Death.
(a) Termination Without Cause; Resignation For Good Reason. The Company may
terminate the Employee’s employment at any time for any reason or no reason,
upon written notice to the Employee. If (i) the Company terminates the
Employee’s employment without Cause at any time prior to the end of the Term of
the Agreement, or (ii) the Employee provides the Company with written notice (a
“Notice of Termination”) of his resignation for Good Reason (as defined below)
at least four (4) weeks prior to the date of termination, or (iii) there is a
substantial change in the financial condition of the Company as evidenced only
by the Company filing a petition for reorganization under any bankruptcy,
insolvency, reorganization or similar law or making an assignment for the
benefit of creditors, then the Employee shall receive the Termination
Compensation (as defined below).
(b) Resignation for Good Reason. A resignation for any one or more of the
following events, without the written consent of Employee or his approval of
such event in his capacity as Chief Medical Officer, shall be referred to herein
as “Good Reason”:
(i) a change in the Employee’s title or a substantial reduction in the
Employee’s duties, status, in either case by reference to the position held by
the Employee on the Effective Date;
(ii) a relocation of the Employee’s assigned office more than fifty (50) miles
from its then-current location;
(iii) any decrease in the Employee’s Base Salary or a material decrease in his
Company benefits in the aggregate, other than as part of a reduction (not
exceeding twenty-five percent) that equitably applies to all of the Company’s
executive officers;
(iv) a failure by any successor-in-interest to assume the Company’s obligations
under this Agreement; or
(v) a material breach of this Agreement by the Company;
provided, however, that an event that is or would constitute grounds for a
resignation for Good Reason shall not constitute such grounds for a resignation
for Good Reason if: (1) the Employee does not send a Notice of Termination to
the Company within forty-five (45) days after the event occurs; or (2) the
Company reverses the action or cures the default that constitutes Good Reason
within twenty (20) days after the delivery of the Notice of Termination.
(c) Termination Compensation. For purposes of this Agreement, the term
“Termination Compensation” shall mean: (i) one hundred percent (100%) of
Employee’s then current annual base salary plus (ii) one hundred percent
(100%) of the greater of the actual cash bonus paid to employee attributable to
the prior year’s service or Employee’s target cash bonus for the current year,
all of which shall be payable in a lump sum within 2 weeks after separation of
employment, conditioned on Employee executing the Company’s standard form
severance and release agreement, and shall be subject to customary withholding
and other applicable payroll processes.
(d) Employee’s Disability. The Company shall be entitled, by providing written
notice to the Employee, to terminate the Employee’s employment under this
Agreement if the Employee shall become permanently disabled such that he is
unable to carry out his duties hereunder for four (4) consecutive calendar
months or for a period aggregating one hundred twenty (120) days in any period
of twelve (12) consecutive calendar months. If the Employee is eligible to
receive benefits under the Company’s Long-Term Disability Plan, then the Company
will pay the Employee additional compensation so that the total received by the
Employee (after taking into consideration the amounts payable to the Employee
under the Long-Term Disability Plan) equals the Termination Compensation. If the
Employee is not eligible to receive benefits under such plan, then he will upon
termination of his employment for permanent disability be entitled to receive
the full Termination Compensation. Any delay or forbearance by the Company in
exercising any such right to terminate this Agreement shall not constitute a
waiver thereof.
(e) Employee’s Death. The Employee’s employment will immediately terminate upon
the death of the Employee. The Employee’s surviving designated beneficiary, or,
if none, the Employee’s estate, shall be entitled to receive the compensation
due the Employee up to the date of the Employee’s death, all accrued, vested or
earned benefits under any applicable benefit plan and any other compensation to
which the Employee is entitled under this Agreement up to and ending on the date
of the Employee’s death.
8. Choice of Law; Venue. This Agreement shall be construed and performed in
accordance to the laws (but not the conflicts of laws) of the State of
California. Venue of any proceeding shall be exclusively in the County of Marin
in the foregoing state, and both parties consent and agree to such exclusive
venue.
9. Arbitration.
(a) The Employee and the Company understand that litigation is a costly and
time-consuming process and agree that they will exclusively resolve any disputes
between them by binding arbitration. The Employee and the Company understand
that this agreement to arbitrate covers all disputes that the Company may have
against the Employee, or that the Employee might have against the Company or its
related entities or employees, including those that relate to the Employee’s
employment or termination of employment (for example claims of unlawful
discrimination or harassment).
(b) The arbitration will be conducted by an impartial arbitrator experienced in
employment law (selected from either the JAMS or the American Arbitration
Association (at the Company’s election) panel of arbitrators) in accordance with
the applicable entity’s then current employment arbitration rules (except as
otherwise provided in this agreement or unless the parties agree to use the
then-current commercial arbitration rules). The Employee and the Company waive
the right to institute a court action, except for requests for injunctive relief
pending arbitration, and understand that they are giving up their right to a
jury trial. The parties shall be entitled to reasonable discovery. The
arbitrator’s award and opinion shall be in writing and in the form typically
rendered in labor and employment arbitrations.
(c) The Company will pay any filing fee and the fees and costs of the
arbitrator, unless the Employee initiates the claim, in which case the Employee
only will be required to contribute an amount equal to the filing fee for a
claim initiated in a court of general jurisdiction in the State of California.
The Employee and the Company each shall be responsible for their own
attorneys’ fees and costs; provided, however, the arbitrator may award
attorneys’ fees to the prevailing party, if permitted by applicable law. This
arbitration agreement does not prohibit either the Employee or the Company from
filing a claim with an administrative agency (e.g., the EEOC), nor does it apply
to claims for workers’ compensation or unemployment benefits, or claims for
benefits under an employee welfare or pension plan that specifies a different
dispute resolution procedure. The arbitration shall take place in Marin County,
California unless the Employee and the Company agree otherwise.
10. Notices. All notices provided for or permitted to be given pursuant to this
Agreement must be in writing. All notices shall be given to the other party by
personal delivery, overnight courier (with receipt signature), or facsimile
transmission (with “answerback” confirmation of transmission), to the Company or
the Employee at the Company’s principal executive offices if to the Company or
to the residential address of the Employee as contained in Employee’s personnel
file if to Employee. Each such notice shall be deemed effective upon the date of
actual receipt in the case of personal delivery, receipt signature in the case
of overnight courier, or confirmation of transmission in the case of facsimile.
11. Entire Agreement; Amendment. This Agreement contains the sole and entire
agreement of the parties and supersedes all prior agreements and understandings
between the Employee and the Company and cannot be modified or changed by any
oral or verbal promise or statement by whomsoever made; nor shall any written
modification of it be binding upon the Company until such written modification
shall have been approved in writing by the CEO or the Board.
12. Waiver; Consent. In the event any term or condition contained in this
Agreement should be breached by any party and thereafter waived or consented to
by the other party, which waiver or consent must be effectuated by a written
instrument signed by the party against whom any waiver or consent is sought
(and, in the case of the Company, approved by the CEO or the Board), such waiver
or consent shall be limited to the particular breach so waived or consented to
and shall not be deemed to waive or consent to any other breach occurring prior
or subsequent to the breach so waived or consented to.
13. Severability. If any provisions of this Agreement or the application thereof
to any person or circumstances shall be invalid or unenforceable to any extent,
the remainder of this Agreement and the application of such provisions to other
persons or circumstances shall not be affected thereby and shall be enforced to
the extent permitted by law.
14. Survival. The provisions hereof which are to be performed or observed after
the termination of this Agreement, and the representations, covenants and
agreements of the parties contained herein with respect thereto shall survive
the termination of this Agreement and be effective according to their terms.
15. Successors. All of the terms and provisions of this Agreement shall be
binding upon and shall inure to the benefit of and be enforceable by and against
the parties to this Agreement and the respective heirs, executors, and
successors in interest; provided, however, that the duties of the Employee
hereunder are personal in nature and may not be delegated without a written
16. Assignment. This Agreement and the rights and benefits contained herein may
not be assigned by either party hereto, except by the Company in connection with
a merger, consolidation, share exchange, business combination or other
reorganization of the Company or a sale of all or substantially all of the
Company’s business or assets.
17. Certain Representations, Covenants and Acknowledgements.
(a) The Employee represents that he is not subject to any employment,
confidentiality, or other agreement or restriction that would prevent him from
fully satisfying his duties under this Agreement or that would be violated if he
did so.
(b) Without the Company’s prior written approval, the Employee agrees not to:
(i) disclose proprietary information belonging to a former employer or other
entity without its written permission; (ii) contact any former employer’s
customers or employees to solicit their business or employment on behalf of the
Company; or (iii) distribute announcements about or otherwise publicize his
(c) The Employee acknowledges that he is free to seek advice from independent
counsel with respect to this Agreement and the Employee has obtained such
advice. The Employee is not relying on any representation or advice from the
Company or any of its officers, directors, attorneys or other representatives
regarding this Agreement, its content or effect.
18. Construction. The masculine pronoun, wherever used herein, shall be
construed to include the feminine and the neuter, where appropriate. The
singular form, wherever used herein, shall be construed to include the plural,
where appropriate.
19. Drafting. The parties represent and acknowledge that they both have
participated in the preparation and drafting of this Agreement and have each
given their approval to all of the language contained in this Agreement, and it
is expressly agreed and acknowledged that if either party later claims that
there is an ambiguity in the language of this Agreement, there shall be no
presumption that such ambiguity be construed for or against either party hereto.
20. Counterparts. This Agreement may be executed and delivered (including by
facsimile transmission) in one or more counterparts, each of which shall be
instrument.
IN WITNESS WHEREOF, the parties to this Agreement have executed this Agreement
BIOMARIN PHARMACEUTICAL INC.
By:
/s/ JEAN-JACQUES BIENAIMÉ
Name: Jean-Jacques Bienaimé Its: Chief Executive Officer
EMPLOYEE
By:
/s/ EMIL KAKKIS
Emil D. Kakkis, M.D., Ph.D.
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Exhibit 10.1 Press Release January 11, 2010 Patient Portal Technologies, Inc. Finalizes Sale of Equipment Business Unit Baldwinsville, NY, January 11, 2010 - Patient Portal Technologies, Inc. (OTCBB: PPRG) announced today that closed January 8th on the sale of its hospital equipment business unit to a former executive of the Company, Tom Brunskole, for $820,000. The transaction included the sale of the name TB&A as well as certain inventory and hospital equipment purchase contracts. The sale price included cash as well as the assumption of certain debt and obligations of the Company. The sale is expected to have an ongoing favorable impact on the Company’s future operating profits. According to Kevin Kelly, CEO, “The healthcare industry is in the midst of dramatic change that is redefining the way hospital facilities impact patient satisfaction. This is an ideal time to complete this transaction as we aggressively pursue our Total Satisfaction platform which includes the expansion of our core high impact and high margin services. This transaction allows us to free up additional resources to support our goal of being the number one provider of patient centric services in healthcare.” As part of the transaction both Companies will continue share space and facilities in Amherst New York. Patient Portal also executed a joint marketing services agreement which will allow the Company to continue to provide hospital television equipment to its customers under favorable market terms and it is retaining its technical support capabilities. About Patient Portal Patient Portal is the nation’s first total satisfaction company, committed to helping our hospital partners achieve the highest patient satisfaction scores in healthcare. We accomplish this by providing a broad array of patient-centric, non-medical services which are delivered before, during and after a hospital stay.The Company utilizes its proprietary technology and employee staffed 24/7 Call Center to leverage a hospital’s existing infrastructure to connect patients and their families to a whole suite of services that focus on education, safety, entertainment, comfort and enhanced communication. The end result is greater and total satisfaction: a more informed and pleasant experience for the patient and their families, a more productive and satisfied medical staff and a more marketable and profitable healthcare facility. Patient Portal currently services over 60 hospitals nationwide, and actively engages with patients over three million times a year. To view the website and obtain Company information go to http://www.patientportal.com. Patient Portal Investor Relations Contact: Vanessa Loysen Patient
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EXHIBIT 10.18D
FOURTH AMENDMENT
TO
EMPLOYMENT AGREEMENT
This amendment (the “Fourth Amendment”) is made the 4th day of March, 2011,
between UIL Holdings Corporation, a Connecticut Corporation (the “Corporation”)
and Anthony J. Vallillo (the “Executive”).
WHEREAS, the United Illuminating Company previously entered into an amended and
restated employment Agreement with the Executive dated as of January 26, 2004, a
First Amendment thereto, dated November 18, 2004, a second Amendment thereto,
dated November 28, 2005, and a Third Amendment thereto, dated August 4, 2008
(collectively, the “Employment Agreement”); and
WHEREAS, the Executive is now an employee of UIL Holdings Corporation, and, in
light of changes to the Executive’s employment, the Corporation and the
Executive wish to amend the Agreement by this Fourth Amendment,
NOW THEREFORE, the following Sections of the Agreement are hereby amended as
follows:
1. Section (4)(g)(i) of the Agreement is hereby revised in its
entirety to provide as follows:
(g) Supplemental Executive Retirement Benefit.
(i) Benefit Formula. Upon the Executive’s Separation from Service (as defined
for purposes of The Supplemental Executive Retirement Plan of the United
Illuminating Company) other than for Cause (as defined in Section 5(b) of this
Agreement), a supplemental retirement benefit shall be payable in accordance
with the provisions of this Section (4)(g). The annual supplemental retirement
benefit, expressed in the form of a single life annuity beginning at the
Executive’s Normal Retirement Date as defined in The United Illuminating Company
Pension Plan (the “UI Pension Plan”), shall be the excess, if any, of (A) less
(B), where (A) is 2.0% (.02) of the Executive’s highest three-year average Total
Compensation times his number of years of service as an employee of the Company
(including any deemed service credited under this Agreement or the CIC Plan II)
at termination (not to exceed thirty years), and (B) is the benefit payable
under the UI Pension Plan, where (A) and (B) are both expressed as a single life
annuity commencing as of the Executive’s Normal Retirement Date. For purposes
of this Section, Total Compensation shall mean the Executive’s Base Salary, and
any amount paid to the Executive as short-term incentive compensation pursuant
to the Company’s annual executive incentive compensation plan. With the
exception of the applicable interest rate used for the purpose of converting the
value of the benefit to a lump sum form of payment and the lump sum methodology
noted below (i.e., the present value of an immediate annuity), the benefits
payable under this Section (4)(g) shall be calculated using the same definitions
of actuarial equivalence, and the same early retirement
reduction factors that are specified in the UI Pension Plan in the event that
the Executive becomes entitled to payment of the supplemental retirement benefit
prior to what would have been his Normal Retirement Date, except that, in the
event that the Executive is credited with deemed years of service, the
reductions shall be based on the Executive’s service deemed as an employee of
the Company. With respect to a Separation from Service on or after January 31,
2011, for purposes of converting the value of the benefit to a lump sum form of
payment the applicable interest rate shall be the applicable interest rate as of
the date of the Executive’s Separation from Service or the applicable interest
rate as of the date that is twelve months prior to the date of the Executive’s
Separation from Service, whichever results in a larger present value for the
Executive.
2. Section (9) of the Agreement is hereby revised in its entirety to
provide as follows:
(9) TAX SAVINGS PROVISION
If any portion of the payments which the Executive has the right to receive from
the Company, or any affiliated entity, hereunder would constitute "excess
parachute payments" (as defined in Section 280G of the Internal Revenue Code,
and not governed by the terms defined in this Agreement) subject to the excise
tax imposed by Section 4999 of the Internal Revenue Code, such excess parachute
payments shall be reduced to the largest amount that will result in no portion
of such excess parachute payments being subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code.
All of the other terms and conditions of the Employment Agreement shall remain
THE UNITED ILLUMINATING COMPANY
Attest:
/s/ Mary Ann Torgerson
By
/s/ James P.
Torgerson
James P. Torgerson
UIL Holdings Corporation, President and
Chief Executive Officer
The United Illuminating Company,
Chief Executive Officer
/s/ Anthony J. Vallillo
Anthony J. Vallillo
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Exhibit 10.2
BLUEROCK RESIDENTIAL GROWTH REIT, INC.
FOURTH AMENDED AND RESTATED 2014 EQUITY INCENTIVE PLAN
FOR ENTITIES
Effective September 8, 2020
Article I
DEFINITIONS
1.01.Affiliate
“Affiliate” means, with respect to any entity, any other entity, whether now or
hereafter existing, which controls, is controlled by, or is under common control
with, the first entity (including, but not limited to, joint ventures, limited
liability companies and partnerships). For this purpose, the term “control”
common control with”) shall mean ownership, directly or indirectly, of 50% or
more of the total combined voting power of all classes of voting securities
issued by such entity, or the possession, directly or indirectly, of the power
to direct the management and policies of such entity, by contract or otherwise.
1.02.Agreement
“Agreement” means a written agreement (including any amendment or supplement
thereto) between the Company and a Participant specifying the terms and
conditions of a Stock Award, an award of Performance Units, an Incentive Award,
an Option, SAR or Other Equity-Based Award (including an LTIP Unit) granted to
such Participant.
1.03.Board
1.04.Change in Control
“Change in Control” means and includes each of the following:
(a) The acquisition, either directly or indirectly, by any individual,
entity or group (within the meaning of Sections 13(d) and 14(d)(2) of the
Exchange Act) of beneficial ownership (within the meaning of Rule 13d-3 under
the Exchange Act), of more than 50% of either (i) the then outstanding shares of
Common Stock, taking into account as outstanding for this purpose such shares of
Common Stock issuable upon the exercise of options or warrants, the conversion
of convertible shares or debt, and the exercise of any similar right to acquire
such Common Stock (the “Outstanding Company Common Stock”) or (ii) the combined
voting power of the then outstanding voting securities of the Company entitled
Securities”); provided, however, that the following acquisitions shall not
constitute a Change in Control (i) any acquisition by the Company or any of its
subsidiaries, (ii) any acquisition by a trustee or other fiduciary holding the
Company’s securities under an employee benefit plan sponsored or maintained by
the Company or any of its Affiliates, (iii) any acquisition by an underwriter,
initial purchaser or placement agent temporarily holding the Company’s
securities pursuant to an offering of such securities or (iv) any acquisition by
an entity owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of the then Outstanding
Company Common Stock.
(b) Individuals who constitute Incumbent Directors at the beginning of
any consecutive twelve month period, together with any new Incumbent Directors
who become members of the Board during such twelve month period, cease to be a
majority of the Board at the end of such twelve month period.
(c) The consummation of a reorganization, merger, consolidation,
statutory share exchange or similar form of corporate transaction involving the
Company that requires the approval of the Company’s stockholders, whether for
such transaction or the issuance of securities in the transaction (a “Business
Combination”), in each case, unless following such Business Combination:
(i) the individuals and entities who were the beneficial owners of the
Outstanding Company Voting Securities immediately prior to such Business
Combination, beneficially own, directly or indirectly, more than 50% of the
generally in the election of members of the board of directors (or the analogous
governing body) of the entity resulting from such Business Combination (the
“Successor Entity”) (or, if applicable, the ultimate parent entity that directly
or indirectly has beneficial ownership of sufficient voting securities to elect
a majority of the members of the board of directors (or the analogous governing
body) of the Successor Entity (the “Parent Company”));
(ii) no Person (other than any employee benefit plan sponsored or
maintained by the Successor Entity or the Parent Company) beneficially owns
(within the meaning of Rule 13d-3 under the Exchange Act), directly or
indirectly, more than 50% of the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of members of the
board of directors (or the analogous governing body) of the Parent Company (or,
if there is no Parent Company, the Successor Entity); and
analogous governing body) of the Parent Company (or, if there is no Parent
Company, the Successor Entity) following the consummation of the Business
Combination were Incumbent Directors at the time of the Board’s approval of the
execution of the initial agreement providing for such Business Combination;
(d) The direct or indirect sale, transfer, conveyance or other
of the Company and its subsidiaries, taken as a whole, to any Person that is not
a subsidiary of the Company.
In addition, if a Change in Control (as defined in clauses (a) through (d)
above) constitutes a payment event with respect to any Option, SAR, Stock Award,
Performance Unit, Incentive Award or Other Equity-Based Award that provides for
the deferral of compensation and is subject to Section 409A of the Code, no
payment will be made under that award on account of a Change in Control unless
the event described in subsection (a), (b), (c) or (d) above, as applicable,
constitutes a “change in control event” as defined in Treasury Regulation
Section 1.409A-3(i)(5).
-2-
1.05.Code
“Code” means the Internal Revenue Code of 1986, and any amendments thereto.
1.06.Committee
“Committee” means the Compensation Committee of the Board. Unless otherwise
determined by the Board, the Committee shall consist solely of two or more
non-employee members of the Board, each of whom is intended to qualify as a
“non-employee director” as defined by Rule 16b-3 of the Exchange Act or any
successor rule, an “outside director” for purposes of Section 162(m) of the Code
(if awards under this Plan are subject to the deduction limitation of Section
162(m) of the Code) and an “independent director” under the rules of any
exchange or automated quotation system on which the Common Stock is listed,
traded or quoted; provided, however, that any action taken by the Committee
shall be valid and effective, whether or not the members of the Committee at the
time of such action are later determined not to have satisfied the foregoing
requirements or otherwise provided in any charter of the Committee. If there is
no Compensation Committee, then “Committee” means the Board.
1.07.Common Stock
“Common Stock” means the Class A common stock of the Company.
1.08.Company
“Company” means Bluerock Residential Growth REIT, Inc., a Maryland corporation.
1.09.Control Change Date
“Control Change Date” means the date on which a Change in Control occurs. If a
Change in Control occurs on account of a series of transactions, the “Control
Change Date” is the date of the last of such transactions on which the Change in
Control occurs.
1.10.Corresponding SAR
“Corresponding SAR” means an SAR that is granted in relation to a particular
Option and that can be exercised only upon the surrender to the Company,
unexercised, of that portion of the Option to which the SAR relates.
1.11.Dividend Equivalent Right
“Dividend Equivalent Right” means the right, subject to the terms and conditions
prescribed by the Committee, of a Participant to receive (or have credited)
cash, securities or other property in amounts equivalent to the cash, securities
or other property dividends declared on shares of Common Stock with respect to
specified Performance Units, an Other Equity-Based Award or Incentive Award of
units denominated in shares of Common Stock or other Company securities, as
determined by the Committee, in its sole discretion. The Committee shall provide
that Dividend Equivalent Rights payable with respect to any such award that does
not become nonforfeitable solely on the basis of continued service shall be
accumulated and distributed only when, and to the extent that, the underlying
award is vested or earned. The Committee may provide that Dividend Equivalent
Rights (if any) shall be deemed to have been reinvested in additional shares of
Common Stock or otherwise reinvested.
-3-
1.12.Effective Date
“Effective Date” means May 28, 2015.
1.13.Exchange Act
1.14.Fair Market Value
“Fair Market Value” means, on any given date, the reported “closing” price of a
share of Common Stock on the New York Stock Exchange for such date or, if there
is no closing price for a share of Common Stock on the date in question, the
closing price for a share of Common Stock on the last preceding date for which a
quotation exists. If, on any given date, the Common Stock is not listed for
trading on the New York Stock Exchange, then Fair Market Value shall be the
“closing” price of a share of Common Stock on such other exchange on which the
Common Stock is listed for trading for such date (or, if there is no closing
price for a share of Common Stock on the date in question, the closing price for
a share of Common Stock on the last preceding date for which such quotation
exists) or, if the Common Stock is not listed on any exchange, the amount
determined by the Committee using any reasonable method in good faith and in
accordance with the regulations under Section 409A of the Code.
1.15.Incentive Award
“Incentive Award” means an award awarded under Article XI which, subject to the
terms and conditions prescribed by the Committee, entitles the Participant to
receive a payment from the Company or an Affiliate of the Company.
1.16.Incumbent Directors
“Incumbent Directors” means individuals elected to the Board (either by a
person is named as a nominee for Director without objection to such nomination)
and whose election or nomination for election to the Board was approved by a
vote of at least two-thirds of the directors serving on the Board at the time of
the election or nomination, as applicable, shall be an Incumbent Director. No
individual designated to serve as a director by a person who shall have entered
into an agreement with the Company to effect a transaction described in Section
1.04(a) or Section 1.04(c) and no individual initially elected or nominated as a
director of the Company as a result of an actual or threatened election contest
with respect to directors shall be an Incumbent Director.
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1.17.Individuals Plan
“Individuals Plan” means the Bluerock Residential Growth, Inc. Fourth Amended
and Restated 2014 Equity Incentive Plan for Individuals, effective September 8,
2020, and as further amended from time to time.
1.18.Initial Value
“Initial Value” means, with respect to a Corresponding SAR, the option price per
share of the related Option and, with respect to an SAR granted independently of
an Option, the price per share of Common Stock as determined by the Committee on
the date of grant; provided, however, that the price shall not be less than the
Fair Market Value on the date of grant. Except as provided in Article XII,
without the approval of stockholders (a) the Initial Value of an outstanding SAR
may not be reduced (by amendment, cancellation and new grant or otherwise) and
(b) no payment shall be made in cancellation of an SAR if, on the date of such
amendment, cancellation, new grant or payment the Initial Value exceeds Fair
Market Value.
1.19.LTIP Unit
“LTIP Unit” means an “LTIP Unit” as defined in the Operating Partnership’s
partnership agreement. An LTIP Unit granted under this Plan represents the right
to receive the benefits, payments or other rights in respect of an LTIP Unit set
forth in that partnership agreement, subject to the terms and conditions of the
applicable Agreement and that partnership agreement.
1.20.Offering
“Offering” means the initial public offering of Common Stock registered under
1.21.OP Units
“OP Units” means units of limited partnership interest of the Operating
Partnership.
1.22.Operating Partnership
“Operating Partnership” means Bluerock Residential Holdings, L.P., a Delaware
limited partnership and the Company’s operating partnership.
1.23.Option
“Option” means a stock option that entitles the holder to purchase from the
Company a stated number of shares of Common Stock at the price set forth in an
Agreement.
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1.24.Other Equity-Based Award
“Other Equity-Based Award” means any award other than an Incentive Award, an
Option, SAR, a Performance Unit award or a Stock Award which, subject to such
terms and conditions as may be prescribed by the Committee, entitles a
Participant to receive shares of Common Stock or rights or units valued in whole
or in part by reference to, or otherwise based on, shares of Common Stock
(including securities convertible into Common Stock) or other equity interests,
including LTIP Units.
1.25.Participant
“Participant” means any entity that provides services to the Company or an
Affiliate of the Company (including an entity that provides services to the
Company or an Affiliate of the Company by virtue of its providing services to
the Operating Partnership or an Affiliate of the Operating Partnership), and
that satisfies the requirements of Article IV and is selected by the Committee
to receive an award of Performance Units or a Stock Award, an Incentive Award,
Option, SAR, Other Equity-Based Award or a combination thereof.
1.26.Performance Award
“Performance Award” means an Option, SAR, Stock Award, award of Performance
Units, Incentive Award or Other Equity-Based Award (including an LTIP Unit) that
is not a Time-Based Award.
1.27.Performance Units
“Performance Units” means an award, in the amount determined by the Committee,
stated with reference to a specified or determinable number of shares of Common
Stock, that in accordance with the terms of an Agreement entitles the holder to
receive a payment for each specified unit equal to the value of an equal number
of shares of Common Stock on the date of payment.
1.28.Plan
“Plan” means this Bluerock Residential Growth REIT, Inc. Fourth Amended and
Restated 2014 Equity Incentive Plan for Entities, as set forth herein and as
further amended from time to time.
1.29.REIT
“REIT” means a real estate investment trust within the meaning of Sections 856
through 860 of the Code.
1.30.SAR
“SAR” means a stock appreciation right that in accordance with the terms of an
Agreement entitles the holder to receive, with respect to each share of Common
Stock encompassed by the exercise of the SAR, the excess, if any, of the Fair
Market Value at the time of exercise over the Initial Value. References to
“SARs” include both Corresponding SARs and SARs granted independently of
Options, unless the context requires otherwise.
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1.31.Stock Award
“Stock Award” means shares of Common Stock awarded to a Participant under
Article VIII.
1.32.Time-Based Award
“Time-Based Award” means an Option, SAR, Stock Award, award of Performance
vests, is earned or becomes exercisable based solely on continued employment or
service.
Article II
PURPOSES
This Plan is intended to assist the Company and its Affiliates in securing and
retaining the services of entities that provide services to the Company or an
Affiliate of the Company with ability and initiative by enabling such entities
to participate in the future success of the Company and its Affiliates and to
associate their interests with those of the Company and its stockholders. This
Plan is intended to permit the grant of Options, SARs, Stock Awards, Performance
Units, Incentive Awards and Other Equity-Based Awards in accordance with this
Plan and any procedures that may be established by the Committee.
Article III
ADMINISTRATION
This Plan shall be administered by the Committee. The Committee shall have
authority to grant SARs, Stock Awards, Performance Units, Incentive Awards,
Options and Other Equity-Based Awards upon such terms (not inconsistent with the
provisions of this Plan), as the Committee may consider appropriate. Such terms
may include conditions (in addition to those contained in this Plan), on the
exercisability of all or any part of an Option or SAR or on the transferability
or forfeitability of a Stock Award, an award of Performance Units, an Incentive
Award or an Other Equity-Based Award. Notwithstanding any such conditions, or
any provision of the Plan, the Committee may, in its discretion, accelerate the
time at which any Option or SAR may be exercised, or the time at which a Stock
Award or Other Equity-Based Award may become transferable or nonforfeitable or
the time at which an Other Equity-Based Award, an Incentive Award or an award of
Performance Units may be settled in connection with an involuntary termination
of service. Options, SARs, Stock Awards, Performance Units, Incentive Awards and
Other Equity-Based Awards (including LTIP Units) for up to five percent of the
aggregate number of shares of Common Stock authorized for issuance under the
Plan pursuant to Section 5.02 may be granted or awarded by the Committee without
regard to the minimum vesting requirements of Sections 6.06, 7.04, 8.02, 9.02,
10.02 and 11.02. In addition, the Committee shall have complete authority to
interpret all provisions of this Plan; to prescribe the form of Agreements; to
adopt, amend, and rescind rules and regulations pertaining to the administration
of this Plan (including rules and regulations that require or allow Participants
to defer the payment of benefits under this Plan); and to make all other
determinations necessary or advisable for the administration of this Plan.
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The Committee’s determinations under this Plan (including without limitation,
determinations of the entities to receive awards under this Plan, the form,
amount and timing of such awards, the terms and provisions of such awards and
the Agreements) need not be uniform and may be made by the Committee selectively
among entities who receive, or are eligible to receive, awards under this Plan,
whether or not such entities are similarly situated. The express grant in this
Plan of any specific power to the Committee with respect to the administration
or interpretation of this Plan shall not be construed as limiting any power or
authority of the Committee with respect to the administration or interpretation
of this Plan. Any decision made, or action taken, by the Committee in connection
with the administration of this Plan shall be final and conclusive. The members
of the Committee shall not be liable for any act done in good faith with respect
to this Plan or any Agreement, Option, SAR, Incentive Award, Stock Award, Other
Equity-Based Award or award of Performance Units. All expenses of administering
this Plan shall be borne by the Company.
Article IV
ELIGIBILITY
Any entity that provides significant services to the Company or an Affiliate of
the Company (including an entity that provides services to the Company or an
Affiliate of the Company by virtue of its providing services to the Operating
Partnership or an Affiliate of the Operating Partnership) is eligible to
participate in this Plan if the Committee, in its sole reasonable discretion,
determines that the participation of such entity is in the best interest of the
Company.
Article V
COMMON SHARES SUBJECT TO PLAN
5.01.Common Shares Issued
Upon the award of Common Stock pursuant to a Stock Award, an Other Equity-Based
Award or in settlement of an Incentive Award or an award of Performance Units,
the Company may deliver (and shall deliver if required under an Agreement) to
the Participant shares of Common Stock from its authorized but unissued Common
Shares. Upon the exercise of any Option or SAR, the Company may deliver, to the
Participant (or the Participant’s broker if the Participant so directs), shares
of Common Stock from its authorized but unissued Common Shares.
5.02.Aggregate Limit
(a) The maximum aggregate number of shares of Common Stock that may be
issued under this Plan (pursuant to Options and SARs, Stock Awards or Other
Equity-Based Awards and the settlement of Incentive Awards and Performance Units
granted on or after the Effective Date) together with the number of shares of
Common Stock issued under the Individuals Plan (pursuant to Options and SARs,
Stock Awards or Other Equity-Based Awards and the settlement of Incentive Awards
and Performance Units granted under the Individuals Plan on or after the
Effective Date) is equal to 6,800,000 shares. Other Equity-Based Awards that are
LTIP Units shall reduce the maximum aggregate number of Common Shares that may
be issued under this Plan and the Individuals Plan on a one-for-one basis, i.e.,
the grant of each LTIP Unit shall be treated as an award of a share of Common
Stock.
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(b) The maximum number of shares of Common Stock that may be issued under
this Plan and the Individuals Plan in accordance with Section 5.02(a) shall be
subject to adjustment as provided in Article XII.
(c) Shares of Common Stock issued under this Plan and the Individuals
Plan pursuant to Options, SARs, Stock Awards or Other Equity-Based Awards and
the settlement of Incentive Awards and Performance Units granted before the
Effective Date shall be issued pursuant to the terms of the Plan and the
Individuals Plan as in effect before the Effective Date and shall not affect or
reduce the number of shares of Common Stock that may be issued in accordance
with Section 5.02(a).
5.03.Reallocation of Shares
If, on or after the Effective Date, any award or grant under this Plan or the
Individuals Plan (including LTIP Units and awards or grants made before the
Effective Date) expires, is forfeited or is terminated without having been
exercised or is paid in cash without a requirement for the delivery of Common
Stock, then any shares of Common Stock covered by such lapsed, cancelled,
expired, unexercised or cash-settled portion of such award or grant and any
forfeited, lapsed, cancelled or expired LTIP Units shall be available for the
grant of other Options, SARs, Stock Awards, Other Equity-Based Awards and
settlement of Incentive Awards and Performance Units under this Plan or the
Individuals Plan. Any shares of Common Stock tendered or withheld on or after
the Effective Date to satisfy the grant or exercise price or tax withholding
obligation pursuant to any award under this Plan or the Individuals Plan shall
not be available for future grants or awards. If shares of Common Stock are
issued in settlement of an SAR granted under this Plan or the Individuals Plan,
the number of shares of Common Stock available under this Plan and the
Individuals Plan shall be reduced by the number of shares of Common Stock for
which the SAR was exercised rather than the number of shares of Common Stock
issued in settlement of the SAR. To the extent permitted by applicable law or
the rules of any exchange on which the Common Stock is listed for trading,
shares of Common Stock issued in assumption of, or in substitution for, any
outstanding awards of any entity acquired in any form of combination by the
Company or any Affiliate of the Company shall not reduce the number of shares of
Common Stock available for issuance under this Plan and the Individuals Plan.
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Article VI
OPTIONS
6.01.Award
In accordance with the provisions of Articles III and IV, the Committee will
designate each entity to whom an Option is to be granted and will specify the
number of shares of Common Stock covered by such awards and the terms and
conditions of such awards.
6.02.Option Price
The price per share of Common Stock purchased on the exercise of an Option shall
be determined by the Committee on the date of grant, but shall not be less than
the Fair Market Value on the date the Option is granted. Except as provided in
Article XII, without the approval of stockholders (a) the price per share of
Common Stock of an outstanding Option may not be reduced (by amendment,
cancellation and new grant or otherwise) and (b) no payment shall be made in
cancellation of an Option if, on the date of such amendment, cancellation,
replacement grant or payment the Option Price exceeds Fair Market Value.
6.03.Maximum Option Period
The maximum period in which an Option may be exercised shall be determined by
the Committee on the date of grant except that no Option shall be exercisable
after the expiration of ten years from the date such Option was granted. The
terms of any Option may provide that it is exercisable for a period less than
such maximum period.
6.04.Transferability
An Option granted under this Plan may be transferred only in accordance with
this Section 6.04. To the extent permitted by the Agreement relating to an
Option, an Option granted under this Plan may be transferred by a Participant
but only to an Affiliate of the Participant or an individual who is employed by
or provides services to the Participant or an Affiliate of the Participant. The
holder of an Option transferred pursuant to this Section 6.04 shall be bound by
the same terms and conditions that governed the Option during the period it was
held by the Participant. If an Option is transferred (by the Participant or the
Participant’s transferee), such Option and any Corresponding SAR must be
transferred to the same person or persons or entity or entities.
6.05.Service Provider Status
In the event that the terms of any Option provide that it may be exercised only
during continued service or within a specified period of time after termination
of continued service, the Committee may decide to what extent temporary
interruptions of continuous service shall affect the Option.
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6.06.Exercise
Subject to the provisions of this Plan and the applicable Agreement, an Option
may be exercised in whole at any time or in part from time to time at such times
and in compliance with such requirements as the Committee shall determine;
provided, however, that (subject to the provisions of Article III) no Option may
become exercisable before the first anniversary of its grant or as provided in
Section 15.01. An Option granted under this Plan may be exercised with respect
to any number of whole shares of Common Stock less than the full number for
which the Option could be exercised. A partial exercise of an Option shall not
affect the right to exercise the Option from time to time in accordance with
this Plan and the applicable Agreement with respect to the remaining shares of
Common Stock subject to the Option. The exercise of an Option shall result in
the termination of any Corresponding SAR to the extent of the number of shares
of Common Stock with respect to which the Option is exercised.
6.07.Payment
Subject to rules established by the Committee and unless otherwise provided in
an Agreement, payment of all or part of the Option price may be made in cash,
certified check, by tendering shares of Common Stock, by attestation of
ownership of shares of Common Stock, by a broker-assisted cashless exercise or
in such other form or manner acceptable to the Committee. If shares of Common
Stock are used to pay all or part of the Option price, the sum of the cash and
cash equivalent and the Fair Market Value (determined on the date of exercise)
of the Common Stock so surrendered or other consideration paid must not be less
than the Option price of the shares for which the Option is being exercised.
6.08.Stockholder Rights
No Participant shall have any rights as a stockholder with respect to shares of
Common Stock subject to an Option until the date of exercise of such Option.
6.09.Disposition of Shares
A Participant may not sell or dispose of more than fifty percent of the shares
of Common Stock acquired pursuant to an Option before the earlier of (i) the
first anniversary of the exercise of the Option or (ii) the date the Participant
is no longer providing services to the Company, an Affiliate of the Company, or
the Operating Partnership.
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Article VII
SARS
7.01.Award
designate each entity to whom SARs are to be granted and will specify the number
of shares of Common Stock covered by such awards and the terms and conditions of
such awards.
7.02.Maximum SAR Period
The term of each SAR shall be determined by the Committee on the date of grant,
except that no SAR shall have a term of more than ten years from the date of
grant. The terms of any SAR may provide that it has a term that is less than
such maximum period.
7.03.Transferability
An SAR granted under this Plan may be transferred only in accordance with this
Section 7.03. To the extent permitted by the Agreement relating to an SAR, an
SAR granted under this Plan may be transferred by a Participant but only to an
Affiliate of the Participant or an individual who is employed by or provides
services to the Participant or an Affiliate of the Participant. The holder of an
SAR transferred pursuant to this Section 7.03 shall be bound by the same terms
and conditions that governed the SAR during the period it was held by the
Participant. If a Corresponding SAR is transferred (by the Participant or the
Participant’s transferee), such Corresponding SAR and the related Option must be
7.04.Exercise
Subject to the provisions of this Plan and the applicable Agreement, an SAR may
in compliance with such requirements as the Committee shall determine; provided,
however, that (subject to the provisions of Article III) no SAR may become
exercisable before the first anniversary of its grant or as provided in Section
15.01. An SAR granted under this Plan may be exercised with respect to any
number of whole shares less than the full number for which the SAR could be
exercised. A partial exercise of an SAR shall not affect the right to exercise
the SAR from time to time in accordance with this Plan and the applicable
Agreement with respect to the remaining shares of Common Stock subject to the
SAR. The exercise of a Corresponding SAR shall result in the termination of the
related Option to the extent of the number of shares of Common Stock with
respect to which the SAR is exercised.
7.05.Service Provider Status
If the terms of any SAR provide that it may be exercised only during continued
service or within a specified period of time after termination of continued
service, the Committee may decide to what extent temporary interruptions of
continuous service shall affect the SAR.
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7.06.Settlement
At the Committee’s discretion, the amount payable as a result of the exercise of
an SAR may be settled in cash, shares of Common Stock, or a combination of cash
and Common Stock. No fractional share of Common Stock will be deliverable upon
the exercise of an SAR but a cash payment will be made in lieu thereof.
7.07.Stockholder Rights
No Participant shall, as a result of receiving an SAR, have any rights as a
stockholder of the Company or any Affiliate of the Company until the date that
the SAR is exercised and then only to the extent that the SAR is settled by the
issuance of Common Stock.
7.08.Disposition of Shares
of Common Stock acquired pursuant to an SAR before the earlier of (i) the first
anniversary of the exercise of the SAR or (ii) the date the Participant is no
longer providing services to the Company, an Affiliate of the Company, or the
Operating Partnership.
Article VIII
STOCK AWARDS
8.01.Award
designate each entity to whom a Stock Award is to be made and will specify the
8.02.Vesting
The Committee, on the date of the award, shall prescribe that a Participant’s
rights in a Stock Award shall be forfeitable or otherwise restricted for a
period of time or subject to such conditions as may be set forth in the
Agreement. Subject to the provisions of Article III, the period in which the
shares of Common Stock covered by a Stock Award are forfeitable or otherwise
restricted shall not end before the first anniversary of the grant of the Stock
Award or as provided in Section 15.01. By way of example and not of limitation,
the Committee may prescribe that a Participant’s rights in a Stock Award shall
be forfeitable or otherwise restricted subject to the attainment of objectives
stated with reference to the business of the Company or an Affiliate of the
Company or a business unit’s attainment of objectives stated with respect to
performance criteria established by the Committee.
8.03.Service Provider Status
In the event that the terms of any Stock Award provide that shares may become
transferable and nonforfeitable thereunder only after completion of a specified
period of employment or continuous service, the Committee may decide in each
case to what extent temporary interruptions of continuous service shall affect
the Stock Award.
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8.04.Stockholder Rights
Unless otherwise specified in accordance with the applicable Agreement, while
the shares of Common Stock granted pursuant to the Stock Award may be forfeited
or are nontransferable, a Participant will have all rights of a stockholder with
respect to a Stock Award, including the right to receive dividends and vote the
shares of Common Stock; provided, however, that (i) dividends payable on shares
of Common Stock subject to a Stock Award that does not become nonforfeitable
solely on the basis of continued service shall be accumulated and paid, without
interest, when and to the extent that the underlying Stock Award becomes
nonforfeitable; (ii) a Participant may not sell, transfer, pledge, exchange,
hypothecate, or otherwise dispose of shares of Common Stock granted pursuant to
a Stock Award, (iii) the Company shall retain custody of any certificates
representing shares of Common Stock granted pursuant to a Stock Award, and (iv)
the Participant will deliver to the Company a stock power, endorsed in blank,
with respect to each Stock Award. The limitations set forth in the preceding
sentence shall not apply after the shares of Common Stock granted under the
Stock Award are transferable and are no longer forfeitable.
8.05.Disposition of Shares
of Common Stock acquired under a Stock Award before the earlier of (i) the first
anniversary of the date that the Stock Award became nonforfeitable and (ii) the
date the Participant is no longer providing services to the Company, an
Affiliate of the Company, or the Operating Partnership.
Article IX
PERFORMANCE UNIT AWARDS
9.01.Award
designate each entity to whom an award of Performance Units is to be made and
will specify the number of shares of Common Stock covered by such awards and the
terms and conditions of such awards. The Committee also will specify whether
Dividend Equivalent Rights are granted in conjunction with the Performance
Units.
9.02.Earning the Award
The Committee, on the date of the grant of an award, shall prescribe that the
Performance Units will be earned, and the Participant will be entitled to
receive payment pursuant to the award of Performance Units, only upon the
satisfaction of performance objectives or such other criteria as may be
prescribed by the Committee. Subject to the provisions of Article III, the
period in which Performance Units will be earned shall not end before the first
anniversary of the grant of the Performance Units or as provided in Section
15.01.
9.03.Payment
In the discretion of the Committee, the amount payable when an award of
Performance Units is earned may be settled in cash, by the issuance of shares of
Common Stock, by the grant of an Other Equity-Based Award (including LTIP
Units), by the delivery of other securities or property or a combination
thereof. A fractional share of Common Stock shall not be deliverable when an
award of Performance Units is earned, but a cash payment will be made in lieu
thereof. The amount payable when an award of Performance Units is earned shall
be paid in a lump sum.
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9.04.Stockholder Rights
A Participant, as a result of receiving an award of Performance Units, shall not
have any rights as a stockholder until, and then only to the extent that, the
award of Performance Units is earned and settled in shares of Common Stock.
After an award of Performance Units is earned and settled in Common Stock, a
Participant will have all the rights of a stockholder of the Company.
9.05.Transferability
Any rights or restrictions with respect to the ability of the holder of any
Performance Unit granted under this Plan to transfer such Performance Unit shall
be set forth in the Agreement relating to such grant.
9.06.Service Provider Status
In the event that the terms of any Performance Unit award provide that no
payment will be made unless the Participant completes a stated period of
continued service, the Committee may decide to what extent temporary
interruptions of continuous service shall effect the Performance Unit award.
9.07.Disposition of Shares
of Common Stock issued in settlement of Performance Units before the earlier of
(i) the first anniversary of the date the shares were issued to the Participant
or (ii) the date the Participant is no longer providing services to the Company,
an Affiliate of the Company, or the Operating Partnership.
Article X
OTHER EQUITY–BASED AWARDS
10.01.Award
designate each entity to whom an Other Equity-Based Award is to be made and will
specify the number of shares of Common Stock or other equity interests
(including LTIP Units) covered by such awards and the terms and conditions of
such awards; provided, however, that the grant of LTIP Units must satisfy the
requirements of the partnership agreement of the Operating Partnership as in
effect on the date of grant. The Committee also will specify whether Dividend
Equivalent Rights are granted in conjunction with the Other Equity-Based Award.
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10.02.Terms and Conditions
The Committee, at the time an Other Equity-Based Award is made, shall specify
the terms and conditions which govern the award. The terms and conditions of an
Other Equity-Based Award may prescribe that a Participant’s rights in the Other
Equity-Based Award shall be forfeitable, nontransferable or otherwise restricted
for a period of time or subject to such other conditions as may be determined by
the Committee, in its discretion and set forth in the Agreement. Subject to the
Provisions of Article III, the period in which such award shall be forfeitable,
nontransferable or otherwise restricted shall not end before the first
anniversary of the grant of the Other Equity-Based Award or as provided in
Section 15.01. Other Equity-Based Awards may be granted to Participants, either
alone or in addition to other awards granted under this Plan, and Other
Equity-Based Awards may be granted in the settlement of other Awards granted
under this Plan.
10.03.Payment or Settlement
Other Equity-Based Awards valued in whole or in part by reference to, or
otherwise based on, Common Stock, shall be payable or settled in shares of
Common Stock, cash or a combination of Common Stock and cash, as determined by
the Committee in its discretion; provided, however, that any shares of Common
Stock that are issued on account of the conversion of LTIP Units into shares of
Common Stock shall not be issued under this Plan, i.e., the conversion shall not
reduce the number of shares of Common Stock available for issuance under the
Plan or the Entities Plan. Other Equity-Based Awards denominated as equity
interests other than shares of Common Stock may be paid or settled in shares or
units of such equity interests or cash or a combination of both as determined by
the Committee in its discretion.
10.04.Service Provider Status
If the terms of any Other Equity-Based Award provides that it may be earned or
exercised only during continued service or within a specified period of time
after termination of continued service, the Committee may decide to what extent
temporary interruptions of continuous service shall affect the Other
Equity-Based Award.
10.05.Transferability
Any rights or restrictions with respect to the ability of the holder of an Other
Equity-Based Award (including LTIP Units) granted under the Plan to transfer
such Other Equity Based Award (including LTIP Units) shall be set forth in the
Agreement relating to such grant.
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10.06.Stockholder Rights
A Participant, as a result of receiving an Other Equity-Based Award, shall not
Other Equity-Based Award is earned and settled in shares of Common Stock.
10.07.Disposition of Shares
of Common Stock or other equity interests (including LTIP units) covered by an
Other Equity-Based Award before the earlier of (i) the first anniversary of the
date that such shares or interests become nonforfeitable and (ii) the date the
Participant is no longer providing services to the Company, an Affiliate of the
Company, or the Operating Partnership.
Article XI
INCENTIVE AWARDS
11.01.Award
designate each entity to whom an Incentive Award is to be made and will specify
the terms and conditions of such award. The Committee also will specify whether
Dividend Equivalent Rights are granted in conjunction with the Incentive Award.
11.02.Terms and Conditions
The Committee, at the time an Incentive Award is made, shall specify the terms
and conditions that govern the award. Such terms and conditions may prescribe
that the Incentive Award shall be earned only to the extent that the
Participant, the Company or an Affiliate of the Company, during a performance
period of at least one year, achieves objectives stated with reference to one or
more performance measures or criteria prescribed by the Committee. A goal or
objective may be expressed on an absolute basis or relative to the performance
of one or more similarly situated companies or a published index. When
establishing goals and objectives, the Committee may exclude any or all special,
unusual, and/or extraordinary items as determined under U.S. generally accepted
accounting principles including, without limitation, the charges or costs
associated with restructurings of the Company, discontinued operations, other
unusual or non-recurring items, and the cumulative effects of accounting
changes. The Committee may also adjust the performance goals for any Incentive
Award as it deems equitable in recognition of unusual or non-recurring events
affecting the Company, changes in applicable tax laws or accounting principles,
or such other factors as the Committee may determine. Such terms and conditions
also may include other limitations on the payment of Incentive Awards including,
by way of example and not of limitation, requirements that the Participant
complete a specified period of service with the Company or an Affiliate of the
Company or that the Company, an Affiliate of the Company, or the Participant
attain stated objectives or goals (in addition to those prescribed in accordance
with the preceding sentence) as a prerequisite to payment under an Incentive
Award.
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11.03.Transferability
Incentive Award granted under the Plan to transfer such Incentive Award shall be
set forth in the Agreement relating to such grant.
11.04.Service Provider Status
If the terms of an Incentive Award provide that a payment will be made
thereunder only if the Participant completes a stated period of continued
continuous service shall affect the Incentive Award.
11.05.Settlement
An Incentive Award that is earned shall be settled with a single lump sum
payment which may be in cash, shares of Common Stock, an Other Equity-Based
Award (including LTIP Units) or a combination thereof, as determined by the
Committee.
11.06.Stockholder Rights
No Participant shall, as a result of receiving an Incentive Award, have any
rights as a stockholder of the Company or an Affiliate of the Company until the
date that the Incentive Award is settled and then only to the extent that the
Incentive Award is settled by the issuance of shares of Common Stock.
11.07.Disposition of Shares
of Common Stock issued in settlement of an Incentive Award until the earlier of
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Article XII
ADJUSTMENT UPON CHANGE IN COMMON SHARES
The maximum number of shares of Common Stock as to which Options, SARs,
Performance Units, Incentive Awards, Stock Awards and Other Equity-Based Awards
may be granted under this Plan and the Entities Plan, and the terms of
outstanding Stock Awards, Options, SARs, Incentive Awards, Performance Units and
Other Equity-Based Awards granted under this Plan and the Entities Plan, shall
be adjusted as the Board determines is equitably required in the event that (i)
the Company (a) effects one or more nonreciprocal transactions between the
Company and its shareholders such as a share dividend, extra-ordinary cash
dividend, share split-up, subdivision or consolidation of Common Stock that
affects the number or kind of shares of Common Stock (or other securities of the
Company) or the Fair Market Value (or the value of other Company securities) and
causes a change in the Fair Market Value of the shares of Common Stock subject
to outstanding awards or (b) engages in a transaction to which Section 424 of
the Code applies or (ii) there occurs any other event which, in the judgment of
the Board necessitates such action. Any determination made under this Article
XII by the Board shall be nondiscretionary, final and conclusive.
The issuance by the Company of any class of Common Stock, or securities
convertible into any class of Common Stock, for cash or property, or for labor
or services, either upon direct sale or upon the exercise of rights or warrants
to subscribe therefor, or upon conversion of Common Stock or obligations of the
Company convertible into such Common Stock or other securities, shall not
maximum number of shares of Common Stock as to which Options, SARs, Performance
Units, Incentive Awards, Stock Awards and Other Equity-Based Awards may be
granted under this Plan and the Entities Plan, or the terms of outstanding Stock
Awards, Incentive Awards, Options, SARs, Performance Units or Other Equity-Based
Awards under this Plan and the Entities Plan.
The Committee may make Stock Awards and may grant Options, SARs, Performance
Units, Incentive Awards or Other Equity-Based Awards under this Plan and under
the Entities Plan in substitution for performance shares, phantom shares, share
awards, stock options, share appreciation rights, or similar awards held by an
individual who becomes an employee of the Company or an Affiliate of the Company
in connection with a transaction described in the first paragraph of this
Article XII. Notwithstanding any provision of this Plan and the Entities Plan,
the terms of such substituted Stock Awards, SARs, Other Equity-Based Awards,
Options or Performance Units granted under this Plan or the Entities Plan shall
be as the Committee, in its discretion, determines is appropriate.
Article XIII
COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES
No Option or SAR shall be exercisable, no Common Stock shall be issued, no
certificates for shares of Common Stock shall be delivered, and no payment shall
be made under this Plan except in compliance with all applicable federal, state
and foreign laws and regulations (including, without limitation, withholding tax
requirements), any listing agreement to which the Company is a party, and the
rules of all stock exchanges on which the Common Stock may be listed. The
Company shall have the right to rely on an opinion of its counsel as to such
compliance. Any certificate issued to represent Common Stock when a Stock Award
is granted, a Performance Unit, Incentive Award or Other Equity-Based Award is
settled or for which an Option or SAR is exercised may bear such legends and
statements as the Committee may deem advisable to assure compliance with
federal, state and foreign laws and regulations. No Option or SAR shall be
exercisable, no Stock Award or Performance Unit shall be granted, no Common
Stock shall be issued, no certificate for Common Stock shall be delivered, and
no payment shall be made under this Plan until the Company has obtained such
consent or approval as the Committee may deem advisable from regulatory bodies
having jurisdiction over such matters.
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Article XIV
GENERAL PROVISIONS
14.01.Effect on Service
Neither the adoption of this Plan, its operation, nor any documents describing
or referring to this Plan (or any part thereof), shall confer upon any entity
any right to continue in the service of the Company or an Affiliate of the
Company or in any way affect any right and power of the Company or an Affiliate
of the Company to terminate the service of any entity at any time with or
without assigning a reason therefor.
14.02.Unfunded Plan
This Plan, insofar as it provides for grants, shall be unfunded, and the Company
shall not be required to segregate any assets that may at any time be
represented by grants under this Plan. Any liability of the Company to any
person with respect to any grant under this Plan shall be based solely upon any
contractual obligations that may be created pursuant to this Plan. No such
obligation of the Company shall be deemed to be secured by any pledge of, or
other encumbrance on, any property of the Company.
14.03.Rules of Construction
Headings are given to the articles and sections of this Plan solely as a
convenience to facilitate reference. The reference to any statute, regulation,
or other provision of law shall be construed to refer to any amendment to or
successor of such provision of law.
All awards made under this Plan are intended to comply with, or otherwise be
exempt from, Section 409A of the Code (“Section 409A”), after giving effect to
the exemptions in Treasury Regulation sections 1.409A-1(b)(3) through (b)(12).
This Plan and all Agreements shall be administered, interpreted and construed in
a manner consistent with Section 409A. Nevertheless, the tax treatment of the
benefits provided under this Plan or any Agreement is not warranted or
guaranteed. Neither the Company, its Affiliates nor their respective directors
or trustees, officers, employees or advisors shall be held liable for any taxes,
interest, penalties or other monetary amounts owed by any Participant or any
other taxpayer as a result of the Plan or any Agreement. If any provision of
this Plan or any Agreement is found not to comply with, or otherwise not be
exempt from, the provisions of Section 409A, it shall be modified and given
effect, in the sole discretion of the Committee and without requiring the
Participant’s consent, in such manner as the Committee determines to be
necessary or appropriate to comply with, or effectuate an exemption from,
Section 409A. Each payment under an award granted under this Plan shall be
treated as a separate identified payment for purposes of Section 409A.
-20-
If a payment obligation under an award or an Agreement arises on account of the
Participant’s termination of service and such payment obligation constitutes
“deferred compensation” (as defined under Treasury Regulation section
sections 1.409A-1(b)(3) through (b))12)), it shall be payable only after the
Participant’s “separation from service” (as defined under Treasury Regulation
section 1.409A-1(h)).
14.04.Withholding Taxes
Each Participant shall be responsible for satisfying any income, employment and
other tax withholding obligations attributable to participation in this Plan.
Unless otherwise provided by the Agreement, any such withholding tax obligations
may be satisfied in cash (including from any cash payable in settlement of an
award of Performance Units, SARs or Other Equity-Based Award) or a cash
equivalent acceptable to the Committee. Except to the extent prohibited by
Treasury Regulation Section 1.409A-3(j), any minimum statutory federal, state,
district, city or foreign withholding tax obligations also may be satisfied (a)
by surrendering to the Company shares of Common Stock previously acquired by the
Participant; (b) by authorizing the Company to withhold or reduce the number of
shares of Common Stock otherwise issuable to the Participant upon the exercise
of an Option or SAR, the settlement of a Performance Unit award, Incentive Award
or an Other Equity-Based Award (if applicable) or the grant or vesting of a
Stock Award; or (c) by any other method as may be approved by the Committee. If
shares of Common Stock are used to pay all or part of such withholding tax
obligation, the Fair Market Value of the Common Stock surrendered, withheld or
reduced shall be determined as of the date of surrender, withholding or
reduction and the number of shares of Common Stock which may be withheld,
surrendered or reduced shall be limited to the number of shares of Common Stock
which have a Fair Market Value on the date of withholding, surrender or
reduction equal to the aggregate amount of such liabilities based on the minimum
statutory withholding rates for tax purposes that are applicable to such
supplemental taxable income.
14.05.REIT Status
This Plan shall be interpreted and construed in a manner consistent with the
Company’s status as a REIT. No award shall be granted or awarded, and with
respect to any award granted under this Plan, such award shall not vest, be
exercisable or be settled (i) to the extent that the grant, vesting, exercise or
settlement could cause the Participant or any other person to be in violation of
the share ownership limit or any other limitation on ownership or transfer
prescribed by the Company’s charter, or (ii) if, in the discretion of the
Committee, the grant, vesting, exercise or settlement of the award could impair
the Company’s status as a REIT.
14.06.Elections Under Section 83(b)
No Participant may make an election under Section 83(b) of the Code with respect
to the grant of any award, the vesting of any award, the settlement of any award
or the issuance of Common Stock under the Plan without the consent of the
Company, which the Company may grant or withhold in its sole discretion.
-21-
14.07.Return of Awards; Repayment
Each Option, SAR, Stock Award, Performance Unit Award, Incentive Award and Other
Equity-Based Award (including an LTIP Unit) granted under the Plan is subject to
the condition that the Company may require that such award be returned, and that
any payment made with respect to such award must be repaid, if (a) such action
is required under the terms of any Company recoupment or “clawback” policy as in
effect on the date that the award was granted or (b) such award or payment made
with respect to an award is, or in the future becomes, subject to any law, rule,
requirement or regulation which imposes mandatory recoupment or forfeiture,
under circumstances set forth in such law, rule, requirement or regulation;
provided, however, that such clawback shall not be duplicative of any clawback
required under clause (a).
Article XV
CHANGE IN CONTROL
15.01.Time-Based Awards Not Assumed
Each Time-Based Award that is outstanding on a Control Change Date and that is
not assumed or replaced with a substitute award in accordance with Section 15.02
shall be fully vested, earned or exercisable as of the Control Change Date.
The Committee, in its discretion and without the need of the consent of a
Participant (or a Participant’s transferee of an award), may provide that a
Time-Based Award that becomes vested, earned or exercisable under this Section
15.01 may be cancelled in exchange for a payment. The payment may be in cash,
Common Stock or other securities or consideration received by stockholders in
the Change in Control Transaction. With respect to each Time-Based Award that
becomes vested, earned or exercisable under this Section 15.01, the payment
shall be an amount that is substantially equal to (i) the amount by which the
price per share received by stockholders in the Change in Control for each share
of Common Stock exceeds the option price or Initial Value in the case of an
Option and SAR or (ii) for each vested share of Common Stock subject to a Stock
Award, Performance Unit or Other Equity-Based Award, the price per share
received by stockholders for Common Stock and (iii) the value of the other
securities or property in which the Performance Unit or Other Equity-Based Award
is denominated and vested. Notwithstanding any contrary provision of this
Section 15.01, if the option price or Initial Value exceeds the price per share
of Common Stock received by stockholders in the Change in Control transaction,
the Option or SAR may be cancelled without any payment to the Participant.
15.02.Performance Awards; Assumption of Time-Based Awards
Each Performance Award that is outstanding on a Control Change Date must be
assumed by, or a substitute award granted by, the Successor Entity (or if
applicable, the Parent Company) in the Change in Control. Such assumed or
substituted award shall be of the same type of award as the original Performance
Award being assumed or replaced. The assumed or substituted award shall have a
value, as of the Control Change Date, that is substantially equal to the value
of the original Performance Award (or the difference between the Fair Market
Value and the option price or Initial Value in the case of Options and SARs) as
the Committee determines is equitably required. The assumed or substituted award
shall have the same vesting terms and conditions as the original Performance
Award being assumed or replaced; provided, however, that the performance
objectives and measures of the original Performance Award being assumed or
replaced shall be adjusted as the Committee determines is equitably required.
-22-
Participant (or the Participant’s transferee of an award), may provide that a
Time-Based Award that is outstanding on the Control Change Date shall be assumed
by, or a substitute award granted by, the Successor Entity (or, if applicable,
the Parent Company) in the Change in Control. Such assumed or substituted award
shall be of the same type of award as the original Time-Based Award being
assumed or replaced. The assumed or substituted award shall have a value, as of
the Control Change Date, that is substantially equal to the value of the
original Time-Based Award (or the difference between the Fair Market Value and
the option price or Initial Value in the case of Options and SARs) as the
Committee determines is equitably required. The assumed or substituted award
shall have the same vesting terms and conditions as the original Time-Based
Award being assumed or replaced.
15.03.Limitation of Benefits
The benefits that a Participant may be entitled to receive under this Plan and
other benefits that a Participant is entitled to receive under other plans,
agreements and arrangements (which, together with the benefits provided under
this Plan, are referred to as “Payments”), may constitute Parachute Payments
that are subject to Code Sections 280G and 4999. As provided in this Section
15.03, the Parachute Payments will be reduced pursuant to this Section 15.03 if,
and only to the extent that, a reduction will allow a Participant to receive a
greater Net After Tax Amount than a Participant would receive absent a
reduction.
The Accounting Firm will first determine the amount of any Parachute Payments
that are payable to a Participant. The Accounting Firm also will determine the
Net After Tax Amount attributable to the Participant’s total Parachute Payments.
The Accounting Firm will next determine the largest amount of Payments that may
be made to the Participant without subjecting the Participant to tax under Code
Section 4999 (the “Capped Payments”). Thereafter, the Accounting Firm will
determine the Net After Tax Amount attributable to the Capped Payments.
The Participant will receive the total Parachute Payments or the Capped
Payments, whichever provides the Participant with the higher Net After Tax
Amount. If the Participant will receive the Capped Payments, the total Parachute
Payments will be adjusted by first reducing the amount of any benefits under
this Plan or any other plan, agreement or arrangement that are not subject to
Section 409A of the Code (with the source of the reduction to be directed by the
Participant) and then by reducing the amount of any benefits under this Plan or
any other plan, agreement or arrangement that are subject to Section 409A of the
Code (with the source of the reduction to be directed by the Participant) in a
manner that results in the best economic benefit to the Participant (or, to the
extent economically equivalent, in a pro rata manner). The Accounting Firm will
notify the Participant and the Company if it determines that the Parachute
Payments must be reduced to the Capped Payments and will send the Participant
and the Company a copy of its detailed calculations supporting that
determination.
-23-
As a result of the uncertainty in the application of Code Sections 280G and 4999
at the time that the Accounting Firm makes its determinations under this Article
XV, it is possible that amounts will have been paid or distributed to the
Participant that should not have been paid or distributed under this Section
15.03 (“Overpayments”), or that additional amounts should be paid or distributed
to the Participant under this Section 15.03 (“Underpayments”). If the Accounting
Firm determines, based on either the assertion of a deficiency by the Internal
Revenue Service against the Company or the Participant, which assertion the
Accounting Firm believes has a high probability of success or controlling
precedent or substantial authority, that an Overpayment has been made, the
Participant must repay the Overpayment to the Company, without interest;
provided, however, that no amount will be payable by the Participant to the
Company unless, and then only to the extent that, the repayment would either
reduce the amount on which the Participant is subject to tax under Code Section
4999 or generate a refund of tax imposed under Code Section 4999. If the
Accounting Firm determines, based upon controlling precedent or substantial
authority, that an Underpayment has occurred, the Accounting Firm will notify
the Participant and the Company of that determination and the amount of that
Underpayment will be paid, without interest, to the Participant promptly by the
Company.
For purposes of this Section 15.03, the term “Accounting Firm” means the
independent accounting firm engaged by the Company immediately before the
Control Change Date. For purposes of this Article XV, the term “Net After Tax
Amount” means the amount of any Parachute Payments or Capped Payments, as
applicable, net of taxes imposed under Code Sections 1, 3101(b) and 4999 and any
State or local income taxes applicable to the Participant on the date of
payment. The determination of the Net After Tax Amount shall be made using the
highest combined effective rate imposed by the foregoing taxes on income of the
same character as the Parachute Payments or Capped Payments, as applicable, in
effect on the date of payment. For purposes of this Section 15.03, the term
“Parachute Payment” means a payment that is described in Code Section
280G(b)(2), determined in accordance with Code Section 280G and the regulations
promulgated or proposed thereunder.
Notwithstanding any other provision of this Section 15.03, this Section 15.03
shall not limit or otherwise supersede the provisions of any other agreement or
plan which provides that a Participant cannot receive Payments in excess of the
Capped Payments.
Article XVI
AMENDMENT
The Board may amend or terminate this Plan at any time; provided, however, that
no amendment may adversely impair the rights of Participants with respect to
outstanding awards. In addition, an amendment will be contingent on approval of
the Company’s stockholders if (a) such approval is required by law or the rules
of any exchange on which the Common Stock is listed, (b) the amendment would
materially increase the benefits accruing to Participants under this Plan,
materially increase the aggregate number of shares of Common Stock that may be
issued under this Plan and the Entities Plan (except as provided in Article XII)
or materially modify the requirements as to eligibility for participation in
this Plan or (c) other than in connection with an involuntary termination of
service, the amendment would accelerate the time at which any Option or SAR may
be exercised, the time at which a Stock Award or Other Equity-Based Award may
become transferable or nonforfeitable or the time at which an Other Equity-Based
Award, an Incentive Award or an award of Performance Units may be settled. For
the avoidance of doubt, without the approval of stockholders, the Board may not
(except pursuant to Article XII) (a) reduce the option price per share of an
outstanding Option or the Initial Value of an outstanding SAR, (b) cancel an
outstanding Option or outstanding SAR when the option price or Initial Value, as
applicable exceeds the Fair Market Value or (c) take any other action with
respect to an outstanding Option or an outstanding SAR that may be treated as a
repricing of the award under the rules and regulations of the principal exchange
on which the Common Stock is listed for trading.
-24-
Article XVII
DURATION OF PLAN
No Stock Award, Performance Unit Award, Incentive Award, Option, SAR or Other
Equity-Based Award may be granted under this Plan after October 25, 2027. Stock
Awards, Performance Unit awards, Options, SARs and Other Equity-Based Awards
granted before such date shall remain valid in accordance with their terms.
Article XVIII
EFFECTIVENESS OF PLAN
Options, SARs, Stock Awards, Performance Unit Awards, Incentive Awards and Other
Equity-Based Awards may be granted under this Plan, as amended and restated
herein, on and after the date that this Plan, as amended and restated herein, is
approved by a majority of the votes cast by the Company’s stockholders, voting
either in person or by proxy, at a duly held stockholders’ meeting within twelve
months of its adoption by the Board
-25-
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EXPORTER SERVICES AGREEMENT
This Exporter Services Agreement (this "Agreement") is effective as of the date
of the agreement is 1/8/2015 (the "Effective Date") and is by and between
AmericaTowne, Inc., a Delaware corporation doing business at 353 E. Six Forks
Road, Suite 270 in Raleigh, North Carolina 27609 ("AmericaTowne"), and Leah Bett
a Partnership doing business at 3/51 Larapinta drive Alice Springs, NT, 0870 AU
("Exporter"). AmericaTowne and Exporter are collectively referred to as the
"Parties" or each individually as a "Party".
WHEREAS, AmericaTowne is a publicly-reporting company with the United States
Securities and Exchange Commission (the "SEC"). Through those agreements
disclosed in AmericaTowne's filings, it represents herein that it has the
exclusive right, title and interest in certain intellectual property rights and
other assets used in the introduction, maintenance and facilitation of the
exportation of consumer goods into, amongst other countries, China, through the
use of an international import trade platform ("AmericaTowne's Exporting
Business").
WHEREAS, AmericaTowne's Exporting Business consists or will consist of
exhibition, showroom and display facilities, support office(s) and staff located
in the United States and China, and the platform consists or will consist of a
buyer's network, and online websites either directly owned by AmericaTowne or in
a partnership with third-parties in order to support the exhibition center,
showroom and network to market imported goods and services to consumers in China
(collectively referred to as the "AmericaTowne Platform").
WHEREAS, the AmericaTowne Platform is designed to save Exporter time, money, and
other resources in testing the market to determine if a demand exists for their
product or service in China. AmericaTowne will use its buyer's network, and
staff in China and elsewhere to make its commercially reasonable best efforts to
promote, distribute and market throughout the Exporter's goods and services and
identify potential buyers and other business relationships for the Exporter's
goods or services.
WHEREAS, AmericaTowne's Exporting Business compliments, in certain
circumstances, specific businesses under separate agreement with AmericaTowne
through Management Services and Lease Agreements ("Management Agreement"). The
Parties agree that unless otherwise agreed, the Exporter is not subject to the
rights, duties or obligations under the Management Agreement; rather, the
rights, duties and obligations set forth herein are distinct from those under
the Management Agreement. The Parties agree that to the extent they are or shall
become parties to a Management Agreement, this Agreement and the Management
Agreement shall be merged forming a fully integrated agreement under Delaware
law, and shall be read consistent with each other.
WHEREAS, the Parties agree that these recitals are not mere statements but
statements in which they have each relied on in entering into this Agreement.
NOW, THEREFORE, for the consideration stated herein, the Parties agree as
follows:
1. Term and Termination. This Agreement shall be effective on the Effective
Date. This Agreement shall expire fifteen (15) years after the Effective Date,
unless otherwise extended herein pursuant to Section 7, or terminated early as
provided below for breach of a representation, warranty or term or condition of
performance. The Parties agree that termination of this Agreement does not
terminate AmericaTowne's right to a Transaction Fee under Section 6(c).
Page 1
2. Good and Services Offered Through The AmericaTowne Platform. The goods
and services covered by the AmericaTowne Platform, and the types of goods
directed to wholesalers, agents, resellers or consumers, through online websites
in China or physical locations, includes, but is not limited to, the following:
(a) Imported food, agricultural, fishery and forestry products,
personal care and daily necessities products, home decoration, accessories, and
handicraft;
(b) Imported aviation industry, aircraft and helicopter and general
aviation sales, training, maintenance, and parts, operations, club and
financing, yachts; jewelry, and other luxury items;
(c) Imported hospital equipment and supplies, and medical equipment
and supplies; general machinery, computers, electronics, equipment and supplies;
(d) Leisure community development, and senior care facilities, senior
care products, and senior care services;
(e) Imported high-end technology, other imported items and investment
and financial services; and/or
(f) Other goods or services deemed appropriate by AmericaTowne based
on its expertise and experience in the target markets.
3. The AmericaTowne Platform Membership. For the consideration set forth
herein, and pursuant to the terms and conditions of this Agreement, AmericaTowne
hereby grants a membership license to Exporter to test, market and sample the
Exporter's goods and services in China and any other proper location. The
Exporter membership solely pertains to exporting sorghum grains , and other
areas as AmericaTowne Inc. designates.
4. Sample and Test Market Program. For the consideration set forth herein,
AmericaTowne shall provide Exporter with access to and participation in a sample
and test market program assessing market acceptance and demand of their products
or services through its "Sample and Test Market Program," which incorporates the
following terms and conditions (where expanded or contracted where deemed
necessary):
(a) Exporter may send samples or examples of products or services,
respectively, to the AmericaTowne Platform, and if deemed strategically
beneficial by AmericaTowne, Exporter may send specific videos, brochures and
other promotional material to explain, show, and demonstrate the products or
services features to the Chinese consumer and or wholesale customers;
(b) AmericaTowne agrees that Exporter, other than the consideration
set forth herein, shall not be charged any extra amounts for participation in
the Sample and Test Market Program;
(c) Exporter agrees to be responsible for those costs associated with
packaging, shipping and other reasonable and commercially acceptable costs to
send the samples to the AmericaTowne Trading Platform, including where
applicable, Value Added Tax (VAT) or custom costs;
Page 2
(d) Upon receipt of samples, brochures, and other promotional and
marketing materials, AmericaTowne will be responsible for displaying Exporter's
goods and services in its online portal, and/or exhibition and showroom
facilities in China, as well as marketing Exporter's products through marketing
channels. AmericaTowne, in conjunction with any representative of Exporter, will
exercise commercially reasonable discretion in determining how Exporter's
products and services are exhibited in the AmericaTowne Trading Platform;
(e) AmericaTowne will use its best efforts to match Exporter with an
end buyer of its products or services. Exporter agrees that there is no
assurance that a demand for its product will exist or an end buyer will be
found. The Sample and Test Market Program allows Exporter an opportunity to (i)
test the demand and market for its products and service by exhibiting it
products or service in the AmericaTowne Platform, and (ii) receive follow-on
orders for its products or services, if a demand and buyers exist, without
expending normal costs for exporting; and
(f) Exporter has one-year from the Effective Date to participate in
the Sample and Test Market Program. Afterwards, provided no transaction has
occurred in the AmericaTowne Trading Platform, Exporter agrees to pay a fee
equal to 25% of the original Service fee within thirty (30) days (the "Extension
Fee"). To the extent the Extension Fee is not paid, Exporter's participation and
membership in the Sample and Test Program terminates. In the event of
termination, the Parties agree that the balance of this Agreement remains in
5. Accepted Market Program. Provided that AmericaTowne concludes that the
Sample and Test Market Program has resulted in market demand and target
consumers for Exporter's goods and services, AmericaTowne will notify Exporter
within a commercially reasonable time of its opinions, conclusions and
recommendations, and in turn, provide the following services (the "Accepted
Market Program"):
(a) Advise Exporter in the negotiation of price, and terms and
conditions of sale of Exporter's goods and/or services;
(b) Assist Exporter in all phases of the exporting process, including
but not limited to, labeling and preparation for exporting, customs inspection
and clearance, shipping, warehousing, and payment; and
(c) Propose form and substance of purchase orders to be presented to
the target buyer setting forth, amongst other things, terms and conditions of
sale, costs, and payment to the Exporter (or its assignee or designee) with
AmericaTowne being responsible for currency exchange into United States dollars;
(d) AmericaTowne will advise Exporter of the various components of the
selling price including, but not limited to, normal product costs, shipping
costs, other related expenses, and customs and VAT. Exporter will make the final
determination of its sale price offered to the buyer;
Page 3
(e) AmericaTowne will advise Exporter on available incentives and
accommodations as a result of AmericaTowne operating out of a Bonded Port Zone
in China, such as, but not limited to, making the determination that the buyer
assumes VAT and customs costs by including such costs in the price of the
product or service, and reduced warehousing and logistics product costs in
China;
(f) From time to time state and federal agencies will have marketing
and promotional programs to assist small businesses in exporting their products
and services. AmericaTowne will work with Exporter, where warranted, to take
advantage of the various funding, grants and promotional opportunities
available;
(g) In certain cases, special certification will be required from the
appropriate authorities in China, prior to export of Exporter's goods and/or
services in conjunction with an end buyer's purchase order. In such a case,
AmericaTowne will assist Exporter in securing the proper certification. Exporter
agrees to be responsible for all costs of such certification. Prior to any such
certification action, AmericaTowne will advise Exporter, and Exporter will have
the sole discretion to determine if a certification is to be obtained, and
understand if such certification is obtained, Exporter (or its assignee or
designee) is responsible for the costs of certification.
6. Consideration. Exporter agrees to pay the following consideration for
the services set forth herein:
(a) Service Fee and Deliverables. Subject to Section 6(c), Exporter
agrees to pay AmericaTowne a nonrefundable service fee of $55,000.00 USD on the
Effective Date (the "Service Fee"). The Service Fee is recognized when
deliverables are provided. The Service Fee is paid for deliverables including a
market analysis, review of proposed goods and services, expectations for supply
and demand in the market, how to conduct export business in China, information
on financing, the export tax savings programs, and selecting and assigning a
sister tax saving company. The Service Fee is to be paid as follows: $5,000 upon
signing this agreement; and monthly payments of $2,000 a month for twenty-five
months after signing this agreement. The first monthly payment will start on 15
February 2015, and run for 24 consecutive months. At the discretion of
AmericaTowne Inc. the Exporter may be required to sign a note for outstanding
service fees. In addition AmericaTowne Inc. at its sole discretion may exchange
other assets or items of value for payments due.
(b) Transaction Fee. Exporter agrees to pay a Transaction Fee for each
transaction between Exporter and the end buyer arranged through or facilitated
by AmericaTowne in the amount of 5% (the "Transaction Fee"). The Transaction Fee
shall include the services provided by AmericaTowne in the AmericaTowne
Platform, Sample and Test Market Program, and if applicable, Accepted Market
Program. The Transaction Fee shall be recognized as revenue after the
transactions is completed. The Transaction Fee shall be first deducted by
AmericaTowne from the amount the end buyer owes Exporter, plus other fees, if
any, agreed to by Exporter with the balance remitted to Exporter within two (2)
days of receipt from the end buyer, unless commercial circumstances dictate
additional time.
Page 4
(c) Refund of Service Fee. From time to time there may be products or
services that are on the restricted import list in China. If Exporter's product
or service is on this list, AmericaTowne will advise Exporter of such
restriction and Exporter will be entitled to a refund of the Service Fee minus
any setoffs due under this Agreement, i.e. outstanding Transaction Fee. This
Section 6(c) shall be null and void upon termination of this Agreement, as
provided for in Section 1, above.
7. Extension of Term. Provided Exporter's goods and services are in demand
and Exporter is processing sales generating Transaction Fees, as set forth in
Section 6, within fifteen (15) years from the Effective Date, Exporter shall
have an option to (a) continue with its membership under Section 2 at no
additional fee, or (b) option of developing single point of sales, distribution,
networking, and logistics facilities separate and distinct from AmericaTowne for
a mutually agreeable reduced rate, which shall be agreed upon in writing prior
to thirty (30) days from the termination of fifteen (15) years from the
Effective Date. The Exporter has the option of choosing option (b) above at its
discretion.
8. Right to Use Promotional Material and Ownership of Samples. Exporter
grants AmericaTowne exclusive rights to use the marketing and promotional
material provided by Exporter and Exporter certifies that it has complied with
any and all intellectual property rights pertaining to the material provided.
Any and all Exporter samples sent to the AmericaTowne Platform shall become the
property of AmericaTowne once received and will be solely used to promote and
market Exporter's products or service within AmericaTowne Platform.
9. Country of Origin Taxes and Fees. Exporter agrees that it is solely
responsible for paying any and all taxes, if required, to the country of origin
of the goods and services. For purchase and sales orders received after the
Sample and Test Market Program, Exporter agrees that any customs and VAT payable
in China will be paid by either including any such taxes in the end buyer's
purchase price in the purchase order, and paying such taxes upon payment by
buyer or paying such taxes directly to customs prior to the goods being accepted
by the buyer.
10. Liability and Claims. AmericaTowne shall in no circumstance be liable
to Exporter or authorized users of the AmericaTowne Platform for any error,
mistake, misuse, delay, loss or omission whatsoever and howsoever occurring in
communications between them or the level of safety with which they are
conducted. Exporter unconditionally and irrevocably undertakes that it will not
make any claim either legal or equitable against the Company, its affiliates
and/or agents for any losses, damages, costs or expenses that it may suffer or
incur as a result of or otherwise in connection with such error, mistake,
misuse, delay, loss or omission.
11. Indemnity. Exporter agrees to fully and unconditionally indemnify and
hold AmericaTowne, and its agents, representatives, contractors, attorneys and
employees harmless against any claims, damages, penalties, losses or any
expenses howsoever incurred as a result of or in connection with (i) any breach
or alleged breach of representation, warranty or undertaking given by the
exporter herein; (ii) any infringement or alleged infringement of intellectual
property rights, including but not limited to patents, registered designs,
copyrights or trade mark infringement arising as a result of the insertion of
any material by Exporter or any agent of Exporter in AmericaTowne's website
and/or AmericaTowne Platform; (iii) any claim that the material involves false
or deceptive advertising or sale practices; (iv) any claim arising or in
connection with proof of quality and/or (v) any third party claims whatsoever
arising in or derived from or as a result of the insertion or providing any
material by Exporter.
Page 5
12. Proof of Quality. All statements, claims or representations ("Claims")
in material submitted by Exporter for its products or services regarding the
quality of its products or services must be (a) accompanied by a clear and
written reference in the material to the independent survey, research or other
source upon which the Claims are based; and (b) supported by the relevant
independent survey, research or other source, a copy of which must be provided
to AmericaTowne.
13. Representations and Warranties of Exporter. Exporter hereby represents
and warrants to AmericaTowne as follows:
(a) This Agreement has been duly and validly executed and delivered by
an authorized person and constitutes Exporter's legal, valid and binding
obligation, enforceable against it in accordance with its terms; and that the
execution, delivery and performance of this Agreement is within the signator's
legal capacity and power; has been duly authorized by all requisite action on
the signator's part; requires the approval or consent of no other persons; and
neither violates nor constitutes a default under the (a) provision of any law,
rule, regulation, order, judgment or decree to which Exporter is subject or
which is binding upon Exporter, or (ii) the terms of any other agreement,
document or instrument applicable to Exporter or binding upon it.
(b) That, in the event of any breach by Exporter of any of its
warranties, undertakings and/or other provisions of this Agreement, AmericaTowne
shall have the right at its sole and absolute discretion to remove from the
AmericaTowne Platform any material or samples placed by Exporter and/or to
terminate this Agreement immediately without notice, in which case AmericaTowne
shall not be liable to refund the Service Fee or any earned, but yet paid,
Transaction Fee for such material so removed and Exporter hereby undertakes that
it will not make any claims both legal or equitable against AmericaTowne, its
employees, contractors, attorneys and/or agents for any losses, damages, costs
or expenses that it may suffer or incur as a result of or otherwise in
connection with such removal.
(c) Exporter represents and warrants that it shall act in good faith
in all respects and undertakes that (i) no third party intellectual property
rights or any other rights will be infringed as a result of the publication of
any listing on the AmericaTowne Platform or any website utilized by AmericaTowne
in featuring Exporter's products or services and/or in any material supplied by
Exporter to AmericaTowne in relation to or otherwise in connection with
Exporter's products or services; (ii) all of Exporter's products or services
comply with and will comply with all applicable laws and regulations, including
without limitation, those relating to advertising; (iii) Exporter has obtained
all necessary consents and licenses for using the products or services; and (iv)
Exporter, if exporting US origin automobiles, will only export used automobiles,
at no time will the Exporter attempt to export new automobiles from the US to
China through the AmericaTowne Platform.
Page 6
(d) Exporter agrees that AmericaTowne reserves the sole and absolute
discretion to decline to publish any material if it reasonably suspects that
Exporter may involve the infringement of intellectual property rights or other
rights of any third party, unless Exporter can, within three (3) business days
of being requested to do so, provide evidence to the satisfaction of the
AmericaTowne that it has the right to place use the material in question and/or
the material does not infringe any intellectual property rights of any third
party. Exporter agrees that AmericaTowne shall remove the material immediately
if it reasonably suspects that the material may involve the infringement of
intellectual property rights or other rights of any third party, unless it
subsequently determines, using its own discretion, that the material does not
infringe any intellectual property rights of any third party.
(e) "While engaged in exporting, the Exporter warrants and agrees that
it will use the services of an Interest Charge - Domestic International Sales
Corporation (IC-DISC) to maximize its tax savings. Americatowne Inc. at its sole
discretion will determine the IC-DISC the Exporter (Licensee) will use. The
costs and tax savings for utilizing the services of the IC-DISC shall be
determined and agreed to by the Exporter and the assigned IC-DISC. Failure to
use a IC-DISC designated by AmericaTowne will result in a default under the
agreement."
(f) EXPORTER ACKNOWLEDGES AND AGREES THAT IT HAS READ THIS AGREEMENT
AND AGREE TO ALL ITS TERMS AND CONDITIONS. EXPORTER HAS INDEPENDENTLY EVALUATED
THE DESIRABILITY OF PARTICIPATING IN THE AMERICATOWNE PLATFORM, SAMPLE AND TEST
MARKET PROGRAM, AND IF APPLICABLE, ACCEPTED MARKET PROGRAM AND IS NOT RELYING ON
ANY REPRESENTATION, GUARANTEE, OR STATEMENT OTHER THAN AS SET FORTH IN THIS
AGREEMENT.
14. Representations and Warranties of AmericaTowne. AmericaTowne hereby
represents and warrants to Exporter as follows:
(a) It shall provide Exporter to a full-time staff in China to provide
support and assistance, and to identify a network of potential buyers in China
for Exporter's products and services;
(b) It shall provide and coordinate any and all actions and procedures
for customs and inspection clearance procedures and methods for Exporter that
will allow them to clear customs and inspection in China in a prompt manner;
(c) It shall provide methods and procedures for Exporter's products
and services to be sampled and displayed in the AmericaTowne Platform;
(d) It shall exercise commercially reasonable efforts to ensure that
Exporter shall pay the least amount of VAT and other taxes required by the laws
of China in full compliance with the laws of China;
(e) It shall exercise commercially reasonable efforts in providing
various financial programs to assist and support buyers in purchasing products
from Exporter; and
Page 7
(f) It shall exercise commercially reasonable efforts to ensure
high-level government officials from the Africa, USA and China in commerce,
trade, investments and policy are invited to review and participate in the
AmericaTowne Platform.
15. Relationship of Parties. The Parties agree that AmericaTowne is an
independent contractor, and nothing in this Agreement will create any
partnership, joint venture, agency, franchise, or employment relationship
between them.
16. Limitation of Liability. Exporter agrees that AmericaTowne will not be
liable for any indirect, incidental, special, or consequential punitive or
multiple damages, including without limitation any damages resulting from loss
of use, loss of business, loss of revenue, loss of profits, or loss of data,
arising in connection with this Agreement, AmericaTowne's performance of
services or of any other obligations relating to this Agreement, even if
AmericaTowne has been advised of the possibility of such damages. The foregoing
limitation of liability shall apply regardless of the cause of action under
which such damages are sought.
17. Disclaimers of Warranty. AmericaTowne makes no express or implied
warranties or representations with respect to the AmericaTowne Platform, Sample
and Test Market Program, or Accepted Market Program (including, without
limitation, warranties of fitness for a particular purpose, merchantability,
non-infringement, or any implied warranties arising out of a course of
performance, dealing, or trade usage). In addition, AmericaTowne makes no
representation that the operation of the AmericaTowne Platform (including
exhibition showrooms, websites and other network properties) will be
uninterrupted or error-free, and AmericaTowne will not be liable for the
consequences of any interruptions or errors.
18. Settlement of Disputes. The Parties agree to use their best efforts to
settle any dispute arising from the interpretation or performance in connection
with this Agreement through negotiations. In case no settlement can be reached,
subject to Section 25 or Section 26, below, either Party may submit such matter
to the American Arbitration Association ("AAA").The proceedings shall be
conducted in English and be conducted in Mecklenburg County, North Carolina, the
United States of America. The arbitration award shall be final and binding upon
the Parties. This Section shall not be influenced by the termination or
elimination of this Agreement. Each Party shall continue to perform its
obligations in good faith according to the provisions of this Agreement except
for the matters in dispute.
19. Force Majeure. Force Majeure, which includes but is not limited to,
acts of governments, acts of nature, fire, explosion, typhoon, flood,
earthquake, tide, lightning, war, means any event that is beyond the Party's
reasonable control and cannot be prevented with reasonable care. However, any
shortage of credit, capital or finance shall not be regarded as an event of
Force Majeure. The affected Party who is claiming to be not liable to its
failure of fulfilling this Agreement by Force Majeure shall inform the other
Party, without delay.
20. Notices. Notices or other communications required to be given by any
Party pursuant to this Agreement shall be written in English and shall be deemed
to be duly given when it is delivered by email to the address stated below, or
as subsequently supplemented, or by regular United States mail to the addresses
identified in the introductory paragraph of this Agreement.
Page 8
21. Severability. Any provision of this Agreement that is invalid or
unenforceable because of any inconsistency with relevant law shall be
ineffective or unenforceable within such jurisdiction where the relevant law
governs, without affecting in any way the remaining provisions hereof.
22. Amendments and Supplement. Any amendment and supplement of this
Agreement shall come into force only after Parties sign a written document.
governed, construed and enforced in accordance with and governed by the laws of
the United States and the State of Delaware applicable to agreements made and to
be performed in such jurisdiction without reference to conflicts of law
principles.
24. Attorney's Fees. If a Party shall commit a material breach of a term
hereof, such party shall pay to the successful party all of the successful
party's costs and expenses, including, without limitation, attorneys' and expert
witness fees, incurred by such party in enforcing the terms of this Agreement.
25. Confidentiality. The Parties agree that, by virtue of this Agreement,
they may receive or become aware of information belonging or relating to the
other, its business, business plans, affairs or activities, which information is
confidential and proprietary to the other party and/or its suppliers and/or
customers and in respect of which they are bound by a strict duty of confidence
("Confidential Information").
In consideration of such Confidential Information being disclosed or otherwise
made available to either Party for the purposes of the performance of this
Agreement, the Parties agree that they will not at any time, either before or
after the termination of this Agreement, and either directly or indirectly,
disclose, divulge or make unauthorized use of any Confidential Information,
except to the extent to which such Confidential Information, is publicly known
at the time of its disclosure or being made available to them; (b) after such
disclosure or being made available to them, becomes publicly known otherwise
than through a breach of this provision; and/or (c) disclosure is required by
law, regulation or order of a competent authority (including any regulatory or
governmental body or securities exchange) by a Party, provided that, where
practicable, the other Party is given reasonable advance notice of the intended
disclosure. The Parties agree that upon the earlier of a request from the other
party or the termination of this Agreement, each Party shall return to the other
or destroy all documents or records in any medium or format containing any
Confidential Information that are in its possession or control and will not
retain any copies of them, and the provisions of this Section 24 will continue
without limit of time, notwithstanding the termination of this Agreement for any
reason.
This Section 25 does not apply to AmericaTowne's reporting obligations as a
publicly-reporting company under the rules promulgated by the SEC.
The Parties irrevocably consent that any legal action or proceeding against them
under, arising out of or in any manner relating to this Section 24, may be
brought only in a court with jurisdiction located in, or the federal district
court the district of which includes, Mecklenburg County, North Carolina and the
Parties each irrevocably consent to that venue and to the personal jurisdiction
thereof. The Parties hereby expressly and irrevocably waive any claim or defense
in any action or proceeding based on any alleged lack of personal jurisdiction,
improper venue or forum non conveniens or any similar basis.
Page 9
26. Noncompetition and Noncircumvention. The Parties agree that each will
refrain, directly or indirectly from utilizing information gained from the other
in a way other than as contemplated hereunder. Further, neither Party will
circumvent the other by attempting to take advantage of research and development
performed by the other. The Parties agree that this Section 26 is an essential
and material part of this Agreement. As of the Effective Date, Exporter agrees
that it will take no action to compete with or adversely affect AmericaTowne's
efforts to secure funding, where necessary, primarily through Exim Bank and
elsewhere under the guidance and the direction of AmericaTowne. As such, no
Party to this Agreement shall attempt to compete or circumvent in any way at any
time the purpose of this Agreement or those including the entities and people
that have been charged to carry out this Agreement.
under, arising out of or in any manner relating to this Section 26, may be
27. Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the Parties and their respective successors and assigns.
Nothing in this Agreement shall be construed to create any rights in third
parties as third-party beneficiaries or otherwise. This Agreement shall not be
assigned to any party.
28. Counterpart Signatures. This Agreement may be executed in numerous
counterparts, all of which shall be considered one and the same agreement. For
purposes of this Agreement, facsimile or electronic signatures shall be
considered original signatures.
29. Assignment and Subcontracting. This Agreement is personal to the
Parties and, except to the extent necessary for the collection of outstanding
bills through a factoring agent, Exporter shall not without the prior written
approval of the Company: (a) assign, mortgage, charge or otherwise transfer or
deal in, or create any trust over, any of its rights; or (b) subcontract or
otherwise delegate the whole or any part of its rights or obligations under this
contract to another person.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly
executed on their behalf by a duly authorized representative.
AMERICATOWNE
By: /s/Alton Perkins
Name: Alton Perkins, CEO
Date: 1/8/2015
EXPORTER
By: /s/Leah Bett
Name:Leah Bett, President
Page 10
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N-SAR FILING THRIVENT FINANCIAL SECURITIES LENDING TRUST Transactions Effected Pursuant to Rule 10f-3 For the six months period ending April 30, 2010 Fund Trade Date CUSIP Issuer 144A Price Par/ Amount Issuer Size Percent Broker Participating Underwriters Selling Concession NONE
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SECURITIES AND EXCHANGE COMMISSION Washington, D.C. Schedule 13G Under the Securities Exchange Act of 1934 (Amendment No.: 2 )* Name of issuer: Banc of California Inc Title of Class of Securities:Common Stock CUSIP Number:05990K106 Date of Event Which Requires Filing of this Statement: May 31, 2017 Check the appropriate box to designate the rule pursuant to which this Schedule is filed: (X) Rule 13d-1(b) ( ) Rule 13d-1(c) ( ) Rule 13d-1(d) *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter the disclosures provided in a prior cover page. The information required in the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). (Continued on the following page(s)) 13G CUSIP No.:05990K106 1.NAME OF REPORTING PERSON S.S.
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Exhibit 10.153 EMPLOYMENT AGREEMENT This EMPLOYMENT AGREEMENT (this "Agreement") is made effective as of December 14, 2010 (the "Effective Date"), by and between ADVANCED CELL TECHNOLOGY, INC., a Delaware corporation (the "Company") and GARY H. RABIN, an individual (the "Executive"). WHEREAS, the Board of Directors of the Company (the "Board") has approved and authorized the entry into this Agreement with Executive; and WHEREAS, Company desires to employ Executive to serve, on an interim basis, as the Company's Chief Executive Officer, Chief Financial Officer and Chairman of the Board, and Executive desires to so serve, on the terms and conditions set forth in this Agreement. NOW, THEREFORE, in consideration of the promises and mutual covenants and agreements herein contained, and for other valuable consideration, the receipt and sufficiency of which is hereby acknowledged by Company and Executive, and intending to be legally bound hereby, the Company and Executive hereby agree as follows: 1.Term; "At Will" Employment. (a)Executive's employment with the Company shall commence as of the Effective Date and shall end on the date when this Agreement is terminated in accordance with the terms hereof (the "Term"). (b)Executive's employment with Company is on an "at will" basis. This means that the Company may terminate Executive's employment at any time for any reason or no reason, with or without notice, and with or without "Cause" (defined below). Similarly, Executive is free to resign at any time or decline to commence work, for any reason or for no reason, and with or without "Good Reason" (defined below). Notwithstanding the foregoing, the parties acknowledge that, despite Executive's "at will" employment status, the termination of Executive's employment for various reasons shall entitle Executive to receive certain benefits as set forth in Section 10 below in greater detail. 2.Employment. Executive shall be employed as and hold the title of Chief Executive Officer, Chief Financial Officer and Chairman of the Board from the Effective Date until the date on which a new Chief Executive Officer commences full-time employment with the Company (the "New CEO Start Date") or, if sooner, the date on which Executive's employment is otherwise terminated in accordance with this Agreement. Executive, in his capacity as Chief Executive Officer, will have the full range of executive duties and responsibilities that are customary for public company CEO positions. All Company officers shall report to and take direction from Executive, provided however, that nothing herein shall restrict the Board from conferring directly with Company officers and the Company shall have the right to enter into agreements with Company officers for the Board to determine specific employment-related issues such as compensation and termination. Executive shall have day-to-day responsibility for the affairs of the Company and shall have such other powers and duties as may be from time to time assigned to him by the Board. Executive shall report directly to the Board. All other employees of Company will report, either directly or through other officers of Company, to Executive. Executive shall devote substantially all of Executive's time, attention and energies to the business and affairs of the Company; provided, however, the Company acknowledges that Executive is an executive and/or director in the entities listed on Schedule "A" attached hereto, as described therein and may continue in such capacities only so long as such activities do not present any conflicts of interest with the Company. 3.Base Salary. The Company shall pay Executive an annual salary at the rate of four hundred eighty thousand ($480,000) per year (the "Base Salary"), less applicable deductions. The Base Salary shall be payable by the Company to Executive in substantially equal installments not less frequently than bi-weekly, provided that the first payment hereunder shall include Base Salary retroactive to the Effective Date. The Company's awards of deferred compensation, discretionary bonus, retirement, stock option and other Executive benefit plans and in fringe benefits shall not reduce the Base Salary; provided, however, that voluntary deferrals or contributions by the Executive to such plans agreed to by Executive, if any, shall reduce the current cash compensation paid to Executive. 4.Performance Bonus; Stock Awards. (a)Within ten (10) days following the execution of this Agreement by the Company and Executive, but in no event prior to January 3, 2011, Company will pay to Executive a one-time fully earned cash signing bonus of $40,000. For the avoidance of doubt, the signing bonus shall not be refundable or creditable against any other amounts owed by the Company to Executive hereunder. 1 (b)The Company shall pay Executive a performance bonus (the "Performance Bonus") in accordance with the terms of this Section 4(b). The target amount of the Performance Bonus shall be $480,000 (i.e., 100% of Base Salary) per year. However, the Performance Bonus shall be no less than $144,000 (i.e., 30% of Base Salary) per year (the "Guaranteed Minimum Bonus") and no more than $720,000 (i.e., 150% of Base Salary) per year. The actual amount of the Performance Bonus shall be determined by the Compensation Committee of the Board during each calendar year quarter based on the performance of the Company and Executive, with reference to the performance goals and/or metrics established by the Compensation Committee in consultation with Executive with respect to such Performance Bonus period. The Performance Bonus shall be payable to the Executive on a calendar year quarterly basis (with the annual amounts noted above being pro-rated accordingly), commencing with the quarter ending on March 31, 2011, and continuing through the date on which this Agreement is terminated. The Performance Bonus shall be determined by the Compensation Committee and payable to Executive in cash within ten (10) business days after the end of each calendar year quarter. Upon the termination of this Agreement for any reason, the Performance Bonus shall be pro-rated on a daily basis based on the number of days during the calendar year quarter in which such termination occurs prior to the date of such termination, over a presumed 91-day quarter. Notwithstanding the foregoing, if and to the extent that the Performance Bonus exceeds 75% of Base Salary with respect to any period, the Company may satisfy its payment obligations with respect to such excess by granting unrestricted and registered common stock of the Company to Executive with a fair market value (as determined by the Board in good faith) on the date of grant (which grant date shall be no later than ten [10] business days after the end of the quarter) equal to the amount of such excess. (c)On January 3, 2011, the Company shall grant Executive Five Million (5,000,000) shares of restricted common stock of the Company (the "Restricted Shares"). On the date of execution of this Agreement, the Company shall grant Executive a non-qualified option to purchase Five Million (5,000,000) shares of common stock of the Company with an exercise price equal to the per share price of the Company's common stock as of the close of trading on the trading day that the Compensation Committee approves the award (the "Stock Option," and together with the Restricted Shares, the "Incentive Awards"). The Incentive Awards shall vest fully, become fully exercisable and not be subject to any further restrictions, on the earliest to occur if: (1) January 1, 2012, provided that Executive is employed by the Company on such date; (2) the New CEO Start Date, provided that Executive is employed by the Company on such date; (3) the occurrence of a "Change of Control" (as defined in the Company's 2005 Stock Option Plan), provided that Executive is employed by the Company on such date; (4) the termination of this Agreement by the Company without Cause, or (5) the termination of this Agreement by Executive for Good Reason. For the avoidance of doubt, and notwithstanding anything to the contrary herein, (x) the Incentive Awards shall not vest if Executive's employment is terminated for Cause or as a result of Executive's death or "Disability" (defined below) pursuant to the terms of this Agreement or Executive resigns without Good Reason, in each case prior to the date on which the Incentive Awards otherwise vest pursuant to clause (1) through clause (3) of the immediately preceding sentence; and (y) in the event that Executive's employment is terminated for Cause or as a result of Executive's death or Disability pursuant to the terms of this Agreement or Executive resigns without Good Reason, in each case after the date on which the Incentive Awards otherwise vest pursuant to clause (1) through clause (3) of the immediately preceding sentence, any such later termination or resignation shall not change or impact the prior full vesting of the Incentive Awards. The Restricted Shares and the common stock underlying the Stock Option shall be registered by the Company pursuant to the Securities Act of 1933 (on SEC Form S-8) and shall not be subject to any restrictions whatsoever (other than the Company's insider trading and blackout policies, in the event Executive is then deemed to be an "insider") once the Incentive Awards have vested. Without limiting the foregoing, the Stock Option, once vested, shall remain exercisable by Executive for the entire ten-year term of the Stock Option, even if Executive is no longer performing services to the Company prior to the expiration of such ten-year term. The format by which the Restricted Shares shall vest is as follows. The Restricted Shares shall be owned by Executive on the date of grant, subject to the right of the Company to repurchase (the "Repurchase Right") the Restricted Shares for the aggregate consideration of One Dollar ($1.00) in the event that the Restricted Shares do not vest on or before January 1, 2012, in accordance with the first paragraph of this Section 4(c). The Restricted Shares shall become fully vested once the Repurchase Right has lapsed. In all events the Repurchase Right shall lapse, and may not be exercised by the Company, at any time after January 2, 2012. The parties understand that the Incentive Awards may be documented pursuant to separate award/grant agreements or notices. In such event, the Company agrees to prepare any separate agreements or notices consistent with the provisions of this Agreement. 5.Benefits. During the Term, Executive shall receive the following benefits and/or be entitled to participate in the following benefits programs of Company: (a)Executive and his spouse and dependents shall be entitled to participate in the Company's health insurance program and the Company shall pay all premiums for said insurance for Executive and his spouse and dependents under the applicable plans. However, as of the Effective Date, the Executive does not plan to participate in this program as he is covered by another health insurance program. However, Executive may opt to join this program at any time. (b)In addition to the foregoing, Executive shall be entitled to participate with other key executive officers of the Company based on position, tenure and salary in any plan of the Company relating to stock purchases, pension, thrift, profit sharing, life insurance, disability insurance, education, or other retirement or Executive benefits that the Company has adopted or may hereafter adopt for the benefit of its executive officers. (c)Executive shall be reimbursed for his legal fees incurred in connection with negotiating and drafting this Agreement up to a maximum of $10,000. 2 6.Vacation. Executive shall be entitled to seven days paid vacation per calendar quarter in accordance with the Company's policy, in addition to holidays and other paid time off (excluding vacation) provided to similarly situated executive officers of the Company. 7.Business Expenses. During such time as Executive is rendering services hereunder, Executive shall be entitled to incur and be reimbursed by the Company for all reasonable business expenses, including but not limited to, at least business class airfare while traveling at least 1,000 miles from Executive's home city (at least coach class for travel under 1,000 miles), first class hotel accommodations, ground transportation while traveling, reasonable meals or an agreed upon per diem while traveling, mobile telephone and text messaging charges. The Company agrees that it will reimburse Executive for all such expenses upon the presentation by Executive, on a monthly basis, of an itemized statement of such expenditures setting forth the date, the purposes for which incurred, and the amounts thereof, together with such receipts showing payments in conformity with the Company's established policies. Reimbursement for approved expenses shall be made within a reasonable period not to exceed 30 days after the receipt of foregoing statements and supporting documentation. 8.Indemnity. Company shall to the extent permitted and required by law, indemnify and hold Executive harmless from costs, expense or liability arising out of or relating to any acts or decisions made by Executive in the course of his employment to the same extent Company indemnifies and holds harmless other officers and directors of Company in accordance with Company's established policies. This indemnity shall include, without limitation, advancing Executive attorneys fees to the fullest extent permitted by applicable law. Company agrees to continuously maintain Directors and Officers Liability Insurance with limits of coverage the same as currently in effect, unless a change is mutually agreed upon by Executive and the Board of Directors of Company, and to include Executive within said coverage while Executive is employed by Company and for at least thirty-six (36) months after the termination of Executive's employment by Company. 9.Termination. Executive's employment with Company may be terminated in accordance with the terms of this Agreement with the effects specified below. 9.1 Death. This Agreement shall terminate upon Executive's death. Company shall pay Executive's estate (i) on the date it would have been payable to Executive any unpaid Base Salary and accrued vacation earned prior to the date of Executive's death, (ii) within 30 days of the conclusion of the quarter following Executive's death, any unpaid Performance Bonus prorated to the date of Executive's death (calculated at "target" regardless of actual performance), and (iii) any unpaid reimbursements due Executive for expenses incurred by Executive prior to Executive's death upon receipt from Executive's personal representative of receipts therefore. 9.2Disability. If, as a result of Executive's incapacity due to physical or mental illness, Executive shall have been absent from the full time performance of substantially all of his material duties with Company for 45 consecutive days or 90 days total within any six month period, Executive's employment may be terminated by Company or by Executive for "Disability." Termination shall occur immediately upon written notice delivered to Executive by Company or by Executive to Company. In the event of such a termination, Company shall pay Executive (i) any unpaid Base Salary and accrued vacation earned prior to the date of termination, (ii) within 30 days of the end of the quarter following the date of termination, any unpaid Performance Bonus prorated to Executive's last day of actual employment (calculated at "target" regardless of actual performance), (iii) any unpaid reimbursements due Executive for expenses incurred by Executive prior to the date of termination, pursuant to paragraph 8, and (iv) if Executive is not covered by any other comprehensive insurance that provides a comparable level of benefits, Company will pay Executive an amount equivalent to Executive's COBRA payments up to 18 months following the date of termination or the maximum term allowable by then applicable law for coverage of Executive and his eligible dependents. 9.3 Cause. The Company may terminate Executive's employment hereunder for Cause. For purposes of this Agreement, "Cause" means (i)an act or acts of fraud or dishonesty undertaken by Executive during the course of his employment; (ii)misconduct by Executive that is willful or deliberate on Executive's part and that, in either event, is materially injurious to Company, monetarily or otherwise; (iii)the indictment, formal charge, conviction of Executive of, or the Executive entering of a plea of nolo contendere to, a misdemeanor involving fraud, theft, dishonesty or moral turpitude or a felony, or Executive's debarment by the U.S. Food and Drug Administration from working in or providing services to any pharmaceutical or biotechnology company; (iv)the material breach of any terms and conditions of this Agreement by Executive, which failure or breach has not been cured by Executive within 30 days after written notice thereof to Executive from Company; or (v)Executive's failure to perform his duties or follow the lawful directions of the Board, which failure has not been cured by Executive within 30 days after written notice thereof to Executive from Company 3 The termination of Executive's employment shall not be deemed to be for Cause unless and until there shall have been delivered to Executive a copy of a resolution, duly adopted by the affirmative vote of not less than a majority of the entire membership of the Board (not including Executive) at a meeting of the Board (after reasonable notice to Executive and an opportunity for him, together with his counsel, to be heard before the Board), finding that, in the good faith opinion of the Board, one or more causes for termination exist under this Section 10.3, and specifying the particulars thereof in detail. In the event of termination for Cause, Executive will be entitled to such Base Salary, accrued vacation pay, and benefits as have accrued under this Agreement through the date of termination which accrued amounts shall be payable on the date of termination, and to extend his insurance coverage at his own expense for up to 18 months following the Effective Date of Termination or the maximum term allowable by then applicable law for coverage of Executive and his eligible dependents, but will not be entitled to any other salary, benefits, bonuses or other compensation after such date. 9.4 Without Cause. This Agreement may also be terminated by Company without Cause, and for any reason or no reason, at any time by the delivery to Executive of a written notice of termination; provided, however, that upon any termination of this Agreement by Company other than for Cause (but only if such termination without Cause constitutes a "separation from service" as defined in Section 409A of the Internal Revenue Code of 1986, asamended (the "Code"), subject to Section 9.7 below), Executive shall be entitled to receive the following (collectively, the "Severance Benefits"): (a)on the date of termination, Executive will be paid such Base Salary and any unpaid Performance Bonus pro-rated to the termination date (calculated at "target" regardless of the actual performance); (b)all other benefits, including accrued vacation, as have been earned or accrued under this Agreement through the date of termination; and (c)provided Executive executes the Company's standard general release for employees (and does not revoke such general release) within sixty (60) days following the date of the termination of Executive's employment by Company, Executive will receive the payments described below on the sixtieth (60th) day after the date of the termination of Executive's employment: (i)if Executive is not covered by any other comprehensive insurance, the Company will pay Executive an amount equivalent to Executive's and Executive's spouse and dependent's COBRA payments up to 24 months following the date of termination if Executive properly electives COBRA coverage, or for the maximum term allowable by then applicable law for coverage of Executive and his spouse and dependents; (ii)a lump-sum payment equal to the positive difference (if any) between (A) $480,000 (i.e., Base Salary for six months plus a deemed Performance Bonus for six months at "target"), minus (B) the total amount of Base Salary and Performance Bonus paid to Executive under this Agreement prior to the date of termination, including the amounts paid to Executive under Section 10.4(a) above but specifically not including any amounts paid to Executive for transition services under Section 10.7 below; and (iii)full vesting of the Incentive Awards as provided in Section 4(c) above. 9.5 By Executive. Executive may terminate this Agreement for any reason or no reason at any time upon written notice to Company. (a) In the event Executive terminates this Agreement for "Good Reason," Executive shall be entitled to receive the Severance Benefits; provided that such termination constitutes a "separation from service" as defined in Code Section 409A and Executive executes the Company's standard general release for employees (and does not revoke such general release) within sixty (60) days following the date of the termination of Executive's employment by Company. The severance benefits shall be payable to Executive on the sixtieth (60th) day after the date of the termination of Executive's employment. As used herein, "Good Reason" shall mean: (i)any removal of Executive from, or any failure to nominate or re-elect Executive to, his current office and/or as the Chairman of the Board, except in connection with the appointment of a new Chief Executive Officer, termination of Executive's employment for death, Disability or Cause as provided above in this Agreement; (ii)the failure of Company to obtain the assumption of this Agreement by any successor to Company, as provided in this Agreement; 4 (iii)in the event of a Change in Control: a.(I) any reduction in Executive's then-current Base Salary or any material reduction in Executive's comprehensive benefit package (other than changes, if any, required by group insurance carriers applicable to all persons covered under such plans or changes required under applicable law), without Executive's prior written consent, or (2) the assignment to Executive of duties that represent or constitute a material adverse change in Executive's position, duties, responsibilities and status with Company immediately prior to a Change in Control, without Executive's prior written consent, or (3) a material adverse change in Executive's reporting responsibilities, titles, offices, or any removal of Executive from, or any failure to re-elect Executive to, any of such positions; except in connection with the termination of Executive's employment for Cause, upon the disability or death of Executive, or upon the voluntary termination by Executive; b.the relocation of Executive's place of employment from the location at which Executive was principally employed immediately prior to the date of the Change in Control to a location more than 50 miles from such location, without Executive's prior written consent; or c.the failure of any successor to Company to assume and agree to perform Company's obligations under this Agreement; or (iv)the material breach of any terms and conditions of this Agreement by Company. Executive shall provide Company written notice of any claimed event of Good Reason within sixty (60) days of the date that one of the Good Reason events set forth above first occurred without Executive's written consent. Executive's termination for Good Reason will only be effective if Company shall not have cured such claimed event of Good Reason within thirty (30) days of receipt of written notice from Executive (such notice shall describe in detail the basis and underlying facts supporting Executive's belief that a Good Reason event has occurred). Company shall notify Executive in writing of the timely cure of any claimed event of Good Reason and the manner in which such cure was effected, and upon receipt of written notice from Executive of his concurrence that a cure has been effectuated, any notice delivered by Executive based on such claimed Good Reason shall be deemed withdrawn and shall not be effective to terminate this Agreement. If it shall be determined that any payment or distribution by Company to or for the benefit of Executive hereunder (a "Payment") would be subject to the excise tax imposed by Code Section 4999 or any interest or penalties are incurred by Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereafter collectively referred to as the "Excise Tax"), then Company shall calculate the amount Executive will retain net after-all-taxes, including Excise Taxes, if all payments are made and also calculate the amount Executive shall retain net after-all-taxes, including Excise Taxes, if payments are reduced to an amount so that no Excise Taxes are imposed, and Company shall pay Executive the amount that maximizes the amount Executive will receive after-all-taxes. Company will consult with Executive as to the appropriate Federal and any state income tax to be used in making such calculations. In the event that it is determined that Executive should receive an amount that results in the Payment not being subject to Excise Taxes (the "ReducedPayment"), Executive will advise Company as to how to reduce or eliminate the Payment or Payments from among the following categories: the portion denominated and payable in cash; the portion payable in-kind, such as insurance coverage, or in cash as a reimbursement; and equity-based compensation and enhancements, such as accelerated vesting and extended periods to exercise options. Executive shall have full discretionary authority to determine which payments to reduce within any of the three categories described in the preceding sentence, and can determine to have Company reduce payments in any or all of the three categories in such order as Executive shall advise Company. As promptly as practicable following such determination and election by Executive and subject to any payment provisions otherwise applicable under this Agreement, Company shall pay to or distribute for the benefit of Executive such Payments as are then due to Executive under this Agreement. In the event that Executive is nevertheless subject to Excise Tax, the Company shall have no liability to Executive for payment thereof. (b)In the event Executive terminates this Agreement other than because of Disability or other than for Good Reason, Company shall pay Executive: (i) on the date it would have been payable to Executive, any unpaid Base Salary and accrued vacation pay earned prior to the date of Executive's termination, and (ii) any unpaid reimbursements due Executive for expenses incurred by Executive prior to the date of Executive's termination, pursuant to this Agreement, and Executive shall have the right to extend Executive's and Executive's eligible dependents' medical insurance coverage at Executive's own expense for up to twelve (12) months following the date of termination, or the maximum term allowable by then applicable law for coverage of Executive and his eligible dependents. 5 9.6No Mitigation. Notwithstanding anything contained in this Agreement, under applicable law, or otherwise, in the event of any termination of this Agreement whereby Executive is entitled to receive all or any portion of the Severance Benefits (as defined and provided in this Agreement), then (a) Executive shall have no obligation to seek or accept any other employment or engagement with any other individual or entity following any such termination, and (b) in the event that Executive accepts any other employment or any engagement with any other individual or entity, Company will not be entitled to offset or reduce any portion of the Severance Benefits by any compensation, remuneration, consideration or other things of value received or to be received by Executive from or in connection therewith, it being expressly understood and agreed by Company and Executive that Executive will be entitled to receive all such Severance Benefits without deduction or offset as provided in this Agreement, except that any benefits otherwise receivable by Executive pursuant to Sections 10.4(b)(i) and 10.4(b)(iii) shall be reduced,to the extent comparable benefits are received by Executive from a subsequent employer during the two years after termination of his employment. 9.7Transition Services. Unless this Agreement has been terminated for any reason prior to the New CEO Start Date, the Company may request Executive to perform part-time transition services (the "Transition Services") for a period of up to three months after the New CEO Start Date in order to assist in the transition of Company leadership. In the event Executive agrees to perform the Transition Services, Executive shall be paid the same Base Salary, Performance Bonus (calculated at "target", regardless of actual performance) and benefits set forth in this Agreement during the three-month Transition Services period, provided it is understood that Executive's services during such period shall be subject to his professional availability. In addition, in the event that Executive performs the Transition Services, the parties agree that, notwithstanding anything to the contrary herein, any termination of Executive's employment shall not be treated as a "separation from service" (pursuant to Code Section 409A), and the Severance Benefits shall not be payable, until a "separation from service" occurs after the completion by Executive of the Transition Services. 10. Assignment. 10.1 This Agreement may not be assigned by Executive. 10.2 This Agreement may be assigned by Company provided that Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of Company to expressly assume and agree to perform under this Agreement in the same manner and to the same extent that Company would be required to perform as if no such succession had taken place. 11.Covenants. 11.1 Confidential Information. During the term of this Agreement and thereafter, Executive shall not, except as may be required to perform his duties hereunder or as required by applicable law or court order, disclose to others for use, whether directly or indirectly, any Confidential Information regarding Company. "Confidential Information" shall mean information about Company, its subsidiaries and affiliates, and their respective clients and customers that is not available to the general public or that does not otherwise become available to the general public, and that was learned by Executive in the course of his employment by Company, including, without limitation, any data, formulae, recipes, methods, information, proprietary knowledge, trade secrets and client and customer lists and all papers, resumes, records and other documents containing such Confidential Information. Executive acknowledges that such Confidential Information is specialized, unique in nature and of great value to Company, and that such information gives Company a competitive advantage. Upon the termination of his employment, Executive will promptly deliver to Company all documents, maintained in any format, including electronic or print, (and all copies thereof) in his possession containing any Confidential Information. 11.2 Noncompetition. Except as otherwise provided herein, Executive agrees that during the term of this Agreement he will not, directly or indirectly, without the prior written consent of Company, provide consulting services with or without pay, or own, manage, operate, join, control, participate in, or be connected as a stockholder, employee, partner, or otherwise with any business, individual, partner, firm, corporation, or other entity which is then in competition with Company or any present affiliate of Company in the biotech industry; provided, however, that the "beneficial ownership" by Executive, either individually or as a member of a "group," as such terms are used in Rule 13d of the General Rules and Regulations under the Securities Exchange Act of 1934 ("Exchange Act"), of not more than 5 % of the voting stock of any corporation shall not be a violation of this Agreement. Notwithstanding the foregoing, Executive shall be permitted to maintain the ownership interests and directorship described on Exhibit "A" attached hereto so long as they do not interfere with the performance of his duties and do not constitute competitive activities. 11.3 Right to Company Materials. Executive agrees that all materials, books, files, reports, correspondence, records, and other documents ("Company Material") used, prepared, or made available to Executive, shall be and shall remain the property of Company. Upon the termination of his employment and/or the expiration of this Agreement, all Company Materials shall be returned immediately to Company, and Executive shall not make or retain any copies thereof, unless and except to the extent required by applicable law, rule or regulation and provided that Executive gives the Company with specific written notice of the copies retained and the purpose of retaining them. 11.4 Non-solicitation. Executive understands and agrees that in the course of employment with Company, Executive will obtain access to and/or acquire Company trade secrets, including Confidential Information, which are solely the property of Company. Therefore, to protect such trade secrets, Executive promises and agrees that during the term of this Agreement, and for a period of six (6) months thereafter, he will not solicit or assist or instruct others in soliciting any employees of Company or any of its present or future subsidiaries or affiliates, to divert their employment or business to or with any individual, partnership, firm, corporation or other entity then in competition with the business of Company, or any subsidiary or affiliate of Company. 11.5 Non-disparagement. Except for statements of fact, internal Company communications relating to the performance of Company, disclosures required under applicable law or in connection with any legal proceedings with respect to which Executive is a party or witness, Executive will not make any disparaging remarks regarding Company at any time during or after the termination of Executive's employment with Company. Except for statements of fact, internal communications relating to the performance of Executive, and disclosures required under applicable law or in connection with any legal proceedings with respect to which Company is a party or witness, Company will not make any disparaging remarks regarding Executive at any time during or after the termination of his employment with Company. 6 11.6 Survival. This Article 11 shall survive the termination or expiration of this Agreement for the periods of time indicated herein or indefinitely if no period of time is indicated. 12.Notice. For the purpose of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or when mailed by United States certified or registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below, or to such other addresses as either party may have furnished to the other in writing in accordance herewith, exception that notice of a change of address shall be effective only upon actual receipt: Company: Executive: Advanced Cell Technology, Inc. 381 Plantation Street Biotech V. Worcester, Massachusetts 09605 Attention: Rita Parker Gary H. Rabin 330 N. Carmelina Ave. Los Angeles, California 90049 With a copy (which shall not constitute notice) to: Jackoway Tyerman Wertheimer Austen Mandelbaum Morris & Klein, P.C. 1925 Century Park East, 22nd Floor Los Angeles, California 90067 Attention: Alan J. Epstein, Esq. 13.Amendments or Additions. No amendment or additions to this Agreement shall be binding unless in writing and signed by both parties hereto. 14.Section Headings. The section headings used in this Agreement are included solely for convenience and shall not affect, or be used in connection with, the interpretation of this Agreement. 15.Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. 16.Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but both of which together will constitute one and the same instrument. 17.Arbitration. Except as provided herein, any controversy or claim arising out of or relating in any way to this Agreement or the breach thereof, or Executive's employment and any statutory claims including all claims of employment discrimination shall be subject to private and confidential arbitration in Los Angeles County, California in accordance with the laws of the State of California. The arbitration shall be conducted in a procedurally fair manner by a mutually agreed upon neutral arbitrator selected in accordance with the National Rules for the Resolution of Employment Disputes ("Rules") of the American Arbitration Association or if none can be mutually agreed upon, then by one arbitrator appointed pursuant to the Rules. The arbitration shall be conducted confidentially in accordance with the Rules. The arbitration fees shall be paid by the Company. Each party shall have the right to conduct discovery including depositions, requests for production of documents and such other discovery as permitted under the Rules or ordered by the arbitrator. The statute of limitations or any cause of action shall be that prescribed by law. The arbitrator shall have the authority to award any damages authorized by law for the claims presented including punitive damages and shall have the authority to award reasonable attorneys fees to the prevailing party in accordance with applicable law. The decision of the arbitrator shall be final and binding on all parties and shall be the exclusive remedy of the parties. The award shall be in writing in accordance with the Rules, and shall be subject to judicial enforcement in accordance with California law. Notwithstanding anything to the contrary contained in this Section, nothing herein shall prevent or restrict the Company or Executive from seeking provisional injunctive relief from any forum having competent jurisdiction over the parties. 7 18.Section 409A. This Agreement is intended to comply with Code Section 409A and will be interpreted in a manner intended to comply with Code Section 409A. To the extent any reimbursements or in-kind benefits due to Executive under this Agreement constitute "deferred compensation" under Section 409A of the Code, any such reimbursements or in-kind benefits shall be paid to Executive in a manner consistent with Treas. Reg. Section 1.409A-3(i)(1)(iv). Each payment made under this Agreement shall be designated as a "separate payment" within the meaning of Section 409A of the Code. Notwithstanding anything herein to the contrary, if any payment of money or other benefits due to Executive hereunder could cause the application of an accelerated or additional tax under Section 409A of the Code, Company, in its reasonable discretion, may decide such payments or other benefits shall be deferred if deferral will make such payment or other benefits compliant under Section 409A of the Code ("a 409A Tax"), or otherwise such payment or other benefits shall be restructured, to the extent possible, in a manner, determined by Company that does not cause such accelerated or additional tax. In addition, to the extent Executive is a "specified employee" as defined in Section 409A of the Code as of the earlier of a "separation from service" (as defined in Code Section 409A and the regulations promulgated thereunder) or the date of termination of Executive's employment, and the deferral of the commencement of any compensation or benefits otherwise payable under this Agreement, or any other applicable separation program or plan, as a result of such "separation from service" or termination of employment is necessary in order to prevent a 409A Tax, then Company will postpone the commencement of such payment of any such compensations or benefits until the first business day of the seventh month following Executive's termination date (the "Delayed Payment Date"). Payment of the withheld and accumulated payments (with interest as calculated below) shall be treated as made on the Delayed Payment Date if the payment is made on such date or on a later date within the same calendar year as the Delayed Payment Date, or, if later, by the 15th day of the third month following the Delayed Payment Date, provided that Executive may not, directly or indirectly, designate the year of payment. In the event that this Paragraph 14(d) requires a delay of any payment or benefit, such payment shall be accumulated and paid in a single lump sum on the Delayed Payment Date, with interest for the period of delay, compounded monthly, equal to the prime or base lending rate then in effect as of the date the payment would have otherwise been made. Company shall consult with Executive in good faith regarding the implementation of the provisions of this Paragraph, but Company shall determine the terms of any such implementation. Executive acknowledges that Executive has been advised to obtain independent legal, tax or other counsel in connection with 409A, and that Executive has done so to the extent that you deemed necessary or appropriate. 19.Miscellaneous. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by Executive and such officer as may be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of California without regard to its conflicts of law principles. All references to sections of the Exchange Act shall be deemed also to refer to any successor provisions to such sections. This Agreement may be executed in counterparts, each of which shall constitute an original but all of which, taken together, shall constitute one document. /// (signatures continued on following page) 8 9 IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement and has made it effective as of the date first indicated above. ADVANCED CELL TECHNOLOGY, INC. EXECUTIVE By: /s/ Alan C. Shapiro Alan C. Shaprio, as its GARY H. RABIN Chairman, ACT Compensation Committee 10 IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement and has made it effective as of the date first indicated above. ADVANCED CELL TECHNOLOGY, INC. EXECUTIVE By: /s/ Gary H. Rabin , as its GARY H. RABIN 11 SCHEDULE A EXISTING EXECUTIVE AND/OR DIRECTOR POSITIONS Managing Member, Villetta Management, LLC Managing Member, GR Advisors, LLC 12
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Exhibit 99.1 SEMI-ANNUAL SERVICER’S CERTIFICATE Pursuant to Section4.01(c)(ii) of the Storm Recovery Property Servicing Agreement, dated as of August 18, 2010 (the “Servicing Agreement”), between ENTERGY ARKANSAS, INC., as servicer and ENTERGY ARKANSAS RESTORATION FUNDING,LLC, the Servicer does hereby certify, for the May 1, 2013 Payment Date (the “Current Payment Date”), as follows: Capitalized terms used herein have their respective meanings as set forth in the Indenture.References herein to certain sections and subsections are references to the respective sections of the Servicing Agreement or the Indenture, as the context indicates. 1. Allocation of SRC Remittances as of Current Payment Date allocable to principal and interest: a) Principal i. Tranche A b) Interest i. Tranche A 2. Outstanding Amount of Bonds prior to, and after giving effect to the payment on the Current Payment Date and the difference, if any, between the Outstanding Amount specified in the Expected Amortization Schedule (after giving effect to payments to be made on such Payment Date under 1a) above) and the Principal Balance to be Outstanding (following payment on Current Payment Date): a) Principal Balance Outstanding (as of the date of this certification): i. Tranche A b) Principal Balance to be Outstanding (following payment on Current Payment Date): i. Tranche A c) Difference between (b) above and Outstanding Amount specified in Expected Amortization Schedule: . i. Tranche A 3. All other transfers to be made on the Current Payment Date, including amounts to be paid to the Indenture Trustee and to the Servicer: a) Operating Expenses i. Trustee Fees and Expenses: (subject to $1,000,000 cap on Indemnity Amounts per Section 8.02(e)(1)) ii. Servicing Fee: Entergy Arkansas, Inc. Wire Instructions: Capital One, NA New Orleans, LA ABA Number:065000090 Account Name:EAI - General Fund Account Number:0812276557 iii. Administration Fee: Entergy Arkansas, Inc. Wire Instructions: Capital One, NA New Orleans, LA ABA Number:065000090 Account Name:EAI - General Fund Account Number:0812276557 iv. Other Operating Expenses: Independent Manager’s Fees Wilmington Trust SP Services, Inc. Wire Instructions: Wilmington Trust Company ABA Number:031100092 For credit to account of Wilmington Trust SP Services Account Number:2460-3504 Attn:Thomas Strauss, Re: Entergy Arkansas Restoration Funding, LLC v. Total: b) Other Payments i. Operating Expenses (payable pursuant to Section 8.02(e)(4)): Deloitte & Touche LLP Deloitte & Touche LLP Wire Instructions: Bank Name: CitiBank ABA Number: 031100209 Account Name: Deloitte & Touche LLP Account Number: 3874-0688 Invoice #: 8001852879 Stradley & Ronon Stradley & Ronon Wire Instructions: Citizens Bank of PA ABA Number: 036076150 For Credit to Stradley Ronon Stevens & Young Account Number: 620096-961-6 Invoice # N/A Williams & Anderson PLC Williams & Anderson PLC Wire Instructions: Metropolitan National Bank ABA Number: 082001247 Account Number: 0335827 Bank Account Name: Williams & Anderson, PLC Client/MatterNo.: 7207-13932 Sidley Austin LLP Sidley Austin LLP JPMorgan Chase Bank, NA Chicago, IL ABA Routing #:071000013 Account Name: Sidley Austin LLP Account # 5519624 SWIFT code: CHASUS33XXX For invoice numbers: 33018502, 32057704 Richards Layton & Finger Richards Layton & Finger M&T Bank Rodney Square North Wilmington, Delaware 19890 Name on the Account: Richards Layton & Finger Routing/ABA #:022000046 Account #:2264-1174 Invoice No.: 9-16786 Standard & Poor’s Ratings Services Standard & Poor’s Ratings Services Bank of America San Francisco, CA Standard & Poor’s ABA#:0260-0959-3 Account #:12334-02500 Invoice No.:N/A Deloitte & Touche LLP Deloitte & Touche LLP Wire Instructions: Bank Name: CitiBank ABA Number: 031100209 Account Name: Deloitte & Touche LLP Account Number: 3874-0688 Invoice #: 8001852879 Stradley & Ronon Stradley & Ronon Wire Instructions: Citizens Bank of PA ABA Number: 036076150 For Credit to Stradley Ronon Stevens & Young Account Number: 620096-961-6 Invoice # N/A Williams & Anderson PLC Williams & Anderson PLC Wire Instructions: Metropolitan National Bank ABA Number: 082001247 Account Number: 0335827 Bank Account Name: Williams & Anderson, PLC Client/MatterNo.: 7207-13932 Sidley Austin LLP Sidley Austin LLP JPMorgan Chase Bank, NA Chicago, IL ABA Routing #:071000013 Account Name: Sidley Austin LLP Account # 5519624 SWIFT code: CHASUS33XXX For invoice numbers: 33018502, 32057704 Richards Layton & Finger Richards Layton & Finger M&T Bank Rodney Square North Wilmington, Delaware 19890 Name on the Account: Richards Layton & Finger Routing/ABA #:022000046 Account #:2264-1174 Invoice No.: 9-16786 Standard & Poor’s Ratings Services Standard & Poor’s Ratings Services Bank of America San Francisco, CA Standard & Poor’s ABA#:0260-0959-3 Account #:12334-02500 Invoice No.:N/A i. Funding of Capital Subaccount (to required amount): ii. Interest Earnings on Capital Subaccount to Entergy Arkansas Restoration Funding as of 4/17/2013*: Wire Instructions: Capital One, NA New Orleans, LA ABA Number:065000090 Account Name:EAI - General Fund Account Number:0812276557 iii. Operating Expenses and Indemnity Amounts over $1,000,000 (payable pursuant to Section 8.02(e)(8)): iv. Withdraw from Excess Funds Subaccount**: v. Total: *Interest is posted monthly on the second business day of the following month. **This amount assumes that estimated remittances of $0.00 covering the period of April 18, 2013 – April 30, 2013 will be deposited into the General Subaccount.The amount that is deposited to the Excess Funds Subaccount may be less/more if remittances to the General Subaccount are lower/higher than such estimated amount 4. Estimated amounts on deposit in the Capital Subaccount and Excess Funds Subaccount after giving effect to the foregoing payments: a) Capital Subaccount i. Total:$620,600.00 b) Excess Funds Subaccount i. Total: $1,112,342.83 IN WITNESS WHEREOF, the undersigned has duly executed and delivered this Servicer’s Certificate this 25th day ofApril 2013. ENTERGY ARKANSAS, INC. as Servicer By: /s/ Frank Williford Name:Frank Williford Title: Assistant Treasurer
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EXHIBIT 10.1 ASSISTED LIVING CONCEPTS, INC. 2 Effective October 31, 2006; Restated April 13, 2009 Amended and restated as of May 20, 2011 to reflect May 20, 2011 two-for-one stock split SECTION 1.Purpose. The purpose of this Assisted Living Concepts, Inc. 2006 Omnibus Incentive Compensation Plan is to promote the interests of Assisted Living Concepts, Inc., a Nevada corporation (the “Company”), and its stockholders by (a) attracting and retaining exceptional directors, officers, employees and consultants (including prospective directors, officers, employees and consultants) of the Company and its Affiliates (as defined below) and (b) enabling such individuals to participate in the long-term growth and financial success of the Company. SECTION 2. Definitions.As used herein, the following terms shall have the meanings set forth below: “Affiliate” means (a) any entity that, directly or indirectly, is controlled by, controls or is under common control with, the Company and (b) any entity in which the Company has a significant equity interest, in either case following the Initial Distribution and as otherwise determined by the Committee. “Award” means any award that is permitted under Section 6 and granted under the Plan. “Award Agreement” means any written agreement, contract or other instrument or document evidencing any Award, which may, but need not, require execution or acknowledgment by a Participant. “Board” means the Board of Directors of the Company. “Cash Incentive Award” shall have the meaning specified in Section 6(f). “Change of Control” shall (a) have the meaning set forth in an Award Agreement or (b) if there is no definition set forth in an Award Agreement, mean the occurrence of any of the following events, not including any events occurring prior to or in connection with the Initial Distribution (including the occurrence of such Initial Distribution): (i) the consummation of (A) a merger, consolidation, statutory share exchange or similar form of corporate transaction involving (x) the Company or (y) any of its subsidiaries, but in the case of this clause (y) only if Company Voting Securities (as defined below) are issued or issuable in connection with such transaction (each of the transactions referred to in this clause (A), a “Reorganization”) or (B) a sale or other disposition of all or substantially all the assets of the Company to a person that is not an Affiliate of the Company (a “Sale”), in each case, if such Reorganization or Sale requires the approval of the Company’s stockholders under the law of the Company’s jurisdiction of organization (whether such approval is required for such Reorganization or Sale or for the issuance of securities in such Reorganization or Sale), unless, immediately following such Reorganization or Sale, (1) all or substantially all the persons who were the “beneficial owners” (as such term is defined in Rule 13d-3 under the Exchange Act) of the securities eligible to vote for the election of the Board (“Company Voting Securities”) outstanding immediately prior to the consummation of such Reorganization or Sale beneficially own, directly or indirectly, more than 50% of the combined voting power of the then outstanding voting securities of the corporation or other entity resulting from such Reorganization or Sale (including a corporation or other entity that as a result of such transaction directly or indirectly owns the Company or all or substantially all the Company’s assets) (the “Continuing Company”) in substantially the same proportions as their ownership, immediately prior to the consummation of such Reorganization or Sale, of the outstanding Company Voting Securities (excluding any outstanding voting securities of the Continuing Company that such beneficial owners hold immediately following the consummation of such Reorganization or Sale as a result of their ownership prior to such consummation of voting securities of any corporation or other entity (other than the Company) involved in or forming part of such Reorganization or Sale), (2) no Person (excluding (x) any employee benefit plan (or related trust or fiduciary) sponsored or maintained by the Company or its Affiliates, (y) Scotia and (z) the Company and its Affiliates) beneficially owns, directly or indirectly, 20% or more of the combined voting power of the outstanding voting securities of the Continuing Company immediately following the consummation of such Reorganization or Sale and (3) immediately following the consummation of such Reorganization or Sale, at least a majority of the members of the board of directors (or equivalent body) of the Continuing Company are Incumbent Directors; (ii)the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company, unless such liquidation or dissolution is part of a transaction or series of transactions described in paragraph (i) above that does not otherwise constitute a Change of Control; or (iii) any Person or “group” (as used in Section 14(d)(2) of the Exchange Act) (excluding (x) any employee benefit plan (or related trust or fiduciary) sponsored or maintained by the Company or its Affiliates, (y) Scotia and (z) the Company and its Affiliates) becomes the beneficial owner, directly or indirectly, of Company Voting Securities representing 20% or more of the combined voting power of the then outstanding Company Voting Securities; provided, however, that, for purposes of this subparagraph (iv), no acquisition of Company Voting Securities (x) directly from the Company or (y) by any employee benefit plan (or related trust or fiduciary) sponsored or maintained by the Company or its Affiliates shall constitute a Change of Control. “Code” means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated thereunder. “Committee” means the Compensation/ Nominating/ Governance committee of the Board, or such other committee of the Board as may be designated by the Board from time to time to administer the Plan. “EBITDA” means earnings before interest, taxes, depreciation and amortization. “Effective Date” has the meaning assigned thereto in the Arrangement Agreement, dated as of September 12, 2006, among Extendicare Real Estate Investment Trust, the Company and the other parties thereto. “Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor statute thereto. “Exercise Price” means (a) in the case of Options, the price specified in the applicable Award Agreement as the price-per-Share at which Shares may be purchased pursuant to such Option or (b) in the case of SARs, the price specified in the applicable Award Agreement as the reference price-per-Share used to calculate the amount payable to the Participant. “Fair Market Value” means (a) with respect to any property other than Shares, the fair market value of such property determined by such methods or procedures as shall be established from time to time by the Committee and (b) with respect to the Shares, as of any date, (i) the mean between the high and low sales prices of the Shares (A) as reported by the NYSE for such date or (B) if the Shares are listed on any other national stock exchange, as reported on the stock exchange composite tape for securities traded on such stock exchange for such date or, with respect to each of clauses (A) and (B), if there were no sales on such date, on the closest preceding date on which there were sales of Shares or (ii) in the event there shall be no public market for the Shares on such date, the fair market value of the Shares as determined in good faith by the Committee. “Incentive Stock Option” means an option to purchase Shares from the Company that (a) is granted under Section 6 and (b) is intended to qualify for special Federal income tax treatment pursuant to Sections 421 and 422 of the Code, as now constituted or subsequently amended, or pursuant to a successor provision of the Code, and which is so designated in the applicable Award Agreement. “Independent Director” means a member of the Board who is neither (a) an employee of the Company nor (b) an employee of any Affiliate, and who, at the time of acting, is a “Non-Employee Director” under Rule 16b-3. “Initial Distribution” means the issuance of shares of Class A common stock and Class B common stock of the Company to the holders of Extendicare Inc. Subordinate Voting Shares and Multiple Voting Shares, respectively, on the Effective Date pursuant to the Plan of Arrangement to be filed by Extendicare Inc. with Canadian authorities in connection with, among other things, the Company’s separation from Extendicare Inc. “IRS” means the Internal Revenue Service or any successor thereto and includes the staff thereof. “Nonqualified Stock Option” means an option to purchase Shares from the Company that (a) is granted under Section 6 and (b) is not an Incentive Stock Option. “NYSE” means the New York Stock Exchange or any successor thereto. “Option” means an Incentive Stock Option or a Nonqualified Stock Option or both, as the context requires. “Participant” means any director, officer, employee or consultant (including any prospective director, officer, employee or consultant) of the Company or its Affiliates who is eligible for an Award under Section 5 and who is selected by the Committee to receive an Award under the Plan or who receives a Substitute Award pursuant to Section 4(c). “Performance Compensation Award” means any Award designated by the Committee as a Performance Compensation Award pursuant to Section 6(i). “Performance Criteria” means the criterion or criteria that the Committee shall select for purposes of establishing a Performance Goal for a Performance Period with respect to any Performance Compensation Award, Performance Unit or Cash Incentive Award under the Plan. “Performance Formula” means, for a Performance Period, the one or more objective formulas applied against the relevant Performance Goal to determine, with regard to the Performance Compensation Award, Performance Unit or Cash Incentive Award of a particular Participant, whether all, a portion or none of the Award has been earned for the Performance Period. “Performance Goal” means, for a Performance Period, the one or more goals established by the Committee for the Performance Period based upon the Performance Criteria. “Performance Period” means the one or more periods of time as the Committee may select over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Participant’s right to and the payment of a Performance Compensation Award, Performance Unit or Cash Incentive Award. “Performance Unit” means an Award under Section 6(e) that has a value set by the Committee (or that is determined by reference to a valuation formula specified by the Committee or the Fair Market Value of Shares), which value may be paid to the Participant by delivery of such property as the Committee shall determine, including without limitation, cash or Shares, or any combination thereof, upon achievement of such Performance Goals during the relevant Performance Period as the Committee shall establish at the time of such Award or thereafter. “Person” means an individual, partnership, corporation, limited liability company, association, trust, unincorporated organization or a government agency or political subdivision thereof or any other entity. “Plan” means this Assisted Living Concepts, Inc. 2006 Omnibus Incentive Compensation Plan, as in effect from time to time. “Restricted Share” means a Share delivered under the Plan that is subject to certain transfer restrictions, forfeiture provisions and/or other terms and conditions specified herein and in the applicable Award Agreement. “RSU” means a restricted stock unit Award that is designated as such in the applicable Award Agreement and that represents an unfunded and unsecured promise to deliver Shares, cash, other securities, other Awards or other property in accordance with the terms of the applicable Award Agreement. “Rule 16b-3” means Rule 16b-3 as promulgated and interpreted by the SEC under the Exchange Act or any successor rule or regulation thereto as in effect from time to time. “SAR” means a stock appreciation right Award that represents an unfunded and unsecured promise to deliver Shares, cash, other securities, other Awards or other property equal in value to the excess, if any, of the Fair Market Value per Share over the Exercise Price per Share of the SAR, subject to the terms of the applicable Award Agreement. “Scotia” means, collectively, Scotia Investments Limited, Minas Basin Creditco Limited, Parrsboro Lumber Company, Minas Basin Investments and BH Investments Limited, and any Person who would be deemed the same “person” as any such entity for purposes of Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable or who is directly or indirectly controlled by members of the family of the late R.A. Jodrey. “SEC” means the Securities and Exchange Commission or any successor thereto and shall include the staff thereof. “Shares” means shares of Class A common stock of the Company, $0.01 par value, or such other securities of the Company (a) into which such shares shall be changed by reason of a recapitalization, merger, consolidation, split-up, combination, exchange of shares or other similar transaction or (b) as may be determined by the Committee pursuant to Section 4(b). “Subsidiary” means any entity in which the Company, directly or indirectly, possesses 50% or more of the total combined voting power of all classes of its stock. “Substitute Awards” shall have the meaning specified in Section 4(c). SECTION 3. Administration. (a) Composition of Committee.The Plan shall be administered by the Committee, which shall be composed of one or more directors, as determined by the Board; provided that after the date of the consummation of the Initial Distribution, to the extent necessary to comply with the rules of the NYSE and Rule 16b-3 and to satisfy any applicable requirements of Section 162(m) of the Code and any other applicable laws or rules, the Committee shall be composed of two or more directors, all of whom shall be Independent Directors and all of whom shall (i) qualify as “outside directors” under Section 162(m) of the Code and (ii) meet the independence requirements of the NYSE. (b) Authority of Committee.Subject to the terms of the Plan and applicable law, and in addition to other express powers and authorizations conferred on the Committee by the Plan, the Committee shall have sole and plenary authority to administer the Plan, including, but not limited to, the authority to (i) designate Participants, (ii) determine the type or types of Awards to be granted to a Participant, (iii) determine the number of Shares to be covered by, or with respect to which payments, rights or other matters are to be calculated in connection with, Awards, (iv) determine the terms and conditions of any Awards, (v) determine the vesting schedules of Awards and, if certain performance criteria must be attained in order for an Award to vest or be settled or paid, establish such performance criteria and certify whether, and to what extent, such performance criteria have been attained, (vi) determine whether, to what extent and under what circumstances Awards may be settled or exercised in cash, Shares, other securities, other Awards or other property, or canceled, forfeited or suspended and the method or methods by which Awards may be settled, exercised, canceled, forfeited or suspended, (vii) determine whether, to what extent and under what circumstances cash, Shares, other securities, other Awards, other property and other amounts payable with respect to an Award shall be deferred either automatically or at the election of the holder thereof or of the Committee, (viii) interpret, administer, reconcile any inconsistency in, correct any default in and supply any omission in, the Plan and any instrument or agreement relating to, or Award made under, the Plan, (ix) establish, amend, suspend or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan, (x) accelerate the vesting or exercisability of, payment for or lapse of restrictions on, Awards, (xi) amend an outstanding Award or grant a replacement Award for an Award previously granted under the Plan if, in its sole discretion, the Committee determines that (A) the tax consequences of such Award to the Company or the Participant differ from those consequences that were expected to occur on the date the Award was granted or (B) clarifications or interpretations of, or changes to, tax law or regulations permit Awards to be granted that have more favorable tax consequences than initially anticipated and (xii) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan. (c) Committee Decisions.Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations and other decisions under or with respect to the Plan or any Award shall be within the sole and plenary discretion of the Committee, may be made at any time and shall be final, conclusive and binding upon all persons, including the Company, any Affiliate, any Participant, any holder or beneficiary of any Award and any stockholder. (d) Indemnification.No member of the Board, the Committee or any employee of the Company (each such person, a “Covered Person”) shall be liable for any action taken or omitted to be taken or any determination made in good faith with respect to the Plan or any Award hereunder.Each Covered Person shall be indemnified and held harmless by the Company against and from (i) any loss, cost, liability or expense (including attorneys’ fees) that may be imposed upon or incurred by such Covered Person in connection with or resulting from any action, suit or proceeding to which such Covered Person may be a party or in which such Covered Person may be involved by reason of any action taken or omitted to be taken under the Plan or any Award Agreement and (ii) any and all amounts paid by such Covered Person, with the Company’s approval, in settlement thereof, or paid by such Covered Person in satisfaction of any judgment in any such action, suit or proceeding against such Covered Person; provided that the Company shall have the right, at its own expense, to assume and defend any such action, suit or proceeding, and, once the Company gives notice of its intent to assume the defense, the Company shall have sole control over such defense with counsel of the Company’s choice.The foregoing right of indemnification shall not be available to a Covered Person to the extent that a court of competent jurisdiction in a final judgment or other final adjudication, in either case not subject to further appeal, determines that the acts or omissions of such Covered Person giving rise to the indemnification claim resulted from such Covered Person’s bad faith, fraud or willful criminal act or omission or that such right of indemnification is otherwise prohibited by law or by the Company’s Amended and Restated Articles of Incorporation or Bylaws.The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which Covered Persons may be entitled under the Company’s Amended and Restated Articles of Incorporation or Bylaws, as a matter of law, or otherwise, or any other power that the Company may have to indemnify such persons or hold them harmless. (e) Delegation of Authority to Senior Officers.The Committee may delegate, on such terms and conditions as it determines in its sole and plenary discretion, to one or more senior officers of the Company the authority to make grants of Awards to officers (other than executive officers), employees and consultants of the Company and its Affiliates (including any prospective officer, employee or consultant) and all necessary and appropriate decisions and determinations with respect thereto. (f) Awards to Independent Directors.Notwithstanding anything to the contrary contained herein, the Board may, in its sole and plenary discretion, at any time and from time to time, grant Awards to Independent Directors or administer the Plan with respect to such Awards.In any such case, the Board shall have all the authority and responsibility granted to the Committee herein. SECTION 4. Shares Available for Awards; Other Limits. (a) Shares Available.Subject to adjustment as provided in Section 4(b), the aggregate number of Shares that may be delivered pursuant to Awards granted under the Plan shall be 1,600,000, of which the maximum number of Shares that may be delivered pursuant to Incentive Stock Options granted under the Plan shall be 1,600,000, provided that each such number of Shares shall automatically be adjusted to take into account any stock distribution or stock split that occurs in connection with the Initial Distribution.If, after the effective date of the Plan, any Award granted under the Plan is forfeited, or otherwise expires, terminates or is canceled without the delivery of Shares, then the Shares covered by such forfeited, expired, terminated or canceled Award shall again become available to be delivered pursuant to Awards under the Plan.If Shares issued upon exercise, vesting or settlement of an Award, or Shares owned by a Participant (which are not subject to any pledge or other security interest), are surrendered or tendered to the Company in payment of the Exercise Price of an Award or any taxes required to be withheld in respect of an Award, in each case, in accordance with the terms and conditions of the Plan and any applicable Award Agreement, such surrendered or tendered Shares shall again become available to be delivered pursuant to Awards under the Plan; provided, however, that in no event shall such Shares increase the number of Shares that may be delivered pursuant to Incentive Stock Options granted under the Plan.Subject to adjustment as provided in Section 4(b), (i) the maximum number of Shares with respect to which Awards may be granted to any Participant in any fiscal year of the Company shall be 80,000, provided that such number of Shares shall automatically be adjusted to take into account any stock distribution or stock split that occurs in connection with the Initial Distribution, and (ii) the maximum aggregate amount of cash and other property (valued at its Fair Market Value) other than Shares that may be paid or delivered pursuant to Awards to any Participant in any fiscal year of the Company shall be $2,000,000. (b) Adjustments for Changes in Capitalization and Similar Events.In the event that the Committee determines that any dividend or other distribution (whether in the form of cash, Shares, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company, or other similar corporate transaction or event affects the Shares such that an adjustment is determined by the Committee in its discretion to be appropriate or desirable, then the Committee may (i) in such manner as it may deem equitable or desirable, adjust any or all of (A) the number of Shares or other securities of the Company (or number and kind of other securities or property) with respect to which Awards may be granted, including (1) the aggregate number of Shares that may be delivered pursuant to Awards granted under the Plan, as provided in Section 4(a) and (2) the maximum number of Shares or other securities of the Company (or number and kind of other securities or property) with respect to which Awards may be granted to any Participant in any fiscal year of the Company and (B) the terms of any outstanding Award, including (1) the number of Shares or other securities of the Company (or number and kind of other securities or property) subject to outstanding Awards or to which outstanding Awards relate and (2) the Exercise Price with respect to any Award, (ii) if deemed appropriate or desirable by the Committee, make provision for a cash payment to the holder of an outstanding Award in consideration for the cancellation of such Award, including, in the case of an outstanding Option or SAR, a cash payment to the holder of such Option or SAR in consideration for the cancellation of such Option or SAR in an amount equal to the excess, if any, of the Fair Market Value (as of a date specified by the Committee) of the Shares subject to such Option or SAR over the aggregate Exercise Price of such Option or SAR and (iii) if deemed appropriate or desirable by the Committee, cancel and terminate any Option or SAR having a per Share Exercise Price equal to, or in excess of, the Fair Market Value of a Share subject to such Option or SAR without any payment or consideration therefor. (c) Substitute Awards.Awards may, in the discretion of the Committee, be granted under the Plan in assumption of, or in substitution for, outstanding awards previously granted by the Company or any of its Affiliates or a company acquired by the Company or any of its Affiliates or with which the Company or any of its Affiliates combines (“Substitute Awards”).The number of Shares underlying any Substitute Awards shall be counted against the aggregate number of Shares available for Awards under the Plan; provided, however, that Substitute Awards issued in connection with the assumption of, or in substitution for, outstanding awards previously granted by an entity that is acquired by the Company or any of its Affiliates or with which the Company or any of its Affiliates combines shall not be counted against the aggregate number of Shares available for Awards under the Plan; provided further, however, that Substitute Awards issued in connection with the assumption of, or in substitution for, outstanding stock options intended to qualify for special tax treatment under Sections 421 and 422 of the Code that were previously granted by an entity that is acquired by the Company or any of its Affiliates or with which the Company or any of its Affiliates combines shall be counted against the aggregate number of Shares available for Incentive Stock Options under the Plan. (d) Sources of Shares Deliverable Under Awards.Any Shares delivered pursuant to an Award may consist, in whole or in part, of authorized and unissued Shares or of treasury Shares. SECTION 5.Eligibility.Any director, officer, employee or consultant (including any prospective director, officer, employee or consultant) of the Company or any of its Affiliates shall be eligible to be designated a Participant. SECTION 6. Awards. (a)Types of Awards.Awards may be made under the Plan in the form of (i) Options, (ii) SARs, (iii) Restricted Shares, (iv) RSUs, (v) Performance Units, (vi) Cash Incentive Awards and (viii) other equity-based or equity-related Awards that the Committee determines are consistent with the purpose of the Plan and the interests of the Company.Awards may be granted in tandem with other Awards.No Incentive Stock Option (other than an Incentive Stock Option that may be assumed or issued by the Company in connection with a transaction to which Section 424(a) of the Code applies) may be granted to a person who is ineligible to receive an Incentive Stock Option under the Code. (b)Options. (i) Grant.Subject to the provisions of the Plan, the Committee shall have sole and plenary authority to determine the Participants to whom Options shall be granted, the number of Shares to be covered by each Option, whether the Option will be an Incentive Stock Option or a Nonqualified Stock Option and the conditions and limitations applicable to the vesting and exercise of the Option.In the case of Incentive Stock Options, the terms and conditions of such grants shall be subject to and comply with such rules as may be prescribed by Section 422 of the Code and any regulations related thereto, as may be amended from time to time.All Options granted under the Plan shall be Nonqualified Stock Options unless the applicable Award Agreement expressly states that the Option is intended to be an Incentive Stock Option.If an Option is intended to be an Incentive Stock Option, and if for any reason such Option (or any portion thereof) shall not qualify as an Incentive Stock Option, then, to the extent of such nonqualification, such Option (or portion thereof) shall be regarded as a Nonqualified Stock Option appropriately granted under the Plan; provided that such Option (or portion thereof) otherwise complies with the Plan’s requirements relating to Nonqualified Stock Options. (ii) Exercise Price.Except as otherwise established by the Committee at the time an Option is granted and set forth in the applicable Award Agreement, the Exercise Price of each Share covered by an Option shall be not less than 100% of the Fair Market Value of such Share (determined as of the date the Option is granted); provided, however, that in the case of an Incentive Stock Option granted to an employee who, at the time of the grant of such Option, owns stock representing more than 10% of the voting power of all classes of stock of the Company or any Affiliate, the per Share Exercise Price shall be no less than 110% of the Fair Market Value per Share on the date of the grant.Options are intended to qualify as “qualified performance-based compensation” under Section 162(m) of the Code. (iii) Vesting and Exercise.Each Option shall be vested and exercisable at such times, in such manner and subject to such terms and conditions as the Committee may, in its sole and plenary discretion, specify in the applicable Award Agreement or thereafter.Except as otherwise specified by the Committee in the applicable Award Agreement, an Option may only be exercised to the extent that it has already vested at the time of exercise.Except as otherwise specified by the Committee in the Award Agreement, Options shall become vested and exercisable with respect to one-fourth of the Shares subject to such Options on each of the first four anniversaries of the date of grant.An Option shall be deemed to be exercised when written or electronic notice of such exercise has been given to the Company in accordance with the terms of the Award by the person entitled to exercise the Award and full payment pursuant to Section 6(b)(iv) for the Shares with respect to which the Award is exercised has been received by the Company.Exercise of an Option in any manner shall result in a decrease in the number of Shares that thereafter may be available for sale under the Option and, except as expressly set forth in Section 4(c), in the number of Shares that may be available for purposes of the Plan, by the number of Shares as to which the Option is exercised.The Committee may impose such conditions with respect to the exercise of Options, including, without limitation, any relating to the application of Federal or state securities laws, as it may deem necessary or advisable. (iv) Payment. (A) No Shares shall be delivered pursuant to any exercise of an Option until payment in full of the aggregate Exercise Price therefor is received by the Company, and the Participant has paid to the Company an amount equal to any Federal, state, local and foreign income and employment taxes required to be withheld.Such payments may be made in cash (or its equivalent) or, in the Committee’s sole and plenary discretion, (1) by exchanging Shares owned by the Participant (which are not the subject of any pledge or other security interest) or (2) if there shall be a public market for the Shares at such time, subject to such rules as may be established by the Committee, through delivery of irrevocable instructions to a broker to sell the Shares otherwise deliverable upon the exercise of the Option and to deliver promptly to the Company an amount equal to the aggregate Exercise Price, or by a combination of the foregoing; provided that the combined value of all cash and cash equivalents and the Fair Market Value of any such Shares so tendered to the Company as of the date of such tender is at least equal to such aggregate Exercise Price and the amount of any Federal, state, local or foreign income or employment taxes required to be withheld. (B) Wherever in the Plan or any Award Agreement a Participant is permitted to pay the Exercise Price of an Option or taxes relating to the exercise of an Option by delivering Shares, the Participant may, subject to procedures satisfactory to the Committee, satisfy such delivery requirement by presenting proof of beneficial ownership of such Shares, in which case the Company shall treat the Option as exercised without further payment and shall withhold such number of Shares from the Shares acquired by the exercise of the Option. (v) Expiration.Except as otherwise set forth in the applicable Award Agreement, each Option shall expire immediately, without any payment, upon the earlier of (A) the tenth anniversary of the date the Option is granted and (B) 90 days after the date the Participant who is holding the Option ceases to be a director, officer, employee or consultant of the Company or one of its Affiliates.In no event may an Option be exercisable after the tenth anniversary of the date the Option is granted. (c) SARs. (i)Grant.Subject to the provisions of the Plan, the Committee shall have sole and plenary authority to determine the Participants to whom SARs shall be granted, the number of Shares to be covered by each SAR, the Exercise Price thereof and the conditions and limitations applicable to the exercise thereof. SARs may be granted in tandem with another Award, in addition to another Award or freestanding and unrelated to another Award. SARs granted in tandem with, or in addition to, an Award may be granted either at the same time as the Award or at a later time. (ii)Exercise Price.Except as otherwise established by the Committee at the time a SAR is granted and set forth in the applicable Award Agreement, the Exercise Price of each Share covered by a SAR shall be not less than 100% of the Fair Market Value of such Share (determined as of the date the SAR is granted). SARs are intended to qualify as “qualified performance-based compensation” under Section 162(m) of the Code. (iii)Exercise.A SAR shall entitle the Participant to receive an amount equal to the excess, if any, of the Fair Market Value of a Share on the date of exercise of the SAR over the Exercise Price thereof.The Committee shall determine, in its sole and plenary discretion, whether a SAR shall be settled in cash, Shares, other securities, other Awards, other property or a combination of any of the foregoing. (iv) Other Terms and Conditions.Subject to the terms of the Plan and any applicable Award Agreement, the Committee shall determine, at or after the grant of a SAR, the vesting criteria, term, methods of exercise, methods and form of settlement and any other terms and conditions of any SAR.Any such determination by the Committee may be changed by the Committee from time to time and may govern the exercise of SARs granted or exercised thereafter.The Committee may impose such conditions or restrictions on the exercise of any SAR as it shall deem appropriate or desirable. (d) Restricted Shares and RSUs. (i) Grant.Subject to the provisions of the Plan, the Committee shall have sole and plenary authority to determine the Participants to whom Restricted Shares and RSUs shall be granted, the number of Restricted Shares and RSUs to be granted to each Participant, the duration of the period during which, and the conditions, if any, under which, the Restricted Shares and RSUs may vest or may be forfeited to the Company and the other terms and conditions of such Awards. (ii) Transfer Restrictions.Restricted Shares and RSUs may not be sold, assigned, transferred, pledged or otherwise encumbered except as provided in the Plan or as may be provided in the applicable Award Agreement; provided, however, that the Committee may in its discretion determine that Restricted Shares and RSUs may be transferred by the Participant.Certificates issued in respect of Restricted Shares shall be registered in the name of the Participant and deposited by such Participant, together with a stock power endorsed in blank, with the Company or such other custodian as may be designated by the Committee or the Company, and shall be held by the Company or other custodian, as applicable, until such time as the restrictions applicable to such Restricted Shares lapse.Upon the lapse of the restrictions applicable to such Restricted Shares, the Company or other custodian, as applicable, shall deliver such certificates to the Participant or the Participant’s legal representative. (iii) Payment/Lapse of Restrictions.Each RSU shall be granted with respect to one Share or shall have a value equal to the Fair Market Value of one Share.RSUs shall be paid in cash, Shares, other securities, other Awards or other property, as determined in the sole and plenary discretion of the Committee, upon the lapse of restrictions applicable thereto, or otherwise in accordance with the applicable Award Agreement.If a Restricted Share or an RSU is intended to qualify as “qualified performance-based compensation” under Section 162(m) of the Code, all requirements set forth in Section 6(i) must be satisfied in order for the restrictions applicable thereto to lapse. (e) Performance Units. (i) Grant.Subject to the provisions of the Plan, the Committee shall have sole and plenary authority to determine the Participants to whom Performance Units shall be granted and the terms and conditions thereof. (ii) Value of Performance Units.Each Performance Unit shall have an initial value that is established by the Committee at the time of grant.The Committee shall set Performance Goals in its discretion which, depending on the extent to which they are met during a Performance Period, will determine the number and value of Performance Units that will be paid out to the Participant. (iii) Earning of Performance Units.Subject to the provisions of the Plan, after the applicable Performance Period has ended, the holder of Performance Units shall be entitled to receive a payout of the number and value of Performance Units earned by the Participant over the Performance Period, to be determined by the Committee, in its sole and plenary discretion, as a function of the extent to which the corresponding Performance Goals have been achieved. (iv) Form and Timing of Payment of Performance Units.Subject to the provisions of the Plan, the Committee, in its sole and plenary discretion, may pay earned Performance Units in the form of cash or in Shares (or in a combination thereof) that has an aggregate Fair Market Value equal to the value of the earned Performance Units at the close of the applicable Performance Period.Such Shares may be granted subject to any restrictions in the applicable Award Agreement deemed appropriate by the Committee.The determination of the Committee with respect to the form and timing of payout of such Awards shall be set forth in the applicable Award Agreement.If a Performance Unit is intended to qualify as “qualified performance-based compensation” under Section 162(m) of the Code, all requirements set forth in Section 6(i) must be satisfied in order for a Participant to be entitled to payment. (f) Cash Incentive Awards.Subject to the provisions of the Plan, the Committee, in its sole and plenary discretion, shall have the authority to grant Cash Incentive Awards.The Committee shall establish Cash Incentive Award levels to determine the amount of a Cash Incentive Award payable upon the attainment of Performance Goals.If a Cash Incentive Award is intended to qualify as “qualified performance-based compensation” under Section 162(m) of the Code, all requirements set forth in Section 6(i) must be satisfied in order for a Participant to be entitled to payment. (g)Other Stock-Based Awards.Subject to the provisions of the Plan, the Committee shall have the sole and plenary authority to grant to Participants other equity-based or equity-related Awards (including, but not limited to, fully-vested Shares) in such amounts and subject to such terms and conditions as the Committee shall determine.If such an Award is intended to qualify as “qualified performance-based compensation” under Section 162(m) of the Code, all requirements set forth in Section 6(i) must be satisfied in order for a Participant to be entitled to payment. (h)Dividend Equivalents.In the sole and plenary discretion of the Committee, an Award, other than an Option, SAR or Cash Incentive Award, may provide the Participant with dividends or dividend equivalents, payable in cash, Shares, other securities, other Awards or other property, on a current or deferred basis, on such terms and conditions as may be determined by the Committee in its sole and plenary discretion, including, without limitation, payment directly to the Participant, withholding of such amounts by the Company subject to vesting of the Award or reinvestment in additional Shares, Restricted Shares or other Awards. (i)Performance Compensation Awards. (i) General.The Committee shall have the authority, at the time of grant of any Award, to designate such Award (other than Options and SARs) as a Performance Compensation Award in order to qualify such Award as “qualified performance-based compensation” under Section 162(m) of the Code. Options and SARs granted under the Plan shall not be included among Awards that are designated as Performance Compensation Awards under this Section 6(i). (ii)Eligibility.The Committee shall, in its sole discretion, designate within the first 90 days of a Performance Period (or, if shorter, within the maximum period allowed under Section 162(m) of the Code) which Participants will be eligible to receive Performance Compensation Awards in respect of such Performance Period.However, designation of a Participant eligible to receive an Award hereunder for a Performance Period shall not in any manner entitle the Participant to receive payment in respect of any Performance Compensation Award for such Performance Period.The determination as to whether or not such Participant becomes entitled to payment in respect of any Performance Compensation Award shall be decided solely in accordance with the provisions of this Section 6(i).Moreover, designation of a Participant eligible to receive an Award hereunder for a particular Performance Period shall not require designation of such Participant eligible to receive an Award hereunder in any subsequent Performance Period and designation of one person as a Participant eligible to receive an Award hereunder shall not require designation of any other person as a Participant eligible to receive an Award hereunder in such period or in any other period. (iii)Discretion of Committee with Respect to Performance Compensation Awards.With regard to a particular Performance Period, the Committee shall have full discretion to select the length of such Performance Period, the types of Performance Compensation Awards to be issued, the Performance Criteria that will be used to establish the Performance Goals, the kinds and levels of the Performance Goals that are to apply to the Company or any of its Subsidiaries, Affiliates, divisions or operational units, or any combination of the foregoing, and the Performance Formula.Within the first 90 days of a Performance Period (or, if shorter, within the maximum period allowed under Section 162(m) of the Code), the Committee shall, with regard to the Performance Compensation Awards to be issued for such Performance Period, exercise its discretion with respect to each of the matters enumerated in the immediately preceding sentence and record the same in writing. (iv) Performance Criteria.Notwithstanding the foregoing, the Performance Criteria that will be used to establish the Performance Goals shall be based on the attainment of specific levels of performance of the Company or any of its Subsidiaries, Affiliates, divisions or operational units, or any combination of the foregoing, and shall be limited to the following: (A) net income before or after taxes, (B) earnings before or after taxes (including EBITDA), (C) operating income, (D) earnings per share, (E) return on stockholders’ equity, (F) return on investment or capital, (G) return on assets, (H) level or amount of acquisitions, (I) share price, (J) profitability and profit margins (including EBITDA margins), (K) market share, (L) revenues or sales (based on units or dollars), (M) costs, (N) cash flow, (O) working capital and (P) project completion time and budget goals. Such performance criteria may be applied on an absolute basis and/or be relative to one or more peer companies of the Company or indices or any combination thereof. To the extent required under Section 162(m) of the Code, the Committee shall, within the first 90 days of the applicable Performance Period (or, if shorter, within the maximum period allowed under Section 162(m) of the Code), define in an objective manner the method of calculating the Performance Criteria it selects to use for such Performance Period. (v)Modification of Performance Goals.The Committee is authorized at any time during the first 90 days of a Performance Period (or, if shorter, within the maximum period allowed under Section 162(m) of the Code), or any time thereafter (but only to the extent the exercise of such authority after such 90-day period (or such shorter period, if applicable) would not cause the Performance Compensation Awards granted to any Participant for the Performance Period to fail to qualify as “qualified performance-based compensation” under Section 162(m) of the Code), in its sole and plenary discretion, to adjust or modify the calculation of a Performance Goal for such Performance Period to the extent permitted under Section 162(m) of the Code (A) in the event of, or in anticipation of, any unusual or extraordinary corporate item, transaction, event or development affecting the Company or any of its Affiliates, Subsidiaries, divisions or operating units (to the extent applicable to such Performance Goal) or (B) in recognition of, or in anticipation of, any other unusual or nonrecurring events affecting the Company or any of its Affiliates, Subsidiaries, divisions or operating units (to the extent applicable to such Performance Goal), or the financial statements of the Company or any of its Affiliates, Subsidiaries, divisions or operating units (to the extent applicable to such Performance Goal), or of changes in applicable rules, rulings, regulations or other requirements of any governmental body or securities exchange, accounting principles, law or business conditions. (vi)Payment of Performance Compensation Awards. (A)Condition to Receipt of Payment.A Participant must be employed by the Company on the last day of a Performance Period to be eligible for payment in respect of a Performance Compensation Award for such Performance Period.Notwithstanding the foregoing, in the discretion of the Committee, Performance Compensation Awards may be paid to Participants who have retired or whose employment has terminated prior to the last day of a Performance Period for which a Performance Compensation Award is made or to the designee or estate of a Participant who has died prior to the last day of a Performance Period. (B)Limitation.A Participant shall be eligible to receive payments in respect of a Performance Compensation Award only to the extent that (1) the Performance Goals for such period are achieved and certified by the Committee in accordance with Section 6(i)(vi)(C) and (2) the Performance Formula as applied against such Performance Goals determines that all or some portion of such Participant’s Performance Compensation Award has been earned for the Performance Period. (C)Certification.Following the completion of a Performance Period, the Committee shall meet to review and certify in writing whether, and to what extent, the Performance Goals for the Performance Period have been achieved and, if so, to calculate and certify in writing that amount of the Performance Compensation Awards earned for the period based upon the Performance Formula.The Committee shall then determine the actual size of each Participant’s Performance Compensation Award for the Performance Period and, in so doing, may apply negative discretion as authorized by Section 6(i)(vi)(D). (D)Negative Discretion.In determining the actual size of an individual Performance Compensation Award for a Performance Period, the Committee may, in its sole and plenary discretion, reduce or eliminate the amount of the Award earned in the Performance Period, even if applicable Performance Goals have been attained. (E)Timing of Award Payments.The Performance Compensation Awards granted for a Performance Period shall be paid to Participants as soon as administratively possible following completion of the certifications required by Section 6(i)(vi)(C), unless the Committee shall determine that any Performance Compensation Award shall be deferred. (F)Discretion.In no event shall any discretionary authority granted to the Committee by the Plan be used to (1) grant or provide payment in respect of Performance Compensation Awards for a Performance Period if the Performance Goals for such Performance Period have not been attained, (2) increase a Performance Compensation Award for any Participant at any time after the first 90 days of the Performance Period (or, if shorter, the maximum period allowed under Section 162(m)) or (3) increase a Performance Compensation Award above the maximum amount payable under Section 4(a) of the Plan. SECTION 7. Amendment and Termination. (a)Amendments to the Plan.Subject to any applicable law or government regulation, to any requirement that must be satisfied if the Plan is intended to be a stockholder approved plan for purposes of Section 162(m) of the Code and to the rules of the NYSE or any successor exchange or quotation system on which the Shares may be listed or quoted, the Plan may be amended, modified or terminated by the Board without the approval of the stockholders of the Company except that stockholder approval shall be required for any amendment that would (i) increase the maximum number of Shares for which Awards may be granted under the Plan or increase the maximum number of Shares that may be delivered pursuant to Incentive Stock Options granted under the Plan; provided, however, that any adjustment under Section 4(b) shall not constitute an increase for purposes of this Section 7(a) or (ii) change the class of employees or other individuals eligible to participate in the Plan.No modification, amendment or termination of the Plan may, without the consent of the Participant to whom any Award shall theretofor have been granted, materially and adversely affect the rights of such Participant (or his or her transferee) under such Award, unless otherwise provided by the Committee in the applicable Award Agreement. (b) Amendments to Awards.The Committee may waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate any Award theretofor granted, prospectively or retroactively; provided, however, that, except as set forth in the Plan, unless otherwise provided by the Committee in the applicable Award Agreement, any such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination that would materially and adversely impair the rights of any Participant or any holder or beneficiary of any Award theretofor granted shall not to that extent be effective without the consent of the impaired Participant, holder or beneficiary. (c) Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events.The Committee is hereby authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events (including, without limitation, the events described in Section 4(b) or the occurrence of a Change of Control) affecting the Company, any Affiliate, or the financial statements of the Company or any Affiliate, or of changes in applicable rules, rulings, regulations or other requirements of any governmental body or securities exchange, accounting principles or law (i) whenever the Committee, in its sole and plenary discretion, determines that such adjustments are appropriate or desirable, including, without limitation, providing for a substitution or assumption of Awards, accelerating the exercisability of, lapse of restrictions on, or termination of, Awards or providing for a period of time for exercise prior to the occurrence of such event, (ii) if deemed appropriate or desirable by the Committee, in its sole and plenary discretion, by providing for a cash payment to the holder of an Award in consideration for the cancellation of such Award, including, in the case of an outstanding Option or SAR, a cash payment to the holder of such Option or SAR in consideration for the cancellation of such Option or SAR in an amount equal to the excess, if any, of the Fair Market Value (as of a date specified by the Committee) of the Shares subject to such Option or SAR over the aggregate Exercise Price of such Option or SAR and (iii) if deemed appropriate or desirable by the Committee, in its sole and plenary discretion, by canceling and terminating any Option or SAR having a per Share Exercise Price equal to, or in excess of, the Fair Market Value of a Share subject to such Option or SAR without any payment or consideration therefor. SECTION 8. Change of Control.Unless otherwise provided in the applicable Award Agreement, in the event of a Change of Control after the date of the adoption of the Plan, unless provision is made in connection with the Change of Control for (a) assumption of Awards previously granted or (b) substitution for such Awards of new awards covering stock of a successor corporation or its “parent corporation” (as defined in Section 424(e) of the Code) or “subsidiary corporation” (as defined in Section 424(f) of the Code) with appropriate adjustments as to the number and kinds of shares and the Exercise Prices, if applicable, (i) any outstanding Options or SARs then held by Participants that are unexercisable or otherwise unvested shall automatically be deemed exercisable or otherwise vested, as the case may be, as of immediately prior to such Change of Control, (ii) all Performance Units and Cash Incentive Awards shall be paid out as if the date of the Change of Control were the last day of the applicable Performance Period and “target” performance levels had been attained and (iii) all other outstanding Awards (i.e., other than Options, SARs, Performance Units and Cash Incentive Awards) then held by Participants that are unexercisable, unvested or still subject to restrictions or forfeiture, shall automatically be deemed exercisable and vested and all restrictions and forfeiture provisions related thereto shall lapse as of immediately prior to such Change of Control. SECTION 9. General Provisions. (a) Nontransferability.Except as otherwise specified in the applicable Award Agreement, during the Participant’s lifetime each Award (and any rights and obligations thereunder) shall be exercisable only by the Participant, or, if permissible under applicable law, by the Participant’s legal guardian or representative, and no Award (or any rights and obligations thereunder) may be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by a Participant otherwise than by will or by the laws of descent and distribution, and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the Company or any Affiliate; provided that (i) the designation of a beneficiary shall not constitute an assignment, alienation, pledge, attachment, sale, transfer or encumbrance and (ii) the Board or the Committee may permit further transferability, on a general or specific basis, and may impose conditions and limitations on any permitted transferability; provided, however, that Incentive Stock Options granted under the Plan shall not be transferable in any way that would violate Section 1.422-2(a)(2) of the Treasury Regulations.All terms and conditions of the Plan and all Award Agreements shall be binding upon any permitted successors and assigns. (b) No Rights to Awards.No Participant or other Person shall have any claim to be granted any Award, and there is no obligation for uniformity of treatment of Participants or holders or beneficiaries of Awards.The terms and conditions of Awards and the Committee’s determinations and interpretations with respect thereto need not be the same with respect to each Participant and may be made selectively among Participants, whether or not such Participants are similarly situated. (c) Share Certificates.All certificates for Shares or other securities of the Company or any Affiliate delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan, the applicable Award Agreement or the rules, regulations and other requirements of the SEC, the NYSE or any other stock exchange or quotation system upon which such Shares or other securities are then listed or reported and any applicable Federal or state laws, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. (d) Withholding.A Participant may be required to pay to the Company or any Affiliate, and the Company or any Affiliate shall have the right and is hereby authorized to withhold from any Award, from any payment due or transfer made under any Award or under the Plan or from any compensation or other amount owing to a Participant, the amount (in cash, Shares, other securities, other Awards or other property) of any applicable withholding taxes in respect of an Award, its exercise or any payment or transfer under an Award or under the Plan and to take such other action as may be necessary in the opinion of the Committee or the Company to satisfy all obligations for the payment of such taxes. (e) Award Agreements.Each Award hereunder shall be evidenced by an Award Agreement, which shall be delivered to the Participant and shall specify the terms and conditions of the Award and any rules applicable thereto, including, but not limited to, the effect on such Award of the death, disability or termination of employment or service of a Participant and the effect, if any, of such other events as may be determined by the Committee. (f) No Limit on Other Compensation Arrangements.Nothing contained in the Plan shall prevent the Company or any Affiliate from adopting or continuing in effect other compensation arrangements, which may, but need not, provide for the grant of options, restricted stock, shares and other types of equity-based awards (subject to stockholder approval if such approval is required), and such arrangements may be either generally applicable or applicable only in specific cases. (g) No Right to Employment.The grant of an Award shall not be construed as giving a Participant the right to be retained as a director, officer, employee or consultant of or to the Company or any Affiliate, nor shall it be construed as giving a Participant any rights to continued service on the Board.Further, the Company or an Affiliate may at any time dismiss a Participant from employment or discontinue any consulting relationship, free from any liability or any claim under the Plan, unless otherwise expressly provided in the Plan or in any Award Agreement. (h) No Rights as Stockholder.No Participant or holder or beneficiary of any Award shall have any rights as a stockholder with respect to any Shares to be distributed under the Plan until he or she has become the holder of such Shares. In connection with each grant of Restricted Shares, except as provided in the applicable Award Agreement, the Participant shall not be entitled to the rights of a stockholder in respect of such Restricted Shares.Except as otherwise provided in Section 4(b), Section 7(c) or the applicable Award Agreement, no adjustments shall be made for dividends or distributions on (whether ordinary or extraordinary, and whether in cash, Shares, other securities or other property), or other events relating to, Shares subject to an Award for which the record date is prior to the date such Shares are delivered. (i) Governing Law.The validity, construction and effect of the Plan and any rules and regulations relating to the Plan and any Award Agreement shall be determined in accordance with the laws of the State of Nevada, without giving effect to the conflict of laws provisions thereof. (j)Severability.If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or as to any Person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to the applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Award, such provision shall be construed or deemed stricken as to such jurisdiction, Person or Award and the remainder of the Plan and any such Award shall remain in full force and effect. (k) Other Laws.The Committee may refuse to issue or transfer any Shares or other consideration under an Award if, acting in its sole and plenary discretion, it determines that the issuance or transfer of such Shares or such other consideration might violate any applicable law or regulation or entitle the Company to recover the same under Section 16(b) of the Exchange Act, and any payment tendered to the Company by a Participant, other holder or beneficiary in connection with the exercise of such Award shall be promptly refunded to the relevant Participant, holder or beneficiary.Without limiting the generality of the foregoing, no Award granted hereunder shall be construed as an offer to sell securities of the Company, and no such offer shall be outstanding, unless and until the Committee in its sole and plenary discretion has determined that any such offer, if made, would be in compliance with all applicable requirements of the U.S. Federal and any other applicable securities laws. (l)No Trust or Fund Created.Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Affiliate, on one hand, and a Participant or any other Person, on the other hand.To the extent that any Person acquires a right to receive payments from the Company or any Affiliate pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company or such Affiliate. (m)No Fractional Shares.No fractional Shares shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall determine whether cash, other securities or other property shall be paid or transferred in lieu of any fractional Shares or whether such fractional Shares or any rights thereto shall be canceled, terminated or otherwise eliminated. (n) Requirement of Consent and Notification of Election Under Section 83(b) of the Code or Similar Provision.No election under Section 83(b) of the Code (to include in gross income in the year of transfer the amounts specified in Section 83(b) of the Code) or under a similar provision of law may be made unless expressly permitted by the terms of the applicable Award Agreement or by action of the Committee in writing prior to the making of such election.If an Award recipient, in connection with the acquisition of Shares under the Plan or otherwise, is expressly permitted under the terms of the applicable Award Agreement or by such Committee action to make such an election and the Participant makes the election, the Participant shall notify the Committee of such election within ten days of filing notice of the election with the IRS or other governmental authority, in addition to any filing and notification required pursuant to regulations issued under Section 83(b) of the Code or other applicable provision. (o)Requirement of Notification Upon Disqualifying Disposition Under Section 421(b) of the Code.If any Participant shall make any disposition of Shares delivered pursuant to the exercise of an Incentive Stock Option under the circumstances described in Section 421(b) of the Code (relating to certain disqualifying dispositions) or any successor provision of the Code, such Participant shall notify the Company of such disposition within ten days of such disposition. (p) Headings.Headings are given to the Sections and subsections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof. SECTION 10. Term of the Plan. (a) Effective Date.The Plan shall be effective as of the date of its adoption by the Board and approval by the Company’s stockholders; provided, however, that no Incentive Stock Options may be granted under the Plan unless it is approved by the Company’s stockholders within twelve (12) months before or after the date the Plan is adopted by the Board. (b)Expiration Date.No Award shall be granted under the Plan after the tenth anniversary of the date the Plan is approved under Section 10(a).Unless otherwise expressly provided in the Plan or in an applicable Award Agreement, any Award granted hereunder may, and the authority of the Board or the Committee to amend, alter, adjust, suspend, discontinue or terminate any such Award or to waive any conditions or rights under any such Award shall, nevertheless continue thereafter.
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 12b-25 NOTIFICATION OF LATE FILING (Check one): oForm 10-K oForm 20-F oForm 11-KxForm 10-Q oForm N-SAR oForm N-CSR For Period Ended:September 30, 2015 oTransition Report on Form 10-K oTransition Report on Form 20-F oTransition Report on Form 11-K oTransition Report on Form 10-Q oTransition Report on Form N-SAR For the Transition Period Ended: Nothing in this form shall be construed to imply that the Commission has verified any information contained herein. If the notification relates to a portion of the filing checked above, identify the item(s) to which the notification relates: PART I REGISTRANT INFORMATION MOLLER INTERNATIONAL, INC. Full Name of Registrant Former Name if Applicable 1 Address of Principal Executive Office (Street and Number) DAVIS, CA 95618 City, State and Zip Code PART II RULES 12b-25(b) AND (c) If the subject report could not be filed without unreasonable effort or expense and the registrant seeks relief pursuant to Rule 12b-25(b), the following should be completed. (Check box if appropriate) x (a) The reasons described in reasonable detail in Part III of this form could not be eliminated without unreasonable effort or expense; x (b) The subject annual report, semi-annual report, transition report on Form 10-K, Form 20-F, Form 11-K, Form N-SAR or Form N-CSR, or portion thereof, will be filed on or before the fifteenth calendar day following the prescribed due date; or the subject quarterly report or transition report on Form 10-Q, or portion thereof, will be filed on or before the fifth calendar day following the prescribed due date; and (c) The accountant's statement or other exhibit required by Rule 12b-25(c) has been attached if applicable. PART III NARRATIVE State below in reasonable detail why Forms 10-K, 20-F, 11-K, 10-Q, N-SAR, N-CSR, or the transition report or portion thereof, could not be filed within the prescribed time period. Moller International (the "Company") is filing this report for a 5-day extension for filing itsQuarterly Report on Form 10-Q for the period endedSeptember 30, 2015. The Company has experienced delays in gathering and compiling the information necessary to draft a complete and accurate Form 10-Q. As a result of the delays, the Company is not able to file its Form 10-Q by the prescribed filing date without unreasonable effort and expense. PART IV OTHER INFORMATION (1) Name and telephone number of person to contact in regard to this notification Paul S. Moller 756-5086 (Name) (Area Code) (Telephone Number) (2) Have all other periodic reports required under Section 13 or 15(d) of the Securities Exchange Act of 1934 or Section 30 of the Investment Company Act of 1940 during the preceding 12 months or for such shorter period that the registrant was required to file such report(s) been filed? If answer is no, identify report(s). Yeso No x Form 10-K 06-30-2015 (3) Is it anticipated that any significant change in results of operations from the corresponding period for the last fiscal year will be reflected by the earnings statements to be included in the subject report or portion thereof? YesoNox If so, attach an explanation of the anticipated change, both narratively and quantitatively, and, if appropriate, state the reasons why a reasonable estimate of the results cannot be made. MOLLER INTERNATIONAL, INC. (Name of Registrant as Specified in Charter) has caused this notification to be signed on its behalf by the undersigned hereunto duly authorized. Dated:November 17, 2015 By: /s/Paul S. Moller Name: Paul S. Moller Title: President
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported):May 26, 2010 FIRST CALIFORNIA FINANCIAL GROUP, INC. (Exact name of registrant as specified in its charter) Commission File No. 000-52498 Delaware 38-3737811 (State or other jurisdiction of incorporation) (IRS Employer Identification No.) 3027 Townsgate Road, Suite 300 Westlake Village, CA (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code:(805) 322-9655 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): ¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) ¨ Soliciting material pursuant to Rule14a-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 5.07Submission of Matters to a Vote of Security Holders. First California Financial Group, Inc. (the “Company”) held its annual meeting of stockholders on May 26, 2010 (the “Annual Meeting”). At the Annual Meeting, the proposals listed below were submitted to a vote of stockholders as set forth in the Company’s definitive proxy statement for the Annual Meeting. 1) The election of nine (9) nominees named in the definitive proxy statement to serve as director for a one-year term expiring at the 2011 annual meeting of stockholders or until their successors are duly elected and qualified (Proposal 1). Nominee For Withheld Broker Non-Votes Richard D. Aldridge Donald E. Benson John W. Birchfield Joseph N. Cohen Robert E. Gipson Antoinette Hubenette, M.D. C. G. Kum Sung Won Sohn, Ph.D. Thomas Tignino 2) The approval ofthe appointment of Moss Adams LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2010 (Proposal 2). For Against Abstain Broker Non-Votes 0 3) The approval of a non-binding advisory proposal on the Company’s executive compensation (Proposal 3). For Against Abstain Broker Non-Votes 0 Pursuant to the foregoing votes, the nine nominees listed above were elected to serve as directors and Proposals 2 and 3 were approved. 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 hereunder duly authorized. FIRST CALIFORNIA FINANCIAL GROUP, INC. Dated:May 27, 2010 By: /s/Romolo Santarosa Name: Romolo Santarosa Title: Executive Vice President, Chief Financial Officer
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FORM 6 - K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Report of Foreign Private Issuer Pursuant to Rule 13a - 16 or 15d -16 Under the Securities Exchange Act of 1934 For the Month of November 2011 Commissionfilenumber 001-14184 B.O.S. Better Online Solutions Ltd. (Translation of Registrant's Name into English) 20 Freiman Street, Rishon LeZion, 75100, Israel (Address of principal executive office) Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F. Form 20-F xForm 40-F o Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): B.O.S. Better Online Solutions Ltd. Paragraphs 1-4 of the Press Release that is attached to this Form 6-K, and the GAAP financial statements included therein, are hereby incorporated by reference into all effective Registration Statements, filed by us under the Securities Act of 1933, to the extent not superseded by documents or reports subsequently filed or furnished. The following exhibit is attached: Press Release: B.O.S. Announces Financial Results for Third Quarter of 2011 Signature Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. B.O.S. Better Online Solutions Ltd. (Registrant) By: /s/ Eyal Cohen Eyal Cohen Chief Financial Officer Dated: November 30, 2011 EXHIBIT INDEX EXHIBIT NO. DESCRIPTION Press Release:B.O.S. Announces Financial Results for Third Quarter of 2011
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Exhibit 10.11
INDEMNITY AGREEMENT
THIS INDEMNITY AGREEMENT (this “Agreement”) is made as of July 27, 2020.
Between:
(1)ACE CONVERGENCE ACQUISITION CORP., an exempted company incorporated under the
laws of the Cayman Islands with registered office at PO Box 309, Ugland House,
Grand Cayman, KY1-1104, Cayman Islands (the “Company”); and
(2)Omid Tahemia (“Indemnitee”).
Whereas:
(A)Highly competent persons have become more reluctant to serve publicly-held
corporations as directors, officers or in other capacities unless they are
against inordinate risks of claims and actions against them arising out of their
service to and activities on behalf of such corporations;
(B)The board of directors of the Company (the “Board”) has determined that, in
order to attract and retain qualified individuals, the Company will attempt to
maintain on an ongoing basis, at its sole expense, liability insurance to
protect persons serving the Company and any of its subsidiaries from certain
liabilities. Although the furnishing of such insurance has been a customary and
widespread practice among publicly traded corporations and other business
enterprises, the Company believes that, given current market conditions and
trends, such insurance may be available to it in the future only at higher
premiums and with more exclusions. At the same time, directors, officers and
other persons in service to corporations or business enterprises are being
increasingly subjected to expensive and time-consuming litigation relating to,
among other things, matters that traditionally would have been brought only
against the Company or business enterprise itself. The amended and restated
articles of association of the Company (the “Articles”) provide for the
indemnification of the officers and directors of the Company. The Articles
the Company and members of the board of directors, officers and other persons
with respect to indemnification, hold harmless, exoneration, advancement and
reimbursement rights;
(C)The uncertainties relating to such insurance and to indemnification have
increased the difficulty of attracting and retaining such persons;
(D)The Board has determined that the increased difficulty in attracting and
retaining such persons is detrimental to the best interests of the Company’s
shareholders and that the Company should act to assure such persons that there
will be increased certainty of such protection in the future;
(E)It is reasonable, prudent and necessary for the Company contractually to
obligate itself to indemnify, hold harmless, exonerate and to advance expenses
on behalf of, such persons to the fullest extent permitted by applicable law so
that they will serve or continue to serve the Company free from undue concern
that they will not be so protected against liabilities;
(F)This Agreement is a supplement to and in furtherance of the Articles and any
resolutions adopted pursuant thereto, and shall not be deemed a substitute
therefor, nor to diminish or abrogate any rights of Indemnitee thereunder;
(G)Indemnitee may not be willing to serve as an officer or director, advisor or
in another capacity without adequate protection, and the Company desires
Indemnitee to serve in such capacity. Indemnitee is willing to serve, continue
to serve and to take on additional service for or on behalf of the Company on
the condition that Indemnitee be so indemnified; and
herein and subject to the provisions of the letter agreement dated as of July
27, 2020 between the Company, Indemnitee and other parties thereto pursuant to
the Underwriting Agreement between the Company and the representative of the
Underwriters named therein in connection with the Company’s initial public
offering, the Company and Indemnitee do hereby covenant and agree as follows:
TERMS AND CONDITIONS
1SERVICES TO THE COMPANY
In consideration of the Company’s covenants and obligations hereunder,
Indemnitee will serve or continue to serve as an officer, director, advisor, key
employee or in any other capacity of the Company, as applicable, for so long as
Indemnitee is duly elected, appointed or retained or until Indemnitee tenders
Indemnitee’s resignation or until Indemnitee is removed. The foregoing
notwithstanding, this Agreement shall continue in full force and effect after
Indemnitee has ceased to serve as a director, officer, advisor, key employee or
in any other capacity of the Company, as provided in Section 17. This
Agreement, however, shall not impose any obligation on Indemnitee or the Company
to continue Indemnitee’s service to the Company beyond any period otherwise
required by law or by other agreements or commitments of the parties, if any.
2DEFINITIONS
As used in this Agreement:
2.1References to “agent” shall mean any person who is or was a director, officer
or employee of the Company or a subsidiary of the Company or other person
authorized by the Company to act for the Company, to include such person serving
in such capacity as a director, officer, employee, advisor, fiduciary or other
official of another corporation, partnership, limited liability company, joint
venture, trust or other enterprise at the request of, for the convenience of, or
to represent the interests of the Company or a subsidiary of the Company.
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2.2The terms “Beneficial Owner” and “Beneficial Ownership” shall have the
meanings set forth in Rule 13d-3 promulgated under the Exchange Act (as defined
below) as in effect on the date hereof.
2.3A “Change in Control” shall be deemed to occur upon the earliest to occur
after the date of this Agreement of any of the following events:
(a)Acquisition of Shares by Third Party. Other than an affiliate of ACE
Convergence Acquisition LLC, any Person (as defined below) is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Company
representing fifteen percent (15%) or more of the combined voting power of the
of directors, unless (1) the change in the relative Beneficial Ownership of the
Company’s securities by any Person results solely from a reduction in the
aggregate number of outstanding shares entitled to vote generally in the
election of directors, or (2) such acquisition was approved in advance by the
Continuing Directors (as defined below) and such acquisition would not
constitute a Change in Control under part (c) of this definition;
(b)Change in Board of Directors. Individuals who, as of the date hereof,
constitute the Board, and any new director whose election by the Board or
nomination for election by the Company’s shareholders was approved by a vote of
at least two-thirds of the directors then still in office who were directors on
the date hereof or whose election or nomination for election was previously so
approved (collectively, the “Continuing Directors”), cease for any reason to
constitute at least a majority of the members of the Board;
(c)Corporate Transactions. The effective date of a merger, amalgamation, share
exchange, asset acquisition, share purchase, reorganization or similar business
combination, involving the Company and one or more businesses (a “Business
Combination”), in each case, unless, following such Business Combination:
(1) all or substantially all of the individuals and entities who were the
Beneficial Owners of securities entitled to vote generally in the election of
directors immediately prior to such Business Combination beneficially own,
directly or indirectly, more than fifty-one percent (51%) of the combined voting
power of the then outstanding securities of the Company entitled to vote
generally in the election of directors resulting from such Business Combination
(including, without limitation, a corporation which as a result of such
either directly or through one or more Subsidiaries) in substantially the same
proportions as their ownership immediately prior to such Business Combination,
of the securities entitled to vote generally in the election of directors; (2)
other than an affiliate of ACE Convergence Acquisition LLC, no Person (excluding
any corporation resulting from such Business Combination) is the Beneficial
Owner, directly or indirectly, of fifteen percent (15%) or more of the combined
voting power of the then outstanding securities entitled to vote generally in
the election of directors of the surviving corporation except to the extent that
such ownership existed prior to the Business Combination; and (3) at least a
majority of the Board of Directors of the corporation resulting from such
Business Combination were Continuing Directors at the time of the execution of
the initial agreement, or of the action of the Board of Directors, providing for
such Business Combination;
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(d)Liquidation. The approval by the shareholders of the Company of a complete
liquidation of the Company or an agreement or series of agreements for the sale
or disposition by the Company of all or substantially all of the Company’s
assets, other than factoring the Company’s current receivables or escrows due
(or, if such approval is not required, the decision by the Board to proceed with
such a liquidation, sale, or disposition in one transaction or a series of
related transactions); or
(e)Other Events. There occurs any other event of a nature that would be required
the Exchange Act, whether or not the Company is then subject to such reporting
requirement.
2.4“Corporate Status” describes the status of a person who is or was a director,
officer, trustee, general partner, manager, managing member, fiduciary, employee
or agent of the Company or of any other Enterprise (as defined below) which such
person is or was serving at the request of the Company.
2.5“Delaware Court” shall mean the Court of Chancery of the State of Delaware.
2.6“Disinterested Director” shall mean a director of the Company who is not and
was not a party to the Proceeding (as defined below) in respect of which
2.7“Enterprise” shall mean the Company and any other corporation, constituent
corporation (including any constituent of a constituent) absorbed in a merger or
consolidation to which the Company (or any of its wholly owned subsidiaries) is
a party, limited liability company, partnership, joint venture, trust, employee
benefit plan or other enterprise of which Indemnitee is or was serving at the
request of the Company as a director, officer, trustee, general partner,
manager, managing member, fiduciary, employee or agent.
2.8“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
2.9“Expenses” shall include all direct and indirect costs, fees and expenses of
any type or nature whatsoever, including, without limitation, all attorneys’
fees and costs, retainers, court costs, transcript costs, fees of experts,
witness fees, travel expenses, fees of private investigators and professional
advisors, duplicating costs, printing and binding costs, telephone charges,
postage, delivery service fees, fax transmission charges, secretarial services
and all other disbursements, obligations or expenses in connection with
or preparing to be a witness in, settlement or appeal of, or otherwise
participating in, a Proceeding, including reasonable compensation for time spent
by Indemnitee for which Indemnitee is not otherwise compensated by the Company
or any third party. Expenses also shall include Expenses incurred in connection
with any appeal resulting from any Proceeding, including, without limitation,
the principal, premium, security for, and other costs relating to any cost bond,
supersedeas bond, or other appeal bond or its equivalent. Expenses, however,
shall not include amounts paid in settlement by Indemnitee or the amount of
judgments or fines against Indemnitee.
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2.10“Independent Counsel” shall mean a law firm or a member of a law firm with
significant experience in matters of corporate law and neither presently is, nor
in the past five years has been, retained to represent: (i) the Company or
to matters concerning Indemnitee under this Agreement, or of other indemnitees
under similar indemnification agreements); or (ii) any other party to the
Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding
the foregoing, the term “Independent Counsel” shall not include any person who,
under the applicable standards of professional conduct then prevailing, would
have a conflict of interest in representing either the Company or Indemnitee in
an action to determine Indemnitee’s rights under this Agreement.
2.11References to “fines” shall include any excise tax assessed on Indemnitee
with respect to any employee benefit plan; references to “serving at the request
of the Company” shall include any service as a director, officer, employee,
agent or fiduciary of the Company which imposes duties on, or involves services
by, such director, officer, employee, agent or fiduciary with respect to an
employee benefit plan, its participants or beneficiaries; and if Indemnitee
acted in good faith and in a manner Indemnitee reasonably believed to be in the
best interests of the participants and beneficiaries of an employee benefit
plan, Indemnitee shall be deemed to have acted in a manner “not opposed to the
best interests of the Company” as referred to in this Agreement.
2.12The term “Person” shall have the meaning as set forth in Sections 13(d) and
14(d) of the Exchange Act as in effect on the date hereof; provided, however,
that “Person” shall exclude: (i) the Company; (ii) any Subsidiaries (as defined
below) of the Company; (iii) any employment benefit plan of the Company or of a
Subsidiary of the Company or of any corporation owned, directly or indirectly,
by the shareholders of the Company in substantially the same proportions as
their ownership of share of the Company; and (iv) any trustee or other fiduciary
holding securities under an employee benefit plan of the Company or of a
Subsidiary of the Company or of a corporation owned directly or indirectly by
the shareholders of the Company in substantially the same proportions as their
ownership of share of the Company.
2.13The term “Proceeding” shall include any threatened, pending or completed
action, suit, arbitration, mediation, alternate dispute resolution mechanism,
investigation, inquiry, administrative hearing or any other actual, threatened
or completed proceeding, whether brought in the right of the Company or
otherwise and whether of a civil (including intentional or unintentional tort
claims), criminal, administrative, or investigative or related nature, in which
Indemnitee was, is, will or might be involved as a party or otherwise by reason
of the fact that Indemnitee is or was a director or officer of the Company, by
reason of any action (or failure to act) taken by Indemnitee or of any action
(or failure to act) on Indemnitee’s part while acting as a director or officer
of the Company, or by reason of the fact that Indemnitee is or was serving at
the request of the Company as a director, officer, trustee, general partner,
manager, managing member, fiduciary, employee or agent of any other Enterprise,
in each case whether or not serving in such capacity at the time any liability
or expense is incurred for which indemnification, reimbursement, or advancement
of expenses can be provided under this Agreement.
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2.14The term “Subsidiary,” with respect to any Person, shall mean any
corporation, limited liability company, partnership, joint venture, trust or
other entity of which a majority of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by that Person.
3INDEMNITY IN THIRD-PARTY PROCEEDINGS
To the fullest extent permitted by applicable law, the Company shall indemnify,
hold harmless and exonerate Indemnitee in accordance with the provisions of this
Section 3 if Indemnitee was, is, or is threatened to be made, a party to or a
participant (as a witness, deponent or otherwise) in any Proceeding, other than
a Proceeding by or in the right of the Company to procure a judgment in its
favor by reason of Indemnitee’s Corporate Status. Pursuant to this Section 3,
Indemnitee shall be indemnified, held harmless and exonerated against all
Expenses, judgments, liabilities, fines, penalties and amounts paid in
settlement (including all interest, assessments and other charges paid or
payable in connection with or in respect of such Expenses, judgments, fines,
penalties and amounts paid in settlement) actually and reasonably incurred by
Indemnitee or on Indemnitee’s behalf in connection with such Proceeding or any
claim, issue or matter therein, if Indemnitee acted in good faith and in a
interests of the Company and, in the case of a criminal Proceeding, had no
reasonable cause to believe that Indemnitee’s conduct was unlawful.
4INDEMNITY IN PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY
Section 4 if Indemnitee was, is, or is threatened to be made, a party to or a
participant (as a witness, deponent or otherwise) in any Proceeding by or in the
right of the Company to procure a judgment in its favor by reason of
Indemnitee’s Corporate Status. Pursuant to this Section 4, Indemnitee shall be
indemnified, held harmless and exonerated against all Expenses actually and
reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with
such Proceeding or any claim, issue or matter therein, if Indemnitee acted in
opposed to the best interests of the Company. No indemnification, hold harmless
or exoneration for Expenses shall be made under this Section 4 in respect of any
claim, issue or matter as to which Indemnitee shall have been finally adjudged
by a court to be liable to the Company, unless and only to the extent that any
court in which the Proceeding was brought or the Delaware Court shall determine
the circumstances of the case, Indemnitee is fairly and reasonably entitled to
indemnification, to be held harmless or to exoneration.
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5INDEMNIFICATION FOR EXPENSES OF A PARTY WHO IS WHOLLY OR PARTLY SUCCESSFUL
Notwithstanding any other provisions of this Agreement except for Section 27, to
the extent that Indemnitee was or is, by reason of Indemnitee’s Corporate
Status, a party to (or a participant in) and is successful, on the merits or
otherwise, in any Proceeding or in defense of any claim, issue or matter
therein, in whole or in part, the Company shall, to the fullest extent permitted
by applicable law, indemnify, hold harmless and exonerate Indemnitee against all
Expenses actually and reasonably incurred by Indemnitee in connection therewith.
If Indemnitee is not wholly successful in such Proceeding but is successful, on
matters in such Proceeding, the Company shall, to the fullest extent permitted
behalf in connection with each successfully resolved claim, issue or matter. If
Indemnitee is not wholly successful in such Proceeding, the Company also shall,
to the fullest extent permitted by applicable law, indemnify, hold harmless and
exonerate Indemnitee against all Expenses reasonably incurred in connection with
a claim, issue or matter related to any claim, issue, or matter on which
Indemnitee was successful. For purposes of this Section 5 and without
limitation, the termination of any claim, issue or matter in such a Proceeding
by dismissal, with or without prejudice, shall be deemed to be a successful
result as to such claim, issue or matter.
6INDEMNIFICATION FOR EXPENSES OF A WITNESS
Notwithstanding any other provision of this Agreement except for Section 27, to
the extent that Indemnitee is, by reason of Indemnitee’s Corporate Status, a
witness or deponent in any Proceeding to which Indemnitee is not a party or
threatened to be made a party, Indemnitee shall, to the fullest extent permitted
by applicable law, be indemnified, held harmless and exonerated against all
behalf in connection therewith.
7ADDITIONAL INDEMNIFICATION, HOLD HARMLESS AND EXONERATION RIGHTS
7.1Notwithstanding any limitation in Section 3, 4, or 5, and subject to Section
27, the Company shall, to the fullest extent permitted by applicable law,
indemnify, hold harmless and exonerate Indemnitee if Indemnitee is a party to or
the right of the Company to procure a judgment in its favor) against all
Expenses, judgments, fines, penalties and amounts paid in settlement (including
all interest, assessments and other charges paid or payable in connection with
or in respect of such Expenses, judgments, fines, penalties and amounts paid in
settlement) actually and reasonably incurred by Indemnitee in connection with
the Proceeding. No indemnification, hold harmless or exoneration rights shall be
available under this Section 7.1 on account of Indemnitee’s conduct which
constitutes a breach of Indemnitee’s duty of loyalty to the Company or its
shareholders or is an act or omission not in good faith or which involves
intentional misconduct or a knowing violation of applicable law.
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7.2Notwithstanding any limitation in Section 3, 4, 5 or 7.1, and subject to
Section 27, the Company shall, to the fullest extent permitted by applicable
law, indemnify, hold harmless and exonerate Indemnitee if Indemnitee is a party
to or threatened to be made a party to any Proceeding (including a Proceeding by
or in the right of the Company to procure a judgment in its favor) against all
the Proceeding.
8CONTRIBUTION IN THE EVENT OF JOINT LIABILITY
8.1To the fullest extent permissible under applicable law, if the
indemnification, hold harmless and/or exoneration rights provided for in this
Agreement are unavailable to Indemnitee in whole or in part for any reason
whatsoever, the Company, in lieu of indemnifying, holding harmless or
exonerating Indemnitee, shall pay, in the first instance, the entire amount
incurred by Indemnitee, whether for judgments, liabilities, fines, penalties,
amounts paid or to be paid in settlement and/or for Expenses, in connection with
any Proceeding without requiring Indemnitee to contribute to such payment, and
at any time against Indemnitee.
8.2The Company shall not enter into any settlement of any Proceeding in which
the Company is jointly liable with Indemnitee (or would be if joined in such
Proceeding) unless such settlement provides for a full and final release of all
claims asserted against Indemnitee.
8.3The Company hereby agrees to fully indemnify, hold harmless and exonerate
Indemnitee from any claims for contribution which may be brought by officers,
directors or employees of the Company other than Indemnitee who may be jointly
liable with Indemnitee.
9EXCLUSIONS
The Company shall not be obligated under this Agreement to make any
indemnification, advance expenses, hold harmless or exoneration payment in
connection with any claim made against Indemnitee:
(a)for which payment has actually been received by or on behalf of Indemnitee
under any insurance policy or other indemnity or advancement provision and which
payment has not subsequently been returned, except with respect to any excess
beyond the amount actually received under any insurance policy, contract,
agreement, other indemnity or advancement provision or otherwise;
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(b)for an accounting of profits made from the purchase and sale (or sale and
Section 16(b) of the Exchange Act (or any successor rule) or similar provisions
of state statutory law or common law; or
(c)prior to a Change in Control, other than as provided in Sections 14.5 and
14.6 hereof, in connection with any Proceeding (or any part of any Proceeding)
officers, employees or other indemnitees, unless (i) the Board authorized the
Proceeding (or any part of any Proceeding) prior to its initiation or (ii) the
Company provides the indemnification, hold harmless or exoneration payment, in
its sole discretion, pursuant to the powers vested in the Company under
applicable law.
10ADVANCES OF EXPENSES; DEFENSE OF CLAIM
10.1Notwithstanding any provision of this Agreement to the contrary except for
Section 27, and to the fullest extent not prohibited by applicable law, the
Company shall pay the Expenses incurred by Indemnitee (or reasonably expected by
Indemnitee to be incurred by Indemnitee within three months) in connection with
any Proceeding within ten (10) days after the receipt by the Company of a
statement or statements requesting such advances from time to time, prior to the
final disposition of any Proceeding. Advances shall, to the fullest extent
permitted by law, be unsecured and interest free. Advances shall be made without
regard to Indemnitee’s ability to repay the Expenses and without regard to
Indemnitee’s ultimate entitlement to be indemnified, held harmless or exonerated
under the other provisions of this Agreement. Advances shall include any and all
reasonable Expenses incurred pursuing a Proceeding to enforce this right of
advancement, including Expenses incurred preparing and forwarding statements to
the Company to support the advances claimed. To the fullest extent required by
applicable law, such payments of Expenses in advance of the final disposition of
the Proceeding shall be made only upon the Company’s receipt of an undertaking,
by or on behalf of Indemnitee, to repay the advance to the extent that it is
ultimately determined that Indemnitee is not entitled to be indemnified by the
Company under the provisions of this Agreement, the Articles, applicable law or
otherwise. This Section 10.1 shall not apply to any claim made by Indemnitee for
which an indemnification, hold harmless or exoneration payment is excluded
10.2The Company will be entitled to participate in the Proceeding at its own
expense.
10.3The Company shall not settle any action, claim or Proceeding (in whole or in
part) which would impose any Expense, judgment, fine, penalty or limitation on
Indemnitee without Indemnitee’s prior written consent.
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11PROCEDURE FOR NOTIFICATION AND APPLICATION FOR INDEMNIFICATION
11.1Indemnitee agrees to notify promptly the Company in writing upon being
served with any summons, citation, subpoena, complaint, indictment, information
or other document relating to any Proceeding or matter which may be subject to
indemnification, hold harmless or exoneration rights, or advancement of Expenses
covered hereunder. The failure of Indemnitee to so notify the Company shall not
relieve the Company of any obligation which it may have to Indemnitee under this
Agreement, or otherwise.
11.2Indemnitee may deliver to the Company a written application to indemnify,
hold harmless or exonerate Indemnitee in accordance with this Agreement. Such
application(s) may be delivered from time to time and at such time(s) as
Indemnitee deems appropriate in Indemnitee’s sole discretion. Following such a
written application for indemnification by Indemnitee, Indemnitee’s entitlement
to indemnification shall be determined according to Section 12.1 of this
Agreement.
12PROCEDURE UPON APPLICATION FOR INDEMNIFICATION
12.1A determination, if required by applicable law, with respect to Indemnitee’s
entitlement to indemnification shall be made in the specific case by one of the
following methods, which shall be at the election of Indemnitee: (i) by a
majority vote of the Disinterested Directors, even though less than a quorum of
the Board (ii) by Independent Counsel in a written opinion to the Board, a copy
of which shall be delivered to Indemnitee; or (iii) by vote of the shareholders
by ordinary resolution. The Company will promptly advise Indemnitee in writing
with respect to any determination that Indemnitee is or is not entitled to
indemnification has been denied. If it is so determined that Indemnitee is
entitled to indemnification, payment to Indemnitee shall be made within ten (10)
days after such determination. Indemnitee shall reasonably cooperate with the
person, persons or entity making such determination with respect to Indemnitee’s
entitlement to indemnification, including providing to such person, persons or
entity upon reasonable advance request any documentation or information which is
not privileged or otherwise protected from disclosure and which is reasonably
available to Indemnitee and reasonably necessary to such determination. Any
costs or Expenses (including attorneys’ fees and disbursements) incurred by
Indemnitee in so cooperating with the person, persons or entity making such
determination shall be borne by the Company (irrespective of the determination
as to Indemnitee’s entitlement to indemnification) and the Company hereby agrees
to indemnify and to hold Indemnitee harmless therefrom.
12.2In the event the determination of entitlement to indemnification is to be
made by Independent Counsel pursuant to Section 12.1 hereof, the Independent
Counsel shall be selected as provided in this Section 12.2. The Independent
Counsel shall be selected by Indemnitee (unless Indemnitee shall request that
such selection be made by the Board), and Indemnitee shall give written notice
to the Company advising it of the identity of the Independent Counsel so
selected and certifying that the Independent Counsel so selected meets the
requirements of “Independent Counsel” as defined in Section 2 of this Agreement.
If the Independent Counsel is selected by the Board, the Company shall give
written notice to Indemnitee advising Indemnitee of the identity of the
Independent Counsel so selected and certifying that the Independent Counsel so
selected meets the requirements of “Independent Counsel” as defined in Section 2
of this Agreement. In either event, Indemnitee or the Company, as the case may
be, may, within ten (10) days after such written notice of selection shall have
been received, deliver to the Company or to Indemnitee, as the case may be, a
Agreement, and the objection shall set forth with particularity the factual
basis of such assertion. Absent a proper and timely objection, the person so
selected shall act as Independent Counsel. If such written objection is so made
and substantiated, the Independent Counsel so selected may not serve as
Independent Counsel unless and until such objection is withdrawn or a court of
competent jurisdiction has determined that such objection is without merit. If,
within twenty (20) days after submission by Indemnitee of a written request for
indemnification pursuant to Section 11.2 hereof, no Independent Counsel shall
have been selected and not objected to, either the Company or Indemnitee may
petition the Delaware Court for resolution of any objection which shall have
been made by the Company or Indemnitee to the other’s selection of Independent
Counsel and/or for the appointment as Independent Counsel of a person selected
by the Delaware Court, and the person with respect to whom all objections are so
resolved or the person so appointed shall act as Independent Counsel under
Section 12.1 hereof. Upon the due commencement of any judicial proceeding or
arbitration pursuant to Section 14.1 of this Agreement, Independent Counsel
shall be discharged and relieved of any further responsibility in such capacity
(subject to the applicable standards of professional conduct then prevailing).
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12.3The Company agrees to pay the reasonable fees and expenses of Independent
Counsel and to fully indemnify and hold harmless such Independent Counsel
against any and all Expenses, claims, liabilities and damages arising out of or
relating to this Agreement or its engagement pursuant hereto.
13PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS
13.1In making a determination with respect to entitlement to indemnification
hereunder, the person, persons or entity making such determination shall presume
that Indemnitee is entitled to indemnification under this Agreement if
Section 11.2 of this Agreement, and the Company shall have the burden of proof
to overcome that presumption in connection with the making by any person,
persons or entity of any determination contrary to that presumption. Neither the
failure of the Company (including by its directors or Independent Counsel) to
have made a determination prior to the commencement of any action pursuant to
this Agreement that indemnification is proper in the circumstances because
Indemnitee has met the applicable standard of conduct, nor an actual
determination by the Company (including by its directors or Independent Counsel)
that Indemnitee has not met such applicable standard of conduct, shall be a
defense to the action or create a presumption that Indemnitee has not met the
applicable standard of conduct.
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13.2If the person, persons or entity empowered or selected under Section 12 of
this Agreement to determine whether Indemnitee is entitled to indemnification
shall not have made a determination within thirty (30) days after receipt by the
Company of the request therefor, the requisite determination of entitlement to
indemnification shall be deemed to have been made and Indemnitee shall be
indemnification, or (ii) a final judicial determination that any or all such
indemnification is expressly prohibited under applicable law; provided, however,
that such 30-day period may be extended for a reasonable time, not to exceed an
additional fifteen (15) days, if the person, persons or entity making the
determination with respect to entitlement to indemnification in good faith
and/or information relating thereto.
13.3The termination of any Proceeding or of any claim, issue or matter therein,
or its equivalent, shall not (except as otherwise expressly provided in this
unlawful.
13.4For purposes of any determination of good faith, Indemnitee shall be deemed
to have acted in good faith if Indemnitee’s action is based on the records or
books of account of the Enterprise, including financial statements, or on
information supplied to Indemnitee by the directors, managers, managing members,
or officers of the Enterprise in the course of their duties, or on the advice of
legal counsel for the Enterprise, its Board, any committee of the Board or any
director, trustee, general partner, manager or managing member or on information
or records given or reports made to the Enterprise, its Board, any committee of
the Board or any director, trustee, general partner, manager or managing member
by an independent certified public accountant or by an appraiser or other expert
selected by the Enterprise, its Board, any committee of the Board or any
director, trustee, general partner, manager or managing member. The provisions
of this Section 13.4 shall not be deemed to be exclusive or to limit in any way
the other circumstances in which Indemnitee may be deemed or found to have met
the applicable standard of conduct set forth in this Agreement.
13.5The knowledge and/or actions, or failure to act, of any other director,
officer, trustee, partner, manager, managing member, fiduciary, agent or
employee of the Enterprise shall not be imputed to Indemnitee for purposes of
determining the right to indemnification under this Agreement.
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14REMEDIES OF INDEMNITEE
14.1In the event that (i) a determination is made pursuant to Section 12 of this
Agreement that Indemnitee is not entitled to indemnification under this
Agreement, (ii) advancement of Expenses, to the fullest extent permitted by
applicable law, is not timely made pursuant to Section 10 of this Agreement,
(iii) no determination of entitlement to indemnification shall have been made
pursuant to Section 12.1 of this Agreement within thirty (30) days after receipt
indemnification is not made pursuant to Sections 5, 6, 7 or the last sentence of
Section 12.1 of this Agreement within ten (10) days after receipt by the Company
of a written request therefor, (v) a contribution payment is not made in a
timely manner pursuant to Section 8 of this Agreement, (vi) payment of
indemnification pursuant to Section 3 or 4 of this Agreement is not made within
ten (10) days after a determination has been made that Indemnitee is entitled to
indemnification, or (vii) payment to Indemnitee pursuant to any hold harmless or
exoneration rights under this Agreement or otherwise is not made within ten (10)
days after receipt by the Company of a written request therefor, Indemnitee
shall be entitled to an adjudication by the Delaware Court to such
indemnification, hold harmless, exoneration, contribution or advancement rights.
Alternatively, Indemnitee, at Indemnitee’s option, may seek an award in
Arbitration Rules and Mediation Procedures of the American Arbitration
Association. Except as set forth herein, the provisions of Delaware law (without
regard to its conflict of laws rules) shall apply to any such arbitration. The
Company shall not oppose Indemnitee’s right to seek any such adjudication or
award in arbitration.
14.2In the event that a determination shall have been made pursuant to Section
12.1 of this Agreement that Indemnitee is not entitled to indemnification, any
judicial proceeding or arbitration commenced pursuant to this Section 14 shall
be conducted in all respects as a de novo trial, or arbitration, on the merits
and Indemnitee shall not be prejudiced by reason of that adverse determination.
In any judicial proceeding or arbitration commenced pursuant to this Section 14,
Indemnitee shall be presumed to be entitled to be indemnified, held harmless,
exonerated and to receive advances of Expenses under this Agreement and the
Company shall have the burden of proving Indemnitee is not entitled to be
indemnified, held harmless, exonerated and to receive advances of Expenses, as
the case may be, and the Company may not refer to or introduce into evidence any
determination pursuant to Section 12.1 of this Agreement adverse to Indemnitee
for any purpose. If Indemnitee commences a judicial proceeding or arbitration
pursuant to this Section 14, Indemnitee shall not be required to reimburse the
Company for any advances pursuant to Section 10 until a final determination is
made with respect to Indemnitee’s entitlement to indemnification (as to which
all rights of appeal have been exhausted or lapsed).
14.3If a determination shall have been made pursuant to Section 12.1 of this
bound by such determination in any judicial proceeding or arbitration commenced
pursuant to this Section 14, absent (i) a misstatement by Indemnitee of a
law.
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14.4The Company shall be precluded from asserting in any judicial proceeding or
arbitration commenced pursuant to this Section 14 that the procedures and
presumptions of this Agreement are not valid, binding and enforceable and shall
stipulate in any such court or before any such arbitrator that the Company is
bound by all the provisions of this Agreement.
14.5The Company shall indemnify and hold harmless Indemnitee to the fullest
extent permitted by law against all Expenses and, if requested by Indemnitee,
shall (within ten (10) days after the Company’s receipt of such written request)
pay to Indemnitee, to the fullest extent permitted by applicable law, such
Expenses which are incurred by Indemnitee in connection with any judicial
proceeding or arbitration brought by Indemnitee (i) to enforce Indemnitee’s
rights under, or to recover damages for breach of, this Agreement or any other
indemnification, hold harmless, exoneration, advancement or contribution
agreement or provision of the Articles now or hereafter in effect; or (ii) for
recovery or advances under any insurance policy maintained by any person for the
benefit of Indemnitee, regardless of the outcome and whether Indemnitee
ultimately is determined to be entitled to such indemnification, hold harmless
or exoneration right, advancement, contribution or insurance recovery, as the
case may be (unless such judicial proceeding or arbitration was not brought by
Indemnitee in good faith).
14.6Interest shall be paid by the Company to Indemnitee at a rate to be agreed
between the Company and Indemnitee for amounts which the Company indemnifies,
holds harmless or exonerates, or is obliged to indemnify, hold harmless or
exonerate for the period commencing with the date on which Indemnitee requests
indemnification, to be held harmless, exonerated, contribution, reimbursement or
advancement of any Expenses and ending with the date on which such payment is
made to Indemnitee by the Company.
15SECURITY
Notwithstanding anything herein to the contrary except for Section 27, to the
extent requested by Indemnitee and approved by the Board, the Company may at any
time and from time to time provide security to Indemnitee for the Company’s
obligations hereunder through an irrevocable bank line of credit, funded trust
or other collateral. Any such security, once provided to Indemnitee, may not be
revoked or released without the prior written consent of Indemnitee.
16NON-EXCLUSIVITY; SURVIVAL OF RIGHTS; INSURANCE; SUBROGATION
16.1The rights of Indemnitee as provided by this Agreement shall not be deemed
exclusive of any other rights to which Indemnitee may at any time be entitled
under applicable law, the Articles, any agreement, a vote of shareholders or a
resolution of directors, or otherwise. No amendment, alteration or repeal of
this Agreement or of any provision hereof shall limit or restrict any right of
Indemnitee under this Agreement in respect of any Proceeding (regardless of when
such Proceeding is first threatened, commenced or completed) arising out of, or
related to, any action taken or omitted by such Indemnitee in Indemnitee’s
Corporate Status prior to such amendment, alteration or repeal. To the extent
that a change in applicable law, whether by statute or judicial decision,
permits greater indemnification, hold harmless or exoneration rights or
advancement of Expenses than would be afforded currently under the Articles or
this Agreement, then this Agreement (without any further action by the parties
hereto) shall automatically be deemed to be amended to require that the Company
indemnify Indemnitee to the fullest extent permitted by law. No right or remedy
every other right and remedy shall be cumulative and in addition to every other
right and remedy given hereunder or now or hereafter existing at law or in
equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
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16.2The Articles permit the Company to purchase and maintain insurance or
furnish similar protection or make other arrangements including, but not limited
to, providing a trust fund, letter of credit, or surety bond (“Indemnification
Arrangements”) on behalf of Indemnitee against any liability asserted against
Indemnitee or incurred by or on behalf of Indemnitee or in such capacity as a
director, officer, employee or agent of the Company, or arising out of
indemnify Indemnitee against such liability under the provisions of this
Agreement, as it may then be in effect. The purchase, establishment, and
maintenance of any such Indemnification Arrangement shall not in any way limit
or affect the rights and obligations of the Company or of Indemnitee under this
Agreement except as expressly provided herein, and the execution and delivery of
this Agreement by the Company and Indemnitee shall not in any way limit or
affect the rights and obligations of the Company or the other party or parties
thereto under any such Indemnification Arrangement.
16.3To the extent that the Company maintains an insurance policy or policies
providing liability insurance for directors, officers, trustees, partners,
managers, managing members, fiduciaries, employees, or agents of the Company or
of any other Enterprise which such person serves at the request of the Company,
Indemnitee shall be covered by such policy or policies in accordance with its or
their terms to the maximum extent of the coverage available for any such
director, officer, trustee, partner, manager, managing member, fiduciary,
employee or agent under such policy or policies. If, at the time the Company
receives notice from any source of a Proceeding as to which Indemnitee is a
party or a participant (as a witness, deponent or otherwise), the Company has
director and officer liability insurance in effect, the Company shall give
prompt notice of such Proceeding to the insurers in accordance with the
procedures set forth in the respective policies. The Company shall thereafter
of Indemnitee, all amounts payable as a result of such Proceeding in accordance
with the terms of such policies.
16.4In the event of any payment under this Agreement, the Company shall be
15
16.5The Company’s obligation to indemnify, hold harmless, exonerate or advance
Expenses hereunder to Indemnitee who is or was serving at the request of the
Company as a director, officer, trustee, partner, manager, managing member,
fiduciary, employee or agent of any other Enterprise shall be reduced by any
amount Indemnitee has actually received as indemnification, hold harmless or
exoneration payments or advancement of expenses from such Enterprise.
Notwithstanding any other provision of this Agreement to the contrary except for
Section 27, (i) Indemnitee shall have no obligation to reduce, offset, allocate,
pursue or apportion any indemnification, hold harmless, exoneration,
advancement, contribution or insurance coverage among multiple parties
possessing such duties to Indemnitee prior to the Company’s satisfaction and
performance of all its obligations under this Agreement, and (ii) the Company
shall perform fully its obligations under this Agreement without regard to
whether Indemnitee holds, may pursue or has pursued any indemnification,
advancement, hold harmless, exoneration, contribution or insurance coverage
rights against any person or entity other than the Company.
17DURATION OF AGREEMENT
All agreements and obligations of the Company contained herein shall continue
during the period Indemnitee serves as a director or officer of the Company or
employee or agent of any other corporation, partnership, joint venture, trust,
employee benefit plan or other Enterprise which Indemnitee serves at the request
of the Company and shall continue thereafter so long as Indemnitee shall be
subject to any possible Proceeding (including any rights of appeal thereto and
any Proceeding commenced by Indemnitee pursuant to Section 14 of this Agreement)
by reason of Indemnitee’s Corporate Status, whether or not Indemnitee is acting
in any such capacity at the time any liability or expense is incurred for which
indemnification or advancement can be provided under this Agreement.
18SEVERABILITY
If any provision or provisions of this Agreement shall be held to be invalid,
illegal or unenforceable for any reason whatsoever: (a) the validity, legality
and enforceability of the remaining provisions of this Agreement (including,
without limitation, each portion of any Section, paragraph or sentence of this
unenforceable, that is not itself invalid, illegal or unenforceable) shall not
in any way be affected or impaired thereby and shall remain enforceable to the
fullest extent permitted by law; (b) such provision or provisions shall be
deemed reformed to the extent necessary to conform to applicable law and to give
limitation, each portion of any Section, paragraph or sentence of this Agreement
containing any such provision held to be invalid, illegal or unenforceable, that
is not itself invalid, illegal or unenforceable) shall be construed so as to
give effect to the intent manifested thereby.
16
19ENFORCEMENT AND BINDING EFFECT
19.1The Company expressly confirms and agrees that it has entered into this
Indemnitee to serve as a director, officer or key employee of the Company, and
the Company acknowledges that Indemnitee is relying upon this Agreement in
serving as a director, officer or key employee of the Company.
19.2Without limiting any of the rights of Indemnitee under the Articles as they
may be amended from time to time, this Agreement constitutes the entire
and supersedes all prior agreements and understandings, oral, written and
implied, between the parties hereto with respect to the subject matter hereof.
19.3The indemnification, hold harmless, exoneration and advancement of expenses
rights provided by or granted pursuant to this Agreement shall be binding upon
and be enforceable by the parties hereto and their respective successors and
consolidation or otherwise to all or substantially all of the business and/or
assets of the Company), shall continue as to an Indemnitee who has ceased to be
a director, officer, employee or agent of the Company or a director, officer,
trustee, general partner, manager, managing member, fiduciary, employee or agent
of any other Enterprise at the Company’s request, and shall inure to the benefit
of Indemnitee and Indemnitee’s spouse, assigns, heirs, devisees, executors and
administrators and other legal representatives.
19.4The Company shall require and cause any successor (whether direct or
taken place.
19.5The Company and Indemnitee agree herein that a monetary remedy for breach of
this Agreement, at some later date, may be inadequate, impracticable and
difficult of proof, and further agree that such breach may cause Indemnitee
irreparable harm. Accordingly, the parties hereto agree that Indemnitee may
enforce this Agreement by seeking, among other things, injunctive relief and/or
specific performance hereof, without any necessity of showing actual damage or
irreparable harm and that by seeking injunctive relief and/or specific
performance, Indemnitee shall not be precluded from seeking or obtaining any
other relief to which Indemnitee may be entitled. The Company and Indemnitee
further agree that Indemnitee shall be entitled to such specific performance and
injunctive relief, including temporary restraining orders, preliminary
injunctions and permanent injunctions, without the necessity of posting bonds or
other undertaking in connection therewith. The Company acknowledges that in the
Court of competent jurisdiction and the Company hereby waives any such
requirement of such a bond or undertaking.
17
20MODIFICATION AND WAIVER
No supplement, modification or amendment of this Agreement shall be binding
unless executed in writing by the Company and Indemnitee. No waiver of any of
the provisions of this Agreement shall be deemed or shall constitute a waiver of
any other provisions of this Agreement nor shall any waiver constitute a
continuing waiver.
21NOTICES
shall be in writing and shall be deemed to have been duly given (i) if delivered
by hand and received for by the party to whom said notice or other communication
shall have been directed, on such delivery, or (ii) if mailed by certified or
registered mail with postage prepaid, on the third (3rd) business day after the
date on which it is so mailed:
Agreement or such other address as Indemnitee shall provide in writing to the
Company.
(b)If to the Company, to:
ACE Convergence Acquisition Corp.
1013 Centre Road, Suite 403S
Wilmington, DE 19805
With copies, which shall not constitute notice, to:
525 University Avenue, Suite 1400
Palo Alto, California 94301
Attn: Gregg A. Noel
or to any other address as may have been furnished to Indemnitee in writing by
the Company.
22APPLICABLE LAW AND CONSENT TO JURISDICTION
This Agreement and the legal relations among the parties shall be governed by,
Delaware, without regard to its conflict of laws rules. Except with respect to
any arbitration commenced by Indemnitee pursuant to Section 14.1 of this
Agreement, the Company and Indemnitee hereby irrevocably and unconditionally:
(a) agree that any action or proceeding arising out of or in connection with
this Agreement shall be brought only in the Delaware Court and not in any other
country; (b) consent to submit to the exclusive jurisdiction of the Delaware
Court for purposes of any action or proceeding arising out of or in connection
with this Agreement; (c) waive any objection to the laying of venue of any such
action or proceeding in the Delaware Court; and (d) waive, and agree not to
plead or to make, any claim that any such action or proceeding brought in the
Delaware Court has been brought in an improper or inconvenient forum, or is
subject (in whole or in part) to a jury trial.
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23IDENTICAL COUNTERPARTS
for all purposes be deemed to be an original but all of which together shall
constitute one and the same Agreement. Only one such counterpart signed by the
party against whom enforceability is sought needs to be produced to evidence the
existence of this Agreement.
24MISCELLANEOUS
Use of the masculine pronoun shall be deemed to include usage of the feminine
pronoun where appropriate. The headings of the paragraphs of this Agreement are
25PERIOD OF LIMITATIONS
No legal action shall be brought and no cause of action shall be asserted by or
in the right of the Company against Indemnitee, Indemnitee’s spouse, heirs,
executors or personal or legal representatives after the expiration of two (2)
years from the date of accrual of such cause of action, and any claim or cause
of action of the Company shall be extinguished and deemed released unless
asserted by the timely filing of a legal action within such two-year period;
provided, however, that if any shorter period of limitations is otherwise
applicable to any such cause of action such shorter period shall govern.
26ADDITIONAL ACTS
If for the validation of any of the provisions in this Agreement any act,
resolution, approval or other procedure is required, the Company undertakes to
cause such act, resolution, approval or other procedure to be affected or
adopted in a manner that will enable the Company to fulfil its obligations under
this Agreement.
27WAIVER OF CLAIMS TO TRUST ACCOUNT
Indemnitee hereby agrees that it does not have any right, title, interest or
claim of any kind (each, a “Claim”) in or to any monies in the trust account
established in connection with the Company’s initial public offering for the
benefit of the Company and holders of shares issued in such offering, and hereby
waives any Claim it may have in the future as a result of, or arising out of,
any services provided to the Company and will not seek recourse against such
trust account for any reason whatsoever.
19
IN WITNESS WHEREOF, the parties hereto have caused this Indemnity Agreement to
be signed as of the day and year first above written.
By: /s/ Omid Tahemia Name: Omid Tahemia Address: c/o ACE
Convergence Acquisition Corp. 1013 Centre Road, Suite 403S Wilmington,
DE 19805
ACE CONVERGENCE ACQUISITION CORP. By: /s/ Denis Tse Name:
Denis Tse Title: Authorized Signatory
[Signature Page to D&O’s Indemnity Agreement]
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Title: Chain oil company nonsense
Question:i got an oil change a couple months ago from a chain oil change place. i used to go to the same place when i had my previous subaru. i looked at the online receipt today to see at what mileage i needed to change my oil and i saw the car they serviced per the receipt was my previous 2014 impreza and not my 2017 wrx. they even used the old vin from the subaru that i traded in for my current car. what kind of legal action would i he able to take due to their error?
Answer #1: Have you suffered damages because of this grievous clerical error?
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Exhibit 5.1 150 Third Avenue South, Suite 2800 Nashville, TN37201 (615) 742-6200 May 17, 2012 Luminex Corporation 12212 Technology Boulevard Austin, Texas 78727 RE: Registration Statement on Form S-8 relating to the Luminex Corporation Second Amended and Restated 2006 Equity Incentive Plan (the “Plan”) Ladies and Gentlemen: We have acted as counsel to Luminex Corporation, a Delaware corporation (“Luminex”), in connection with the preparation and filing of a Registration Statement on Form S-8 (the “Registration Statement”) relating to certain shares of common stock, par value $0.001 (the “Common Stock”), of Luminex to be issued pursuant to the Plan. In connection with this opinion, we have examined and relied upon such records, documents, certificates, and other instruments as we have deemed necessary or appropriate in order to express the opinions hereinafter set forth. We have also assumed the legal capacity of all natural persons, the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as copies, the authenticity of the originals of such latter documents, the legal competence of all signatories to such documents, and the due authorization, execution and delivery of all documents by the parties thereto. As to various questions of fact relevant to the opinion expressed herein, we have relied upon, and assume the accuracy of, certificates and oral or written statements and other information of or from public officials and officers and representatives of Luminex. Based upon and subject to the qualifications, assumptions and limitations set forth herein, we are of the opinion that the shares of Common Stock issuable in connection with the Plan have been duly authorized and, when issued in accordance with the terms of the Plan, will be legally issued, fully paid and non-assessable. The opinions expressed above are limited to the General Corporation Law of the State of Delaware (which includes applicable provisions of the Delaware Constitution and reported judicial decisions interpreting the General Corporation Law of the State of Delaware and the Delaware Constitution) and the federal law of the United States. We hereby consent to the filing of this opinion with the Securities and Exchange Commission (the “Commission”) as Exhibit5.1 to the Registration Statement. In giving this consent, we do not thereby admit that we are in the category of persons whose consent is required under Section7 of the Securities Act of 1933, as amended, or the rules and regulations of the Commission. This opinion is limited to the specific issues addressed herein, and no opinion may be inferred or implied beyond that expressly stated herein. This opinion is furnished to you in connection with the filing of the Registration Statement. Our opinion is rendered as of the date hereof and we assume no obligation to advise you of changes in law or fact (or the effect thereof on the opinions expressed herein) that hereafter may come to our attention. Sincerely, /s/ Bass, Berry & Sims PLC Bass, Berry & Sims PLC
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Exhibit 10.1
TERMINATION OF KEY EXECUTIVE
DEFERRED COMPENSATION AGREEMENT
This Termination of Key Executive Deferred Compensation Agreement is made and
entered into on this 4th day of April, 2005, between WATSCO, INC., a Florida
corporation (the “Company”) and ALBERT H. NAHMAD (the “Executive”).
WHEREAS, effective as of June 1, 1981, the Company and the Executive entered
into a Key Executive Deferred Compensation Agreement (the “Agreement”), pursuant
to which the Company was required to provide certain retirement and death
benefits to the Executive; and
WHEREAS, the Company and the Employee now agree that the Agreement no longer
serves the purposes of either the Company or the Employee and now wish to
terminate the Agreement in its entirety.
NOW THEREFORE, in consideration of the Company’s award to the Executive of
55,000 shares of Class B Common Stock of the Company, pursuant to the terms of a
Restricted Stock Agreement of even date hereof, and other valuable
Company and the Employee hereby agree that the Agreement is hereby terminated
and shall be considered null and void ab initio and that no retirement, death or
other benefits shall be paid thereunder.
WASTCO, INC. By:
/s/ Paul Manley, Chairman
Paul Manley, Chairman,
Compensation Committee
/s/ Albert H. Nahmad
Albert H. Nahmad
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Exhibit 10.27
ADDENDUM TO ADMINISTRATIVE SERVICES AGREEMENT
This Addendum (the “Addendum”) is entered into as of January 1, 2015, by and
among NEW YORK RADIATION THERAPY MANAGEMENT SERVICES, LLC., a New York limited
liability company (“MANAGEMENT SERVICES”) and YONKERS RADIATION MEDICAL
PRACTICE, P.C., a New York professional corporation (the “PC”). This Addendum
amends Section 3.1 of the Administrative Services Agreement dated January 1,
1999 between the parties (the “Agreement”) to adjust the monthly Service Fee
payable at the rate of $550.00 per external beam treatment billed in 2013 to a
monthly Service Fee payable at the rate of $425.00 per external beam treatment
billed (currently CPT codes 77372, 77373, 77401 – 77416, 77418, and 77781 –
77784) and replaces the Addendum of that same Section dated January 1, 2014.
From and after the date hereof, Section 3.1 shall read as follows:
3.1. Service Fee. For the services to be provided hereunder by MANAGEMENT
SERVICES, the PC shall pay to MANAGEMENT SERVICES a monthly Service Fee at the
rate of $425.00 per external beam treatment billed (currently including, but not
limited to CPT codes 0073T; 58999, V; 77001-26, 77002-26, 77021, 77021-26,
77300-59, 77336-59, 77372 – 77373, 77385 – 77386, 77401 – 77416, 77418, 77421,
77424 – 77424, 77600, 77605, 77610, 77615, 77620, 99144 – 99145, 99149, A9606,
A9699, G0339 – G0340, and G6003 – G6016). The parties agree that the Service
Fee represents the fair market value of the services provided by MANAGEMENT
SERVICES hereunder and that the parties shall meet annually to reevaluate the
value of services provided by MANAGEMENT SERVICES and shall establish the fair
market value thereof for purposes of this Section 3.1.
Accepted:
NEW YORK RADIATION THERAPY
MANAGEMENT SERVICES, INC.
By:
/s/ JOSEPH BISCARDI
Joseph Biscardi
Assistant Treasurer
Accepted:
YONKERS RADIATION MEDICAL PRACTICE, P.C.
By:
/s/ DANIEL E. DOSORETZ, M.D.
Daniel E. Dosoretz, M.D.
President
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Name: 81/807/EEC: Commission Decision of 22 July 1981 authorizing the French Republic not to apply Community treatment to woven fabrics of cotton and woven fabrics of discontinuous synthetic textile fibres, originating in Thailand (Only the French text is authentic)
Type: Decision_ENTSCHEID
Subject Matter: nan
Date Published: 1981-10-22
Avis juridique important|31981D080781/807/EEC: Commission Decision of 22 July 1981 authorizing the French Republic not to apply Community treatment to woven fabrics of cotton and woven fabrics of discontinuous synthetic textile fibres, originating in Thailand (Only the French text is authentic) Official Journal L 301 , 22/10/1981 P. 0035****( 1 ) OJ NO L 16 , 22 . 1 . 1980 , P . 14 . ( 2 ) OJ NO L 365 , 27 . 12 . 1978 , P . 1 . COMMISSION DECISION OF 22 JULY 1981 AUTHORIZING THE FRENCH REPUBLIC NOT TO APPLY COMMUNITY TREATMENT TO WOVEN FABRICS OF COTTON AND WOVEN FABRICS OF DISCONTINUOUS SYNTHETIC TEXTILE FIBRES , ORIGINATING IN THAILAND ( ONLY THE FRENCH TEXT IS AUTHENTIC ) ( 81/807/EEC ) THE COMMISSION OF THE EUROPEAN COMMUNITIES , HAVING REGARD TO THE TREATY ESTABLISHING THE EUROPEAN ECONOMIC COMMUNITY , AND IN PARTICULAR THE FIRST PARAGRAPH OF ARTICLE 115 THEREOF , HAVING REGARD TO COMMISSION DECISION 80/47/EEC OF 20 DECEMBER 1979 ON SURVEILLANCE AND PROTECTIVE MEASURES WHICH MEMBER STATES MAY BE AUTHORIZED TO TAKE IN RESPECT OF IMPORTS OF CERTAIN PRODUCTS ORIGINATING IN THIRD COUNTRIES AND PUT INTO FREE CIRCULATION IN ANOTHER MEMBER STATE ( 1 ), AND IN PARTICULAR ARTICLE 3 THEREOF , WHEREAS , ON 13 JULY 1981 , A REQUEST WAS MADE UNDER THE FIRST PARAGRAPH OF ARTICLE 115 OF THE TREATY BY THE FRENCH GOVERNMENT TO THE COMMISSION OF THE EUROPEAN COMMUNITIES FOR AUTHORIZATION NOT TO APPLY COMMUNITY TREATMENT TO WOVEN FABRICS OF COTTON AND WOVEN FABRICS OF DISCONTINUOUS SYNTHETIC TEXTILE FIBRES FALLING WITHIN HEADING NO 55.09 AND SUBHEADING 56.07 A OF THE COMMON CUSTOMS TARIFF ( CATEGORIES 2 AND 3 ), ORIGINATING IN THAILAND AND IN FREE CIRCULATION IN THE OTHER MEMBER STATES ; WHEREAS THE IMPORTATION INTO THE COMMUNITY OF THE PRODUCTS IN QUESTION ORIGINATING IN THAILAND IS COVERED BY AN AGREEMENT NEGOTIATED BETWEEN THE COMMUNITY AND THAT COUNTRY ; WHEREAS , UNDER THAT AGREEMENT , THAILAND HAS UNDERTAKEN TO TAKE ALL NECESSARY STEPS TO LIMIT ITS EXPORTS OF THE PRODUCTS IN QUESTION TO THE COMMUNITY WITHIN CERTAIN CEILINGS ; WHEREAS , IN ORDER TO IMPLEMENT THAT AGREEMENT AND TAKE ACCOUNT OF ITS CHARACTERISTICS , THE COUNCIL ADOPTED REGULATION ( EEC ) NO 3059/78 ( 2 ) INTRODUCING SPECIFIC COMMON RULES FOR IMPORTS OF CERTAIN TEXTILE PRODUCTS ; WHEREAS THE DIFFERENCES IN MARKET CONDITIONS WITHIN THE COMMUNITY AND THE PARTICULAR SENSITIVITY OF THIS BRANCH OF COMMUNITY INDUSTRY HAVE BEEN TAKEN INTO ACCOUNT IN ALLOCATING THE ABOVEMENTIONED COMMUNITY CEILING BETWEEN THE MEMBER STATES ; WHEREAS , FOR THIS REASON , DISPARITIES STILL EXIST BETWEEN THE CONDITIONS GOVERNING THE IMPORTATION OF THE PRODUCTS IN QUESTION INTO THE DIFFERENT MEMBER STATES ; WHEREAS UNIFORMITY CAN ONLY BE BROUGHT ABOUT GRADUALLY ; WHEREAS THESE DISPARITIES IN THE COMMERCIAL POLICY MEASURES APPLIED BY THE MEMBER STATES HAVE RESULTED IN DEFLECTIONS OF TRADE , IN THAT , SINCE 1 JANUARY 1981 , FRANCE HAS ADMITTED 274.8 TONNES OF THE PRODUCTS IN QUESTION IN FREE CIRCULATION , ORIGINATING IN THE SAID THIRD COUNTRY , OF WHICH 114 TONNES WERE IN CATEGORY 2 ; WHEREAS , WITH REGARD TO THE SITUATION OF THE INDUSTRY CONCERNED , THE INFORMATION RECEIVED BY THE COMMISSION INDICATES THAT TOTAL IMPORTS OF THE PRODUCTS IN QUESTION ORIGINATING IN THIRD COUNTRIES HAVE INCREASED FROM 59 849 TONNES IN 1979 TO 62 885 TONNES IN 1980 ; WHEREAS THE PRICES OF THE PRODUCTS IN QUESTION ORIGINATING IN THAILAND ARE CONSIDERABLY BELOW THE PRICES OF LIKE PRODUCTS MANUFACTURED IN FRANCE ; WHEREAS OUTPUT OF THE PRODUCTS IN CATEGORY 2 IN FRANCE HAS FALLEN FROM 102 731 TONNES IN 1978 TO 101 645 TONNES IN 1979 ; WHEREAS THE DOMESTIC INDUSTRY ' S SHARE OF THE HOME MARKET HAS FALLEN FROM 48 % IN 1978 TO 41 % IN 1979 ; WHEREAS THE NATIONAL OUTPUT OF THE PRODUCTS IN CATEGORY 3 HAS FALLEN FROM 61 514 TONNES IN 1979 TO 55 195 TONNES IN 1980 ; WHEREAS THE DOMESTIC INDUSTRY ' S SHARE OF THE HOME MARKET HAS FALLEN FROM 63 % IN 1978 TO 61 % IN 1979 ; WHEREAS FURTHER INDIRECT IMPORTS , IN ADDITION TO THOSE ALREADY ADMITTED OR PLANNED , WOULD BE LIKELY TO AGGRAVATE THESE DIFFICULTIES AND JEOPARDIZE THE AIMS OF THE ABOVEMENTIONED COMMERCIAL POLICY MEASURES ; WHEREAS IT IS NOT POSSIBLE TO SET IN MOTION RAPIDLY THE MACHINERY FOR BRINGING ABOUT THE NECESSARY COOPERATION FROM THE OTHER MEMBER STATES ; WHEREAS AUTHORIZATION SHOULD ACCORDINGLY BE GIVEN FOR THE APPLICATION OF PROTECTIVE MEASURES UNDER THE FIRST PARAGRAPH OF ARTICLE 115 , SUBJECT TO THE CONDITIONS LAID DOWN IN DECISION 80/47/EEC , AND IN PARTICULAR ARTICLE 3 THEREOF ; WHEREAS AN APPLICATION FOR IMPORT DOCUMENTS COVERING 8.7 TONNES OF CATEGORY 3 IS DULY PENDING WITH THE AUTHORITIES OF THE MEMBER STATE HAVING MADE THE REQUEST ; WHEREAS THIS APPLICATION DOES NOT NEED TO BE COVERED BY SUCH AUTHORIZATION ; HAS ADOPTED THIS DECISION : ARTICLE 1 THE FRENCH REPUBLIC IS AUTHORIZED NOT TO APPLY COMMUNITY TREATMENT TO THE PRODUCTS INDICATED BELOW , ORIGINATING IN THAILAND AND IN FREE CIRCULATION IN THE OTHER MEMBER STATES , IN RESPECT OF WHICH APPLICATIONS FOR IMPORT LICENCES WERE LODGED AFTER THE DATE OF ADOPTION OF THIS DECISION : // // CCT HEADING NO // DESCRIPTION // // 55.09 AND 56.07 A ( NIMEXE CODES : 55.09-01 , 02 , 03 , 04 , 05 , 11 , 12 , 13 , 14 , 15 , 16 , 17 , 19 , 21 , 29 , 31 , 33 , 35 , 37 , 38 , 39 , 41 , 49 , 51 , 52 , 53 , 54 , 55 , 56 , 57 , 59 , 61 , 63 , 64 , 65 , 66 , 67 , 68 , 69 , 70 , 71 , 72 , 73 , 74 , 76 , 77 , 78 , 81 , 82 , // WOVEN FABRICS OF COTTON , OTHER THAN GAUZE , TERRY FABRICS , NARROW WOVEN FABRICS , PILE FABRICS , CHENILLE FABRICS , TULLE AND OTHER NET FABRICS WOVEN FABRICS OF SYNTHETIC FIBRES // 83 , 84 , 86 , 87 , 92 , 93 , 97 ; 56.07-01 , 04 , 05 , 07 , 08 , 11 , 13 , 14 , 16 , 17 , 18 , 21 , 23 , 24 , 26 , 27 , 28 , 32 , 33 , 34 , 36 ) ( CATEGORIES 2 AND 3 ) // ( DISCONTINUOUS OR WASTE ), OTHER THAN NARROW WOVEN FABRICS , PILE FABRICS ( INCLUDING TERRY FABRICS ) AND CHENILLE FABRICS // ARTICLE 2 THIS DECISION SHALL APPLY UNTIL NEW OPPORTUNITIES ARISE IN FRANCE FOR THE IMPORTATION OF THE PRODUCTS IN QUESTION OR , IF EARLIER , UNTIL 31 DECEMBER 1981 FOR THE PRODUCTS IN CATEGORY 2 OR UNTIL 30 SEPTEMBER 1981 FOR THE PRODUCTS IN CATEGORY 3 . ARTICLE 3 THIS DECISION IS ADDRESSED TO THE FRENCH REPUBLIC . DONE AT BRUSSELS , 22 JULY 1981 . FOR THE COMMISSION WILHELM HAFERKAMP VICE-PRESIDENT
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Osterweis Fund Osterweis strategic income fund Osterweis Strategic Investment Fund Osterweis institutional equity fund Supplement dated May 13, 2014 to Summary Prospectuses, Prospectus and Statement of Additional Information dated June30, 2013, as supplemented Effective June30, 2014, the Funds will no longer assess a 2.00% redemption fee on sales of Fund shares occurring within 30 days of purchase. Accordingly, all references to the redemption fee in the Summary Prospectuses, statutory Prospectus and Statement of Additional Information are hereby deleted. Please retain this Supplement with the Summary Prospectus, Prospectus and Statement of Additional Information. ONE MARITIME PLAZA, SUITE 800
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Exhibit 10.23
LICENSE AGREEMENT
between
TITAN TECHNOLOGIES INCORPORATED
3206 Candelaria N.E. A1buquerque, New Mexico 87107
(hereinafter referred to as “Titan”)
and
Ally Investment, LLP
c/o Saeed A. Ally, M.D.
2501 Jimmy Johnson Blvd., Suite 201
Port Arthur, TX 77640
(hereinafter referred to as “Ally”)
WITNESSETH:
Whereas, TITAN is the owner of certain proprietary technologies (hereinafter
collectively referred to as the “Technology”) with respect to recycling of tires
in order to recover marketable oil, steel and carbon there from (but
specifical1y excluding any applications of the Technology with respect to waste
products other than tires); and
Whereas, TITAN has previously authorized use of the Technology in tire recycling
plants located in the Republic of Korea (South Korea) and Taiwan and, in
connection therewith, has supervised construction and commissioning of such
plants; and
Whereas, Ally believes that it has preliminary financial arrangements in place
for construction and operation of a double train recycling plant in Port Arthur,
Texas, at a feed rate of between 200 and 300 tons of tires per day per plant,
including satisfactory preliminary commitments for supply of tires at such rate;
Whereas, Ally has access to a site, building and infrastructure in each of Port
Arthur, Texas and Philadelphia, Mississippi for a double train plant using the
Titan Technology at a rate of not less than 200 tons of shredded tires per day
(“Plant”); and
Now therefore, TITAN and Ally agree as follows:
I. PLANT LICENSE
A. Titan from and after the date that $1,600,000.00 is fully paid by Ally,
grants to Ally or his assigns an exclusive license (the “License”) to utilize
its technology and patent for construction and operation of a recycling plant
and to utilize Titan’s Technology for the other recycling plants within the
states of Texas, Louisiana, Mississippi, and Oklahoma (the “Territory”) subject
to the additional conditions stated below. Ally shall have no ownership rights
to the Technology other than the right to utilize Titan’s technology in the
Territory for the construction and operation of one tire recycling plant
utilizing Titan’s technology and the right to build and operate additional
plants in the Territory on the conditions stated below. The License for the
Plant shall commence upon the payment of $1,600,000.00 toward the licensing fee
as stated in Paragraph I.B. below by Ally, assuming that Ally has funding in
place for construction and operation of the Plant and pays all other amounts
under this License Agreement. Design, permitting, financing, governmental
approvals and commencement of construction of the first plant must be completed
(hereinafter called “Commencement of Construction”) on or before March 1, 2007.
If the non-refundable initial License fee deposit of $100,000, which shall be
applied to the license fee for the first Plant, is not paid by Ally to Titan on
or before August 31, 2006, this Agreement and the License shall be and become
null and void unless extended by mutual agreement in writing.
If the Plant is not commenced, completed and in operation by March 31, 2008,
then the exclusive license fee for the Territory will become the property of
Titan and the license for any plant(s) for which construction has not commenced
will terminate and any further obligation of Titan to Ally will cease. The
termination of the exclusive license or loss of any license to build a plant or
plants will not affect the license granted to Ally for any plants built or
commenced prior to March 31, 2008. If Ally has the Plant in operation prior to
March 31, 2008, Ally will be granted the exclusive license for Titan’s
Technology for the territory in perpetuity subject to payment of Titan’s then
applicable license and royalty fees for each subsequent plant.
B. The Licensing Fee and royalties for each two train plant will be paid to
Titan in accordance with the following schedule:
(i)
Payment of the Licensing Fee of $1,600,000.00 for each plant upon the date
Licensee designates a new location for construction of a plant in the territory
and has financing to build the plant in place; and
(v)
Production royalties shall commence when each plant reaches a sustained capacity
of 200 tons of tires per day as determined by Titan.
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The production royalties shall be 1.5% of gross revenues derived by Licensee
from sale of all products generated from the technology and the Plant payable
quarterly by January 30, April 30, July 30, and October 30 for the preceding
quarter for every quarter after each plant reaches the ability to run a capacity
C. Ally shall be responsible for funding detailed engineering for each plant
in consultation with Titan and Lockwood Greene. Ally reserves the right to use
its selected sub-contractors for certain elements of the construction process of
each plant, subject to approval by Lockwood Greene.
D. Titan agrees to provide two Titan technical personnel to be under the
direction of Ally to provide such technical assistance as may be necessary or
advisable for detailed engineering construction, commissioning and operations of
each plant, including the period following execution of this Agreement until the
Initial Plant is completed and until each Plant has become fully operational.
The salaries and travel expenses of such technical personnel at any site outside
of Albuquerque, New Mexico, shall be paid for by Ally on a current basis within
10 days after the end of any month during which Titan technical personnel
provide services for Ally away from Titan’s Albuquerque office. For purposes of
this Agreement, the salaries payable by Ally for said technical personnel shall
be based upon an annual salary of $80,000 per person plus applicable payroll
taxes and Titan shall notify Ally what portion of said employee’s monthly salary
and what travel expenses were actually incurred working on the Initial Plant at
Ally’s direction out of Albuquerque, based upon a 4O hour work week.
Also, prior to execution of this Agreement Titan has provided to Ally a copy of
U.S. Patent 5,871,619. Ally acknowledges that Pat. No. 5,714,043 has lapsed and
one utility patent for the feed system and two other new provisional patents
have been applied for with the U.S Patent Office. Titan and Ally are satisfied
that Titan’s technology is sufficient to operate the proposed plants.
E. The exclusive license to utilize Titan’s Technology in the Territory
shall commence when this License Agreement is signed, but shall terminate on
March 2, 2007, if Ally does not commence construction of the first plant and pay
the initial license fee payment of $1,600,000.00 to Titan by March 1, 2007. Said
license shall be exclusive as to each plant for such period as each Plant is in
continuous operation. The License shall also be deemed to grant Ally the right
to use the Technology for the purpose of generating electric power within the
defined Territory through combustion of products produced using the Technology.
Titan shall not grant licenses for the tire recycling Technology (including its
use for generation of electric power) to any entity or person other than Ally.
3
II. SUBSEQUENT PLANTS
A. Ally may add additional plant locations when Ally identifies other
locations or has a need for greater capacity and has the necessary financing in
place and is ready to construct a subsequent plant.
The license fee for each additional plant shall be $l,600,000.00 per plant,
which shall be paid to Titan at the time the License is granted for each
subsequent plant and the location of the subsequent plant identified and
accepted by Titan.
Production royalties for each subsequent plant shall be paid quarterly as stated
in Section I.b. above.
If after the first plant is fully operational (meaning that it has achieved a
continuous operational capacity of 200 tons of tires for a 24 hour period) Ally
fails to expand its capacity by one two train plant within every twelve(12)
month period up to a projected level of four plants (being two plants in Texas,
one plant in Mississippi, and one plant in Oklahoma), the Territory may be
reduced by the amount of capacity within the Territory upon the election of
Titan if a willing and able prospective Licensee approaches Titan with an offer
to build a plant within the Territory and Licensee does not, within thirty days
after it is provided all of the terms and conditions of the offer by the
Prospective Licensee, agree to build a plant to meet the additional capacity
within a one year period from the date of the offer plus Ally’s ongoing
commitment to build one plant per year.
B. Ally acknowledges that Titan has on-going discussions with third parties
for construction of tire recycling plants using the Technology with respect to
other locations outside the Territory and that Titan shall have the free and
unfettered right to conclude licensing transactions for the Technology in any
other area, state or country outside the Territory without first offering the
opportunity to Licensee.
Nothing shall prevent Titan from negotiating or completing a merger,
consolidation, reorganization or similar transaction with a third party that
desires to purchase tire recycling or other technologies owned or controlled by
Titan, so long as the terms and obligations owed by Titan to Ally under this
Agreement are not modified.
C. Titan and Ally mutually acknowledge and agree that Titan shall be free
and unencumbered to pursue other opportunities outside the Territory covered by
this License.
4
III. GENERAL PROVISIONS
A. Titan represents that its technology includes the above described patents
and other trade secrets and know how with respect to the Technology.
B. Titan and Ally shall use reasonable efforts to ensure that Titan’s patent
rights are protected and enforced within the Territory covered by the License.
Titan shall retain exclusive ownership of the Technology, including the patent
and patent rights. In addition, all proprietary rights to design, know-how,
copyright or improvements or modifications to the process or processes shall
remain or become the exclusive property of Titan, and Ally agrees to execute
such documents as may be required from time to time to assign and transfer to
Titan such rights at no further costs or fees to Titan.
C. Titan shall exclusively be entitled to apply for and register any patents
or patent improvements arising out of this Agreement or definitive Agreements
hereafter with respect to the Technology, and Ally shall sign all necessary
applications or otherwise provide its approval with respect to any such
applications or registrations. Ally shall similarly assist Titan in protecting
its patent rights or proprietary knowledge within the scope of the License and
this Agreement.
D. All prior agreements signed by the parties prior to this Agreement are
hereby null and void, except for the document entitled Confidentiality and
Non-Circumvention Agreement, which is attached hereto as Exhibit A (and by this
reference made a part hereof), which shall survive any termination of this
Agreement.
E. This transaction will be effective when signed by all parties hereto. Each
party states that it has adopted the appropriate corporate resolutions
authorizing adoption and completion of this transaction and that the persons
signing for each corporation have the requisite corporate authorization and
capacity to sign this Agreement
IV. TERMINATION
This Agreement shall terminate upon the occurrence of the following events:
(i)
Failure of Ally to make any of the payments required in this Agreement on or
before the dates provided for said payments herein, unless such failure is cured
within Fifteen (15) business days following the date written notice by Titan
that any such payment has not been received is delivered to Ally at the address
below, or such other address provided to Titan by Ally.
5
(ii)
By mutual agreement of the parties; or
(iii)
In the event any Plant is constructed and operated, this Agreement shall
terminate as to any such plant upon the permanent cessation of operations of
said Plant and the winding up of all matters in connection with the cessation of
operations
V. ARBITRATION AND GOVERNING LAW
This Agreement is governed by the laws of the State of New Mexico. Any disputes
concerning this Agreement shall be exclusively and finally settled by
arbitration in accordance with the provisions of the Uniform Arbitration Act as
in effect in the State of New Mexico with venue lying in Albuquerque, New
Mexico. Provided, however, that nothing contained herein shall be deemed to
restrict the right of Titan to seek other remedies in any jurisdiction of its
choosing in the event that any such dispute re1ates to alleged violation of the
Confidentiality and Non- Circumvention Agreement attached hereto as Exhibit A.
VI.. NOTICES
Notices hereunder shall be given in writing and addressed to the parties at the
respective addresses set forth on the first page of this Agreement.Notices shall
not be effective unti1 receipt has been confirmed to the Party sending the
notice. Provided, however, that notices hereunder shall a1so be effective if
personally delivered to an officer of the recipient or given by facsimile copier
with receipt confirmed. For purposes of this Article, the facsimi1e copier
number of Titan is (505) 881-71l3 (Attention: Mr. Ron Wi1der) and the telephone
number for Ally is 409-651-5605 and the fax address for Ally is 409 722-4010 and
by mail to Ally at 2501 Jimmy Johnson Blvd., Suite 201, Port Arthur, TX 77640,
Port Arthur, Texas.
6
VII. AMENDMENTS
The parties may amend this Agreement by a writing signed by both parties.
In witness whereof, the parties have executed this Agreement this 23rd day of
August, 2006.
TITAN TECHNOLOGIES, INC.
By: /s/ Ronald L. Wilder
Ronald L. Wilder,President
By: /s/ Saeed A. Ally, M.D.
Name:
Saeed A. Ally, M.D.,
Managing General Partner
Licensee
Ally Investment, LLP,
A Texas limited liability partnership
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SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. )* Concierge Technologies, Inc. (Name of Issuer) Common Stock (Title of Class of Securities) (CUSIP Number) Nicholas Daniel Gerber C/O USCF Advisers LLC 1999 Harrison Street, Suite 1530 Oakland, CA 94612 925-297-9465 Scott Schoenberger 1714 14th Street Santa Monica, CA 90404 310-895-6358 (Name, address and telephone number of person authorized to receive notices and communications) January 26, 2015 (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 which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), Rule 13d-1(f) or Rule 13d-1(g), check the following box.o NOTE:Schedules filed in paper format shall include a signed original and five copies of the Schedule, including all exhibits.See Rule 13d-7(b) for other parties to whom copies are to be sent. ————— *The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter the disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be “filed” for purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes) CUSIP No. 206065104 SCHEDULE 13D
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Exhibit 10.2 AMENDED AND RESTATED EMPLOYMENT AGREEMENT THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into by THE PANTRY, INC., a Delaware corporation (the “Corporation”) and Keith A. Oreson (the “Employee”) and shall be effective as of January, 2012 (the “Effective Date”). The Corporation and Employee are parties to an employment agreement dated June 14, 2010 (“Employment Agreement”).The parties wish to amended and restate the Employment Agreement as provided herein. The Corporation desires to employ Employee and Employee desires to accept such employment on the terms set forth below. In consideration of the mutual promises set forth below and other good and valuable consideration, the receipt and sufficiency of which the parties acknowledge, the Corporation and Employee agree as follows: 1.EMPLOYMENT.The Corporation employs Employee and Employee accepts employment on the terms and conditions set forth in this Agreement.Employee shall serve as Senior Vice President, Human Resources and have such responsibilities and authority as the Corporation may assign from time to time.Employee, at the Corporation’s discretion, may be reassigned or transferred to different units or locations; provided, however, that Employee shall not be required to be based more than fifty (50) miles from his assigned Corporate office on his initial date of employment. 1.1Employee shall perform all duties and exercise all authority in accordance with, and otherwise comply with, all Corporation policies, procedures, practices and directions. 1.2Employee shall devote all working time and best efforts to successfully perform his duties and advance the Corporation’s interests.During his employment, Employee shall not engage in any other business activities of any nature whatsoever (including board memberships) for which he receives compensation without the Corporation’s prior consent; provided, however, this provision does not prohibit him from personally owning and trading in stocks, bonds, securities, real estate, commodities or other investment properties for his own benefit which do not create actual or potential conflicts of interest with the Corporation. 2.COMPENSATION. 2.1Base Salary.Employee’s annual salary for all services rendered shall be Two Hundred and Ninety Thousand Dollars ($290,000) less any applicable taxes and withholdings, payable in accordance with the Corporation’s policies, procedures and practices as they may exist from time to time.Employee’s salary periodically may be subject to annual increases in the Corporation’s discretion in accordance with its policies, procedures and practices as they may exist from time to time. 2.2Bonus Programs.Employee may participate in any incentive program which may be made available from time to time to Corporation’s employees at Employee’s level; provided, however, that Employee’s participation is subject to the applicable terms, conditions and eligibility requirements of the program, as they may exist from time to time. 2.3Benefits.Employee may participate in all medical, dental, disability, insurance, 401(k), pension, vacation and other employee benefit plans and programs which may be made available from time to time to Corporation employees at Employee’s level; provided, however, that Employee’s participation is subject to the applicable terms, conditions and eligibility requirements of these plans and programs, some of which are within the plan administrator’s discretion, as they may exist from time to time.Notwithstanding the foregoing, Employee shall be entitled to a minimum of four (4) weeks of annual vacation.Subject to applicable state law, accrued, unused vacation may not be carried over from year to year. 2.4Relocation Expenses.The Corporation will assist Employee in relocating to North Carolina by providing relocation assistance under the Corporation’s regular relocation practices and policies at a type and level currently offered to employees with a similar position and title.Provided, however, no such relocation expenses shall be paid later than March 15 of the year following the year in which the expense was incurred. 2.5Benefit Plans Subject to Amendment.Nothing in this Agreement shall require the Corporation to create, continue or refrain from amending, modifying, revising or revoking any of the plans, programs or benefits set forth in Sections 2.2, 2.3 and 2.4.Employee acknowledges that the Corporation, in its sole discretion, may amend, modify, revise or revoke any such plans, programs or benefits.Any amendments, modifications, revisions and revocations of these plans, programs and benefits shall apply to Employee.Nothing in this Agreement shall afford Employee any greater rights or benefits with regard to these plans, programs and benefits than are afforded to him under their applicable terms, conditions and eligibility requirements, some of which are within the plan administrator’s discretion, as they may exist from time to time. 2.6Offset for Disability Payments.If at any time during which Employee is receiving salary or post-termination payments from the Corporation, he receives payments on account of mental or physical disability from any Corporation-provided plan, then the Corporation, in its discretion, may reduce his salary or post-termination payments by the amount of such disability payments. 2.7Clawback Provision.It is the Corporation’s Policy that, consistent with Section 954 of the Dodd-Frank Act, in the event that the Corporation is required to prepare an accounting restatement due to the material noncompliance of the Corporation with any financial reporting requirement under the securities laws, the Corporation will seek to recover from any current or former executive officer of the Corporation who received incentive-based compensation (including stock options and performance shares awarded as compensation) during the 3-year period preceding the date on which the Corporation is required to prepare the accounting restatement, the amount, based on the erroneous data, in excess of what would have been paid to the executive officer under the accounting restatement.The Corporation will implement this Policy in accordance with the rules of the Securities Exchange Commission, as they are promulgated.Pursuant to this agreement, Employee agrees to promptly return to the Corporation any and all amounts received pursuant to this Agreement to the extent the Corporation is entitled or required to recover such amounts by the terms of (i) the Corporation’s Executive Compensation Recoupment Policy or other clawback or recoupment policy, as adopted, amended, implemented, and interpreted by the Corporation from time to time, and/or (ii) Section 954 of the Dodd-Frank Act (as may be amended) and any applicable rules or regulations promulgated by the Securities Exchange Commission. 3.TERM OF EMPLOYMENT AND TERMINATION.The original term of employment under this Agreement shall be from the Effective Date listed above to June 14, 2012 and subject to the following provisions: 3.1Automatic Renewal.Upon the expiration of the original term or any renewal term of employment, Employee’s employment shall be automatically renewed for a one (1) year period unless, at least sixty (60) days prior to the renewal date, either party gives the other party written notice of its intent not to continue the employment relationship.During any renewal term of employment, the terms, conditions and provisions set forth in this Agreement shall remain in effect unless modified in accordance with Section 8. 3.2Without Cause.During the original or any renewal term, this Agreement and the employment relationship hereunder shall be terminated without cause thirty (30) days after either the Corporation or Employee gives notice of such termination to the other party. 3.3With Cause.The Corporation may terminate this Agreement and Employee’s employment hereunder immediately without notice at any time for the following reasons which shall constitute “Cause”: (i) gross negligence or willful misconduct in the performance of the Employee’s duties; (ii) Employee’s insubordination in responding to any specific, reasonable instructions from either the Corporation’s Chief Executive Officer or Board of Directors; (iii) conduct by Employee which is demonstrably and materially injurious to the Corporation, monetarily or otherwise; or (iv) the conviction of Employee of, or the entry of a plea of guilty or nolo contendere by Employee to, any crime involving moral turpitude or any felony.Prior to a termination pursuant to Section 3.3(i), Employee shall be given written notice of the manner in which he has failed to perform and a thirty (30) day opportunity to cure such failure. 3.4Death or Disability.The Corporation may terminate Employee’s employment without notice in the event of Employee’s death or “Disability” which shall mean Employee’s physical or mental inability to perform the essential functions of his duties with or without reasonable accommodation for a period of 180 consecutive days or 180 days in total within a 365-day period as determined by the Corporation in its reasonable discretion and in accordance with applicable law. 3.5Survival.Section 4 (Compensation Upon Termination), Section 5 (Competitive Business Activities, Trade Secrets, Confidential Information and Corporation Property), and Section 6 (Change in Control) shall survive the expiration or termination of this Agreement, regardless of the reasons for such expiration or termination, until the obligations set forth therein have been satisfied. 4.COMPENSATION UPON TERMINATION. 4.1By Corporation For Cause or By Employee Without Cause or By Notice of Non-Renewal.If Employee’s employment is terminated by the Corporation for Cause or by Employee without cause or by notice of non-renewal, the Corporation’s obligation to compensate Employee ceases on the effective termination date except as to amounts due at that time. 4.2By Corporation by Non-Renewal or Without Cause.If the Corporation terminates Employee’s employment by notice of non-renewal or without Cause, then Employee shall be entitled to receive: (A)amounts due on the effective termination date; (B)a prorated bonus for the fiscal year in which the effective termination date occurs.The amount of the pro-rata bonus paid, if any, will be determined based on actual results of the Employee and Corporation and days worked by Employee during the year.The bonus will be paid at the same time as bonuses paid to other employees with a similar position and title; (C)if the termination is by the Corporation without Cause, an amount equal to the greater of Employee’s then current monthly salary for the then remaining months in the term of this Agreement or for twelve (12) months, less any applicable taxes and withholdings and payable, subject to section 4.2(D) below, in substantially equal installments on the last business day of each applicable month and, if the termination is after the first two years of employment hereunder, an amount (less any applicable taxes and withholdings) equal to Employee’s then current monthly salary for twelve (12) months, payable in substantially equal installments on the last business day of each applicable month (“Severance Payments”). Such Severance Payments shall commence in the month immediately following the month in which the release of claims required by Section 4.4 becomes effective.During the period in which Employee is receiving the Severance Payments, if Employee accepts employment or a consultancy with another entity or becomes self-employed, then he must notify the Corporation before such employment or consultancy begins and the payments made pursuant to Section 4.2(B) shall be reduced by the amount of compensation to be paid to him in connection with such employment, consultancy or self-employment.If Employee does not notify the Corporation in accordance with this provision, then its obligation to make payments or further payments pursuant to Section 4.2(B) shall cease; (D)In order to ensure compliance with Section 409A and notwithstanding Sections B and C above, all severance payments will paid to the Employee prior to March 15 of the year following the calendar year of termination.If the payments would otherwise extend beyond such date,prior to the applicable March 15, the remaining balance of the severance amounts will be paid to the Employee in a lump sum; and (E)unless Employee obtains comparable group health insurance coverage from a subsequent employer, then, for the twelve (12) months following the termination of Employee’s employment, Employee may elect to continue participation in the Corporation’s group health insurance plan in which Employee participated upon termination of employment by electing continuation coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”).For the twelve (12) month continuation period, the Corporation shall reimburse Employee for that portion of the COBRA premiums in excess of the amount Employee paid for group health plan coverage immediately prior to termination from employment.In the event Employee prefers to obtain coverage under an individual health insurance policy that is less expensive than COBRA coverage rather than electing COBRA continuation coverage, the Corporation shall, for twelve (12) months, reimburse Employee for that portion of the premium payments that are in excess of the amount Employee paid for group health plan coverage immediately prior to termination of employment.All such reimbursements required pursuant to this Section 4.2(E) shall be paid as soon as reasonably practicable following employee’s submission of proof of timely premium payments to the Corporation, subject to the following: (i) all such claims for reimbursement shall be submitted by Employee and paid by the Corporation no later than fifteen (15) months following Employee’s termination of employment, (ii) any claims for reimbursements shall be paid no later than the end of the calendar year after the calendar year in which the reimbursable expense is incurred, (iii) reimbursements in one calendar year shall not affect those payable in any later calendar year, and (iv) no benefit provided under this Section 4.2(E) may be cashed out or exchanged for other benefits. 4.3Death or Disability.If Employee’s employment is terminated because of Employee’s death either before or after a Change in Control (as hereinafter defined), then the Corporation shall pay to the estate of Employee an amount (less any applicable taxes and withholdings) equal to Employee’s then current monthly salary for six (6) months.If Employee’s employment is terminated because of Disability either before or after a Change in Control, then the Corporation shall pay Employee his then current monthly salary (less any applicable taxes and withholdings) for a period equal to the shorter of:(i) six (6) months from the date of termination; or, (ii) the time period from the date of termination through the date on which Employee begins receiving long term disability insurance benefits in accordance with the Corporation’s long term disability plan.Any payments paid to Employee or his estate pursuant to this Section shall be paid in periodic, substantially equal installments; provided, however, that all such amounts payable shall be paid no later than two and one-half (2½) months following the end of the calendar year in which Employee’s employment terminated. 4.4Severance Pursuant to Agreement. The Corporation’s obligation to provide the payments under Sections 4.2, 4.3 (except in the event of termination because of Employee’s death) and Section 6.3 is conditioned upon Employee’s execution of an enforceable release of all claims and his compliance with Section 5 hereof (specifically including the return of all Corporation property, including but not limited to documents and electronic information).The required release shall contain a non-disparagement clause, confidentiality agreement and agreement to cooperate and shall be provided to Employee within seven (7) days following the date of his separation from service.Employee must execute the release within the time period specified in the release (which shall not be longer than forty-five (45) days from the date of Employee’s receipt of the release).Such release shall not be effective until any applicable revocation period, which shall be no more than seven (7) days, has expired.If Employee chooses not to execute such a release or fails to comply with Section 5 of this Agreement, then the Corporation’s obligation to compensate him ceases on the effective termination date except as to amounts due at that time. Employee is not entitled to receive any compensation or benefits upon his termination except as: (i) set forth in this Agreement; (ii) otherwise required by law; or (iii) otherwise required by any employee benefit plan in which he participates; provided, however, that the terms and conditions afforded Employee under this Agreement are in lieu of any severance benefits to which he otherwise might be entitled pursuant to a severance plan, policy or practice.Nothing in this Agreement, however, is intended to waive or supplant any death, disability, retirement, 401(k) or pension benefits to which Employee may be entitled under employee benefit plans in which Employee participates. 5.COMPETITIVE BUSINESS ACTIVITIES, TRADE SECRETS, CONFIDENTIAL INFORMATION AND CORPORATION PROPERTY.Employee acknowledges that by virtue of Employee’s employment and position with the Corporation, Employee (i) has or will have access to trade secrets and Confidential Information (as defined in Section 5.2(B)) of the Corporation including valuable information about its business operations and entities with whom it does business in various locations, and (ii) has developed or will develop relationships with parties with whom it does business in various locations.Employee also acknowledges that the trade secrets, Confidential Information and Competitive Business Activities provisions set forth in this Agreement are reasonably necessary to protect the Corporation’s legitimate business interests, are reasonable as to the time, territory and scope of activities which are restricted, do not interfere with public policy or public interest and are described with sufficient accuracy and definiteness to enable him to understand the scope of the restrictions imposed on him. 5.1Competitive Business Activities.Without the Corporation’s prior written approval, during Employee’s employment and for twelve (12) months following termination of employment regardless of the reason for such termination: (A)Employee shall not, either individually or on behalf of another, directly or indirectly, as employer, employee, owner, partner, stockholder, independent contractor, agent, or otherwise enter into or in any manner participate in the convenience store business in North Carolina, South Carolina, Florida, or any other state in which the Corporation owns or operates ten (10) or more convenience stores upon the date of termination of employment.Notwithstanding the foregoing, Employee’s ownership, directly or indirectly, of not more than one percent of the issued and outstanding stock of a corporation the shares of which are regularly traded on a national securities exchange or in the over-the-counter market shall not violate Section 5.1(A). (B)Employee will not directly or indirectly, request or induce any other employee of the Corporation to: (i) terminate employment with the Corporation, or (ii) accept employment with another business entity, or (iii) become engaged in the convenience store business in competition with the Corporation. 5.2Trade Secrets; Confidential Information. (A)Employee hereby covenants and agrees not to use or disclose any Confidential Information (as hereinafter defined) or trade secrets except to authorized representatives of the Corporation or except as required by any governmental or judicial authority; provided, however, that the foregoing restrictions shall not apply to items that, through no fault of Employee’s, have entered the public domain. (B)Confidential Information.For purposes of this Agreement, “Confidential Information” means any data or information with respect to the business conducted by the Corporation, other than trade secrets, that is material to the Corporation and not generally known by the public.To the extent consistent with the foregoing definition, Confidential Information includes without limitation: (i) reports, pricing, sales manuals and training manuals, selling and pricing procedures, and financing methods of the Corporation, together with any techniques utilized by the Corporation in designing, developing, manufacturing, testing or marketing its products or in performing services for clients, customers and accounts of the Corporation; and (ii) the business plans, financial statements, reports and projections of the Corporation, and the Corporation’s prospective strategic or expansion plans. (C)Corporation Property.Employee acknowledges that all trade secrets and Confidential Information are and shall remain the sole, exclusive and valuable property of the Corporation and that Employee has and shall acquire no right, title or interest therein.Any and all printed, typed, written and other material which Employee may have or obtain with respect to trade secrets or Confidential Information (including without limitation all copyrights therein) shall be and remain the exclusive property of the Corporation, and any and all such material (including any copies) and all other Corporation property shall, upon request of the Corporation, be promptly delivered by Employee to the Corporation. 5.3Other Agreements.Nothing in this Agreement shall terminate, revoke or diminish Employee’s obligations or the Corporation’s rights and remedies under law or any agreements relating to trade secrets, confidential information, or non-competition which Employee has executed in the past or may execute in the future or contemporaneously with this Agreement. 6.CHANGE IN CONTROL. 6.1Definition of Change in Control.For purposes of this Agreement, a “Change in Control” shall mean: (A)any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than: (i)the Corporation; (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Corporation; (iii) a corporation owned, directly or indirectly, by the stockholders of the Corporation in substantially the same proportions as their ownership of stock of the Corporation; or (iv) the existing holders of capital stock of the Corporation as of the date hereof, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Corporation representing more than fifty percent (50%) of the combined voting power of the Corporation’s then outstanding securities; or (B)the consummation of a merger, share exchange, consolidation or reorganization involving the Corporation and any other corporation or other entity as a result of which less than fifty percent (50%) of the combined voting power of the Corporation or of the surviving or resulting corporation or entity after such transaction is held in the aggregate by the holders of the combined voting power of the outstanding securities of the Corporation immediately prior to such transaction (“Business Combination”), unless, following such Business Combination, (i) the individuals and entities who were the beneficial owners of the Corporation prior to the Business Combination beneficially own, directly or indirectly, more than 60% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Corporation or substantially all of the Corporation’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination, (ii) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) is the beneficial owner (as defined in Rule 13d-3 under the Securities Exchange Act of 1934) , directly or indirectly,of 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (iii) at least a majority of the members of the Board of Directors of the Corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the board, providing for such Business Combination; or (C)the stockholders of the Corporation approve a plan of complete liquidation of the Corporation or an agreement for the sale or disposition by the Corporation of all or substantially all of the Corporation’s assets; or (D)during any period of twelve (12) consecutive months, the individuals who constitute the Board of Directors of the Corporation at the beginning of such period (the “Incumbent Directors”) cease for any reason to constitute a majority of the Board of Directors; provided, however, that a director who is not a director at the beginning of such period shall be deemed to be an Incumbent Director if such director is elected or recommended for election by a majority of the directors who are then Incumbent Directors, but excluding, for this purpose, any such individual whose initial assumption of the office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board. 6.2Termination Following a Change in Control.After the occurrence of a Change in Control, Employee shall be entitled to receive payments and benefits pursuant to this Agreement if Employee’s employment is terminated within eighteen (18) months following the Change in Control either by the Corporation by notice of non-renewal, without Cause or by Employee for Good Reason.For purposes of this Agreement, “Good Reason” shall exist for Employee to terminate his employment if Employee resigns within six (6) months of any of the following conditions having arisen without his consent after having given the Corporation written notice of the existence of such condition within sixty (60) days of the initial existence of the condition and providing the Corporation with thirty (30) days to remedy the condition: (A)a substantial adverse alteration in the nature or status of his position or responsibilities or the conditions of his employment from those in effect immediately prior to the Change in Control; (B)a material diminution by the Corporation of Employee’s annual base salary and target bonus, as such target bonus is described in the Corporation’s Annual Incentive Plan (“Target Bonus”); (C)the Corporation’s requiring Employee to be based more than fifty (50) miles from the Corporation’s offices at which he was principally employed immediately prior to the date of the Change in Control; (D)the Corporation’s material failure to pay Employee any compensation due under this Agreement; (E)the failure of the Corporation to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement; (F)any other action or inaction that constitutes a material breach by the Corporation of this Agreement. 6.3Severance Pay and Benefits.If Employee’s employment with the Corporation terminates under circumstances as described in Section 6.2 above, Employee shall be entitled to receive all of the following: (A)all accrued compensation through the termination date; (B)a severance payment equal to Employee’s then current monthly salary for twenty-four (24) months plus an amount equal to two (2) times the value of Employee’s Target Bonus for the year in which the termination occurs (less any applicable taxes and withholdings), payable in a lump sum within thirty (30) calendar days after the date on which the release of claims required by Section 4.4 becomes effective; and (C)unless Employee obtains comparable medical insurance coverage from a subsequent employer, then, for twenty-four (24) months following the termination of Employee’s employment, the Corporation shall continue to pay for Employee’shealth insurance coverage as described in this Section 6.3(C).Employee may elect to continue coverage under the Corporation’s group health insurance plan in which he participated on the effective date of the termination of employment by election of continuation coverage under COBRA, subject to the terms of the group health plan and applicable law.The Corporation shall pay Employee’s premiums directly to the COBRA administrator for the same health insurance coverage for the same group health insurance plan in which Employee participated on the effective date of the termination of employment.At the end of the maximum COBRA continuation period, the Corporation shall reimburse Employee for that portion of health insurance premiums under a fully-insured, individual health insurance policy that are in excess of the amount Employee paid for coverage under the Corporation’s group health plan immediately prior to termination of employment.Such individual health insurance policy reimbursements shall continue for no longer than the remainder, if any, of the twenty-four (24) month health insurance continuation period following expiration of the maximum COBRA continuation period.Notwithstanding the foregoing, in the event Employee prefers to initially obtain health insurance coverage under a fully-insured, individual health insurance policy that is less expensive than COBRA coverage, the Corporation shall reimburse Employee for premiums that are in excess of the amount Employee paid for health insurance under the Corporation’s group health plan immediately prior to termination through the earlier to occur of:(i) twenty-four (24) months following termination of employment, or (ii) the date Employee obtains comparable group health insurance coverage from a subsequent employer.All such reimbursements required pursuant to this Section 6.3(C) shall be paid as soon as reasonably practicable following employee’s submission of proof of timely premium payments to the Corporation, subject to the following: (i) all such claims for reimbursement shall be submitted by Employee and paid by the Corporation no later than twenty-seven (27) months following Employee’s termination of employment, (ii) any claims for reimbursements shall be paid no later than the end of the calendar year after the calendar year in which the reimbursable expense is incurred, (iii) reimbursements in one calendar year shall not affect those payable in any later calendar year, and (iv) no benefit provided under this Section 6.3(C) may be cashed out or exchanged for other benefits. 6.4Parachute Payments.Payments shall be reduced to the extent, if any, determined in accordance with the following provisions: (A)For purposes of this Section 6:(i) a "Payment" shall mean any payment or distribution in the nature of compensation to or for the benefit of the Executive, whether paid or payable pursuant to this Agreement or otherwise, that is treated as a parachute payment under the provisions of Code Section 280G(b)(2) ; (ii) "Agreement Payment" shall mean a Payment paid or payable pursuant to this Agreement (disregarding this Section); (iii) "Reduced Amount" shall mean the amount of Payments that has a Present Value that is equal to 2.99 times the Executive’s “base amount,” as that term is defined under Code Section 280G(b)(3); (iv) "Present Value" shall mean such value determined in accordance with Sections 280G(b)(2)(A)(ii) and 280G(d)(4) of Code; and (v) “Code” shall mean the Internal Revenue Code of 1986, as amended. (B)Anything in the Agreement to the contrary notwithstanding, in the event Deloitte & Touche LLP or such other accounting firm as shall be designated by the Company (the "Accounting Firm") shall determine that receipt of all Payments would subject the Executive to tax under Section 4999 of the Code, the Accounting Firm shall determine whether the Net After-Tax Reduced Amount exceeds that of the Net After-Tax Payments.For these purposes, the Net After-Tax Reduced Amount and the Net After-Tax Payments refer to the Reduced Amount and Payments, respectively, received by the Executive net of all taxes imposed on the Executive with respect thereto under Sections 1 and 4999 of the Code and under applicable state and local laws, determined by applying the highest marginal rate under Section 1 of the Code and under state and local laws which applied to the Executive’s taxable income for the immediately preceding taxable year, or such other rate(s) as the Executive shall certify, in the Executive’s sole discretion, as likely to apply to the Executive in the relevant tax year(s).If the Accounting Firm determines that the Net After-Tax Reduced Amount exceeds that of the Net After-Tax Payments, then the aggregate Agreement Payments shall be reduced to the Reduced Amount. (C)If the Accounting Firm determines that aggregate Agreement Payments should be reduced to the Reduced Amount, the Company shall promptly give the Executive notice to that effect and a copy of the detailed calculation thereof. For purposes of reducing the aggregate Agreement Payments to the Reduced Amount, only amounts payable under this Agreement (and no other Payments) shall be reduced.The reduction of the aggregate Agreement Payments to the Reduced Amount, if applicable, shall be made by reducing the amounts payable to the Executive pursuant to Section 6.3 (as modified by Section 6.4) of this Agreement.All determinations made by the Accounting Firm under this Section shall be binding upon the Company and the Executive and shall be made within 60 days of a termination of employment of the Executive.As promptly as practicable following such determination, the Company shall pay to or distribute for the benefit of the Executive such Agreement Payments as are then due to the Executive under this Agreement and shall promptly pay to or distribute for the benefit of the Executive in the future such Agreement Payments as become due to the Executive under this Agreement. (D)As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that amounts will have been paid or distributed by the Company to or for the benefit of the Executive pursuant to this Agreement which should not have been so paid or distributed ("Overpayment") or that additional amounts which will have not been paid or distributed by the Company to or for the benefit of the Executive pursuant to this Agreement could have been so paid or distributed ("Underpayment"), in each case, consistent with the calculation of the Reduced Amount hereunder.In the event that the Accounting Firm, based upon the assertion of a deficiency by the Internal Revenue Service against either the Company or the Executive which the Accounting Firm believes has a high probability of success determines that an Overpayment has been made, any such Overpayment paid or distributed by the Company to or for the benefit of the Executive shall be repaid to the Company together with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code; provided, however, that no such amount shall be payable by the Executive to the Company if and to the extent suchpayment would not either reduce the amount on which the Executive is subject to tax under Section 1 and Section 4999 of the Code or generate a refund of such taxes.In the event that the Accounting Firm, based upon controlling precedent or substantial authority, determines that an Underpayment has occurred, any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive together with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code. (E)All fees and expenses of the Accounting Firm in implementing the provisions of this Section 6.4 shall be borne by the Company. 7.WAIVER OF BREACH.The Corporation’s waiver of any breach of a provision of this Agreement shall not waive any subsequent breach by the Corporation. 8.ENTIRE AGREEMENT.Except as expressly provided in this Agreement, this Agreement:(i)supersedes all other understandings and agreements, oral or written, between the parties with respect to the subject matter of this Agreement; and (ii)constitutes the sole agreement between the parties with respect to this subject matter.Each party acknowledges that: (i)no representations, inducements, promises or agreements, oral or written, have been made by any party or by anyone acting on behalf of any party, which are not embodied in this Agreement; and (ii)no agreement, statement or promise not contained in this Agreement shall be valid.No change or modification of this Agreement shall be valid or binding upon the parties unless such change or modification is in writing and is signed by the parties. 9.SEVERABILITY.If a court of competent jurisdiction holds that any provision or sub-part thereof contained in this Agreement is invalid, illegal or unenforceable, that invalidity, illegality or unenforceability shall not affect any other provision in this Agreement.Additionally, if any of the provisions, clauses or phrases in the Competitive Business Activities, Trade Secrets, Confidential Information and Corporation Property provisions set forth in this Agreement are held unenforceable by a court of competent jurisdiction, then the parties’ desire is that they be “blue-penciled” or rewritten by the court to the extent necessary to render them enforceable. 10.PARTIES BOUND.The terms, provisions, covenants and agreements contained in this Agreement shall apply to, be binding upon and inure to the benefit of the Corporation’s successors and assigns.The Corporation, at its discretion, may assign this Agreement.Employee may not assign this Agreement without the Corporation’s prior written consent. 11.REMEDIES.Employee acknowledges that his breach of this Agreement would cause the Corporation irreparable harm for which damages would be difficult, if not impossible, to ascertain and legal remedies would be inadequate.Therefore, in addition to any legal or other relief to which the Corporation may be entitled by virtue of Employee’s breach or threatened breach of this Agreement, the Corporation may seek equitable relief, including but not limited to preliminary and injunctive relief, and such other available remedies. 12.SECTION 409A OF THE INTERNAL REVENUE CODE. 12.1Parties’ Intent.The parties intend that the provisions of this Agreement comply withSection 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and the regulations thereunder (collectively, “Section 409A”) and all provisions of this Agreement shall be construed in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A. The Company does not guarantee to the Employee or any other person that any benefit or payment under this Agreement is exempt from Section 409A, nor will the Corporation indemnify, defend or hold harmless the Employee or any other person with respect to the tax consequences of a failure of any benefit or payment under this Agreement to meet an exemption under Section 409A.If any provision of this Agreement (or of any award of compensation, including equity compensation or benefits) would cause Employee to incur any additional tax or interest under Section 409A, the Corporation shall, upon the specific request of Employee, use its reasonable business efforts to in good faith reform such provision to comply with Code Section 409A; provided, that to the maximum extent practicable, the original intent and economic benefit to Employee and the Corporation of the applicable provision shall be maintained, and the Corporation shall have no obligation to make any changes that could create any additional economic cost or loss of benefit to the Corporation. 12.2Application of Section 409A.In the event any benefit or payment under this Agreement becomes subject to the provisions of Section 409A, the provisions of Section 409A of the Code and the regulations issued thereunder are incorporated herein by reference to the extent necessary for any benefit or payment that is subject Section 409A to comply therewith.In such event, the provisions of this Agreement shall be interpreted in a manner that satisfies the requirements of Section 409A and the related regulations, and this Agreement shall be operated accordingly. Notwithstanding any other provision of this Agreement, in the event the Employee is treated as a “specified employee” under Section 409A and any payment or benefit under this Agreement is treated as a nonqualified deferred compensation payment under Section 409A, then payment of such amounts shall be delayed for six months and a day following the Employee’s “separation from service,” as such term is defined in Section 409A, at which time a lump sum payment shall be made to the Employee consisting of the sum of the delayed payments.This provision shall not apply in the event of a specified employee’s termination of employment on account of death and, in the event of a specified employee’s death during the aforementioned six-month and a day period, any such delayed nonqualified deferred compensation shall be paid within 30 days after such specified employee’s death. 13.GOVERNING LAW.This Agreement and the employment relationship created by it shall be governed by North Carolina law without giving effect to North Carolina choice of law provisions. IN WITNESS WHEREOF, the parties have entered into this Agreement on the day and year written below. EMPLOYEE /s/ Keith A. Oreson 1/5/12 Keith A. Oreson Date THE PANTRY, INC. /s/ Edwin J. Holman 1/10/12 Ed Holman Date Chairman & Interim CEO
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Exhibit 10.3
THIS PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED. NO SALE OR DISPOSITION MAY BE EFFECTED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR AN EXEMPTION THEREFROM.
FORM OF SECURED CONVERTIBLE PROMISSORY NOTE
US$2,000,000 SEPTEMBER 21, 2009
For value received DayStar Technologies, Inc., a Delaware corporation (“Payor”),
promises to pay to TD Waterhouse RRSP Account 240832S, in trust for Peter Alan
Lacey as beneficiary (the “Lacey RRSP Account”), or its assigns, the principal
sum of US$2,000,000 on the terms set forth below. Interest on the outstanding
principal amount shall accrue at the rate of 8% per annum. Interest shall
commence on the date hereof and shall continue on the outstanding principal
until paid in full. Interest shall be computed on the basis of a year of 365
days for the actual number of days elapsed.
This secured convertible promissory note (this “Note”) is issued pursuant to the
terms of that certain Purchase Agreement (the “Agreement”) dated as of
September 18, 2009 between Payor and Holder. This Note shall be secured by
Payor’s pledge to Holder of Payor’s assets as set forth on Exhibit A to that
certain Security Agreement by and between Payor and Holder dated on or about
September 21, 2009 and incorporated herein by reference (the “Security
Agreement”).
1. Definitions. The following terms shall have the meanings herein specified:
“Capital Stock” means any of the current or future authorized class or series of
capital stock of Payor.
“Common Stock” means authorized Common Stock, $.01 par value, of Payor, and
shall include any other class or series of capital stock of Payor that is not
limited to a fixed sum in respect of the rights of the holder thereof to
participate in the liquidation or winding up of Payor.
“Conversion Notice” shall have the meaning set forth in Section 2(a).
“Conversion Price” shall mean the per share price(s) at which some or all of the
outstanding principal amount plus all accrued interest thereon is converted or
convertible pursuant to Section 2(a), and in all cases as adjusted pursuant to
Section 2(d).
“Conversion Shares” means the shares of Common Stock, or such other shares of
Capital Stock, issuable upon conversion of this Note.
“Event of Default” means an event specified in Section 4 hereof.
“Excluded Securities” means (i) securities issued as a result of any stock
split, stock dividend or reclassification of Common Stock or Preferred Stock,
distributable on a pro rata basis to all holders of Common Stock or Preferred
Stock; (ii) securities issued pursuant to a stock option plan or deferred
compensation plan approved by the Board of Directors of the Company;
(v) securities issued by the Company upon the conversion or exercise of options,
warrants, or convertible securities previously issued by the Company; or
(iii) any securities issued to the Holder, EPOD Solar, Inc. (“EPOD”), any
affiliate of the Holder or EPOD or any recipient of securities issued by the
Company, as directed by the Holder or EPOD, as applicable, or any affiliate of
the Holder or EPOD, as applicable.
“Future Issuance” shall have the meaning set forth in Section 2(a).
“Holder” means the Lacey RRSP Account, and each endorsee, pledgee, assignee,
owner and holder of this Note, as such; and any consent, waiver or agreement in
writing by the then Holder with respect to any matter or thing in connection
with this Note, whether altering any provision hereof or otherwise, shall bind
all subsequent Holders. Notwithstanding the foregoing, Payor may treat the
registered holder of this Note as Holder for all purposes.
“Preferred Stock” means authorized Preferred Stock, $.01 par value, of Payor.
“Share Equivalents” means options, warrants, convertible preferred stock,
convertible debt, or other securities convertible into or exercisable for shares
of Capital Stock.
Words of one gender include the other gender; the singular includes the plural;
and the plural includes the singular, unless the context otherwise requires.
2. Conversion of the Note.
a. Election to Convert. Common Stock. Holder may, at its option exercisable by
written notice (the “Conversion Notice”) to Payor at any time prior to payment
in full hereof, elect to convert all or any part of the entire outstanding
principal amount of this Note plus the accrued interest on the then outstanding
balance (i) into shares of Common Stock at a conversion price equal to the
lesser of (A) $0.60 per share or (B) if between the date hereof and such
conversion, Payor issues or sells any shares of Capital Stock, other than
Excluded Securities (a “Future Issuance”), then into shares of Common Stock at a
per share price equal to the lowest per share price at which any such shares are
issued or sold in such Future Issuance (subject to adjustment in the event of
any stock splits, stock dividends or other recapitalization of Common Stock
subsequent to the date of such sale or issuance), or (ii) if between the date
hereof and such conversion, there is a Future Issuance, then into shares of such
class or series of Capital Stock issued or sold in such Future Issuance at a per
any stock splits, stock dividends or other recapitalization of such class or
series of Capital Stock subsequent to the date of such sale or issuance);
provided that Holder will only be permitted to convert that portion of the
outstanding principal amount of this Note plus the accrued interest on the then
outstanding balance that will not result in the issuance of more than 3,333,333
shares of Common Stock (subject to adjustment in the event of any stock splits,
stock dividends or other recapitalization of such class or series of Capital
Stock subsequent to the date of such sale or issuance) pursuant to (i) above, or
upon conversion of any securities that may be
- 2 -
issued pursuant to (ii) above. For purposes of this Section, the issuance or
sale of any Share Equivalents shall be deemed to be an issuance or sale of such
class or series of Capital Stock issuable upon exercise or conversion thereof,
at a per share price equal to a fraction, the numerator of which is equal to the
sum of (i) the total amount received or receivable by Payor as consideration for
such issuance of the Share Equivalent, plus (ii) the minimum aggregate amount of
additional consideration (as set forth in the instruments relating thereto
without regard to any provision contained therein for a subsequent adjustment of
such consideration) payable to Payor upon the exercise, conversion or exchange
of such Share Equivalent, and the denominator of which is equal to the total
number of shares of Capital Stock issuable upon the exercise, conversion or
exchange of such Share Equivalents. If Payor issues or sells any Capital Stock
or Share Equivalents for consideration other than cash, the amount of the
consideration other than cash received by Payor shall be deemed to be the fair
value of such consideration as reasonably determined by Payor’s Board of
Directors with the advice of Payor’s investment banker. If Payor sells units
consisting of two or more different securities at a single per unit price,
Payor’s Board of Directors shall, with the advice of Payor’s investment banker,
make a reasonable allocation of the per unit price among such different
securities, and each security included in such unit shall be deemed to have been
sold at such allocated price for purposes of this Section.
b. Delivery of Conversion Shares. The Conversion Shares shall be delivered as
follows:
1. As promptly as practicable after conversion, Payor shall deliver to Holder,
or to such person or persons as are designated by Holder in the Conversion
Notice, (1) a certificate or certificates representing the number of shares of
Capital Stock into which this Note or portion thereof is to be converted, in
such name or names as are specified in the Conversion Notice and (2) in the case
of conversion of the entire remaining principal balance hereof, any cash payable
in respect of a fractional share. Such conversion shall be deemed to have been
effected at the close of business on the date when this Note shall have been
surrendered to Payor for conversion, so that the person entitled to receive such
Conversion Shares shall be treated for all purposes as having become the record
holder of such Conversion Shares at such time.
2. In the event that less than the entire outstanding principal of this Note is
converted hereunder pursuant to subsection (a) above, this Note shall not be
surrendered for cancellation but shall have the fact and amount of conversion
recorded on the face of this Note by writing acknowledged by Holder and Payor.
If less than the entire principal balance of this Note is converted, the amount
of principal converted shall be reduced to the nearest amount that results in no
fractional shares.
c. Reservation of Shares. Payor agrees that, during the period within which this
Note may be converted, Payor will at all times have authorized and in reserve,
and will keep available solely for delivery upon the conversion of this Note, a
sufficient number of shares of Capital Stock and other securities and properties
as from time to time shall be receivable upon the conversion of this Note, free
and clear of all restrictions on issuance, sale or transfer other than those
imposed by law and free and clear of all pre-emptive rights. Payor agrees that
the Conversion Shares shall, at the time of such delivery, be validly issued and
outstanding, fully
- 3 -
paid and non-assessable, and Payor will take all such action as may be necessary
to assure that the stated value or par value per share of the Conversion Shares
is at all times equal to or less than the Conversion Price.
d. Protection Against Dilution.
1. In the event of any consolidation with or merger of Payor with or into
another corporation (other than a merger or consolidation in which Payor is the
surviving or continuing corporation) or any sale, lease or conveyance to another
corporation of the property of Payor as an entirety or substantially as an
entirety, in either case while any principal or accrued interest remains
outstanding under this Note, then the Company shall use its reasonable best
efforts to cause such successor, leasing or purchasing corporation, as the case
may be, to (i) execute with Holder an agreement providing that Holder shall have
the right thereafter to receive upon conversion of this Note solely the kind and
amount of shares of stock and other securities, property, cash or any
combination thereof receivable upon such consolidation, merger, sale, lease or
conveyance by a holder of the number of shares of Capital Stock for which this
Note might have been converted immediately prior to such consolidation, merger,
sale, lease or conveyance, (ii) make effective provision in its articles of
association or otherwise, if necessary, in order to effect such agreement, and
(iii) set aside or reserve, for the benefit of Holder, the stock, securities,
property and cash to which Holder would be entitled upon conversion of this
Note.
2. In the event of any reclassification or change of the Capital Stock into
which this Note may be converted (other than a change in par value or from no
par value to a specified par value, or as a result of a subdivision or
combination, but including any change in the shares into two or more classes or
series of shares), or in the event of any consolidation or merger of another
corporation into Payor in which Payor is the continuing corporation and in which
there is a reclassification or change (including a change to the right to
receive cash or other property) of the Capital Stock into which this Note may be
converted (other than a change in par value, or from no par value to a specified
par value, or as a result of a subdivision or combination, but including any
change in the shares into two or more classes or series of shares), in either
case while any principal or accrued interest remains outstanding under this
Note, then Holder shall have the right thereafter to receive upon conversion of
this Note solely the kind and amount of shares of stock and other securities,
property, cash or any combination thereof receivable upon such reclassification,
change, consolidation or merger by a holder of the number of shares of Capital
Stock for which this Note might have been converted immediately prior to such
reclassification, change, consolidation or merger.
3. If, subsequent to any Future Issuance of Capital Stock upon which the
calculation of the Conversion Price is based and while any principal or accrued
interest remains outstanding under this Note, Payor distributes to holders of
such class or series of Capital Stock any assets (excluding ordinary cash
dividends) or debt securities or any rights or warrants to purchase debt
securities, assets or other securities, the Conversion Price shall be adjusted
in accordance with the formula:
C x [(O x M) - F]
O x M
C1 =
- 4 -
where:
C1 = the adjusted Conversion Price.
C = the Conversion Price prior to adjustment pursuant to this subsection.
M = the fair market value per share of such class or series of Capital Stock
immediately before the record date mentioned below, as reasonably determined by
Payor’s Board of Directors with the advice of Payor’s investment banker.
O = the number of shares of such class or series of Capital Stock outstanding on
the record date mentioned below.
F = the fair market value on the record date of the aggregate of all assets,
securities, rights or warrants distributed, as reasonably determined by Payor’s
Board of Directors with the advice of Payor’s investment banker.
The adjustment shall be made successively whenever any such distribution is made
and shall become effective immediately after the record date for the
determination of stockholders entitled to receive the distribution.
The above provisions of this Section 2 shall similarly apply to successive
reclassifications and changes of Capital Stock and to successive consolidations,
mergers, sales, leases or conveyances.
Notice of such consolidation, merger, sale, distribution, reclassification or
reorganization and of such provisions so proposed to be made, shall be mailed to
Holder not less than fifteen (15) days prior to such event.
e. No Stockholder Approval. In no event shall any conversion under this Note
require the Payor to seek stockholder approval under applicable Nasdaq listing
rules.
3. Payment of the Note – Principal and Interest
a. Term. All principal and all unpaid accrued interest that has not been
converted into Capital Stock pursuant to Section 2 above shall be due and
payable on or before the 180th day after the date of this Note (the “Maturity
Date”). The Maturity Date may be extended by Holder, at the option of Holder and
in its sole discretion, effective upon notice of such extension by Holder to
Payor not less than 15 calendar days prior to the original Maturity Date. At any
time after the Maturity Date (as it may be extended pursuant to this
Section 3(a)), Holder may proceed to collect such unconverted principal and
accrued interest. All payments of interest and principal shall be in lawful
money of the United States of America and shall be made to Holder. All payments
shall be applied first to accrued interest, and thereafter to principal.
- 5 -
b. Payment on Event of Default. If any Event of Default occurs hereunder, then,
at the option and upon the declaration of Holder of this Note and upon written
notice to Payor (which election and notice shall not be required in the case of
an Event of Default under Section 4(c) or 4(d)) and Payor’s subsequent failure
to cure any such Event of Default under Section 4(d) within thirty (30) days
following receipt of such written notice, this Note shall accelerate and all
principal and unpaid accrued interest that has not been converted into Common
Stock pursuant to Section 2 above shall become due and payable, and, at any time
thereafter, Holder may proceed to collect such unconverted principal and accrued
interest.
c. Default Interest. In the event Payor fails to pay the entire unpaid principal
balance when due, Payor shall pay a default penalty (the “Default Penalty”) in
an amount equal to 6% of the then outstanding principal and accrued and
outstanding interest under this Note and the entire unpaid principal balance,
accrued and outstanding interest, and the Default Penalty (if not paid) shall
thereafter bear interest at a default interest rate equal to the lower of
12% per annum or the highest rate permitted by law.
d. Prepayment. Payor may prepay this Note at any time after one month following
the date hereof; provided that Payor shall give Holder at least 30 calendar days
advance written notice of Payor’s intent so to prepay and Holder shall have the
right to convert all or any portion of this Note, as applicable, pursuant to
Section 2(b) at any time during such 30 calendar day period.
e. Attorney’s Fees. If an Event of Default shall occur hereunder, Payor shall
pay all reasonable attorneys’ fees and court costs incurred by Holder in
enforcing and collecting this Note.
4. Events of Default. The occurrence of any one or more of the following, if
uncured within 10 days from written notice thereof with respect to subsections
(a) and (b) only, shall constitute an “Event of Default”:
a. Payor fails to pay timely any of the principal amount due under this Note on
the date the same becomes due and payable or any accrued interest or other
amounts due under this Note on the date the same becomes due and payable;
b. Payor breaches any of its representations, warranties, covenants or
agreements set forth in the Agreement, the Security Agreement or this Note;
c. Payor files any petition or action for relief under any bankruptcy,
reorganization, insolvency or moratorium law or any other law for the relief of,
or relating to, debtors, now or hereafter in effect, or makes any assignment for
the benefit of creditors or takes any corporate action in furtherance of any of
the foregoing; or
d. An involuntary petition is filed against Payor under any bankruptcy statute
now or hereafter in effect, unless such petition is dismissed or discharged
within sixty (60) days thereafter, or a custodian, receiver, trustee, assignee
for the benefit of creditors (or other similar official) is appointed to take
possession, custody or control of any property of Payor.
- 6 -
5. Transfer.
a. In order to transfer this Note, Holder, or its duly authorized
representative, shall surrender this Note at the office of Payor pursuant to
Section 10 hereof, accompanied by an assignment duly executed by Holder hereof,
but in no event shall this Note be transferred to a third party unrelated to
Holder, unless (i) an Event of Default under Section 4(a) of this Note has been
declared by Holder and (ii) Payor shall have received thirty (30) days prior
written notice of such proposed transfer. In the event that Holder seeks to make
a transfer of this Note in the absence of registration under the 1933 Act and
any applicable state securities laws, Holder shall furnish an opinion of counsel
satisfactory in form and in substance to the Company that such transfer is
exempt from registration under the 1933 Act and any applicable state securities
laws.
b. This Note is, and each certificate representing Conversion Shares shall be,
stamped or otherwise imprinted with a legend substantially in the following
form:
“The securities represented hereby have not been registered under the Securities
Act of 1933, as amended, or applicable state securities laws and may not be
reoffered, sold, transferred, pledged, or otherwise disposed of except pursuant
to (1) registration under such act or laws or (2) an exemption from registration
under such act or laws.”
6. Loss or Mutilation of Note. Upon receipt by Payor of evidence satisfactory to
Payor of the loss, theft, destruction or mutilation of this Note, together with
an indemnity reasonably satisfactory to Payor, in the case of loss, theft, or
destruction, or the surrender and cancellation of this Note, in the case of
mutilation, Payor shall execute and deliver to Holder a new Note of like tenor
and denomination as this Note.
7. Waiver or Amendment. Any term of this Note may be amended or waived with the
written consent of Payor and Holder. The failure of Holder to enforce at any
time any of the provisions of this Note shall not, absent an express written
waiver signed by Holder specifying the provision being waived, be construed to
be a waiver of any such provision, nor in any way to affect the validity of this
Note or any part hereof or the right of Holder thereafter to enforce each and
every such provision. No waiver of any breach of this Note shall be held to be a
waiver of any other or subsequent breach.
8. Taxes. Payor agrees that it will pay, when due and payable, any and all
stamp, original issue or similar taxes which may be payable in respect of the
issue of this Note and/or any Conversion Shares or certificates therefor. Payor
shall not, however, be required to pay any stamp, original issue or similar tax
which may be payable in respect of any transfer involved in the transfer and
delivery of stock certificates to a person other than of Holder.
- 7 -
9. Notices. All notices or other communications to a party required or permitted
hereunder shall be in writing and shall be delivered personally or by facsimile
(receipt confirmed electronically) to such party (or, in the case of an entity,
to an executive officer of such party) or shall be sent by a reputable express
delivery service or by certified mail, postage prepaid with return receipt
requested, addressed as follows:
if to Holder to:
TD Waterhouse RRSP Account 240832S
c/o Peter Alan Lacey
RR#2 Site 19
Box 6 Red Deer AB
T4N 5E2
if to Payor to:
2972 Stender Way
Santa Clara, California
Attn: Mr. Robert Aldrich
Interim Chief Executive Officer and Chairman
Phillips Lytle LLP
30 South Pearl Street
Albany, New York 12207
Attn: Richard E. Honen, Esq.
Any party may change the above specified recipient and/or mailing address by
notice to all other parties given in the manner herein prescribed. All notices
shall be deemed given on the day when actually delivered as provided above (if
received during regular business hours at the recipient’s location) or on the
day shown on the return receipt (if delivered by mail or delivery service).
10. Headings. The titles and headings to the Sections herein are inserted for
the convenience of reference only and are not intended to be a part of or to
affect the meaning or interpretation of this Note. This Note shall be construed
without regard to any presumption or other rule requiring construction hereof
against the party causing this Note to be drafted.
11. Governing Law; Waiver of Jury Trial. This Note shall be governed by
construed under the laws of the State of California, as applied to agreements
among California residents, made and to be performed entirely within the State
of California, without giving effect to conflicts of laws principles that would
require the application of the laws of any other jurisdiction. THE PARTIES EACH
HEREBY, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, WAIVE THEIR
RESPECTIVE RIGHTS TO JURY TRIAL OF ANY DISPUTE BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY OTHER AGREEMENTS RELATING HERETO OR ANY DEALINGS AMONG THEM
RELATING TO THE TRANSACTIONS.
- 8 -
DayStar Technologies, Inc. a Delaware corporation By:
/s/ William S. Steckel
Name: William S. Steckel Title: Chief Financial Officer
[SIGNATURE PAGE TO SECURED CONVERTIBLE PROMISSORY NOTE]
|
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 (Mark One) ☒ Annual report pursuant to Section15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December31, 2014 OR ☐ Transition report pursuant to Section15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission File Number 001-08308 A. Full title of the plan and the address of the plan, if different from that of the issuer named below: Luby’s Savings and Investment Plan B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: Luby’s, Inc. 13111 Northwest Freeway Suite 600 Houston, Texas 77040 Table of Contents Item1 Audited Statements of Net Assets Available for Benefits Audited statements of net assets available for benefits at December 31, 2014 and 2013, prepared in accordance with the financial reporting requirements of ERISA are filed herewith as an exhibit. Item2 Audited Statement of Changes in Net Assets Available for Benefits Audited statement of changes in net assets available for benefits for the year ended December 31, 2014, prepared in accordance with the financial reporting requirements of ERISA are filed herewith as an exhibit. REQUIRED INFORMATION Item1 Audited Statements of Net Assets Available for Benefits Audited statements of net assets available for benefits at December 31, 2014 and 2013, prepared in accordance with the financial reporting requirements of ERISA are filed herewith as an exhibit. Item2 Audited Statement of Changes in Net Assets Available for Benefits Audited statement of changes in net assets available for benefits for the year ended December 31, 2014, prepared in accordance with the financial reporting requirements of ERISA are filed herewith as an exhibit. SIGNATURE The Plan.Pursuant to the requirements of the Securities Exchange Act of 1934, the administrator of the plan has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. LUBY’S SAVINGS AND INVESTMENT PLAN Date:June 24, 2015 By: /s/Paulette Gerukos Paulette Gerukos Plan Administrator Luby’s Savings and Investment Plan EXHIBIT INDEX 1 Audited financial statements, notes thereto and supplemental schedule 2 Consent of Calvetti Ferguson 99 Certification by the Plan Administrator pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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Exhibit 10.1
AMENDED AND RESTATED CORPORATE AND SUBSIDIARY OFFICER
CAPITAL ACCUMULATION PLAN
SECTION 1. ESTABLISHMENT AND PURPOSE
1.1 Establishment. American Healthways, Inc. established the CORPORATE AND
SUBSIDIARY OFFICER CAPITAL ACCUMULATION PLAN (hereinafter called the “Plan”)
effective as of September 1, 1987, as a deferred compensation plan for
Participants as described herein. This Amended and Restated Plan is adopted
effective November 11, 2005.
1.2 Purpose. The purpose of this Plan is to provide a means whereby compensation
payable to Company and Subsidiary officers may be deferred for a specified
period and, when combined with Company additions, provide for capital
accumulation toward savings goals.
SECTION 2. DEFINITIONS
2.1 Definitions. Whenever used hereinafter, the following terms shall have the
meaning set forth below:
(a) “Account” means the total of a Participant’s pay deferrals, Company
additions and growth additions thereon.
(c) “Change in Control” means a change in control as defined in Section 409A
of the Code and the regulations promulgated thereunder.
(e) “Company” means American Healthways, Inc., a Delaware corporation.
(f) “Company 401(k) Plan” means the American Healthways, Inc. Retirement
Savings Plan.
(g) “Disability” means disability as determined under the Company’s
long-term disability insurance policy, or if no such policy exists, as defined
in Section 409A(a)(2)(C) of the Code.
(h) “Early Retirement” means termination of employment where (i) the sum of
the Participant’s age plus years of employment at the Company as of the proposed
early retirement date is equal to or greater than 70, (ii) the Participant has
given written notice to the Company at least one year prior to the proposed
early retirement date of his or her intent to retire and (iii) the Chief
Executive Officer has approved in writing such early retirement request prior to
the proposed early retirement date, provided that in the event the Chief
Executive Officer does not approve the request for early retirement or the Chief
Executive Officer is the Participant giving notice of his or her intent to
retire, then in both cases, the Board shall make the determination of whether to
approve or disapprove such request.
(i) “Employee” means a regular salaried officer of the Company or any of its
Subsidiaries.
(j) “Normal Retirement” means termination of employment on or after the
Participant reaches age 65.
(k) “Participant” means an officer of American Healthways, Inc. or an
officer of any Subsidiary designated by the Board to participate in this Plan.
(l) “Subsidiary” means any corporation, 80% or more of the total combined
voting power of all classes of stock of which is directly or indirectly owned by
the Company.
(m) “Plan Year” means the 12-month period beginning January 1 and ending
December 31.
(n) “Unforeseeable Emergency” means a severe financial hardship of the
Participant resulting from the Participant’s:
(i) illness or accident (including the Participant’s dependent’s (as
defined in Section 152(a) of the Code) or spouse’s illness or accident);
(ii) loss of property due to casualty;
(iii) imminent foreclosure of or eviction from the Participant’s
primary residence;
(iv) medical expenses;
(v) funeral expenses of a spouse or dependent; or
(vi) other similar extraordinary and unforeseeable circumstances
arising as a result of events beyond the control of the Participant.
2.2 Gender and Number. Except when otherwise indicated by the context, any
masculine terminology when used in the Plan shall also include the feminine
gender, and the definition of any term herein in the singular shall also include
the plural.
SECTION 3. ELIGIBILITY FOR PARTICIPATION
3.1 Eligibility. Participation in the Plan shall be limited to Employees who are
designated as Participants by the Board. In the event an Employee no longer
meets the requirements for participation in this Plan, he or she shall become an
inactive Participant, retaining all the rights described under this Plan, except
the right to make any further deferrals, until the time that he or she again
becomes an active Participant.
3.2 Participation. An Employee designated as a Participant by the Board may
elect to defer under the Plan for a Plan Year only if such Participant elects to
defer the maximum amount permitted under the terms of the Company 401(k) Plan as
limited by Section 402(g) and other provisions of the Code for such Plan Year.
SECTION 4. ELECTION TO DEFER
4.1 Deferral Amount. No later than December 31 preceding each Plan Year, any
Participant may, by written notice to the Company, elect to defer an amount not
less than 2% nor more than 10% of the Participant’s base salary for such Plan
Year; provided, however, that the amount of the Participant’s aggregate
deferrals under the Plan and the Company 401(k) Plan shall not exceed 10% of the
Participant’s base salary for the Plan Year.
4.2 Deferral Period. Simultaneous with a Participant’s first deferral election
specified in Section 4.1, the Participant shall also designate the time for
payout of his or her Account. Payments must begin no earlier than four years
from the beginning of each Plan Year, and no later than the earliest to occur
of: (a) The date specified in the election (or in the event that no date is
specified, the date will be four years from the beginning of such Plan Year),
(b) Normal Retirement, (c) Early Retirement, (d) Disability, (e) Death, or (f)
Termination of employment.
4.3 Manner of Payment Election. Concurrent with the election in Section 4.2, the
Participant, by written notice to the Company, also shall elect the manner in
which the Account will be paid. The Participant may choose to have payment made
either in a lump sum or in periodic annual installments over a fixed number of
years. However, if payment results from the Participant’s termination of
employment, other than for Normal Retirement or Early Retirement, such payment
shall be made in a lump sum at a date one year following the date of termination
of employment. Also, if payout results from the death or Disability of the
Participant, payout will be made in a lump sum immediately after the
Participant’s death or immediately after the determination of Disability.
4.4 Separate Payout Elections. The Participant may elect separate payout
elections for time and manner of payment during the term of his or her
participation. Each separate election regarding time and manner of payment must
be made at the time the Participant’s deferral election is made (no later than
December 31 preceding the Plan Year as provided in Section 4.1) and will apply
only to the amounts deferred during such Plan Year, including base salary,
Company additions and growth additions.
4.5 Irrevocable Elections. The elections in this Section 4 are irrevocable and
may not be modified or terminated by the Participant or his or her beneficiary.
4.6 Amounts deferred under this Section 4 are fully vested to the Participant.
SECTION 5. COMPANY ADDITIONS
5.1 Mandatory Company Additions. On the last day of each Plan Year, the Company
shall add to each Participant’s Account an amount equal to not less than 25% of
the Participant’s deferrals during that Plan Year; provided, however, that the
Company’s aggregate additions to the Participant’s Account under the Plan and
the Participant’s account under the Company 401(k) Plan shall not exceed 6% of
the Participant’s base salary for that Plan Year. The Participant must defer the
maximum amount permitted under the terms of the Company 401(k) Plan as limited
by Section 402(g) and other provisions of the Code for the Plan Year to be
eligible for mandatory Company additions pursuant to this Section 5.1.
5.2 Discretionary Company Additions. The Board, in its sole discretion, may
provide for discretionary additions to the Plan based solely on the Company’s
financial performance for the Plan Year. The maximum discretionary Company
addition which may be made in any Plan Year is 20% of a Participant’s base
salary paid during the Plan Year. Discretionary Company additions are made to
all Participants regardless of a Participant’s deferrals into the Plan and such
additions are credited to the Account of Participants as of the last day of each
Plan Year.
5.3 Vesting. Company additions shall vest 25% per year over four years on the
last day of each Plan Year as long as the Participant continues to be employed
by the Company or any of its Subsidiaries. The first vesting date is the date
the addition is credited to the Participant’s Account. Notwithstanding the
foregoing, a Participant shall fully vest in any Company additions pursuant to
Section 5.1 and Section 5.2 (i) if the Participant’s employment by the Company
and any Subsidiary terminates by reason of his or her death, Disability, Normal
Retirement or Early Retirement or (ii) as separately provided for in the
Participant’s separate employment agreement with the Company.
5.4 Employment at Year End. No Company addition shall be made for persons who
are no longer employed by the Company on the last day of the Plan Year.
SECTION 6. DEFERRED ACCOUNTS
6.1 Participant Accounts. The Company shall establish and maintain a bookkeeping
Account for each Participant, to be credited as of the date the deferred
compensation would have been paid. Accounts also shall be credited as of the
date Company additions are made as described in Section 5, and their status as
vested or nonvested noted according to Section 5.3.
6.2 Growth Additions. Each Participant’s Account shall be credited with a growth
addition. The growth addition shall be equal to said Account balance multiplied
by a growth increment, the amount of which shall be determined from time to time
by the Board. Growth additions shall be calculated on a monthly basis based on
the Participant’s Account balance but shall be credited to the Participant’s
Account and compounded annually as of the last day of each Plan Year. However,
for Participants whose payout results from termination of employment, the growth
factor on employee deferrals and on associated compounded growth factors will be
calculated through the date of payment to the Participant.
Growth additions shall vest to the extent the Company additions to which they
apply are vested under Section 5.3. Growth additions on Participant deferrals
are fully vested when credited to the Participant’s Account. Growth additions
will be paid at such time and in such manner as the Participant’s other Account
balances.
6.3 Charges Against Accounts. There shall be charged against each Participant’s
Account any payments made to the Participant or to his or her beneficiary in
accordance with Section 7 hereof.
6.4 Contractual Obligation. It is intended that the Company is under a
contractual obligation to make payments from a Participant’s Account when due.
Account balances shall not be financed through a trust fund or insurance
contracts or otherwise unless such trust fund or insurance contracts are owned
by the Company. Payment of Account balances shall be made out of the general
funds of the Company.
6.5 Unsecured Interest. No Participant or beneficiary shall have any interest
whatsoever in any specific asset of the Company. To the extent that any person
acquires a right to receive payments under this Plan, such right shall be no
greater than the right of any unsecured general creditor of the Company.
SECTION 7. PAYMENT OF DEFERRED AMOUNTS
7.1 Payment of Deferred Amounts. Payment of a Participant’s Account shall be
paid in a lump sum or in periodic annual installments over a fixed number of
years, in the manner provided for by the Company and elected by the Participant
under Section 4.3 of this Plan. Subject to Section 4.3 and Section 7.3, payments
shall begin as soon as possible following the date described by Section 4 of
this Plan.
7.2 Unforeseeable Emergency. The Board, in its sole discretion, may permit a
distribution from a Participant’s Account in the event that the Participant
establishes, to the satisfaction of the Board, an Unforeseeable Emergency. A
distribution may not be made to the extent that the Unforeseeable Emergency is
or may be relieved through reimbursement or compensation from insurance or
otherwise, by liquidation of the Participant’s assets (to the extent the
liquidation of such assets would not cause severe financial hardship) or by
cessation of deferrals under the Plan. If the Board determines that an
Unforeseeable Emergency exists, then a distribution from the vested portion of
the Participant’s Account may be made to the Participant, provided that such
distribution shall not be in excess of the amount reasonably necessary to
satisfy the Unforeseeable Emergency (which may include amounts necessary to pay
any federal, state or local income taxes or penalties reasonably anticipated to
result from the distribution).
7.3 Six Month Delay of Certain Payments. In the event the receipt of amounts
payable pursuant to this Section 7 or Section 13 within 6 months of a
Participant’s separation from service for any reason whatsoever would cause a
Participant to incur any penalty under Section 409A of the Code, then payment of
such amounts shall be delayed until the date that is 6 months following the
Participant’s separation of service (the “Earliest Payment Date”). If this
provision becomes applicable, it is anticipated that payments that would have
been made prior to the Earliest Payment Date in the absence of this provision
would be paid as a lump sum on the Earliest Payment Date and the remaining
benefits or other payments would be paid according to the schedule otherwise
applicable to the payments.
SECTION 8. FEDERAL INCOME TAX CONSEQUENCES
8.1 Federal Income Tax Consequences. It is intended that the Plan shall be
considered nonqualified for Federal income tax purposes. Thus, the Company shall
not be entitled to a tax deduction until the earlier of (i) the year payment is
actually made or (ii) the year in which the Participant reports such amounts as
income.
SECTION 9. BENEFICIARY
9.1 Beneficiary. A Participant must designate a beneficiary or beneficiaries
who, upon his or her death, are to receive the distributions that otherwise
would have been paid to him or her. All designations shall be in writing and
shall be effective only if and when delivered to the Chief Financial Officer or
his or her designee or a replacement designated by the Board during the lifetime
of the Participant. If a designated beneficiary predeceases the Participant and
no revised beneficiary designation is made, amounts will be prorated to living
beneficiaries. If all beneficiaries predecease the Participant, amounts shall be
paid to the Participant’s estate.
A Participant may from time to time during his or her lifetime change his or her
beneficiary or beneficiaries by a written instrument delivered to the Chief
Financial Officer or his or her designee or a replacement designated by the
Board. In the event a Participant shall not designate a beneficiary or
beneficiaries pursuant to this Section 9.1, or if for any reason such
designation shall be ineffective, in whole or in part, the distribution that
otherwise would have been paid to such Participant shall be paid to his or her
estate and in such event, the term “beneficiary” shall include his or her
estate.
SECTION 10. RIGHTS OF EMPLOYEES, PARTICIPANTS
10.1 Employment. Nothing in this Plan shall interfere with or limit in any way
the right of the Company or any of its Subsidiaries to terminate any Employee’s
or Participant’s employment at any time, nor confer upon any Employee or
Participant any right to continue in the employ of the Company or any of its
Subsidiaries.
10.2 Nontransferability. No right or interest of any Participant in this Plan
shall be assignable or transferable, or subject to any lien, directly, by
operation of law, or otherwise, including executive, levy, garnishment,
attachment, pledge, and bankruptcy. In the event of a Participant’s death,
payment of any amounts due under this Plan shall be made to the Participant’s
designated beneficiary, or in the absence of such designation, to the
Participant’s estate.
10.3 Participation. No Employee shall have a right to be selected as a
Participant, or, having been so selected, to be selected again as a Participant.
SECTION 11. ADMINISTRATION
11.1 Administration. The Board shall be responsible for the administration of
the Plan. The Board is authorized to interpret the Plan, to prescribe, amend,
and rescind rules and regulations relating to the Plan, provide for conditions
and assurances deemed necessary or advisable to protect the interests of the
Company, and to make all other determinations necessary or advisable for the
administration of the Plan, but only to the extent not contrary to the express
provisions of the Plan. The Board shall determine, within the limits of the
express provisions of the Plan, the Employees to whom, and the time or times at
which, participation shall be extended, and the amount which may be deferred. In
making such determinations, the Board may take into account the nature of the
services rendered by such Employees or classes of Employees, their present and
potential contributions to the Company’s or its Subsidiaries’ success and such
other factors as the Board in its discretion shall deem relevant. The
determination of the Board, interpretation or other action made or taken
pursuant to the provisions of the Plan, shall be final and shall be binding and
conclusive for all purposes and upon all persons.
SECTION 12. AMENDMENT, MODIFICATION, AND TERMINATION OF THE PLAN
12.1 Amendment, Modification, and Termination of the Plan. The Board may
terminate and from time to time may amend or modify the Plan in accordance with
Section 409A of the Code and the regulations promulgated thereunder, provided,
however, that no such action of the Board, without approval of the Participant,
may adversely affect in any way amounts already deferred pursuant to Section 4.1
of this Plan nor the vesting schedule for an Account as it exists at the time of
the modification.
If the Plan is terminated pursuant to Section 409A of the Code and the
regulations promulgated thereunder at a date other than the last day of the Plan
Year, the Company may make, in the Board’s sole discretion, a pro-rated
discretionary Company addition to each Participant’s Account based on operating
earnings of the Company generated through the date the Plan is terminated.
SECTION 13. MERGER OR CONSOLIDATION
Merger or Consolidation. If the Company is involved in a merger or acquisition
which results in a Change in Control pursuant to which the Company is not the
surviving entity, the Plan will be terminated and all amounts deferred,
including any growth additions and Company additions, will immediately vest and
be paid out to the Participants in accordance with Section 409A of the Code and
the regulations promulgated thereunder.
SECTION 14. REQUIREMENTS OF LAW
14.1 Requirements of Law. The payment of cash pursuant to this Plan shall be
subject to all applicable laws, rules and regulations as may be required.
14.2 Governing Law. The Plan, and all agreements hereunder, shall be construed
in accordance with and governed by the laws of the State of Tennessee.
SECTION 15. WITHHOLDING TAXES
15.1 Withholding Taxes. The Company shall have the right to deduct from all
payments under this Plan an amount necessary to satisfy any Federal, state, or
local withholding tax requirements.
SECTION 16. EFFECTIVE DATE OF THE PLAN
16.1 Effective Date. This Amended and Restated Plan shall become effective as of
November 11, 2005.
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EXHIBIT 99.74 MANAGEMENT INFORMATION CIRCULAR TASMAN METALS LTD. (the "Corporation") Suite 1305 - 1090 W. Georgia Street Vancouver, British Columbia, Canada INFORMATION CIRCULAR (Containing information as at February 4, 2011 unless indicated otherwise) SOLICITATION OF PROXIES THIS INFORMATION CIRCULAR IS FURNISHED IN CONNECTION WITH THE SOLICITATION OFPROXIES BY THE MANAGEMENT OF THE CORPORATION FOR USE AT THE ANNUAL GENERAL MEETING OF SHAREHOLDERS OF THE CORPORATION (AND ANY ADJOURNMENT THEREOF) (THE "MEETING") TO BE HELD ON FRIDAY, MARCH 11, 2While it is expected that the solicitation will be primarily by mail, proxies may be solicited personally or by telephone by the regular employees of the Corporation at nominal cost.All costs of solicitation by management will be borne by the Corporation. THE CONTENTS AND THE SENDING OF THIS INFORMATION CIRCULAR HAVE BEEN APPROVED BY THE DIRECTORS OF THE CORPORATION. APPOINTMENT AND REVOCATION OF PROXIES The individuals named in the accompanying form of proxy are Directors and/or Officers of the Corporation.A SHAREHOLDER WISHING TO APPOINT SOME OTHER PERSON (WHO NEED NOT BE A SHAREHOLDER) TO REPRESENT HIM AT THE MEETING HAS THE RIGHT TO DO SO, EITHER BY STRIKING OUT THE NAMES OF THOSE PERSONS NAMED IN THE ACCOMPANYING FORM OF PROXY AND INSERTING THE DESIRED PERSON'S NAME IN THE BLANK SPACE PROVIDED IN THE FORM OF PROXY OR BY COMPLETING ANOTHER FORM OF PROXY.A proxy will not be valid unless the completed form of proxy is received by Computershare Investor Services Inc., Attention:Proxy Department, 9th Floor, 100 University Avenue, Toronto, Ontario, M5J 2Y1, or by fax at 1-866-249-7775, (the "Transfer Agent") not less than 48 hours (excluding Saturdays, Sundays and holidays) before the time for holding the Meeting or any adjournment thereof, or delivered to the Chairman of the Meeting prior to the commencement of the Meeting. A shareholder who has given a proxy may revoke it by an instrument in writing executed by the shareholder or by his attorney authorized in writing or, where the shareholder is a corporation, by a duly authorized officer or attorney of the corporation, and delivered to the registered and records office of the Corporation, at #1305 - 1090 West Georgia Street, Vancouver, British Columbia, V6E 3V7, at any time up to and including the last business day preceding the day of the Meeting or if adjourned, any reconvening thereof, or to the Chairman of the Meeting on the day of the Meeting or, if adjourned, any reconvening thereof or in any other manner provided by law.A revocation of a proxy does not affect any matter on which a vote has been taken prior to the revocation. ADVICE TO BENEFICIAL SHAREHOLDERS Only registered Shareholders or duly appointed proxyholders are permitted to vote at the Meeting. Shareholders who do not hold their shares in their own name (referred to herein as "Beneficial Shareholders") are advised that only proxies from Shareholders of record can be recognized and voted at the Meeting. Beneficial Shareholders who complete and return an instrument of proxy must indicate thereon the person (usually a brokerage house) who holds their shares as a registered shareholder. Every intermediary (broker) has its own mailing procedure, and provides its own return instructions, which should be carefully followed. The instrument of proxy supplied to Beneficial Shareholders is identical to -2- that provided to registered Shareholders. However, its purpose is limited to instructing the registered Shareholder how to vote on behalf of the Beneficial Shareholder. If common shares are listed in an account statement provided to a Shareholder by a broker, then in almost all cases those shares will not be registered in such Shareholder's name on the records of the Corporation. Such shares will more likely be registered under the name of the Shareholder's broker or an agent of that broker. In Canada, the majority of such shares are registered under the name of CDS & Co. (the registration name for The Canadian Depository for Securities Limited, which company acts as nominee for many Canadian brokerage firms). Common shares held by brokers or their nominees can only be voted (for or against resolutions) upon the instructions of the Beneficial Shareholder. Without specific instructions, brokers/nominees are prohibited from voting shares for their clients. The directors and officers of the Corporation do not know for whose benefit the common shares registered in the name of CDS & Co. are held. In accordance with National Instrument 54 -101 of the Canadian Securities Administrators, the Corporation has distributed copies of the Notice of Meeting, this Management Proxy Circular and the Proxy to the clearing agencies and intermediaries for onward distribution to non-registered Shareholders. Applicable regulatory policy requires intermediaries/brokers to seek voting instructions from Beneficial Shareholders in advance of Shareholders Meetings unless the Beneficial Shareholders have waived the right to receive Meeting materials. Every intermediary/broker has its own mailing procedures and provides its own return instructions, which should be carefully followed by Beneficial Shareholders in order to ensure that their common shares are voted at the Meeting. Often the form of proxy supplied to a Beneficial Shareholder by its broker is identical to the form of proxy provided by the Corporation to the registered Shareholders. However, its purpose is limited to instructing the registered shareholder how to vote on behalf of the Beneficial Shareholder should a Beneficial Shareholder receiving such a form wish to vote at the Meeting, the Beneficial Shareholder should strike out the names of the Management Proxyholders named in the form and insert the Beneficial Shareholder's name in the blank provided. The majority of brokers now delegate responsibility for obtaining instructions from clients to Broadridge Investor Communication Solutions, Canada ("Broadridge").Broadridge typically applies a special sticker to the proxy forms, mails those forms to the Beneficial Shareholders and asks Beneficial Shareholders to return the proxy forms to Broadridge. Broadridge then tabulates the results of all instructions received and provides appropriate instructions respecting the voting of common shares to be represented at the Meeting. A Beneficial Shareholder receiving a proxy with an Broadridge sticker on it cannot use that proxy to vote common shares directly at the Meeting B the proxy must be returned to Broadridge well in advance of the Meeting in order to have the common shares voted. All references to Shareholders in this Management Proxy Circular and the accompanying form of Proxy and Notice of Meeting are to Shareholders of record unless specifically stated otherwise. VOTING OF PROXIES Shares represented by properly executed proxies in favour of persons designated in the enclosed form of proxy WILL BE VOTED FOR ALL MATTERS TO BE VOTED ON AT THE MEETING AS SET OUT IN THIS INFORMATION CIRCULAR OR WITHHELD FROM VOTING IF SO INDICATED ON THE FORM OF PROXY. The shares represented by proxies will, on any poll where a choice with respect to any matter to be acted upon has been specified in the form of proxy, be voted in accordance with the specification made. SUCH SHARES WILL ON A POLL BE VOTED IN FAVOUR OF EACH MATTER FOR WHICH NO CHOICE HAS BEEN SPECIFIED BY THE SHAREHOLDER. The enclosed form of proxy when properly completed and delivered and not revoked confers discretionary authority upon the person appointed proxy thereunder to vote with respect to amendments or variations of matters identified in the Notice of Meeting, and with respect to other matters which may properly come before the Meeting.In the event that amendments or variations to matters identified in the Notice of Meeting are properly brought before the Meeting or any further or other business is properly brought before the Meeting, it is the intention of the persons designated in the enclosed form of proxy to -3- vote in accordance with their best judgement on such matters or business.At the time of the printing of this Information Circular, the management of the Corporation knows of no such amendment, variation or other matter which may be presented to the Meeting. VOTING SHARES AND PRINCIPAL HOLDERS THEREOF Issued and Outstanding: 56,562,302 shares without par value Authorized Capital: unlimited common shares without par value Only shareholders of record at the close of business on February 4, 2011 (the "Record Date") who either personally attend the Meeting or who have completed and delivered a form of proxy in the manner and subject to the provisions described above shall be entitled to vote or to have their shares voted at the Meeting. Each shareholder is entitled to one vote for each common share registered in his name on the list of shareholders, which is available for inspection during normal business hours at the Transfer Agent and at the Meeting. To the knowledge of the directors and senior officers of the Corporation, no person or company beneficially owns, directly or indirectly, or exercises control or direction over, shares carrying more than 10% of the voting rights attached to all outstanding shares of the Corporation as of the close of business on February 4, 2011. APPOINTMENT OF AUDITORS Unless such authority is withheld, the persons named in the accompanying proxy intend to vote for the appointment of D&H Group LLP, Chartered Accountants, as auditors of the Corporation and to authorize the Directors to fix their remuneration.D&H Group LLP were first appointed auditors on October 22, 2009 when the Corporation was formed through the amalgamation of Ausex Capital Corp., Lumex Capital Corp. and Tasman Metals Ltd. ELECTION OF DIRECTORS The term of office of each of the present directors expires at the Meeting.The persons named below will be presented for election at the Meeting as management's nominees and the persons named in the accompanying form of proxy intend to vote for the election of these nominees.Management does not contemplate that any of these nominees will be unable to serve as a director.Each director elected will hold office until his/her successor is elected or appointed, unless his/her office is earlier vacated in accordance with the Articles of the Corporation, or with the provisions of the Business Corporations Act (British Columbia). In the following table and notes thereto is stated the name of each person proposed to be nominated by management for election as a director, the country in which he/she is ordinarily resident, all offices of the Corporation now held by him/her, his/her principal occupation, the period of time for which he/she has been a director of the Corporation, and the number of shares of the Corporation beneficially owned by him/her, directly or indirectly, or over which he/she exercises control or direction, as at the date hereof. Name, Position and Country of Residence(1) Principal Occupation and if not at present an elected Director, Occupation during the past five years(1) Director Since(2) No. of Shares beneficially held(3) MARK SAXON President, Chief Executive Officer & Director (resident of Victoria, Australia) Professional Geologist.President and CEO of the Corporation October 22, 2009 -4- Name, Position and Country of Residence(1) Principal Occupation and if not at present an elected Director, Occupation during the past five years(1) Director Since(2) No. of Shares beneficially held(3) NICK DEMARE(4) Chief Financial Officer & Director (resident of British Columbia, Canada) Chartered Accountant.President of Chase Management Ltd. since 1991. October 22, 2009 DAVID HENSTRIDGE(4) Non-Executive Chairman & Director (resident of Victoria, Australia) Professional Geologist.President and CEO of Tumi Resources Limited October 22, 2009 MICHAEL HUDSON Director (resident of Victoria, Australia) Professional Geologist.President and CEO of Mawson Resources Limited October 22, 2009 ROBERT G. ATKINSON(4) Director (resident of British Columbia, Canada) Self-employed businessman, Vice Chairman of Spur Ventures; Director of Sprott Resource Lending Corp. October 22, 2009 NOTES: The information as to country of residence and principal occupation, not being within the knowledge of the Corporation, has been furnished by the respective directors individually. The Corporation was formed on October 22, 2009 through the amalgamation of Ausex Capital Corp., Lumex Capital Corp., both public companies, and Tasman Metals Ltd., a private company prior to the amalgamation. The information as to shares beneficially owned or over which a director exercises control or direction, not being within the knowledge of the Corporation, has been furnished by the respective directors individually. Denotes member of Audit Committee. Held through Floresta Trust, a family trust of which Mark Saxon is the trustee. Held through Elwood Partners Discretionary Trust, a family trust of which Michael Hudson is the trustee. No proposed director is to be elected under any arrangement or understanding between the proposed director and any other person or company, except the directors and executive officers of the company acting solely in such capacity. Cease Trade Orders, Bankruptcies, Penalties or Sanctions Other than as disclosed below, no director or executive officer of the Company is, as at the date hereof, or has been, within the 10 years before the date of this information circular, a director, chief executive officer or chief financial officer of any corporation (including the Company) that: (a) was subject to an order that was issued and which was in effect for a period of more than 30 consecutive days, while the director or executive officer was acting in the capacity as director, chief executive officer or chief financial officer; or (b) was subject to an order that was issued and which was in effect for a period of more than 30 consecutive days, after the director or executive officer ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer. No director or executive officer of the Company, or a shareholder holding a sufficient number of securities of the Company to affect materially the control of the Company: -5- (a) is, as at the date of this information circular, or has been within the 10 years before the date of this information circular, a director or executive officer of any company (including the Company) that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; or (b) has, within the 10 years before the date of this information circular, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the director, executive officer or shareholder. No director or executive officer of the Company, or a shareholder holding a sufficient number of the Company’s securities to affect materially the control of the Company, has been subject to: (a) any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or (b) any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor in making an investment decision. Nick DeMare is a former independent director of Andean American Mining Corp. (“Andean American”). On August2, 2007, the British Columbia Securities Commission (“BCSC”) issued Andean American a cease trade order for deficiencies in Andean American’s continuous disclosure material related to its resource properties and for deficiencies in a previously filed NI 43-101 technical report. On October 22, 2007, Andean American filed an amended NI 43-101 and issued a clarifying news release. The BCSC revoked the cease trade order and the shares resumed trading on October 24, 2007. Nick DeMare is director and officer of Salazar Resources Limited (“Salazar”). On September 10, 2010, the BCSC issued Salazar a cease trade order for deficiencies in a previously filed NI 43-101 technical report.On October12, 2010, Salazar filed a new NI 43-101 report.The BCSC revoked the cease trade order and the shares resumed trading on October 18, 2010. COMPENSATION DISCUSSION AND ANALYSIS Compensation Discussion and Analysis Compensation, Philosophy and Objectives The Corporation does not have a formal compensation program.The board of directors (the “Board”) meets to discuss and determine management compensation, without reference to formal objectives, criteria or analysis.The general objectives of the Corporation’s compensation strategy are to (a) compensate management in a manner that encourages and rewards a high level of performance and outstanding results with a view to increasing long-term shareholder value; (b) align management’s interests with the long-term interests of shareholders; (c) provide a compensation package that is commensurate with other junior mineral exploration companies to enable the Corporation to attract and retain talent; and (d) ensure that the total compensation package is designed in a manner that takes into account the constraints that the Corporation is under by virtue of the fact that it is a junior mineral exploration company without a history of earnings. The Board, as a whole, ensures that total compensation paid to all Named Executive Officers (“NEOs”), as hereinafter defined, is fair and reasonable.The Board relies on the experience of its members as officers and directors with other junior mining companies in assessing compensation levels. -6- Analysis of Elements Base salary is used to provide the Named Executive Officers a set amount of money during the year with the expectation that each Named Executive Officer will perform his responsibilities to the best of his ability and in the best interests of the Corporation. The Corporation considers the granting of incentive stock options to be a significant component of executive compensation as it allows the Corporation to reward each NEO’s efforts to increase value for shareholders without requiring the Corporation to use cash from its treasury.Stock options are generally awarded to executive officers at the commencement of employment and periodically thereafter.The terms and conditions of the Corporation’s stock option grants, including vesting provisions and exercise prices, are governed by the terms of the Corporation’s stock option plan (the “Stock Option Plan”). Long Term Compensation and Option-Based Awards The Corporation has no long-term incentive plans other than the Stock Option Plan.The Corporation’s directors and officers and certain consultants are entitled to participate in the Stock Option Plan.The Stock Option Plan is designed to encourage share ownership and entrepreneurship on the part of the senior management and other employees.The Board believes that the Stock Option Plan aligns the interests of the NEOs and the Board with shareholders by linking a component of executive compensation to the longer term performance of the Corporation’s common shares. Options are granted by the Board. In monitoring or adjusting the option allotments, the Board takes into account its own observations on individual performance (where possible) and its assessment of individual contribution to shareholder value, previous option grants and the objectives set for the NEOs and the Board.The scale of options is generally commensurate to the appropriate level of base compensation for each level of responsibility. In addition to determining the number of options to be granted pursuant to the methodology outlined above, the Board also makes the following determinations: · parties who are entitled to participate in the Stock Option Plan; · the exercise price for each stock option granted, subject to the provision that the exercise price cannot be lower than the prescribed discount permitted by the Exchange from the market price on the date of grant; · the date on which each option is granted; · the vesting period, if any, for each stock option; · the other material terms and conditions of each stock option grant; and · any re-pricing or amendment to a stock option grant. The Board makes these determinations subject to and in accordance with the provisions of the Stock Option Plan.The Board reviews and approves grants of options on an annual basis and periodically during a financial year. SUMMARY COMPENSATION TABLE For the purposes of this Information Circular, a “Named Executive Officer”, or “NEO”, means each of the following individuals: (a) a chief executive officer (“CEO”) of the Corporation; (b) a chief financial officer (“CFO”) of the Corporation, -7- (c) each of the Corporation’s three most highly compensated executive officers, or the three most highly compensated individuals acting in a similar capacity, other than the CEO and CFO, at the end of the most recently completed financial year whose total compensation was, individually, more than $150,000 as determined in accordance with subsection 1.3(6) of Form51-102F6, for the August31, 2010 financial year; and (d) each individual who would be a NEO under paragraph(c) but for the fact that the individual was neither an executive officer, nor acting in a similar capacity at August31, 2010. During the financial year ended August31, 2010, the Corporation had two (2) NEOs: Mark Saxon, the President and CEO of the Company and Nick DeMare, CFO. The following table sets forth all direct and indirect compensation for, or in connection with, services provided to the Corporation and its subsidiaries for the financial year ended August31, 2010 in respect of the NEOs of the Corporation.For the information concerning compensation related to previous years, please refer to the Corporation’s previous Management Proxy Circulars available at www.sedar.com: Name and principal position Year(1) Fees Earned Option-based awards All other compensation Total compensation Mark Saxon President & CEO 2009(4) N/A N/A Nil N/A N/A Nick DeMare CFO 2010 2009(4) Nil N/A N/A N/A N/A NOTES: Financial years ended August31. All amounts shown was paid in Canadian currency, the reporting currency of the Corporation. Figures represent the grant date fair value of the options.The Corporation used the Black-Scholes option pricing model for calculating such fair value, as such model is commonly used by junior public companies. The Corporation was formed on October 22, 2009 through the amalgamation of Ausex Capital Corp., Lumex Capital Corp., both public companies, and Tasman Metals Ltd., a private company prior to the amalgamation. Billed by Chase Management Ltd. (“Chase”), a private company owned by Mr. DeMare, for administrative, accounting and management services provided and office rent. INCENTIVE PLAN AWARDS Outstanding Option-Based Awards The following table sets forth for the NEOs, the incentive stock options (option-based awards), pursuant to the Stock Option Plan, outstanding as at August31, 2010. Option-based Awards Name Number of securities underlying unexercised options (#) Option exercise price Option expiration date Value of unexercised in-the-money options Mark Saxon October 22, 2012 Nick DeMare May 31, 2012 January 25, 2013 October 22, 2012 -8- NOTES: This amount is calculated as the difference between the market value of the securities underlying the options on August31, 2010, being the last trading day of the Corporation’s shares for the financial year, which was $0.21, and the exercise price of the option. (2)Includes 75,000 options granted to Chase. Incentive Plan Awards – Value Vested or Earning During The Year The following table sets forth for the NEOs, the value vested during the financial year ended on August31, 2010 for options awarded under the Stock Option Plan, as the value earned under non-equity incentive plans for the same period. Name Option-based awards – Value vested during the year Non-equity incentive plan compensation - Value earned during the year Mark Saxon Nil Nick DeMare Nil TERMINATION AND CHANGE OF CONTROL BENEFITS Termination and Change of Control Benefits The Corporation does not have any plan contract, agreement or plan or arrangement that provides for payments to a NEOs at, following or in connection with any termination (whether voluntary, involuntary or constructive), resignation, a change in control of the Corporation or a change in the NEO’s responsibilities. DIRECTOR COMPENSATION Director Compensation Table The following table sets forth all amounts of compensation provided to the directors for the Corporation’s most recently completed financial year. Name Fees Earned Option-based awards All other compensation Total David Henstridge Nil Michael Hudson Nil Robert G. Atkinson Nil Mark Saxon See Note(2) - - - Nick DeMare See Note(2) - - - NOTES: Figures represent the grant date fair value of the options.The Corporation used the Black-Scholes option pricing model for calculating such fair value, as such model is commonly used by junior public companies. Messrs. Saxon and DeMare are NEOs and their compensation is disclosed in the Summary Compensation Table above. -9- Outstanding Option-Based Awards The following table sets forth for each director all awards outstanding at the end of the most recently completed financial year, including awards granted before the most recently completed financial year. Option-based Awards Name Number of securities underlying unexercised options (#) Option exercise price Option expiration date Value of unexercised in-the-money options David Henstridge May 31, 2012 January 25, 2013 October 22, 2012 Michael Hudson October 22, 2012 Robert G. Atkinson May 31, 2012 January 25, 2013 October 22, 2012 NOTE: Value is calculated based on the difference between the exercise price of the option and the closing price of the Corporation’s common shares on the TSX Venture Exchange (the “Exchange”) on August 31, 2010, being the last trading day of the Corporation’s shares for the financial year, which was $1.21. Incentive Plan Awards – Value Vested or Earned During The Year The following table sets forth, for each director, other than those who are also NEOs of the Corporation, the value of all incentive plan awards vested during the year ended August31, 2010. Name Option-based awards - Value vested during the year Non-equity incentive plan compensation - Value earned during the year David Henstridge 28,000 Nil Michael Hudson 49,000 Nil Robert G. Atkinson 10,500 Nil A description of the significant terms of the Stock Option Plan is found under the heading “Particulars of Matters to be Acted Upon – Ratification of Stock Option Plan”. SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS The following table provides information regarding compensation plans under which securities of the Corporation are authorized for issuance to directors, officers, employees and consultants in effect as of the end of the fiscal year ended August31, 2010: -10- Plan Category Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a) Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (b) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c) Equity Compensation Plans Approved By Securityholders See Note (1) Equity Compensation Plans Not Approved By Securityholders N/A N/A N/A Total See Note (1) NOTE: The Corporation currently has in place a "rolling" stock option plan (the "Rolling Plan") whereby the maximum number of common shares that may be reserved for issuance pursuant to the Rolling Plan will not exceed 10% of the issued shares of the Corporation at the time of the stock option grant. See "Particulars of Other Matters to be Acted Upon BB Stock Option Plan" for further particulars of the Rolling Plan. INDEBTEDNESS OF DIRECTORS AND SENIOR OFFICERS OF THE CORPORATION No director or senior officer of the Corporation, proposed management nominee for election as a director of the Corporation or each associate or affiliate of any such director, senior officer or proposed nominee is or has been indebted to the Corporation or any of its subsidiaries at any time during the Corporation's last completed financial year, other than routine indebtedness. INTEREST OF INSIDERS IN MATERIAL TRANSACTIONS Other than transactions carried out in the normal course of business of the Corporation or any of its affiliates, none of the directors or senior officers of the Corporation, a proposed management nominee for election as a director of the Corporation, any shareholder beneficially owning shares carrying more than 10% of the voting rights attached to the shares of the Corporation nor an associate or affiliate of any of the foregoing persons had since September 1, 2009 (the commencement of the Corporation's last completed financial year) any material interest, direct or indirect, in any transactions which materially affected the Corporation or any of its subsidiaries or in any proposed transaction which has or would materially affect the Corporation or any of its subsidiaries. INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON Other than as set forth in this Information Circular, no director or senior officer of the Corporation nor any proposed nominee for election as a director of the Corporation, nor any associate or affiliate of any of the foregoing, has any material interest, directly or indirectly, by way of beneficial ownership of securities or otherwise, in any matter to be acted upon other than the election of directors or the appointment of auditors.Directors and senior officers may, however, be interested in the general authorization granted to the directors with respect to "Stock Options to Insiders" as detailed herein. MANAGEMENT CONTRACTS During the most recently completed financial year, no management functions of the Corporation were, to any substantial degree, performed by a person or company other than the directors or executive officers (or private companies controlled by them, either directly or indirectly) of the Corporation. -11- DISCLOSURE OF CORPORATE GOVERNANCE PRACTICES National Instrument 58-101 - Disclosure of Corporate Governance Practices ("NI58-101") requires issuers to disclose their governance practices in accordance with that instrument.The Corporation is a "venture issuer" within the meaning of NI 58-101.A discussion of the Corporation's governance practices within the context of NI 58-101 is set out below: Board of Directors The Corporation has three independent directors, namely:Messrs. David Henstridge, Michael Hudson and Robert G. Atkinson.The Corporation has two directors who are not independent because they are executive officers of the Corporation, namely:Mr. Mark Saxon, President, CEO and Mr. Nick DeMare, CFO. Directorships As of the date of this information circular, two of the directors of the Corporation are also serving as directors of other reporting issuers, details of which are as follows: Mark Saxon:Mawson Resources Limited. Nick DeMare:Aguila American Resources Ltd., Ava Resources Corp., Astral Mining Corporation, Batero Gold Corp., Blue Cove Capital Corp., Cliffmont Resources Ltd., East West Petroleum Corp., Enterprise Oilfield Group, Inc., GeoPetro Resources Company, GGL Diamond Corp., Golden Peaks Resources Ltd., Halo Resources Ltd., Hansa Resources Limited, Kola Mining Corp., Lariat Energy Ltd., Mawson Resources Limited, Mirasol Resources Ltd., Rochester Resources Ltd., Salazar Resources Limited, Tinka Resources Limited and Tumi Resources Limited. David Henstridge:Mawson Resources Limited, Tinka Resources Limited and Tumi Resources Limited. Michael Hudson:Mawson Resources Limited. Robert G. Atkinson:Hansa Resources Limited, Sprott Resource Lending Corp. and Spur Ventures Inc. Orientation and Continuing Education The CEO and/or the CFO are responsible for providing an orientation for new directors.Director orientation and on-going training will include presentations by senior management to familiarize directors with the Corporation's strategic plans, its significant financial, accounting and risk management issues, its compliance programs, its principal officers and its internal and independent auditors. Ethical Business Conduct The Corporation does not have a written code of ethical business conduct for its directors, officers and employees.Each director, officer and employee is expected to comply with relevant corporate and securities laws and, where applicable, the terms of their employment agreements. Nomination of Directors When a Board vacancy occurs or is contemplated, any director may make recommendations to the Board as to qualified individuals for nomination to the Board. In identifying new candidates, the directors will take into account the mix of director characteristics and diverse experiences, perspectives and skills appropriate for the Corporation at that time. -12- Compensation The Corporation's Compensation Committee, which currently comprises the Board as a whole, reviews the compensation of the directors and executive officers.The Compensation Committee also administers the Corporation's stock option plan. The Compensation Committee reviews and makes recommendations to the Board regarding the granting of stock options to directors and executive officers of the Corporation as well as compensation for executive officers of the Corporation as well as compensation for executive officers and directors fees, if any, from time to time.Executive officers and directors may be compensated in cash and/or equity for their expert advice and contribution towards the success of the Corporation.In addition to stock option grants, each independent director of the Corporation is paid $500 per month in their capacity as independent director.The form and amount of cash such compensation will be evaluated by the Compensation Committee, which will be guided by the following goals: (i) compensation should be commensurate with the time spent by executive officers and directors in meeting theirobligations and reflective of the compensation paid by companies similar in size and business to the Corporation; and (ii) the structure of the compensation should be simple, transparent and easy for shareholders to understand.Shareholders will be given the opportunity to vote on all new or substantially revised equity compensation plans for directors as required by regulatory policies. Other Board Committees The Board has no other standing committees. Assessments The Board of Directors of the Corporation does not conduct any formal evaluation of the performance and effectiveness of the members of the Board, the Board as a whole or any committee of the Board. AUDIT COMMITTEE The Audit Committee's Charter The following is the text of the Corporation's Audit Committee Charter: "Mandate The primary function of the audit committee (the "Committee") is to assist the Board of Directors in fulfilling its financial oversight responsibilities by reviewing the financial reports and other financial information provided by the Corporation to regulatory authorities and shareholders, the Corporation's systems of internal controls regarding finance and accounting and the Corporation's auditing, accounting and financial reporting processes. The Committee's primary duties and responsibilities are to: ! Serve as an independent and objective party to monitor the Corporation's financial reporting and internal control system and review the Corporation's financial statements. ! Review and appraise the performance of the Corporation's external auditors. ! Provide an open avenue of communication among the Corporation's auditors, financial and senior management and the Board of Directors. -13- Composition The Committee shall be comprised of three directors as determined by the Board of Directors, the majority of whom shall be free from any relationship that, in the opinion of the Board of Directors, would interfere with the exercise of his independent judgment as a member of the Committee. At least one member of the Committee shall have accounting or related financial management expertise. All members of the Committee that are not financially literate will work towards becoming financially literate to obtain a working familiarity with basic finance and accounting practices. For the purposes of the Audit Committee Charter, the definition of "financially literate" is the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can presumably be expected to be raised by the Corporation's financial statements. The members of the Committee shall be elected by the Board of Directors at its first meeting following the annual shareholders' meeting. Unless a Chair is elected by the full Board of Directors, the members of the Committee may designate a Chair by a majority vote of the full Committee membership. Meetings The Committee shall meet a least twice annually, or more frequently as circumstances dictate. As part of its job to foster open communication, the Committee will meet at least annually with the Chief Financial Officer and the external auditors in separate sessions. Responsibilities and Duties To fulfill its responsibilities and duties, the Committee shall: Documents/Reports Review (a) Review and update the Charter annually. (b) Review the Corporation's financial statements, MD&A and any annual and interim earnings, press releases before the Corporation publicly discloses this information and any reports or other financial information (including quarterly financial statements), which are submitted to any governmental body, or to the public, including any certification, report, opinion, or review rendered by the external auditors. External Auditors (a) Review annually, the performance of the external auditors who shall be ultimately accountable to the Board of Directors and the Committee as representatives of the shareholders of the Corporation. (b) Recommend to the Board of Directors the selection and, where applicable, the replacement of the external auditors nominated annually for shareholder approval. (c) Review with management and the external auditors the audit plan for the year-end financial statements and intended template for such statements. (d) Review and pre-approve all audit and audit-related services and the fees and other compensation related thereto, and any non-audit services, provided by the Corporation's external auditors. Provided the pre-approval of the non-audit services is presented to the Committee's first scheduled meeting following such approval such authority may be delegated by the Committee to one or more independent members of the Committee. Financial Reporting Processes -14- (a) In consultation with the external auditors, review with management the integrity of the Corporation's financial reporting process, both internal and external. (b) Consider the external auditors' judgments about the quality and appropriateness of the Corporation's accounting principles as applied in its financial reporting. (c) Consider and approve, if appropriate, changes to the Corporation's auditing and accounting principles and practices as suggested by the external auditors and management. (d) Following completion of the annual audit, review separately with management and the external auditors any significant difficulties encountered during the course of the audit, including any restrictions on the scope of work or access to required information. (e) Review any significant disagreement among management and the external auditors in connection with the preparation of the financial statements. (f) Review with the external auditors and management the extent to which changes and improvements in financial or accounting practices have been implemented. (g) Review any complaints or concerns about any questionable accounting, internal accounting controls or auditing matters. (h) Review certification process. (i) Establish a procedure for the confidential, anonymous submission by employees of the Corporation of concerns regarding questionable accounting or auditing matters. Other Review any related-party transactions." Composition of the Audit Committee The following are the members of the Committee (1): Independent (1) Financially Literate David Henstridge Y Y Nick DeMare N Y Robert G. Atkinson Y Y NOTE: As defined by Multilateral Instrument 52-110 ("MI 52-110"). The Corporation is relying on the exemption provided under Section 6.1 of MI52-110. Audit Committee Oversight At no time since the commencement of the Corporation's most recently completed financial year was a recommendation of the Committee to nominate or compensate an external auditor not adopted by the Board of Directors. -15- Reliance on Certain Exemptions At no time since the commencement of the Corporation's most recently completed financial year has the Corporation relied on the exemption in Section 2.4 of MI 52-110 (De Minimis Non-audit Services), or an exemption from MI 52-110, in whole or in part, granted under Part 8 of Multilateral Instrument 52-110. Pre-Approval Policies and Procedures The Committee has adopted specific policies and procedures for the engagement of non-audit services as described above under the heading "External Auditors". External Auditor Service Fees (By Category) The aggregate fees billed by the Corporation's external auditors in each of the last two fiscal years for audit fees are as follows: Financial Year Ending Audit Fees Audit Related Fees Tax Fees All Other Fees August 31, 2010 Nil August 31, 2009(1) N/A N/A N/A N/a NOTE: The Corporation was formed on October 22, 2009 through the amalgamation of Ausex Capital Corp., Lumex Capital Corp., both public companies, and Tasman Metals Ltd., a private company prior to the amalgamation. PARTICULARS OF OTHER MATTERS TO BE ACTED UPON Ratification of Approved Stock Option Plan In 2009, the Corporation adopted a rolling stock option plan (the “Plan”), which makes a total of 10% of the issued and outstanding shares of the Corporation available for issuance thereunder. The Plan was approved by the shareholders at a meeting held on September 8, 2009 and by the Exchange on November 2, 2009.In accordance with the policies of the Exchange, a rolling plan, which is the type of plan the Corporation has adopted, requires the approval of the shareholders of the Corporation on an annual basis.Accordingly, the Corporation requests that the shareholders ratify and approve the Plan. The purpose of the Plan is to provide the Corporation with a share related mechanism to enable it to attract and retain qualified directors, officers, employees and consultants, promote a proprietary interest in the Corporation and its affiliates among its employees, officers, directors and consultants, and stimulate the active interest of such persons in the development and financial success of the Corporation and its affiliates. The Plan provides that it is solely within the discretion of the Board to determine who should receive options and in what amounts. The Board may issue a majority of the options to insiders of the Corporation. However, the Plan provides that in no case will the Plan or any existing share compensation arrangement of the Corporation result, at any time, in the issuance to any option holder, within a one year period, of a number of shares exceeding 5% of the Corporation’s issued and outstanding share capital, unless disinterested shareholders approval is obtained by the Corporation. The following information is intended to be a brief description of the Plan and is qualified in its entirety by the full text of the Plan, which is available for review by any shareholder up until the day preceding the meeting at the Corporation’s head office at Suite 1305, 1090 West Georgia Street, Vancouver, British Columbia, and will be available at the meeting: (a) The maximum number of common shares that may be issued upon exercise of stock options granted under the Plan will be that number of Shares which is 10% of the issued and outstanding -16- shares of the Corporation. Any outstanding options will form a part of the foregoing 10%.The exercise price of the stock options, as determined by the Board in its sole discretion, shall not be less than the closing price of the Corporation’s shares traded through the facilities of the TSXV on the date prior to the date of grant, less allowable discounts, in accordance with the policies of the TSXV or, if the shares are no longer listed for trading on the TSXV, then such other exchange or quotation system on which the shares are listed and quoted for trading. (b) The Board may not grant options to any one person which will exceed 5% of the issued and outstanding shares of the Corporation in any 12 month period, unless disinterested shareholder approval is obtained. (c) Upon expiry of the option, or in the event an option is otherwise terminated for any reason, without having been exercised in full, the number of shares in respect of the expired or terminated option shall again be available for the purposes of the Plan. All options granted under the Plan may not have an expiry date exceeding ten years from the date on which the Board grant and announce the granting of the option. (d) If the option holder ceases to be a director of the Corporation or ceases to be employed by the Corporation (other than by reason of death), as the case may be, then the option granted shall expire within 90 days following the date that the option holder ceases to be a director or ceases to be employed by the Corporation, or for those holders engaged in providing investor relations services, the options granted shall expire within 30 days following the date that the option holder ceases to provide such investor relations services, unless the Board or Committee, at its own discretion, extends the expiry of the Option. The Plan may be administered by the Corporation’s secretary or such other officer or employee as may be designated by the Board from time to time. Upon the approval of the Plan by the Corporation’s shareholders, shareholder approval will not be required or sought on a case-by-case basis for the purpose of the granting of options to and the exercise of options by employees of the Corporation regularly employed on a full-time or part-time basis, directors of the Corporation and persons who perform services for the Corporation on an ongoing basis or who have provided, or are expected to provide, services of value to the Corporation. The TSX Venture Policies require that the Plan be approved by the affirmative vote of a majority of the votes cast at the Meeting.Accordingly, the Corporation requests that the shareholders pass the following resolution: "RESOLVED, AS AN ORDINARY RESOLUTION, THAT: (a) the Plan, in the form approved by the shareholders of the Corporation at the previous shareholders’ meeting held on September 8, 2009, with or without amendments as may be required or approved by the Exchange, is hereby ratified, confirmed and approved; (b) the Corporation is authorized to grant stock options pursuant and subject to the terms and conditions of the Plan entitling all of the optionholders in aggregate to purchase up to such number of common shares of the Corporation as is equal to 10% of the number of common shares of the Corporation issued and outstanding on the applicable grant date; and (c) any one or of the directors or officers of the Corporation be authorized and directed to perform all such acts, deeds and things and execute, under the seal of the Corporation or otherwise, all such documents and other writings, including treasury orders, stock exchange and securities commission forms, as may be required to give effect to the true intent of this resolution." -17- OTHER MATTERS Management of the Corporation knows of no other matters to come before the Meeting other than those referred to in the Notice of Meeting accompanying this Information Circular.However, if any other matters properly come before the Meeting, it is the intention of the persons named in the form of proxy accompanying this Information Circular to vote the same in accordance with their best judgment of such matters. ADDITIONAL INFORMATION Additional information relating to the Corporation is on SEDAR at www.sedar.com.Shareholders may contact the Corporation at #1305 - 1090 West Georgia Street, Vancouver, BC, V6E 3V7 or by telephone at 604-685-9316 to request copies of the Corporation's financial statements and MD&A for its most recently completed financial year.Financial information is provided in the Corporation's comparative financial statements and MD&A for its most recently completed financial year.
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POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned as trustees and/or officers of NATIONWIDE MUTUAL FUNDS (the “Trust”), a Delaware statutory trust, and the Trust, hereby constitutes and appoints James Bernstein, Eric E. Miller and Allan J. Oster and each of them with power to act without the others, his or her attorney, with full power of substitution and resubstitution, for and in his or her name, place and stead, in any and all capacities, to approve, and sign such Registration Statement on Form N-14 under the Securities Act of 1933, as amended, and the Investment Company Act of 1940, as amended, of the Trust as it relates to the reorganization of the Nationwide Short Duration Bond Fund into the Nationwide HighMark Short Term Bond Fund, each a series of the Trust, and any and all amendments thereto, with power to affix the corporate seal of said Trust thereto and to attest said seal and to file the same, with all exhibits thereto and other documents in connection therewith, with the U.S. Securities and Exchange Commission, hereby granting unto said attorneys, and each of them, full power and authority to do and perform all and every act and thing requisite to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming that which said attorneys, or any of them, may lawfully do or cause to be done by virtue hereof.This instrument may be executed in one or more counterparts. IN WITNESS WHEREOF, the undersigned has herewith set his or her name and seal as of this 11th day of June 2014. /s/Charles E. Allen Charles E. Allen, Trustee /s/Barbara L. Hennigar Barbara L. Hennigar, Trustee /s/Paula H.J. Cholmondeley Paula H.J. Cholmondeley, Trustee /s/Barbara I. Jacobs Barbara I. Jacobs, Trustee /s/Douglas F. Kridler Douglas F. Kridler, Trustee /s/Phyllis Kay Dryden Phyllis Kay Dryden, Trustee /s/Keith F. Karlawish Keith F. Karlawish, Trustee /s/ David C. Wetmore David C. Wetmore, Trustee /s/Carol A. Kosel Carol A. Kosel, Trustee /s/ Lydia Micheaux Marshall Lydia Micheaux Marshall, Trustee
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Exhibit 10.3
EXECUTION VERSION
CANADIAN GUARANTEE AND COLLATERAL AGREEMENT
made by
UNISOURCE CANADA, INC.
and
the Canadian Guarantors,
in favour of
as Administrative Agent and as ABL Collateral Agent
Dated as of July 1, 2014
TABLE OF CONTENTS
Page
SECTION 1
DEFINED TERMS 2
1.1
Definitions 2
1.2
Other Definitional Provisions 9
SECTION 2
GUARANTEE 10
2.1
Guarantee 10
2.2
Right of Contribution 11
2.3
No Subrogation 11
2.4
Amendments, etc. with Respect to the Obligations 12
2.5
Guarantee Absolute and Unconditional 12
2.6
Reinstatement 14
2.7
Payments 14
SECTION 3
GRANT OF SECURITY INTEREST 14
3.1
Grant 14
3.2
Pledged Collateral 15
3.3
Certain Limited Exceptions 15
SECTION 4
REPRESENTATIONS AND WARRANTIES 18
4.1
Representations and Warranties of Each Canadian Guarantor 18
4.2
Representations and Warranties of Each Canadian Grantor 19
4.3
Representations and Warranties of Each Canadian Pledgor 22
4.4
Representations and Warranties of Each Canadian Granting Party 23
SECTION 5
COVENANTS 23
5.1
Covenants of Each Canadian Guarantor 23
5.2
Covenants of Each Canadian Grantor 23
5.3
Covenants of Each Canadian Pledgor 27
SECTION 6
REMEDIAL PROVISIONS 29
6.1
Certain Matters Relating to Accounts 29
6.2
Communications with Obligors; Canadian Grantors Remain Liable 30
6.3
Pledged Stock 31
6.4
Proceeds to Be Turned Over to the ABL Collateral Agent 32
6.5
Application of Proceeds 32
6.6
PPSA and Other Remedies 32
6.7
Registration Rights 34
6.8
Waiver; Deficiency 35
SECTION 7
THE ABL COLLATERAL AGENT 35
7.1
ABL Collateral Agent’s Appointment as Attorney-in-Fact, etc. 35
7.2
Duty of ABL Collateral Agent 37
7.3
Financing Statements 37
7.4
Authority of ABL Collateral Agent 38
7.5
Right of Inspection 38
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Page
SECTION 8
NON-LENDER SECURED PARTIES 38
8.1
Rights to Collateral 38
8.2
Appointment of Agent 39
8.3
Waiver of Claims 40
8.4
Designation of Non-Lender Secured Parties 40
SECTION 9
MISCELLANEOUS 40
9.1
Amendments in Writing 40
9.2
Notices 41
9.3
No Waiver by Course of Conduct; Cumulative Remedies 41
9.4
Enforcement Expenses; Indemnification 41
9.5
Successors and Assigns 42
9.6
Set-Off 42
9.7
Counterparts 42
9.8
Severability 42
9.9
Section Headings 42
9.10
Integration 43
9.11
GOVERNING LAW 43
9.12
Submission to Jurisdiction; Waivers 43
9.13
Acknowledgments 44
9.14
WAIVER OF JURY TRIAL 44
9.15
Additional Canadian Granting Parties 44
9.16
Releases 44
9.17
Judgment 46
9.18
Canadian Amalgamation 46
9.19
Language 46
9.20
No Implicit Subordination 47
9.21
Paramountcy 47
SCHEDULES
1
Notice Addresses of Canadian Granting Parties
2
Pledged Securities
3
Perfection Matters
4A
Financing Statement Jurisdictions
4B
Granting Party Information
5
Intellectual Property
ANNEXES
1
Acknowledgment and Consent of Issuers who are not Canadian Granting
Parties
2
Assumption Agreement
3
Supplemental Agreement
-ii-
CANADIAN GUARANTEE AND COLLATERAL AGREEMENT, dated as of July 1, 2014, made by
UNISOURCE CANADA, INC., a Canadian amalgamated corporation (the “Canadian
Borrower”), and certain Canadian Subsidiaries of the Parent Borrower (as
described below) from time to time party hereto (the “Canadian Guarantors”), in
favour of BANK OF AMERICA, N.A., as ABL Collateral Agent (in such capacity, the
“ABL Collateral Agent”) and administrative agent (in such capacity, the
“Administrative Agent”) for the banks and other financial institutions from time
to time party to the ABL Credit Agreement (as described below).
WHEREAS, pursuant to that certain ABL Credit Agreement, dated as of the date
hereof (as amended, waived, supplemented or otherwise modified from time to
time, together with any agreement extending the maturity of, or restructuring,
refunding, refinancing or increasing the Indebtedness under such agreement or
any successor agreements, the “ABL Credit Agreement”), among Veritiv Corporation
(“Holding”), xpedx Intermediate, LLC (the “Parent Borrower”), xpedx, LLC (the
“OpCo Borrower”), the several Subsidiary Borrowers that are or may become
parties thereto, including the Canadian Borrower (together with Holding, the
Parent Borrower and the OpCo Borrower, the “Borrowers”), the Administrative
Agent and the ABL Collateral Agent and the other parties party thereto, the
Lenders (as defined in the ABL Credit Agreement) have severally agreed to make
conditions set forth therein;
WHEREAS, the Canadian Borrower is a member of an affiliated group of companies
that includes the Canadian Borrower and the Parent Borrower’s other Canadian
Subsidiaries that are party hereto and any other Canadian Subsidiaries of the
Parent Borrower (other than any Excluded Subsidiary (as defined in the ABL
Credit Agreement)) that becomes a party hereto from time to time after the date
hereof (such Canadian Subsidiaries together with the Canadian Borrower,
collectively, the “Canadian Granting Parties”);
WHEREAS, the proceeds of the extensions of credit under the ABL Credit Agreement
will be used in part to enable the Canadian Borrower to make valuable transfers
to one or more of the other Canadian Granting Parties in connection with the
operation of their respective businesses;
WHEREAS, the Canadian Borrower and the other Canadian Granting Parties are
engaged in related businesses, and each such Canadian Granting Party will derive
substantial direct and indirect benefit from the making of the extensions of
credit under the ABL Credit Agreement; and
WHEREAS, it is a condition to the obligation of the Lenders to make their
respective extensions of credit under the ABL Credit Agreement that the Canadian
Granting Parties shall execute and deliver this Agreement to the ABL Collateral
Agent for the benefit of the Secured Parties.
Administrative Agent, the ABL Collateral Agent and the Lenders to enter into the
ABL Credit Agreement and to induce the Lenders to make their respective
extensions of credit to the Canadian Borrower thereunder, each Canadian Granting
Party hereby agrees with the Administrative Agent and the ABL Collateral Agent,
for the benefit of the Secured Parties (as defined herein), as follows:
SECTION 1 DEFINED TERMS
1.1 Definitions.
(a) Unless otherwise defined herein, terms defined in the ABL Credit Agreement
and used herein shall have the meanings given to them in the ABL Credit
Agreement, and the following terms that are defined in the PPSA (as defined
below and in effect on the date hereof) are used herein as so defined:
Certificated Security, Chattel Paper, Consumer Goods, Document of Title,
Equipment, Goods, Intangibles, Investment Property, Money, Proceeds, Securities
Account, Securities Intermediary, Security, Security Certificate, Security
Entitlement and Uncertificated Security.
(b) The following terms shall have the following meanings:
“ABL Collateral Agent”: as defined in the preamble hereto.
“ABL Credit Agreement”: as defined in the recitals hereto.
“Accounts”: all accounts (as defined in the PPSA) of each Canadian Grantor,
including, without limitation, all Accounts (as defined in the ABL Credit
Agreement) and Accounts Receivable of such Canadian Grantor.
“Accounts Receivable”: any right to payment, whether or not earned by
performance, for goods sold, leased, licensed, assigned or otherwise disposed,
or for services rendered or to be rendered, which is not evidenced by an
Instrument or Chattel Paper.
“Additional Agent”: any administrative agent, collateral agent, security agent,
trustee or other representative, in each case including any successor thereto,
for or of any one or more secured parties in respect of any Incurrence of
Indebtedness (including under subsection 8.1(a) of the ABL Credit Agreement)
that is permitted by the ABL Credit Agreement to be secured by a Lien on the
Security Collateral.
“Adjusted Net Worth”: of any Canadian Guarantor at any time, the greater of
(x) $0 and (y) the amount by which the fair saleable value of such Canadian
Guarantor’s assets on the date of the respective payment hereunder exceeds its
debts and other liabilities (including contingent liabilities, but without
giving effect to any of its obligations under this Agreement or any other Loan
Document).
“Administrative Agent”: as defined in the preamble hereto.
“Agreement”: this Canadian Guarantee and Collateral Agreement, as the same may
be amended, supplemented, waived or otherwise modified from time to time.
“Applicable Law”: as defined in subsection 9.8.
“Bank Products Affiliate”: shall mean any Person who (i) has entered into a Bank
Products Agreement with a Canadian Grantor with the obligations of such Canadian
Grantor thereunder being secured by one or more Loan Documents, (ii) was an
Agent, a Lender or an Affiliate or branch of a Lender on the date hereof, or at
the time of entry into such Bank Products Agreement, or on the date hereof, or
at the time of the designation referred to in the following clause (iii) and
(iii) has been designated by the Parent Borrower for and on behalf of the
Canadian Borrower in accordance with subsection 8.4.
-2-
“Bank Products Agreement”: any agreement pursuant to which a bank or other
financial institution agrees to provide (i) treasury services, (ii) credit card,
merchant card, purchasing card or stored value card services (including, without
limitation, processing and other administrative services with respect thereto),
(iii) cash management services (including, without limitation, controlled
disbursements, credit cards, credit card processing services, automated
clearinghouse transactions, return items, netting, overdrafts, depository,
lockbox, stop payment, electronic funds transfer, information reporting, wire
transfer and interstate depository network services) and (iv) other similar
banking products or services as may be requested by any Canadian Grantor (other
than letters of credit and other than loans except indebtedness arising from
services described in clauses (i) through (iii) of this definition).
“Bankruptcy Case”: (i) Holding or any of its Subsidiaries commencing any case,
proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, conservatorship, arrangement or relief of debtors, seeking to
have an order for relief entered with respect to it, or seeking to adjudicate it
a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
to it or its debts, or (B) seeking appointment of a receiver, trustee,
custodian, conservator, interim receiver, monitor or other similar official for
it or for all or any substantial part of its assets, or Holding or any of its
Subsidiaries making a general assignment for the benefit of its creditors; or
(ii) there being commenced against Holding or any of its Subsidiaries any case,
proceeding or other action of a nature referred to in clause (i) above which
(A) results in the entry of an order for relief or any such adjudication or
appointment or (B) remains undismissed, undischarged or unbonded for a period of
60 days.
“Borrower”: as defined in the recitals hereto.
“Borrower Obligations”: with respect to the Canadian Borrower, the collective
reference to all obligations and liabilities of the Canadian Borrower in respect
of the unpaid principal of and interest on (including, without limitation,
interest and fees accruing after the maturity of the Canadian Facility Revolving
Credit Loans and Reimbursement Obligations with respect to Canadian Facility
Letters of Credit and interest and fees accruing after (or that would accrue but
for) the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to the Canadian
Borrower, whether or not a claim for post-filing or post-petition interest or
fees is allowed in such proceeding) the Canadian Facility Revolving Credit Loans
and Reimbursement Obligations with respect to Canadian Facility Letters of
Credit, and all other obligations and liabilities of the Canadian Borrower to
the Secured Parties, 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, the ABL Credit Agreement, the Canadian Facility
Revolving Credit Loans, the Canadian Facility Letters of Credit, this Agreement,
the other Loan Documents, any Hedging Agreement entered into with any Hedging
Affiliate or any Bank Products Agreement entered into with any Bank Products
Affiliate, in each case whether on account of principal, interest, reimbursement
obligations, amounts payable in connection with any such Bank Products Agreement
or termination of any transaction entered into pursuant to any such Interest
Rate Agreement, fees, indemnities, costs, expenses or otherwise (including,
without limitation, all reasonable fees, expenses and disbursements of counsel
to the Administrative Agent or any other Secured Party that are required to be
paid by the Canadian Borrower pursuant to the terms of the ABL Credit Agreement
or any other Loan Document). With respect to any Canadian Guarantor, if and to
the extent, under the Commodity Exchange Act or any rule, regulation or order of
the CFTC (or the application or official interpretation of any thereof), all or
a portion of the guarantee of such Canadian Guarantor of, or the grant by such
Canadian Guarantor of a security interest for, the obligation (the “Excluded
Borrower Obligation”) to pay or perform under any agreement, contract or
transaction that constitutes a “swap” within the meaning of section 1a(47) of
the Commodity Exchange Act (or the analogous term or section in any amended or
successor statute) is or becomes illegal, the Borrower Obligations guaranteed by
such Canadian Guarantor shall not include any such Excluded Borrower Obligation.
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“Canadian Borrower”: as defined in the preamble hereto.
“Canadian Granting Parties”: as defined in the recitals hereto.
“Canadian Grantor”: the Canadian Borrower and any other Canadian Subsidiary of
the Parent Borrower (other than any Excluded Subsidiary) that becomes a party
hereto from time to time after the date hereof.
“Canadian Guarantors”: the collective reference to each Canadian Subsidiary from
time to time party hereto.
“Canadian Pledgor”: Each Canadian Granting Party (with respect to Pledged
Securities held by such Canadian Granting Party and all other Pledged Collateral
of such Canadian Granting Party).
“CFTC”: the Commodity Futures Trading Commission or any successor to the
Commodity Futures Trading Commission.
“Collateral”: as defined in subsection 3.1; provided that, for purposes of
subsection 6.5 and Section 8, “Collateral” shall have the meaning assigned to
such term in the ABL Credit Agreement.
“Collateral Account Bank”: any bank or an Affiliate or branch thereof which at
all times is the ABL Collateral Agent or a Lender or an Affiliate thereof as
selected by the relevant Canadian Grantor and consented to in writing by the ABL
Collateral Agent (such consent not to be unreasonably withheld or delayed).
“Collateral Proceeds Account”: a non-interest bearing cash collateral account
established and maintained by the relevant Canadian Grantor at an office of the
Collateral Account Bank in the name, and in the sole dominion and control of,
the ABL Collateral Agent for the benefit of the Secured Parties.
“Commitments”: collective reference to (i) each Canadian Facility Lender’s
obligation to make Canadian Facility Revolving Credit Loans pursuant to the ABL
Credit Agreement and (ii) the obligation of the Canadian Facility Issuing Lender
to issue Canadian Facility Letters of Credit to the Canadian Borrower pursuant
to subsection 3.1 of the ABL Credit Agreement.
“Concentration Account”: as defined in the ABL Credit Agreement.
“Contracts”: with respect to any Canadian Grantor, all contracts, agreements,
instruments and indentures in any form and portions thereof, to which such
Canadian Grantor is a party or under which such Canadian Grantor or any property
of such Canadian Grantor is subject, as the same may from time to time be
amended, supplemented, waived or otherwise modified, and all rights of such
Canadian Grantor thereunder, including, without limitation, (i) all rights of
such Canadian Grantor to receive moneys due and to become due to it thereunder
or in connection therewith, (ii) all rights of such Canadian Grantor to damages
arising thereunder and (iii) all rights of such Canadian Grantor to perform and
to exercise all remedies thereunder.
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“Copyright Licenses”: with respect to any Canadian Grantor, all Canadian written
license agreements of such Canadian Grantor providing for the grant by or to
such Canadian Grantor of any right under any Copyright of such Canadian Grantor,
other than agreements with any Person that is an Affiliate or a Subsidiary of
the Parent Borrower or such Canadian Grantor, including, without limitation, any
license agreements listed on Schedule 5, subject, in each case, to the terms of
such license agreements, and the right to prepare for sale, sell and advertise
for sale, all Inventory now or hereafter covered by such licenses.
“Copyrights”: with respect to any Canadian Grantor, all of such Canadian
Grantor’s right, title and interest in and to all Canadian copyrights, whether
or not the underlying works of authorship have been published or registered, all
Canadian and United States copyright registrations and copyright applications,
including, without limitation, any copyright registrations and copyright
applications listed on Schedule 5, and (i) all renewals thereof, (ii) all
income, royalties, damages and payments now and hereafter due and/or payable
with respect thereto, including, without limitation, payments under all licenses
entered into in connection therewith, and damages and payments for past or
future infringements thereof and (iii) the right to sue or otherwise recover for
past, present and future infringements and misappropriations thereof.
“Deposit Account”: any demand, time, savings, passbook or like account now or
hereafter maintained by any Canadian Grantor with a depositary institution, and,
in any event, shall include, but shall not be limited to all DDAs, all
Concentration Accounts and the Canadian Core Concentration Account.
“Excluded Assets”: as defined in subsection 3.3.
“first priority”: with respect to any Lien purported to be created by this
Agreement, that such Lien is the most senior Lien to which such Collateral is
subject.
“Foreign Intellectual Property”: any right, title or interest in or to any
copyrights, copyright licenses, patents, patent applications, patent licenses,
trade secrets, trade secret licenses, trade-marks, service marks, trade-mark and
service mark applications, trade names, trade dress, trade-mark licenses,
technology, know-how and processes or any other intellectual property governed
by or arising or existing under, pursuant to or by virtue of the laws of any
jurisdiction other than Canada or any province, territory and other political
subdivision thereof.
“Foreign Subsidiary”: for the purposes of this Agreement, (i) any Restricted
Subsidiary of the Parent Borrower that is not organized under the laws of
Canada, including all provinces, territories and political subdivisions thereof
and (ii) any Foreign Subsidiary Holdco.
“Guarantor Obligations”: with respect to any Canadian Guarantor, the collective
reference to (i) the Obligations guaranteed by such Canadian Guarantor pursuant
to Section 2 and (ii) all obligations and liabilities of such Canadian Guarantor
that may arise under or in connection with this Agreement or any other Loan
Document to which such Canadian Guarantor is a party, any Hedging Agreement
entered into with any Hedging Affiliate or any Bank Products Agreement entered
into with any Bank Products Affiliate, in each case whether on account of
guarantee obligations, reimbursement obligations, fees, indemnities, costs,
expenses or otherwise (including, without limitation, all reasonable fees,
expenses and disbursements of counsel to the Administrative Agent or to any
other Secured Party that are required to be paid by such Canadian Guarantor
pursuant to the terms of this Agreement or any other Loan Document and interest
and fees accruing after (or that would accrue but for) the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, relating to such Canadian Guarantor, whether or not a claim for
post-filing or post-petition interest or fees is allowed in such proceeding).
With respect to any Canadian Guarantor, if and to the extent, under the
Commodity Exchange Act or any rule, regulation or order of the CFTC (or the
application or official interpretation of any thereof),
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all or a portion of the guarantee of such Canadian Guarantor of, or the grant by
such Canadian Guarantor of a security interest for, the obligation (together
with the Excluded Borrower Obligation, the “Excluded Obligation”) to pay or
within the meaning of section 1a(47) of the Commodity Exchange Act (or the
analogous term or section in any amended or successor statute) is or becomes
illegal, the Guarantor Obligations of such Canadian Guarantor shall not include
any such Excluded Obligation.
“Hedging Affiliate”: any Person who (i) has entered into a Hedging Agreement
with any Canadian Grantor with the obligations of such Canadian Grantor
thereunder being secured by one or more Loan Documents, (ii) was an Agent, a
Lender or an Affiliate of a Lender on the date hereof, or at the time of entry
into such Agreement, or at the time of the designation referred to in the
following clause (iii), and (iii) has been designated by the Parent Borrower for
and on behalf of the Canadian Borrower in accordance with subsection 8.4.
“Hedging Agreement”: any Interest Rate Agreement, Commodities Agreement,
Currency Agreement or any other credit or equity swap, collar, cap, floor or
forward rate agreement, or other agreement or arrangement designed to protect
against fluctuations in interest rates or currency, commodity, credit or equity
values or creditworthiness (including, without limitation, any option with
respect to any of the foregoing and any combination of the foregoing agreements
or arrangements), and any confirmation executed in connection with any such
agreement or arrangement.
“Industrial Design Licenses”: with respect to any Canadian Grantor, all written
agreements of such Canadian Grantor providing for the grant by or to such
Canadian Grantor of any right under any Industrial Design, other than agreements
with any Person that is an Affiliate or a Subsidiary of the Parent Borrower or
such Canadian Grantor, including, without limitation, the license agreements
listed on Schedule 5, subject, in each case to the terms of such license
agreements, and the right to prepare for sale, sell and advertise for sale, all
Inventory now or hereafter covered by such licenses.
“Industrial Designs”: with respect to any Canadian Grantor, all of such Canadian
Grantor’s right, title and interest in and to (a) all industrial designs,
including, without limitation all industrial designs identified on Schedule 5
and all renewals and extensions thereof, (b) all registrations and recordings
thereof and all applications that have been or shall be made or filed in Canada
or any other country or political subdivision thereof and all records thereof
and all reissues, extensions or renewals thereof, and (c) all Canadian common
law and other rights in the above.
“Instruments”: as defined in the PPSA but excluding Pledged Securities.
“Intellectual Property”: with respect to any Canadian Grantor, the collective
reference to such Canadian Grantor’s Copyrights, Copyright Licenses, Patents,
Patent Licenses, Trade Secrets, Trade Secret Licenses, Trade-marks, Trade-mark
Licenses Industrial Designs and Industrial Design Licenses.
“Intercompany Note”: with respect to any Canadian Grantor, any promissory note
in a principal amount in excess of $5,000,000 evidencing loans made by such
Canadian Grantor to the Parent Borrower or any of its Subsidiaries.
“Inventory”: with respect to any Canadian Grantor, all inventory (as defined in
the PPSA) of such Canadian Grantor, including, without limitation, all Inventory
(as defined in the ABL Credit Agreement) of such Canadian Grantor.
“Issuer”: as defined in the STA.
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“Lender Secured Parties”: the collective reference to (i) the Administrative
Agent, the ABL Collateral Agent and each Other Representative, (ii) the Canadian
Facility Lenders and the Canadian Facility Issuing Lender, and (iii) each of
their respective successors and assigns and their permitted transferees and
endorsees.
“Non-Lender Secured Parties”: the collective reference to all Bank Products
Affiliates and Hedging Affiliates and their respective successors, assigns,
transferees and replacements thereof, in each case in their capacity as such.
“Obligations”: (i) in the case of the Canadian Borrower, its Borrower
Obligations and (ii) in the case of each Canadian Guarantor, its Guarantor
Obligations.
“Parent Borrower”: as defined in the recitals hereto.
“Patent Licenses”: with respect to any Canadian Grantor, all Canadian written
such Canadian Grantor of any right under any Patent, patent application, or
patentable invention other than agreements with any Person who is an Affiliate
or a Subsidiary of the Parent Borrower or such Canadian Grantor, including,
without limitation, the license agreements listed on Schedule 5, subject, in
each case, to the terms of such license agreements, and the right to prepare for
sale, sell and advertise for sale, all Inventory now or hereafter covered by
such licenses.
“Patents”: with respect to any Canadian Grantor, all of such Canadian Grantor’s
right, title and interest in and to all Canadian patents, patent applications
and patentable inventions and all reissues and extensions thereof, including,
without limitation, all patents and patent applications identified in Schedule
5, and including, without limitation, (i) all inventions and improvements
described and claimed therein, (ii) the right to sue or otherwise recover for
any and all past, present and future infringements and misappropriations
thereof, (iii) all income, royalties, damages and other payments now and
hereafter due and/or payable with respect thereto (including, without
limitation, payments under all licenses entered into in connection therewith,
and damages and payments for past, present or future infringements thereof), and
(iv) all other rights corresponding thereto in Canada and all reissues,
divisions, continuations, continuations-in-part, substitutes, renewals, and
extensions thereof, all improvements thereon, and all other rights of any kind
whatsoever of such Canadian Grantor accruing thereunder or pertaining thereto.
“Pledged Collateral”: as to any Canadian Pledgor, the Pledged Securities now
owned or at any time hereafter acquired by such Canadian Pledgor, and any
Proceeds thereof.
“Pledged Notes”: with respect to any Canadian Pledgor, all Intercompany Notes at
any time issued to, or held or owned by, such Canadian Pledgor.
“Pledged Securities”: the collective reference to the Pledged Notes and the
Pledged Stock.
“Pledged Stock”: with respect to any Canadian Pledgor, the shares of Capital
Stock listed on Schedule 2 as held by such Canadian Pledgor, together with any
other shares of Capital Stock of any Subsidiary of such Canadian Pledgor
required to be pledged by such Canadian Pledgor pursuant to subsection 7.9 of
the ABL Credit Agreement, as well as any other shares, stock, unit or other
similar certificates, options or rights of any nature whatsoever in respect of
any Capital Stock of any Issuer that may be issued or granted to, or held by,
such Canadian Pledgor while this Agreement is in effect; provided that in no
event shall there be pledged, nor shall any Canadian Pledgor be required to
pledge, directly or indirectly, (i) any of the Capital Stock of a Foreign
Subsidiary, (ii) de minimis shares of a Foreign Subsidiary held by
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any Canadian Pledgor as a nominee or in a similar capacity, (iii) any Capital
Stock of any Captive Insurance Subsidiary, (iv) Capital Stock of any Subsidiary
that is not a Loan Party, or of any joint venture, in each case that is
prohibited (for so long as such restriction or any replacement or renewal
thereof is in effect) by any applicable Contractual Obligation or Requirement of
Law from being pledged to secure the Obligations or that would require
governmental (including regulatory) consent, approval, license or authorization
to be pledged unless such consent, approval, license or authorization has been
received and (v) without duplication, any Excluded Assets.
“PPSA”: the Personal Property Security Act (Ontario), as such legislation may be
amended, renamed or replaced from time to time, and includes all regulations
from time to time made under such legislation, provided that, if perfection or
the effect of perfection or non-perfection or the priority of any Lien created
hereunder on the Collateral is governed by the personal property security
legislation or other applicable legislation with respect to personal property
security as in effect in a jurisdiction other than Ontario, “PPSA” means the
Personal Property Security Act, or the Civil Code of Quebec, or such other
applicable legislation as in effect from time to time in such other jurisdiction
for purposes of the provisions hereof relating to such perfection, effect of
“Restrictive Agreements”: as defined in subsection 3.3(a).
“Secured Parties”: the collective reference to the Lender Secured Parties and
the Non-Lender Secured Parties.
“Security Collateral”: with respect to any Canadian Granting Party,
collectively, the Collateral (if any) and the Pledged Collateral (if any) of
such Canadian Granting Party.
“Specified Assets”: as defined in subsection 4.2.2(b).
“STA”: the Securities Transfer Act, 2006 (Ontario), as such legislation may be
from time to time made under such legislation; provided that, if perfection or
hereunder on the Collateral that is Investment Property is governed by the laws
in effect in any province or territory of Canada other than Ontario in which
there is in force legislation substantially the same as the Securities Transfer
Act, 2006 (Ontario) (an “Other STA Province”), then “STA” shall mean such other
legislation as in effect from time to time in such Other STA Province for
purposes of the provisions hereof referring to or incorporating by reference
provisions of the STA.
“Trade Secret Licenses”: with respect to any Canadian Grantor, all Canadian
written license agreements of such Canadian Grantor providing for the grant by
or to such Canadian Grantor of any right under any Trade Secrets, including,
without limitation, know-how, processes, formulae, compositions, designs, and
confidential business and technical information, and all rights of any kind
whatsoever accruing thereunder or pertaining thereto, other than agreements with
any Person that is an Affiliate or a Subsidiary of the Parent Borrower or such
Canadian Grantor, subject, in each case, to the terms of such license
“Trade Secrets”: with respect to any Canadian Grantor, all of such Canadian
Grantor’s right, title and interest in and to all Canadian trade secrets,
including, without limitation, know-how, processes, formulae, compositions,
designs, and confidential business and technical information, and all rights of
any kind whatsoever accruing thereunder or pertaining thereto, including,
without limitation, (i) all income, royalties, damages and payments now and
hereafter due and/or payable with respect thereto, including,
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without limitation, payments under all licenses, non-disclosure agreements and
memoranda of understanding entered into in connection therewith, and damages and
payments for past or future misappropriations thereof, and (ii) the right to sue
or otherwise recover for past, present or future misappropriations thereof.
“Trade-mark Licenses”: with respect to any Canadian Grantor, all Canadian
or to such Canadian Grantor of any right under any Trade-marks, service marks,
trade names, trade dress or other indicia of trade origin or business
identifiers, other than agreements with any Person that is an Affiliate or a
Subsidiary of the Parent Borrower or such Canadian Grantor, including, without
limitation, the license agreements listed on Schedule 5, subject, in each case,
to the terms of such license agreements, and the right to prepare for sale, sell
and advertise for sale, all Inventory now or hereafter covered by such licenses.
“Trade-marks”: with respect to any Canadian Grantor, all of such Canadian
Grantor’s right, title and interest in and to all Canadian trade-marks, service
marks, trade names, trade dress or other indicia of trade origin or business
identifiers, trade-mark and service mark registrations, and applications for
trade-mark or service mark registrations (except for “intent to use”
applications for Trade-mark or service mark registrations) and any renewals
thereof, including, without limitation, each registration and application
identified in Schedule 5, and including, without limitation, (i) the right to
sue or otherwise recover for any and all past, present and future infringements
or dilutions thereof, (ii) all income, royalties, damages and other payments now
and hereafter due and/or payable with respect thereto (including, without
and damages and payments for past or future infringements thereof), and
(iii) all other rights corresponding thereto in Canada and all other rights of
any kind whatsoever of such Canadian Grantor accruing thereunder or pertaining
thereto in Canada, together in each case with the goodwill of the business
connected with the use of, and symbolized by, each such trade-mark, service
mark, trade name, trade dress or other indicia of trade origin or business
identifiers.
“ULC”: an Issuer that is an unlimited company, unlimited liability corporation
or unlimited liability company.
“ULC Laws”: the Companies Act (Nova Scotia), the Business Corporations Act
(British Columbia), the Business Corporations Act (Alberta) and all laws of Nova
Scotia, British Columbia, Alberta or any other province or territory of Canada
related to ULCs.
“ULC Shares”: shares or other equity interests in the Capital Stock of a ULC.
“Vehicles”: all cars, trucks, trailers, construction and earth moving equipment
and other vehicles covered by a certificate of title law of any province or
territory and all tires and other appurtenances to any of the foregoing.
1.2 Other Definitional Provisions.
(a) The words “hereof,” “herein,” “hereto” and “hereunder” and words of similar
not to any particular provision of this Agreement, and Section, subsection,
Schedule and Annex references are to this Agreement unless otherwise specified.
The words “include,” “includes,” and “including” shall be deemed to be followed
by the phrase “without limitation.”
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(b) The meanings given to terms defined herein shall be equally applicable to
(c) Where the context requires, terms relating to the Collateral, Pledged
Collateral or Security Collateral or any part thereof, when used in relation to
a Canadian Granting Party shall refer to such Canadian Granting Party’s
Collateral, Pledged Collateral or Security Collateral or the relevant part
thereof.
(d) All references in this Agreement to any of the property described in the
definition of the term “Collateral,” “Pledged Collateral” or “Security
Collateral,” or to any Proceeds thereof, shall be deemed to be references
thereto only to the extent the same constitute Collateral, Pledged Collateral or
Security Collateral, respectively.
SECTION 2 GUARANTEE
2.1 Guarantee.
(a) Each of the Canadian Guarantors hereby, jointly and severally,
unconditionally and irrevocably, guarantees to the Administrative Agent, for the
benefit of the Secured Parties, the prompt and complete payment and performance
by the Canadian Borrower when due and payable (whether at the stated maturity,
by acceleration or otherwise) of the Borrower Obligations of the Canadian
Borrower owed to the Secured Parties.
(b) Anything herein or in any other Loan Document to the contrary
notwithstanding, the maximum liability of each Canadian Guarantor hereunder and
under the other Loan Documents shall in no event exceed the amount that can be
guaranteed by such Canadian Guarantor under applicable law, including applicable
federal or provincial laws relating to the insolvency of debtors; provided that,
to the maximum extent permitted under applicable law, it is the intent of the
parties hereto that the rights of contribution of each Canadian Guarantor
provided in subsection 2.2 be included as an asset of the respective Canadian
Guarantor in determining the maximum liability of such Canadian Guarantor
hereunder.
(c) Each Canadian Guarantor agrees that the Borrower Obligations guaranteed by
it hereunder may at any time and from time to time exceed the amount of the
liability of such Canadian Guarantor hereunder without impairing the guarantee
contained in this Section 2 or affecting the rights and remedies of the
Administrative Agent or any other Secured Party hereunder.
(d) The guarantee contained in this Section 2 shall remain in full force and
effect until the earliest to occur of (i) the first date on which all the
Canadian Facility Revolving Credit Loans, any Reimbursement Obligations with
respect to Canadian Facility Letters of Credit, all other Borrower Obligations
then due and owing, and the obligations of each Canadian Guarantor under the
guarantee contained in this Section 2 then due and owing shall have been
satisfied by payment in full in cash, no Canadian Facility Letter of Credit
shall be outstanding (except for Canadian Facility Letters of Credit that have
been cash collateralized, backstopped or otherwise provided for pursuant to
arrangements reasonably acceptable to the relevant Issuing Lender) and the
Commitments shall be terminated, notwithstanding that from time to time during
the term of the ABL Credit Agreement the Canadian Borrower may be free from any
Borrower Obligations, (ii) as to any Canadian Guarantor, the sale or other
disposition of all of the Capital Stock of such Canadian Guarantor (to a Person
other than the Canadian Borrower or a Canadian Guarantor), or any other
transaction or occurrence as a result of which such Canadian Guarantor ceases to
be a Restricted Subsidiary of the Parent Borrower, in each case that is
permitted under the ABL Credit Agreement and (iii) as to any Canadian Guarantor,
such Canadian Guarantor becoming an Excluded Subsidiary.
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(e) No payment made by the Canadian Borrower, any of the Canadian Guarantors,
any other Canadian Guarantor or any other Person or received or collected by the
Administrative Agent or any other Secured Party from the Canadian Borrower, any
of the Canadian Guarantors, any other Canadian Guarantor or any other Person by
any of the Borrower Obligations shall be deemed to modify, reduce, release or
otherwise affect the liability of any Canadian Guarantor hereunder which shall,
notwithstanding any such payment (other than any payment made by such Canadian
Guarantor in respect of the Borrower Obligations or any payment received or
collected from such Canadian Guarantor in respect of any of the Borrower
Obligations), remain liable for the Borrower Obligations of the Canadian
Borrower guaranteed by it hereunder up to the maximum liability of such Canadian
Guarantor hereunder until the earliest to occur of (i) the first date on which
all the Canadian Facility Revolving Credit Loans, any Reimbursement Obligations
with respect to Canadian Facility Letters of Credit and all other Borrower
Obligations then due and owing, are paid in full in cash, no Canadian Facility
Letter of Credit shall be outstanding (except for Canadian Facility Letters of
Credit that have been cash collateralized ,backstopped or otherwise provided for
pursuant to arrangements reasonably acceptable to the relevant Issuing Lender)
and the Commitments are terminated, (ii) as to any Canadian Guarantor, a sale or
other disposition of all of the Capital Stock of such Canadian Guarantor (other
than to the Canadian Borrower or a Canadian Guarantor), or any other transaction
or occurrence as a result of which such Canadian Guarantor ceases to be a
Restricted Subsidiary of the Parent Borrower, in each case, that is permitted
under the ABL Credit Agreement and (iii) as to any Canadian Guarantor, such
Canadian Guarantor becoming an Excluded Subsidiary.
2.2 Right of Contribution. Each Canadian Guarantor hereby agrees that to the
extent that a Canadian Guarantor shall have paid more than its proportionate
share (based, to the maximum extent permitted by law, on the respective Adjusted
Net Worths of the Canadian Guarantors on the date the respective payment is
made) of any payment made hereunder, such Canadian Guarantor shall be entitled
to seek and receive contribution from and against any other Canadian Guarantor
hereunder that has not paid its proportionate share of such payment. Each
Canadian Guarantor’s right of contribution shall be subject to the terms and
conditions of subsection 2.3. The provisions of this subsection 2.2 shall in no
respect limit the obligations and liabilities of any Canadian Guarantor to the
Administrative Agent and the other Secured Parties, and each Canadian Guarantor
shall remain liable to the Administrative Agent and the other Secured Parties
for the full amount guaranteed by such Canadian Guarantor hereunder.
2.3 No Subrogation. Notwithstanding any payment made by any Canadian Guarantor
hereunder or any set-off or application of funds of any Canadian Guarantor by
the ABL Collateral Agent or any other Secured Party, no Canadian Guarantor shall
be entitled to be subrogated to any of the rights of the ABL Collateral Agent or
any other Secured Party against the Canadian Borrower or any other Canadian
Guarantor or any collateral security or guarantee or right of offset held by the
ABL Collateral Agent or any other Secured Party for the payment of the Borrower
Obligations, nor shall any Canadian Guarantor seek or be entitled to seek any
contribution or reimbursement from the Canadian Borrower or any other Canadian
Guarantor in respect of payments made by such Canadian Guarantor hereunder,
until all amounts owing to the ABL Collateral Agent and the other Secured
Parties by the Canadian Borrower on account of the Borrower Obligations are paid
in full in cash, no Canadian Facility Letter of Credit shall be outstanding
(except for Canadian Facility Letters of Credit that have been cash
collateralized, backstopped or otherwise provided for pursuant to arrangements
reasonably acceptable to the relevant Issuing Lender) and the Commitments are
terminated. If any amount shall be paid to any Canadian
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Guarantor on account of such subrogation rights at any time when all of the
Borrower Obligations shall not have been paid in full in cash or any Canadian
Facility Letter of Credit shall remain outstanding (except for Canadian Facility
Letters of Credit that have been cash collateralized, backstopped or otherwise
provided for pursuant to arrangements reasonably acceptable to the relevant
Issuing Lender) or any of the Commitments shall remain in effect, such amount
shall be held by such Canadian Guarantor in trust for the ABL Collateral Agent
and the other Secured Parties, segregated from other funds of such Canadian
Guarantor, and shall, forthwith upon receipt by such Canadian Guarantor, be
turned over to the ABL Collateral Agent in the exact form received by such
Canadian Guarantor (duly endorsed by such Canadian Guarantor to the ABL
Collateral Agent, if required), to be held as collateral security for all of the
Borrower Obligations (whether matured or unmatured) guaranteed by such Canadian
Guarantor and/or then or at any time thereafter may be applied against any
Borrower Obligations, whether matured or unmatured, in such order as the ABL
Collateral Agent may determine.
2.4 Amendments, etc. with Respect to the Obligations. To the maximum extent
permitted by law, each Canadian Guarantor shall remain obligated hereunder
notwithstanding that, without any reservation of rights against any Canadian
Guarantor and without notice to or further assent by any Canadian Guarantor, any
demand for payment of any of the Borrower Obligations made by the ABL Collateral
Agent, the Administrative Agent or any other Secured Party may be rescinded by
the ABL Collateral Agent, the Administrative Agent or such other Secured Party
and any of the Borrower Obligations continued, and the Borrower Obligations, or
the liability of any other Person upon or for any part thereof, or any
collateral security or guarantee therefor or right of offset with respect
thereto, may, from time to time, in whole or in part, be renewed, extended,
amended, waived, modified, accelerated, compromised, subordinated, waived,
surrendered or released by the ABL Collateral Agent, the Administrative Agent or
any other Secured Party, and the ABL Credit Agreement and the other Loan
Documents and any other documents executed and delivered in connection therewith
may be amended, waived, modified, supplemented or terminated, in whole or in
part, as the ABL Collateral Agent or the Administrative Agent (or the Required
Lenders or the applicable Lender(s), as the case may be) may deem advisable from
time to time, and any collateral security, guarantee or right of offset at any
time held by the ABL Collateral Agent, the Administrative Agent or any other
Secured Party for the payment of any of the Borrower Obligations may be sold,
exchanged, waived, surrendered or released. None of the ABL Collateral Agent,
the Administrative Agent and each other Secured Party shall have any obligation
to protect, secure, perfect or insure any Lien at any time held by it as
security for any of the Borrower Obligations or for the guarantee contained in
this Section 2 or any property subject thereto, except to the extent required by
applicable law.
2.5 Guarantee Absolute and Unconditional. Each Canadian Guarantor waives, to the
maximum extent permitted by applicable law, any and all notice of the creation,
renewal, extension or accrual of any of the Borrower Obligations and notice of
or proof of reliance by the ABL Collateral Agent, the Administrative Agent or
any other Secured Party upon the guarantee contained in this Section 2 or
acceptance of the guarantee contained in this Section 2; each of the Borrower
Obligations, and any obligation contained therein, shall conclusively be deemed
to have been created, contracted or incurred, or renewed, extended, amended or
waived, in reliance upon the guarantee contained in this Section 2; and all
dealings between the Canadian Borrower and any of the Canadian Guarantors, on
the one hand, and the ABL Collateral Agent, the Administrative Agent and the
other Secured Parties, on the other hand, likewise shall be conclusively
presumed to have been had or consummated in reliance upon the guarantee
contained in this Section 2. Each Canadian Guarantor waives, to the maximum
extent permitted by applicable law, diligence, presentment, protest, demand for
payment and notice of default or nonpayment to or upon the Canadian Borrower or
any of the other Canadian Guarantors with respect to any of the Borrower
Obligations. Each Canadian Guarantor understands and agrees, to the extent
permitted by law,
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that the guarantee contained in this Section 2 shall be construed as a
continuing, absolute and unconditional guarantee of payment and not of
collection. Each Canadian Guarantor hereby waives, to the maximum extent
permitted by applicable law, any and all defenses (other than any claim alleging
breach of a contractual provision of any of the Loan Documents) that it may have
arising out of or in connection with any and all of the following: (a) the
validity or enforceability of the ABL Credit Agreement or any other Loan
Document, any of the Borrower Obligations or any other collateral security
therefor or guarantee or right of offset with respect thereto at any time or
from time to time held by the ABL Collateral Agent, the Administrative Agent or
any other Secured Party, (b) any defense, set-off or counterclaim (other than a
defense of payment or performance) that may at any time be available to or be
asserted by the Canadian Borrower against the ABL Collateral Agent, the
Administrative Agent or any other Secured Party, (c) any change in the time,
place, manner or place of payment, amendment, or waiver or increase in any of
the Obligations, (d) any exchange, non-perfection, taking, or release of
Collateral, (e) any change in the structure or existence of the Canadian
Borrower, (f) any application of Collateral to any of the Obligations, (g) any
law, regulation or order of any jurisdiction, or any other event, affecting any
term of any Obligation or the rights of the ABL Collateral Agent, the
Administrative Agent or any other Secured Party with respect thereto, including,
without limitation, (i) the application of any such law, regulation, decree or
order, including any prior approval, which would prevent the exchange of any
currency (other than Dollars) for Dollars or the remittance of funds outside of
such jurisdiction or the unavailability of Dollars in any legal exchange market
in such jurisdiction in accordance with normal commercial practice, (ii) a
declaration of banking moratorium or any suspension of payments by banks in such
jurisdiction or the imposition by such jurisdiction or any Governmental
Authority thereof of any moratorium on, the required rescheduling or
jurisdiction, (iii) any expropriation, confiscation, nationalization or
requisition by such country or any Governmental Authority that directly or
indirectly deprives the Canadian Borrower or any Canadian Guarantor of any
assets or their use, or of the ability to operate its business or a material
part thereof, or (iv) any war (whether or not declared), insurrection,
revolution, hostile act, civil strife or similar events occurring in such
jurisdiction which has the same effect as the events described in clause (i),
(ii) or (iii) above (in each of the cases contemplated in clauses (i) through
(iv) above, to the extent occurring or existing on or at any time after the date
of this Agreement), or (h) any other circumstance whatsoever (other than payment
in full in cash of the Borrower Obligations guaranteed by it hereunder) (with or
without notice to or knowledge of the Canadian Borrower or such Canadian
Guarantor) or any existence of or reliance on any representation by the Secured
Parties that constitutes, or might be construed to constitute, an equitable or
legal discharge of the Canadian Borrower for the Borrower Obligations, or of
such Canadian Guarantor under the guarantee contained in this Section 2, in
bankruptcy or in any other instance. When making any demand hereunder or
otherwise pursuing its rights and remedies hereunder against any Canadian
Guarantor, the ABL Collateral Agent, the Administrative Agent and any other
Secured Party may, but shall be under no obligation to, make a similar demand on
or otherwise pursue such rights and remedies as it may have against the Canadian
Borrower, any other Canadian Guarantor or any other Person or against any
collateral security or guarantee for the Borrower Obligations guaranteed by such
Canadian Guarantor hereunder or any right of offset with respect thereto, and
any failure by the ABL Collateral Agent, the Administrative Agent or any other
Secured Party to make any such demand, to pursue such other rights or remedies
or to collect any payments from the Canadian Borrower, any other Canadian
Guarantor or any other Person or to realize upon any such collateral security or
guarantee or to exercise any such right of offset, or any release of the
Canadian Borrower, any other Canadian Guarantor or any other Person or any such
collateral security, guarantee or right of offset, shall not relieve any
Canadian Guarantor of any obligation or liability hereunder, and shall not
impair or affect the rights and remedies, whether express, implied or available
as a matter of law, of the ABL Collateral Agent, the Administrative Agent or any
other Secured Party against any Canadian Guarantor. For the purposes hereof
“demand” shall include the commencement and continuance of any legal
proceedings.
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2.6 Reinstatement. The guarantee of any Canadian Guarantor contained in this
Section 2 shall continue to be effective, or be reinstated, as the case may be,
if at any time payment, or any part thereof, of any of the Borrower Obligations
guaranteed by such Canadian Guarantor hereunder is rescinded or must otherwise
be restored or returned by the ABL Collateral Agent, the Administrative Agent or
any other Secured Party upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of the Canadian Borrower or any Canadian
Guarantor, or upon or as a result of the appointment of a receiver, intervenor
or conservator of, or trustee or similar officer for, the Canadian Borrower or
any Canadian Guarantor or any substantial part of its property, or otherwise,
all as though such payments had not been made.
2.7 Payments. Each Canadian Guarantor hereby guarantees that payments hereunder
will be paid to the Administrative Agent without set-off or counterclaim, in
Canadian Dollars (or in the case of any amount required to be paid in any other
currency pursuant to the requirements of the ABL Credit Agreement or other
agreement relating to the respective Obligations, such other currency), at the
Administrative Agent’s office specified in subsection 11.2 of the ABL Credit
Agreement or such other address as may be designated in writing by the
Administrative Agent to such Canadian Guarantor from time to time in accordance
with subsection 11.2 of the ABL Credit Agreement.
2.8 Remedies. The Administrative Agent and the Secured Parties need not seek or
exhaust their recourse against the Canadian Borrower or any other Person or
realize on any security interest they may hold in respect of the Borrower
Obligations or the Guarantor Obligations before being entitled to (a) enforce
payment and performance under this Agreement, or (b) pursue any other remedy
against a Canadian Guarantor. Should the Administrative Agent or the Secured
Parties elect to realize on any security interest they hold, either before,
concurrently with, or after demand for payment under this Agreement, such
Canadian Guarantor renounces the benefits of division or discussion.
SECTION 3 GRANT OF SECURITY INTEREST
3.1 Grant. Each Canadian Grantor hereby grants, assigns, hypothecates and
pledges all of its present and after acquired personal property to the ABL
Collateral Agent, for the benefit of the Secured Parties, including, without
limitation, a security interest in all of the Collateral of such Canadian
Grantor, as collateral security for the prompt and complete payment and
performance when due (whether at the stated maturity, by acceleration or
otherwise) of the Obligations of such Canadian Grantor, except as provided in
subsection 3.3 and subject to existing licenses to use the Copyrights, Patents,
Trade-marks, Trade Secrets and Industrial Designs granted by such Canadian
Grantor in the ordinary course of business and described on Schedule 3 hereto.
The term “Collateral,” as to any Canadian Grantor, means all present and after
acquired personal property of such Canadian Grantor, including the following
property (wherever located) now owned or at any time hereafter acquired by such
Canadian Grantor or in which such Canadian Grantor now has or at any time in the
future may acquire any right, title or interest, except as provided in
subsection 3.3:
(a) all Accounts;
(b) all Money (including all cash);
(c) all Cash Equivalents;
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(d) all Chattel Paper;
(e) all Contracts;
(f) all Deposit Accounts;
(g) all Documents of Title;
(h) all Equipment and Goods;
(i) all Intangibles;
(j) all Instruments;
(k) all Intellectual Property;
(l) all Inventory;
(m) all Investment Property;
(n) all books and records relating to the foregoing;
(o) the Collateral Proceeds Account; and
(p) to the extent not otherwise included, all Proceeds and products of any and
all of the foregoing and all collateral security and guarantees given by any
Person with respect to any of the foregoing;
provided that, Collateral shall not include any Pledged Collateral, Excluded
Assets or any property or assets described in the proviso to the definition of
Pledged Stock.
3.2 Pledged Collateral. Each Canadian Granting Party that is a Canadian Pledgor
hereby grants to the ABL Collateral Agent, for the benefit of the Secured
Parties, a security interest in all of the Pledged Collateral of such Canadian
Pledgor now owned or at any time hereafter acquired by such Canadian Pledgor,
including any Proceeds thereof, as collateral security for the prompt and
complete payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of the Obligations of such Canadian Pledgor, except
as provided in subsection 3.3.
3.3 Certain Limited Exceptions. No security interest is or will be granted
pursuant to this Agreement or any other Security Document in any right, title or
interest of any Canadian Granting Party under or in, and “Collateral” and
“Pledged Collateral” shall not include the following (collectively, the
“Excluded Assets”):
(a) any Instruments, Contracts, Chattel Paper, Intangibles, Copyright Licenses,
Patent Licenses, Trade-mark Licenses, Trade Secret Licenses, Industrial Design
Licenses or other contracts or agreements with or issued by Persons other than
Holding, a Subsidiary of Holding, the Parent Borrower, a Restricted Subsidiary
or an Affiliate thereof (collectively, “Restrictive Agreements”) that would
otherwise be included in the Security Collateral (and such Restrictive
Agreements shall not be deemed to constitute a part of the Security Collateral)
for so long as, and to the extent that, the granting of such a security interest
pursuant hereto would result in a breach,
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default or termination of such Restrictive Agreements (in each case, except to
the extent that, pursuant to the PPSA and any other applicable law, the granting
of security interests therein can be made without resulting in a breach, default
or termination of such Restrictive Agreements);
(b) any Equipment or other property that would otherwise be included in the
Security Collateral (and such Equipment or other property shall not be deemed to
constitute a part of the Security Collateral) if such Equipment or other
property (x) is subject to a Lien described in subsection 8.2(e) (with respect
to Purchase Money Obligations or Capitalized Lease Obligations) or 8.2(n) of the
ABL Credit Agreement (with respect to such Liens described in such subsection
8.2(e) of the ABL Credit Agreement) to the extent that the agreements governing
such Purchase Money Obligations or Capitalized Lease Obligations prohibit the
granting of a security interest to the ABL Collateral Agent hereunder (but in
each case only for so long as such Liens are in place) or (y) is subject to any
Lien in respect of Hedging Obligations permitted by subsection 8.2(d) of the ABL
Credit Agreement that do not constitute Secured Bank Product Obligations of the
ABL Credit Agreement to the extent that the agreements governing such Hedging
Obligations prohibit the granting of a security interest to the ABL Collateral
Agent hereunder (but in each case only for so long as such Liens are in place),
and, in the case of such other property, such other property consists solely of
(i) cash, Cash Equivalents or Temporary Cash Investments, together with
proceeds, dividends and distributions in respect thereof, (ii) any assets
relating to such assets, proceeds, dividends or distributions, or to such
Hedging Obligations, and/or (iii) any other assets consisting of, relating to or
arising under or in connection with (1) any Hedging Obligations or (2) any other
agreements, instruments or documents related to any such Hedging Obligations or
to any of the assets referred to in any of clauses (i) through (iii) of this
clause (y);
(c) any property that (A) would otherwise be included in the Security Collateral
(and such property shall not be deemed to constitute a part of the Security
Collateral) if such property has been sold or otherwise transferred in
connection with a Sale and Leaseback Transaction or (B) is subject to any Liens
permitted under subsection 8.2 of the ABL Credit Agreement which relates to
property subject to any such Sale and Leaseback Transaction or Intangibles
related thereto (but only for so long as such Liens are in place), provided
that, notwithstanding the foregoing, a security interest of the Collateral Agent
shall attach to any money, securities or other consideration received by any
Canadian Grantor as consideration for the sale or other disposition of such
property as and to the extent such consideration would otherwise constitute
Security Collateral;
(d) each Canadian Pledgor acknowledges that certain of the Pledged Collateral of
such Canadian Pledgor may now or in the future consist of ULC Shares, and that
it is the intention of the ABL Collateral Agent and each Canadian Pledgor that
neither the ABL Collateral Agent nor any other Secured Party should under any
circumstances prior to realization be held to be a “member” or “shareholder,” as
applicable, of a ULC for the purposes of any ULC Laws. Therefore,
notwithstanding any provisions to the contrary contained in this Agreement, the
ABL Credit Agreement or any other Loan Document, where a Canadian Pledgor is the
registered and beneficial owner of ULC Shares which are Pledged Collateral of
such Canadian Pledgor, such Canadian Pledgor will remain the sole registered and
beneficial owner of such ULC Shares until such time as such ULC Shares are
effectively transferred into the name of the ABL Collateral Agent, any other
Secured Party, or any other Person on the books and records of the applicable
ULC. Accordingly, each Canadian Pledgor shall be entitled to receive and retain
for its own account any dividend or other distribution, if any, in respect of
such ULC Shares (except for any dividend or distribution comprised of
Certificated Securities representing Pledged Collateral,
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which shall be delivered to the ABL Collateral Agent to hold as Pledged
Collateral hereunder) and shall have the right to vote such ULC Shares and to
control the direction, management and policies of the applicable ULC to the same
extent as such Canadian Pledgor would if such ULC Shares were not pledged to the
ABL Collateral Agent pursuant hereto. Nothing in this Agreement, the ABL Credit
Agreement or any other Loan Document is intended to, and nothing in this
Agreement, the ABL Credit Agreement or any other Loan Document shall, constitute
the ABL Collateral Agent, any other Secured Party, or any other Person other
than the applicable Canadian Pledgor, a member or shareholder of a ULC for the
purposes of any ULC Laws (whether listed or unlisted, registered or beneficial),
until such time as notice is given to such Canadian Pledgor and further steps
are taken pursuant hereto or thereto so as to register the ABL Collateral Agent,
any other Secured Party, or such other Person, as specified in such notice, as
the holder of the ULC Shares. To the extent any provision hereof would have the
effect of constituting the ABL Collateral Agent or any other Secured Party as a
member or a shareholder, as applicable, of any ULC prior to such time, such
provision shall be severed herefrom and shall be ineffective with respect to ULC
Shares which are Pledged Collateral of any Canadian Pledgor, without otherwise
invalidating or rendering unenforceable this Agreement or invalidating or
rendering unenforceable such provision insofar as it relates to Pledged
Collateral of any Canadian Pledgor which is not ULC Shares. Except upon the
exercise of rights of the ABL Collateral Agent to sell, transfer or otherwise
dispose of ULC Shares in accordance with this Agreement, each Canadian Pledgor
shall not cause or permit, or enable an Issuer that is a ULC to cause or permit,
the ABL Collateral Agent or any other Secured Party to: (a) be registered as a
shareholder or member of such Issuer; (b) have any notation entered in their
favour in the share register of such Issuer; (c) be held out as shareholders or
members of such Issuer; (d) receive, directly or indirectly, any dividends,
property or other distributions from such Issuer by reason of the ABL Collateral
Agent holding the security interests over the ULC Shares; or (e) act as a
shareholder of such Issuer, or exercise any rights of a shareholder including
the right to attend a meeting of shareholders of such Issuer or to vote its ULC
Shares;
(e) Capital Stock which is described in the proviso to the definition of Pledged
Stock;
(f) any interest in leased real property (including fixtures related thereto)
(and there shall be no requirement to deliver landlord lien waivers, estoppels
or collateral access letters);
(g) any fee interest in owned real property (including fixtures related thereto)
if the fair market value of such fee interest is less than the Dollar Equivalent
of $25,000,000 individually;
(h) any Vehicles;
(i) assets to the extent the granting or perfecting of a security interest in
such assets would result in costs or other consequences to Holding or any of its
Subsidiaries as reasonably determined in writing by the Parent Borrower, the
Administrative Agent and, to the extent such assets would otherwise constitute
Collateral, the ABL Collateral Agent, that are excessive in view of the benefits
that would be obtained by the Secured Parties;
(j) those assets over which the granting of security interests in such assets
would be prohibited by contract permitted under the ABL Credit Agreement,
applicable law or regulation or the organizational or joint venture documents of
any non-wholly owned Subsidiary (after giving effect to the applicable
anti-assignment provisions of the PPSA, or any other applicable law
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or principles of equity as in effect in any relevant jurisdiction), or to the
extent that such security interests would result in material adverse tax
consequences to the Parent Borrower or any one or more of its Subsidiaries as
reasonably determined in writing by the Parent Borrower and consented to in
writing by the ABL Collateral Agent (it being understood that the Lenders shall
not require the Canadian Borrower or any of its subsidiaries to enter into any
security agreements or pledge agreements governed by foreign law);
(k) Foreign Intellectual Property; and
(l) any aircraft, airframes, aircraft engines, helicopters, vessels or rolling
stock or any Equipment or other assets constituting a part thereof.
3.3.1 The Collateral shall not include the last day of the term of any lease or
agreement therefor but upon the enforcement of the security interest granted
hereby in the Collateral, the Canadian Grantors or any of them shall stand
such term.
3.3.2 The term “Goods” when used in this Agreement shall not include Consumer
Goods of any Canadian Grantor.
3.3.3 Notwithstanding subsection 3.1, any Canadian Grantor’s grant of security
in Trade-marks under this Agreement shall be limited to a grant by such Canadian
Grantor of a security interest in all of such Canadian Grantor’s right, title
and interest in such Trade-marks.
3.3.4 Each Canadian Grantor and the ABL Collateral Agent hereby acknowledge that
(a) value has been given in respect of the security interests granted herein;
(b) such Canadian Grantor has rights in the Collateral in which it has granted a
security interest (other than after-acquired property); (c) this Agreement
constitutes a security agreement as that term is defined in the PPSA; (d) it has
not agreed to postpone the time of attachment of the security interest granted
hereunder; and (e) it has received a copy of this Agreement.
3.3.5 If the Collateral is realized upon and the security interest in the
Collateral is not sufficient to satisfy all of the Borrower Obligations or
Guarantor Obligations, each Canadian Grantor acknowledges and agrees that,
subject to the provisions of the PPSA, such Canadian Grantor shall continue to
be liable for any Borrower Obligations or Guarantor Obligations, as applicable,
remaining outstanding and the ABL Collateral Agent shall be entitled to pursue
full payment thereof.
SECTION 4 REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of Each Canadian Guarantor. To induce the ABL
Collateral Agent and the Lenders to enter into the ABL Credit Agreement and to
induce the Canadian Facility Lenders to make their respective extensions of
credit to the Canadian Borrower thereunder, each Canadian Guarantor hereby
represents and warrants to the ABL Collateral Agent and each other Secured Party
that the representations and warranties set forth in Section 5 of the ABL Credit
Agreement as they relate to such Canadian Guarantor or to the Loan Documents to
which such Canadian Guarantor is a party, each of which representations and
warranties is hereby incorporated herein by reference, are true and correct in
all material respects, and the ABL Collateral Agent and each other Secured Party
shall be entitled to rely on each of such representations and warranties as if
fully set forth herein; provided that each reference in each such representation
and warranty to the Parent Borrower’s knowledge shall, for the purposes of this
subsection 4.1, be deemed to be a reference to such Canadian Guarantor’s
knowledge.
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4.2 Representations and Warranties of Each Canadian Grantor. To induce the ABL
credit to the Canadian Borrower thereunder, each Canadian Grantor hereby
that, in each case after giving effect to the Transactions:
4.2.1 Title; No Other Liens. Except for the security interests granted to the
ABL Collateral Agent for the benefit of the Secured Parties pursuant to this
Agreement and the other Liens permitted to exist on such Canadian Grantor’s
Security Collateral by the ABL Credit Agreement (including, without limitation,
subsection 8.2 thereof), such Canadian Grantor owns each item of such Canadian
Grantor’s Collateral free and clear of any and all Liens. As of the Closing
Date, except as set forth on Schedule 3, no currently effective financing
statement or other similar public notice with respect to any Lien securing
Indebtedness on all or any part of such Canadian Grantor’s Security Collateral
is on file or of record in any public office in Canada, any province, territory
or dependency thereof or the District of Columbia, except such as have been
filed in favour of the ABL Collateral Agent for the benefit of the Secured
Parties pursuant to this Agreement or as are permitted by the ABL Credit
Agreement (including, without limitation, subsection 8.2 thereof) or any other
Loan Document or for which financing charge statements or discharges will be
delivered on the Closing Date.
4.2.2 Perfected First Priority Liens.
(a) This Agreement is effective to create, as collateral security for the
Obligations of such Canadian Grantor, valid and enforceable Liens on such
Canadian Grantor’s Security Collateral in favour of the ABL Collateral Agent for
the benefit of the Secured Parties, except as to enforcement, as may be limited
by applicable domestic or foreign bankruptcy, insolvency, fraudulent conveyance,
creditors’ rights generally, general equitable principles (whether considered in
a proceeding in equity or at law) and an implied covenant of good faith and fair
dealing.
(b) Except with regard to (i) Liens (if any) on Specified Assets and (ii) any
rights in favour of the Canadian federal, provincial or territorial government
as required by law (if any), upon the completion of the Filings and, with
respect to Instruments, Chattel Paper and Documents of Title, upon the earlier
of such Filing or the delivery to and continuing possession by the ABL
Collateral Agent of all Instruments, Chattel Paper and Documents of Title a
security interest in which is perfected by possession, and upon obtaining and
maintenance of “control” (as defined in the STA) by the ABL Collateral Agent or
any nominee of the ABL Collateral Agent with respect to Pledged Stock), the
Liens created pursuant to this Agreement will constitute valid Liens on and (to
the extent provided herein) perfected security interests in such Canadian
Grantor’s Security Collateral in favour of the ABL Collateral Agent for the
benefit of the Secured Parties, and will be prior to all other Liens of all
other Persons, in each case other than Liens permitted to have priority pursuant
to subsection 8.2 of the ABL Credit Agreement, and enforceable as such as
against all other Persons other than Ordinary Course Transferees, except to the
extent that the recording of an assignment or other transfer of title to the ABL
Collateral Agent or the recording of other applicable documents in the Canadian
Intellectual Property Office may be necessary for perfection or enforceability,
and except as to enforcement, as may be limited by applicable domestic or
foreign bankruptcy, insolvency, fraudulent conveyance, reorganisation,
moratorium and
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other similar laws relating to or affecting creditors’ rights generally, general
equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing. As used in this
subsection 4.2.2(b), the following terms shall have the following meanings:
“Filings”: the filing or recording of (i) the Financing Statements as set forth
in Schedule 3, (ii) this Agreement or short form or a notice thereof with
respect to Intellectual Property as set forth in Schedule 3, and (iii) any
filings after the Closing Date in any other jurisdiction as may be necessary
under any Requirement of Law.
“Financing Statements”: the financing statements or financing change statements
for filing in the jurisdictions listed in Schedule 4A which such schedule
includes the jurisdictions where each Canadian Grantor has tangible personal
property.
“Ordinary Course Transferees”: (i) with respect to Goods only, buyers in the
ordinary course of business and lessees in the ordinary course of business,
(ii) with respect to Intangibles only, licensees in the ordinary course of
business and (iii) any other Person who is entitled to take free of the Lien
pursuant to the PPSA as in effect from time to time in the relevant
jurisdiction.
“Specified Assets”: the following property and assets of such Canadian Grantor:
(1) Patents, Patent Licenses, Trade-marks, Trade-mark Licenses, Industrial
Designs and Industrial Design Licenses to the extent that (a) Liens thereon
cannot be perfected by the filing of financing statements under the PPSA or by
the filing and acceptance of this Agreement or intellectual property security
agreements in the Canadian Intellectual Property Office or (b) such Patents,
Patent Licenses, Trade-marks, Trade-mark Licenses, Industrial Designs and
Industrial Design Licenses are not, individually or in the aggregate, material
to the business of the Parent Borrower and its Subsidiaries taken as a whole;
(2) Copyrights and Copyright Licenses with respect thereto and Accounts or
receivables arising therefrom to the extent that the PPSA is not applicable to
the creation or perfection of Liens thereon or Liens thereon cannot be perfected
by filing and acceptance of intellectual property security agreements in the
Canadian Intellectual Property Office;
(3) Collateral for which the perfection of Liens thereon requires filings in
or other actions under the laws of jurisdictions outside of Canada and the
United States of America (or any province, territory or state thereof, as
applicable);
(4) Goods included in Collateral received by any Person from any Canadian
Grantor for “sale or return” to the extent of claims of creditors of such
Person;
(5) fixtures, Vehicles, any other assets subject to certificates of title,
Money and Cash Equivalents (other than Cash Equivalents constituting Investment
Property to the extent a security interest therein is perfected by the filing of
a financing statement under the PPSA as in effect from time to time in the
relevant jurisdiction);
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(6) Proceeds of Accounts or Inventory which do not themselves constitute
Collateral or which do not constitute identifiable cash Proceeds or which have
not yet been transferred to or deposited in the Collateral Proceeds Account (if
any) or the Concentration Account of a Canadian Grantor subject to the ABL
Collateral Agent’s control;
(7) Contracts, Accounts or receivables subject to the Financial Administration
Act (Canada);
(8) Uncertificated Securities (to the extent a security interest is not
perfected by the filing of a financing statement under the PPSA as in effect
from time to time in the relevant jurisdiction);
(9) any Goods in which a security interest is not perfected by filing a
financing statement in either the applicable Canadian Grantor’s jurisdiction of
organization or the jurisdiction of the location of such Goods; and
(10) any assets specifically requiring perfection through control agreements
(including cash, cash equivalents, deposit accounts or other bank or securities
accounts), other than (i) any assets in which a security interest is
automatically perfected by filings under the PPSA, (ii) Pledged Stock and
(iii) DDAs, Concentration Accounts and the Canadian Core Concentration Account
(in each case only to the extent required pursuant to subsection 4.16 of the ABL
Credit Agreement).
4.2.3 Jurisdiction of Organization and Location of Collateral. On the date
hereof, such Canadian Grantor’s jurisdiction of organization, location of its
chief executive office and the location of its Collateral are as specified on
Schedule 4B, including the books and records relating to the Collateral.
4.2.4 [Reserved]
4.2.5 Accounts Receivable. The amounts represented by such Canadian Grantor to
the Administrative Agent or the other Secured Parties from time to time as owing
by each account debtor or by all account debtors in respect of such Canadian
Grantor’s Accounts Receivable constituting Collateral will at such time be the
correct amount, in all material respects, actually owing by such account debtor
or debtors thereunder, except to the extent that appropriate reserves therefor
have been established on the books of such Canadian Grantor in accordance with
GAAP. Unless otherwise indicated in writing to the Administrative Agent, each
Account Receivable of such Canadian Grantor arises out of a bona fide sale and
delivery of goods or rendition of services by such Canadian Grantor. Such
Canadian Grantor has not given any account debtor any deduction in respect of
the amount due under any such Account, except in the ordinary course of
business, as otherwise permitted by the Loan Documents or as such Canadian
Grantor may otherwise advise the Administrative Agent in writing.
4.2.6 Patents, Trade-marks, Copyrights and Industrial Designs. Schedule 5 lists
all material Trade-marks, material Copyrights, material Patents and material
Industrial Designs, in each case, registered in the Canadian Intellectual
Property Office and owned by such Canadian Grantor in its own name as of the
date hereof, and all material Trade-mark Licenses, all material Copyright
Licenses, all material Patent Licenses and all material Industrial Design
Licenses (including, without limitation, material Trade-mark Licenses for
registered Trade-marks, material
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Copyright Licenses for registered Copyrights, material Patent Licenses for
registered Patents and material Industrial Design Licenses for registered
Industrial Designs but excluding licenses to commercially available
“off-the-shelf” software) owned by such Canadian Grantor in its own name as of
the date hereof, in each case, other than Foreign Intellectual Property.
4.2.7 [Reserved].
4.3 Representations and Warranties of Each Canadian Pledgor. To induce the ABL
Collateral Agent, the Administrative Agent and the Canadian Facility Lenders to
enter into the ABL Credit Agreement and to induce the Canadian Facility Lenders
to make their respective extensions of credit to the Canadian Borrower
thereunder, each Canadian Pledgor hereby represents and warrants to the ABL
Collateral Agent and each other Secured Party that:
4.3.1 Except as provided in subsection 3.3, the shares of Pledged Stock pledged
by such Canadian Pledgor hereunder include all the issued and outstanding shares
of all classes of the Capital Stock of such Subsidiary owned by such Canadian
Pledgor.
4.3.2 [Reserved].
4.3.3 Such Canadian Pledgor is the record and beneficial owner of, and has good
title to, the Pledged Securities pledged by it hereunder, free of any and all
Liens securing Indebtedness owing to any other Person, except the security
interest created by this Agreement and Liens permitted by subsection 8.2 of the
ABL Credit Agreement.
4.3.4 Except with respect to security interests in Pledged Securities (if any)
constituting Specified Assets, upon delivery to the ABL Collateral Agent of the
Certificated Securities evidencing the Pledged Securities held by such Canadian
Pledgor together with executed undated stock powers or other instruments of
transfer, the security interest created by this Agreement in such Pledged
Securities constituting Certificated Securities, assuming the continuing
possession of such Pledged Securities by the ABL Collateral Agent will
constitute a valid, perfected first priority security interest in such Pledged
Securities to the extent provided in and governed by the PPSA enforceable in
accordance with its terms against all creditors of such Canadian Pledgor and any
Persons purporting to purchase such Pledged Securities from such Canadian
Pledgor, in each case subject to Liens permitted by subsection 8.2 of the ABL
Credit Agreement to attach to such Pledged Securities, and except as to
enforcement, as may be limited by applicable domestic or foreign bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors’ rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
4.3.5 Except with respect to security interests in Pledged Securities (if any)
constituting Specified Assets, upon the earlier of (x) the filing of the
Financing Statements or of financing statements delivered pursuant to subsection
7.9 of the ABL Credit Agreement in the relevant jurisdiction and (y) the
obtaining and maintenance of “control” (as described in the STA) by the ABL
Collateral Agent (or its agent appointed for purposes of perfection), of all
Pledged Securities that constitute Uncertificated Securities, the security
interest created by this Agreement in such Pledged Securities that constitute
Uncertificated Securities and upon filing of the financing statements listed on
Schedule 3, will constitute a valid, perfected (and in the case of clause (y),
first priority) security interest in such Pledged Securities constituting
Uncertificated Securities to the extent provided in and governed by the STA,
enforceable in accordance with its
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terms against all creditors of such Canadian Pledgor and any persons purporting
to purchase such Pledged Securities from such Canadian Pledgor, to the extent
provided in and governed by the STA, in each case subject to Liens permitted by
subsection 8.2 of the ABL Credit Agreement to attach to such Pledged Securities,
foreign bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors’ rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
4.4 Representations and Warranties of Each Canadian Granting Party.
4.4.1 As of the Closing Date, Schedule 4B sets forth the full and exact legal
name (as it appears in each respective certificate or articles of incorporation,
limited liability company certificate of formation or similar organizational
documents, in each case as amended to date), the type of organization, the
jurisdiction of organization (or formation, as applicable), the organizational
identification number and the principal place of business (or chief executive
office address if such Canadian Grantor has more than one principal place of
business) and the preferred mailing address (if different than chief executive
office) of each Canadian Granting Party.
SECTION 5 COVENANTS
5.1 Covenants of Each Canadian Guarantor. Each Canadian Guarantor covenants and
agrees with the ABL Collateral Agent and the other Secured Parties that, from
and after the date of this Agreement until the earliest to occur of (i) the date
upon which the Canadian Facility Revolving Credit Loans, any Reimbursement
Obligations with respect to Canadian Facility Letters of Credit, and all other
Obligations then due and owing, shall have been paid in full in cash, no
Canadian Facility Letter of Credit shall be outstanding (except for Canadian
Facility Letters of Credit that have been cash collateralized, backstopped or
otherwise provided for pursuant to arrangements reasonably acceptable to the
relevant Issuing Lender) and the Commitments shall have terminated, (ii) as to
any Canadian Guarantor, a sale or other disposition of all the Capital Stock of
such Canadian Guarantor (other than to the Canadian Borrower or a Canadian
Guarantor), or any other transaction or occurrence as a result of which such
Canadian Guarantor ceases to be a Restricted Subsidiary of the Parent Borrower,
in each case that is permitted under the ABL Credit Agreement or (iii) as to any
Canadian Guarantor, such Canadian Guarantor becoming an Excluded Subsidiary,
such Canadian Guarantor shall take, or shall refrain from taking, as the case
may be, each action that is necessary to be taken or not taken, as the case may
be, so that no Default or Event of Default is caused by the failure to take such
action or to refrain from taking such action by such Canadian Guarantor or any
of its Restricted Subsidiaries.
5.2 Covenants of Each Canadian Grantor. Each Canadian Grantor covenants and
Obligations with respect to Canadian Facility, and all other Obligations then
due and owing shall have been paid in full in cash, no Canadian Facility Letter
of Credit shall be outstanding (except for Canadian Facility Letters of Credit
that have been cash collateralized, backstopped or otherwise provided for
and the Commitments shall have terminated, (ii) as to any Canadian Grantor, a
sale or other disposition of all the Capital Stock of such Canadian Grantor
(other than to the Canadian Borrower or a Canadian Guarantor), or any other
transaction or occurrence as a result of which such Canadian Grantor ceases to
permitted under the ABL Credit Agreement or (iii) as to any Canadian Grantor,
such Canadian Grantor becoming an Excluded Subsidiary:
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5.2.1 Delivery of Instruments and Chattel Paper. If any amount payable under or
in connection with any of such Canadian Grantor’s Collateral shall be or become
evidenced by any Instrument or Chattel Paper, such Canadian Grantor shall
(except as provided in the following sentence) be entitled to retain possession
of all Collateral of such Canadian Grantor evidenced by any Instrument or
Chattel Paper, and shall hold all such Collateral in trust for the ABL
Collateral Agent, for the benefit of the Secured Parties. In the event that an
Event of Default shall have occurred and be continuing, upon the request of the
ABL Collateral Agent such Instrument or Chattel Paper shall be promptly
delivered to the ABL Collateral Agent, duly endorsed in a manner reasonably
satisfactory to the ABL Collateral Agent, to be held as Collateral pursuant to
this Agreement. Such Canadian Grantor shall not permit any other Person to
possess any such Collateral at any time other than in connection with any sale
or other disposition of such Collateral in a transaction permitted by the ABL
Credit Agreement.
5.2.2 [Reserved]
5.2.3 Payment of Obligations. Such Canadian Grantor will pay and discharge or
otherwise satisfy before they become delinquent, as the case may be, all
material taxes, assessments and governmental charges or levies imposed upon such
Canadian Grantor’s Collateral or in respect of income or profits therefrom, as
well as all material claims of any kind (including, without limitation, material
claims for labour, materials and supplies) against or with respect to such
Canadian Grantor’s Collateral, except where the amount or validity thereof is
currently being contested in good faith by appropriate proceedings and reserves
in conformity with GAAP with respect thereto have been provided on the books of
such Canadian Grantor and except to the extent that failure to do so, in the
5.2.4 Maintenance of Perfected Security Interest; Further Documentation.
(a) Such Canadian Grantor shall maintain the security interest created by this
Agreement in such Canadian Grantor’s Collateral as a perfected security interest
as and to the extent described in subsection 4.2.2 and to defend the security
interest created by this Agreement in such Canadian Grantor’s Collateral against
the claims and demands of all Persons whomsoever (subject to the other
provisions hereof).
(b) Such Canadian Grantor will furnish to the ABL Collateral Agent from time to
time statements and schedules further identifying and describing such Canadian
Grantor’s Collateral and such other reports in connection with such Canadian
Grantor’s Collateral as the ABL Collateral Agent may reasonably request in
writing, all in reasonable detail.
(c) At any time and from time to time, upon the written request of the ABL
Collateral Agent, and at the sole expense of such Canadian Grantor, such
Canadian Grantor will promptly and duly execute and deliver such further
instruments and documents and take such further actions as the ABL Collateral
Agent may reasonably request for the purpose of obtaining or preserving the full
benefits of this Agreement and of the rights and powers herein granted by such
Canadian Grantor, including, without limitation, the filing of any financing
statements or financing change statements under the PPSA as in effect from time
to time in any Canadian jurisdiction with respect to the security interests
created hereby; provided that, notwithstanding any other provision of this
Agreement or any other Loan Document, neither the Canadian Borrower nor any
Canadian Grantor will be required to (i) take any action in any jurisdiction
other than Canada, or required by the laws of any such non-Canadian
jurisdiction, or enter into any security agreement
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or pledge agreement governed by the laws of any such non-Canadian jurisdiction,
in order to create any security interests (or other Liens) in assets located or
titled outside of Canada or to perfect any security interests (or other Liens)
in any Collateral, (ii) deliver control agreements with respect to, or confer
perfection by “control” over, any deposit accounts, bank or securities account
or other Collateral, except (A) as required by subsection 4.16 of the ABL Credit
Agreement and (B) in the case of Security Collateral that constitutes Capital
Stock or Intercompany Notes in certificated form, delivering such Capital Stock
or Intercompany Notes to the ABL Collateral Agent (or another Person as required
under any applicable Intercreditor Agreement), (iii) take any action in order to
perfect any security interests in any assets specifically requiring perfection
through control (including cash, cash equivalents, deposit accounts or
securities accounts) (except, in each case (A) as required by subsection 4.16 of
the ABL Credit Agreement and (B) to the extent consisting of proceeds perfected
by the filing of a financing statement under the PPSA or, in the case of Pledged
Stock, by being held by the ABL Collateral Agent or an Additional Agent as agent
for the ABL Collateral Agent), (iv) deliver landlord lien waivers, estoppels or
collateral access letters or (v) file any fixture filing with respect to any
security interest in fixtures affixed to or attached to any real property
constituting Excluded Assets.
(d) The ABL Collateral Agent may grant extensions of time for the creation and
perfection of security interests in, or obtaining a delivery of documents or
other deliverables with respect to, particular assets of any Canadian Grantor
where it determines that such action cannot be accomplished without undue effort
or expense by the time or times at which it would otherwise be required to be
accomplished by this Agreement or any other Security Documents.
5.2.5 Changes in Name, Jurisdiction of Organization, etc. Such Canadian Grantor
will give prompt written notice to the ABL Collateral Agent of any change in its
name, legal form or jurisdiction of organization (whether by amalgamation or
otherwise) (and in any event, within 30 days of such change); provided that,
promptly after receiving a written request therefor from the ABL Collateral
Agent, such Canadian Grantor shall deliver to the ABL Collateral Agent all
additional financing statements or financing change statements and other
documents reasonably necessary or desirable to maintain the validity, perfection
and priority of the security interests created hereunder and other documents
reasonably requested by the ABL Collateral Agent to maintain the validity,
perfection and priority of the security interests as and to the extent provided
for herein and upon receipt of such additional financing statements the ABL
Collateral Agent shall either promptly file such additional financing statements
or approve the filing of such additional financing statements by such Canadian
Grantor. Upon any such approval such Canadian Grantor shall proceed with the
filing of the additional financing statements and deliver copies (or other
evidence of filing) of the additional filed financing statements to the ABL
Collateral Agent.
5.2.6 Notices. Such Canadian Grantor will advise the ABL Collateral Agent
promptly, in reasonable detail, of:
(a) any Lien (other than security interests created hereby or permitted by the
ABL Credit Agreement (including Liens permitted by subsection 8.2 of the ABL
Credit Agreement) on any of such Canadian Grantor’s Collateral which would
materially adversely affect the ability of the ABL Collateral Agent to exercise
any of its remedies hereunder; and
(b) the occurrence of any other event which would reasonably be expected to have
a material adverse effect on the security interests created hereby.
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5.2.7 Pledged Stock. In the case of each Canadian Grantor that is an Issuer,
such Issuer agrees that (i) it will be bound by the terms of this Agreement
relating to the Pledged Stock other than ULC Shares issued by it and will comply
with such terms insofar as such terms are applicable to it, (ii) it will notify
the ABL Collateral Agent promptly in writing of the occurrence of any of the
events described in subsection 5.3.1 with respect to the Pledged Stock issued by
it and (iii) the terms of subsections 6.3(c) and 6.7 shall apply to it, mutatis
mutandis, with respect to all actions that may be required of it pursuant to
subsection 6.3(c) or 6.7 with respect to the Pledged Stock other than ULC Shares
issued by it.
5.2.8 Accounts Receivable.
(a) With respect to Accounts Receivable, such Canadian Grantor will not, other
than in the ordinary course of business or as permitted by the Loan Documents,
(i) grant any extension of the time of payment of any of such Canadian Grantor’s
Accounts Receivable, (ii) compromise or settle any such Account Receivable for
less than the full amount thereof, (iii) release, wholly or partially, any
Person liable for the payment of any such Account Receivable, (iv) allow any
credit or discount whatsoever on any such Account Receivable, (v) amend,
supplement or modify any such Account Receivable unless such extensions,
compromises, settlements, releases, credits, discounts, amendments, supplements
or modifications would not reasonably be expected to materially adversely affect
the value of the Accounts Receivable taken as a whole or (vi) evidence any
Accounts Receivable by an Instrument as Chattel Paper.
(b) Such Canadian Grantor will deliver to the ABL Collateral Agent a copy of
each material demand, notice or document received by it from any obligor under
the Accounts Receivable that disputes the validity or enforceability of more
than 7.5% of the aggregate amount of the then outstanding Accounts Receivable.
5.2.9 Maintenance of Records. Such Canadian Grantor will keep and maintain at
its own cost and expense reasonably satisfactory records of its Collateral,
including, without limitation, a record of all payments received and all credits
granted with respect to such Collateral, and shall mark such records to evidence
this Agreement and the Liens and the security interests created hereby.
5.2.10 Acquisition of Intellectual Property. Concurrently with the delivery of
the annual Compliance Certificate pursuant to subsection 7.2(a) of the ABL
Credit Agreement, the Borrower Representative will notify the ABL Collateral
Agent of any acquisition by the Canadian Grantor of (i) any registration of any
material Copyright, Patent, Trade-mark or Industrial Design or (ii) any
exclusive rights under a material Copyright License, Patent License, Trade-mark
License or Industrial Design License constituting Collateral, and shall take
such actions as may be reasonably requested by the ABL Collateral Agent (but
only to the extent such actions are within such Canadian Grantor’s control) to
perfect the security interest granted to the ABL Collateral Agent and the other
Secured Parties therein, to the extent provided herein in respect of any
Copyright, Patent, Trade-mark or Industrial Design constituting Collateral, by
(x) the execution and delivery of an amendment or supplement to this Agreement
(or amendments to any such agreement previously executed or delivered by such
Canadian Grantor) and/or (y) the making of appropriate registrations (I) of
financing statements under the PPSA as in effect from time to time in any
applicable jurisdiction and/or (II) in the Canadian Intellectual Property
Office, or with any other applicable Canadian governmental authority.
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5.2.11 [Reserved].
5.2.12 [Reserved].
5.2.13 Deposit Accounts; etc. Such Canadian Grantor shall take, or refrain from
taking, as the case may be, each action that is necessary to be taken or not
taken, as the case may be, so that no breach of subsection 4.16 of the ABL
Credit Agreement is caused by the failure to take such action or to refrain from
taking such action by such Canadian Grantor or any of its Subsidiaries.
5.2.14 Protection of Trade-marks. Such Canadian Grantor shall, with respect to
any Trade-marks that are material to the business of such Canadian Grantor, use
commercially reasonable efforts not to cease the use of any of such Trade-marks
or fail to maintain the level of the quality of products sold and services
rendered under any of such Trade-marks at a level at least substantially
consistent with the quality of such products and services as of the date hereof,
and shall use commercially reasonable efforts to take all steps reasonably
necessary to ensure that licensees of such Trade-marks use such consistent
standards of quality, in each case, except as would not reasonably be expected
5.2.15 Protection of Intellectual Property. Subject to and except as permitted
by the ABL Credit Agreement, such Canadian Grantor shall use commercially
reasonable efforts not to do any act or omit to do any act whereby any of the
Intellectual Property that is material to the business of Canadian Grantor may
lapse, expire, or become abandoned, or unenforceable, in each case, except as
would not reasonably be expected to have a Material Adverse Effect.
5.2.16 Assignment of Letter-of-Credit Rights. In the case of any letters of
credit not constituting Excluded Assets acquired following the Closing Date and
constituting Collateral, such Canadian Grantor shall use its commercially
reasonable efforts to promptly obtain the consent of the issuer thereof and any
nominated person thereon to the assignment of the proceeds of the related letter
of credit.
5.3 Covenants of Each Canadian Pledgor. Each Canadian Pledgor covenants and
respect to Canadian Facility Letters of Credit, and all other Obligations then
and the Commitments shall have terminated, (ii) as to any Canadian Pledgor, a
sale or other disposition of all the Capital Stock of such Canadian Pledgor
transaction or occurrence as a result of which such Canadian Pledgor ceases to
be a Restricted Subsidiary of the Parent Borrower, in each that is permitted
under the ABL Credit Agreement or (iii) as to any Canadian Pledgor, such
Canadian Pledgor becoming an Excluded Subsidiary:
5.3.1 Additional Shares. If such Canadian Pledgor shall, as a result of its
ownership of its Pledged Stock, become entitled to receive or shall receive any
Certificated Securities (including, without limitation, any Certificated
Securities representing a stock dividend or a distribution in connection with
any reclassification, increase or reduction of capital or any Certificated
Securities issued in connection with any reorganization), stock option or
similar rights in respect of the Capital Stock of any Issuer, whether in
addition to, in substitution of, as a conversion of, or in exchange for, any
shares of the Pledged Stock, or otherwise in respect thereof, such Canadian
Pledgor shall accept the same as the agent of the ABL Collateral Agent
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and the other Secured Parties, hold the same in trust for the ABL Collateral
Agent and the other Secured Parties and deliver the same forthwith to the ABL
Collateral Agent (who will hold the same on behalf of the Secured Parties as
Pledged Collateral) in the exact form received, duly endorsed by such Canadian
Pledgor to the ABL Collateral Agent, as applicable, if required, together with
an undated stock power covering such Certificated Securities duly executed in
blank by such Canadian Grantor, to be held by the ABL Collateral Agent subject
to the terms hereof, as additional collateral security for the Obligations
(subject to subsection 3.3). Any sums paid upon or in respect of the Pledged
Stock upon the liquidation or dissolution of any Issuer (except any liquidation
or dissolution of any Subsidiary of the Parent Borrower not prohibited by the
ABL Credit Agreement) shall be paid over to the ABL Collateral Agent to be held
by the ABL Collateral Agent subject to the terms hereof as additional collateral
security for the Obligations, and, except in the case of ULC Shares, in case any
distribution of capital shall be made on or in respect of the Pledged Stock or
any property shall be distributed upon or with respect to the Pledged Stock
pursuant to the recapitalization or reclassification of the capital of any
Issuer or pursuant to the reorganization thereof, the property so distributed
shall, unless otherwise subject to a perfected security interest in favour of
the ABL Collateral Agent, be delivered to the ABL Collateral Agent to be held by
the ABL Collateral Agent subject to the terms hereof as additional collateral
security for the Obligations, in each case except as otherwise provided by the
applicable Intercreditor Agreement. If any sums of money or property so paid or
distributed in respect of the Pledged Stock shall be received by such Canadian
Pledgor, such Canadian Pledgor shall, until such money or property is paid or
delivered to the ABL Collateral Agent hold such money or property in trust for
the Secured Parties, segregated from other funds of such Canadian Pledgor, as
additional collateral security for the Obligations.
5.3.2 [Reserved].
5.3.3 Pledged Notes. Such Canadian Pledgor shall, within 60 days (or such longer
period as may be agreed by the ABL Collateral Agent in its sole discretion)
following the date of this Agreement (or on such later date upon which it
becomes a party hereto pursuant to subsection 9.15), deliver to the ABL
in blank or, at the request of the ABL Collateral Agent, endorsed to the ABL
Collateral Agent. Furthermore, within ten Business Days after any Canadian
Pledgor obtains a Pledged Note, such Canadian Pledgor shall cause such Pledged
Note to be delivered to the ABL Collateral Agent endorsed in blank or, at the
request of the ABL Collateral Agent, endorsed to the ABL Collateral Agent.
5.3.4 Maintenance of Security Interest.
(a) Such Canadian Pledgor shall maintain the security interest created by this
Agreement in such Canadian Pledgor’s Pledged Collateral as a security interest
having at least the perfection and priority described in subsection 4.3.4 or
subsection 4.3.5, as applicable and shall defend such security interest against
the claims and demands of all Persons whomsoever. At any time and from time to
time, upon the written request of the ABL Collateral Agent and at the sole
expense of such Canadian Pledgor, such Canadian Pledgor will promptly and duly
execute and deliver such further instruments and documents and take such further
actions as the ABL Collateral Agent may reasonably request for the purpose of
obtaining or preserving the full benefits of this Agreement and of the rights
and powers herein granted by such Canadian Pledgor; provided, that
notwithstanding any other provision of this Agreement or any other Loan
Documents, neither the Parent Borrower nor any other Canadian Pledgor will be
required to (i) take any action in any jurisdiction other Canada, or required by
the laws of any such non-Canadian jurisdiction, or enter into any security
agreement or pledge agreement governed by the laws of any such non-Canadian
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jurisdiction, in order to create any security interests (or other Liens) in
assets located or titled outside of Canada or to perfect any security interests
(or other Liens) in any Collateral, (ii) deliver control agreements with respect
to, or confer perfection by “control” over, any deposit accounts, bank or
securities account or other Collateral, except (A) as required by subsection
4.16 of the ABL Credit Agreement and (B) in the case of Security Collateral that
constitutes Capital Stock or Intercompany Notes in certificated form, delivering
such Capital Stock or Intercompany Notes to the ABL Collateral Agent (or another
Person as required under any applicable Intercreditor Agreement), (iii) take any
action in order to perfect any security interests in any assets specifically
requiring perfection through control (including cash, cash equivalents, deposit
accounts or securities accounts) constituting Excluded Assets (except, in each
case, to the extent consisting of proceeds perfected by the filing of a
financing statement under the PPSA or, in the case of Pledged Stock, by being
held by the ABL Collateral Agent or an Additional Agent as agent for the ABL
Collateral Agent), (iv) deliver landlord lien waivers, estoppels or collateral
access letters or (v) file any fixture filing with respect to any security
interest in fixtures affixed to or attached to any real property constituting
Excluded Assets.
(b) The ABL Collateral Agent may grant extensions of time for the creation and
perfection of security interests in, or obtaining or delivery of documents or
other deliverables with respect to, particular assets of any Canadian Pledgor
SECTION 6 REMEDIAL PROVISIONS
6.1 Certain Matters Relating to Accounts.
(a) At any time and from time to time after the occurrence and during the
continuance of an Event of Default, the ABL Collateral Agent shall have the
right to make test verifications of the Accounts Receivable constituting
Collateral in any reasonable manner and through any reasonable medium that it
reasonably considers advisable, and the relevant Canadian Grantor shall furnish
all such assistance and information as the ABL Collateral Agent may reasonably
require in connection with such test verifications. At any time and from time to
time after the occurrence and during the continuance of an Event of Default upon
the ABL Collateral Agent’s reasonable request and at the expense of the relevant
Canadian Grantor, such Canadian Grantor shall cause independent public or
chartered accountants or others reasonably satisfactory to the ABL Collateral
Agent to furnish to the ABL Collateral Agent reports showing reconciliations,
aging and test verifications of, and trial balances for, the Accounts Receivable
constituting Collateral.
(b) The ABL Collateral Agent hereby authorizes each Canadian Grantor to collect
such Canadian Grantor’s Accounts Receivable and the ABL Collateral Agent may
curtail or terminate said authority at any time, without limiting the ABL
Collateral Agent’s rights under subsection 4.16 of the ABL Credit Agreement,
after the occurrence and during the continuance of an Event of Default specified
in subsection 9(a) of the ABL Credit Agreement. If required by the ABL
Collateral Agent at any time, without limiting the ABL Collateral Agent’s rights
under subsection 4.16 of the ABL Credit Agreement, after the occurrence and
during the continuance of an Event of Default specified in subsection 9(a) of
the ABL Credit Agreement any Proceeds constituting payments or other cash
Proceeds of Accounts Receivable constituting Collateral, when collected by such
Canadian Grantor, (i) shall be forthwith (and, in any event, within two Business
Days of receipt by such Canadian Grantor) deposited in, or otherwise transferred
by such Canadian Grantor to, the Collateral Proceeds Account, subject to
withdrawal by the
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ABL Collateral Agent for the account of the Secured Parties only as provided in
subsection 6.5, and (ii) until so turned over, shall be held by such Canadian
Grantor in trust for the ABL Collateral Agent and the other Secured Parties,
segregated from other funds of such Canadian Grantor. All Proceeds constituting
collections or other cash Proceeds of Accounts Receivable constituting
Collateral while held by the Collateral Account Bank (or by any Canadian Grantor
in trust for the benefit of the ABL Collateral Agent and the other Secured
Parties) shall continue to be collateral security for all of the Obligations and
shall not constitute payment thereof until applied as hereinafter provided. At
any time when an Event of Default specified in subsection 9(a) of the ABL Credit
Agreement has occurred and is continuing at the ABL Collateral Agent’s election,
each of the ABL Collateral Agent and the Administrative Agent may apply all or
any part of the funds on deposit in the Collateral Proceeds Account established
by the relevant Canadian Grantor to the payment of the Obligations of such
Canadian Grantor then due and owing, such application to be made as set forth in
subsection 6.5. So long as no Event of Default has occurred and is continuing,
the funds on deposit in the Collateral Proceeds Account shall be remitted as
provided in subsection 6.1(d).
(c) At any time and from time to time after the occurrence and during the
Credit Agreement at the ABL Collateral Agent’s request, each Canadian Grantor
shall deliver to the ABL Collateral Agent copies or, if required by the ABL
Collateral Agent for the enforcement thereof or foreclosure thereon, originals
of all documents held by such Canadian Grantor evidencing, and relating to, the
agreements and transactions which gave rise to such Canadian Grantor’s Accounts
Receivable constituting Collateral, including, without limitation, all
statements relating to such Canadian Grantor’s Accounts Receivable constituting
Collateral and all orders, invoices and shipping receipts related thereto.
(d) So long as no Event of Default has occurred and is continuing the ABL
Collateral Agent shall instruct the Collateral Account Bank to promptly remit
any funds on deposit in each Canadian Grantor’s Collateral Proceeds Account to
any account designated by such Canadian Grantor, maintained in compliance with
the provisions of subsection 4.16 of the ABL Credit Agreement. In the event that
an Event of Default has occurred and is continuing the ABL Collateral Agent, at
its option, may require that each Collateral Proceeds Account and the
Concentration Account of each Canadian Grantor be established at the ABL
Collateral Agent or another institution reasonably acceptable to the ABL
Collateral Agent. Subject to subsection 4.16 of the ABL Credit Agreement, each
Canadian Grantor shall have the right, at any time and from time to time, to
withdraw such of its own funds from its own Concentration Account, and to
maintain such balances in its Concentration Account, as it shall deem to be
necessary or desirable.
6.2 Communications with Obligors; Canadian Grantors Remain Liable.
(a) The ABL Collateral Agent in its own name or in the name of others, may at
any time and from time to time after the occurrence and during the continuance
of an Event of Default specified in subsection 9(a) of the ABL Credit Agreement
communicate with obligors under the Accounts Receivable and parties to the
Contracts (in each case, to the extent constituting Collateral) to verify with
them to the ABL Collateral Agent’s satisfaction the existence, amount and terms
of any Accounts Receivable or Contracts.
(b) Upon the request of the ABL Collateral Agent at any time after the
occurrence and during the continuance of an Event of Default specified in
subsection 9(a) of the ABL Credit Agreement each Canadian Grantor shall notify
obligors on such Canadian Grantor’s Accounts Receivable and parties to such
Canadian Grantor’s Contracts (in each case, to the extent constituting
Collateral) that such Accounts Receivable and such Contracts have been assigned
to the ABL Collateral Agent, for the benefit of the Secured Parties, and that
payments in respect thereof shall be made directly to the ABL Collateral Agent.
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(c) Anything herein to the contrary notwithstanding, each Canadian Grantor shall
remain liable under each of such Canadian Grantor’s Accounts Receivable to
observe and perform all the conditions and obligations to be observed and
performed by it thereunder, all in accordance with the terms of any agreement
giving rise thereto. None of the ABL Collateral Agent, the Administrative Agent
or any other Secured Party shall have any obligation or liability under any
Accounts Receivable (or any agreement giving rise thereto) by reason of or
arising out of this Agreement or the receipt by the ABL Collateral Agent or any
other Secured Party of any payment relating thereto, nor shall the ABL
Collateral Agent or any other Secured Party be obligated in any manner to
perform any of the obligations of any Canadian Grantor under or pursuant to any
Accounts Receivable (or any agreement giving rise thereto) to make any payment,
to make any inquiry as to the nature or the sufficiency of any payment received
by it or as to the sufficiency of any performance by any party thereunder, to
present or file any claim, to take any action to enforce any performance or to
collect the payment of any amounts that may have been assigned to it or to which
it may be entitled at any time or times.
6.3 Pledged Stock.
(a) Unless an Event of Default shall have occurred and be continuing and the ABL
Collateral Agent shall have given notice to the relevant Canadian Pledgor of the
ABL Collateral Agent’s intent to exercise its corresponding rights pursuant to
subsection 6.3(b), each Canadian Pledgor shall be permitted to receive all cash
dividends and distributions paid in respect of the Pledged Stock (subject to the
last two sentences of subsection 5.3.1) and all payments made in respect of the
Pledged Notes, to the extent permitted in the ABL Credit Agreement, and to
exercise all voting and corporate rights with respect to the Pledged Stock;
provided, however, that no vote shall be cast or corporate right exercised or
such other action taken which is prohibited by, or would result in any violation
of, any provision of the ABL Credit Agreement, this Agreement or any other Loan
Document.
(b) If an Event of Default shall occur and be continuing and the ABL Collateral
Agent shall give written notice of its intent to exercise such rights to the
relevant Canadian Pledgor or Canadian Pledgors, (i) the ABL Collateral Agent,
subject to the terms of any applicable Intercreditor Agreement, shall have the
right, except in the case of ULC Shares, to receive any and all cash dividends,
payments or other Proceeds paid in respect of the Pledged Stock and make
application thereof to the Obligations of the relevant Canadian Pledgor as
provided in the ABL Credit Agreement consistent with subsection 6.5, and
(ii) except in the case of ULC Shares, any or all of the Pledged Stock shall be
registered in the name of the ABL Collateral Agent or a nominee of any thereof,
as applicable, subject to the terms of any applicable Intercreditor Agreement,
and the ABL Collateral Agent, or the nominee, as applicable, subject to the
terms of any applicable Intercreditor Agreement, may thereafter exercise
(x) except in the case of ULC Shares, all voting, corporate and other rights
pertaining to such Pledged Stock at any meeting of shareholders of the relevant
Issuer or Issuers or otherwise and (y) except in the case of ULC Shares, any and
all rights of conversion, exchange, subscription and any other rights,
privileges or options pertaining to such Pledged Stock as if it were the
absolute owner thereof (including, without limitation, the right to exchange at
its discretion any and all of the Pledged Stock other than ULC Shares upon the
merger, amalgamation, consolidation, reorganization, recapitalization or other
fundamental change in the corporate structure of any Issuer, or upon the
exercise by the relevant Canadian Pledgor or the ABL Collateral Agent, subject
to the terms of any applicable Intercreditor Agreement, of any right, privilege
or option pertaining to such Pledged Stock other than ULC Shares, and in
connection therewith, the right to deposit and deliver any and all of the
Pledged Stock other than ULC Shares with any committee, depositary, transfer
agent, registrar or other designated agency upon such terms and conditions as
the ABL Collateral Agent may reasonably determine), all without liability (other
than for its gross negligence or willful misconduct) except to account for
property actually received by it, but the ABL Collateral
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Agent shall have no duty to any Canadian Pledgor to exercise any such right,
privilege or option and shall not be responsible for any failure to do so or
delay in so doing, provided that the ABL Collateral Agent, shall not exercise
any voting or other consensual rights pertaining to the Pledged Stock in any way
that would constitute an exercise of the remedies described in subsection 6.6
other than in accordance with subsection 6.6.
(c) Each Canadian Pledgor hereby authorizes and instructs each Issuer or maker
of any Pledged Stock pledged by such Canadian Pledgor hereunder other than ULC
Shares to, subject to any applicable Intercreditor Agreement, (i) comply with
any instruction received by it from the ABL Collateral Agent in writing with
respect to Capital Stock in such Issuer that (x) states that an Event of Default
has occurred and is continuing and (y) is otherwise in accordance with the terms
of this Agreement, without any other or further instructions from such Canadian
Pledgor, and each Canadian Pledgor agrees that each Issuer or maker shall be
fully protected in so complying, and (ii) unless otherwise expressly permitted
hereby, pay any dividends or other payments with respect to the Pledged Stock
directly to the ABL Collateral Agent.
6.4 Proceeds to Be Turned Over to the ABL Collateral Agent. In addition to the
rights of the ABL Collateral Agent specified in subsection 6.1 with respect to
payments of Accounts Receivable constituting Collateral, if an Event of Default
shall occur and be continuing, and the ABL Collateral Agent shall have
instructed any Canadian Grantor to do so, all Proceeds of Collateral received by
such Canadian Grantor consisting of cash, cheques and other Cash Equivalent
items shall be held by such Canadian Grantor in trust for the ABL Collateral
Agent and the other Secured Parties hereto, segregated from other funds of such
Canadian Grantor, and shall, forthwith upon receipt by such Canadian Grantor, be
Canadian Grantor (duly endorsed by such Canadian Grantor to the ABL Collateral
Agent). All Proceeds of Security Collateral received by the ABL Collateral Agent
hereunder shall be held by the ABL Collateral Agent in the relevant Collateral
Proceeds Account maintained under its sole dominion and control. All Proceeds of
Security Collateral while held by the ABL Collateral Agent in such Collateral
Proceeds Account (or by the relevant Canadian Grantor in trust for the ABL
Collateral Agent and the other Secured Parties) shall continue to be held as
collateral security for all the Obligations of such Canadian Grantor and shall
not constitute payment thereof until applied as provided in subsection 6.5 and
any applicable Intercreditor Agreement.
6.5 Application of Proceeds. It is agreed that if an Event of Default shall
occur and be continuing, any and all Proceeds of the relevant Canadian Granting
Party’s Security Collateral received by the ABL Collateral Agent (whether from
the relevant Canadian Granting Party or otherwise) shall be held by the ABL
Collateral Agent for the benefit of the Secured Parties as collateral security
for the Obligations of the relevant Canadian Granting Party (whether matured or
unmatured), and/or then or at any time thereafter may, in the sole discretion of
the ABL Collateral Agent, subject to any applicable Intercreditor Agreement, be
applied by the ABL Collateral Agent against the Obligations of the relevant
Canadian Granting Party then due and owing in the order of priority set forth in
the ABL Credit Agreement.
6.6 PPSA and Other Remedies.
(a) If an Event of Default shall occur and be continuing, subject to the terms
of any applicable Intercreditor Agreement, the ABL Collateral Agent, on behalf
of the Secured Parties, may exercise, in addition to all other rights and
remedies granted to them in this Agreement and in any other
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instrument or agreement securing, evidencing or relating to the Obligations to
the extent permitted by applicable law, all rights and remedies of a secured
party under the Bankruptcy and Insolvency Act (Canada), the Companies’ Creditors
Arrangement Act (Canada), the Winding-up and Restructuring Act (Canada) and the
PPSA and under any other applicable law and in equity. Subject to subsection
3.3(d), without limiting the generality of the foregoing, to the extent
permitted by applicable law, subject to the terms of any applicable
Intercreditor Agreement, the ABL Collateral Agent, without demand of performance
or other demand, presentment, protest, advertisement or notice of any kind
(except any notice required by law referred to below) to or upon any Canadian
Granting Party or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances,
forthwith collect, receive, appropriate and realize upon the Security
Collateral, or any part thereof, and/or may forthwith, subject to any existing
reserved rights or licenses, sell, lease, assign, give option or options to
purchase, or otherwise dispose of and deliver the Security Collateral or any
part thereof (or contract to do any of the foregoing), in one or more parcels at
public or private sale or sales, at any exchange, broker’s board or office of
the ABL Collateral Agent or any other Secured Party or elsewhere upon such terms
and conditions as it may deem advisable and at such prices as it may deem best,
for cash or on credit or for future delivery without assumption of any credit
risk. To the extent permitted by law, subject to the terms of any applicable
Intercreditor Agreement, the ABL Collateral Agent or any other Secured Party
shall have the right, upon any such sale or sales, to purchase the whole or any
part of the Security Collateral so sold, free of any right or equity of
redemption in such Canadian Grantor, which right or equity is hereby waived and
released. Each Canadian Granting Party further agrees, at the ABL Collateral
Agent’s request (subject to the terms of any applicable Intercreditor
Agreement), to assemble the Security Collateral and make it available to the ABL
Collateral Agent at places which the ABL Collateral Agent shall reasonably
select, whether at such Canadian Granting Party’s premises or elsewhere. The ABL
Collateral Agent shall apply the net proceeds of any action taken by it pursuant
to this subsection 6.6, after deducting all reasonable costs and expenses of
every kind incurred in connection therewith or incidental to the care or
safekeeping of any of the Security Collateral or in any way relating to the
Security Collateral or the rights of the ABL Collateral Agent and the other
Secured Parties hereunder, including, without limitation, reasonable attorneys’
fees and disbursements, to the payment in whole or in part of the Obligations of
the relevant Canadian Granting Party then due and owing, in the order of
priority specified in subsection 6.5, and only after such application and after
the payment by the ABL Collateral Agent of any other amount required by any
provision of law, need the ABL Collateral Agent account for the surplus, if any,
to such Canadian Granting Party. To the extent permitted by applicable law,
(i) such Canadian Granting Party waives all claims, damages and demands it may
acquire against the ABL Collateral Agent or any other Secured Party arising out
of the repossession, retention or sale of the Security Collateral, other than
any such claims, damages and demands that may arise from the gross negligence or
willful misconduct of any of the ABL Collateral Agent or such other Secured
Party, and (ii) if any notice of a proposed sale or other disposition of
Security Collateral shall be required by law, such notice shall be deemed
reasonable and proper if given at least 10 days before such sale or other
disposition.
(b) The ABL Collateral Agent may appoint, remove or reappoint by instrument in
writing, any Person or Persons, whether an officer or officers or an employee or
employees of any Canadian Granting Party or not, to be an interim receiver,
receiver or receivers (hereinafter called a “Receiver,” which term when used
herein shall include a receiver and manager) of such Collateral (including any
interest, income or profits therefrom). Any such Receiver shall, to the extent
permitted by applicable law, be deemed the agent of such Canadian Granting Party
and not of the ABL Collateral Agent, and the ABL Collateral Agent shall not be
in any way responsible for any misconduct, negligence or non-feasance on the
part of any such Receiver or its servants, agents or employees. Subject to the
provisions of the instrument appointing it, any such Receiver shall, if an Event
of Default shall occur and be continuing, (i)
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have such powers as have been granted to the ABL Collateral Agent under this
Section 6 and (ii) be entitled to exercise such powers at any time that such
powers would otherwise be exercisable by the ABL Collateral Agent under this
Section 6, which powers shall include, but are not limited to, the power to take
possession of the Collateral, to preserve the Collateral or its value, to carry
on or concur in carrying on all or any part of the business of such Canadian
Granting Party and, subject to existing reserved rights or licenses, to sell,
lease, license or otherwise dispose of or concur in selling, leasing, licensing
or otherwise disposing of the Collateral. To facilitate the foregoing powers,
any such Receiver may, to the exclusion of all others, including any Canadian
Granting Party, if an Event of Default shall occur and be continuing, enter
upon, use and occupy all premises owned or occupied by such Canadian Granting
Party wherein the Collateral may be situated, maintain the Collateral upon such
premises, borrow money on a secured or unsecured basis and use the Collateral
directly in carrying on such Canadian Granting Party’s business or as security
for loans or advances to enable the Receiver to carry on such Canadian Granting
Party’s business or otherwise, as such Receiver shall, in its reasonable
discretion, determine. Except as may be otherwise directed by the ABL Collateral
Agent, all money received from time to time by such Receiver in carrying out
his/her/its appointment shall be received in trust for and be paid over to the
ABL Collateral Agent and any surplus shall be applied in accordance with
applicable law. Every such Receiver may, in the discretion of the ABL Collateral
Agent, be vested with, in addition to the rights set out herein, all or any of
the rights and powers of the Administrative Agent, the ABL Collateral Agent
described in the ABL Credit Agreement, the PPSA, the Bankruptcy and Insolvency
Act (Canada), the Companies’ Creditors Arrangement Act (Canada) or the
Winding-Up and Restructuring Act (Canada).
6.7 Registration Rights.
(a) Subject to any applicable Intercreditor Agreement, if the ABL Collateral
Agent shall determine to exercise its right to sell any or all of the Pledged
Stock pursuant to subsection 6.6, and if in the reasonable opinion of the ABL
Collateral Agent it is necessary or reasonably advisable to have the Pledged
Stock, or that portion thereof to be sold, registered under the provisions of
the applicable securities legislation, the relevant Canadian Pledgor will use
its reasonable best efforts to cause the Issuer thereof to (i) execute and
deliver, and use its reasonable best efforts to cause the directors and officers
of such Issuer to execute and deliver, all such instruments and documents, and
do or cause to be done all such other acts as may be, in the reasonable opinion
of the ABL Collateral Agent, necessary or advisable to register such Pledged
Stock, or that portion thereof to be sold, under the provisions of the
applicable securities legislation, (ii) use its reasonable best efforts to cause
the registration statement relating thereto to become effective and to remain
effective for a period of not more than one year from the date of the first
public offering of such Pledged Stock, or that portion thereof to be sold, and
(iii) make all amendments thereto and/or to the related prospectus which, in the
reasonable opinion of the ABL Collateral Agent, are necessary or advisable, all
in conformity with the requirements of the applicable securities legislation and
the rules and regulations of the applicable securities commission or regulation
applicable thereto. Such Canadian Pledgor agrees to use its reasonable best
efforts to cause such Issuer to comply with the provisions of the securities
laws of any and all provinces and territories that the ABL Collateral Agent
shall reasonably designate and to make available to its security holders, as
soon as practicable, an earnings statement (which need not be audited) that will
satisfy the provisions of Section 11(a) of the applicable securities
legislation.
(b) Such Canadian Pledgor recognizes that the ABL Collateral Agent may be unable
to effect a public sale of any or all such Pledged Stock, by reason of certain
prohibitions contained in applicable securities legislation or otherwise, and
may be compelled to resort to one or more private sales thereof to a restricted
group of purchasers which will be obliged to agree, among other things, to
acquire such securities for their own account for investment and not with a view
to the distribution or resale thereof.
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Such Canadian Pledgor acknowledges and agrees that any such private sale may
result in prices and other terms less favourable than if such sale were a public
sale and, notwithstanding such circumstances, to the extent permitted by
applicable law, agrees that any such private sale shall be deemed to have been
made in a commercially reasonable manner. The ABL Collateral Agent shall not be
under any obligation to delay a sale of any of the Pledged Stock for the period
of time necessary to permit the Issuer thereof to register such securities for
public sale under the Securities Act, or under applicable securities
legislation, even if such Issuer would agree to do so.
(c) Such Canadian Pledgor agrees to use its reasonable best efforts to do or
cause to be done all such other acts as may be necessary to make such sale or
sales of all or any portion of such Pledged Stock pursuant to this subsection
6.7 valid and binding and in compliance with any and all other applicable
Requirements of Law. Such Canadian Pledgor further agrees that a breach of any
of the covenants contained in this subsection 6.7 will cause irreparable injury
to the ABL Collateral Agent and the Lenders, that the ABL Collateral Agent and
the Lenders have no adequate remedy at law in respect of such breach and, as a
consequence, that each and every covenant contained in this subsection 6.7 shall
be specifically enforceable against such Canadian Pledgor, and to the extent
permitted by applicable law, such Canadian Pledgor hereby waives and agrees not
to assert any defenses against an action for specific performance of such
covenants (except for a defense that no Event of Default has occurred or is
continuing under the ABL Credit Agreement).
6.8 Waiver; Deficiency. Each Canadian Granting Party shall remain liable for any
deficiency if the proceeds of any sale or other disposition of the Security
Collateral are insufficient to pay in full, the Canadian Facility Revolving
Credit Loans, Reimbursement Obligations constituting Obligations of such
Canadian Granting Party and, to the extent then due and owing, all other
Obligations of such Canadian Granting Party and the reasonable fees and
disbursements of any legal counsel employed by the ABL Collateral Agent or any
other Secured Party to collect such deficiency.
SECTION 7 THE ABL COLLATERAL AGENT
7.1 ABL Collateral Agent’s Appointment as Attorney-in-Fact, etc.
(a) Each Canadian Granting Party hereby irrevocably constitutes and appoints the
ABL Collateral Agent and any authorized officer or agent thereof, with full
power of substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of such Canadian Granting
Party and in the name of such Canadian Granting Party or in its own name, for
the purpose of carrying out the terms of this Agreement, to take any and all
appropriate action and to execute any and all documents and instruments that may
be reasonably necessary or desirable to accomplish the purposes of this
Agreement to the extent permitted by applicable law, provided that the ABL
Collateral Agent agrees not to exercise such power except upon the occurrence
and during the continuance of any Event of Default and in accordance with and
subject to each applicable Intercreditor Agreement. Without limiting the
generality of the foregoing, at any time when an Event of Default has occurred
and is continuing (in each case to the extent permitted by applicable law and
subject to each applicable Intercreditor Agreement), (x) each Canadian Pledgor
hereby gives the ABL Collateral Agent the power and right, on behalf of such
Canadian Pledgor, without notice or assent by such Canadian Pledgor, to execute,
in connection with any sale provided for in subsection 6.6 or 6.7, any
endorsements, assessments or other instruments of conveyance or transfer with
respect to such Canadian Pledgor’s Pledged Collateral other than any ULC Shares
and (y) each Canadian Grantor hereby gives the ABL Collateral Agent the power
and right, on behalf of such Canadian Grantor, without notice to or assent by
such Canadian Grantor, to do any or all of the following:
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(i) in the name of such Canadian Grantor or its own name, or otherwise, take
possession of and endorse and collect any cheques, drafts, notes, acceptances or
other instruments for the payment of moneys due under any Accounts Receivable of
such Canadian Grantor that constitutes Collateral or with respect to any other
Collateral of such Canadian Grantor and file any claim or take any other action
or institute any proceeding in any court of law or equity or otherwise deemed
appropriate by the ABL Collateral Agent for the purpose of collecting any and
all such moneys due under any Accounts Receivable of such Canadian Grantor that
constitutes Collateral or with respect to any other Collateral of such Canadian
Grantor whenever payable;
(ii) in the case of any Copyright, Patent, Trade-mark or Industrial Design
constituting Collateral of such Canadian Grantor, execute and deliver any and
all agreements, instruments, documents and papers as the ABL Collateral Agent
may reasonably request to such Canadian Grantor to evidence the ABL Collateral
Agent’s and the Lenders’ security interest in such Copyright, Patent, Trade-mark
or Industrial Design and the goodwill and intangibles of such Canadian Grantor
relating thereto or represented thereby, and such Canadian Grantor hereby
consents to the non-exclusive royalty free use by the Collateral Agent of any
Copyright, Patent, Trade-mark or Industrial Design owned by such Canadian
Grantor included in the Collateral for the purposes of disposing of any
Collateral;
(iii) pay or discharge taxes and Liens, other than Liens permitted under this
Agreement or the other Loan Documents, levied or placed on the Security
Collateral of such Canadian Grantor, effect any repairs or any insurance called
for by the terms of this Agreement and pay all or any part of the premiums
therefor and the costs thereof; and
(iv) (A) direct any party liable for any payment under any of the Security
Collateral of such Canadian Grantor to make payment of any and all moneys due or
to become due thereunder directly to the ABL Collateral Agent or as the ABL
Collateral Agent shall direct; (B) ask or demand for, collect, receive payment
of and receipt for, any and all moneys, claims and other amounts due or to
become due at any time in respect of or arising out of any Security Collateral
of such Canadian Grantor; (C) sign and endorse any invoices, freight or express
bills, bills of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications, notices and other documents in connection with any
of the Security Collateral of such Canadian Grantor; (D) commence and prosecute
any suits, actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Security Collateral of such Canadian Grantor or any
portion thereof and to enforce any other right in respect of any Security
Collateral of such Canadian Grantor; (E) defend any suit, action or proceeding
brought against such Canadian Grantor with respect to any Security Collateral of
such Canadian Grantor; (F) settle, compromise or adjust any such suit, action or
proceeding described in clause (E) above and, in connection therewith, to give
such discharges or releases as the ABL Collateral Agent may deem appropriate;
(G) subject to any existing reserved rights or licenses, assign any Copyright,
Patent, Trade-mark or Industrial Design constituting Security Collateral of such
Canadian Grantor (along with the goodwill of the business to which any such
Copyright, Patent, Trade-mark or Industrial Design pertains), for such term or
terms, on such conditions, and in such manner, as the ABL Collateral Agent shall
in its sole discretion determine; and (H) generally, sell, transfer, pledge and
make any agreement with respect to or otherwise deal with any of the Security
Collateral of such Canadian Grantor as fully and completely as though the ABL
Collateral Agent were the absolute owner thereof for all purposes, and do, at
the ABL Collateral Agent’s option and such Canadian Grantor’s expense, at any
time, or from time to time, all acts and things which the ABL Collateral Agent
deems necessary to protect, preserve or realize upon the Security Collateral of
such Canadian Grantor and the ABL Collateral Agent’s and the other Secured
Parties’ security interests therein and to effect the intent of this Agreement,
all as fully and effectively as such Canadian Grantor might do.
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(b) The reasonable expenses of the ABL Collateral Agent incurred in connection
with actions undertaken as provided in this subsection 7.1, together with
interest thereon at a rate per annum equal to the rate per annum at which
interest would then be payable on past due ABR Loans that are Canadian Facility
Revolving Credit Loans under the ABL Credit Agreement, from the date of payment
by the ABL Collateral Agent to the date reimbursed by the relevant Canadian
Granting Party, shall be payable by such Canadian Granting Party to the ABL
Collateral Agent on demand.
(c) Each Canadian Granting Party hereby ratifies all that said attorney shall
lawfully do or cause to be done by virtue hereof. All powers, authorizations and
agencies contained in this Agreement are coupled with an interest and are
irrevocable as to the relevant Canadian Granting Party until the earliest to
occur of (i) the first date on which all the Canadian Facility Revolving Credit
Loans and all other Borrower Obligations then due and owing, are paid in full in
cash, no Canadian Facility Letters of Credit remain outstanding (except for
Canadian Facility Letters of Credit that have been cash collateralized,
backstopped or otherwise provided for pursuant to arrangements reasonably
acceptable to the relevant Issuing Lender), (ii) as to any Canadian Granting
Party, a sale or other disposition of all of the Capital Stock of such Canadian
Granting Party (other than to a Borrower or a Canadian Guarantor), or any other
transaction or occurrence as a result of which such Canadian Granting Party
ceases to be a Restricted Subsidiary of the Parent Borrower, in each case, that
is permitted under the Credit Agreement and (iii) as to any Canadian Granting
Party, such Canadian Granting Party becoming an Excluded Subsidiary.
7.2 Duty of ABL Collateral Agent. The ABL Collateral Agent’s sole duty with
respect to the custody, safekeeping and physical preservation of the Security
Collateral in its possession shall be to deal with it in the same manner as the
ABL Collateral Agent deals with similar property for its own account. None of
the ABL Collateral Agent or any other Secured Party nor any of their respective
officers, directors, employees or agents shall be liable for failure to demand,
collect or realize upon any of the Security Collateral or for any delay in doing
so or shall be under any obligation to sell or otherwise dispose of any Security
Collateral upon the request of any Canadian Granting Party or any other Person
or, except as otherwise provided herein, to take any other action whatsoever
with regard to the Security Collateral or any part thereof. The powers conferred
on the ABL Collateral Agent and the other Secured Parties hereunder are solely
to protect the ABL Collateral Agent’s and the other Secured Parties’ interests
in the Security Collateral and shall not impose any duty upon the ABL Collateral
Agent or any other Secured Party to exercise any such powers. The ABL Collateral
Agent and the other Secured Parties shall be accountable only for amounts that
they actually receive as a result of the exercise of such powers, and to the
maximum extent permitted by applicable law, neither they nor any of their
officers, directors, employees or agents shall be responsible to any Canadian
Granting Party for any act or failure to act hereunder, except as otherwise
provided herein or for their own gross negligence or willful misconduct (as
determined by a court of competent jurisdiction in a final and non-appealable
decision).
7.3 Financing Statements. Pursuant to any applicable law, each Canadian Granting
Party authorizes the ABL Collateral Agent to file or record financing
statements, financing change statements and other filing or recording documents
or instruments with respect to such Canadian Grantor’s Security Collateral
without the signature of such Canadian Granting Party in such form and in such
filing offices as the ABL Collateral Agent reasonably determines appropriate to
perfect the security interests of the ABL Collateral Agent under this Agreement.
Each Canadian Granting Party authorizes the ABL Collateral Agent to use any
collateral description reasonably determined by the ABL Collateral Agent,
including, without limitation, the collateral description “all personal property
now existing or hereafter acquired” or “all assets no existing or hereafter
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acquired” or words of similar meaning in any such financing statements or
financing charge statements. The ABL Collateral Agent agrees to use its
commercially reasonable efforts to notify the relevant Canadian Granting Party
of any financing statement or financing change statement filed by it, provided
that any failure to give such notice shall not affect the validity or
effectiveness of any such filing.
7.4 Authority of ABL Collateral Agent. Each Canadian Granting Party acknowledges
that the rights and responsibilities of the ABL Collateral Agent under this
Agreement with respect to any action taken by the ABL Collateral Agent or the
exercise or non-exercise by the ABL Collateral Agent of any option, voting
right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Agreement or any amendment, supplement or other
modification of this Agreement shall, as between the ABL Collateral Agent and
the Secured Parties, be governed by the ABL Credit Agreement and by such other
agreements with respect thereto as may exist from time to time among them, but,
as between the ABL Collateral Agent and the Canadian Granting Parties, the ABL
Collateral Agent shall be conclusively presumed to be acting as agent for the
Secured Parties with full and valid authority so to act or refrain from acting,
and no Canadian Granting Party shall be under any obligation, or entitlement, to
make any inquiry respecting such authority.
7.5 Right of Inspection. Upon reasonable written advance notice to any Canadian
Grantor and as often as may reasonably be desired, or at any time and from time
to time after the occurrence and during the continuation of an Event of Default,
the ABL Collateral Agent shall have reasonable access during normal business
hours to all the books, correspondence and records of such Canadian Grantor, and
the ABL Collateral Agent and its representatives may examine the same, and to
the extent reasonable take extracts therefrom and make photocopies thereof, and
such Canadian Grantor agrees to render to the ABL Collateral Agent at such
Canadian Grantor’s reasonable cost and expense, such clerical and other
assistance as may be reasonably requested with regard thereto. The ABL
Collateral Agent and its representatives shall also have the right, upon
reasonable advance written notice to such Canadian Grantor subject to any lease
restrictions, to enter during normal business hours into and upon any premises
owned, leased or operated by such Canadian Grantor where any of such Canadian
Grantor’s Inventory or Equipment is located for the purpose of inspecting the
same, observing its use or otherwise protecting its interests therein to the
extent not inconsistent with the provisions of the ABL Credit Agreement and the
other Loan Documents (and subject to each applicable Intercreditor Agreement).
SECTION 8 NON-LENDER SECURED PARTIES
8.1 Rights to Collateral.
(a) The Non-Lender Secured Parties shall not have any right whatsoever to do any
of the following: (i) exercise any rights or remedies with respect to the
Collateral (such term, as used in this Section 8, having the meaning assigned to
it in the ABL Credit Agreement), or to direct the ABL Collateral Agent to do the
same, including, without limitation, the right to (A) enforce any Liens or sell
or otherwise foreclose on any portion of the Collateral, (B) request any action,
institute any proceedings, exercise any voting rights, give any instructions,
make any election, notify account debtors or make collections with respect to
all or any portion of the Collateral or (C) release any Canadian Granting Party
under this Agreement or release any Collateral from the Liens of any Security
Document or consent to or otherwise approve any such release; (ii) demand,
accept or obtain any Lien on any Collateral (except for Liens arising under, and
subject to the terms of, this Agreement); (iii) vote in any Bankruptcy Case or
similar proceeding in respect of the Canadian Borrower or any of its
Subsidiaries (any such proceeding, for purposes of this clause (a), a
“Bankruptcy”) with respect to, or take any other actions concerning the
Collateral; (iv) receive any proceeds from any sale, transfer or other
disposition of any of the Collateral
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(except in accordance with this Agreement); (v) oppose any sale, transfer or
other disposition of the Collateral; (vi) object to any debtor-in-possession
financing in any Bankruptcy which is provided by one or more Lenders among
others (including on a priming basis under the Companies’ Creditors Arrangement
Act, the Bankruptcy and Insolvency Act (Canada), or any other applicable law);
(vii) object to the use of cash collateral in respect of the Collateral in any
Bankruptcy; or (viii) seek, or object to the Lenders or Agents seeking on an
equal and ratable basis, any adequate protection or relief from the automatic
stay with respect to the Collateral in any Bankruptcy.
(b) Each Non-Lender Secured Party, by its acceptance of the benefits of this
Agreement and the other Security Documents, agrees that in exercising rights and
remedies with respect to the Collateral, the ABL Collateral Agent and the
Canadian Facility Lenders, with the consent of the ABL Collateral Agent, may
enforce the provisions of the Security Documents and exercise remedies
thereunder and under any other Loan Documents (or refrain from enforcing rights
and exercising remedies), all in such order and in such manner as they may
determine in the exercise of their sole business judgment. Such exercise and
enforcement shall include, without limitation, the rights to collect, sell,
dispose of or otherwise realize upon all or any part of the Collateral, to incur
expenses in connection with such collection, sale, disposition or other
realization and to exercise all the rights and remedies of a secured lender
under the PPSA as in effect from time to time in any applicable jurisdiction.
The Non-Lender Secured Parties by their acceptance of the benefits of this
Agreement and the other Security Documents hereby agree not to contest or
otherwise challenge any such collection, sale, disposition or other realization
of or upon all or any of the Collateral. Whether or not a Bankruptcy Case has
been commenced, the Non-Lender Secured Parties shall be deemed to have consented
to any sale or other disposition of any property, business or assets of Holding
or any of its Subsidiaries and the release of any or all of the Collateral from
the Liens of any Security Document in connection therewith.
(c) Notwithstanding any provision of this subsection 8.1, the Non-Lender Secured
Parties shall be entitled, subject to each applicable Intercreditor Agreement,
to file any necessary responsive or defensive pleadings in opposition to any
motion, claim, adversary proceeding or other pleadings (A) in order to prevent
any Person from seeking to foreclose on the Collateral or supersede the
Non-Lender Secured Parties’ claim thereto or (B) in opposition to any motion,
claim, adversary proceeding or other pleading made by any Person objecting to or
otherwise seeking the disallowance of the claims of the Non-Lender Secured
Parties. Each Non-Lender Secured Party, by its acceptance of the benefits of
this Agreement, agrees to be bound by and to comply with each applicable
Intercreditor Agreement and authorize the ABL Collateral Agent to enter into
each Intercreditor Agreement on its own behalf.
(d) Each Non-Lender Secured Party, by its acceptance of the benefits of this
Agreement, agrees that the ABL Collateral Agent and the Canadian Facility
Lenders may deal with the Collateral, including any exchange, taking or release
of Collateral, may change or increase the amount of the Borrower Obligations
and/or the Guarantor Obligations, and may release any Canadian Granting Party
from its Obligations hereunder, all without any liability or obligation (except
as may be otherwise expressly provided herein) to the Non-Lender Secured
Parties.
8.2 Appointment of Agent. Each Non-Lender Secured Party, by its acceptance of
the benefits of this Agreement and the other Security Documents, shall be deemed
irrevocably to make, constitute and appoint the ABL Collateral Agent, as agent
under the ABL Credit Agreement (and all officers, employees or agents designated
by the ABL Collateral Agent) as such Person’s true and lawful agent and
attorney-in-fact, and in such capacity, the ABL Collateral Agent shall have the
right, with power of substitution for the Non-Lender Secured Parties and in each
such Person’s name or otherwise, to effectuate any sale, transfer or other
disposition of the Collateral. It is understood and agreed that the appointment
of the ABL Collateral Agent as the agent and attorney-in-fact of the Non-Lender
Secured
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Parties for the purposes set forth herein is coupled with an interest and is
irrevocable. It is understood and agreed that the ABL Collateral Agent has
appointed the Administrative Agent as its agent for purposes of perfecting
certain of the security interests created hereunder and for otherwise carrying
out certain of its obligations hereunder.
8.3 Waiver of Claims. To the maximum extent permitted by law, each Non-Lender
Secured Party waives any claim it might have against the ABL Collateral Agent or
the Lenders with respect to, or arising out of, any action or failure to act or
any error of judgment, negligence, or mistake or oversight whatsoever on the
part of the ABL Collateral Agent or the Lenders or their respective directors,
officers, employees or agents with respect to any exercise of rights or remedies
under the Loan Documents or any transaction relating to the Collateral
(including, without limitation, any such exercise described in subsection
8.1(b)), except for any such action or failure to act that constitutes willful
misconduct or gross negligence of such Person. To the maximum extent permitted
by applicable law, none of the ABL Collateral Agent or any Lender or any of
their respective directors, officers, employees or agents shall be liable for
failure to demand, collect or realize upon any of the Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose
of any Collateral upon the request of Holding, any Subsidiary of Holding, any
Non-Lender Secured Party or any other Person or to take any other action or
forbear from doing so whatsoever with regard to the Collateral or any part
thereof, except for any such action or failure to act that constitutes willful
misconduct or gross negligence of such Person.
8.4 Designation of Non-Lender Secured Parties. The Parent Borrower on behalf of
the Canadian Borrower may from time to time designate a Person as a “Bank
Products Affiliate,” or a “Hedging Affiliate” hereunder by written notice to the
ABL Collateral Agent in accordance with the terms of the ABL Credit Agreement.
Upon being so designated by the Parent Borrower, such Bank Products Affiliate or
Hedging Affiliate (as the case may be) shall be a Non-Lender Secured Party for
the purposes of this Agreement for as long as so designated by the Parent
Borrower provided that, at the time of the Parent Borrower’s designation of such
Non-Lender Secured Party, the obligations of the relevant Canadian Granting
Party under the applicable Hedging Agreement or Bank Products Agreement (as the
case may be) have not been designated as Additional Obligations.
SECTION 9 MISCELLANEOUS
9.1 Amendments in Writing. None of the terms or provisions of this Agreement may
be waived, amended, supplemented or otherwise modified except by a written
instrument executed by each affected Canadian Granting Party and the ABL
Collateral Agent, provided that (a) any provision of this Agreement imposing
obligations on any Canadian Granting Party may be waived by the ABL Collateral
Agent in a written instrument executed by the ABL Collateral Agent and (b) if
separately agreed in writing between the Canadian Borrower and any Non-Lender
Secured Party (and such Non-Lender Secured Party has been designated in writing
by the Canadian Borrower to the ABL Collateral Agent for purposes of this
sentence, for so long as so designated), no such waiver and no such amendment or
modification shall amend, modify or waive subsection 6.5 (or the definition of
“Non-Lender Secured Party” or “Secured Party” to the extent relating thereto) if
such waiver, amendment, supplement or modification would directly and adversely
affect a Non-Lender Secured Party without the written consent of such affected
Non-Lender Secured Party. For the avoidance of doubt, it is understood and
agreed that any amendment, amendment and restatement, waiver, supplement or
other modification of or to any Intercreditor Agreement that would have the
effect, directly or indirectly, through any reference herein to any
Intercreditor Agreement or otherwise, of waiving, amending, supplementing or
otherwise modifying this Agreement, or any term or provision hereof, or any
right or obligation of any Canadian Granting Party hereunder or in respect
hereof, shall not be given such effect except pursuant to a written instrument
executed by each affected Canadian Granting Party and the ABL Collateral Agent
in accordance with this subsection 9.1.
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9.2 Notices. All notices, requests and demands to or upon the ABL Collateral
Agent or any Canadian Granting Party hereunder shall be effected in the manner
provided for in subsection 11.2 of the ABL Credit Agreement; provided that any
such notice, request or demand to or upon any Canadian Guarantor shall be
addressed to such Canadian Guarantor at its notice address set forth on
Schedule 1, unless and until such Canadian Guarantor shall change such address
by notice to the ABL Collateral Agent and the Administrative Agent given in
accordance with subsection 11.2 of the ABL Credit Agreement.
9.3 No Waiver by Course of Conduct; Cumulative Remedies. None of the ABL
Collateral Agent or any other Secured Party shall by any act (except by a
written instrument pursuant to subsection 9.1), delay, indulgence, omission or
otherwise be deemed to have waived any right or remedy hereunder or to have
acquiesced in any Default or Event of Default. No failure to exercise, nor any
delay in exercising, on the part of the ABL Collateral Agent or any other
Secured Party, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the ABL Collateral Agent or
any other Secured Party of any right or remedy hereunder on any one occasion
shall not be construed as a bar to any right or remedy that the ABL Collateral
Agent or such other Secured Party would otherwise have on any future occasion.
The rights and remedies herein provided are cumulative, may be exercised singly
or concurrently and are not exclusive of any other rights or remedies provided
by law.
9.4 Enforcement Expenses; Indemnification.
(a) Each Canadian Guarantor jointly and severally agrees to pay or reimburse
each Secured Party and the ABL Collateral Agent for all their respective
reasonable costs and expenses incurred in collecting against such Canadian
Guarantor under the guarantee contained in Section 2 or otherwise enforcing or
preserving any rights under this Agreement against such Canadian Guarantor and
the other Loan Documents to which such Canadian Guarantor is a party, including,
without limitation, the reasonable fees and disbursements of counsel to the
Secured Parties, the ABL Collateral Agent and the Administrative Agent.
(b) Each Canadian Grantor jointly and severally agrees to pay, and to save the
ABL Collateral Agent, the Administrative Agent and the other Secured Parties
harmless from, (x) any and all liabilities with respect to, or resulting from
any delay in paying, any and all stamp, excise, sales or other similar taxes
which may be payable or determined to be payable with respect to any of the
Security Collateral or in connection with any of the transactions contemplated
by this Agreement and (y) any and all liabilities, obligations, losses, damages,
kind or nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Agreement (collectively, the “indemnified
liabilities”), in each case to the extent the Canadian Borrower would be
required to do so pursuant to subsection 11.5 of the ABL Credit Agreement, and
in any event excluding any taxes or other indemnified liabilities arising from
gross negligence, bad faith or willful misconduct of the ABL Collateral Agent,
the Administrative Agent or any other Secured Party as determined by a court of
competent jurisdiction in a final and nonappealable decision.
(c) The agreements in this subsection 9.4 shall survive repayment of the
Obligations and all other amounts payable under the ABL Credit Agreement and the
other Loan Documents.
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9.5 Successors and Assigns. This Agreement shall be binding upon and shall inure
to the benefit of the Canadian Granting Parties, the ABL Collateral Agent and
the Secured Parties and their respective successors and assigns; provided that
no Granting Party may assign, transfer or delegate any of its rights or
obligations under this Agreement without the prior written consent of the ABL
Collateral Agent, except as permitted hereby or by the ABL Credit Agreement.
9.6 Set-Off. Each Canadian Guarantor hereby irrevocably authorizes each of the
Administrative Agent and the ABL Collateral Agent and each other Secured Party
at any time and from time to time without notice to such Canadian Guarantor or
any other Canadian Granting Party, any such notice being expressly waived by
each Canadian Granting Party, to the extent permitted by applicable law, upon
the occurrence and during the continuance of an Event of Default under
subsection 9(a) of the ABL Credit Agreement so long as any amount remains unpaid
after it becomes due and payable by such Canadian Guarantor hereunder, to
set-off and appropriate and apply against any such amount any and all deposits
(general or special, time or demand, provisional or final) (other than the
Collateral Proceeds Account), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by the ABL Collateral Agent, the Administrative Agent or such other
Secured Party to or for the credit or the account of such Canadian Guarantor, or
any part thereof in such amounts as the ABL Collateral Agent, the Administrative
Agent or such other Secured Party may elect. The ABL Collateral Agent, the
Administrative Agent and each other Secured Party shall notify such Canadian
Guarantor promptly of any such set-off and the application made by the ABL
Collateral Agent, the Administrative Agent or such other Secured Party of the
proceeds thereof; provided that the failure to give such notice shall not affect
the validity of such set-off and application. The rights of the ABL Collateral
Agent, the Administrative Agent and each other Secured Party under this
subsection 9.6 are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which the ABL Collateral Agent, the
Administrative Agent or such other Secured Party may have.
9.7 Counterparts. This Agreement may be executed by one or more of the parties
to this Agreement on any number of separate counterparts (including by telecopy
or other electronic transmission), and all of said counterparts taken together
shall be deemed to constitute one and the same instrument.
9.8 Severability. Any provision of this Agreement which is prohibited or
remaining provisions hereof, and any such prohibition or unenforceability in any
other jurisdiction; provided that, with respect to any Pledged Stock issued by a
Foreign Subsidiary, all rights, powers and remedies provided in this Agreement
may be exercised only to the extent that they do not violate any provision of
any law, rule or regulation of any Governmental Authority applicable to any such
Pledged Stock or affecting the legality, validity or enforceability of any of
the provisions of this Agreement against the Canadian Pledgor (such laws, rules
or regulations, “Applicable Law”) and are intended to be limited to the extent
necessary so that they will not render this Agreement invalid, unenforceable or
not entitled to be recorded, registered or filed under the provisions of any
Applicable Law.
9.9 Section Headings. The section headings used in this Agreement are for
convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.
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9.10 Integration. This Agreement and the other Loan Documents represent the
entire agreement of the Canadian Granting Parties, the ABL Collateral Agent and
the other Secured Parties with respect to the subject matter hereof, and there
are no promises, undertakings, representations or warranties by the Canadian
Granting Parties, the ABL Collateral Agent or any other Secured Party relative
other Loan Documents.
9.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER AND ANY CLAIM OR CONTROVERSY RELATING HERETO SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE PROVINCE OF ONTARIO
AND THE FEDERAL LAWS OF CANADA APPLICABLE THEREIN WITHOUT GIVING EFFECT TO ITS
PRINCIPLES OR RULES OF CONFLICT OF LAWS TO THE EXTENT SUCH PRINCIPLES OR RULES
ARE NOT MANDATORILY APPLICABLE BY STATUTE AND WOULD REQUIRE OR PERMIT THE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
9.12 Submission to Jurisdiction; Waivers. Each party hereto hereby irrevocably
and unconditionally:
relating to this Agreement and the other Loan Documents to which it is a party
to the exclusive general jurisdiction of the courts of the Province of Ontario
sitting in the City of Toronto;
(b) consents that any such action or proceeding may be brought in such courts
and waives any objection that it may now or hereafter have to the venue of any
such action or proceeding in any such court or that such action or proceeding
was brought in an inconvenient forum and agrees not to plead or claim the same;
(c) agrees that service of process in any such action or proceeding may be
substantially similar form of mail), postage prepaid, to any party at its
address referred to in subsection 9.2 or at such other address of which the ABL
Collateral Agent and the Administrative Agent (in the case of any other party
hereto) and the Parent Borrower (in the case of the ABL Collateral Agent and the
Administrative Agent) shall have been notified pursuant thereto;
process in any other manner permitted by law or (subject to clause (a) above)
shall limit the right to sue in any other jurisdiction; and
subsection 9.12 any consequential or punitive damages.
Each Canadian Granting Party hereby agrees that The Limitation of Civil Rights
Act (Saskatchewan), The Land Contracts (Actions) Act (Saskatchewan) and Part IV
(excepting only section 46) of The Saskatchewan Farm Security Act do not apply
insofar as they relate to actions as defined in those Acts, or insofar as they
relate to or affect this Agreement, the rights of the ABL Collateral Agent and
the Secured Parties under this Agreement or any instrument, charge, security
agreement or other document of any nature that renews, extends or is collateral
to this Agreement and such Canadian Granting Party hereby irrevocably and
unconditionally waives any and all benefits and remedies provided thereunder.
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9.13 Acknowledgments. Each Canadian Grantor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and delivery of
this Agreement and the other Loan Documents to which it is a party;
(b) none of the ABL Collateral Agent, the Administrative Agent or any other
Secured Party has any fiduciary relationship with or duty to any Canadian
Guarantor arising out of or in connection with this Agreement or any of the
other Loan Documents, and the relationship between the Canadian Guarantors, on
other Secured Parties, on the other hand, in connection herewith or therewith is
solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents or
Secured Parties or among the Canadian Guarantors and the Secured Parties.
9.14 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN TO
THE EXTENT PERMISSIBLE BY APPLICABLE LAW.
9.15 Additional Canadian Granting Parties. Each new Subsidiary of the Parent
Borrower that is required to become a party to this Agreement pursuant to
subsection 7.9(b) or 7.9(c) of the ABL Credit Agreement shall become a Canadian
Granting Party for all purposes of this Agreement upon execution and delivery by
such Subsidiary of an Assumption Agreement substantially in the form of Annex 2
hereto. Each existing Canadian Granting Party that is required to become a
Canadian Pledgor with respect to Capital Stock of any new Subsidiary of the
Parent Borrower pursuant to subsection 7.9(c) of the ABL Credit Agreement shall
become a Canadian Pledgor with respect thereto upon execution and delivery by
such Canadian Granting Party of a Supplemental Agreement substantially in the
form of Annex 3 hereto.
9.16 Releases.
(a) At such time as the Canadian Facility Revolving Credit Loans and the other
Obligations (other than any Obligations owing to a Non-Lender Secured Party)
then due and owing shall have been paid in full, the Commitments have been
terminated and no Canadian Facility Letter of Credit shall be outstanding
reasonably acceptable to the relevant Issuing Lender), all Security Collateral
shall be automatically released from the Liens created hereby, and this
Agreement and all obligations (other than those expressly stated to survive such
termination) of the ABL Collateral Agent and each Canadian Granting Party
hereunder shall terminate, all without delivery of any instrument or performance
of any act by any party, and all rights to the Security Collateral shall revert
to the Canadian Granting Parties. At the request and sole expense of any
Canadian Granting Party following any such termination, the ABL Collateral Agent
shall deliver to such Canadian Granting Party (subject to subsection 7.2,
without recourse and without representation or warranty) any Security Collateral
held by the ABL Collateral Agent hereunder, and execute, acknowledge and deliver
to such Canadian Granting Party such releases, instruments or other documents
(including, without limitation, PPSA financing change statements and
discharges), and do or cause to be done all other acts, as any Canadian Granting
Party shall reasonably request to evidence such termination.
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(b) Upon any sale or other disposition of Security Collateral permitted by the
ABL Credit Agreement (other than any sale or disposition to another Canadian
Grantor), the Lien pursuant to this Agreement on such sold or disposed of
Security Collateral shall be automatically released. In connection with a sale
or other disposition of all of the Capital Stock of any Canadian Granting Party
(other than to any Canadian Granting Party or any other transaction or
occurrence as a result of which such Canadian Granting Party ceases to be a
Restricted Subsidiary of the Parent Borrower), or the sale or other disposition
of Security Collateral (other than a sale or disposition to another Canadian
Grantor) permitted under the ABL Credit Agreement, the ABL Collateral Agent
shall, upon receipt from the Parent Borrower of a written request for the
release of such Canadian Granting Party from its Guarantee or the release of the
Security Collateral subject to such sale, disposition or other transaction,
identifying such Canadian Granting Party or the relevant Security Collateral and
the terms of the sale, disposition or other transaction in reasonable detail,
including the price thereof and any expenses in connection therewith, together
with a certification by the Parent Borrower stating that such transaction is in
compliance with the ABL Credit Agreement and the other Loan Documents, execute
and deliver to the Parent Borrower or the relevant Canadian Granting Party
(subject to subsection 7.2, without recourse and without representation or
warranty), at the sole cost and expense of such Canadian Grantor, any Security
Collateral of such relevant Canadian Granting Party held by the ABL Collateral
Agent, or the Security Collateral subject to such sale or disposition (as
applicable), and, at the sole cost and expense of such Canadian Granting Party,
execute, acknowledge and deliver to such Canadian Granting Party such releases,
instruments or other documents (including, without limitation, PPSA financing
change statements and discharges), and do or cause to be done all other acts, as
the Parent Borrower or such Canadian Granting Party shall reasonably request
(x) to evidence or effect the release of such Canadian Granting Party from its
Guarantee (if any) and of the Liens created hereby (if any) on such Canadian
Granting Party’s Collateral or (y) to evidence the release of the Security
Collateral subject to such sale or disposition.
(c) Upon any Canadian Granting Party becoming an Excluded Subsidiary in
accordance with the provisions of the ABL Credit Agreement, the Lien pursuant to
this Agreement on all Security Collateral of such Canadian Granting Party (if
any) shall be automatically released, and the Guarantee (if any) of such
Canadian Granting Party, and all obligations of such Canadian Granting Party
hereunder, shall terminate, all without delivery of any instrument or
performance of any act by any party, and the ABL Collateral Agent shall, upon
the request of the Parent Borrower or such Canadian Granting Party, deliver to
the Parent Borrower or such Canadian Granting Party (subject to subsection 7.2,
of such Canadian Granting Party held by the ABL Collateral Agent hereunder and
the ABL Collateral Agent and the Administrative Agent shall execute, acknowledge
and deliver to the Parent Borrower or such Canadian Granting Party (at the sole
cost and expense of the Parent Borrower or such Canadian Granting Party) all
releases, instruments or other documents (including, without limitation, PPSA
financing change statements and discharges), and do or cause to be done all
other acts, necessary or reasonably desirable for the release of such Canadian
Granting Party from its Guarantee (if any) or the Liens created hereby (if any)
on such Canadian Granting Party’s Security Collateral, as applicable, as the
Borrower or such Canadian Granting Party may reasonably request.
(d) Upon any Security Collateral being or becoming an Excluded Asset, the Lien
pursuant to this Agreement on such Security Collateral shall be automatically
released on Collateral. At the request and sole expense of any Canadian Granting
Party, the ABL Collateral Agent shall deliver such Security Collateral (if held
by the ABL Collateral Agent) to such Canadian Granting Party and execute,
acknowledge and deliver to such Canadian Granting Party such releases,
change statements and discharges and do or cause to be done all other acts, as
such Canadian Granting Party shall reasonably request to evidence such release.
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(e) [Reserved].
(f) The ABL Collateral Agent shall have no liability whatsoever to any other
Secured Party as the result of any release of Security Collateral by it in
accordance with (or which the ABL Collateral Agent in good faith believes to be
in accordance with) this subsection 9.16.
9.17 Judgment.
(a) If for the purpose of obtaining judgment in any court it is necessary to
convert a sum due hereunder in one currency into another currency, the parties
hereto agree, to the fullest extent that they may effectively do so, that the
rate of exchange used shall be that at which in accordance with normal banking
procedures the ABL Collateral Agent could purchase the first currency with such
other currency on the Business Day preceding the day on which final judgment is
given.
(b) The obligations of any Canadian Guarantor in respect of this Agreement to
the ABL Collateral Agent, for the benefit of each holder of Secured Obligations,
shall, notwithstanding any judgment in a currency (the “judgment currency”)
other than the currency in which the sum originally due to such holder is
denominated (the “original currency”), be discharged only to the extent that on
the Business Day following receipt by the ABL Collateral Agent of any sum
adjudged to be so due in the judgment currency, the ABL Collateral Agent may in
accordance with normal banking procedures purchase the original currency with
the judgment currency; if the amount of the original currency so purchased is
less than the sum originally due to such holder in the original currency, such
Canadian Guarantor agrees, as a separate obligation and notwithstanding any such
judgment, to indemnify the ABL Collateral Agent, for the benefit of such holder,
against such loss, and if the amount of the original currency so purchased
exceeds the sum originally due to the ABL Collateral Agent, the ABL Collateral
Agent agrees to remit to the Parent Borrower, such excess. This covenant shall
survive the termination of this Agreement and payment of the Obligations and all
other amounts payable hereunder.
9.18 Canadian Amalgamation. Each Canadian Granting Party acknowledges and agrees
that, in the event it amalgamates with any other company or companies, it is the
intention of the parties hereto that the term “Canadian Grantor” or “Canadian
Pledgor,” as the case may be, when used herein, shall apply to each of the
amalgamating corporations and to the amalgamated corporation, such that the lien
granted hereby:
(a) shall extend to Collateral (or in the case of a Canadian Pledgor, Pledged
Collateral) owned by each of the amalgamating corporations and the amalgamated
corporations at the time of amalgamation and to any Collateral (or in the case
of a Canadian Pledgor, Pledged Collateral) thereafter owned or acquired by the
amalgamated corporation, and
(b) shall secure all Obligations of each of the amalgamating corporations and
the amalgamated corporations to the ABL Collateral Agent and the Secured Parties
at the time of amalgamation and all Obligations of the amalgamated corporation
to the ABL Collateral Agent and the Secured Parties thereafter arising. The Lien
shall attach to all Collateral (or in the case of a Canadian Pledgor, Pledged
Collateral) owned by each corporation amalgamating with a Canadian Grantor, and
by the amalgamated corporation, at the time of the amalgamation, and shall
Collateral) thereafter owned or acquired by the amalgamated corporation when
such becomes owned or is acquired.
9.19 Language. The parties hereto confirm that it is their wish that this
Agreement, as well as any other documents relating to this Agreement, including
notices, schedules and authorizations, have
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been and shall be drawn up in the English language only. Les signataires
confirment leur volonté que la présente convention, de même que tous les
documents s’y rattachant, y compris tout avis, annexe et autorisation, soient
rédigés en anglais seulement.
9.20 No Implicit Subordination. The inclusion of reference to Permitted Liens in
this Agreement or any other Loan Document is not intended to subordinate and
shall not subordinate, and shall not be interpreted as subordinating, any Lien
created by this Agreement or any of the other Loan Documents to any Permitted
Lien.
9.21 Paramountcy. In the event of any conflict between the provisions of this
Agreement and the provisions of the ABL Credit Agreement, the provisions of the
ABL Credit Agreement shall govern.
[Remainder of page left blank intentionally; signature pages follow.]
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executed, all as of the date first written above.
UNISOURCE CANADA, INC., as Canadian Borrower, Canadian Grantor and Canadian
Pledgor By:
/s/ Mark W. Hianik
Name: Mark W. Hianik Title: Senior Vice President, General Counsel and
Corporate Secretary
[Signature Page to Canadian Guarantee and Collateral Agreement]
Acknowledged and Agreed to as of the date hereof by:
as Administrative Agent and ABL Collateral Agent
By:
/s/ William J. Wilson
Name: William J. Wilson Title: Senior Vice President
Annex 1 to
Canadian Guarantee and Collateral Agreement
ACKNOWLEDGEMENT AND CONSENT1
The undersigned hereby acknowledges receipt of a copy of the Canadian Guarantee
and Collateral Agreement, dated as of July 1, 2014 (as amended, supplemented,
waived or otherwise modified from time to time, the “Agreement”); capitalized
terms used and not otherwise defined herein shall have the meanings assigned to
them in the Agreement or the ABL Credit Agreement referred to therein, as the
case may be), made by the Canadian Granting Parties party thereto in favour of
Bank of America, N.A., as Administrative Agent and ABL Collateral Agent. The
undersigned agrees for the benefit of the Administrative Agent and the Canadian
Facility Lenders as follows:
The undersigned will be bound by the terms of the Agreement applicable to it as
an Issuer (as defined in the Agreement) and will comply with such terms insofar
as such terms are applicable to the undersigned as an Issuer.
The undersigned will notify the ABL Collateral Agent promptly in writing of the
occurrence of any of the events described in subsection 5.3.1 of the Agreement.
The terms of subsections 6.3(c) and 6.7 of the Agreement shall apply to it,
mutatis mutandis, with respect to all actions that may be required of it
pursuant to subsection 6.3(c) or 6.7 of the Agreement.
[NAME OF ISSUER] By:
Name: Title: Address for Notices:
1 This consent is necessary only with respect to any Issuer that is not also a
Canadian Granting Party.
Annex 1-1
Annex 2 to
ASSUMPTION AGREEMENT
ASSUMPTION AGREEMENT, dated as of [ ] [ ], 20[ ], made by
[ ], a [ ] corporation
(the “Additional Canadian Granting Party”), in favour of Bank of America, N.A.,
as collateral agent (in such capacity, the “ABL Collateral Agent”) and as
administrative agent (in such capacity, the “Administrative Agent”) for the
banks and other financial institutions from time to time party to the ABL Credit
Agreement referred to below as a Canadian Facility Lender and the other Secured
Parties (as defined in the Canadian Guarantee and Collateral Agreement). All
such Canadian Guarantee and Collateral Agreement referred to below, or if not
defined therein, in the ABL Credit Agreement.
WHEREAS, VERITIV CORPORATION, a Delaware corporation (“Holding”), XPEDX
INTERMEDIATE, LLC, a Delaware limited liability company (together with its
successors and assigns, the “Parent Borrower”), XPEDX, LLC, a New York limited
liability company (together with its successors and assigns, the “OpCo
Borrower”) and UNISOURCE CANADA, INC., a Canadian amalgamated corporation (the
“Canadian Borrower”), entered into a certain ABL Credit Agreement dated as of
July 1, 2014 (as amended, supplemented, waived or otherwise modified from time
to time, the “ABL Credit Agreement”);
WHEREAS, in connection with the ABL Credit Agreement, the Canadian Borrower and
certain Canadian Guarantors are, or are to become, parties to the Canadian
Guarantee and Collateral Agreement, dated as of July 1, 2014 (as amended,
supplemented, waived or otherwise modified from time to time, the “Canadian
Guarantee and Collateral Agreement”), in favour of the ABL Collateral Agent, for
the benefit of the Secured Parties (as defined in the Canadian Guarantee and
Collateral Agreement);
WHEREAS, the ABL Credit Agreement requires the Additional Canadian Granting
Party to become a party to the Canadian Guarantee and Collateral Agreement; and
WHEREAS, the Additional Canadian Granting Party has agreed to execute and
deliver this Assumption Agreement in order to become a party to the ABL
Guarantee and Collateral Agreement;
NOW, THEREFORE, IT IS AGREED:
1. Canadian Guarantee and Collateral Agreement. By executing and delivering this
Assumption Agreement, the Additional Canadian Granting Party, as provided in
subsection 9.15 of the Canadian Guarantee and Collateral Agreement, hereby
becomes a party to the Canadian Guarantee and
Annex 2-1
Collateral Agreement as a Canadian Granting Party thereunder with the same force
and effect as if originally named therein as a [Canadian Guarantor] [Canadian
Grantor and Canadian Pledgor] [and Canadian Grantor] [and Canadian Pledgor]2
and, without limiting the generality of the foregoing, hereby expressly assumes
all obligations and liabilities of a [Canadian Guarantor] [Canadian Grantor and
Canadian Pledgor] [and Canadian Grantor] [and Canadian Pledgor]3 thereunder. The
information set forth in Annex 1-A hereto is hereby added to the information set
forth in Schedules [ ] to the Canadian Guarantee and
Collateral Agreement, and such Schedules are hereby amended and modified to
include such information. The Additional Canadian Granting Party hereby
represents and warrants that each of the representations and warranties of such
Additional Canadian Granting Party, in its capacities as a [Canadian Guarantor]
[Canadian Grantor and Canadian Pledgor] [and Canadian Grantor] [and Canadian
Pledgor],4 contained in Section 4 of the Canadian Guarantee and Collateral
Agreement is true and correct in all material respects on and as the date hereof
(after giving effect to this Assumption Agreement) as if made on and as of such
date. Each Additional Canadian Granting Party hereby grants, as and to the same
extent as provided in the Canadian Guarantee and Collateral Agreement, to the
ABL Collateral Agent, for the benefit of the Secured Parties, a continuing
security interest in the [Collateral (as such term is defined in subsection 3.1
of the Canadian Guarantee and Collateral Agreement) of such Additional Canadian
Granting Party] [and] [the Pledged Collateral (as such term is defined in the
Canadian Guarantee and Collateral Agreement) of such Additional Canadian
Granting Party, except as provided in subsection 3.3 of the Canadian Guarantee
and Collateral Agreement].
2. GOVERNING LAW. THIS ASSUMPTION AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER AND ANY CLAIM OR CONTORVERSY RELATING HERETO SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE
PROVINCE OF ONTARIO AND THE FEDERAL LAWS OF CANADA APPLICABLE THEREIN WITHOUT
GIVING EFFECT TO ITS PRINCIPLES OR RULES OF CONFLICT OF LAWS TO THE EXTENT SUCH
PRINCIPLES OR RULES ARE NOT MANDATORILY APPLICABLE BY STATUTE AND WOULD REQUIRE
OR PERMIT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
2 Indicate the capacities in which the Additional Canadian Granting Party is
becoming a Canadian Grantor.
3 Indicate the capacities in which the Additional Canadian Granting Party is
4 Indicate the capacities in which the Additional Canadian Granting Party is
Annex 2-2
IN WITNESS WHEREOF, the undersigned has caused this Assumption Agreement to be
duly executed and delivered as of the date first above written.
[ADDITIONAL CANADIAN GRANTING PARTY] By:
Name: Title:
as ABL Collateral Agent and Administrative Agent
By:
Name: Title:
Annex 2-3
Annex 3 to
SUPPLEMENTAL AGREEMENT
SUPPLEMENTAL AGREEMENT, dated as of [ ] [ ], 20[ ], made by
[ ], a [ ] corporation (the “Additional Canadian
Pledgor”), in favour of BANK OF AMERICA, N.A., as collateral agent (in such
capacity, the “ABL Collateral Agent”) and as administrative agent (in such
capacity, the “Administrative Agent”) for the banks and other financial
institutions from time to time party to the ABL Credit Agreement referred to
below as a Canadian Facility Lender and the other Secured Parties (as defined in
the Canadian Guarantee and Collateral Agreement). All capitalized terms not
defined herein shall have the meaning ascribed to them in such Canadian
Guarantee and Collateral Agreement referred to below, or if not defined therein,
in the ABL Credit Agreement.
to time, together with any agreement extending the maturity of, or
restructuring, refunding, refinancing or increasing the Indebtedness under such
agreement or any successor agreements, the “ABL Credit Agreement”);
Collateral Agreement);
WHEREAS, the ABL Credit Agreement requires the Additional Canadian Pledgor to
become a Canadian Pledgor under the Canadian Guarantee and Collateral Agreement
Canadian Pledgor; and
WHEREAS, the Additional Canadian Pledgor has agreed to execute and deliver this
Supplemental Agreement in order to become such a Canadian Pledgor under the
Canadian Guarantee and Collateral Agreement;
Supplemental Agreement, the Additional Canadian Pledgor, as provided in
becomes a Canadian Pledgor under the Canadian Guarantee and Collateral Agreement
with respect to the shares of Capital Stock of the Subsidiary of the Additional
Canadian Pledgor listed in Annex 1-A hereto, and will be bound by all terms,
conditions and duties applicable to a Canadian Pledgor under the Canadian
Guarantee and Collateral Agreement, as a Canadian Pledgor thereunder. The
forth in Schedule 2 to the Canadian Guarantee and Collateral Agreement, and such
Schedule 2 is hereby amended and modified to include such information.
2. GOVERNING LAW. THIS SUPPLEMENTAL AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER AND ANY CLAIM OR CONTROVERSY RELATING HERETO SHALL BE
PROVINCE OF ONTARIO AND THE FEDERAL LAWS OF CANADA APPLICABLE THEREIN.
Annex 1-A-2
IN WITNESS WHEREOF, the undersigned has caused this Supplemental Agreement to be
[ADDITIONAL CANADIAN PLEDGOR] By:
Name: Title:
Acknowledged and Agreed to as of the date hereof by: BANK OF AMERICA, N.A., as
ABL Collateral Agent and Administrative Agent By:
Name: Title:
Annex 1-A-3
Schedule 1
Unisource Canada, Inc.
6185 McLaughlin Road
Mississauga, ON
L5R 3W7
Attn: Law Department
Schedule 2
Pledged Securities
1. Pledged Stock
None.
Schedule 3
Perfection Matters
1. Existing Security Interests
i) British Columbia
BASE
REGISTRATION #
SECURED PARTY(IES)
DEBTOR(S)
DATE OF
REGISTRATION/EXPIRY
012178E
RYDER TRUCK RENTAL CANADA LTD.
UNISOURCE CANADA INC.
(DELTA, BC)
REG: OCT 31, 2007
EXPIRY: OCT 31, 2017
012180E
RYDER TRUCK RENTAL CANADA LTD. UNISOURCE CANADA INC. (DELTA, BC)
012182E
012184E
EXPIRY: OCT 31, 2014
091943E
RYDER TRUCK RENTAL CANADA LTD UNISOURCE CANADA INC. (DELTA, BC)
REG: DEC 17, 2007
EXPIRY: DEC 17, 2017
091947E
091949E
091950E
675761E
RYDER TRUCK RENTAL CANADA LTD UNISOURCE CANADA INC. (WINNIPEG, BC)
REG: NOV 03, 2008
EXPIRY: NOV 03, 2015
837981E
RYDER TRUCK RENTAL CANADA LTD UNISOURCE CANADA INC. (NEW WESTMINSTER, BC)
REG: FEB 20, 2009
EXPIRY: FEB 20, 2016
857837E
PENSKE TRUCK LEASING CANADA INC
LOCATIONS DE CAMIONS PENSKE CANADA INC
UNISOURCE CANADA INC. (RICHMOND HILL, ON)
UNISOURCE CANADA INC (MISSISAUGA, ON)
REG: MAR 05, 2009
EXPIRY: MAR 05, 2017
987610E
REG: MAY 27, 2009
EXPIRY: MAY 27, 2017
539689F
G.N. JOHNSTON EQUIPMENT CO. LTD. UNISOURCE CANADA INC. (NEW WESTMINSTER,
BC)
REG: MAY 04, 2010
EXPIRY: MAY 04, 2015
743025F
REG: SEP 01, 2010
EXPIRY: SEP 01, 2017
830707F
REG: OCT 26, 2010
EXPIRY: OCT 26, 2014
888168F
REG: NOV 30, 2010
EXPIRY: NOV 30, 2016
029832G
BANK OF AMERICA UNISOURCE CANADA INC (RICHMOND HILL, ON)
REG: MAR 04, 2011
EXPIRY: MAR 04, 2018
260410G
XEROX CANADA LTD
UNISOURCE CANADA INC. (DELTA, BC)
UNISOURCE CANADA INC. (DARTMOUTH, NS)
UNISOURCE CANADA INC. (WINNIPEG, MB)
REG: JUL 21, 2011
EXPIRY: JUL 21, 2015
BASE
REGISTRATION #
DEBTOR(S)
DATE OF
REGISTRATION/EXPIRY
628797G
REG: MAR 12, 2012
EXPIRY: MAR 12, 2021
938054G
XEROX CANADA LTD
UNISOURCE CANADA INC. (OTTAWA, ON)
UNISOURCE CANADA INC. (CALGARY, AB)
UNISOURCE CANADA INC. (SAINT-LAURENT, QC)
REG: SEP 06, 2012
EXPIRY: SEP 06, 2016
010206H
REG: OCT 19, 2012
EXPIRY: OCT 19, 2020
714923H
XEROX CANADA LTD
UNISOURCE CANADA INC. (MISSISSAUGA, ON)
REG: DEC 17, 2013
717189H
DOCUMENT DIRECTION LIMITED PARTNERSHIP UNISOURCE CANADA INC. (PRINCE
GEORGE, BC)
REG: DEC 18, 2013
EXPIRY: DEC 18, 2017
767110H
REG: JAN 23, 2014
EXPIRY: JAN 23, 2022
ii) Alberta
SECURED PARTY
REGISTRATION TYPE
REGISTRATION NO.
MAXIUM FINANCIAL SERVICES INC. SECURITY AGREEMENT
08080618182
(6 YEARS)
EXPIRY DATE:
2014-AUG-06
AMENDED BY:
10070810529
AMENDED BY:
10070832438
AMENDED BY:
10071209152
SECURITY AGREEMENT
09030527634
(8 YEARS)
EXPIRY DATE:
2017-MAR-05
SECURITY AGREEMENT
09052703857
(8 YEARS)
EXPIRY DATE:
2017-MAY-27
XEROX CANADA LTD SECURITY AGREEMENT
10072028138
(4 YEARS)
EXPIRY DATE:
2014-JUL-20
10072110732
(4 YEARS)
EXPIRY DATE:
2014-JUL-21
SECURED PARTY
REGISTRATION TYPE
REGISTRATION NO.
G.N. JOHNSTON EQUIPMENT CO LTD. SECURITY AGREEMENT
10112405957
(4 YEARS)
EXPIRY DATE:
2014-NOV-24
SECURITY AGREEMENT
10113017880
(6 YEARS)
EXPIRY DATE:
2016-NOV-30
BANK OF AMERICA, N.A., AS ADMINISTRATIVE AGENT SECURITY AGREEMENT
11030423700
(7 YEARS)
EXPIRY DATE:
2018-MAR-04
BANK OF AMERICA, N.A., AS ADMINISTRATIVE AGENT LAND CHARGE
11030423784
(INFINITY)
NATIONAL LEASING GROUP INC. SECURITY AGREEMENT
11051124442
(6 YEARS)
EXPIRY DATE:
2017-MAY-11
DE LAGE LANDEN FINANCIAL SERVICES CANADA INC.
SERVICES FINANCIERS DE LAGE LANDEN CANADA INC.
SECURITY AGREEMENT
11062412445
(6 YEARS)
EXPIRY DATE:
2017-JUN-24
11072221645
(4 YEARS)
EXPIRY DATE:
2015-JUL-22
DE LAGE LANDEN FINANCIAL SERVICES CANADA INC. SECURITY AGREEMENT
11122123336
(6 YEARS)
EXPIRY DATE:
2017-DEC-21
12020915445
(5 YEARS)
EXPIRY DATE:
2017-FEB-09
SECURITY AGREEMENT
12031209451
(9 YEARS)
EXPIRY DATE:
2021-MAR-12
12081412765
(6 YEARS)
EXPIRY DATE:
2018-AUG-14
12090630447
(4 YEARS)
EXPIRY DATE:
2016-SEP-06
SECURITY AGREEMENT
12101904752
(8 YEARS)
EXPIRY DATE:
2020-OCT-19
G.N JOHNSTON EQUIPMENT CO LTD. SECURITY AGREEMENT
13012823119
(6 YEARS)
EXPIRY DATE:
2019-JAN-28
RYDER TRUCK RENTAL CANADA LTD SECURITY AGREEMENT
13050609103
(7 YEARS)
EXPIRY DATE:
2020-MAY-06
SECURED PARTY
REGISTRATION TYPE
REGISTRATION NO.
13050609181
(6 YEARS)
EXPIRY DATE:
2019-MAY-06
13053044123
(6 YEARS)
EXPIRY DATE:
2019-MAY-30
DOCUMENT DIRECTION LIMITED PARTNERSHIP SECURITY AGREEMENT
13121841319
(4 YEARS)
EXPIRY DATE:
2017-DEC-18
14010620846
(4 YEARS)
EXPIRY DATE:
2018-JAN-06
SECURITY AGREEMENT
14012307272
(8 YEARS)
EXPIRY DATE:
2022-JAN-23
iii) Saskatchewan
SECURED PARTY
REGISTRATION NUMBER AND DATE
COMMENTS/EXPIRY DATE
MAXIUM FINANCIAL SERVICES INC.
300356043
AUGUST 6, 2008
EXPIRY: AUGUST 6, 2014
JULY 8, 2010: ADD DEBTOR PARTY
JULY 9, 2010: DELETE SECURED PARTY ADD SECURED PARTY
JULY 12, 2010: DELETE DEBTOR PARTY
G N JOHNSTON EQUIPMENT CO LTD
300679994
JANUARY 24, 2011
EXPIRY: JANUARY 24, 2016 BANK OF AMERICA, N.A., AS ADMINISTRATIVE AGENT
300693305
MARCH 4, 2011
EXPIRY: MARCH 4, 2018
1. PENSKE TRUCK LEASING CANADA INC
2. LOCATIONS DE CAMIONS PENSKE CANADA INC
300431651
MARCH 5, 2009
EXPIRY: MARCH 5, 2017
300463029
MAY 27, 2009
300839545
MARCH 12, 2012
EXPIRY: MARCH 12, 2021
300941003
OCTOBER 19, 2012
EXPIRY: OCTOBER 19, 2020
301138957
JANUARY 23, 2014
EXPIRY: JANUARY 23, 2022 XEROX CANADA LTD
300650454
OCTOBER 28, 2010
EXPIRY: OCTOBER 28, 2014 XEROX CANADA LTD
300670253
DECEMBER 22, 2010
EXPIRY: DECEMBER 22, 2014 XEROX CANADA LTD
300846242
MARCH 27, 2012
EXPIRY: MARCH 27, 2016 G N JOHNSTON EQUIPMENT CO LTD
300982887
FEBRUARY 5, 2013
EXPIRY: FEBRUARY 5, 2018
DECEMBER 4, 2013: AMEND GENERAL PROPERTY DESCRIPTION
DOCUMENT DIRECTION LIMITED PARTNERSHIP
301126023
DECEMBER 18, 2013
EXPIRY: DECEMBER 18, 2017
iv) Manitoba
1. REGISTRATION NO. 201110832708 EVIDENCING A SECURITY INTEREST IN A CERTAIN
MOTOR VEHICLE LISTED BY SERIAL NUMBER IN FAVOUR OF G.N. JOHNSTON EQUIPMENT CO.
LTD.;
2. REGISTRATION NO. 201106954300 EVIDENCING A SECURITY INTEREST IN CERTAIN MOTOR
VEHICLES LISTED BY SERIAL NUMBER IN FAVOUR OF G.N. JOHNSTON EQUIPMENT CO. LTD.;
3. REGISTRATION NO. 201105563308 EVIDENCING A SECURITY INTEREST IN A CERTAIN
LTD.;
4. REGISTRATION NO. 201103415301 EVIDENCING A SECURITY INTEREST IN ALL OF THE
DEBTOR’S PRESENT AND AFTER-ACQUIRED PERSONAL PROPERTY IN FAVOUR OF BANK OF
AMERICA, N.A., AS ADMINISTRATIVE AGENT;
5. REGISTRATION NO. 201401307406 EVIDENCING A SECURITY INTEREST WITH PERFECTION
IN ANOTHER JURISDICTION IN CERTAIN MOTOR VEHICLES LISTED BY SERIAL NUMBER IN
FAVOUR OF PENSKE TRUCK LEASING CANADA INC. / LOCATIONS DE CAMIONS PENSKE CANADA
INC.;
6. REGISTRATION NO. 201307658106 EVIDENCING A SECURITY INTEREST IN CERTAIN MOTOR
VEHICLES LISTED BY SERIAL NUMBER IN FAVOUR OF RYDER TRUCK RENTAL CANADA LTD.;
7. REGISTRATION NO. 201307657606 EVIDENCING A SECURITY INTEREST IN CERTAIN MOTOR
8. REGISTRATION NO. 201218557606 EVIDENCING A SECURITY INTEREST WITH PERFECTION
INC.;
9. REGISTRATION NO. 201203931706 EVIDENCING A SECURITY INTEREST WITH PERFECTION
INC.;
10. REGISTRATION NO. 201112176506 EVIDENCING A SECURITY INTEREST IN CERTAIN
OFFICE EQUIPMENT AND SOFTWARE IN FAVOUR OF XEROX CANADA LTD.;
11. REGISTRATION NO. 200908651200 EVIDENCING A SECURITY INTEREST WITH PERFECTION
INC.;
12. REGISTRATION NO. 200903433905 EVIDENCING A SECURITY INTEREST WITH PERFECTION
IN ANOTHER JURISDICTION IN A CERTAIN MOTOR VEHICLE LISTED BY SERIAL NUMBER IN
INC.;
13. REGISTRATION NO. 201322871800 EVIDENCING A SECURITY INTEREST IN CERTAIN
OFFICE EQUIPMENT AND/OR INVENTORY IN FAVOUR OF DOCUMENT DIRECTION LIMITED
PARTNERSHIP;
14. REGISTRATION NO. 201108460500 EVIDENCING A SECURITY INTEREST IN CERTAIN
OFFICE EQUIPMENT AND SOFTWARE OM FAVOUR OF XEROX CANADA LTD.
v) Ontario
SECURED PARTY
COLLATERAL CLASSIFICATION
REFERENCE FILE NO. & REGISTRATION NO.
G.N. JOHNSTON EQUIPMENT CO. LTD.
EQUIPMENT, MOTOR VEHICLES
MOTOR VEHICLE SCHEDULE ATTACHED
6 SPECIFIC MOTOR VEHICLES REFERENCED
695875338 -
20140506 1116 1097 5210 (5 YEARS)
TRAILER WIZARDS LTD
EQUIPMENT, MOTOR VEHICLES
1 SPECIFIC MOTOR VEHICLE REFERENCED
694382832 -
20140313 1111 1590 8455 (3 YEARS)
TRAILER WIZARDS LTD
EQUIPMENT, MOTOR VEHICLES
2 SPECIFIC MOTOR VEHICLES REFERENCED
693502821 -
20140131 1051 1590 6061 (3 YEARS)
EQUIPMENT, OTHER, MOTOR VEHICLES
693341505 -
20140123 1427 1462 1779 (8 YEARS)
XEROX CANADA LTD EQUIPMENT, OTHER
692670258 -
20131218 1007 1462 4150 (4 YEARS)
SECURED PARTY
COLLATERAL CLASSIFICATION
692670267 -
20131218 1007 1462 4151 (4 YEARS)
DOCUMENT DIRECTION LIMITED PARTNERSHIP EQUIPMENT, ACCOUNTS, OTHER
692697663 -
20131218 1942 1531 2882 (4 YEARS)
RICOH CANADA INC. EQUIPMENT 692288748 -
20131202 1526 5064 3730 (5 YEARS) G.N. JOHNSTON EQUIPMENT CO. LTD.
EQUIPMENT, MOTOR VEHICLES
MOTOR VEHICLE SCHEDULE ATTACHED
4 SPECIFIC MOTOR VEHICLES REFERENCED
689852925 -
20130829 0929 1097 4966 (1 YEAR) G.N. JOHNSTON EQUIPMENT CO. LTD.
EQUIPMENT, MOTOR VEHICLES
MOTOR VEHICLE SCHEDULE ATTACHED
10 SPECIFIC MOTOR VEHICLES REFERENCED
688069512 -
20130625 1601 1097 4903 (6 YEARS) TRAILER WIZARDS LIMITED
686147382 -
20130417 1407 1462 3250 (3 YEARS) TRAILCON LEASING INC.
EQUIPMENT, MOTOR VEHICLES
684141525 -
20130116 1702 1462 8335 (8 YEARS) TRAILCON LEASING INC.
EQUIPMENT, MOTOR VEHICLES
684141534 -
20130116 1702 1462 8336 (8 YEARS) TRAILCON LEASING INC.
EQUIPMENT, MOTOR VEHICLES
7 SPECIFIC MOTOR VEHICLES REFERENCED
684141543 -
20130116 1702 1462 8337 (8 YEARS) TRAILCON LEASING INC.
EQUIPMENT, MOTOR VEHICLES
684141552 -
20130116 1702 1462 8338 (8 YEARS) TRAILCON LEASING INC.
EQUIPMENT, MOTOR VEHICLES
684141561 -
20130116 1702 1462 8339 (8 YEARS) TRAILCON LEASING INC.
EQUIPMENT, MOTOR VEHICLES
684141579 -
20130116 1702 1462 8340 (8 YEARS) TRAILCON LEASING INC.
EQUIPMENT, MOTOR VEHICLES
684141588 -
20130116 1702 1462 8341 (8 YEARS) TRAILCON LEASING INC.
EQUIPMENT, MOTOR VEHICLES
684141597 -
20130116 1702 1462 8342 (8 YEARS) G.N.J OHNSTON {SIC} EQUIPMENT CO. LTD.
EQUIPMENT, MOTOR VEHICLES
684035397 -
20130110 1455 1097 4755 (6 YEARS) XEROX CANADA LTD EQUIPMENT, OTHER
683441145 -
20121207 1704 1462 9842 (4 YEARS) TRAILCON LEASING INC.
EQUIPMENT, MOTOR VEHICLES
24 SPECIFIC MOTOR VEHICLES REFERENCED
682550127 -
20121031 1405 1462 8802 (8 YEARS)
32 SPECIFIC MOTOR VEHICLES REFERENCED
682267266 -
20121018 1710 1462 6093 (8 YEARS) XEROX CANADA LTD EQUIPMENT, OTHER
681257187 -
20120906 1709 1462 6400 (4 YEARS) XEROX CANADA LTD EQUIPMENT, OTHER
679316805 -
20120620 1003 1462 9005 (4 YEARS) G.N. JOHNSTON EQUIPMENT CO. LTD.
EQUIPMENT, MOTOR VEHICLES
677537127 -
20120412 1401 1097 4537 (6 YEARS)
676771641 -
20120312 1403 1462 1004 (9 YEARS) XEROX CANADA LTD EQUIPMENT, OTHER
676694052 -
20120307 1708 1462 9711 (4 YEARS)
SECURED PARTY
COLLATERAL CLASSIFICATION
EQUIPMENT, MOTOR VEHICLES
676546371 -
20120301 1126 1097 4503 (5 YEARS) RYDER TRUCK RENTAL CANADA LTD
EQUIPMENT, MOTOR VEHICLES
674667027 -
20111128 1406 1462 4505 (6 YEARS) G.N. JOHNSTON EQUIPMENT CO. LTD.
EQUIPMENT, MOTOR VEHICLES
MOTOR VEHICLE SCHEDULE ATTACHED
672674967 -
20110902 1351 1097 4308 (6 YEARS) XEROX CANADA LTD EQUIPMENT, OTHER
671674248 -
20110722 1706 1462 1897 (4 YEARS) XEROX CANADA LTD EQUIPMENT, OTHER
671631201 -
20110721 1406 1462 1534 (4 YEARS) TRAILER WIZARDS LIMITED
670990266 -
20110627 1402 1462 4685 (3 YEARS) XEROX CANADA LTD EQUIPMENT, OTHER
670102533 -
20110524 1701 1462 5702 (4 YEARS) G.N. JOHNSTON EQUIPMENT CO. LTD.
EQUIPMENT, MOTOR VEHICLES
669423186 -
20110428 1358 1097 4202 (5 YEARS) AMENDED BY:
20110506 1134 1097 4208 AMENDED BY:
20110914 1438 1097 4330 XEROX CANADA LTD EQUIPMENT, OTHER 669106341 -
20110414 1702 1462 6102 (4 YEARS) RYDER TRUCK RENTAL CANADA LTD
EQUIPMENT, MOTOR VEHICLES
668166228 -
20110309 1407 1462 5797 (3 YEARS)
RENEWED BY:
20140210 1404 1462 7298 (1 YEAR)
BANK OF AMERICA, N.A., AS ADMINISTRATIVE AGENT INVENTORY, EQUIPMENT,
ACCOUNTS, OTHER 668059038 -
20110304 1417 1590 7676 (7 YEARS) G.N. JOHNSTON EQUIPMENT CO. LTD.
EQUIPMENT, MOTOR VEHICLES
667271061 -
20110121 1537 1097 4121 (5 YEARS) G.N. JOHNSTON EQUIPMENT CO. LTD.
EQUIPMENT, MOTOR VEHICLES
667271133 -
20110121 1540 1097 4122 (5 YEARS) XEROX CANADA LTD EQUIPMENT, OTHER
666730242 -
20101222 1412 1462 9042 (4 YEARS)
WESTERN TORONTO INTERNATIONAL TRUCKS INC.
TALLMAN TRUCK CENTRE LIMITED
EQUIPMENT, MOTOR VEHICLES
666420975 -
20101207 1703 1462 5377 (7 YEARS) AMENDED BY:
20130417 1407 1462 3365
TALLMAN TRUCK CENTRE LIMITED
EQUIPMENT, MOTOR VEHICLES
666018297 -
20101119 1703 1462 0995 (7 YEARS) AMENDED BY:
20130417 1407 1462 3367 XEROX CANADA LTD EQUIPMENT, OTHER 665988327 -
20101118 1732 1462 0722 (4 YEARS) XEROX CANADA LTD EQUIPMENT, OTHER
664140546 -
20100901 1714 1462 3199 (4 YEARS) XEROX CANADA LTD EQUIPMENT, OTHER
659833551 -
20100315 1706 1462 1657 (5 YEARS) XEROX CANADA LTD EQUIPMENT, OTHER
659745405 -
20100310 1702 1462 0166 (5 YEARS) RYDER TRUCK RENTAL CANADA LTD
EQUIPMENT, MOTOR VEHICLES
654843456 -
20090710 1947 1531 1960 (4 YEARS)
RENEWED BY:
20130704 1706 1462 7359 (1 YEAR)
SECURED PARTY
COLLATERAL CLASSIFICATION
12 SPECIFIC MOTOR VEHICLES REFERENCED
653733783 -
20090527 1701 1462 1434 (8 YEARS)
RYDER TRUCK RENTAL CANADA LTD
EQUIPMENT, MOTOR VEHICLES
653252589 -
20090506 1701 1462 6001 (6 YEARS)
EQUIPMENT, MOTOR VEHICLES
653080932 -
20090430 1005 1462 4118 (6 YEARS)
EQUIPMENT, MOTOR VEHICLES
653096016 -
20090430 1401 1462 4224 (6 YEARS)
651900852 -
20090306 1405 1462 1820 (8 YEARS)
HEWLETT-PACKARD FINANCIAL SERVICES CANADA COMPANY EQUIPMENT, OTHER
649578393 -
20081029 1437 8077 1301 (25 YEARS)
AMENDED BY:
20130910 1647 8077 4792
647507205 -
20080806 1448 1530 6060 (6 YEARS)
AMENDED BY:
20100708 1453 1530 0349
ASSIGNED BY:
20100708 1939 1531 2095
AMENDED BY:
20100712 1452 1530 2214
EQUIPMENT, MOTOR VEHICLES
646496613 -
20080630 1004 1462 2980 (8 YEARS)
EQUIPMENT, MOTOR VEHICLES
645963489 -
20080610 1702 1462 8802 (7 YEARS)
EQUIPMENT, MOTOR VEHICLES
645963498 -
20080610 1702 1462 8803 (7 YEARS)
EQUIPMENT, MOTOR VEHICLES
644309811 -
20080417 1703 1462 6430 (7 YEARS)
EQUIPMENT, MOTOR VEHICLES
644164182 -
20080414 1003 1462 5443 (6 YEARS)
RENEWED BY:
20140326 1403 1462 1350 (1 YEAR)
EQUIPMENT, MOTOR VEHICLES
644189265 -
20080414 1703 1462 5660 (7 YEARS)
EQUIPMENT, MOTOR VEHICLES
633364848 -
20070309 1455 1530 1443 (6 YEARS)
RENEWED BY:
20130115 1703 1462 8095 (1 YEAR)
RENEWED BY:
20140210 1404 1462 7296 (1 YEAR)
EQUIPMENT, MOTOR VEHICLES
633364857 -
20070309 1455 1530 1444 (6 YEARS)
RENEWED BY:
20130115 1703 1462 8092 (1 YEAR)
RENEWED BY:
20140210 1404 1462 7297 (1 YEAR)
SECURED PARTY
COLLATERAL CLASSIFICATION
EQUIPMENT, MOTOR VEHICLES
633364893 -
20070309 1455 1530 1448 (7 YEARS)
RENEWED BY:
20140304 1409 1462 3579 (1 YEAR)
EQUIPMENT, MOTOR VEHICLES
633364902 -
20070309 1455 1530 1449 (7 YEARS)
RENEWED BY:
20140304 1409 1462 3580 (1 YEAR)
EQUIPMENT, MOTOR VEHICLES
632939859 -
20070220 1950 1531 4757 (6 YEARS)
RENEWED BY:
20130104 1704 1462 5890 (1 YEAR)
RENEWED BY:
20140127 1423 1462 2662 (1 YEAR)
EQUIPMENT, MOTOR VEHICLES
622575576 -
20060207 1943 1531 5954 (8 YEARS)
RENEWED BY:
20140130 1403 1462 3889 (1 YEAR)
EQUIPMENT, MOTOR VEHICLES
622537173 -
20060206 1450 1530 2358 (8 YEARS)
RENEWED BY:
20140130 1403 1462 3888 (1 YEAR)
EQUIPMENT, MOTOR VEHICLES
622537182 -
20060206 1450 1530 2359 (8 YEARS)
RENEWED BY:
20140130 1403 1462 3885 (1 YEAR)
EQUIPMENT, MOTOR VEHICLES
622537191 -
20060206 1450 1530 2360 (8 YEARS)
RENEWED BY:
20140130 1403 1462 3887 (1 YEAR)
EQUIPMENT, MOTOR VEHICLES
622537209 -
20060206 1450 1530 2361 (8 YEARS)
RENEWED BY:
20140130 1403 1462 3886 (1 YEAR)
894386835 -
20030515 1445 8077 3945 (4 YEARS)
AMENDED BY:
20060308 1044 8077 2654
RENEWED BY:
20060308 1448 8077 2724 (15 YEARS)
Ontario - Security interests registered under Section 427 of the Bank Act:
NAME & ADDRESS:
50 EAST WILMOT STREET
RICHMOND HILL, ON L4B 3Z3
DATE: MARCH 8, 2011 EXPIRY DATE: DECEMBER 31, 2016 NUMBER: 01261955 NAME &
ADDRESS OF THE BANK:
0241 – BANK OF AMERICA NATIONAL ASSOCIATION
56792 – MAIN BRANCH
200 FRONT ST. W., SUITE 2700
TORONTO, ON M5V 3L2
vi) Quebec
REF
NO
REGISTRATION NO./
REGISTRATION DATE
(Y-M-D) & TIME
PARTIES
NATURE OF REGISTRATION/
AMOUNT - CDN $/
AGREEMENT DATE
(Y-M-D)/
FORM
ASSIGNOR (AND RE-ASSIGNEE): UNISOURCE CANADA, INC
1.
96-0066195-0001
1996-06-05
01:23 PM
ASSIGNEE:
STARS TRUST
SUBSEQUENT ASSIGNEE:
CANADIAN MASTERS TRUST
RIGHTS WERE THEN RE-ASSIGNED TO UNISOURCE CANADA, INC.
ASSIGNMENT OF A UNIVERSALITY OF CLAIMS
1992-09-04
2.
11-0147974-0001
2011-03-09
9:00 AM
HOLDER:
GRANTOR:
MOVABLE HYPOTHEC WITHOUT DELIVERY
$420,000,000
2011-03-08
(PRIVATE WRITING)
3.
07-0202799-0002 2007-04-18
11:01 AM
EXPIRY DATE: 2015-04-01
LESSOR:
LESSEE:
RIGHTS UNDER A LEASE
4.
07-0245003-0001 2007-05-070
9:00 AM
EXPIRY DATE: 2017-05-04
LESSOR:
LESSEE:
VIC COLOR INC. /COULEUR VIC INC.
RIGHTS UNDER A LEASE
NO DATE
5.
07-0272290-0005 2007-05-16
01:50 PM
EXPIRY DATE: 2015-02-27
LESSOR:
LESSEE:
UNISOURCE CANADA INC.
RIGHTS UNDER A LEASE
2007-03-24
6.
07-0289404-0001 2007-05-24
01:57 PM
LESSOR:
LESSEE:
RIGHTS UNDER A LEASE
7.
09-0115848-0004 2009-03-06
01:12 PM
EXPIRY DATE: 2017-03-05
LESSOR:
PENSKE TRUCK LEASING CANADA INC/ LOCATIONS DE CAMIONS PENSKE CANADA INC.
LESSEE:
UNISOURCE CANADA INC
RIGHTS UNDER A LEASE
NO DATE
8.
09-0257206-0002 2009-05-07
10:39 AM
EXPIRY DATE: 2016-05-06
LESSOR:
LESSEE:
UNISOURCE CANADA INC.
RIGHTS UNDER A LEASE
NO DATE
9.
09-0306814-0002 2009-05-27
02:43 PM
EXPIRY DATE: 2017-05-27
LESSOR:
LESSEE:
UNISOURCE CANADA INC
RIGHTS UNDER A LEASE
NO DATE
10.
10-0608666-0005 2010-09-02
12:37 AM
EXPIRY DATE: 2017-09-01
LESSOR:
LESSEE:
UNISOURCE CANADA INC
RIGHTS UNDER A LEASE
NO DATE
REF
NO
REGISTRATION NO./
REGISTRATION DATE
PARTIES
NATURE OF REGISTRATION/
AGREEMENT DATE
FORM
11.
10-0751911-0005 2010-10-26
02:19 PM
EXPIRY DATE: 2014-10-25
LESSOR:
LESSEE:
UNISOURCE CANADA INC
RIGHTS UNDER A LEASE
NO DATE 12.
10-0817636-0008 2010-11-19
10:48 AM
EXPIRY DATE: 2014-11-18
LESSOR:
XEROX CANADA LTD
LESSEE:
UNISOURCE CANADA INC.
RIGHTS UNDER A LEASE
NO DATE 13.
10-0847359-0006 2010-12-01
12:11 AM
EXPIRY DATE: 2016-11-30
LESSOR:
LESSEE:
UNISOURCE CANADA INC
RIGHTS UNDER A LEASE
NO DATE 14.
10-0903495-0005 2010-12-24
09:00 AM
EXPIRY DATE: 2014-12-22
LESSOR:
XEROX CANADA LTD
LESSEE:
UNISOURCE CANADA INC.
RIGHTS UNDER A LEASE
NO DATE 15.
11-0222470-0001 2011-04-04
10:28 AM
EXPIRY DATE: 2016-04-04
LESSOR (CRÉDIT-PRENEUR):
EQUIPMENTS G.N. JONSTON CO. LTÉE
LESSEE (CRÉDIT-PRENEUR):
UNISOURCE CANADA INC.
RIGHTS OF OWNERSHIP OF THE LESSOR IN A LEASING CONTRACT
NO DATE 16.
11-0558274-0001 2011-07-22
02:57 PM
EXPIRY DATE: 2015-07-21
LESSOR:
XEROX CANADA LTD
LESSEE:
UNISOURCE CANADA INC.
RIGHTS UNDER A LEASE
NO DATE 17.
11-0621491-0001 2011-08-16
09:00 AM
EXPIRY DATE: 2015-08-01
HEWLETT-PACKARD FINANCIAL SERVICES CANADA COMPANY
COMPAGNIE DE SERVICES FINANCIERS HEWLETT-PACKARD CANADA
UNISOURCE CANADA INC.
2011-08-01 18.
12-0173578-0009 2012-03-12
02:56 PM
EXPIRY DATE: 2021-03-12
LESSOR:
LOCATIONS DE CAMIONS PENSKE CANADA INC.
LESSEE:
UNISOURCE CANADA INC
RIGHTS UNDER A LEASE
NO DATE
19.
12-0734507-0007 2012-09-07
10:15 AM
EXPIRY DATE: 2016-09-06
LESSOR:
XEROX CANADA LTD
LESSEE:
UNISOURCE CANADA INC.
RIGHTS UNDER A LEASE
2012-08-05 20.
12-0864708-0007 2012-10-19
02:58 PM
EXPIRY DATE: 2022-01-23
LESSOR:
LESSEE:
UNISOURCE CANADA INC
RIGHTS UNDER A LEASE
NO DATE 21.
13-0162025-0010 2013-03-05
11:24 AM
EXPIRY DATE: 2017-03-04
LESSOR:
XEROX CANADA LTD
LESSEE:
UNISOURCE CANADA INC.
RIGHTS UNDER A LEASE
2013-02-27
REF
NO
REGISTRATION NO./
REGISTRATION DATE
PARTIES
NATURE OF REGISTRATION/
AGREEMENT DATE
FORM
22.
13-0285706-0005 2013-04-15
09:00 AM
LESSOR:
LESSEE:
UNISOURCE CANADA INC.
RIGHTS UNDER A LEASE
NO DATE 23.
13-0874667-0001 2013-10-02
10:24 AM
EXPIRY DATE: 2019-10-01
G.N. JONSTON EQUIPMENT CO. LTD.
UNISOURCE CANADA INC.
2013-10-02 24.
13-1119483-0003 2013-12-18
01:05 PM
EXPIRY DATE: 2017-12-17
LESSOR:
XEROX CANADA LTD
LESSEE:
UNISOURCE CANADA INC.
RIGHTS UNDER A LEASE
2013-12-11 25.
13-1120222-0001 2013-12-19
09:00 AM
LESSOR:
DOCUMENT DIRECTION LIMITED PARTNERSHIP
LESSEE:
UNISOURCE CANADA INC.
RIGHTS UNDER A LEASE
2013-12-17 26.
14-0053112-0010 2014-01-23
12:08 AM
LESSOR:
LESSEE:
UNISOURCE CANADA INC
RIGHTS UNDER A LEASE
NO DATE 27.
14-0291356-0006 2014-04-09
02:55 PM
EXPIRY DATE: 2015-04-08
LESSOR:
LESSEE:
RIGHTS UNDER A LEASE
NO DATE
vii) New Brunswick
(A) REGISTRATION DETAILS FOR REGISTRATION NUMBER: 17230384
PROVINCE OR TERRITORY: NEW BRUNSWICK
TYPE NUMBER DATE/TIME EXPIRY DATE
ORIGINAL
17230384 2009-03-06 09:57 2017-03-06
DEBTORS
UNISOURCE CANADA INC
50 EAST WILMOT STREET
RICHMOND HILL ON L4B3Z3
UNISOURCE CANADA INC
560 HENSALL CIRCLE
MISSISSAUGA ON L5A1Y1
SECURED PARTIES
RT 10 GREEN HILLS, PO BOX 791
READING PA 19603
READING PA 19603
(B) REGISTRATION DETAILS FOR REGISTRATION NUMBER: 17528456
ORIGINAL
17528456 2009-05-27 11:15 2017-05-27
DEBTORS
UNISOURCE CANADA INC
50 EAST WILMOT STREET
RICHMOND HILL ON L4B3Z3
UNISOURCE CANADA INC
560 HENSALL CIRCLE
MISSISSAUGA ON L5A1Y1
SECURED PARTIES
READING PA 19603
READING PA 19603
(C) REGISTRATION DETAILS FOR REGISTRATION NUMBER: 19725324
ORIGINAL
19725324 2011-02-02 14:47 2015-02-02
DEBTORS
UNISOURCE CANADA INC.
675 ST. GEORGE BLVD.
MONCTON NB E1E 2C2
SECURED PARTIES
G. N. JOHNSTON EQUIPMENT CO. LTD.
5990 AVEBURY ROAD
MISSISSAUGA ON L5R 3R2
(D) REGISTRATION DETAILS FOR REGISTRATION NUMBER: 19814854
ORIGINAL
19814854 2011-03-04 13:16 2018-03-04
DEBTORS
50 EAST WILMOT STREET
RICHMOND HILL ON L4B 3Z3
SECURED PARTIES
BANK OF AMERICA, N.A., AS ADMINISTRATIVE AGENT
335 MADISON AVENUE
NEW YORK NY 10017
(E) REGISTRATION DETAILS FOR REGISTRATION NUMBER: 21213244
ORIGINAL
21213244 2012-03-12 17:09 2021-03-12
DEBTORS
UNISOURCE CANADA INC
560 HENSALL CIRCLE
MISSISSAUGA ON L5A1Y1
SECURED PARTIES
READING PA 19603
READING PA 19603
(F) REGISTRATION DETAILS FOR REGISTRATION NUMBER: 22118871
ORIGINAL
22118871 2012-10-19 15:17 2020-10-19
DEBTORS
UNISOURCE CANADA INC
560 HENSALL CIRCLE
MISSISSAUGA ON L5A1Y1
SECURED PARTIES
READING PA 19603
READING PA 19603
(G) REGISTRATION DETAILS FOR REGISTRATION NUMBER: 23961295
ORIGINAL
23961295 2014-01-23 12:29 2022-01-23
DEBTORS
UNISOURCE CANADA INC
560 HENSALL CIRCLE
MISSISSAUGA ON L5A1Y1
SECURED PARTIES
READING PA 19603
READING PA 19603
(H) REGISTRATION DETAILS FOR REGISTRATION NUMBER: 22768428
ORIGINAL
22768428 2013-03-27 10:20 2019-03-27
DEBTORS
UNISOURCE CANADA INC.
675 ST. GEORGE STREET
MONCTON NB E1E 2C2
SECURED PARTIES
5990 AVEBURY ROAD
MISSISSAUGA ON L5R 3R2
(I) REGISTRATION DETAILS FOR REGISTRATION NUMBER: 23867880
ORIGINAL
23867880 2013-12-18 19:41 2017-12-18
DEBTORS
UNISOURCE CANADA INC.
675 ST GEORGE BLVD
MONCTON NB E1E 2C2
SECURED PARTIES
DOCUMENT DIRECTION LIMITED PARTNERSHIP
3450 SUPERIOR COURT, UNIT 1
OAKVILLE ON L6L 0C4
viii) Nova Scotia
(A) REGISTRATION DETAILS FOR REGISTRATION NUMBER: 14997688
PROVINCE OR TERRITORY: NOVA SCOTIA
ORIGINAL
14997688 2009-03-06 10:20 2017-03-06
DEBTORS
UNISOURCE CANADA INC
50 EAST WILMOT STREET
RICHMOND HILL ON L4B3Z3
UNISOURCE CANADA INC
560 HENSALL CIRCLE
MISSISSAUGA ON L5A1Y1
SECURED PARTIES
READING PA 19603
READING PA 19603
(B) REGISTRATION DETAILS FOR REGISTRATION NUMBER: 15310485
ORIGINAL
15310485 2009-05-27 11:19 2017-05-27
DEBTORS
UNISOURCE CANADA INC
50 EAST WILMOT STREET
RICHMOND HILL ON L4B3Z3
UNISOURCE CANADA INC
560 HENSALL CIRCLE
MISSISSAUGA ON L5A1Y1
SECURED PARTIES
READING PA 19603
READING PA 19603
(C) REGISTRATION DETAILS FOR REGISTRATION NUMBER: 17766437
ORIGINAL
17766437 2011-03-04 13:18 2018-03-04
DEBTORS
50 EAST WILMOT STREET
SECURED PARTIES
335 MADISON AVENUE
NEW YORK NY 10017
(D) REGISTRATION DETAILS FOR REGISTRATION NUMBER: 12311478
ORIGINAL
12311478 2007-04-18 18:21 2013-04-18
DEBTORS
UNISOURCE CANADA INC.
110 SIMMONDS DRIVE
DARTMOUTH NS B3B 1N9
SECURED PARTIES
4255 WESTON ROAD
NORTH YORK ON M9L 1W8
(E) REGISTRATION DETAILS FOR REGISTRATION NUMBER: 18354787
ORIGINAL
18354787 2011-07-21 13:15 2015-07-21
DEBTORS
UNISOURCE CANADA INC
110 SIMMONS DR
DARTMOUTH NS B3B1N9
UNISOURCE CANADA INC
160 OMANDS CREEK BOULEVARD
WINNIPEG MB R2R1V7
UNISOURCE CANADA INC
1425 DERWENT ST.
DELTA BC V3M6N3
UNISOURCE CANADA INC
50 EAST WILMOT ST.
RICHMOND HILL ON L4B3Z3
SECURED PARTIES
XEROX CANADA LTD
33 BLOOR ST. E. 3RD FLOOR
TORONTO ON M4W3H1
(F) REGISTRATION DETAILS FOR REGISTRATION NUMBER: 19264654
ORIGINAL
19264654 2012-03-12 17:13 2021-03-12
DEBTORS
UNISOURCE CANADA INC
560 HENSALL CIRCLE
MISSISSAUGA ON L5A1Y1
SECURED PARTIES
READING PA 19603
READING PA 19603
(G) REGISTRATION DETAILS FOR REGISTRATION NUMBER: 20223004
ORIGINAL
20223004
2012-10-19 17:11 2020-10-19
DEBTORS
UNISOURCE CANADA INC
560 HENSALL CIRCLE
MISSISSAUGA ON L5A1Y1
SECURED PARTIES
READING PA 19603
READING PA 19603
(H) REGISTRATION DETAILS FOR REGISTRATION NUMBER: 22171268
ORIGINAL
22171268 2013-12-17 18:10 2017-12-17
DEBTORS
UNISOURCE CANADA INC.
110 SIMMONS DR
DARTMOUTH NS B3B1N9
UNISOURCE CANADA INC
1475 COURTNEY PK, SUITE D
MISSISSAUGA ON L5T2R1
UNISOURCE CANADA INC.
1425 DERWENT WAY
DELTA BC V3M6N3
SECURED PARTIES
XEROX CANADA LTD
TORONTO ON M4W3H1
(I) REGISTRATION DETAILS FOR REGISTRATION NUMBER: 22281521
ORIGINAL
22281521 2014-01-23 13:13 2022-01-23
DEBTORS
UNISOURCE CANADA INC
560 HENSALL CIRCLE
MISSISSAUGA ON L5A1Y1
SECURED PARTIES
READING PA 19603
READING PA 19603
ix) Newfoundland and Labrador
(A) REGISTRATION DETAILS FOR REGISTRATION NUMBER: 7194458
PROVINCE OR TERRITORY: NEWFOUNDLAND AND LABRADOR
ORIGINAL
7194458 2009-03-06 10:07 2017-03-06
DEBTORS
UNISOURCE CANADA INC
50 EAST WILMOT STREET
RICHMOND HILL ON L4B3Z3
UNISOURCE CANADA INC
560 HENSALL CIRCLE
MISSISSAUGA ON L5A1Y1
SECURED PARTIES
READING PA 19603
READING PA 19603
(B) REGISTRATION DETAILS FOR REGISTRATION NUMBER: 7378615
ORIGINAL
7378615 2009-05-27 11:17 2017-05-27
DEBTORS
UNISOURCE CANADA INC
50 EAST WILMOT STREET
RICHMOND HILL ON L4B3Z3
UNISOURCE CANADA INC
560 HENSALL CIRCLE
MISSISSAUGA ON L5A1Y1
SECURED PARTIES
READING PA 19603
READING PA 19603
(C) REGISTRATION DETAILS FOR REGISTRATION NUMBER: 8881445
ORIGINAL
8881445 2011-03-04 13:18 2018-03-04
DEBTORS
50 EAST WILMOT STREET
SECURED PARTIES
335 MADISON AVENUE
NEW YORK NY 10017
(D) REGISTRATION DETAILS FOR REGISTRATION NUMBER: 9802332
ORIGINAL
9802332 2012-03-12 17:11 2021-03-12
DEBTORS
UNISOURCE CANADA INC
560 HENSALL CIRCLE
MISSISSAUGA ON L5A1Y1
SECURED PARTIES
READING PA 19603
READING PA 19603
(E) REGISTRATION DETAILS FOR REGISTRATION NUMBER: 10428431
ORIGINAL
10428431 2012-10-19 16:59 2020-10-19
DEBTORS
UNISOURCE CANADA INC
560 HENSALL CIRCLE
MISSISSAUGA ON L5A1Y1
SECURED PARTIES
READING PA 19603
READING PA 19603
(F) REGISTRATION DETAILS FOR REGISTRATION NUMBER: 11662954
ORIGINAL
11662954 2014-01-23 12:43 2022-01-23
DEBTORS
UNISOURCE CANADA INC
560 HENSALL CIRCLE
MISSISSAUGA ON L5A1Y1
SECURED PARTIES
READING PA 19603
READING PA 19603
x) Prince Edward Island
(A) REGISTRATION DETAILS FOR REGISTRATION NUMBER: 2206080
PROVINCE OR TERRITORY: PRINCE EDWARD ISLAND
ORIGINAL
2206080 2009-03-06 10:35 2017-03-06
DEBTORS
UNISOURCE CANADA INC
50 EAST WILMOT STREET
RICHMOND HILL ON L4B3Z3
UNISOURCE CANADA INC
560 HENSALL CIRCLE
MISSISSAUGA ON L5A1Y1
SECURED PARTIES
READING PA 19603
READING PA 19603
(B) REGISTRATION DETAILS FOR REGISTRATION NUMBER: 2256258
ORIGINAL
2256258 2009-05-27 11:21 2017-05-27
DEBTORS
UNISOURCE CANADA INC
50 EAST WILMOT STREET
RICHMOND HILL ON L4B3Z3
UNISOURCE CANADA INC
560 HENSALL CIRCLE
MISSISSAUGA ON L5A1Y1
SECURED PARTIES
READING PA 19603
READING PA 19603
(C) REGISTRATION DETAILS FOR REGISTRATION NUMBER:. 2630077
ORIGINAL
2630077 2011-03-04 13:19 2018-03-04
DEBTORS
50 EAST WILMOT STREET
SECURED PARTIES
335 MADISON AVENUE
NEW YORK NY 10017
(D) REGISTRATION DETAILS FOR REGISTRATION NUMBER: 2860292
ORIGINAL
2860292 2012-03-12 15:36 2021-03-12
DEBTORS
UNISOURCE CANADA INC
560 HENSALL CIRCLE
MISSISSAUGA ON L5A1Y1
SECURED PARTIES
READING PA 19603
READING PA 19603
(E) REGISTRATION DETAILS FOR REGISTRATION NUMBER: 3023294
ORIGINAL
3023294 2012-10-19 17:14 2020-10-19
DEBTORS
UNISOURCE CANADA INC
560 HENSALL CIRCLE
MISSISSAUGA ON L5A1Y1
SECURED PARTIES
READING PA 19603
READING PA 19603
(F) REGISTRATION DETAILS FOR REGISTRATION NUMBER: 3347818
ORIGINAL
3347818 2014-01-23 13:34 2022-01-23
DEBTORS
UNISOURCE CANADA INC
560 HENSALL CIRCLE
MISSISSAUGA ON L5A1Y1
SECURED PARTIES
READING PA 19603
READING PA 19603
xi) District of Columbia, USA
DEBTOR
TYPE OF
FILING
SECURED PARTY
COLLATERAL TYPE
FILE
DATE
FILE #
1.
UNISOURCE
CANADA, INC.
UCC 1
335 MADISON AVENUE
NEW YORK, NY 10017
ALL CURRENT AND FUTURE ASSETS AND PERSONAL PROPERTY OF THE DEBTOR
08/05/2009 2009085898 2.
UNISOURCE
CANADA, INC.
UCC 1
335 MADISON AVENUE
03/16/2011 2011033257
2. Closing Date PPSA Filings
Name of Entity
Secured Party
Jurisdiction
Filing Office
Document Filed
1. Unisource Canada, Inc.
Bank of America, N.A., as ABL Collateral Agent British Columbia
Personal Property Security Register PPSA Financing Statement
2. Unisource Canada, Inc.
Alberta
3. Unisource Canada, Inc.
Saskatchewan
4. Unisource Canada, Inc.
Manitoba
5. Unisource Canada, Inc.
Ontario
6. Unisource Canada, Inc.
Newfoundland
7. Unisource Canada, Inc.
Nova Scotia
8. Unisource Canada, Inc.
New Brunswick
9. Unisource Canada, Inc.
Prince Edward Island
10. Unisource Canada, Inc.
Quebec
Register of Personal and Moveable Real Rights
Application for Registration (form RH)
3. Closing Date IP Filings
1. Confirmation of Security Interest in Intellectual Property – Trade-marks
filed with the Canadian Intellectual Property Office
2. Confirmation of Security Interest in Intellectual Property – Copyrights filed
with the Canadian Intellectual Property Office
Schedule 4A
Financing Statement Jurisdictions
Name of Entity
Secured Party
Jurisdiction
Filing Office
Document Filed
Alberta
Saskatchewan
Manitoba
Ontario
Newfoundland
Nova Scotia
New Brunswick
Prince Edward Island
Quebec Register of Personal and Moveable Real Rights Application for
Registration (form RH)
Schedule 4B
Granting Party Information
1. Jurisdiction of Organization
Canada (Canada Business Corporations Act)
2. Location of Chief Executive Office
6185 McLaughlin Road
Mississauga, ON
L5R 3W7
3. Location of Books and Records
6185 McLaughlin Road, Mississauga, ON L5R 3W7
(location of corporate minute books)
4300 Hickmore Street, St. Laurent, Quebec H4T 1K2
(location of financial records)
4. Location of Collateral
See Numbers 5 and 6 below.
5. Location of all other places of business
Province
City
Address
Nova Scotia Dartmouth 110 Simmonds Drive B3B 1N9 Ontario London 1505
Sise Road N6A 4E3 Ontario Mississauga 560 Hensall Circle L5A 1Y1
6. Location of leased facilities and name of lessor/sublessor
Province
City
Address
Lessor/Sublessor
Alberta Edmonton 11704 - 186th St. N.W. Yellowhead Crossing II, LP
Alberta Calgary 6040 11th Street N.E. 833759 Alberta, Inc. Newfoundland
St. John’s 60 Clyde Avenue, Suite 100 N.C.H. Holdings Limited New
Brunswick Moncton 675 St. George Blvd. 2093152 Ontario Inc. Quebec
St. Laurent 4300 Hickmore Street Hoopp Realty, Inc. Quebec Quebec City
1750 rue Newton Cominar Real Estate Investment Trust Ontario Ottawa
950 Ages Drive Kayush Investments, Ltd.
Province
City
Address
Lessor/Sublessor
Saskatchewan Saskatoon 858-57 Street East Tim Turple Holdings, Inc
Saskatchewan Regina 480 Hoffer Drive 101104406 Saskatchewan Ltd.
Ontario Mississauga 1475 Courtneypark Drive Orlando Corporation and
Orion Properties, Ltd. Ontario Mississauga 6185 McLaughlin Road Orlando
Corporation Ontario Richmond Hill 1 West Pearce St, Suite 600 Capital
Centre Limited British Columbia Prince George 1021 Eastern Street NOORT
Investments British Columbia New Westminster 1425 Derwent Way 349393
B.C. Ltd. And Dayhu Investments Ltd. Manitoba Winnipeg 160 Omands Creek
Blvd. Opus Properties Corp.
Schedule 5
Intellectual Property
Patents, Copyrights, Trade-marks and Industrial Designs
1. Patents
None.
2. Trade-marks
Trademark
Application Number Application
Date
m/dd/yyyy Registration
Number Registration
Date
m/dd/yyyy
://UNISOURCEDESIGN.CA
1207098 2/20/2004 TMA648965 9/26/2005
AGL
1130323 2/6/2002 TMA606298 3/26/2004
ALLSTAR & DESIGN
1011507 4/13/1999 TMA535793 10/26/2000
ALLSTAR & DESIGN
0724381 3/11/1993 TMA450506 11/24/1995
ALLSTAR LIBERATE & DESIGN
1242379 12/31/2004 TMA648880 9/23/2005
BENCHMARK
0415688 9/20/1977 TMA237701 11/30/1979
BENCHMARK
0357744 10/12/1972 TMA199535 5/31/1974
CAMEO DESIGN
0389995 9/23/1975 TMA216796 10/22/1976
CAMEO DESIGN
0389994 9/23/1975 TMA216902 10/29/1976
CIRCLE & DESIGN
0357745 10/12/1972 TMA199536 5/31/1974
COLORSOURCE
0726333 4/8/1993 TMA430268 7/8/1994
COMSOURCE
0546311 7/17/1985 TMA329838 7/10/1987
COPYSOURCE
0612053 7/27/1988 TMA355411 5/5/1989
CUSTOMER SOLUTIONS IN A GLOBAL MARKET
1515090 2/14/2011 TMA841212 1/25/2013
DELIVER THE BEST VALUE EVERY TIME
1311023 7/28/2006 TMA702951 12/12/2007
DOCUSOURCE
0779631 4/5/1995 TMA479748 8/7/1997
ECONOSOURCE
0726334 4/8/1993 TMA430269 7/8/1994
ECOSOURCE DESIGN
1347473 5/15/2007 TMA722083 8/26/2008
ELLIS’ CAMEO WOMEN’S HEAD & DESIGN
0114796 7/10/1923 TMDA33942 7/28/1923
ENVIRO 50
0651343 2/20/1990 TMA383981 5/3/1991
ESCE & DESIGN
1044772 2/1/2000 TMA567114 9/10/2002
EXPERIENCE THE POWER OF THE SOURCE
1130322 2/6/2002 TMA606300 3/26/2004
FORDIS & DESIGN
1418516 11/17/2008 TMA760970 3/5/2010
FORDIS DESIGN
1409222 9/2/2008 TMA771478 7/8/2010
INTER-GRAPH
0643428 10/25/1989 TMA386574 7/12/1991
LIBERATE
1236274 11/4/2004 TMA648879 9/23/2005
LIVRER LA VALEUR OPTIMALE A CHAQUE FOIS
1311024 7/28/2006 TMA702950 12/12/2007
MONDRIAN
1199031 12/4/2003 TMA641403 6/6/2005
MONDRIAN-HALL & DESIGN
1462094 12/8/2009 TMA780695 10/26/2010
MONDRIAN-HALL Logo
1492222 8/13/2010 TMA806712 9/14/2011
ONE COMPANY, ONE SOURCE
1152940 9/17/2002 TMA614609 7/12/2004
ONE NAME. ONE VISION. ONE SOURCE.
0748578 3/1/1994 TMA459279 6/14/1996
ONE SOURCE.MANY SOLUTIONS.
0755923 5/27/1994 TMA453067 1/26/1996
PAPER ONLY
1336234 2/20/2007 TMA721046 8/15/2008
PAPER ONLY LOGO
1349481 5/30/2007 TMA721003 8/15/2008
PAPER PLUS
0492991 10/5/1982 TMA302305 4/26/1985
PAPERONLY.CA
1336910 2/26/2007 TMA721032 8/15/2008
Trademark
Application Number Application
Date
Number Registration
Date
PAPERONLY.CA LOGO
1360802 8/23/2007 TMA717059 6/20/2008
PAPIER PLUS
0538923 3/26/1985 TMA323390 2/6/1987
PAPIER SEULEMENT
1349313 5/29/2007 TMA766287 5/11/2010
PAPIER SEULEMENT LOGO
1349483 5/30/2007 TMA766288 5/11/2010
PARTY PACK
1012105 4/7/1999 TMA580338 4/30/2003
PRICE DAXION
0564138 6/9/1986 TMA333508 10/30/1987
PUR PERFORMANCE & DESIGN
1289407 2/10/2006 TMA818590 2/28/2012
PUR VALUE & DESIGN
1349158 5/28/2007 TMA721002 8/15/2008
PUR VALUE & DESIGN
1349158, 01 12/7/2012 Formalized 12/17/2012
PUR VALUE & DESIGN
1298559 4/21/2006 TMA799568 6/8/2011
PUR VALUE & DESIGN
1259864 6/2/2005 TMA721319 8/19/2008
SAN REMO GLOSS
0720031 1/6/1993 TMA424802 3/4/1994
SAN REMO MATTE
0720032 1/6/1993 TMA424803 3/4/1994
SAN REMO PLUS
1069712 8/3/2000 TMA563393 6/13/2002
SAVE-A-TREE
0642436 10/11/1989 TMA382657 4/5/1991
SAVE-A-TREE & DESIGN
1186553 8/7/2003 TMA648939 9/26/2005
0643599 10/30/1989 TMA385138 5/31/1991
SAVE-A-TREE/DU PAPIER A L-INFINI. & DESIGN
1267668 8/8/2005 TMA684555 3/23/2007
SAVE-A-TREE/PAPER GOES A LONG WAY. & DESIGN
1255270 4/25/2005 TMA684747 3/27/2007
SELECT SOURCE
0819149 7/29/1996 TMA498660 8/14/1998
SIGNET
0741378 11/16/1993 TMA484999 10/30/1997
SMITH PAPER
0762254 8/22/1994 TMA515634 8/27/1999
SOLUTIONS
1298561 4/21/2006 TMA686887 5/4/2007
SPHINX & DESIGN
0724597 3/15/1993 TMA464633 10/25/1996
STARBRITE
0246327 7/3/1958 TMA112542 12/12/1958
STARBRITE & DESIGN
1186557 8/7/2003 TMA650704 10/18/2005
U & DESIGN
1280255 11/21/2005 TMA684554 3/23/2007
U & DESIGN
0728077 5/3/1993 TMA443903 6/16/1995
U’s & DESIGN
0718499 12/10/1992 TMA444908 7/7/1995
UNISOURCE & DESIGN
0718488 12/10/1992 TMA448518 10/6/1995
U UNISOURCE & DESIGN
1280375 11/18/2005 TMA678628 12/20/2006
UNISOURCE CANADA & DESIGN
1224295 7/21/2004 TMA693844 8/10/2007
U UNISOURCE CANADA & DESIGN
1185844 7/28/2003 TMA646006 8/18/2005
U UNISOURCE FINANCE & DESIGN
1226741 8/11/2004 TMA644937 7/26/2005
UBUY & DESIGN
1418681 11/18/2008 TMA816165 1/25/2012
UNE COMPAGNIE, UNE SOURCE
1280257 11/21/2005 TMA677843 11/29/2006
UNE SOURCE. PLUSIEURS SOLUTIONS.
0887965 8/14/1998 TMA522498 1/28/2000
UNICOVER
0734356 8/3/1993 TMA436350 11/25/1994
UNISOURCE
0728076 5/3/1993 TMA443902 6/16/1995
UNISOURCE
0712752 9/11/1992 TMA444899 7/7/1995
UNISOURCE FINANCE
0835618 2/5/1997 TMA561129 5/1/2002
UNISOURCE WIDE FORMAT DOCUJET & DESIGN
1010760 4/1/1999 TMA571644 12/4/2002
UNISOURCEDESIGN
1207097 2/20/2004 TMA683995 3/19/2007
STARBRITE + & DESIGN
1553849 11/25/2011 TMA856779 8/01/2013
STARBRITE PLUS AND DESIGN
1553847 25/11/2011 TMA 856778 8/01/2013
DES SOLUTIONS POUR LES CLIENTS DANS UN MARCHÉ MONDIAL
1563330 2/9/2012 TMA854792 7/9/2013
DEFIANCE
1595202 9/21/2012 TMA862609 10/15/2013
BRAND EFFICIENCY
1622018 4/10/2013 Advertised 2/12/2014
RESPECT
1616221 2/28/2013 Formalized 3/5/2013
SELECTSOURCE LOGO
1567480 3/7/2012 TMA859763 9/10/2013
COMET HI-BRITE & DESIGN
1517423 3/2/2011 TMA859757 9/10/2013
Trademark
Application Number Application
Date
Number Registration
Date
R RESPECT & DESIGN
1616222 2/28/2013 Formalized 3/5/2013
UDIGITAL
1651535 11/12/2013 Formalized 11/14/2013
STEALTH
1616217 2/28/2013 Formalized 3/5/2013
AVENGER
1616220 2/28/2013 Formalized 3/5/2013
UBRAND
1650418 11/01/2013 Formalized 11/06/2013
UVELVET
1650417 11/01/2013 Formalized 11/06/2013
PROSOURCE
0754463 05/11/1994 TMA504290 11/18/1998
U BRAND VELVET & DESIGN (Vertical)
1657398 12/20/2013 Formalized 12/24/2013
U BRAND VELVET & DESIGN (Horizontal)
1657396 12/20/2013 Formalized 12/24/2013
U BRAND GLOSS & DESIGN (Vertical)
1657395 12/20/2013 Formalized 12/24/2013
U BRAND GLOSS & DESIGN (Horizontal)
1657251 12/20/2013 Formalized 12/27/2013
U BRAND DIGITAL & DESIGN (Vertical)
1657250 12/20/2013 Formalized 12/27/2013
U BRAND DIGITAL & DESIGN (Horizontal)
1657249 12/20/2013 Formalized 12/24/2013
U BRAND & DESIGN (Vertical)
1657248 12/20/2013 Formalized 12/24/2013
U BRAND & DESIGN (Horizontal)
1657245 12/20/2013 Formalized 12/24/2013
UGLOSS
1656918 12/18/2013 Formalized 12/20/2013
3. Copyrights
Copyright
Registration No.
Registration Date
Electronic Price List
454282 7/9/1996
4. Industrial Designs
None.
Material Registered Patent, Copyright, Trade-mark and Industrial Design Licenses
1. Material Patent Licenses
None.
2. Material Trade-mark Licenses
None.
3. Material Copyright Licenses
None.
4. Material Industrial Design Licenses
None
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Exhibit 10.2
THIS NOTE AND THE SUBORDINATED NOTE PURCHASE AGREEMENT REFERENCED AND
INCORPORATED HEREIN IS SUBJECT TO ARBITRATION PURSUANT TO THE SOUTH CAROLINA
UNIFORM ARBITRATION ACT: SC CODE ANN. §15-48-10 ET SEQ. AND THE FEDERAL
ARBITRATION ACT 9 U.S.C. 1 ET SEQ.
The issuance of this Subordinated Note has not been registered under the
Securities Act of 1933 or applicable state laws, and this Note may not be sold
or transferred except in a transaction that is exempt under such laws or
pursuant to an effective registration under such laws.
This obligation is not a deposit and is not insured by the United States or any
agency or fund of the United States, including the Federal Deposit Insurance
Corporation. This obligation is subordinated to the claims of senior
indebtedness of the Company and is not secured.
SUBORDINATED NOTE DUE 2020
$[ ] [INSERT APPLICABLE CLOSING DATE], 2010
FOR VALUE RECEIVED, the undersigned, HCSB FINANCIAL CORPORATION, a South
Carolina corporation (the “Company”), hereby promises to pay to the order of
[ ], an [individual resident of / a
corporation/LLC] (“Purchaser”), at its offices at 3640 Ralph
Ellis Boulevard, Loris, South Carolina 29569 (or at such other place as the
holder may from time to time designate) the principal sum of
[ ($ )] on [·], 2020 (the “Maturity Date”) (or
such date as the Company may prepay the principal sum pursuant to Section 1.4 of
the Note Purchase Agreement (as defined below) or any earlier date of
acceleration of the Maturity Date), and to pay interest accrued on the
outstanding principal amount of this Subordinated Note Due 2020 (the “Note”)
from [INSERT APPLICABLE CLOSING DATE], 2010, or from the most recent Interest
Payment Date (as defined below) to which interest has been paid or duly provided
for, semi-annually on April 5, 2010 and October 5, 2010 of each year, commencing
on October 5, 2010 (each, an “Interest Payment Date”), at a rate per annum of
9.00% (or such rate of interest as then in affect pursuant to Section 1.2 of the
Note Purchase Agreement) until the principal hereof shall have been paid.
This Note is one of the Notes referred to in the Subordinated Note Purchase
Agreement (as may be amended, modified, or restated from time to time), dated as
of March 29, 2010, by and among the Company and the purchasers of the Company’s
Subordinated Notes Due 2020 (the “Note Purchase Agreement”). Capitalized terms
used in this Note are defined in the Note Purchase Agreement, unless otherwise
expressly stated herein. This Note is entitled to the benefits of the Note
Purchase Agreement and is subject to all of the agreements, terms, and
conditions contained therein, all of which are incorporated herein by this
reference. This Note may be
prepaid, in whole or in part, in accordance with the terms and conditions set
forth in the Note Purchase Agreement.
The outstanding principal balance of this Note shall be due and payable as
provided in Section 1.4 of the Note Purchase Agreement. Interest on the
principal amount of this Note from time to time outstanding, and other amounts
owing, shall be due and payable as provided in Section 1.2 of the Note Purchase
Agreement (computed on the basis of the actual number of days elapsed over a
365/366-day year). In no event, however, shall interest exceed the maximum rate
permitted by law.
If an Event of Default involving bankruptcy provided for under Section 7.1(F) of
the Note Purchase Agreement occurs, then the principal of, interest accrued on,
and other Obligations payable under the Notes and the Transaction Documents will
immediately become due and payable. Notwithstanding anything to the contrary
herein or in the Note Purchase Agreement, other than Section 7.1(F) of the Note
Purchase Agreement, there is no right of acceleration for any Default, including
a default in the payment of principal or interest or the performance of any
other covenant or obligation by the Company, or Event of Default under this Note
or the Note Purchase Agreement.
This Note is not secured by any assets or commitments of the Company. This Note
is a debt of the Company only and is not an obligation of Horry County State
Bank or any of its affiliates.
The Indebtedness of the Company evidenced by this Note, including the principal,
interest, and premium, if any, is, to the extent and in the manner set forth in
the Note Purchase Agreement, unsecured, subordinated, and junior in right of
payment to its obligations to holders of Senior Indebtedness, as defined in the
Note Purchase Agreement, and each holder of the Notes, by the acceptance hereof,
agrees to and shall be bound by such provisions of the Note Purchase Agreement.
THIS NOTE SHALL BE GOVERNED BY AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF SOUTH CAROLINA, WITHOUT REGARD TO
CONFLICTS OF LAW PRINCIPLES.
BINDING ARBITRATION. UPON DEMAND OF ANY PARTY (AS DEFINED IN THE NOTE PURCHASE
AGREEMENT) (THE TERM PARTY INCLUDES, WITHOUT LIMITATION, ANY SUBSEQUENT HOLDER
OF THIS NOTE),WHETHER SUCH DEMAND IS MADE BEFORE OR AFTER INSTITUTION OF ANY
JUDICIAL PROCEEDING, ANY DISPUTE, CLAIM OR CONTROVERSY ARISING OUT OF,
CONNECTED WITH OR RELATING TO THIS NOTE AND/OR ANY OTHER TRANSACTION DOCUMENT,
THEIR SUBJECT MATTER OR FORMATION OR EXECUTION, OR ANY RIGHT OR OBLIGATION
CREATED THEREBY, IRRESPECTIVE OF THE LEGAL THEORY OR CLAIMS UNDERLYING SUCH
DISPUTE, CLAIM OR CONTROVERSY (INCLUDING TORT OR STATUTORY CLAIMS) (ANY
“DISPUTE”) BETWEEN OR AMONG ANY PARTIES SHALL BE RESOLVED BY BINDING ARBITRATION
AS PROVIDED IN SECTION 10 OF THE REFERENCED NOTE PURCHASE AGREEMENT INCORPORATED
HEREIN. INSTITUTION OF A JUDICIAL
PROCEEDING BY A PARTY DOES NOT WAIVE THE RIGHT OF THAT PARTY TO DEMAND
ARBITRATION HEREUNDER. DISPUTES MAY INCLUDE, WITHOUT LIMITATION, TORT CLAIMS,
COUNTERCLAIMS, DISPUTES AS TO WHETHER A MATTER IS SUBJECT TO ARBITRATION, CLAIMS
BROUGHT AS CLASS ACTIONS, CLAIMS RELATING TO ANY TRANSACTION DOCUMENT EXECUTED
IN THE FUTURE, OR CLAIMS ARISING OUT OF OR CONNECTED WITH THE TRANSACTION
REFLECTED BY THIS NOTE.
EXCLUSIVE VENUE SELECTION. IN THE EVENT THE PRIOR BINDING ARBITRATION IS FOUND
TO BE UNENFORCEABLE (OR IF NO PARTY DEMANDS ARBITRATION), ANY DISPUTE ARISING
BETWEEN OR AMONG ANY PARTIES SHALL BE BROUGHT EXCLUSIVELY IN THE COURT OF COMMON
PLEAS FOR HORRY COUNTY, SOUTH CAROLINA, OR IN THE FEDERAL COURTS OF THE DISTRICT
OF SOUTH CAROLINA, FLORENCE DIVISION.
CONSENT TO JURISDICTION. EACH PARTY CONSENTS TO THE JURISDICTION OF THE STATE
COURTS OF HORRY COUNTY, SOUTH CAROLINA, AND THE FEDERAL COURTS OF THE DISTRICT
OF SOUTH CAROLINA, FLORENCE DIVISION. EACH PARTY EXPRESSLY AND IRREVOCABLY
CONSENTS TO THE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSES OF
LACK OF PERSONAL JURISDICTION, IMPROPER VENUE, OR FORUM NON CONVENIENS.
EACH PARTY WAIVES THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY DISPUTE.
EACH PARTY ACKNOWLEDGES THAT THIS WAVIER IS A MATERIAL INDUCEMENT FOR COMPANY
AND PURCHASER TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS RELIED ON
THIS WAIVER IN ENTERING INTO THIS NOTE AND THE OTHER TRANSACTION DOCUMENTS, AND
THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS.
PURCHASER, ANY SUBSEQUENT HOLDERS, AND THE COMPANY REPRESENT AND WARRANT THAT
EACH HAS HAD THE OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL,
AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.
The provisions of this Note are continued on the reverse side hereof and such
provisions shall for all purposes have the same effect as though fully set forth
at this place.
The undersigned expressly waives any presentment, demand, protest, notice of
default, notice of intention to accelerate, notice of acceleration, or notice of
any other kind except as expressly provided in the Note Purchase Agreement.
This Note is executed as of the date first written above.
HCSB FINANCIAL CORPORATION,
a South Carolina corporation
By:
Name:
Title:
REVERSE OF SECURITY
No reference herein to the Note Purchase Agreement and no provision of this Note
or of the Note Purchase Agreement shall alter or impair the obligation of the
Company, which is absolute and unconditional, to make all payments due on this
Note at the time and place and at the rate and in the money herein prescribed.
Subject to the terms and conditions of the Note Purchase Agreement, this Note is
transferable by the holder hereof on the register maintained by the Company, or
its agent, upon surrender of this Note for registration of transfer at the
office of the Company duly executed by the holder hereof or such holder’s
attorney duly authorized in writing, and thereupon one or more new Notes of
authorized denominations and for the same aggregate principal amount will be
issued to the designated transferee or transferees. No service charge will be
made for any such registration of transfer.
Prior to due presentment for registration of transfer of this Note, the Company,
or its agent, may deem and treat the holder hereof as the absolute owner hereof
for the purpose of receiving payment of the principal of and premium, if any,
and interest on this Note and for all other purposes, and neither the Company,
nor its agent, shall be affected by any notice to the contrary.
|
Title: Are landlords allowed to force their tenants to come to them to pay them rent?
Question:In Florida my landlord is no longer going to his properties to collect rent. Instead sent out a mass text saying you can either go to the main office 45 minutes away to pay, or go to a local shop where he happens to be to pay him. Now normally I wouldn't make a huge deal out of this but my car was recently totaled and now I have no way to get to him without paying even more money just to take an uber to get to him. Is there any laws regarding landlords getting payment?
Answer #1: Can you simply mail or money transfer?
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EXHIBIT 10.4
TANNING TECHNOLOGY CORPORATION CHANGE IN CONTROL PLAN
NOTICE OF PARTICIPATION
This Notice of Participation Agreement ("Notice of Participation") is
entered into this 21st day of March 2003 by and between Tanning Technology
Corporation, a Delaware Corporation ("Tanning") and Katherine Scherping
("Participant"). The Notice of Participation is subject to and governed by the
terms and conditions set forth in the Change in Control Plan ("Plan") adopted by
the Tanning Board of Directors on March 18, 2003.
COMPENSATION UPON TERMINATION
Upon a termination of your employment as set forth in Article IV,
Section 1, of the Plan, you shall be entitled to the following benefits:
Severance payment: Subject to the provisions of the Plan, a severance payment
equal to seventy-five percent (75%) of your Annual Compensation (as defined in
the Plan). Severance shall be payable as set forth in the Plan.
Continuation of Medical Coverage under COBRA: If you elect to participate in
COBRA benefits continuation, the Company shall pay or shall reimburse you (to
the extent you have previously made payments), to the extent COBRA benefits are
available, your monthly premiums for your elected level of group medical
insurance for up to 9 months of continued coverage of your then-currently
elected level of benefit.
Agreed and accepted:
Tanning Technology Corporation
Participant
By:
Gregory A. Conley
By:
/s/ Katherine L. Scherping
Signature Signature
Gregory A. Conley
Katherine Scherping
Printed Name Printed Name
President, CEO & COO
April 1, 2003
Title Date
April 1, 2003
Date
QuickLinks
EXHIBIT 10.4
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Exhibit 32.2 CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION -OXLEY ACT OF 2002 The undersigned, Dror Svorai, the President and Chief Financial Officerof InfoSpi, Inc., hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to their knowledge, theAnnual Report on Amended Form 10-K of InfoSpi, Inc. for fiscal year ended December 31, 2009, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in the Amended Annual Report on Form 10-K fairly presents in all material respects the financial condition and results of operations of InfoSpi, Inc. Date: March 15, 2011 /s/ " Dror Svorai " Dror Svorai President/Chief Financial Officer A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signatures that appear in typed form within the electronic version of this written statement required by Section 906, has been provided to InfoSpi, Inc. and will be retained by InfoSpi, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
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PERRITT FUNDS, INC. FIRST AMENDMENT TO THE TRANSFER AGENT SERVICING AGREEMENT THIS FIRST AMENDMENT dated as of this 23rd day of March, 2011, to the Transfer Agent Servicing Agreement dated as of February 1, 2009 (the "Agreement"), is entered into by and between Perritt Funds, Inc. a Maryland corporation (the "Company") and U.S. Bancorp Fund Services, LLC, a Wisconsin limited liability company ("USBFS"). RECITALS WHEREAS, the parties have entered into the Agreement; and WHEREAS, the parties desire to amend the fees of the Agreement; and WHEREAS, Section 12 of the Agreement allows for its amendment by a written instrument executed by both parties. NOW, THEREFORE, the parties agree as follows: Exhibit C of the Agreement is hereby superseded and replaced with Amended Exhibit C attached hereto. Except to the extent amended hereby, the Agreement shall remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to be executed by a duly authorized officer on one or more counterparts as of the date and year first written above. PERRITT FUNDS, INC. U.S. BANCORP FUND SERVICES, LLC By: /s/ Michael J. Corbett By: /s/ Michael R. McVoy Printed Name: Michael J. Corbett Printed Name:Michael R. McVoy Title: President Title:Executive Vice President Peritt Funds, Inc. 1 Amended Exhibit C to the Transfer Agent Servicing Agreement – Perritt Funds, Inc. TRANSFER AGENT & SHAREHOLDER SERVICES ANNUAL FEE SCHEDULE Effective February, 2009 for 3 Years Service Charges to the Fund* Shareholder Account Fee (Subject to Minimum) No-Load- $[] / open account No-Load - $[] /closed Account Annual Minimum - $[] Annual Minimum on Institutional Class - $[] Telephone Calls - $[] /Minute Daily Valuation Trades - $[] /trade Omnibus Account Transactions $[] each – first [] transactions $[] each – next [] transactions $[] each – next [] transactions $[] each – next [] transactions $[] each – balance of transactions CCO Support Services - $[] per year Lost Shareholder Search - $[] /search AML Base Service (excl Level 3 accounts) [] -[] accounts - $[] /year [] -[] accounts - $[] /year [] -[] accounts - $[] /year [] + accounts - $[] year AML New Account Service - $[] /new domestic accounts and $[] /new foreign account ACH/EFT Shareholder Services: $[] /month/fund group $[] /ACH item, setup, change $[] /correction, reversal Out-of-pocket Costs - Including but not limited to: Telephone toll-free lines, call transfers, etc. Mailing, sorting and postage Stationery, envelopes Programming, special reports Insurance, record retention, microfilm/fiche Proxies, proxy services ACH fees, NSCC charges Disaster Recovery – per open account All other out-of-pocket expenses Service Charges to Investors Qualified Plan Fees (Billed to Investors) $[] /qualified plan acct (Cap at $[] /SSN) $[] /Coverdell ESA acct (Cap at $[] /SSN) $[] /transfer to successor trustee $[] /participant distribution (Excluding SWPs) $[] /refund of excess contribution Additional Shareholder Fees (Billed to Investors) $[] /outgoing wire transfer $[] /overnight delivery $[] /telephone exchange $[] /return check or ACH $[] /stop payment $[] /research request per account (Cap at $[] /request) (For requested items of the second calendar year [or previous] to the request) Technology Charges 1.NSCC Service Interface – All NSCC Services Setup - $[] /fund group 2.Telecommunications and Voice Services Service Setup - $[] ATT transfer connect VRU Setup - $[]/fund group 3.Fund Group Setup (first class) - $[] /fund group 4.Fund Setup - $[] /fund/class (beyond first class) 5.Development/Programming - $[]/hour 6.File Transmissions – subject to requirements 7.Selects - $[]per select, plus $[]/Excel 8.Extraordinary services – charged as incurred Conversion of Records (if necessary) – Estimate to be provided. Custom processing, re-processing All other extraordinary services *Subject to annual CPI increase, Milwaukee MSA. Fees are billed monthly. Peritt Funds, Inc. 2 Amended Exhibit C to the Transfer Agent Service Agreement – Perritt Funds, Inc. FAN Web Shareholder internet access to account information and transaction capabilities through a hyperlink at the fund group web site.Shareholders access account information, portfolio listing fund family, transaction history, purchase additional shares through ACH, etc. § FAN Web Select (Fund Groups under [] open accounts) −Implementation - $[] /fund group – includes up to [] hours of technical/BSA support −Annual Base Fee - $[] /year § FAN Web Direct (API) – Quoted Separately § Customization - $[] /hour § Activity (Session) Fees: −Inquiry - $[] /event −Account Maintenance - $[] /event −Transaction – financial transactions, reorder statements, etc. - $[] /event § Strong Authentication: −$[] /month per active FAN Web ID (Any ID that has had activity within the [] -day period prior to the billing cycle) Electronic Confirm Presentation eCDLY will load shareowner daily confirmations (financial transactions only, does not include maintenance confirmations) and send notification to consented shareowners of a new document to view. § Document Loading, Storage, and Access - $[] /statement § Document Consent Processing, Suppression, and Notification - $[] /suppressed statement § Development & Implementation of Electronic Confirm Statements - $[] initial setup fee Note: Quarterly minimum fee of $[]. Electronic Investor Statement Presentation eStatements will load shareowner investor statements in a PDF format and send notification to the consented shareowners of a new document to view. § Document Loading, Storage, and Access - $[] /statement § Document Consent Processing, Suppression, and Notification - $[] /suppressed statement § Development & Implementation of Electronic Investor Statements - $[] initial setup fee Electronic Tax Presentation eTax will load TA2000 tax forms and send notification to the consented shareowners of a new document to view. § Document Loading, Storage, and Access - $[] /statement § Document Consent Processing, Suppression, and Notification - $[] /suppressed statement Development & Implementation of Electronic Tax Statements – $[] initial setup fee Electronic Compliance Presentation eCompliance allows consented users to receive an email containing a link to the respective compliance material for each compliance run. § Document Loading, Storage, and Access § Document Consent Processing, Suppression, and Notification - $[] /suppressed statement § Development & Implementation of Electronic Compliance Documents - $[] initial setup fee Note: Annual compliance minimum fee of $[]. FAN Web Transaction Fees § View Consent Enrollment - $[] /transaction § Consent Enrollment - $[] /transaction § View Statements - $[] /view Peritt Funds, Inc. 3 Amended Exhibit C to the Transfer Agent Service Agreement – Perritt Funds, Inc. Literature Fulfillment Services* Account Management $[] /month (account management, lead reporting and database administration) Out-of-Pocket Expenses Kit and order processing expenses, postage, and printing Inbound Teleservicing Only Account Management - $[] /month Call Servicing - $[] /minute Lead Conversion Reporting (Closed Loop) Account Management - $[] /month Database Installation, Setup - $[] /fund group Specialized Programming – (Separate Quote)* *Fees exclude postage and printing charges. Peritt Funds, Inc. 4
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Exhibit 10.58
AMENDMENT TO MATCHING PRSU AGREEMENT
(_______________)
This is a [First] Amendment to Matching PRSU Agreement (the “Amendment”),
between Tempur Sealy International, Inc. (the “Company”), and
[_________________] (the “Employee” and together with the Company, the
WHEREAS, the Parties are parties to a Matching Performance Restricted Stock Unit
Award Agreement, dated as of [_________________] (the “Matching PRSU
Agreement”);
WHEREAS, the Matching PRSU Agreement currently provides that upon an “Approved
Retirement”, the Committee may in its discretion continue the vesting of a pro
rata portion (as determined pursuant to the Matching PRSU Agreement) of the
Performance Restricted Stock Units in accordance with the annual vesting
schedule set forth in the Matching PRSU Agreement, subject to the other terms
and conditions of the Matching PRSU Agreement;
WHEREAS, in the Matching PRSU Agreement an Approved Retirement is defined in
part by reference to the term “retirement” as defined in the Company’s
retirement policies as in effect at the applicable time, but the Company has
confirmed that it currently has no Company-wide retirement policies that would
be a suitable reference for this term; and
WHEREAS, the Company wishes to amend the Matching PRSU Agreement to (i) create a
new definition of “Retirement”; (ii) continue to provide the Compensation
Committee the discretion to determine whether any “Retirement” (as redefined)
should constitute an Approved Retirement, and (iii) provide the Compensation
Committee additional discretion to determine whether on an Approved Retirement
all or only part of the unvested Performance Restricted Stock Units (i.e., some
amount other than a pro rata portion as currently provided in the Matching PRSU
Agreement) shall vest.
NOW, THEREFORE, the Parties hereto agree as follows:
1. Amendment.
(a) Section 4(e) (“Approved Retirement”) is hereby amended in its entirety to
read as follows:
“(e) Approved Retirement. In the event of the Recipient’s Approved Retirement,
the Committee may at its sole discretion consent to the continued vesting of all
or part of the unvested Performance Restricted Stock Units on the remaining
Vesting Dates and the balance (if any) shall be cancelled and no Stock issued
therefor. Notwithstanding the foregoing no Stock shall be
Exhibit 10.58
issued and all of Recipient’s rights to the unvested Performance Restricted
Stock Units and the related Stock issuable thereunder shall be forfeited, expire
and terminate unless (i) the Company shall have received a release of all claims
from the Recipient in the form customarily used by the Company in connection
with the departures of senior executives (“Release and Waiver”) (and said
Release and Waiver shall have become irrevocable in accordance with its terms)
prior to the next applicable Vesting Date (or if earlier the deadline
established in the form of release delivered by the Company to Recipient for
execution) and (ii) the Recipient shall have complied with the covenants set
forth in Section 10 of this Agreement. If and to the extent the Committee shall
for any reason decline to consent to continued vesting on the Recipient’s
Retirement, then the provisions of subsection (c) above shall instead apply.”
(b) Section 4(f)(v) (“Retirement”) is hereby amended in its entirety to read
as follows:
“(v) “Retirement” shall mean the voluntary termination of the Recipient’s
employment with the Company or any of its Subsidiaries or Affiliates on or after
reaching the minimum age of fifty-five (55); provided, however, that the sum of
the Recipient’s age plus years of service (counting whole years only) must equal
at least sixty (60) and provided further that there is no basis for the Company
to terminate the Recipient For Cause at the time of Recipient’s voluntary
termination; and”
(c) Section 4(f) is hereby amended by adding the following as a new clause
(vi):
“(vi) “Approved Retirement” shall mean any Retirement of the Recipient the
Committee determines in its sole discretion shall be treated as an “Approved
Retirement” for purposes of this Agreement.”
2. No Other Amendments. Except as expressly set forth above, the Matching
PRSU Agreement remains in full force and effect in accordance with its terms.
3. Defined Terms. Capitalized terms used herein without definition have the
meanings given them in the Matching PRSU Agreement.
4. Counterparts. This Amendment may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall be deemed to
be one and the same agreement. A signed copy of this Amendment delivered by
facsimile, e-mail or other means of electronic transmission shall be deemed to
have the same legal effect as delivery of an original signed copy of this
Amendment.
Exhibit 10.58
IN WITNESS WHEREOF, the Parties have executed this First Amendment to Matching
PRSU Agreement as of this ____ day of ________________, 201[_].
The Company
TEMPUR SEALY INTERNATIONAL, INC.
By: ________________________________
Name:
Title:
Employee
____________________________________
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EXHIBIT 31.1 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO SECTION SARBANES-OXLEY ACT OF 2002 I, John Antonio, certify that: 1.I have reviewed this annual report on Form 10-Q of Wellstar International, Inc.; 2.Based on my knowledge, this annual 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 annual report; 3.Based on my knowledge, the financial statements, and other financial information included in this annual 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 annual 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 Rules 13a-15(e) and 15d-15(e)) and internal controls 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 annual 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 and evaluated the effectiveness of our internal control over financial reporting, and presented in this report our conclusions about the effectiveness of our internal control over financial reporting, as of the end of the period covered by this report based on such evaluation; 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 that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; 5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function): a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information and have identified for the registrant’s auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting. Dated: JuneJune December 14, 2010 By: /s/John Antonio John Antonio Principal Executive Officer
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2010 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 Number: 000-52624 CYBRA CORPORATION (Exact Name of Registrant as Specified in Its Charter) New York 13-3303290 (State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.) One Executive Blvd., Yonkers, NY (Address of Principal Executive Offices) (Zip Code) Registrant’s Telephone Number, Including Area Code (914)963-6600 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 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. þYes¨ No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ¨Yes¨ No 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¨Accelerated filer¨ Non-accelerated filer¨Smaller Reporting Companyþ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨No þ As of May 13, 2010 the registrant had 13,766,662 shares of Common Stock outstanding. CYBRA Corporation Table of Contents Page Part I. Financial Information 1 Item 1. Financial Statements 1 Balance Sheets as of March 31, 2010 and December 31, 2009 1 Statements of Operations for the three months ended March 31, 2010 and 2009 2 Statements of Cash Flows for the three months ended March 31, 2010 and 2009 3 Notes to Financial Statements 4 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 16 Item 3. Quantitative and Qualitative Disclosures About Market Risk 19 Item 4T. Controls and Procedures 19 Part II. Other Information 20 Item 1. Legal Proceedings 20 Item 6. Exhibits 20 Signatures PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CYBRA CORPORATION BALANCE SHEETS March 31, December 31, ASSETS CURRENT ASSETS Cash and cash equivalents $ $ Accounts receivable, less allowance for doubtful accounts of $17,000 at bothdates Total Current Assets PROPERTY AND EQUIPMENT, at cost, less accumulated depreciation and amortization of $268,818 at March 31, 2010 and $263,425 at December 31, 2009 SOFTWARE DEVELOPMENT, at cost, less accumulated amortization of $406,297 at March 31, 2010 and $349,862 at December 31, 2009 SECURITY DEPOSITS AND OTHER ASSETS TOTAL ASSETS $ $ LIABILITIES AND STOCKHOLDERS' DEFICIT CURRENT LIABILITIES 8% Convertible Debentures $ $ Accrued liquidated damages - registration rights agreement Accounts payable and accrued expenses, including deferred unpaid officer/director compensation of $160,229 at March 31, 2010 and $90,565 at December 31, 2009 Accrued interest Deferred revenue 394,041 Loans from stockholders in contemplation of private placement of common stock - TOTAL CURRENT LIABILITIES STOCKHOLDERS' DEFICIT Preferred Stock, Class A 1,000 shares authorized, Class B 1,000 shares authorized, no shares outstanding - - Common stock, par value $0.001 per share, 100,000,000 shares authorized; 13,766,662 shares issued and outstanding Additional Paid - in capital Accumulated deficit ) ) Total Stockholders' Deficit ) ) TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ $ See Accompanying Notes to the Financial Statements -1- CYBRA CORPORATION STATEMENT OF OPERATIONS Three Months Ended March 31, REVENUES Products $ $ Services TOTAL REVENUES COST OF GOODS SOLD Equipment purchases Royalties and consulting GROSS PROFIT Research and Development Selling, General and Administrative TOTAL OPERATING EXPENSES LOSS FROM OPERATIONS ) ) OTHER INCOME (EXPENSE) Loss on debenture valuation adjustment ) - Interest expense, includes amortization of deferred finance costs of $101,073 for the 3 months ended March 31, 2009 ) ) Interest income 7 11 ) ) NET LOSS $ ) $ ) PER SHARE DATA Basic and diluted net loss per share $ ) $ ) Basic and diluted weighted-average shares outstanding See Accompanying Notes to the Financial Statements -2- CYBRA CORPORATION STATEMENT OF CASH FLOWS Three Months Ended March 31, (Audited) (Audited) CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ ) $ ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities Depreciation and Amortization Stock based compensation - Interest expense - amortization of debt discount - Amortization of deferred finance cost - Loss on debenture valuation adjustment - Changes in operating assets and liabilities Accounts receivable ) Accounts payable and accrued expenses ) Accrued interest Deferred revenue Net Cash (Used for) Provided by Operating Activities ) CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property and equipment ) ) Net Cash Used in Investing Activities ) ) CASH FLOWS FROM FINANCING ACTIVITIES Loans from stockholders in contemplation of private placement of common stock - Net Cash Provided by Financing Activities - INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS Beginning of period End of period $ $ SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Income Taxes $ - $ See Accompanying Notes to the Financial Statements -3- CYBRA CORPORATION NOTES TO FINANCIAL STATEMENTS 1.ORGANIZATION, DESCRIPTION OF OPERATIONS, FINANCIAL STATUS OF THE COMPANY AND BASIS OF PRESENATION Organization and Description of Operations CYBRA Corporation (the “Company”) was incorporated under the laws of the State of New York on September 6, 1985. The Company is a software developer, publisher and systems integrator specializing in Auto Identification technology solutions. The Company’s flagship product, MarkMagicTM, is a barcode, radio frequency identification (“RFID”) and forms middleware solution relied upon daily by thousands of customers worldwide. It helps customers easily integrate bar code labels, RFID technology and electronic forms into their business systems EdgeMagic®, first released in February 2008, is an integrated RFID control solution that is highly scalable. It is designed to manage edge readers and analog control devices, commission, read, filter and verify RFID tags to comply with Electronic Product Code (EPC) compliance mandates, as well as for asset tracking applications and integration with popular ERP and Warehouse Management application packages.CYBRA software solutions run on all major computing platforms including IBM Power Systems (System i, iSeries, AS/400, AIX) as well as Linux, Unix, and Microsoft Windows. Substantially all of the Company’s accounts receivable are due from manufacturing companies and software vendors located throughout the United States. Financial Status of the Company-Going Concern At March 31, 2010, the Company had cash and cash equivalents of $59,258, and a working capital deficit of $4,090,884, which includes certain current liabilities that do not require near term cash settlement. Additionally, the Company incurred a net loss of $137,925 for the period ended March 31, 2010, and had a stockholders’ deficit of $3,756,799 at March 31, 2010. Management has taken severalsteps to improve sales and reduce costs in order to ensure that its cash flows will meet its operating cash requirements for the second quarter of 2010. These steps include increasing sales ofEdgeMagic®, which management believes has revenue potential far in excess of the current product mix, as well as the formation of a field level sales team. The Company, as further discussed in Notes 3 and 13, is obligated under 8% Convertible Debentures that became due on April 10, 2009.The Company presently does not have the resources to pay the Debentures and these Debentures are in default.However, the Company has renegotiated the terms of the Debentures (see Note 13, Current Status of Convertible Debentures), either by extending the maturity date of the Debentures or by exchanging the Debentures for a new series of preferred stock. The Company has obtained the agreement of 12 holders of Debentures having an aggregate principal amount of $1,445,000 to amend the terms of their Debentures and to extend their maturity date to April 10, 2011.The Company has also obtained the agreement of 16 holders of Debentures having an aggregate principal amount of $1,045,000 to exchange their Debentures for a new class of preferred stock of the Company having terms similar to those in the Debentures. 2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Software Costs The Company accounts for software development costs in accordance with FASB ASC 985.730, Software Research and Development and ASC 985-20, Costs of Software to be Sold, Leased or Marketed. ASC 985-20 requires that costs related to the development of enhancements to MarkMagic be capitalized as an asset when incurred subsequent to the point at which technological feasibility of the enhancement is established. FASB ASC 985-20 specifies that “technological feasibility” can only be established by the completion of a “detailed program design” or if no such design is prepared, upon the completion of a “working model” of the software. The Company’s development process does not include a detailed program design. Management believes that such a design could be produced in the early stages of development but would entail significant wasted expense and delay. Consequently, FASB ASC 985-20 requires the development costs to be recorded as an expense until the completion of a “working model”. In the Company’s case, the completion of a working model does not occur until shortly before the time when the software is ready for sale. -4- Research and Development Costs Research and development costs incurred after completion of development of a product are expensed as incurred. Total research and development expense for the three months ended March 31, 2010 and 2009 was $46,435 and $52,333, respectively. Accounting for Warrants Classified as Equity Issued to Purchase Company Common Stock Warrants issued in conjunction with equity financings were accounted for under ASC 815-40, Contracts in Entity’s Own Stock.ASC 825-20, Accounting for Registration Payment Arrangements, establishes the standard that contingent obligations to make future payments under a registration rights arrangement shall be recognized and measured separately in accordance with the standard, Reasonable Estimation of the Amount of a Loss. The Company has evaluated how these standards affected these accompanying financial statements. The adoption of the accounting pronouncement on January 1, 2007 changed the classification of the warrant liability, which was $551,910 at January 1, 2007, to stockholders’ equity (additional paid in capital). Derivative Financial Instruments The Company accounts for its Warrants which were issued in a private placement of the 8% Convertible Debentures with detachable Warrants on April 10, 2006, as derivatives under the guidance of ASC 815-10, Accounting for Derivative Instruments and Hedging Activities, and ASC 815-40, Contracts In an Entity’s Own Stock. The Company considers these standards applicable by adopting “View A” of the Issue Summary–The Effect of a Liquidated Damages Clause on a Freestanding Financial Instrument in which the Warrants and the related registration rights agreement are viewed together as a combined instrument that is indexed to the Company's stock. The embedded conversion feature of the Debentures has not been classified as a derivative financial instrument because the Company believes that they are “conventional” as defined in ASC 470-20, “Conventional Convertible Debt Instrument.” Depreciation and Amortization Depreciation and amortization are provided by the straight-line and accelerated methods over the estimated useful lives indicated in Note 5. Income Taxes Income taxes are accounted for under the asset and liability method in accordance with FASB ASC 740, Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial carrying amounts of existing assets and liabilities and their respective tax bases as well as operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the periods in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance to the extent that the recoverability of the asset is unlikely to be recognized. The Company follows ASC 740 rules governing uncertain tax positions which provides guidance for recognition and measurement. This prescribes a threshold condition that a tax position must meet for any of the benefits of the uncertain tax position to be recognized in the financial statements. It also provides accounting guidance on derecognization, classification and disclosure of these uncertain tax positions. Interest costs and penalties related to income taxes are classified as interest expense and selling, general and administrative costs, respectively, in the Company's financial statements. For the three months ended March 31, 2010 and 2009, the Company did not recognize any interest or penalty expense related to income taxes. The Company is currently subject to a three-year statute of limitations by major tax jurisdictions. The Company files income tax returns in the U.S. federal jurisdiction and New York State. Advertising Costs Advertising costs are charged to expense as incurred. Total advertising amounted to $1,017and $2,051 for the three months ended March 31, 2010 and 2009, respectively. -5- 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 revenue and expenses during the reporting period. Actual results could differ from those estimates. The most significant estimates relate to valuation of warrants, stock grants and stock options, the net operating loss carry-forward, the valuation allowance for deferred taxes and various contingent liabilities. It is reasonably possible that these above-mentioned estimates and others may be adjusted as more current information becomes available, and any adjustment could be significant in future reporting periods. Cash and Cash Equivalents The Company classifies marketable securities that are highly liquid and have maturities of six months or less at the date of purchase as cash equivalents.The Company manages exposure to counterparty credit risk through specific minimum credit standards, diversification of counterparties and procedures to monitor its credit risk concentrations. Revenue Recognition The Company recognizes revenues in accordance with AICPA Statement of Position ASC 985-605, Software Revenue Recognition. Revenue from software license agreements is recognized when persuasive evidence of an agreement exists, delivery of the software has occurred, the fee is fixed or determinable, and collectibility is probable. In software arrangements that include more than one element, the Company allocates the total arrangement fee among the elements based on the relative fair value of each of the elements. License revenue allocated to software products generally is recognized upon delivery of the products or deferred and recognized in future periods to the extent that an arrangement includes one or more elements to be delivered at a future date and for which fair values have not been established. Revenue allocated to maintenance agreements is recognized ratably over the maintenance term and revenue allocated to training and other service elements is recognized as the services are performed. If evidence of fair value does not exist for all elements of a license agreement and post customer support (PCS) is the only undelivered element, then all revenue for the license arrangement is recognized ratably over the term of the agreement as license revenue. If evidence of fair value of all undelivered PCS elements exists but evidence does not exist for one or more delivered elements, then revenue is recognized using the residual method. Under the residual method, the fair value of the undelivered elements is deferred and the remaining portion of the arrangement fee is recognized as revenue. Cost of license revenue primarily includes product, delivery, and royalty costs. Cost of maintenance and service revenue consists primarily of labor costs for engineers performing implementation services, technical support, and training personnel as well as facilities and equipment costs. Deferred Finance Costs Deferred finance costs were amortized over the term of the 8% Convertible Debentures on the effective interest method. Accounts Receivable The Company records trade accounts receivable at net realizable value. This value includes an appropriate allowance for estimated uncollectible accounts to reflect any loss anticipated on the trade accounts receivable balances and charged to the provision for doubtful accounts. The Company calculates this allowance based on its history of write-offs, level of past-due accounts based on the contractual terms of the receivables, and its relationships with and the economic status of its customers. Trade receivables are presented net of an allowance for doubtful accounts of $17,000 as of March 31, 2010 and December 31, 2009. Stock-Based Compensation In addition to requiring supplemental disclosures, FASB ASC 718, Compensation – Stock Compensation, addresses the accounting for share-based payment transactions in which a company receives goods or services in exchange for (a) equity instruments of the company or (b) liabilities that are based on the fair value of the company’s equity instruments or that may be settled by the issuance of such equity instruments. FASB ASC 718 focuses primarily on accounting for transactions in which a company obtains employee services in share-based payment transactions. -6- The Company uses the modified prospective method. Stock issued to consultants for consulting services was valued as of the date of the agreements with the various consultants, which in all cases was earlier than the dates when the services were committed to be performed by the various consultants. References to the issuances of restricted stock refer to stock of a public company issued in private placement transactions to individuals who are eligible to sell all or some of their shares of restricted Common Stock pursuant to Rule 144, promulgated under the Securities Act of 1933 (“Rule 144”), subject to certain limitations. In general, pursuant to Rule 144, a stockholder who is not an affiliate and has satisfied a six-month holding period may sell all of his restricted stock without restriction, provided that the Company has current information publicly available. Rule 144 also permits, under certain circumstances, the sale of restricted stock, without any limitations, by a non-affiliate of the Company that has satisfied a one-year holding period. Fair Value of Financial Instruments The Company is required to estimate the fair value of the stock-based financial instruments issued in connection with the sale of the Debentures, which were issued at the time that the Company was privately held. Estimating the values of the stock-based financial instruments of privately held companies, which cannot be referenced to a quoted market price, even to establish the value of the underlying common shares, involves significant uncertainty. It also involves the application of assumptions that may vary substantially from those that would be applied by actual buyers and sellers of the instruments. Without a quoted stock price to use as a basis of measurement, the Company has estimated the value of the Common Stock, Warrants and the conversion feature of the Debentures based on a value of approximately $0.13 per share. This value was estimated by 1) assuming that the $2,500,000 received from investors, as an arm’s-length transaction, represented the total fair value of the instruments issued to those investors, 2) estimating the fair value of the Debentures issued if there were no conversion feature or Warrants, 3) allocating the remainder to the derivative financial instruments, and 4) using a 147% volatility factor, as discussed below, to derive the implied Common Stock value, the value of conversion feature (included as part of the initial value of the Debentures) and values for the two classes of Warrants that are accounted for as separate derivative financial instruments. The estimated initial fair value of the Debentures payable (separated from the embedded conversion feature) is based on the discounted contractual cash flows with the discount rate of 27.1%. This discount rate was based on the 22.6% mean return on United States equity for companies with market capitalizations of under $1,500,000 and then adding 4.5% as the long-term risk premium on software companies as published in a respected independent source. An equity-related discount rate was used because, in the Company’s situation, unsecured debt at this amount would entail equity-like risks. The estimated initial value of the embedded conversion feature was then added to this value to arrive at the total initial value of the 8% Convertible Debentures. In valuing the embedded conversion features and Warrants, in the absence of quoted market prices or historical volatilities for the Company stock, the total fair value of the financial instruments issued in the April 10, 2006 financing was considered to be equal to the proceeds, representing a valuation provided by an arm’s-length transaction. Allocating the total, however, required estimation subject to significant uncertainty. First, proceeds were allocated to the values of the principal and interest payable on the Debentures based on a 27.1% p.a. discount rate as described in the last paragraph. The remainder was allocated between the conversion feature and the Warrants based on Black-Scholes related option pricing models. The Black-Scholes computations used a volatility factor of approximately 147%. The volatility was the average calculated volatility, for the one-year period ended April 10, 2006, of a sample of software companies with market capitalizations of over $1,000,000. The implied Common Stock value that resulted in a value for the derivatives equal to the difference between the debenture value and the gross proceeds was approximately $0.13 per share. This value, less an estimated 26% discount for lack of marketability for a net value of approximately $0.096 per share, was used to estimate the fair value of the 1,826,000 shares of Common Stock sold at a discount to three individuals involved in finding investors for the Company. Management believes that the discount on the finders’ stock is appropriate because 1) there are no liquidated damages provisions associated with that stock, and 2) although they were included among the shares being registered by the Company for sale by the holders to the public, there was no certainty that the registration will become and remain effective. ASC 825-20, Accounting for Registration Payment Arrangements, addresses an issuer’s accounting for registration payment arrangements by specifying that the contingent obligation to make future payments or otherwise transfer consideration under a registration payment arrangement, whether issued as a separate agreement or included as a provision of a financial instrument or other agreement, should be separately recognized and measured in accordance with Accounting for Contingencies. This became effective for fiscal periods beginning after December 15, 2006, and interim periods within those fiscal periods. -7- Basic and Diluted Loss per Share In accordance with FASB ASC 260, Earnings Per Share, the basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted loss per common share is computed in a manner similar to basic loss per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. At March 31, 2010 and 2009, the Company’s stock equivalents were anti-dilutive and excluded in the diluted loss per share computation. Commitments and Contingencies Liabilities for loss contingencies arising from various claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. Recently issued accounting standards FASB ASC 820-10-50.ASC 820-10-50 requires disclosures of the fair value of financial instruments within the scope of FASB ASC 820 in interim financial statements, adding to the current requirement to make those disclosures in annual financial statements. The staff position also requires that companies disclose the method or methods and significant assumptions used to estimate the fair value of financial instruments and a discussion of changes, if any, in the method or methods and significant assumptions during the period. FASB ASC 860. ASC 860 eliminates the concept of a qualifying special-purpose entity, creates more stringent conditions for reporting a transfer of a portion of a financial asset as a sale, clarifies other sale-accounting criteria, and changes the initial measurement of a transferor’s interest in transferred financial assets. FASB ASC 860 is effective for transfers of financial assets in fiscal years beginning after November15, 2009 and in interim periods within those fiscal years with earlier adoption prohibited. The Company adopted FASB ASC 860 on January1, 2010. The Company doesnot believe that the adoption of these new standards have a material impact on its financial position and results of operations. Reclassifications No reclassifications have been made to the financial statements. 3.8% CONVERTIBLE DEBENTURES AND DERIVATIVE FINANCIAL INSTRUMENTS On April 10, 2006, the Company issued 8% Convertible Debentures (the “Debentures”) with a principal (“face”) value of $2,500,000, along with 7,500,000 detachable Stock Warrants (the “Warrants”) to several investors. The gross proceeds of this transaction were $2,500,000, consisting of $2,080,000 cash, $151,000 from the cancellation of debt incurred in 2005, $19,000 from the cancellation of debt incurred earlier in 2006 and $250,000 applied as finders’ fees.The Debenture balances at March 31, 2010 and December 31, 2009 were $2,604,098 and $2,481,143, respectively. The amortization of deferred finance costs was $-0- and $101,073 for the three months ended March 31, 2010 and 2009, respectively. The deferred finance cost balance at March 31, 2010 and December 31, 2009 was $-0- as of each date. Interest on the Debentures is due semiannually at 8% per annum beginning December 31, 2006. Interest is also due upon conversion, redemption and maturity. The total interest paid to two Debenture holders was $16,982. Another Debenture holder converted their accrued interest to shares of common stock. No other payments have been made.The Debentures matured on April 10, 2009 (see Notes 1 and 13). Through April 10, 2009 the Company had the right, subject to certain conditions, to redeem the Debentures for 120% of the principal value. The Company declined to do so. The investors also received 7,500,000 Warrants, 2,500,000 of Class A and 5,000,000 of Class B. Each Class A Warrant gives the holder the right to buy one share of Common Stock for $0.75. Each Class B Warrant gives the holder the right to buy one share of Common Stock for $1.75. The Warrants are exercisable at any time through April 10, 2011. The 7,500,000 Warrants are the only outstanding Warrants at March 31, 2010 that were issued in connection with the sale of the Debentures. As part of the transaction, $250,000 principal amount of the Debentures were issued along with 125,000 Class A Warrants and 250,000 Class B Warrants as finders’ fees. The finders will also receive as additional fees equal to 5% of any cash collected on the exercise of any of the Warrants. To date, no Warrants have been exercised. -8- The shares of Common Stock that underlie the conversion feature of the Debentures and those that underlie the Warrants are subject to a registration rights agreement. Pursuant to the registration rights agreement, the Company was obligated to file a registration statement with the United States Securities and Exchange Commission by June 8, 2006 registering the shares for public sale, and to have the registration statement become effective by September 7, 2006 and to keep the registration statement continuously effective. Failure to achieve these registration requirements will result, in addition to other possible claims by the holders for damages, partial liquidated damages equal to 1.5% per month (pro-rated by day) of the aggregate purchase price originally paid by the investors (i.e., the monthly partial liquidated damages would be $37,500 per month). Any claims and liquidated damages that might have been due as a result of filing the registration statement on June 16, 2006 have been waived by the holders. The registration statement did not become effective until December 6, 2006. Liquidated damages of $110,000 for the period September 7 through December 6, 2006 and $3,151 of related interest have been accrued through March 31, 2010. The Warrants were classified as derivative financial instruments as a result of the issuance of a registration rights agreement that includes a liquidated damages clause, which is linked to an effective registration of such securities. Accordingly, the Company accounted for the Warrants as liabilities at estimated fair value. The Company’s value estimation methods which, in the case of a private company, must inherently involve significant uncertainly are described in the “fair value of financial instruments” section of Note 1, above. The fair value of the financial instrument as shown on a company’s balance sheet assumes that the shares will be registered. The liability under the alternative of the shares never being registered and paying the full cash liquidated damages is estimated to be approximately $892,000 greater than the fair value recorded on the balance sheet. This estimate of value is subject to an extra level of uncertainty concerning the amount at which a willing seller and buyer would exchange such instruments. The estimated value represents discounting the $450,000 p.a. ($2,500,000 at 18%) liquidated damages, in perpetuity, at a rate of 33.875% and adding a separate value of the Warrants. The separate value of the Warrants was in turn, based on the Black-Scholes calculation used for the balance sheet (if registered estimate) but reducing the current share value assumption by 45% for lack of marketability. The 45% was based on published long-term studies. The derivative financial instruments have not been designated as hedges. The purpose of their issuance was to raise additional capital in a more advantageous fashion than could be done without the use of such instruments. In addition to expecting the overall cost of capital to be less, the use of the derivative instruments reduces the cost to the common stockholders when the value of their shares declines in exchange for increasing the cost to the common stockholders when the value of their shares increase, all of which should tend to reduce the volatility of the value of the Company’s common shares. 4. STOCK BASED COMPENSATION During the three months ended March 31, 2010, the Company issued no shares of Common Stock for services.During the three months ended March 31, 2009, the Company issued 60,000 shares of Common Stock for services rendered as a director and for investor relations services, valued at $0.75 per share for total compensation of $45,000. The Company has adopted the CYBRA Corporation 2006 Incentive Stock Plan, a stock-based compensation plan to reward for services rendered by officers, directors, employees and consultants. The Company has reserved 5,000,000 shares of Common Stock of its unissued share capital for issuance under the plan. The Company recognizes share-based compensation expense for all service-based awards with graded vesting schedules on a straight-line basis over the requisite service period for the entire award. Initial accruals of compensation expense are based on the estimated number of shares for which requisite service is expected to be rendered. Estimates are revised if subsequent information indicates that forfeitures will differ from previous estimates, and the cumulative effect on compensation cost of a change in the estimated forfeitures is recognized in the period of the change. For awards with service conditions and graded vesting that were granted prior to the adoption of accounting standards, the Company estimates the requisite service period and the number of shares expected to vest and recognize compensation expense for each tranche on a straight-line basis over the estimated requisite service period of the award or over a period ending with an employee's eligible retirement date, if earlier. Adjustments to compensation expense as a result of revising the estimated requisite service period are recognized prospectively. -9- Total stock options outstanding at March 31, 2010 were 100,000, all of which were vested. Stock option transactions to the employees, directors, and consultants are summarized as follows: Stock Options Outstanding Outstanding at January 1, 2009 Granted 0 Exercised 0 Outstanding at December 31, 2009 Options exercisable at December 31, 2009 Options outstanding at January 1, 2010 Granted 0 Exercised 0 Outstanding at March 31, 2010 Options exercisable at March 31, 2010 The 100,000 options outstanding at March 31, 2010 were issued in December 2007, have a remaining outstanding life of 3 years and have an exercise price of $0.75 per share. Following is a summary of the warrant activity: Class A and B Warrants Total Number ofShares Class A Class B Average Exercise Price per Share Weighted Average Remaining Contractual Term In Years Outstanding at December 31, 2009 Total Outstanding Warrants – March 31, 2009 Exercisable at December 31, 2009 Granted - - - Exercised - - - Forfeited - - - Outstanding at March 31, 2010 Total Outstanding Warrants – March 31, 2010 Exercisable at March 31, 2010 5. PROPERTY AND EQUIPMENT At March 31, 2010 and December 31, 2009, property and equipment consisted of the following: March 31, December 31, Estimated Useful Life in Years Furniture and office equipment $ $ 5 Computer software 3 Leasehold Improvements Life of Lease Less: Accumulated Depreciation $ $ -10- Depreciation and amortization of property and equipment amounted to $5,393 and $6,557 for the three months ended March 31, 2010 and 2009, respectively March 31, December 31, Estimated Useful Life in Years Software Development Costs $ $ 3 Less: Accumulated Amortization $ $ The Company’s policy is to capitalize software development costs in accordance with FASB ASC 985.730 (See Note 2). Amortization of Software Development Costs amounted to $56,435 and $56,433 for the three months ended March 31, 2010 and 2009, respectively, and is included within Selling, General and Administrative Expenses. 6. INCOME TAXES The Company has the following deferred tax assets and liabilities at March 31, 2010 and December 31, 2009: March 31,December 31, Current assets and liabilities: Accounts receivable $ ) $ ) Accounts payable and accrued expenses Deferred revenues Valuation allowance ) ) Net current deferred tax asset $
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EXHIBIT (d)(1) American Century World Mutual Funds, Inc. MANAGEMENT AGREEMENT THIS MANAGEMENT AGREEMENT (“Agreement”) is made as of the 1st day of August, 2008, by and between AMERICAN CENTURY WORLD MUTUAL FUNDS, INC., a Maryland corporation (hereinafter called the “Company”), and AMERICAN CENTURY INVESTMENT MANAGEMENT, INC., a Delaware corporation (hereinafter called the “Investment Manager”). WHEREAS, a majority of those members of the Board of Directors of the Company (collectively, the “Board of
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Exhibit 10.1
Execution Version
SECURED TERM CREDIT AGREEMENT
DATED AS OF
FEBRUARY 1, 2018
AMONG
PETROSHARE CORP.,
AS BORROWER,
PROVIDENCE WATTENBERG, LP, as a Lender and Administrative Agent and
5NR WATTENBERG, LLC, as a Lender
TABLE OF CONTENTS
Page
ANNEXES, EXHIBITS AND SCHEDULES
iii
ARTICLE I. Definitions and Accounting Matters
1
1.01
Terms Defined Above
1
1.02
Certain Defined Terms
1
1.03
19
1.04
20
ARTICLE II. The Credits; Payments of principal and interest; fees
20
2.01
The Term Loan
20
2.02
Availability and Purpose of Advances
20
2.03
Note
22
2.04
Protective Advances
22
2.05
Repayment of Term Loans
22
2.06
Interest
23
2.07
Fees
23
2.08
Payments Generally
23
ARTICLE III. Prepayment
24
3.01
Prepayment
24
3.02
Make-Whole Premium
24
ARTICLE IV. Security; Other Rights Of Lender
25
4.01
Security; Additional Collateral; Release
25
4.02
Observer Rights
26
ARTICLE V. Conditions Precedent
26
5.01
Closing Date
26
ARTICLE VI. Representations and Warranties
29
6.01
Organization; Powers
29
6.02
Authority; Enforceability
29
6.03
Approvals; No Conflicts
30
6.04
Financial Information; Financial Condition; No Material Adverse Change
30
6.05
Litigation
30
6.06
Environmental Matters
31
6.07
32
6.08
Investment Company Act
32
6.09
Taxes
32
6.10
32
6.11
Insurance
32
6.12
Subsidiaries; Equity Interests
33
6.13
Properties; Title, Etc.
33
6.14
Maintenance of Properties
34
6.15
Commissions; Expenses
34
6.16
ERISA
34
6.17
Solvency
35
6.18
Employment Matters
35
6.19
Margin Stock
35
6.20
Gas Imbalances; Prepayments
35
6.21
Swap Agreements
35
6.22
USA PATRIOT Act
35
ARTICLE VII. Affirmative Covenants
35
7.01
Financial Statements; Other Reporting and Information
35
i
7.02
Notices of Material Events
38
7.03
38
7.04
Payment of Obligations
38
7.05
39
7.06
Insurance
39
7.07
40
7.08
Compliance with Laws
40
7.09
Use of Proceeds
40
7.10
Environmental Matters
40
7.11
Further Assurances
40
7.12
Reserve Reports
41
7.13
Creditors
42
7.14
Conversion Rights
42
7.15
Share Purchase Option-Private Placement
44
7.16
Securities Purchase Option
44
7.17
Lenders’ Warrants
45
7.18
Borrower Covenants with Respect to the Common Stock
45
7.19
Board of Directors Rights
46
7.20
Additional Guarantors
46
7.21
Tax Reporting
46
7.22
Post-Closing Requirement
46
ARTICLE VIII. Negative Covenants
47
8.01
Financial Covenants
47
8.02
Debt
47
8.03
Liens
49
8.04
Investments, Loans and Advances
49
8.05
Nature of Business; Budget
50
8.06
Mergers, Etc.
50
8.07
Disposition of Properties
50
8.08
Restricted Payments
51
8.09
Joint Ventures
51
8.10
Change in Management or Compensation
51
8.11
Organizational Documents; Material Agreements; Funding and Operating Accounts
51
8.12
Limitations on Equity Sales
52
8.13
Transactions with Affiliates
52
ARTICLE IX. Events of Default; Remedies
52
9.01
Events of Default
52
9.02
Remedies
55
ARTICLE X. THE ADMINISTRATIVE AGENT
56
ARTICLE XI. Miscellaneous
60
11.01
Notices
60
11.02
Waivers; Amendments
61
11.03
62
11.04
Successors and Assigns
64
11.05
64
11.06
65
11.07
Severability
65
11.08
Right of Setoff
65
11.09
66
11.10
Headings
67
11.11
Confidentiality
67
11.12
Interest Rate Limitation
67
11.13
EXCULPATION PROVISIONS
68
11.14
No Third Party Beneficiaries
69
11.15
USA Patriot Act Notice
69
11.16
Termination; Limited Survival
69
11.17
No Fiduciary Duty
69
ii
Annex A
Commitments
Annex B
Oil and Gas Properties
Exhibit A
Form of Note
Exhibit B
Form of Compliance Certificate
Exhibit C
List of Security Instruments
Exhibit D
Form of Distribution Request
Exhibit E
Form of PDP PV Coverage Ratio Report
Exhibit F
Exhibit G
Form of Notice of Exercise
Exhibit H
Form of Warrant
Schedule 1.02(a)
Base Case Model
Schedule 1.02(c)
Material Agreements
Schedule 6.06
Environmental Matters
Schedule 6.12
Subsidiaries and Equity Interests
Schedule 6.13(c)
Material Adverse Effects
Schedule 6.13(f)
Preferential Rights and Consents
Schedule 8.02
Existing Debt
Schedule 8.03
Existing Liens
Schedule 8.04
Investments
iii
THIS SECURED TERM CREDIT AGREEMENT dated as of February 1, 2018, is by and among
PETROSHARE CORP., a Colorado corporation (the “Borrower”), PROVIDENCE
WATTENBERG, LP, a Texas limited partnership (“Providence”), as a Lender and as
administrative agent for itself and the other Lenders (in such capacity, the
“Administrative Agent”) and 5NR WATTENBERG, LLC, a Texas limited liability
company (“5NR” and together with Providence, each a “Lender” and collectively
the “Lenders”).
RECITALS
A. Borrower has requested that Lenders
provide certain term loans to Borrower.
B. Lenders are willing to provide such terms
loans to Borrower upon and subject to the provisions, terms and conditions
hereinafter set forth.
C. In consideration of the mutual covenants
and agreements herein contained and of the term loans and the commitments
hereinafter referred to, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged and confessed, the parties
ARTICLE I.
DEFINITIONS AND ACCOUNTING MATTERS
1.01 Terms Defined Above. As used in this Agreement,
each term defined above has the meaning indicated above.
1.02 Certain Defined Terms. As used in this Agreement,
the following terms have the meanings specified below:
“Act” means the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law
October 26, 2001).
“Agreement” means this Secured Term Credit Agreement, as the same may be
“Aggregate Commitments” means the sum of the Commitments of the Lenders, which
shall equal $25,000,000.
“Applicable Margin” means a rate of 14% calculated on an annual basis.
percentage of the Aggregate Commitments represented by such Lender’s Commitment,
as such percentage is set forth on Annex A.
1
“Approved Independent Public Accountants” means independent public accountants
(a) of recognized national standing having all accreditations, registrations and
designations required by the SEC for a firm preparing or issuing an audit report
with respect to any issuer, and (b) reasonably acceptable to the Lenders.
Lenders agree that Eide Bailly is an Approved Independent Public Accountant and
acceptable to them.
“Approved Petroleum Engineers” means Cawley, Gillespie & Associates and any
other firm of independent petroleum engineers approved by Lenders.
“ASC 410” means the Accounting Standards Codification No. 410 (Asset Retirement
and Environmental Obligations), as issued by the Financial Accounting Standards
Board, as amended.
“ASC 815” means the Accounting Standards Codification No. 815 (Derivatives and
Hedging), as issued by the Financial Accounting Standards Board, as amended.
“Base Case Model” means the comprehensive financial plan and projections
prepared in good faith by Borrower under certain assumptions showing the
Borrower’s monthly cash flow forecast and development plan beginning on the
Closing Date through and including December 31, 2020 in form and substance
satisfactory to the Lenders in their sole discretion. The Base Case Model as of
the Closing Date is attached hereto as Schedule 1.02(a) and has been approved
and accepted by the Lenders and will be updated semi-annually as required by
this Agreement.
States of America or any successor Governmental Authority.
“Board of Directors” means the Board of Directors of Borrower, or such other
governing body of Borrower.
“Borrower” has the meaning set forth in the preamble hereof.
“Budget” means (a) at any time prior to January 1, 2019, the operating and
capital expenditure budget of the Borrower delivered on or prior to the Closing
Date, and (b) at any time on or after January 1, 2019, the operating and capital
expenditure budget of the Borrower most recently delivered pursuant to
Section 7.01(e).
which commercial banks in New York, New York are authorized or required by Law
to remain closed.
“Capital Leases” means, in respect of any Person, all leases which shall have
been, or should have been, in accordance with GAAP, recorded as capital leases
on the balance sheet of the Person liable (whether contingent or otherwise) for
the payment of rent thereunder.
similar proceeding of, any Property of Borrower or any of its Subsidiaries.
2
“Change in Control” means the occurrence of one or more of the following events:
(a) the acquisition of ownership, directly or indirectly, beneficially or of
record on a fully diluted basis, by any Person or “group” (within the meaning of
the Exchange Act and the rules of the SEC thereunder as in effect on the date
hereof) of 50% or more of the outstanding shares of the voting equity interests
of Borrower, or (b) occupation of a majority of the seats (other than vacant
seats) on the Board of Directors by Persons who were neither (i) nominated by
the Board of Directors nor (ii) appointed by the directors so nominated.
“Closing Date” means February 1, 2018.
“Collateral” means the Property and proceeds and other rights thereof covered by
the Security Instruments, including, without limitation, the “Collateral” and
the “Mortgaged Properties” as defined therein.
“Commitment” shall mean, with respect to each Lender, the amount of funds
committed to be loaned by such Lender hereunder in accordance with the terms
hereof. Each Lender’s Commitment is listed on Annex A attached hereto.
“Common Stock” means Borrower’s Equity Interests consisting of common stock, par
value $0.001 per share.
“Compliance Certificate” means a certificate substantially in the form attached
hereto as Exhibit B, executed and delivered by a Financial Officer of Borrower.
“Consolidated Net Income” means with respect to Borrower and the Consolidated
Subsidiaries, for any period, the aggregate of the net income (or loss) of such
Persons after allowances for Taxes for such period determined on a consolidated
basis in accordance with GAAP; provided that there shall be excluded from such
net income (to the extent included therein) the following:
(a) the net income of any Person in which
Borrower or any of the Consolidated Subsidiaries has an interest (which interest
does not cause the net income of such other Person to be permitted to be
consolidated with the net income of Borrower or the Consolidated Subsidiaries in
accordance with GAAP), except to the extent of the amount of dividends or
distributions actually paid in cash during such period by such other Person to
Borrower or any of the Consolidated Subsidiaries, as the case may be;
(b) the net income (but not loss) during such
period of any Consolidated Subsidiary of Borrower to the extent that the
declaration or payment of dividends or similar distributions or transfers or
loans by that Consolidated Subsidiary is not at the time permitted by operation
of the terms of its charter or any agreement, instrument or Law applicable to
such Consolidated Subsidiary or is otherwise restricted or prohibited, in each
case determined in accordance with GAAP;
3
(c) the net income (or loss) of any Person
acquired in a pooling-of-interests transaction for any period prior to the date
of such transaction;
(d) any extraordinary gains or losses during
such period;
(e) any gains or losses attributable to
write-ups or write-downs of assets, including impairments;
(f) any gains, charges or losses that do not
constitute cash items in the current period or any future period and are
required to be included in net income of Borrower and its Consolidated
Subsidiaries (including as a result of the application of ASC 410 and ASC 815);
and
(g) any net income or loss of any Person
resulting from cash gains or losses in connection with asset sales.
“Consolidated Subsidiaries” means each Subsidiary of Borrower (whether now
existing or hereafter created or acquired) the financial statements of which are
or are permitted to be consolidated with the financial statements of Borrower in
accordance with GAAP. For the avoidance of doubt, each Consolidated Subsidiary
shall be a Guarantor.
“Contract Rate” means a rate per annum equal to the lesser of (a) the Reference
Rate, plus the Applicable Margin and (b) the Highest Lawful Rate.
through the ability to exercise voting power, by contract or otherwise. For the
purposes of this definition, and without limiting the generality of the
foregoing, any Person that owns directly or indirectly 10% or more of the Equity
Interests having ordinary voting power for the election of the directors or
other governing body of a Person (other than as a limited partner of such other
Person) will be deemed to “control” such other Person. “Controlling” and
“Controlled” have meanings correlative thereto.
“Conversion Date” has the meaning set forth in Section 7.14(b).
“Convertible Debt Amount” has the meaning set forth in Section 7.14(b).
“Conversion Floor Price” means a price per share of Common Stock of $1.55 as of
the Closing Date, and as further adjusted pursuant to Section 7.14(e).
“Convertible Notes” means those certain 10% Unsecured Convertible Promissory
Notes in the original principal amount of $10,000,000 and with an outstanding
principal balance as of the date hereof of $4,833,200, and the 15% Series B
Unsecured Convertible Promissory Notes with an original and outstanding
principal balance as of the date hereof of $4,724,900, in each case due on
December 31, 2018 and in the form as of the Closing Date.
“Convertible Note Debt” means the aggregate unsecured Debt due and owing by
Borrower under the Convertible Notes.
4
“Convertible Securities” means any securities (directly or indirectly)
convertible into or exchangeable for Common Stock, but excluding Options.
accounts payable, accrued expenses, liabilities or other obligations of such
Person to pay the deferred purchase price of Property or services which are
outstanding more than ninety (90) days (unless such Person is on notice that it
is in breach of such obligation, then in such case (30) days) past the date of
receipt of the invoice (unless being contested in good faith by appropriate
action and for which adequate reserves have been maintained in accordance with
GAAP); (d) all obligations under Capital Leases; (e) all obligations under
Synthetic Leases; (f) all Debt (as defined in the other clauses of this
definition) of others secured by (or for which the holder of such Debt has an
existing right, contingent or otherwise, to be secured by) a Lien on any
Property of such Person, whether or not such Debt is assumed by such Person;
(g) all Debt (as defined in the other clauses of this definition) of others
guaranteed by such Person or in which such Person otherwise assures a creditor
against loss of the Debt (howsoever such assurance shall be made) to the extent
of the lesser of the amount of such Debt and the maximum stated amount of such
guarantee or assurance against loss; (h) all obligations or undertakings of such
Person to maintain or cause to be maintained the financial position or financial
covenants of others or to purchase the Debt or Property of others;
(i) obligations to deliver commodities, goods or services, including, without
limitation, Hydrocarbons, in consideration of one or more advance payments,
other than gas balancing arrangements in the ordinary course of business;
(j) any Debt of a partnership for which such Person is liable either by
agreement, by operation of Law but only to the extent of such liability (except
to the extent the terms of such Debt provide that such Person is not liable
therefore); (k) Disqualified Capital Stock; (l) the undischarged balance of any
production payment created by such Person or for the creation of which such
Person directly or indirectly received payment; (m) all obligations under Swap
Agreements; and (n) any indebtedness, liability or obligation arising with
respect to any transaction which is the functional equivalent of or takes the
place of borrowing but which does not constitute a liability on the balance
sheets of such Person. The Debt of any Person shall include all obligations of
such Person of the character described above to the extent such Person remains
legally liable in respect thereof notwithstanding that any such obligation is
not included as a liability of such Person under GAAP.
“Debtor Relief Law” means the Bankruptcy Code of the United States, and all
generally.
which, upon notice, lapse of time or both, could become an Event of Default.
“Default Rate” has the meaning set forth in Section 2.06(b).
5
“Distribution Request” has the meaning set forth in Section 2.02(c).
“Disqualified Capital Stock” means any Equity Interest that, by its terms (or by
exchangeable) or upon the happening of any event, matures or is mandatorily
redeemable for any consideration other than other Equity Interests (which would
not constitute Disqualified Capital Stock), pursuant to a sinking fund
obligation or otherwise, or is convertible or exchangeable for Debt or
not constitute Disqualified Capital Stock) at the option of the holder thereof,
in whole or in part, on or prior to the date that is one year after the earlier
of (a) the Maturity Date and (b) the date on which there are no Loans, or other
Obligations hereunder outstanding and all commitments to lend have expired or
terminated.
“Dollars” “USD” or “$” refers to lawful money of the United States of America.
“Domestic Subsidiary” means any Subsidiary that is organized under the Laws of
the United States of America or any state thereof or the District of Columbia.
“EBITDA” means, for any period, the sum of Consolidated Net Income for such
period plus the following expenses or charges to the extent deducted from
Consolidated Net Income in such period: interest, income taxes, depreciation,
depletion, amortization, hedging, stock-based compensation, ceiling test
impairments and other noncash charges, minus without duplication and to the
extent included in the calculation of Consolidated Net Income for such period,
the sum of (i) extraordinary or non-recurring gains; (ii) gains from
dispositions of assets (other than Hydrocarbons produced in the ordinary course
of business); and (iii) other non-cash gains.
“Environmental Laws” means any and all Laws pertaining in any way to health,
safety, the environment or the preservation or reclamation of natural resources,
in effect in any and all jurisdictions in which Borrower or any Subsidiary is
conducting or at any time has conducted business, or where any Property of
Borrower or any Subsidiary is located, including without limitation, the Oil
Pollution Act of 1990 (“OPA”), as amended, the Clean Air Act, as amended, the
Comprehensive Environmental, Response, Compensation, and Liability Act of 1980
(“CERCLA”), as amended, the Federal Water Pollution Control Act, as amended, the
Occupational Safety and Health Act of 1970, as amended, the Resource
Conservation and Recovery Act of 1976 (“RCRA”), as amended, the Safe Drinking
Water Act, as amended, the Toxic Substances Control Act, as amended, the
Superfund Amendments and Reauthorization Act of 1986, as amended, the Hazardous
Materials Transportation Act, as amended, and other environmental conservation
or protection Laws. The term “oil” shall have the meaning specified in OPA, the
terms “hazardous substance” and “release” (or “threatened release”) have the
meanings specified in CERCLA, the terms “solid waste” and “disposal” (or
“disposed”) have the meanings specified in RCRA and the term “oil and gas waste”
shall mean that waste that is excluded from the definition of “hazardous waste”
pursuant to 40 C.F.R. Section 261.4(b)(5) (“Section 261.4(b)(5)”); provided that
(a) in the event either OPA, CERCLA, RCRA or Section 261.4(b)(5) is amended so
as to broaden the meaning of any term defined thereby, such broader meaning
shall apply subsequent to the effective date of such amendment and (b) to the
extent the Laws of the state or other jurisdiction in which any Property of
Borrower or any Subsidiary is located establish a meaning for “oil,” “hazardous
substance,” “release,” “solid waste,” “disposal”
6
or “oil and gas waste” which is broader than that specified in either OPA,
CERCLA, RCRA or Section 261.4(b)(5), such broader meaning shall apply.
“Environmental Permit” means any permit, registration, license, approval,
consent, exemption, variance, or other authorization required under or issued
pursuant to applicable Environmental Laws.
“Equity Interests” means shares of capital stock, partnership interests,
trust or other equity ownership interests in a Person, and any warrants, options
or other rights entitling the holder thereof to purchase or acquire any such
Equity Interest.
that, together with any Loan Party, is treated as a single employer under
Plan; (d) the incurrence by any Loan Party or any of its ERISA Affiliates of any
(e) the receipt by any Loan Party or any ERISA Affiliate from the PBGC or a plan
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by any
Loan Party or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by any Loan Party or any ERISA Affiliate of any notice, or the receipt
by any Multiemployer Plan from any Loan Party or any ERISA Affiliate of any
notice, concerning the imposition of Withdrawal Liability or a determination
“Event of Default” has the meaning set forth in Section 9.01.
“Excepted Liens” means: (a) Liens for Taxes, assessments or other governmental
charges or levies which are not delinquent or which are being contested in good
faith by appropriate action and for which adequate reserves have been maintained
in accordance with GAAP; (b) Liens in connection with workers’ compensation,
unemployment insurance or other social security, old age pension or public
liability obligations which are not delinquent by more than 60 days or which are
being contested in good faith by appropriate action and for which adequate
reserves have been maintained in accordance with GAAP; (c) statutory landlord’s
liens, carriers’, warehousemen’s, repairmen’s, mechanics’, workers’,
materialmen’s, construction or
7
other like Liens arising by operation of law in the ordinary course of business
or incident to the exploration, development, operation and maintenance of Oil
and Gas Properties, each of which is in respect of obligations that are not
delinquent by more than 60 days or which are being contested in good faith by
appropriate action and for which adequate reserves have been maintained in
accordance with GAAP; (d) contractual Liens under the Operating Agreements;
(e) Liens arising solely by virtue of any statutory or common law provision
relating to banker’s liens, rights of set-off or similar rights and remedies and
burdening only deposit accounts or other funds maintained with a creditor
depository institution, provided that no such deposit account is a dedicated
cash collateral account or is subject to restrictions against access by the
depositor in excess of those set forth by regulations promulgated by the Board
and no such deposit account is intended by Borrower or any of its Subsidiaries
to provide collateral to the depository institution; (f) easements, zoning
restrictions, rights-of-way, servitudes, permits, surface leases, and similar
encumbrances on real property imposed by Law or arising in the ordinary course
of business or minor imperfections in title relating to any Property, which do
not materially impair the use of such Property for the purposes of which such
Property is held by Borrower or any of its Subsidiaries or materially impair the
value of such Property subject thereto; (g) Liens on cash or securities pledged
to secure performance of tenders, surety and appeal bonds, government contracts,
performance and return of money bonds, bids, trade contracts, leases, statutory
obligations, regulatory obligations and other obligations of a like nature, in
each case, incurred in the ordinary course of business consistent with past
practices in connection with the operation of the Oil and Gas Properties and not
in connection with borrowed money; (h) Liens arising from Uniform Commercial
Code financing statement filings regarding operating leases entered into in the
ordinary course of business covering the property under the lease; and (i) Liens
in favor of PEP III granted pursuant to the Participation Agreement; provided
that Liens described in clauses (a) through (e) shall remain “Excepted Liens”
only for so long as no action to enforce such Lien has been commenced and no
intention to subordinate the first priority Lien granted in favor of the Secured
Parties is to be hereby implied or expressed by the permitted existence of such
Excepted Liens.
“Excluded Offering” means any offering, issuance or sale by the Borrower after
the Closing Date of: (a) securities issued upon any conversion or exercise of
any other security in accordance with the terms thereof, or (b) securities
issued (i) to directors, officers, employees, or consultants of the Borrower in
connection with their service as directors of the Borrower, their employment by
the Borrower or their retention as consultants by the Borrower and not for the
primary purpose of raising capital, (ii) to persons in connection with a joint
venture, strategic alliance or other commercial relationship with such person
(including persons that are customers, suppliers and strategic partners of the
Borrower) relating to the operation of the Borrower’s business and not for the
primary purpose of raising capital, (iii) in connection with a transaction in
which the Borrower, directly or indirectly, acquires another business or its
tangible or intangible assets, or (iv) to lenders as equity incentives in
connection with debt financings of the Borrower, in each case where such
transactions have been approved by the Board.
“Existing Providence Facility A” means the secured revolving line of credit
under and pursuant to that certain Revolving Line of Credit Facility Agreement,
dated May 13, 2015, between Providence Energy Operators, LLC, as lender, and
Borrower, as amended or modified from time to time
8
“Existing Providence Facility B” means the secured revolving line of credit
dated October 13, 2016, between PEP III, as lender, and Borrower, as amended or
“Expiration Date” has the meaning set forth Section 7.15(a) hereof.
“Fair Market Value” means, as of any particular date: (a) the closing sales
prices of the Common Stock for such day on the principal securities exchange on
which the Common Stock may at the time be listed; (b) if there have been no
sales of the Common Stock on such exchange on any such day, the average of the
highest bid and lowest asked prices for the Common Stock on such exchange at the
end of such day; (c) if on any such day the Common Stock is not listed on a
domestic securities exchange, the closing sales price of the Common Stock as
quoted on the Pink OTC Markets or similar quotation system or association for
such day; or (d) if there have been no sales of the Common Stock on the Pink OTC
Markets or similar quotation system or association on such day, the average of
the highest bid and lowest asked prices for the Common Stock quoted on the Pink
OTC Markets or similar quotation system or association at the end of such day;
in each case, averaged over twenty (20) consecutive Business Days ending on the
Business Day immediately prior to the day as of which “Fair Market Value” is
being determined; provided, that if the Common Stock is listed on any domestic
securities exchange, the term “Business Day” as used in this sentence means
Business Days on which such exchange is open for trading. If at any time the
Common Stock is not listed on any domestic securities exchange or quoted on the
OTC Bulletin Board, the Pink OTC Markets or similar quotation system or
association, the “Fair Market Value” of the Common Stock shall be the fair
market value per share as determined jointly by the Board of Directors and the
Administrative Agent. For purposes of this definition, “Pink OTC Markets” means
the OTC Markets Group Inc. electronic inter-dealer quotation system, including
OTCQX, OTCQB and OTC Pink.
otherwise specified, all references herein to a Financial Officer shall mean a
Financial Officer of Borrower.
“Funding Account” means a deposit account in Borrower’s name into which the
proceeds of the Loans will be deposited.
“Funds Flow” has the meaning set forth in Section 5.01(j).
America as in effect from time to time subject to the terms and conditions set
forth in Section 1.04.
or administrative powers or functions of or
9
pertaining to government over Borrower or any of its Subsidiaries, any of their
Properties or Lender.
“Governmental Requirement” means any law, statute, code, ordinance, order,
whether now or hereinafter in effect, of any Governmental Authority.
“Guarantors” means any Subsidiary that guarantees the Obligations pursuant to
Section 7.20.
“Guaranty Agreement” means an agreement executed by the Guarantors in form and
substance satisfactory to the Lenders, unconditionally guarantying on a joint
and several basis, payment of the Obligations.
“Hazardous Material” means any substance regulated or as to which liability
Environmental Law; (b) petroleum hydrocarbons, petroleum products, petroleum
substances, natural gas, oil, oil and gas waste, crude oil, and any components,
fractions, or derivatives thereof; and (c) radioactive materials, explosives,
asbestos or asbestos containing materials, polychlorinated biphenyls, radon, or
infectious or medical wastes.
non-usurious interest rate, if any, that at any time or from time to time may be
contracted for, taken, reserved, charged or received on each Note or on other
Obligations under Laws applicable to Lenders which are presently in effect or,
to the extent allowed by applicable Law, under such applicable Laws which may
hereafter be in effect and which allow a higher maximum non-usurious interest
rate than applicable Laws allow as of the date hereof.
“Hydrocarbon Interests” means all right, title, interest and estate now owned or
“Hydrocarbons” means oil, gas, coal seam gas, casing head gas, drip gasolines,
natural gasoline, condensate, distillate, and all other liquid and gaseous
hydrocarbons produced or to be produced in conjunction therewith, and all
products, by-products and all other substances derived therefrom or the
processing thereof, and all other minerals and substances, including Sulphur,
lignite, coal, uranium, thorium, iron, geothermal steam, water, carbon dioxide,
helium, and any and all other minerals, ores, or substances of value, and the
products and proceeds therefrom, including all gas resulting from the in-situ
combustion of coal or lignite.
10
“Initial Interest Payment Date” means March 1, 2018; provided that, if such date
is not a Business Day then such date will be the next succeeding Business Day.
of the Closing Date, by and among the Administrative Agent, PEP III and the
Borrower.
“Interest Payment Date” means the first day of each calendar month, beginning
with the Initial Interest Payment Date; provided that, if such Interest Payment
Date is not a Business Day then such Interest Payment Date will be the next
succeeding Business Day.
“Investment” means, for any Person: (a) the acquisition (whether for cash,
Property, services or securities or otherwise) or holding of Equity Interests of
any other Person or any agreement to make any such acquisition (including,
without limitation, any “short sale” or any sale of any securities at a time
when such securities are not owned by the Person entering into such short sale);
(b) the making of any advance, loan or capital contribution to, the assumption
of Debt of, the purchase or other acquisition of any other Debt of or equity
participation or interest in, or other extension of credit to, any other Person
(including the purchase of Property from another Person subject to an
understanding or agreement, contingent or otherwise, to resell such Property to
such Person, but excluding any such advance, loan or extension of credit having
a term not exceeding ninety (90) days representing the purchase price of
inventory or supplies sold by such Person in the ordinary course of business);
(c) the purchase or acquisition (in one or a series of transactions) of Property
of another Person that constitutes a business unit or (d) the entering into of
any guarantee of, or other contingent obligation (including the deposit of any
Equity Interests to be sold) with respect to, Debt or other liability of any
other Person.
“Law” means any law, statute, code, ordinance, order, determination, rule,
regulation, judgment, decree, injunction, franchise, permit, certificate,
license, authorization or other directive or requirement, whether now or
hereinafter in effect, including, without limitation, Environmental Laws, energy
regulations and occupational, safety and health standards or controls, of any
Governmental Authority.
“Lenders’ Option” has the meaning set forth Section 7.15(a) hereof.
“Letter Agreement” means that certain letter agreement between Borrower and
Lenders dated December 21, 2017 pursuant to which the Lenders loaned Borrower
the sum of $5,000,000 and were granted certain rights in return.
“LIBO Rate” means a rate determined by the Administrative Agent, which is equal
to the offered rate that appears on the relevant page of the Bloomberg Financial
Market Information System that displays an average British Bankers Association
Interest Settlement Rate for deposits in dollars with a term equivalent to three
months. If such rate is no longer available, the Administrative Agent and the
Borrower shall negotiate in good faith to amend this definition for a reference
rate to replace the LIBO Rate (subject to the approval of the Lenders). Until
such alternative reference rate is agreed, the LIBO Rate shall mean the greater
of (a) the Prime Rate and (b) 1.00%.
11
“Lien” means any interest in Property securing an obligation owed to, or a claim
by, a Person other than the owner of the Property, whether such interest is
based on the common law, statute or contract, and whether such obligation or
claim is fixed or contingent, and including but not limited to (a) the lien or
security interest arising from a mortgage, encumbrance, pledge, security
agreement, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes or (b) production payments and the like payable out of Oil
and Gas Properties. The term “Lien” shall include easements, restrictions,
servitudes, permits, conditions, covenants, exceptions or reservations. For the
purposes of this Agreement, Borrower and its Subsidiaries shall be deemed to be
the owner of any Property which they have acquired or hold subject to a
conditional sale agreement, or leases under a financing lease or other
arrangement pursuant to which title to the Property has been retained by or
vested in some other Person in a transaction intended to create a financing.
“Loan Balance” means the aggregate outstanding, unpaid principal balance of the
Loans at any given time. When used with respect to any Lender, “Loan Balance”
shall refer to the aggregate outstanding, unpaid principal balance of the Loans
made by such Lender.
“Loan Documents” means this Agreement, the Note, the Security Instruments, the
Registration Rights Agreement, the Warrant, the Lenders’ Option, and each other
agreement, instrument, or document executed by Borrower, any Guarantor or any of
Borrower’s or a Guarantor’s Subsidiaries or any of their officers at any time in
“Loan Parties” means collectively, the Borrower and the Guarantors, and each
individually, a “Loan Party”.
“Loans” means the loans made by the Lenders pursuant to Article II hereof.
“Make-Whole Premium” means, with respect to a prepayment of the Loans by the
Borrower pursuant to Section 3.01 or following acceleration of the Obligations
pursuant to Section 9.02 (including, without limitation, acceleration resulting
in connection with the occurrence of any of the events set forth in
Section 9.01(g), Section 9.01(h) or Section 9.01(i)), an amount equal to (a) the
product of 0.40 multiplied by the principal amount of the Loans, exclusive of
any such principal amount of the Loans that has been converted pursuant to
Section 7.14 prior to such prepayment, less (b) the aggregate amount of interest
payments received by Lender prior to or contemporaneous with the date of such
prepayment, less (c) the amount of the Origination Fee and the Underwriting Fee
paid by Borrower to Lenders prior to the date of such prepayment.
“Material Adverse Effect” means a material adverse change in, or material
adverse effect on (a) the business, operations, Property, condition (financial
or otherwise) or prospects of Borrower and its Subsidiaries taken as a whole,
(b) the ability of Borrower, any of its Subsidiaries or any Guarantor to perform
any of its obligations under any Loan Document to which it is a party after
giving effect to any cure period contained in such Loan Document, (c) the
validity or enforceability of the material terms of any Loan Document or (d) the
rights and remedies of or benefits available to the Secured Parties under any
Loan Document.
12
“Material Agreements” means all Operating Agreements; the Participation
Agreement; Hydrocarbon purchase, sales, exchange, processing, gathering,
treatment, compression and transportation agreements; farm-out or farm in
agreements; exploration agreements; unitization agreements; joint venture,
limited or general partnership, dry hole, bottom hole, acreage contribution,
purchase and acquisition agreements; area of mutual interest agreements; salt
water disposal agreements, and servicing contracts; pooling agreements; in each
case, to which Borrower is a party, including any of the foregoing that relate
or affect the ownership, use or operation of the Oil and Gas Properties,
including, without limitation, the agreements set forth on Schedule
1.02(c) attached hereto. Notwithstanding the foregoing, Material Agreements do
not include the Loan Documents, oil and gas leases of the Loan Parties
comprising the Oil and Gas Properties and any agreements with an implied
monetary value equal to or less than $250,000.
“Material Indebtedness” means Debt (but excluding the Loans hereunder) of
Borrower and its Subsidiaries in an aggregate principal amount exceeding
$200,000.
“Maturity Date” means February 1, 2020.
“Maximum Conversion Price” has the meaning set forth Section 7.14(a) hereof.
“Minimum Conversion Price” has the meaning set forth in Section 7.14(a) hereof.
“Mortgaged Property” has the meaning set forth in the Mortgages and includes,
without limitation, any Property owned by Borrower which is subject to the Liens
existing and to exist under the terms of the Mortgages, including, without
limitation, in accordance with Section 4.01(b).
“Mortgages” means the mortgages or deeds of trust executed by any one or more of
the Loan Parties in favor of the Administrative Agent for the ratable benefit of
the Secured Parties in form and substance satisfactory to Lenders, as the same
including the Mortgages executed and delivered on the Closing Date.
“Multiemployer Plan” means a multiemployer plan as defined in
“Net Revenue Interest” means, with respect to any Oil and Gas Property, the
decimal or percentage share of Hydrocarbons produced and saved from or allocable
to that Oil and Gas Property, after deduction of landowner’s or lessor’s royalty
interests, non-participating royalty interests, overriding royalty interests,
production payments, net profits interests and other burdens on or paid out of
such production.
“Note” means each promissory note made by Borrower described in Section 2.03 and
being substantially in the form of Exhibit A, together with all amendments,
modifications, replacements, extensions and rearrangements thereof.
“Notice of Conversion” has the meaning set forth in Section 7.14(b).
“NYMEX” means the New York Mercantile Exchange.
13
“Obligations” means any and all amounts, including, without limitation, all
principal, interest, Make-Whole Premium, fees and expenses (including reasonable
attorneys’ fees and expenses and including any obligations in respect of
interest, fees, or expenses that accrue after maturity, before and after an
Event of Default, and during the pendency, and after the filing of any
proceeding, under any Debtor Relief Law, regardless of whether allowed or
allowable in whole or in part as a claim in such proceeding), reimbursements and
indemnifications, owing or to be owing by Borrower, any of its Subsidiaries or
any Guarantor (whether direct or indirect (including those acquired by
assumption), absolute or contingent, due or to become due, now existing or
hereafter arising) to Lender under any Loan Document; and all renewals,
extensions and/or rearrangements of any of the above. For the avoidance of
doubt, “Obligations” shall include Protective Advances and all principal,
interest, fees and expenses (including reasonable attorneys’ fees and expenses)
in respect thereof owing by Borrower and the other Loan Parties.
“Observer” has the meaning set forth in Section 4.02.
“Oil and Gas Properties” means all of Borrower’s and its Subsidiaries’ right,
title and interest, whether now owned or hereafter acquired, in and to
(a) Hydrocarbon Interests and Wells, including those that are described in Annex
B attached hereto and made a part hereof, as such Annex B may be amended and
supplemented from time to time, or as otherwise described in and covered by (or
purported to be described in) any of the Security Instruments, whether or not
such Oil and Gas Properties are described in Annex B attached hereto; (b) the
Properties now or hereafter pooled or unitized with the Hydrocarbon Interests or
Wells; (c) all presently existing or future unitization, pooling agreements and
declarations of pooled units and the units created thereby (including without
limitation all units created under orders, regulations and rules of any
Governmental Authority) which may affect all or any portion of the Hydrocarbon
Interests or Wells; (d) all operating agreements, including the Operating
Agreements, contracts and other agreements, including production sharing
contracts and agreements, which relate to any of the Hydrocarbon Interests or
the production, sale, purchase, exchange or processing of Hydrocarbons from or
attributable to such Hydrocarbon Interests or Wells; (e) all Hydrocarbons in and
under and which may be produced and saved or attributable to the Hydrocarbon
Interests or Wells, including all oil in tanks, and all rents, issues, profits,
proceeds, products, revenues and other incomes from or attributable to the
Hydrocarbon Interests or Wells; (f) all tenements, hereditaments, appurtenances
and Properties in any manner appertaining, belonging, affixed or incidental to
the Hydrocarbon Interests or Wells; and (g) all Properties, rights, titles,
interests and estates, including any and all Property, real or personal, now
owned or hereinafter acquired and situated upon, used, held for use or useful
primarily in connection with the operating, working or development of any of the
properties or interests described or referred to in subsections (a) through
(g) above (excluding drilling rigs, automotive equipment, rolling stock, rental
equipment or other personal Property which may be temporarily on such premises
for the purpose of oil and gas operations) and including any and all buildings,
14
“Operating Account” means a deposit account into which revenue from Borrower’s
operations and otherwise will be deposited.
“Operating Agreements” means all operating agreements or joint operating
agreements that relate to or cover any of the Oil and Gas Properties.
“Options” means any warrants or other rights or options to subscribe for or
purchase Common Stock or Convertible Securities.
“Organizational Documents” means, with respect to any Person, (a) in the case of
any corporation, the certificate of incorporation and by-laws (or similar
documents) of such Person, (b) in the case of any limited liability company, the
certificate of formation and limited liability company agreement (or similar
documents) of such Person, (c) in the case of any limited partnership, the
certificate of formation and limited partnership agreement (or similar
documents) of such Person, (d) in the case of any general partnership, the
partnership agreement (or similar document) of such Person and (e) in any other
case, the functional equivalent of the foregoing. For the avoidance of doubt,
“Organizational Documents” includes, without limitation, the Bylaws of Borrower
dated November 30, 2012 and the Articles of Incorporation dated September 4,
2012 as amended by the Articles of Amendment to Articles of Incorporation dated
on or about October 10, 2017.
“Origination Fee” has the meaning set forth in Section 2.07(a).
“Participation Agreement” has the meaning set forth in Section 5.01(u).
ERISA and any successor entity performing similar functions.
“PDP Present Value” means the present value (discounted at ten percent (10%) per
annum) of future net cash flow attributable to all Proved Developed Producing
Reserves from the Oil and Gas Properties of the Loan Parties calculated based on
the most recently delivered Reserve Report, as supplemented by the most recently
delivered Sem-Annual Updates consistent with SEC reporting requirements at the
time, except that commodity prices used in the report shall be pursuant to
Section 7.07(b)(iii).
“PDP PV Coverage Ratio” means the ratio of Borrower’s (a) PDP Present Value to
(b) the Loan Balance.
“PEP III” means Providence Energy Partners III, LP.
“Permitted Equity Sales” means the sale of Common Stock (i) in a firm commitment
underwitten offering to the public registered with the SEC and (ii) which
results in net proceeds to the Borrower of not less than $15,000,000.
or other entity.
15
“Plan” means 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 any Loan Party or any ERISA
“Pledge Agreements” means, collectively, those certain Pledge Agreements
executed by Borrower in relation to its Subsidiaries in form and substance
satisfactory to Lender to secure the payment of the Obligations, as the same may
“Prime Rate” means the rate of interest per annum identified as the U.S. “Prime
Rate” in the “Money Rates” section of The Wall Street Journal; each change in
the Prime Rate shall be effective from and including the date such change is
publicly announced as being effective.
personal or mixed, or tangible or intangible.
“Protective Advance” has the meaning set forth in Section 2.04.
“Proved Reserves” means “Proved Reserves” as defined in the Definitions for Oil
and Gas Reserves (in this paragraph, the “Definitions”) promulgated by the
Society of Petroleum Engineers (or any generally recognized successor) as in
effect at the time in question. “Proved Developed Reserves” means Proved
Reserves which are categorized as “Developed” in the Definitions, “Proved
Developed Producing Reserves” means Proved Reserves which are categorized as
both “Developed” and “Producing” in the Definitions, “Proved Developed
Nonproducing Reserves” or “PDNP” means Proved Reserves which are categorized as
both “Developed” and “Nonproducing” in the Definitions, and “Proved Undeveloped
Reserves” or “PUD” means Proved Reserves which are categorized as “Undeveloped”
in the Definitions.
“Purchasers” means all Persons that are purchasers of production of Hydrocarbons
from the Loan Parties’ Oil and Gas Properties or otherwise receiving the Loan
Parties’ share of such Hydrocarbons.
“Reference Rate” means the greater of (i) the LIBO Rate, or (ii) 1.00%;
provided, that the Reference Rate shall not exceed 3.00%.
as of the Closing Date, among the Borrower and Lenders, as amended from time to
time in accordance with its terms.
Person’s Affiliates.
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“Remedial Work” has the meaning set forth in Section 7.06.
to Lenders prepared by an Approved Petroleum Engineer, setting forth, effective
as of each January 1st the Proved Reserves attributable to the Oil and Gas
Properties of Borrower and its Consolidated Subsidiaries, (a) together with a
projection of the rate of production and future net income, Taxes, operating
expenses and capital expenditures with respect thereto as of such date, based
upon the economic parameters (including without limitation Hydrocarbon prices,
and discount rate assumptions), and (b) prepared in accordance with the
requirements and assumptions set forth in Section 7.07(b).
President, any Financial Officer or any Vice President of such Person. Unless
otherwise specified, all references to a Responsible Officer herein shall mean a
Responsible Officer of Borrower.
securities or other Property) with respect to any Equity Interests in any Loan
Party, or any payment (whether in cash, securities or other Property), including
retirement, acquisition, cancellation or termination of any such Equity
Interests in any Loan Party or any option, warrant or other right to acquire any
such Equity Interests in any Loan Party.
“Secured Parties” means, collectively, the Administrative Agent and the Lenders.
“Security Instruments” means the Mortgages, each Pledge Agreement, and other
agreements, instruments or certificates described or referred to in Exhibit C,
and any and all other agreements or instruments, now or hereafter executed and
delivered by Borrower or any Guarantor in connection with, or as security for
the payment or performance of the Obligations, as such agreements may be
“Security Termination” means the occurrence of each of the following: (a) the
Termination Date, and (b) the payment in full in cash of all Obligations, in
each case, other than indemnity obligations and similar obligations that survive
the termination of this Agreement for which no notice of a claim has been
received by Borrower or Lender.
“Semi-Annual Update” has the meaning set forth in Section 7.07(a).
“Solvent” and “Solvency” mean, with respect to any Person on any date of
determination, that on such date (a) the fair value of the property of such
Person is greater than the total amount of liabilities, including contingent
liabilities, of such Person, (b) 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, (c) such Person is not engaged in
business or a transaction, and is not about to engage in business or a
transaction, for which such Person’s property would constitute an unreasonably
small capital, and (d) such Person is able to pay its debts and liabilities,
contingent obligations and other commitments as they mature in the
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ordinary course of business. The amount of contingent liabilities at any time
be expected to become an actual or matured liability.
“Subsidiary” means: (a) any Person of which at least a majority of the
outstanding Equity Interests having by the terms thereof ordinary voting power
to elect a majority of the board of directors, manager or other governing body
of such Person (irrespective of whether or not at the time Equity Interests of
any other class or classes of such Person shall have or might have voting power
by reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by Borrower or one or more of its Subsidiaries or
by Borrower and one or more of its Subsidiaries and (b) any partnership of which
Borrower or any of its Subsidiaries is a general partner. Unless otherwise
indicated herein, each reference to the term “Subsidiary” shall mean a
Subsidiary of Borrower.
“Swap Agreement” means any agreement with respect to any swap, forward, spot,
future or credit default or derivative transaction or option or similar
agreement involving, or settled by reference to, one or more rates, currencies,
commodities, equity or debt instruments or securities, or economic, financial or
pricing indices or measures of economic, financial or pricing risk or value or
any similar transaction or any combination of these transactions; provided that
in no event shall any (a) phantom stock or similar plan providing for payments
only on account of services provided by current or former directors, officers,
employees or consultants of any Loan Party or any Subsidiary or (b) near term
spot market purchase and sale of a commodity in the ordinary course of business
based on a price determined by a rate quoted on an organized exchange for actual
physical delivery, be a Swap Agreement.
“Synthetic Leases” means, in respect of any Person, all leases which shall have
been, or should have been, in accordance with GAAP, treated as operating leases
on the financial statements of the Person liable (whether contingently or
otherwise) for the payment of rent thereunder and which were properly treated as
indebtedness for borrowed money for purposes of U.S. federal income Taxes, if
the lessee in respect thereof is obligated to either purchase for an amount in
excess of, or pay upon early termination an amount in excess of, 80% of the
residual value of the Property subject to such operating lease upon expiration
or early termination of such lease.
deductions, withholdings, assessments, fees or other charges imposed by any
Governmental Authority, including any interest, additions to tax or penalties
applicable thereto.
“Termination Date” means the earlier to occur of (i) the Maturity Date, (ii) the
date on which all of Obligations under the Loan Documents are indefeasibly paid
in full in cash (other than indemnity obligations and similar obligations that,
in each case, by their terms survive the termination of this Agreement) and
(iii) the date that the Obligations are accelerated pursuant Section 9.02.
“Total Debt” means, at any date, all Debt of Borrower and the Consolidated
Subsidiaries on a consolidated and combined basis.
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“Total Leverage Ratio” means, when determined, the ratio of Total Debt to
EBITDA.
“Tranche” means, as applicable, either Tranche A or Tranche B.
“Tranche A” has the meaning set forth in Section 2.02(a).
“Tranche B” has the meaning set forth in Section 2.02(b).
“Transactions” means, with respect to (a) Borrower, the execution, delivery and
performance by Borrower of this Agreement, and each other Loan Document to which
it is a party, the borrowing of Loans, the use of the proceeds thereof, and the
grant of Liens by Borrower on Mortgaged Properties and other Properties pursuant
to the Security Instruments to which it is a party and (b) each Guarantor, the
execution, delivery and performance by such Guarantor of each Loan Document to
which it is a party, the guaranteeing of the Obligations and the other
obligations under the Guaranty Agreement by such Guarantor and such Guarantor’s
grant of the security interests and provision of Collateral under the Security
Agreement and other Security Instruments to which it is a party, and the grant
of Liens by such Guarantor on Mortgaged Properties and other Properties pursuant
to the Security Instruments to which it is a party.
“UCC” means the Uniform Commercial Code as in effect on the date hereof in the
State of Colorado, as amended from time to time, and any successor statute;
provided that, in the event that, by reason of mandatory provisions of Law, any
or all of the attachment, perfection or priority of the security interest in any
jurisdiction other than the State of Colorado, the term “UCC” shall mean the
Uniform Commercial Code as in effect in such other jurisdiction for purposes of
the provisions hereof relating to such attachment, perfection or priority and
for purposes of definitions related to such provisions.
“Underwriting Fee” has the meaning set forth in Section 2.07(b).
“Warrant” shall have the meaning set forth in Section 7.17.
“Well” means any existing or future oil or gas well, salt water disposal well,
injection well, water supply well or any other well or wellbore located on or
related to the Hydrocarbon Interests, whether producing, shut-in, sidetrack,
behind pipe or non-producing wells, or any lands pooled or unitized therewith,
and any facility or equipment in addition to or replacement of any such well.
“Working Interest” means the property interest which (i) entitles its owner to
explore and develop the Hydrocarbons in and under any Hydrocarbon Interest, or
the lands pooled or unitized therewith, for oil and gas production purposes and
(ii) obligates its owner to bear a proportionate share, in accordance with the
percentage of ownership, of the costs and expenses of such exploration and
development.
1.03 Terms Generally; Rules of Construction. The
definitions of terms herein shall apply equally to the singular and plural forms
of the terms defined. Whenever the context may require, any pronoun shall
include the corresponding masculine, feminine and neuter forms. The
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words “include”, “includes” and “including” shall be deemed to be followed by
the phrase “without limitation”. The word “will” shall be construed to have the
same meaning and effect as the word “shall”. Unless the context requires
otherwise (a) any definition of or reference to any agreement, instrument or
other document herein shall be construed as referring to such agreement,
instrument or other document as from time to time amended, supplemented or
otherwise modified (subject to any restrictions on such amendments, supplements
or modifications set forth in the Loan Documents), (b) any reference herein to
any Law shall be construed as referring to such Law as amended, modified,
codified or reenacted, in whole or in part, and in effect from time to time,
Person’s successors and assigns (subject to the restrictions contained in the
determination of any time period, the word “from” means “from but excluding” and
legal representative drafted such provision.
1.04 Accounting Terms and Determinations; GAAP. Unless
financial matters required to be furnished to Lender hereunder shall be
prepared, in accordance with GAAP, applied on a basis consistent with the
financial statements except for changes in which Borrower’s independent
certified public accountants concur and which are disclosed to Lender on the
next date on which financial statements are required to be delivered to Lender
pursuant to Section 7.01(a); provided that, unless Borrower and Lender shall
otherwise agree in writing, no such change shall modify or affect the manner in
which compliance with the covenants contained herein is computed such that all
such computations shall be conducted utilizing financial information presented
consistently with prior periods; and provided further that interim financial
statements shall be prepared in accordance with SEC rules for interim financial
statements.
ARTICLE II.
THE CREDITS; PAYMENTS OF PRINCIPAL AND INTEREST; FEES
2.01 Commitments. Subject to the terms and conditions
set forth herein, each Lender agrees to make Loans to Borrower on the Closing
Date in an amount not to exceed such Lender’s Commitment. Amounts repaid in
respect of the Loans cannot be reborrowed.
2.02 Availability and Purpose of Advances.
(a) Tranche A. On December 21, 2017, certain
Affiliates of the Lenders advanced to Borrower the sum of $5,000,000 (“Tranche
A”) pursuant to the Letter Agreement. The proceeds of such advance were paid by
Lenders’ Affiliates directly to vendors of Borrower in accordance with
instructions provided to such Affiliates of Lenders by Borrower. Upon execution
of this Agreement and effective on the Closing Date, the Loans constituting
Tranche A
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shall be contributed by such Affiliates to the Lenders and continued hereunder,
and will become for all purposes part of the Loans advanced by the Lenders to
Borrower hereunder. Interest on Tranche A accrued from December 21, 2017
through but excluding the Closing Date at the Contract Rate shall be paid by
Borrower to each Lender (in accordance with the amount of Tranche A advanced by
each Lender’s Affiliate) on the Closing Date. Upon the payment of all interest
owing with respect to such Loans to the Lenders on the Closing Date as described
above in this Section 2.02(a), the obligations of the Borrower to such
Affiliates under the Letter Agreement with respect to such Loans will be
satisfied in full.
(b) Tranche B. Lenders agree, severally and not
jointly, to make available to Borrower on the Closing Date additional Loans in
an aggregate amount equal to $20,000,000 (the “Tranche B”), subject to the terms
and conditions set forth herein. Each Lender shall make available funds so that
the total amount of Loans advanced by such Lender under Tranche A and Tranche B
is equal to its Commitment. The proceeds of Tranche B shall be used (i) to pay
fees and expenses due and owing by Borrower on the Closing Date, (ii) to repay
in full all of the Debt owing with respect to the Existing Providence Facility
A, (iii) to repay a principal amount of the outstanding Debt under the Existing
Providence Facility B equal to $1,500,000, together with all accrued and unpaid
interest owing under such facility as of the Closing Date and (iv) to make the
other payments expressly set forth in the Funds Flow. After payment in full of
the foregoing expenditures, the remaining balance of Tranche B shall be
deposited by Lenders into the Funding Account for funding of approved capital
and other expenditures, including but not limited to working capital, interest
on the Loans, general and administrative expenses and those costs and expenses
related to the Shook Pad and non-operated projects, all in accordance with the
Base Case Model as approved by the Lenders.
(c) Funding Account. On or before the Closing
Date, Borrower shall authorize a representative of Administrative Agent as a
co-signer on the Funding Account for all disbursements from such account.
Borrower may, on at least 24 hours prior written notice to Administrative Agent,
but no more than once each week, request a release (a “Distribution Request”, in
substantially the form of Exhibit D) of sums from the Funding Account to pay,
without duplication, any amounts desired by Borrower consistent with the Base
Case Model. Each Distribution Request shall contain a description in such
detail as Lenders may reasonably request as to the proposed amount of such
distribution and the intended recipient and shall be accompanied by appropriate
supporting documentation. Unless (i) a Default has occurred and is continuing or
would result from such transfer of funds, or (ii) Administrative Agent notifies
Borrower in writing within such 24 hour period that a Distribution Request fails
to satisfy the foregoing criteria or that Administrative Agent requires
additional information with respect to the requested disbursement (in which
case, Administrative Agent will describe requested information in reasonable
detail), then Administrative Agent will promptly approve the Distribution
Request and cause its representative to initiate a transfer of funds for the
requested amount from the Funding Account to the Operating Account by online
transfer or as otherwise requested by Borrower. Borrower shall use such
disbursed amounts exclusively to pay the amounts included in the applicable
Distribution Request.
(d) Operating Account. On or before the Closing
Date, Borrower shall also authorize a representative of Administrative Agent as
a co-signer on the Operating Account for disbursements from such account of
$1,000,000 or more. Administrative Agent shall also have
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viewing rights with regard to the Operating Account at any time. In the event
that Borrower initiates a disbursement of an amount of $1,000,000 or more
pursuant to a Distribution Request, then, unless a Default has occurred and is
continuing or would result from such transfer of funds, the Administrative Agent
will promptly cause its representative to approve a wire transfer to such party
as listed in the Distribution Request.
2.03 Notes. The Loans made by each Lender shall be
evidenced by a single promissory note made by Borrower payable to the order of
such Lender in substantially the form of Exhibit A, dated as of the Closing Date
in a principal amount equal to such Lender’s Commitment and otherwise duly
completed. The amount and interest rate of each Loan made by such Lender, and
all payments made on account of principal thereof, shall be recorded by such
Lender on its books. Lender may attach a schedule to the Note to evidence
payments on the Note but failure to make any such notation or to attach a
schedule shall not affect Lender’s or Borrower’s rights or obligations in
respect of the Loans or affect the validity of the Note.
2.04 Protective Advances. Notwithstanding anything to
the contrary in this Agreement, and whether or not an Event of Default or a
Default shall have occurred and be continuing, Lenders upon not less than three
Business Days’ notice and Borrower’s right to cure during such three Business
Day period, are authorized, from time to time in Lenders’ sole discretion (but
Lenders shall have absolutely no obligation to) make an advance for purposes of
(i) preserving or protecting the Collateral, or any portion thereof, or
(ii) paying any other amount chargeable to or required to be paid by Borrower
pursuant to the terms of this Agreement and the other Loan Documents, including,
without limitation, payments of principal, interest, fees and reimbursable
expenses (each such advance in this Section 2.04, a “Protective Advance”).
Protective Advances may be made without Borrower’s compliance with any of the
terms of this Agreement (including the conditions precedent set forth in this
Article II and Article V). Each Protective Advance under clause (i) or clause
(ii) preceding shall be disbursed by Lenders as either of them deems necessary
or prudent in order to, among other things, protect Lenders’ interest in the
Collateral or to perform any obligation of Borrower under this Agreement or the
Operating Agreements. Each Protective Advance under this Agreement shall bear
interest at the lesser of (x) the Highest Lawful Rate and (y) the Default Rate,
beginning on the date of the advance of such Protective Advance and continuing
until such Protective Advance is paid in full in accordance with this Agreement.
Accrued interest on Protective Advances shall be payable in arrears on the last
Business Day of each calendar month and until repaid in full. Notwithstanding
anything to the contrary in this Agreement or any Loan Documents, any Protective
Advance made under this Section 2.04 shall not cure any Default or Event of
Default occurring and continuing on the date such Protective Advance is made by
Lender. Protective Advances shall constitute Obligations and will be entitled to
the benefit of the Liens under the Security Instruments. Borrower shall pay the
unpaid principal amount and all unpaid and accrued interest of each Protective
Advance on the earlier of the Termination Date and the date on which demand for
payment is made by Lender.
2.05 Repayment of Loans. Borrower unconditionally
promises to pay to each Lender all of the Obligations owing to such Lender on
the Termination Date. All payments to be made by Borrower to each Lender will
be made by wire transfer in immediately available funds not later than 5:00
p.m. Dallas, Texas, time on the date due to such Lender in accordance with wire
instructions provided by such Lender to Borrower.
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2.06 Interest.
(a) Loans. All Loans outstanding under this
Agreement shall bear interest at the Contract Rate beginning on the date of the
advance of each such Loan and continuing until such Loan is paid in full in
(b) Post-Default. Notwithstanding the
foregoing, if an Event of Default has occurred and is continuing, or if any
Borrower or any Guarantor hereunder or under any other Loan Document is not paid
when due, whether at stated maturity, upon acceleration or otherwise, then,
automatically, all Loans outstanding, together with all overdue amounts shall
bear interest, after as well as before judgment, at a rate per annum equal to
five percent (5%) plus the Contract Rate (the “Default Rate”). Administrative
Agent will provide prompt notice to Borrower of the implementation of the
Default Rate in accordance with this Section 2.06(b), but the failure to provide
such notice shall not relieve Borrower from its obligation to pay interest at
the Default Rate or result in the incurrence by the Administrative Agent of any
liability to any Person.
(c) Interest Payment Dates. Accrued interest
on each Loan shall be payable in arrears on each Interest Payment Date and on
the Termination Date; provided that (i) interest accrued pursuant to
Section 2.06(b) shall be payable on demand, and (ii) in the event of the
prepayment of the Loans pursuant to Section 3.01, all accrued and unpaid
interest shall be payable on the date of such payment.
(d) Interest Rate Computations. All interest
hereunder shall be computed on the basis of a year of 360 days, and in each case
shall be payable for the actual number of days elapsed (including the first day
but excluding the last day).
2.07 Fees.
(a) Origination Fee. On the Closing Date,
Borrower shall pay to each Lender an origination fee (the “Origination Fee”)
equal to such Lender’s Applicable Percentage of one million two hundred fifty
thousand dollars ($1,250,000). The Origination Fees shall be included in the
Funds Flow and payable from the proceeds of Tranche B.
(b) Underwriting Fee. On the first anniversary
of the Closing Date, Borrower shall pay to each Lender an underwriting fee (the
“Underwriting Fee”) equal to such Lender’s Applicable Percentage of one million
two hundred fifty thousand dollars ($1,250,000). Any Lender that defaults in
its obligation to make Loans under this Agreement shall not be entitled to
either the Origination Fee or the Underwriting Fee, and the obligations of
Borrower to pay such fees shall be proportionately reduced.
2.08 Payments Generally.
(a) Payments by Borrower. All payments to be
made by the Borrower hereunder and the other Loan Documents shall be made
without condition or deduction for any counterclaim, defense, recoupment, setoff
or Taxes. Except as otherwise expressly provided herein, all such payments
shall be made to the Administrative Agent, for the account of the respective
Lenders to which such payment is owed, at the Administrative Agent’s office in
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immediately available funds not later than 3:00 p.m. (Dallas, Texas time) on the
date specified herein. All amounts received by the Administrative Agent after
such time on any date shall be deemed to have been received on the next
succeeding Business Day and any applicable interest or fees shall continue to
accrue. The Administrative Agent will promptly distribute to each Lender its
ratable share (or other applicable share as provided herein) of such payment in
like funds as received by wire transfer to such Lender’s office (or otherwise
distribute such payment in like funds as received to the Person or Persons
entitled thereto as provided herein). If any payment to be made by the Borrower
shall fall due on a day that is not a Business Day, payment shall be made on the
next succeeding Business Day and such extension of time shall be reflected in
computing interest or fees, as the case may be. All payments hereunder or under
any other Loan Document shall be made in dollars. Fees, once paid, shall be
fully earned and shall not be refundable under any circumstances.
(b) Application of Insufficient Payments.
Subject to Section 9.02, if at any time insufficient funds are received by and
available to the Administrative Agent to pay fully all amounts of principal,
interest, fees and other amounts then due hereunder, such funds shall be applied
(i) first, to pay interest, fees and other amounts then due hereunder, ratably
among the parties entitled thereto in accordance with the amounts of interest,
fees and other amounts then due to such parties, and (ii) second, to pay
principal then due hereunder, ratably among the parties entitled thereto in
accordance with the amounts of principal then due to such parties.
ARTICLE III.
PREPAYMENT
3.01 Prepayment.
(a) Optional Prepayment. Borrower shall have
the right at any time and from time to time to prepay the Loan Balance in whole
(but not in part) prior to the Maturity Date, upon (i) providing Lenders at
least 14-days’ prior written notice and (ii) payment of the Make-Whole Premium
in accordance with Section 3.02.
(b) Notice and Terms of Optional Prepayment.
Borrower shall notify each Lender by email with confirmation of reply email of
its intention to prepay the Obligations in full, not later than 5:00 p.m.,
Dallas, Texas time, fourteen (14) days before the proposed date of prepayment.
Each such notice shall be irrevocable and shall specify the prepayment date, the
amount of Obligations outstanding and the applicable Make-Whole Premium.
3.02 Make-Whole Premium. Upon prepayment of the Loan
Balance pursuant to Section 3.01 or following acceleration of the Obligations
Section 9.01(g), Section 9.01(h) or Section 9.01(i)), Borrower shall pay Lenders
the applicable Make-Whole Premium contemporaneously with such prepayment. The
term “prepayment” in this Section 3.02 shall include amounts that are settled,
compromised or otherwise extinguished, whether voluntarily or involuntarily,
including, without limitation, any prepayment made in connection with a
refinancing following the acceleration of the Obligations pursuant to
Section 9.02. For the avoidance of doubt, the Make-Whole Premium shall not be
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payable with regard to any amounts of principal that are converted to Common
Stock in accordance with Section 7.14.
ARTICLE IV.
SECURITY; OTHER RIGHTS OF LENDER
4.01 Security; Additional Collateral; Release.
(a) Grant of Liens and Security Interests. As
security for all of the Obligations owed to the Secured Parties under this
Agreement and the other Loan Documents, each of Borrower and the other Loan
Parties hereby grants, assigns, transfers and conveys to Administrative Agent,
for the ratable benefit of the Lenders, a first priority mortgage Lien on and
first priority security interest in all of the Oil and Gas Properties and other
Mortgaged Property under the Mortgages. In addition to the foregoing, as further
security for all of the Obligations owed to Lender, each of Borrower and the
other Loan Parties hereby grants, assigns, transfers and conveys to
Administrative Agent, a first priority security interest in all other Collateral
(not otherwise described in the immediately preceding sentence) under the
Security Instruments. Notwithstanding the foregoing, the parties acknowledge and
agree that the lien of the Lenders shall rank pari passu with the lien of PEP
III existing on the date hereof, which lien shall survive the execution of this
Agreement and shall be subject to the terms and conditions of the Intercreditor
Agreement.
(b) Additional Collateral. In the event
Borrower or any other Loan Party acquires additional Oil and Gas Properties
after the Closing Date, then Borrower shall, and shall cause its Subsidiaries
to, promptly (in any event within five (5) Business Days or such later date as
permitted by Lenders in their sole discretion) execute and deliver such
Mortgages and other Security Instruments as Lenders may reasonably request to
grant to Administrative Agent for the benefit of the Secured Parties as security
for the Obligations a first-priority Lien on such additional Oil and Gas
Properties not already subject to a Lien of the Security Instruments such that
after giving effect thereto, the Mortgaged Properties will represent all of the
Oil and Gas Properties of the Loan Parties, subject only to Excepted Liens.
Contemporaneous with the foregoing, Borrower shall, subject to Lenders’
approval, update Annex B to add such additional Oil and Gas Properties. All such
Liens will be created and perfected by and in accordance with the provisions of
deeds of trust, security agreements and financing statements or other Security
Instruments, all in form and substance satisfactory to Lenders and in sufficient
executed (and acknowledged where necessary or appropriate) counterparts for
recording purposes.
(c) Release of Liens; General Release.
Following Security Termination, Administrative Agent will deliver to Borrower,
at Borrower’s expense, releases of all Liens arising under the Security
Instruments with an acknowledgment that the same have been terminated.
(d) Disposition of Proceeds of Production. The
Security Instruments (subject to the limitations in this Section 4.01(d))
contain an assignment by Borrower and/or the Guarantors unto and in favor of
Administrative Agent for the benefit of the Secured Parties of all of Borrower’s
or such Guarantor’s right, title and interest in and to production and all
proceeds attributable thereto which may be produced from or allocated to the
Mortgaged Property. The
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Security Instruments further provide in general for the application of such
proceeds to the satisfaction of the Obligations and other obligations described
therein and secured thereby. Notwithstanding anything in the Security
Instruments to the contrary, Administrative Agent shall not exercise its right
to receive proceeds of production unless an Event of Default has occurred and is
continuing. Borrower and the other Loan Parties hereby authorize the
Administrative Agent, on behalf of the Secured Parties, and grant to the
Administrative Agent the power and authority in place and stead of Borrower and
such Loan Parties, to take such actions as may be necessary to cause such
proceeds to be paid to the Administrative Agent upon the occurrence and during
the continuance of an Event of Default.
4.02 Observer Rights. With respect to any Lender, until
such time as the Board of Directors is expanded and one or more individuals
designated by such Lender is appointed to the Board of Directors in accordance
with Section 7.19, such Lender shall have the right to designate one non-voting
Person or representative (each such designee, an “Observer”) to attend and
observe all meetings of the Board of Directors and any committees, including
special committees thereof. Borrower shall provide each Observer with notice of
(in the same manner that notice is given to the Board of Directors or other
members thereof) all meetings (whether in person, telephonic or otherwise) of
the Board of Directors, including all committee meetings. Borrower shall also
provide to each Observer a copy of all notices, agendas and other materials or
information distributed to the Board of Directors and any committees thereof,
whether provided to the Board of Directors or other members thereof in advance
or, during or after any meeting. Except for disclosures required by law, the
Observers shall keep all such materials and information confidential. The
Borrower shall reimburse the Observers upon demand for any and all reasonable
out-of-pocket expenses incurred by any such Observer in connection with the
foregoing board visitation rights.
ARTICLE V.
CONDITIONS PRECEDENT
5.01 Closing Date. The effectiveness of this Agreement
and the obligations of Lenders to make Loans under Tranche B on the Closing Date
shall not become effective until the date on which each of the following
conditions is satisfied:
(a) Lenders shall have received a certificate of
a Responsible Officer of Borrower setting forth (i) resolutions of its Board of
Directors with respect to the authorization of Borrower to execute and deliver
the Loan Documents to which it is a party and to enter into the Transactions
contemplated in those documents, (ii) the officers of Borrower (y) who are
authorized to sign the Loan Documents to which Borrower is a party and (z) who
will, until replaced by another officer or officers duly authorized for that
purpose, act as its representative for the purposes of signing documents and
giving notices and other communications in connection with this Agreement and
the Transactions contemplated hereby, (iii) specimen signatures of such
authorized officers, and (iv) the Organizational Documents of Borrower,
certified as being true and complete.
(b) Lenders shall have received certificates of
the appropriate Governmental Authorities with respect to the existence,
qualification and good standing of Borrower.
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(c) Lenders shall have received from each party
hereto duly executed counterparts (in such number as may be requested by each
Lender) of this Agreement signed on behalf of such party.
(d) Each Lender shall have received a duly
executed Note in a principal amount equal to such Lender’s Commitment dated as
(e) Lenders shall have received from each party
thereto duly executed counterparts (in such number as may be requested by
Lender) of (i) the Security Instruments, including each Mortgage, the Pledge
Agreement (if any), and the other Security Instruments described on Exhibit C,
(ii) a Guaranty executed by each Subsidiary of the Borrower (if any), (iii) the
Registration Rights Agreement, (iv) the Lenders’ Option, (v) the Warrant and
(vi) the other Loan Documents. In connection with the execution and delivery of
the Security Instruments, Lenders shall be satisfied that the Security
Instruments create Liens (which, upon the Administrative Agent’s recordation of
the Mortgages and properly completed financing statements in the proper
jurisdictions therefor, shall be first priority, perfected Liens) on (A) all of
Borrower’s Equity Interests in all Subsidiaries, if any, and (B) all assets of
Borrower and its Subsidiaries, including all of the Oil and Gas Properties,
subject only to Excepted Liens.
(f) Lenders shall have received an opinion of
Polsinelli PC, special counsel to the Loan Parties, in form and substance
reasonably satisfactory to the Administrative Agent covering such other matters
relating to the Loan Parties, this Agreement or the Transactions as the Lenders
shall reasonably request.
(g) No material adverse change to the
environmental condition of the Oil and Gas Properties to be pledged as
Collateral shall have occurred.
(h) Lenders shall have received a certificate of
a Responsible Officer of Borrower certifying that, as of the Closing Date:
(i) the representations and warranties of the Loan Parties set forth in any Loan
Document shall be true and correct in all respects, (ii) no Default or Event of
Default exists, and (iii) the Loan Parties are in compliance in all material
respects with all obligations under the Loan Documents.
(i) Lenders shall have received the Base
Case Model, in form and content satisfactory to the Lenders in their sole
discretion.
(j) Lenders shall have received and approved
a funds flow memorandum with Financial Officer’s certification regarding the use
and application of proceeds of Tranche B (the “Funds Flow”).
(k) Lenders shall have received appropriate UCC
search certificates for Colorado and any other jurisdiction reasonably requested
by Lenders reflecting no prior Liens encumbering the Properties of Borrower and
the Subsidiaries other than Excepted Liens and the Liens to be released on the
Closing Date.
(l) Lenders shall have received copies of
the Operating Agreements and the other Material Agreements.
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(m) Borrower shall have delivered to each Lender
that is subject to the Act such information requested by Lender in order to
comply with the Act.
(n) At the time of and immediately after giving
effect to any Loan under Tranche B, no Default or Event of Default shall have
(o) There shall exist no event of default (or
condition which would constitute an event of default with the giving of notice
or the passage of time or both) under any existing material obligation of
Borrower or any of its Affiliates or Subsidiaries, or under any capital stock
agreements, financing agreements, material lease agreements or other material
contracts of Borrower or its Affiliates or Subsidiaries, if any.
(p) Substantially contemporaneously with the
funding of the Loans hereunder, all Debt outstanding under the Existing
Providence Facility A shall have been paid in full and all Liens granted by the
Borrower to secure such Debt shall have been released by Providence Energy
Operators, LLC.
(q) Substantially contemporaneously with the
funding of the Loans hereunder, PEP III shall have received payment of the Debt
under the Existing Providence Facility B in a principal amount equal to
$1,500,000, together with all accrued and unpaid interest owing with respect to
such facility as of the Closing Date.
(r) Borrower and PEP III shall have amended
the documents evidencing the Existing Providence Facility B to reflect the
revised terms of such documents as set forth in the Letter Agreement.
(s) The Administrative Agent, PEP III and the
Borrower shall have executed and delivered the Intercreditor Agreement.
(t) Lenders shall have received such other
documents as such Lender or its counsel may reasonably request including audited
and interim financial statements.
(u) Borrower and the Providence Parties shall
have reached agreement and executed an amendment to that certain Amended and
Restated Participation Agreement dated November 16, 2017 (the “Participation
Agreement”) to extend the right of PEP III thereunder for a period until two
years after the Closing Date and to recognize PEP III’s right to assign that
right to any Providence Affiliate.
(v) The Administrative Agent and its counsel
shall have completed all legal due diligence, the results of which shall be
satisfactory to the Administrative Agent in its sole discretion.
(w) The Administrative Agent shall have received
evidence of insurance coverage in form, scope, and substance reasonably
satisfactory to the Administrative Agent and otherwise in compliance with the
terms of Section 7.06.
(x) The Borrower shall have adopted a resolution
to increase the size of the Board of Directors from six directors to nine
directors and Lenders shall have designated
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up to three directors, two designated by Providence and one designated by 5NR;
provided, however, that the formal appointment of such designees shall be
subject to background checks on such individuals and other customary diligence;
and provided further that at least one director designated by the Lenders shall
qualify as independent under rules promulgated by the NYSE American. During the
30 days following the repayment of the Loans, Borrower may request that one of
the three directors designated by Lenders tender his or her resignation from the
Board of Directors; or, if Providence and its Affiliates do not own in the
aggregate 5% or more of Borrower’s Common Stock, then Borrower may request that
all directors designated by Lenders tender his or her resignation. Upon
receipt of such request, Providence shall advise the Lenders which
director(s) is (are) to resign and the applicable Lender will cause its designee
director(s) to resign. All remaining Lender-designated directors will
thereafter be deemed designees of Providence. So long as Providence and its
Affiliates own in the aggregate 5% or more of Borrower’s Common Stock,
Providence shall be entitled to have two designees on the Board.
(y) The Lenders shall have received the Budget
for 2018.
(z) The Lenders shall have received
(i) evidence satisfactory to them that the Funding Account has been opened by
the Borrower and (ii) all documentation necessary to cause transfers from such
account to be subject to the approval of the Administrative Agent in accordance
with Section 2.02(c).
(aa) The Lenders shall have received evidence
satisfactory to them that Borrower has authorize a representative of
Administrative Agent as a co-signer on the Operating Account for disbursements
from such account of $1,000,000 or more.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES
Borrower and the other Loan Parties represent and warrant to Lenders that:
6.01 Organization; Powers. Borrower is duly organized,
validly existing and in good standing under the Laws of the jurisdiction of its
organization, has all requisite power and authority, and has all governmental
licenses, authorizations, consents and approvals necessary, to own its assets
and to carry on its business as now conducted, and is qualified to do business
in, and is in good standing in, every jurisdiction where such qualification is
required.
6.02 Authority; Enforceability. The Transactions are
within Borrower’s powers and have been duly authorized by all necessary
corporate action including, without limitation, any action required to be taken
by the Board of Directors, in order to ensure the due authorization of the
Transactions. Each Loan Document to which Borrower is a party has been duly
executed and delivered by Borrower and constitutes a legal, valid and binding
obligation of Borrower, enforceable against it in accordance with its terms,
subject to Debtor Relief Laws or other Laws affecting creditors’ rights
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6.03 Approvals; No Conflicts. The Transactions (a) do
not require any consent or approval of, registration or filing with, or any
other action by, any Governmental Authority or any other third Person (including
the Board of Directors or the governing body of any other Person, whether
interested or disinterested), nor is any such consent, approval, registration,
filing or other action necessary for the validity or enforceability of any Loan
Document or the consummation of the Transactions contemplated thereby, except
either as expressly contemplated in the Loan Documents or such as have been
obtained or made and are in full force and effect, (b) will not violate any
applicable Law or the Organizational Documents of Borrower or any order of any
Governmental Authority, (c) will not violate or result in a default under any
indenture, loan or credit agreement or other instrument in respect of Debt
binding upon Borrower or its Properties, or give rise to a right thereunder to
require any payment to be made by Borrower and (d) will not result in the
creation or imposition of any Lien on any Property of Borrower (other than the
Liens created by the Loan Documents).
6.04 Financial Information; Financial Condition; No
Material Adverse Change.
(a) The financial statements furnished to the
Lenders on or prior to the Closing Date present fairly the revenues, direct
operating expenses, and consolidated financial condition of the Persons covered
thereby as at the dates thereof and the results of their operations for the
periods then ended. All balance sheets, all statements of operations and of
cash flow and all other financial information of Borrower and the other Loan
Parties furnished pursuant to Section 7.01(a) and (b) have been and will for
periods following the Closing Date be prepared in accordance with GAAP
consistently applied (except for interim statements prepared in accordance with
rules of the SEC), and do or will present fairly the consolidated financial
condition of the Persons covered thereby as at the dates thereof and the results
of their operations for the periods then ended.
(b) Borrower has heretofore furnished to the
Lenders on or before the Closing Date the Base Case Model. The Base Case Model
was prepared in good faith on the basis of assumptions, data, information,
tests, or conditions believed to be reasonable at the time such Base Case Model
was furnished.
(c) Borrower on the date hereof has no Debt
(including Disqualified Capital Stock), or any contingent liabilities
(including, without limitation, any contingent liabilities related to profit
participations, finder’s fees or similar arrangements), off-balance sheet
liabilities or partnerships, liabilities for Taxes, unusual forward or long-term
commitments or unrealized or anticipated losses from any unfavorable commitments
that are not reflected on such balance sheets and statements of income,
shareholders equity and cash flows or otherwise permitted under Section 8.02.
(d) Borrower is not a party to, bound by or
subject to any indenture, Material Agreement, Organizational Document,
injunction, order, restriction or decree not otherwise disclosed in any SEC
filing of Borrower or previously disclosed to the Lenders in writing.
6.05 Litigation. There are no actions, suits or
proceedings by or before any arbitrator or Governmental Authority pending
against or, to the knowledge of Borrower, threatened against or affecting
Borrower.
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6.06 Environmental Matters. Except for such matters as set forth on
Schedule 6.06:
(a) Each of the Properties of the Loan Parties and the operations
thereon are, and within all applicable statute of limitation periods have been,
in compliance with all applicable Environmental Laws;
(b) The Loan Parties have no notice of any claims, demands, suits,
orders, inquiries, or proceedings concerning any violation of, or any liability
(including as a potentially responsible party) under, any applicable
Environmental Law that is pending or threatened against any Loan Party or its
Properties or as a result of any operations at the Properties;
(c) None of its Properties contain or have contained any:
(i) underground storage tanks; (ii) asbestos-containing materials;
(iii) landfills or dumps; (iv) hazardous waste management units as defined
pursuant to RCRA or any comparable state Law; or (v) sites on or nominated for
the National Priority List promulgated pursuant to CERCLA or any state remedial
priority list promulgated or published pursuant to any comparable state Law;
(d) (i) There has been no Release or threatened Release, or prior
Release, of Hazardous Materials at, on, under or from any of the Loan Parties’
Properties which has caused at such Properties (or at any third party site) any
condition that could result in remediation; (ii) there are no existing material
investigations, remediations, abatements, removals, or monitorings of Hazardous
Materials required under applicable Environmental Laws at such Properties (other
than monitoring and reporting of Hydrocarbons in the ordinary course of
business); and (iii) to the knowledge of Borrower, none of such Properties are
adversely affected by any Release or threatened Release, or have been adversely
affected by any prior Release, of a Hazardous Material originating or emanating
from any other real property;
(e) Borrower has not received any notice asserting an alleged
liability or obligation under any applicable Environmental Laws with respect to
the investigation, remediation, abatement, removal, or monitoring of any
Hazardous Materials at, under, or Released or threatened to be Released from any
real properties offsite Borrower’s Properties and there are no conditions or
circumstances that would reasonably be expected to result in the receipt of such
written notice;
(f) There has been no exposure of any Person or property to any
Hazardous Materials as a result of or in connection with the operations and
businesses of any of the Loan Parties’ Properties that could reasonably be
expected to form the basis for a claim for damages or compensation that could
reasonably be excepted to result in a liability of Borrower and there are no
conditions or circumstances that could reasonably be expected to result in the
receipt of notice regarding such exposure; and
(g) As of the Closing Date, Borrower has provided to Lenders complete
and correct copies of all material environmental site assessment reports,
investigations, studies, analyses, and correspondence on environmental matters
(including matters relating to any alleged non-compliance with or liability
under Environmental Laws) that are in Borrower’s possession, knowledge or
control and relating to its Properties or operations thereon.
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6.07 Compliance with the Laws and Agreements; No Defaults. Each Loan
Party is in compliance with all Laws applicable to it or its Property, excluding
Environmental Laws, which representations and warranties with respect thereto
are addressed exclusively in Section 6.06, and all agreements and other
instruments binding upon it or its Property, and possesses all licenses,
permits, franchises, exemptions, approvals and other authorizations granted by
Governmental Authorities necessary for the ownership of its Property and the
conduct of its business.
6.08 Investment Company Act. No Loan Party is an “investment company” or
a company “controlled” by an “investment company,” within the meaning of, or
subject to regulation under, the Investment Company Act of 1940, as amended.
6.09 Taxes. Each Loan Party has timely filed or caused to be filed all
Tax returns and reports required to have been filed and has paid or caused to be
paid all Taxes required to have been paid by it, except where any filing,
non-filing, payment or non-payment is with respect to Taxes that are being
contested in good faith by appropriate proceedings and for which Borrower has
set aside on its books adequate reserves in accordance with GAAP. The charges,
accruals and reserves on the books of Borrower in respect of Taxes and other
governmental charges are, in the reasonable opinion of Borrower, adequate in all
material respects. No Tax Lien has been filed and no claim is being asserted
with respect to any such Tax or other such governmental charge.
6.10 Disclosure; No Material Misstatements. Borrower has disclosed or
filed with the SEC true and correct copies of all material agreements to which
it or any of its Subsidiaries, and its and their respective assets, is subject.
None of the reports, financial statements, or certificates furnished by or on
behalf of Borrower to any Lender or any of its Affiliates in connection with the
negotiation of this Agreement or any other Loan Document or delivered hereunder
or under any other Loan Document (as modified or supplemented by other
information so furnished) or in connection with the Transactions contemplated
hereby or thereby contains any untrue statement of a material fact or omits to
of the circumstances under which they were made, not misleading. There are no
statements or conclusions in any Reserve Report known to the Borrower which are
based upon or include materially inaccurate information or fail to take into
account material information regarding the matters reported therein, it being
understood that each Reserve Report is necessarily based on professional
opinions, estimates and projections and that Borrower does not warrant that such
opinions, estimates and projections will ultimately prove to have been
accurate. The most recently delivered Reserve Report was prepared in good faith
on the basis of assumptions that were reasonable in light of the conditions
existing at the time of delivery.
6.11 Insurance. Borrower has (a) all insurance policies sufficient for
the compliance with all Laws and all agreements to which Borrower is a party and
(b) insurance coverage in at least amounts and against such risk (including,
without limitation, public liability) that are usually insured against by
companies similarly situated and engaged in the same or a similar business for
the assets and operations of Borrower. The Administrative Agent has been named
as additional insured in respect of such liability insurance policies and as
lender’s loss payable with respect to Property loss insurance.
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6.12 Subsidiaries; Equity Interests. Except as set forth on Schedule
6.12, Borrower has no Subsidiaries and owns no Equity Interests in any other
corporation, limited liability company, limited partnership, general partnership
or any comparable non-U.S. entity. Borrower has no Foreign Subsidiaries. The
ownership information with respect to each Subsidiary of Borrower, if any, is
set forth on Schedule 6.12.
6.13 Properties; Title, Etc.
(a) The Borrower has good and defensible title to, or valid leasehold
and fee interests in, the Oil and Gas Properties and good title to, or valid
leasehold and fee interests in, licenses of, or rights to use, all of its
personal Properties necessary or used in the ordinary conduct of its business,
in each case, free and clear of all Liens except Liens permitted by
Section 8.03. After giving full effect to the Excepted Liens and other than
changes which arise pursuant to non-consent provisions of operating agreements
or other agreements (if any) described in an exhibit to any Security Instrument,
Borrower or any of the other Loan Parties specified as the owner owns at least
the Net Revenue Interest attributable to the Hydrocarbon Interests and Wells as
reflected in the most recently delivered Reserve Report, and as set forth in
Annex B attached hereto (or in the most recent update to Annex B delivered by
Borrower to Lender in accordance with Section 4.01(b)), and the ownership of
such Properties shall not in any material respect obligate the Loan Parties to
bear the costs and expenses relating to the maintenance, development and
operations of each such Property in an amount materially in excess of the
Working Interest of each Property set forth in the most recently delivered
Reserve Report, and as set forth on Annex B attached hereto (or in the most
recent update to Annex B delivered by Borrower to Lender in accordance with
Section 4.01(b)), that is not offset by a corresponding proportionate increase
in Borrower’s or any of its Subsidiaries’ Net Revenue Interest in such Property.
(b) To the knowledge of Borrower, all leases and agreements necessary
for the conduct of the business of Borrower are valid and subsisting, in full
force and effect, and there exists no default thereunder.
(c) Except as set forth in Schedule 6.13(c), there has been no event,
development or circumstance that has had or could reasonably expected to have a
Material Adverse Effect since the last interim financial statement date.
(d) The rights and Properties presently owned, leased or licensed by
Borrower including, without limitation, all easements and rights of way, include
all rights and Properties necessary to permit Borrower to conduct its business
(e) All of the material tangible personal Properties of Borrower that
are reasonably necessary for the operation of their businesses are in good
working condition (ordinary wear and tear excepted) and are maintained in
accordance with prudent business standards.
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(f) Except as set forth on Schedule 6.13(f), there are no
(i) preferential rights to purchase or (ii) required consents to assignment, in
either case, affecting any Oil and Gas Properties.
6.14 Maintenance of Properties. The Oil and Gas Properties (and
Properties unitized therewith) of the Borrower and its Subsidiaries have been
Oil and Gas Properties of the Borrower and its Subsidiaries. Specifically in
connection with the foregoing, (i) no Oil and Gas Property of the Borrower or
any Subsidiary is subject to having allowable production reduced below the full
and regular allowable (including the maximum permissible tolerance) because of
any overproduction (whether or not the same was permissible at the time) and
(ii) none of the wells comprising a part of the Oil and Gas Properties (or
Properties unitized therewith) of the Borrower and its Subsidiaries is deviated
from the vertical more than the maximum permitted by Governmental Requirements,
and such wells are, in fact, bottomed under and are producing from, and the well
bores are wholly within, the Oil and Gas Properties (or in the case of wells
located on Properties unitized therewith, such unitized Properties) of the
Borrower and its Subsidiaries. The wells drilled in respect of proved producing
Oil and Gas Properties described in the Reserve Report (other than wells drilled
in respect of such proved producing Oil and Gas Properties that have been
subsequently disposed of in accordance with the terms of this Agreement) are
capable of, and are presently, either producing Hydrocarbons in commercially
profitable quantities or in the process of being worked over or enhanced, and
the Loan Party that owns such proved producing Oil and Gas Properties is
currently receiving payments for its share of production, with no funds in
respect of any thereof being presently held in suspense, other than any such
funds being held in suspense pending delivery of appropriate division orders.
All pipelines, wells, gas processing plants, platforms and other material
improvements, fixtures and equipment owned in whole or in part by the Borrower
or any Subsidiary that are necessary to conduct normal operations are being
maintained in a state adequate to conduct normal operations, and with respect to
such of the foregoing which are operated by the Borrower or any Subsidiary, in a
manner consistent with the past practices of the Borrower and its Subsidiaries.
6.15 Commissions; Expenses. No broker’s or finder’s fees or commissions
have been paid or will be payable by Borrower or any of its Affiliates to any
Person in connection with the Transactions contemplated by this Agreement,
except as payable to Lender or its respective Affiliates.
6.16 ERISA. No ERISA Event has occurred or is reasonably expected to
occur that, when taken together with all other such ERISA Events for which
liability is reasonably expected to occur, could reasonably be expected to
of the most recent financial statements reflecting such amounts, exceed the fair
market value of the assets of such Plan.
34
6.17 Solvency. After giving effect to the Transactions and any
contribution provisions contained in any Loan Document, the Loan Parties and
each of its Subsidiaries are Solvent.
6.18 Employment Matters. As of the Closing Date, there are no strikes,
lockouts or slowdowns against the Borrower or any of its Subsidiaries pending
or, to the knowledge of the Borrower, threatened. All payments due from the
Borrower or any Subsidiary, or for which any claim may be made against Borrower
or any Subsidiary, 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 the
6.19 Margin Stock. Neither the Borrower nor any Subsidiary is engaged
credit for the purpose of purchasing or carrying margin stock (within the
meaning of Regulation U issued by the Federal Reserve Board), and no part of
the proceeds of any Loan will be used to purchase or carry any margin stock or
to extend credit to others for the purpose of purchasing or carrying margin
stock.
6.20 Gas Imbalances; Prepayments. On a net basis there are no gas
imbalances, take or pay or other prepayments which would require the Borrower or
any Subsidiary to deliver Hydrocarbons produced from the Oil and Gas Properties
of the Borrower and its Subsidiaries at some future time without then or
thereafter receiving full payment therefor exceeding a volume equal to 1% of the
total proved reserves (on an mcf equivalent basis) set forth in the most
recently delivered Reserve Report in the aggregate.
6.21 Swap Agreements. No Loan Party has entered into any Swap Agreements
except as otherwise permitted by the Lenders in writing.
6.22 USA PATRIOT Act. Neither Borrower nor any of its respective
Affiliates is a country, individual or entity named on the Specifically
Designated National and Blocked Persons list issued by the Office of Foreign
Asset Control of the Department of the Treasury of the United States of America.
ARTICLE VII.
AFFIRMATIVE COVENANTS
7.01 Financial Statements; Other Reporting and Information. Borrower
will furnish to each Lender:
(a) Annual Financial Statements. As soon as available, and not later
than 90 days after the end of each fiscal year of Borrower (beginning with the
fiscal year ending December 31, 2017), its audited consolidated balance sheet
and related statements of operations, shareholders’ equity and cash flows as of
the end of and for such year, setting forth in each case in comparative form the
figures for the previous fiscal year, all reported on by Approved Independent
Public Accountants to the effect that such consolidated financial statements
present fairly in all material respects the financial condition and results of
operations of Borrower and its Consolidated Subsidiaries on a consolidated
basis, as applicable, in accordance with GAAP consistently applied.
35
(b) Quarterly Financial Statements. As soon as available, and not
later than 60 days after the end of each of the first three fiscal quarters of
each fiscal year of Borrower, its unaudited, consolidated balance sheet and
related statements of operations and cash flows as of the end of and for such
fiscal quarter and the then elapsed portion of the fiscal year, setting forth,
in comparative form the figures for the corresponding period or periods of (or,
in the case of the balance sheet, as of the end of) the previous fiscal year,
all certified by one of its Financial Officers as presenting fairly in all
material respects the financial condition and results of operations of Borrower
and its Subsidiaries on a consolidated basis, as applicable, in accordance with
GAAP consistently applied, subject to normal year-end audit adjustments and SEC
rules relating to interim financial statements.
(c) Compliance Certificate. Concurrently with any delivery of
financial statements under Section 7.01(a) or Section 7.01(b), a Compliance
Certificate in substantially the form of Exhibit B hereto (i) certifying as to
thereto, (ii) setting forth reasonably detailed calculations demonstrating
compliance with Section 8.01, and (iii) stating whether any change in the
application of GAAP to the financial statements being delivered in connection
with such compliance certificate has occurred since the date of the most
recently delivered financial statements and, if any such change has occurred,
specifying the effect of such change on the financial statements accompanying
such certificate.
(d) PDP PV Coverage Ratio Report. Concurrently with any delivery of
financial statements under Section 7.01(a) or Section 7.01(b), a report in the
form of Exhibit E hereto providing detailed calculations of the PDP PV Coverage
Ratio based on the most recently delivered Reserve Report or Semi-Annual Update.
(e) Budget. Not later than 15 days prior to the end of each fiscal
year beginning with the fiscal year ending December 31, 2018, an annual Budget
in form satisfactory to Lenders.
(f) SEC and Other Filings; Reports to Shareholders. Promptly after
the same become publicly available, copies of all financial statements, periodic
and other reports, proxy statements and other materials filed by the Borrower or
any Subsidiary with the SEC, or any Governmental Authority succeeding to any or
all of the functions of the SEC, or with any national securities exchange, or
distributed by the Borrower to its shareholders generally, as the case may be.
(g) Acquisition; Mergers. Promptly, but in any event within three
(3) Business Days after entering into any written agreement between Borrower and
any other Person, any information regarding any proposed or potential
acquisition of Equity Interests or any merger or consolidation relating to
Borrower or any Subsidiary and thereafter provide Lenders all copies of any
related documents or communications, as any Lender may request; provided that
(i) Borrower shall provide all such copies and information at least thirty (30)
days prior to closing of any such transaction and (ii) each Lender has executed
and delivered a mutually agreeable confidentiality or non-disclosure agreement
until such information has been made public.
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(h) Notice of Sales of Oil and Gas Properties. In the event Borrower
or any of its Subsidiaries intends to sell, transfer, assign or otherwise
dispose, or has sold, transferred, assigned or otherwise disposed of, any Oil or
Gas Properties or any Equity Interests in any Subsidiary, which shall be in
compliance with the provisions of the Loan Documents, Borrower will provide such
notice thereof, the price thereof, the anticipated date of closing and such
other information requested by Lender as soon as commercially practicable but in
no event less than 30 days prior to the completion of such sale, transfer,
assignment or disposition.
(i) Notice of Casualty Events. Prompt written notice, and in any
event within three Business Days, of the occurrence of any Casualty Event in an
amount exceeding, or the commencement of any action or proceeding that could
reasonably be expected to result in a Casualty Event.
(j) Notices Under Material Instruments. Promptly after the
furnishing thereof, copies of any financial statement, report or notice
furnished to or by any Person pursuant to the terms of any preferred stock
designation, indenture, loan or credit or other similar agreement, other than
this Agreement and not otherwise required to be furnished to the Lenders
pursuant to any other provision of this Section 7.01.
(k) Information Regarding Borrower and Guarantors. Prompt written
notice (and in any event within thirty (30) days prior thereto) of any change
(i) in the Borrower’s or any Guarantor’s corporate or limited liability company
name, (ii) in the location of the Borrower’s or any Guarantor’s chief executive
office or principal place of business, (iii) in the Borrower’s or any
Guarantor’s identity or corporate structure, (iv) in the Borrower’s or any
Guarantor’s jurisdiction of organization or such Person’s organizational
identification number in such jurisdiction of organization, and (v) in the
Borrower’s or any Guarantor’s federal taxpayer identification number.
(l) Production Report and Lease Operating Statements. Concurrently
with any delivery of financial statements under clauses (a) or (b) above, a
report setting forth, for each calendar month during the then current fiscal
year to date, the volume of production and sales attributable to production (and
sales) for each such calendar month from the Oil and Gas Properties of the
Borrower and its Subsidiaries, and setting forth the related ad valorem,
severance and production taxes and lease operating expenses attributable thereto
and incurred for each such calendar month.
(m) Notices of Certain Changes. Promptly, but in any event within five
(5) Business Days after the execution thereof, copies of any amendment,
modification or supplement to the certificate or articles of incorporation,
by-laws, any preferred stock designation or any other Organizational Document of
(n) Other Requested Information. Promptly following any request
therefor, such other information regarding the operations, business affairs and
financial condition of any Loan Party, or compliance with the terms of this
Agreement, as the Administrative Agent or any Lender may reasonably request.
37
7.02 Notices of Material Events. Borrower will furnish to Administrative
Agent written notice within two (2) Business Days of the following:
(b) the filing or commencement of, or the threat in writing of, any
action, suit, investigation, arbitration or proceeding or the threat in writing
of any investigation, in each case, by or before any arbitrator or Governmental
Authority against or affecting Borrower or any Subsidiary thereof, or any
arbitration (whether or not previously disclosed to the Lenders);
(c) the occurrence of any ERISA Event;
(d) any written notice or written claim to the effect that any Loan
Party is or may be liable to any Person as a result of the release by any Loan
Party, or any other Person of any Hazardous Materials into the environment,
which could reasonably be expected to have a Material Adverse Effect;
(e) any written notice alleging any violation of any Environmental Law
by any Loan Party, which could reasonably be expected to have a Material Adverse
Effect;
(f) the receipt by the Borrower or any Subsidiary of any management
letter or comparable analysis prepared by the auditors for the Borrower or any
such Subsidiary; and
(g) any other development that results in, or could reasonably be
Each notice delivered under this Section 7.02 shall be accompanied by a
statement of a Responsible Officer of Borrower setting forth the details of the
event or development requiring such notice and any action taken or proposed to
be taken with respect thereto.
7.03 Existence; Conduct of Business. The Borrower will, and will cause
each Subsidiary to, (a) do or cause to be done all things necessary to preserve,
renew and keep in full force and effect its legal existence and the rights,
qualifications, licenses, permits, franchises, governmental authorizations and
intellectual property rights material to the conduct of its business, and
maintain all requisite authority to conduct its business in each jurisdiction in
which its business is conducted, and (b) carry on and conduct its business in
substantial compliance with the Budget and substantially the same manner and in
substantially the same fields of enterprise as it is presently conducted.
7.04 Payment of Obligations. Borrower and each other Loan Party will pay
its obligations, including Tax liabilities, before the same shall become
delinquent or in default, except where (a) the validity or amount thereof is
being contested in good faith by appropriate proceedings and (b) Borrower or
such Subsidiary has set aside on its books adequate reserves with respect
thereto; provided, however, each Loan Party will, and will cause each Subsidiary
to,
38
remit withholding taxes and other payroll taxes to appropriate Governmental
Authorities as and when claimed to be due, notwithstanding the foregoing
exceptions.
7.05 Operation and Maintenance of Properties. The Borrower at its sole
expense will, and will cause each of its Subsidiaries to:
(a) operate its Oil and Gas Properties and other material Properties
or cause such Oil and Gas Properties and other material Properties to be
operated in accordance with the practices of the industry and in compliance with
all applicable contracts and agreements and in compliance with all Governmental
Requirements, including, without limitation, applicable pro ration requirements
and Environmental Laws, and all applicable laws, rules and regulations of every
other Governmental Authority from time to time constituted to regulate the
development and operation of its Oil and Gas Properties and the production and
sale of Hydrocarbons and other minerals therefrom;
(b) keep and maintain all Property material to the conduct of its
business in good working order and condition (ordinary wear and tear excepted);
preserve, maintain and keep in good repair, working order and efficiency
(ordinary wear and tear and obsolescence excepted) all of its material Oil and
Gas Properties and other material Properties, including, without limitation, all
equipment, machinery and facilities;
(c) promptly pay and discharge, or make reasonable and customary
efforts to cause to be paid and discharged, all delay rentals, royalties,
expenses and indebtedness accruing under the leases or other agreements
affecting or pertaining to its Oil and Gas Properties and do all other things
necessary to keep materially unimpaired its rights with respect thereto and
(d) promptly perform, or make reasonable and customary efforts to
cause to be performed, in accordance with industry standards, the obligations
required by each and all of the assignments, deeds, leases, sub-leases,
contracts and agreements affecting its interests in its Oil and Gas Properties
and other material Properties;
(e) operate its Oil and Gas Properties and other material Properties
or cause or make reasonable and customary efforts to cause such Oil and Gas
Properties and other material Properties to be operated in accordance with the
practices of the industry and in material compliance with all applicable
contracts and agreements and in compliance in all material respects with all
Governmental Requirements; and
(f) to the extent that a Loan Party is not the operator of any
Property, the Borrower shall use reasonable efforts to cause the operator to
comply with this Section 7.05.
7.06 Insurance. The Borrower will, and will cause each of its
Subsidiaries to, maintain, with financially sound and reputable insurance
companies, insurance in such amounts and against such risks as are customarily
maintained by companies engaged in the same or similar businesses operating in
the same or similar locations. The loss payable clauses or provisions in said
insurance policy or policies insuring any of the Collateral for the Loans shall
39
be endorsed in favor of and made payable to the Administrative Agent as its
interests may appear and such policies shall name the Administrative Agent as
“additional insured” and provide that the insurer will give at least thirty (30)
days prior written notice to the Administrative Agent of any cancellation (or
ten (10) days prior written notice in the event of cancellation for nonpayment
of provisions).
7.07 Books and Records; Inspection Rights. The Borrower will, and will
cause each Subsidiary to, keep proper books of record and account in which full,
true and correct entries are made of all dealings and transactions in relation
to its business and activities. The Borrower will, and will cause each
properties, to examine and make extracts from its books and records, and to
accountants, all at such reasonable times and as often as reasonably requested.
7.08 Compliance with Laws. The Borrower will, and will cause each
Subsidiary to, comply with all Requirements of Law applicable to it or its
Property.
7.09 Use of Proceeds. The proceeds of the Loans will be used only to pay
the fees, expenses and transaction costs of the Transactions as described in the
Letter Agreement and the Funds Flow and the Base Case Model. No part of the
proceeds of any Loan will be used, whether directly or indirectly, for any
purpose that entails a violation of any of the Regulations of the Federal
Reserve Board, including Regulations T, U and X.
7.10 Environmental Matters. Borrower will and will use commercially
reasonable effort to cause the operator of any of the Loan Parties’ Oil and Gas
Properties to (i) comply, and cause Borrower’s Oil and Gas Properties and
operations to comply in all material respects, with all applicable Environmental
Laws; (ii) not dispose of or otherwise release any oil, oil and gas waste,
hazardous substance, or solid waste on, under, about or from any of Borrower’s
Oil and Gas Properties except in compliance in all material respects with
applicable Environmental Laws; (iii) timely obtain or file all material notices,
permits, licenses, exemptions, approvals, registrations or other authorizations,
if any, required under applicable Environmental Laws to be obtained or filed in
connection with the operation or use of Borrower’s Oil and Gas Properties;
(iv) promptly commence and diligently prosecute to completion any assessment,
the actual or suspected past, present or future disposal or other release of any
oil, oil and gas waste, hazardous substance or solid waste on, under, about or
from any of Borrower’s Oil and Gas Properties; and (v) establish and implement
such policies of environmental audit and compliance as may be necessary to
continuously determine and assure that the obligations under this Section 7.06
are timely and fully satisfied.
7.11 Further Assurances.
(a) The Borrower at its sole expense will, and will cause each
Subsidiary to, promptly execute and deliver to the Administrative Agent all such
other documents,
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agreements and instruments reasonably requested by the Administrative Agent to
comply with, cure any defects or accomplish the conditions precedent, covenants
and agreements of the Borrower or any other Loan Party, as the case may be, in
the Loan Documents, including the Notes, or to further evidence and more fully
describe the Collateral intended as security for the Obligations, or to correct
any omissions in this Agreement or the Security Instruments, or to state more
fully the obligations secured therein, or to perfect, protect or preserve any
Liens created pursuant to this Agreement or any of the Security Instruments or
the priority thereof, or to make any recordings, file any notices or obtain any
consents, all as may be reasonably necessary or appropriate, in the reasonable
discretion of the Administrative Agent, in connection therewith.
(b) The Borrower hereby authorizes the Administrative Agent to file
relative to all or any part of the Collateral without the signature of the
Borrower or any other Guarantor where permitted by law. A carbon, photographic
statement where permitted by law. The Borrower acknowledges and agrees that any
such financing statement may describe the collateral as “all assets” of the
applicable Loan Party or words of similar effect as may be required by the
Administrative Agent.
7.12 Reserve Reports.
(a) On or before March 15 of each year, Borrower shall furnish to
Lenders a Reserve Report attributable to the Hydrocarbon Interests of Borrower
as of the immediately preceding January 1. Each Reserve Report shall be prepared
by the Approved Petroleum Engineers. Additionally, Borrower shall furnish to
Lender within 30 days of June 30 of each calendar year, an internally-prepared
update of the Reserve Report reflecting additions and subtractions to the
Hydrocarbons (the “Semi-Annual Update”) as of June 30 of each calendar year.
Each Semi-Annual Update shall (x) be prepared by or under the supervision of the
chief engineer of Borrower and (y) include an analysis using the pricing
assumptions set forth in Section 7.12(b)(iii) below. At Lenders’ request, the
Semi-Annual Update shall be audited or engineered at Borrower’s expense.
(b) Each Reserve Report shall be prepared in accordance with the
following requirements and assumptions:
(i) Proved Reserves shall be estimated and reported in accordance
with Definitions for Oil and Gas Reserves promulgated by the Society of
Petroleum Engineers (or any generally recognized successor) as in effect at the
time in question;
(ii) A production forecast shall be provided that is consistent with
the Proved Reserves, recent production rates and trends, and regulatory
requirements, operational considerations, and infrastructure or market
constraints in effect at the time;
(iii) Hydrocarbon pricing assumptions—
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(A) for all natural gas to be sold by Borrower, the purchase price for
each month in the forecast will be the monthly natural gas futures quotes as
reflected in NYMEX as of the effective date of the Reserve Report;
(B) for all natural gas to be sold by Borrower on a fixed price basis
or with respect to which the price has been hedged, the purchase price will be
the fixed price for the volumes indicated in the contract, agreement or
arrangement;
(C) for all crude oil to be sold by Borrower other than crude oil
described in Section 7.12(b)(iii)(D), the purchase price for each month in the
forecast will be the monthly crude oil futures quotes as reflected in the NYMEX
after applying any hedges in place as of the effective date of the Reserve
Report or the Semi-Annual Update, as the case may be for the remaining term of
the Loan;
(D) for natural gas liquids to be sold by Borrower, the purchase price
for each month in the forecast will be the crude oil purchase prices obtained
pursuant to Section 7.12(b)(iii)(C) multiplied by natural gas liquids adjustment
factor based on historical realizations; and
(E) all Hydrocarbon pricing assumptions will be further adjusted by
appropriate quality, transportation and location differentials as reflected in
Borrower’s lease operating statements;
(iv) projected operating expenses will reflect the current operating
conditions as defined by the average of the previous twelve months of actual
expenses as reported in Borrower’s lease operating statements, and Approved by
Lender; and
(v) Capital expenditures will be based on AFEs and actual costs from
similar recent projects.
7.13 Creditors. Borrower shall provide each Lender, within ten
(10) Business Days following any written request therefor from any Lender, a
true and complete schedule of Borrower’s creditors, including the amount due to
each and the date each payment is due.
7.14 Conversion Rights.
(a) Conversion Privilege. Subject to and in compliance with this
Section 7.14, at any time on or after the Closing Date and until the Termination
Date, each Lender may, from time to time, convert all or part of the outstanding
principal amount of Loans made by such Lender to Borrower for shares of Common
Stock.
(i) With respect to each Lender, with regard to 20% of the Loan
Balance, the number of shares of Common Stock issuable upon conversion shall be
determined by dividing said principal by a price per share of Common Stock of
$1.15 (the “Minimum Conversion Price”), as that price may be adjusted pursuant
to this Section 7.14.
(ii) With respect to each Lender, with regard to the remaining 80% of
the Loan Balance, the number of shares of Common Stock issuable upon conversion
shall be
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determined by dividing the aggregate principal amount of the Loan Balance to be
converted by a price per share of Common Stock of $1.55, as such price per share
may be adjusted pursuant to this Section 7.14 (the “Maximum Conversion Price”).
(iii) Any prepayments of the principal amount of the Loans will first
reduce the amount of the outstanding principal convertible by each Lender
pursuant to Section 7.14(a)(ii) above. If 80% of the principal of the Loans has
been repaid, then future prepayments will reduce the amount of the outstanding
principal convertible pursuant to Section 7.14(a)(i) above.
(iv) Any conversions exercised by any Lender consistent with this
Section 7.14 will first reduce the amount of the outstanding principal
convertible by such Lender pursuant to Section 7.14(a)(i) above. Subsequent
conversions by any Lender will reduce the amount of the outstanding principal
convertible by such Lender pursuant to Section 7.14(a)(ii) above.
(b) Conversion Procedure. To exercise its conversion right, Lender
must deliver a written Notice of Conversion in the form of Exhibit F (the
“Notice of Conversion”), which notice shall specify the amount of the Loan
Balance being converted on such date (the “Convertible Debt Amount”). Borrower
shall deliver to Lender, no later than the third Business Day following
Borrower’s receipt of a Notice of Conversion a certificate for the number of
full shares of Common Stock issuable upon the conversion and cash in payment for
any interest accrued but unpaid on the Convertible Debt Amount and in lieu of
any fractional share determined pursuant to Section 7.14(c). The Person in whose
name the certificate is registered shall be treated as the stockholder of record
on and after the date such certificate is issued (the “Conversion Date”). Upon
conversion, that portion of the Convertible Debt Amount shall be paid in shares
of Common Stock.
(c) Fractional Shares. Borrower will not issue any fractional shares
of Common Stock upon conversion of the Convertible Debt Amount. Instead Borrower
will deliver cash for the value of any fractional share. The value of a
fractional share shall be determined to the nearest 1/1000th of a share by
multiplying the Conversion Price by the fractional amount and rounding the
product to the nearest whole cent.
(d) Taxes on Conversion. If Lender converts any Convertible Debt
Amount, Borrower shall pay any documentary, stamp or similar issue or transfer
tax due on the issue of the shares of Common Stock upon the conversion. Nothing
herein shall preclude any tax withholding required by law or regulations.
(e) Adjustment for Change in Capital Stock. In case Borrower shall
(i) pay a dividend, or make a distribution, in shares of Common Stock, on its
shares of Common Stock as expressly permitted herein, (ii) subdivide its
outstanding Common Stock into a greater number of shares, or (iii) combine its
outstanding Common Stock into a smaller number of shares, the Conversion Price
in effect immediately prior thereto shall be adjusted so that Lenders upon
converting the Convertible Debt Amount thereafter shall be entitled to receive
the number of shares of Common Stock which Lender would have owned or have been
entitled to receive after the occurrence of any of the events described above
had such Convertible Debt Amount been
43
converted immediately before the occurrence of such event. If any dividend or
distribution of the type described in clause (i) above is not so paid or made,
the Conversion Price shall again be adjusted to the Conversion Price, as
applicable, which would then be in effect if such dividend or distribution had
not been declared. An adjustment made pursuant to this Section 7.14(e) shall
become effective immediately after the record date in the case of a dividend and
subdivision or combination.
(f) Notice of Adjustment. Whenever the Conversion Price is adjusted
pursuant to any provision of this Section 7.14, Borrower shall promptly deliver
to Lender a notice setting forth the Conversion Price after such adjustment and
setting forth a brief statement of the facts requiring such adjustment.
7.15 Share Purchase Option-Private Placement
(a) Lenders’ Privilege. Subject to and in compliance with this
Section 7.15, Borrower grants to each Lender an option (the “Lenders’ Option”),
exercisable for one time only beginning on the Maturity Date and continuing for
a period of 12 months thereafter (the “Expiration Date”), to purchase such
Lender’s allocable portion of up to $25,000,000 (in proportion to the Lenders’
Commitments) of Borrower’s Common Stock at a price per share equal to the
then-30 day volume weighted average price of the Common Stock as determined with
reference to the principal trading market for the Common Stock, less a discount
of 10%; provided, however, that the price per share for the Common Stock in any
such transaction shall not be less than $1.85, as such price shall be adjusted
in the same circumstances and manner as the Conversion Price is adjusted under
Section 7.14(e). Lenders shall be granted registration rights with respect to
such securities acquired substantially in the form of the Registration Rights
Agreement.
(b) Exercise of Lenders’ Option. The Lenders’ Option shall be
exercisable by each Lender by delivering to Borrower a Notice of Exercise
executed by such Lender in the form attached as Exhibit G not later than 5:00 pm
Mountain Time on the Expiration Date, which notice shall be irrevocable. If the
Expiration Date shall not be a Business Day, the option shall be exercisable
until 5:00 p.m. on the next succeeding Business Day. Within 10 Business Days
following receipt of a Notice of Exercise, Borrower shall compute the applicable
sale price for the transaction and the number of shares to be purchased by each
Lender and deliver such information to each Lender. Borrower’s determination of
the sale price shall be final and binding, absent manifest error.
(c) Closing of Purchase. The closing of the purchase and sale of the
Common Stock pursuant to a Lender’s exercise of the Lenders’ Option shall be
completed within not more than 30 days following Borrower’s receipt of the
Notice of Exercise.
7.16 Securities Purchase Option.
(a) Lenders’ Privilege. From the Closing Date to December 31, 2018,
Lenders shall have the option to purchase up to 50% of any securities offered by
Borrower in any public or private offering during that time other than Excluded
Offerings. From and after January 1, 2019, Lenders shall have the option to
purchase up to 25% of any securities offered
44
by Borrower in any public or private offering other than Excluded Offerings. In
either event, Lenders shall be entitled to purchase their allotted portion of
any securities on the same terms and conditions as other purchasers in the
public or private offering. Lenders shall be granted registration rights with
respect to such securities acquired substantially in the form of the
Registration Rights Agreement.
(b) Exercise of Privilege. In the event Borrower proposes to conduct
an offering (other than an Excluded Offering) after the Closing Date, whether by
means of a private placement, underwritten offering or other offering, Borrower
shall give Lenders not less than 20 days’ advance written notice of the proposed
offering, including a description of the securities, the price per share or
other unit, the plan of distribution and date of commencement. Lenders shall
have five Business Days from receipt of such notice to accept such offer by
providing written notice to Borrower. Such acceptance shall be irrevocable
unless Borrower notifies Lenders that the terms of the offering have changed in
any material respect. In the event of any material change in the terms,
Borrower shall provide notice of such change and Lenders shall have three
Business Days to reaffirm their participation or decline.
7.17 Lenders’ Warrants Borrower hereby grants to each Lender a warrant
to purchase such Lender’s allocable portion of 1,500,000 shares of Common Stock
(in proportion to the Lenders’ Commitments) exercisable beginning on the Closing
Date and continuing until the Maturity Date (“Warrant”). The Warrant shall be
exercisable at a price of $0.01 per share, subject to adjustment in certain
events as provided in the Warrant. The Warrant shall be in the form of
Exhibit H.
7.18 Borrower Covenants with Respect to the Common Stock.
(a) Registration Rights Agreement. Contemporaneously with the
execution of this Agreement, the parties have entered into the Registration
Rights Agreement covering all Common Stock or other equity securities issuable
to Lenders upon conversion of the Notes or exercise of Lenders’ rights under
Sections 7.14, 7.15, 7.16 and 7.17. At any time when a Registration Default (as
defined under the Registration Rights Agreement) has occurred and is continuing,
then, automatically in such case, (i) if the Loans are outstanding, all Loans
outstanding, together with all overdue amounts shall bear additional interest at
a rate per annum equal to the Default Rate for as long as such Registration
Default is continuing or (ii) if the Loans are no longer outstanding, Borrower
shall pay to Lenders as directed by the Administrative Agent, an amount equal to
the daily amount of interest that would accrue on the maximum principal amount
of Loans advanced by the Lenders hereunder if such principal amount were still
outstanding at a rate per annum equal to the Default Rate as long as such
Registration Default is continuing.
(b) Reserve for Issuance. Borrower has reserved and shall maintain out
of its authorized but unissued shares of Common Stock a sufficient number of
shares of Common Stock to permit the conversion by Lenders of the maximum number
of shares of Common Stock into which Lenders may convert the Notes under
Section 7.14 and that Lenders may acquire under Sections 7.15 and 7.17. All
shares of Common Stock delivered upon conversion of any Convertible Debt Amount
or upon exercise of Lenders’ rights provided in Sections 7.15, 7.16 and 7.17
shall be newly issued shares or treasury shares, shall be duly and validly
issued and
45
fully paid and non-assessable and shall be free from preemptive rights and free
of any Lien, charge or adverse claim or similar encumbrances.
7.19 Board of Directors Rights. In addition to the rights granted to
Lenders in Section 5.01(x) with regard to Lenders’ right to designate three
additional members to Borrower’s Board of Directors, Borrower agrees that
following an Event of Default, Lenders shall have the right to nominate a
majority of the Board of Directors. Such nomination shall be subject to a vote
of the Borrower’s shareholders at Borrower’s next annual meeting of
shareholders, or at Lenders’ option, at a special meeting of shareholders called
for that purpose. Borrower agrees to take all corporate actions to facilitate
such appointment, including, without limitation, holding such special meeting at
Lenders’ request and paying the costs associated with the meeting, including the
solicitation of proxies if required. Notwithstanding the forgoing, any
nominations by Lenders must result in a majority of the Board of Directors being
deemed independent under rules promulgated by the NYSE American. At the request
of Borrower, any individual elected to the Board of Directors pursuant to this
Section 7.19 shall tender his or her resignation from such Board at such time as
the Event of Default is cured or when the Loans are repaid in full.
7.20 Additional Guarantors. If the Borrower shall form or acquire a
Subsidiary or otherwise determines that any Person is a Subsidiary, then the
Borrower shall promptly cause such Subsidiary to (i) execute and deliver to the
Administrative Agent a Guaranty Agreement, (ii) absolutely and unconditionally
guarantee the payment and performance of the Obligations pursuant to the
Guaranty Agreement, and (iii) grant to the Administrative Agent, for the benefit
of the Security Parties, a perfected, first-priority security interest in and
Lien on all or substantially all of the assets of such Subsidiary, including all
of the Equity Interests of each Subsidiary now or hereafter owned by such
Subsidiary. Each Loan Party expressly agrees that its obligations arising under
the Loan Documents shall not be affected or diminished by the addition or
release of any other Loan Party.
7.21 Tax Reporting. The Borrower agrees to consult with each Lender
prior to filing any tax return which includes a valuation of any equity rights
granted to such Lender hereunder, including for purposes of determining the
amount of any “original interest discount” with respect to the Loans.
7.22 Post-Closing Requirement. No later than February 14, 2018 (or such
later date as the Administrative Agent may permit in its sole discretion), the
Borrower shall have taken all actions required by the Administrative Agent to
cause CFW Resources LLC (“CFW”) to be a Loan Party, including, without
limitation, delivery of the following, each in form and substance satisfactory
to the Lenders: (a) a Pledge Agreement executed by the Borrower pursuant to
which the Equity Interests owned by the Borrower in CFW will constitute
Collateral; (b) a Guaranty Agreement executed by CFW; (c) Mortgages and all
other Security Instruments required by the Lenders as necessary to establish
perfected Liens in favor of the Administrative Agent covering all of the assets
of CFW; (d) a certificate of a Responsible Officer of CFW setting forth
(i) resolutions of its managers or other governing body with respect to the
authorization of CFW to execute and deliver the Loan Documents to which it is a
party and to enter into the Transactions contemplated in those documents,
(ii) the officers of CFW (Y) who are authorized to sign the Loan Documents to
which CFW is a party and (Z) who will, until replaced by another officer or
officers duly authorized for that purpose, act as its representative for the
purposes of signing
46
documents and giving notices and other communications in connection with the
Loan Documents and the Transactions contemplated hereby, (iii) specimen
signatures of such authorized officers, and (iv) the Organizational Documents of
CFW, certified as being true and complete; (e) an opinion of Polsinelli PC,
special counsel to CFW covering such matters relating to CFW and the Loan
Documents as the Lenders shall request; and (f) such other certificates and
documents as the Administrative Agent shall request in connection therewith.
ARTICLE VIII.
NEGATIVE COVENANTS
8.01 Financial Covenants.
(a) Total Leverage Ratio.
(i) Borrower shall not permit, for the trailing four fiscal quarter
period ending on the dates provided in the table below, the Total Leverage Ratio
to exceed the ratio provided opposite such date:
Fiscal Quarter End
Maximum Total
Leverage Ratio
June 30, 2018
4.0 to 1.0
September 30, 2018
4.0 to 1.0
December 31, 2018
4.0 to 1.0
March 31, 2019 and the last day of each fiscal quarter ended thereafter
3.5 to 1.0
;provided, that for purposes of calculating the Total Leverage Ratio in this
Section 8.01(a)(i): (x) as of June 30, 2018, EBITDA shall be measured by
multiplying the EBITDA for the two fiscal quarters then ending by two (2); and
(y) as of September 30, 2018, EBITDA shall be measured by multiplying the EBITDA
for the three fiscal quarters then ending by 4/3rds.
(b) PDP PV Coverage Ratio. Borrower shall not permit the PDP PV
Coverage Ratio to be less than (i) during the period from June 30, 2018 through
and including December 31, 2018, 1.10 to 1.00, and (ii) after December 31, 2018,
1.25 to 1.00.
8.02 Debt. Borrower will not, and will not permit any of the other Loan
Parties to, incur, create, assume or suffer to exist any Debt, except:
(a) the Obligations.
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(b) Debt incurred to finance the acquisition, construction or
improvement of any fixed or capital assets, including Capital Leases and any
Debt assumed in connection with the acquisition of any such assets or secured by
a Lien on any such assets prior to the acquisition thereof, and extensions,
renewals and replacements of any such Debt that do not increase the outstanding
principal amount thereof; provided that (i) such Debt is incurred prior to or
within 90 days after such acquisition or the completion of such construction or
improvement and (ii) the aggregate principal amount of obligations permitted by
this Section 8.02(b) shall not exceed $100,000 at any time outstanding.
(c) Debt incurred or deposits made by Borrower (i) under worker’s
compensation Laws, unemployment insurance Laws or similar legislation, or
(ii) in connection with bids, tenders, contracts (other than for the payment of
Debt) or leases to which such Borrower or such Subsidiary is a party prior to
the Closing Date, (iii) to secure public or statutory obligations of such
Borrower, and (iv) of cash or United States Government bonds made to secure the
performance of statutory obligations, surety, stay, customs and appeal bonds to
which such Borrower is a party in connection with the operation of the Oil and
Gas Properties, in each case in the ordinary course of business and consistent
with past practices.
(d) intercompany Debt between the Borrower and any Guarantor or
between Guarantors; provided that all such Debt is unsecured and subordinated to
the Indebtedness as and to the extent set forth in the Guaranty Agreement.
(e) endorsements of negotiable instruments for collection in the
ordinary course of business and consistent with past practices.
(f) the Convertible Note Debt outstanding as of the Closing Date;
provided that (i) the principal amount of such Debt is not increased after the
Closing Date or reclassified and (ii) the rate of interest charged with respect
to such Debt is not increased, unless, in each case, approved by the Lenders.
(g) Debt existing on the date hereof and set forth in Schedule 8.02
and extensions, renewals and replacements of any such Debt that do not increase
the outstanding principal amount thereof or shorten the tenor.
(h) Debt incurred in connection with the financing of insurance
premiums in the ordinary course of business consistent with past practices and
the sound business judgment of Borrower and in an aggregate amount not to exceed
$150,000 outstanding at any time, exclusive of any premiums for D&O policies
which insure Borrower or its officers or directors, as such insurance exists as
of the Closing Date unless otherwise Approved by Lender.
(i) the Debt under the Existing Providence Facility B remaining after
the partial repayment of such Debt with the proceeds of the Loans.
(j) other unsecured Debt of Borrower; provided that the aggregate
principal amount of Debt permitted by this clause (i) shall not exceed $250,000
at any time outstanding.
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8.03 Liens. Borrower will not, and will not permit any of the other Loan
Parties to, create, incur, assume, suffer to exist or permit to exist any Lien
on any of its Properties (now owned or hereafter acquired), except:
(a) Liens securing the Obligations.
(b) Excepted Liens.
(c) Liens on fixed or capital assets acquired, constructed or improved
by Borrower, including Liens securing Capital Leases; provided that (i) such
security interests secure only Debt permitted by Section 8.02(b) and (ii) such
security interests shall not apply to any other property or assets of any
Borrower or any Subsidiary.
(d) Liens on insurance policies, premiums and assets related to the
insurance policy being financed in accordance with Section 8.02(h) of this
Agreement.
(e) any Lien on any property or asset of any Borrower existing on the
date hereof and set forth in Schedule 8.03; provided that (i) such Lien shall
not apply to any other property or asset of any Borrower or any Subsidiary and
(ii) such Lien shall secure only those obligations which it secures on the date
hereof and extensions, renewals and replacements as permitted by
Section 8.02(g).
8.04 Investments, Loans and Advances. Borrower will not, and will not
permit any of the other Loan Parties to, make or permit to remain outstanding
any Investments in or to any Person, other than:
(a) outstanding (but not increases in) Investments listed on Schedule
8.04.
(b) accounts receivable arising in the ordinary course of business and
consistent with past practices.
(c) Investments (i) made by the Borrower in or to any Guarantor (or
any Person that becomes a Guarantor upon the making of such investment so long
as such investment is not made in connection with the acquisition of such
Person); and (ii) made by any Guarantor in or to any other Guarantor (or any
Person that becomes a Guarantor upon the making of such investment so long as
such investment is not made in connection with the acquisition of such Person).
(d) Guarantees constituting Debt to the extent permitted by
Section 8.02.
(e) Investments by the Borrower and its Subsidiaries that are
(i) customary in the oil and gas exploration and production business, (ii) made
in the ordinary course of the Borrower’s or such Subsidiary’s business, and
(iii) made in the form of, or pursuant to, oil, gas and mineral leases,
operating agreements, farm-in agreements, farm-out agreements, development
agreements, unitization agreements, joint bidding agreements, services contracts
and other similar agreements that a reasonable and prudent oil and gas industry
owner or operator would find acceptable.
49
(f) Investments consisting of endorsements for collection or deposit
in the ordinary course of business and consistent with past practices.
(g) Investments represented by prepaid expenses made in the ordinary
course of business and consistent with past practices.
(h) other Investments not to exceed $50,000 in the aggregate at any
time.
8.05 Nature of Business; Budget. Borrower will not, and will not permit
any of the other Loan Parties to, allow any material change to be made in the
character of its business as an independent oil and gas exploration and
production company and related gas gathering and processing. Borrower will not,
and will not permit any of its Subsidiaries to, operate its business outside the
geographical boundaries of the United States, excluding offshore state and
federal waters. The Borrower shall not permit its actual cumulative
disbursements for any calendar month to be materially greater than the
disbursements reflected in the Budget for such month; provided, however, that
savings from the budget for any prior month may be applied to and dispersed in a
later month.
8.06 Mergers, Etc. Borrower will not, and will not permit any of the
other Loan Parties to, merge into or with or consolidate with any other Person,
or sell, lease or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its Property to any other
Person, except that any Subsidiary may merge with, or sell all or substantially
all its assets to, any other Subsidiary and that Borrower may merge with any
Subsidiary so long as Borrower is the survivor; provided that at the time
thereof and immediately after giving effect thereto no Default shall have
occurred and the Administrative Agent shall continue to have a first priority
Lien on the Collateral; provided further that Borrower shall have provided
30-days’ prior written notice to the Lenders.
8.07 Disposition of Properties. Borrower will not, and will not permit
any of the other Loan Parties to, sell, assign, farm-out, convey or otherwise
transfer any Property, or enter into any agreement with respect to the
foregoing, except for:
(a) the sale of Hydrocarbons in the ordinary course of business;
(b) the sale of equipment and related items in the ordinary course of business
that are obsolete or no longer necessary in the business of the Borrower or any
of its Subsidiaries or that is being replaced by equipment of at least
comparable value and utility;
(c) like-kind acreage swaps;
(d) sales or other dispositions of Oil and Gas Properties or any interest
therein or the Subsidiary owning Oil and Gas Properties not otherwise permitted
by this Section, provided that (i) no Event of Default has occurred or will
result from such sale or disposition; (ii) the consideration received in respect
of any sale or other disposition shall be equal to or greater than the fair
market value (as approved by the Administrative Agent) of the Oil and Gas
Property, any interest therein or the Subsidiary subject of such sale or other
disposition, (iii) if any such sale or other disposition is of a Subsidiary
owning Oil and Gas Properties, such sale or other disposition shall include all
the Equity Interests of such Subsidiary that are owned by Borrower and its
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Subsidiaries, and (iv) the fair market value of the Oil and Gas Properties sold
shall not exceed (x) $100,000 for any one transaction or $250,000 in the
aggregate for all such transactions during any 12-month period or (y) $1,000,000
during any calendar year so long as no later than 90 days after the consummation
of such sale pursuant to this clause (y) the proceeds of such sale are either
used by the Borrower to purchase like-kind Oil and Gas Properties (and a Lien
has been granted to the Administrative Agent on such like-kind properties) or
the Borrower shall have repaid the principal amount of the Loans in an amount
equal to such proceeds; or
(e) other sales or dispositions of Oil and Gas Properties permitted by
the Lenders in their sole discretion.
8.08 Restricted Payments. The Borrower will not, nor will it permit any
of its Subsidiaries to, declare or make, or agree to pay or make, directly or
indirectly, any Restricted Payment, or incur any obligation (contingent or
otherwise) to do so, except that (a) the Borrower may declare and pay dividends
with respect to its Equity Interests payable solely in additional Equity
Interests (other than Disqualified Capital Stock), and (b) any Subsidiary may
declare and pay dividends and distributions ratably with respect to its Equity
Interests.
8.09 Joint Ventures. Without the prior approval of the Lenders, Borrower
will not, and will not permit any of the other Loan Parties to, enter into,
agree to enter into or commit any of their respective Properties in connection
with the organization of any partnership, joint venture, joint development
(including drillco arrangements) or similar arrangement.
8.10 Change in Management or Compensation. Without the approval of
Lenders, Borrower will not, and will not permit any of the other Loan Parties
to, (i) hire or terminate any executive officers or key employees, (ii) increase
or decrease the size of the Board of Directors, or (iii) change in any material
respect the compensation of such executive officers or key employees except as
set forth in the Base Case Model; provided, however that nothing in this
Section 8.10 shall prevent the Board of Directors from taking any action that it
believes is necessary to fulfill its fiduciary duty to the shareholders. For
purposes of this Section 8.10, “key employee” shall mean any employee with a
title of vice-president or above.
8.11 Organizational Documents; Material Agreements; Funding and Operating
Accounts. Without the prior written consent of the Lenders, Borrower will not,
and will not permit any of the other Loan Parties to, and shall not permit any
of its Subsidiaries to, (a) amend, restate or otherwise modify (i) its
Organizational Documents; (ii) its name or change its jurisdiction of
incorporation, organization or formation; or (iii) the documents executed by the
Borrower providing for the creation or that otherwise govern the Funding Account
and the Operating Account or otherwise establishing the controls provided to
Administrative Agent with respect to such accounts as required pursuant to
Sections 2.02(c) and (d); or (b) amend or otherwise modify any indenture, loan
agreement or other material agreement (including the Convertible Notes) so as to
(y) release, qualify, limit, make contingent or otherwise adversely affect the
rights and benefits of any Lender under or acquired pursuant to any Loan
Document or (z) otherwise conflict with any other specific provision in this
Agreement or any other Loan Document. Borrower shall provide to each Lender
executed copies of any amendments or other modifications to its Organizational
Documents permitted by clause (a) above within three (3) Business Day of
entering into any such amendment or modification.
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8.12 Limitations on Equity Sales. Without the consent of
to, (a) issue or sell any of its equity securities, (b) issue or sell any
securities that are convertible or exercisable for equity securities or
(c) reclassify any such equity securities; provided, however, that the forgoing
shall not prohibit any issuance (i) of securities pursuant to Permitted Equity
Sales, (ii) pursuant to the exercise or conversion of outstanding warrants,
options or Convertible Notes, (iii) pursuant to the Lenders’ Warrants, Lender’s
Options or Conversion of the Loans, or (iv) under the Borrower’s Amended and
Restated Equity Incentive Plan so long as the exercise price of any securities
issued under such plan are exercisable at a price not less than the closing
price of the Common Stock on the date of issuance and provided that, in the case
of clauses (ii), (iii) and (iv), such securities are not amended after the date
hereof to increase the number of shares of Common Stock issuable thereunder or
to lower the exercise or conversion price thereof.
8.13 Transactions with Affiliates. The Borrower will not, nor will it
permit any of its Subsidiaries to, sell, lease or otherwise transfer any
Property, or purchase, lease or otherwise acquire any Property from, or
otherwise engage in any other transactions with, any of its Affiliates, except
(a) transactions that (i) are in the ordinary course of business and (ii) are at
prices and on terms and conditions not less favorable to the Borrower or such
Subsidiary than could be obtained on an arm’s-length basis from unrelated third
parties and (b) transactions between or among the Borrower and the Guarantors
not involving any other Affiliate.
ARTICLE IX.
9.01 Events of Default. One or more of the following events shall
constitute an “Event of Default”:
(a) Borrower shall fail to pay any principal, interest or any fee or
any other amounts payable under any Loan Document when and as the same shall
become due and payable, whether at the due date thereof or by acceleration or
otherwise;
(b) any representation or warranty made or deemed made by or on behalf
of the Borrower or any other Loan Party in or in connection with any Loan
Document or any amendment or modification of any Loan Document or waiver under
such Loan Document, or in any report, certificate, or financial statement
furnished pursuant to or in connection with any Loan Document or any amendment
or modification thereof or waiver thereunder, shall prove to have been incorrect
in any material respect (without duplication of any materiality qualifier
contained therein) when made or deemed made;
(c) the Borrower or any other Loan Party shall fail to observe or
perform any covenant, condition or agreement contained in Section 7.01,
Section 7.02, Section 7.03, Section 7.06, Section 7.22, or Article VIII;
(d) Borrower or any of its Subsidiaries shall fail to observe or
than those specified in Section 9.01(a) or (c)) or any other Loan Document and
such failure shall continue unremedied for a period of 30 days after the earlier
to occur of (A) notice thereof from
52
the Administrative Agent or any Lender to Borrower or (B) a Responsible Officer
of Borrower or any of its Subsidiaries otherwise becoming aware of such default;
(e) Borrower or any of its Subsidiaries shall fail to make any payment
(whether of principal or interest or other amounts and regardless of amount) in
payable, and such failure shall continue after the applicable grace period, if
any, specified in the agreement or instrument relating to such Material
Indebtedness;
(f) any event or condition occurs that results in any Material
holder or holders of such Material Indebtedness or any trustee or agent on its
or their behalf to cause such Material Indebtedness to become due, or to require
the redemption thereof or any offer to redeem to be made in respect thereof,
prior to its scheduled maturity;
(g) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other relief
in respect of Borrower or any of its Subsidiaries or its debts, or of a
substantial part of its assets, under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar Law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for Borrower or any of its Subsidiaries or for a substantial
part of its assets, and, in any such case, such proceeding or petition shall
(h) Borrower or any of its Subsidiaries shall (i) voluntarily commence
any proceeding or file any petition seeking liquidation, reorganization or other
relief under any Federal, state or foreign bankruptcy, insolvency, receivership
or similar Law now or hereafter in effect, (ii) consent to the institution of,
or fail to contest in a timely and appropriate manner, any proceeding or
petition described in Section 9.01(g), (iii) apply for or consent to the
part of its assets, (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 or (vi) take any action for the purpose of
effecting any of the foregoing;
(i) Borrower or any of its Subsidiaries shall become unable, or admit
in writing its inability to pay its debts or other obligations as they become
due;
(j) (i) one or more judgments for the payment of money in an
aggregate amount in excess of $100,000 (to the extent not covered by independent
third party insurance provided by insurers as to which the insurer does not
dispute coverage and is not subject to an insolvency proceeding) or (ii) any one
or more non-monetary judgments shall be rendered against Borrower, any of its
Subsidiaries 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
53
judgment creditor to attach or levy upon any assets of Borrower or any of its
Subsidiaries to enforce any such judgment;
(k) the Loan Documents after delivery thereof shall for any reason
cease to be in full force and effect and valid, binding and enforceable in
accordance with their terms against Borrower or a Guarantor party thereto or
shall be repudiated by any of them, or cease to create a valid and perfected
Lien of the priority required thereby on any of the Oil and Gas Properties
purported to be covered thereby, in each case except as a result of the sale or
other disposition of the applicable Oil and Gas Properties in a transaction
permitted under the terms of this Agreement;
(l) a Change in Control shall occur;
(m) any federal tax Lien or any other Liens (other than Excepted Liens)
totaling $100,000 or more arise of record against Borrower or any of its
Subsidiaries or their respective Properties and are not fully bonded or
discharged within 30 days after Borrower or such Subsidiary receives actual or
constructive notice of their filing unless (i) Borrower or such Subsidiary is
contesting the Lien(s) in good faith through appropriate proceedings timely
filed and diligently prosecuted and against which Borrower or such Subsidiary
maintains adequate reserves in accordance with GAAP and (ii) all such Liens are
fully bonded or discharged within 30 days after Borrower or such Subsidiary
receives actual or constructive notice of their filing;
(n) an ERISA Event shall have occurred that, when taken together with
all other ERISA Events that have occurred, could reasonably be expected to have
(o) the Borrower shall fail to observe or perform any material
covenant, condition or agreement contained in the Lenders’ Option, the Warrants
or any document or agreement executed in connection with any of the foregoing;
(p) the Borrower shall fail to maintain quotation of its Common Stock
in an electronic quotation medium or listing on a national securities exchange;
(q) any director designated by a Lender pursuant to Section 5.01(x),
or any successor to such director designated by such Lender, shall cease to be a
director for any reason and the vacancy so created shall not be filled by
appointment of a person designated by such Lender within 30 days after such
designation is received by Borrower, provided that Lender has given Borrower not
less than 20 days advance notice of the identification of the designee and that
such designee has passed the background check and satisfied the independence
requirements set forth in Section 5.01(x); and/or
(r) there shall occur or exist any fact, event or circumstance that
has or could have a Material Adverse Effect.
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9.02 Remedies.
(a) In the case of an Event of Default other than one described in
Section 9.01(g), Section 9.01(h) or Section 9.01(i), at any time thereafter
during the continuance of such Event of Default, the Administrative Agent may,
and at the request of the Lenders, shall, by notice to the Borrower, declare the
Notes and the Loans then outstanding to be due and payable in whole (or in part,
in which case any principal not so declared to be due and payable may thereafter
be declared to be due and payable), and thereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon, the
applicable Make-Whole Premium and all fees and other obligations of Borrower and
the Guarantors accrued hereunder and under the Note and the other Loan
Documents, shall become due and payable immediately, without presentment,
notice of any kind, all of which are hereby waived by Borrower and each
Guarantor;
(b) In case of an Event of Default described in Section 9.01(g),
Section 9.01(h) or Section 9.01(i), the Notes and the principal of the Loans
then outstanding, together with accrued interest thereon, the applicable
Make-Whole Premium and all fees and the other obligations of Borrower and the
Guarantors accrued hereunder and under the Notes and the other Loan Documents,
shall automatically become due and payable, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by Borrower and each
Guarantor.
(c) In the case of the occurrence of and during the continuation of an
Event of Default, Lender will have all other rights and remedies available at
law and equity.
(d) From and during the continuance of any Event of Default, any
monies or property actually received by Lender pursuant to this Agreement or any
other Loan Document, the exercise of any rights or remedies under any Security
Instrument or any other agreement with Borrower, any Guarantor or any of their
respective Subsidiaries which secures any of the Obligations, shall, subject to
the terms of the Intercreditor Agreement, be applied in the following order:
(i) first, to payment or reimbursement of that portion of the
Obligations constituting fees, expenses and indemnities payable to the
Administrative Agent in its capacity as such;
(ii) second, pro rata to payment or reimbursement of that portion of
the Obligations constituting fees, expenses and indemnities payable to the
Lenders;
(iii) third, pro rata to payment of the Make-Whole Premium;
(iv) fourth, pro rata to payment of accrued interest on the Loans;
(v) fifth, pro rata to payment of principal outstanding on the Loans;
(vi) sixth, pro rata to any other Obligations; and
55
(vii) seventh, any excess, after all of the Obligations shall have been
indefeasibly paid in full in cash, shall be paid to the Borrower or as otherwise
required by any Governmental Requirement.
ARTICLE X.
THE ADMINISTRATIVE AGENT
10.01 Appointment; Powers. Each of the Lenders hereby irrevocably appoints
the Administrative Agent as its agent and authorizes the Administrative Agent to
take such actions on its behalf, including execution of other Loan Documents,
and to exercise such powers as are delegated to the Administrative Agent by the
terms of the Loan Documents, together with such actions and powers as are
reasonably incidental thereto.
10.02 Duties and Obligations of Administrative Agent. The Administrative
Agent shall not have any duties or obligations except those expressly set forth
in the Loan Documents. Without limiting the generality of the foregoing,
(a) the Administrative Agent shall not be subject to any fiduciary or other
implied duties, regardless of whether a Default has occurred and is continuing
(the use of the term “agent” herein and in the other Loan Documents with
applicable law; rather, such term is used merely as a matter of market custom,
independent contracting parties), (b) the Administrative Agent shall not have
any duty to take any discretionary action or exercise any discretionary powers,
except discretionary rights and powers expressly contemplated by the Loan
Documents that the Administrative Agent is required to exercise in writing as
directed by the Lenders, and (c) except as expressly set forth in the Loan
Documents, the Administrative Agent shall not have any duty to disclose, and
shall not be liable for the failure to disclose, any information relating to any
Loan Party or any of its Subsidiaries that is communicated to or obtained by the
institution serving as Administrative Agent or any of its Affiliates in any
capacity. The Administrative Agent shall be deemed not to have knowledge of any
Default unless and until written notice thereof is given to the Administrative
Agent by the Borrower or a Lender, and the Administrative Agent shall not be
responsible for or have any duty to ascertain or inquire into (i) any statement,
warranty or representation made in or in connection with any Loan Document,
(ii) the contents of any certificate, report or other document delivered
hereunder or in connection with any Loan Document, (iii) the performance or
forth in any Loan Document, (iv) the validity, enforceability, effectiveness or
genuineness of any Loan Document or any other agreement, instrument or document,
(v) the creation, perfection or priority of Liens on the Collateral or the
existence of the Collateral, (vi) the satisfaction of any condition set forth in
Article V or elsewhere in any Loan Document, other than to confirm receipt of
items expressly required to be delivered to the Administrative Agent or
(vii) any failure by the Borrower or any other Person (other than itself) to
perform any of its obligations hereunder or under any other Loan Document or the
performance or observance of any covenants, agreements or other terms or
conditions set forth herein or therein.
10.03 Action by Administrative Agent. The Administrative Agent shall have
no duty to take any discretionary action or exercise any discretionary powers,
except discretionary rights
56
and powers expressly contemplated hereby or by the other Loan Documents that the
Administrative Agent is required to exercise in writing as directed by the
Lenders and in all cases the Administrative Agent shall be fully justified in
shall (a) receive written instructions from the Lenders specifying the action to
be taken and (b) be indemnified to its satisfaction by the Lenders against any
and all liability and expenses which may be incurred by it by reason of taking
or continuing to take any such action. The instructions as aforesaid and any
action taken or failure to act pursuant thereto by the Administrative Agent
shall be binding on all of the Lenders. If a Default has occurred and is
continuing, then the Administrative Agent shall take such action with respect to
such Default as shall be directed by the Lenders in the written instructions
(with indemnities) described in this Section 10.03, 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 as it shall deem
advisable in the best interests of the Lenders. In no event, however, shall the
Administrative Agent be required to take any action which exposes the
Agreement, the Loan Documents or applicable law. If a Default has occurred and
is continuing, the Administrative Agent shall not have any obligation to perform
any act in respect thereof except as expressly provided herein. The
Administrative Agent shall not be liable for any action taken or not taken by it
with the consent or at the request of the Lenders, and otherwise the
hereunder or under any other Loan Document or under any other document or
instrument referred to or provided for herein or therein or in connection
herewith or therewith INCLUDING ITS OWN ORDINARY NEGLIGENCE, except for its own
10.04 Reliance by Administrative Agent. The Administrative Agent shall be
writing believed by it to be genuine and to have been signed or sent by the
to it orally or by telephone and believed by it to be made by the proper Person,
and shall not incur any liability for relying thereon, and each of the Borrower
and the Lenders hereby waives the right to dispute the Administrative Agent’s
record of such statement, except in the case of gross negligence or willful
misconduct by the Administrative Agent. The Administrative Agent may consult
10.05 Subagents. The Administrative Agent may perform any and all its
duties and exercise its rights and powers by or through any one or more
sub-agents appointed by the Administrative Agent. The Administrative Agent and
any such sub-agent may perform any and all its duties and exercise its rights
and powers through their respective Related Parties. The exculpatory provisions
of the preceding clauses 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.
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10.06 Resignation of Administrative Agent. Subject to the appointment and
acceptance of a successor Administrative Agent as provided in this clause, the
Administrative Agent may resign at any time by notifying the Lenders and the
Borrower. Upon any such resignation, the Lenders shall have the right, in
consultation with the Borrower, to appoint a successor. If no successor shall
have been so appointed by the Lenders and shall have accepted such appointment
within thirty (30) days after the retiring Administrative Agent gives notice of
its resignation, then the retiring Administrative Agent may, on behalf of the
Lenders, appoint a successor Administrative Agent. Upon the acceptance of its
appointment as Administrative Agent hereunder by a successor, such successor
shall succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Administrative Agent, and the retiring Administrative
Agent shall be discharged from its duties and obligations hereunder. The fees
payable by the Borrower to a successor Administrative Agent shall be the same as
those payable to its predecessor unless otherwise agreed between the Borrower
and such successor. After the Administrative Agent’s resignation hereunder, the
provisions of this Article and Section 11.03 shall continue in effect for the
10.07 Administrative Agent as Lender. The institution serving as the
Administrative Agent hereunder shall have the same rights and powers in its
capacity as a Lender as any other Lender and may exercise the same as though it
were not the Administrative Agent, and such institution and its Affiliates may
generally engage in any kind of business with any Loan Party or any Subsidiary
of a Loan Party or other Affiliate thereof as if it were not the Administrative
Agent hereunder.
10.08 No Reliance. Each Lender acknowledges that it has, independently and
without reliance upon the Administrative Agent or any other Lender and based on
analysis and decision to enter into this Agreement and each other Loan Document
to which it is a party. Each Lender also acknowledges that it will,
Lender and based on such documents and information as it shall from time to time
action under or based upon this Agreement, any other Loan Document or related
agreement or any document furnished hereunder or thereunder. The Administrative
Agent shall not be required to keep itself informed as to the performance or
observance by the Borrower or any of its Subsidiaries of this Agreement, the
Loan Documents or any other document referred to or provided for herein or to
inspect the Properties or books of the Borrower or its Subsidiaries. Except for
notices, reports and other documents and information 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 affairs, financial
condition or business of the Borrower (or any of its Affiliates) which may come
into the possession of the Administrative Agent or any of its Affiliates. In
this regard, each Lender acknowledges that Munsch Hardt Kopf & Harr, P.C. is
acting in this transaction as special counsel to the Administrative Agent only,
except to the extent otherwise expressly stated in any legal opinion or any Loan
Document. Each other party hereto will consult with its own legal counsel to
the extent that it deems necessary in connection with the Loan Documents and the
matters contemplated therein.
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10.09 Administrative Agent May File Proofs of Claim. In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Borrower or any of its Subsidiaries, the
Administrative Agent (irrespective of whether the principal of any Loan shall
then be due and payable as herein expressed or by declaration or otherwise and
irrespective of whether the Administrative Agent shall have made any demand on
the Borrower) shall be entitled and empowered, by intervention in such
proceeding or otherwise:
and interest owing and unpaid in respect of the Loans and all other Obligations
or advisable in order to have the claims of the Lenders and the Administrative
Agent (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Lenders and the Administrative Agent and their
respective agents and counsel and all other amounts due the Lenders and the
Administrative Agent under Section 11.03) allowed in such judicial proceeding;
and
deliverable on any such claims and to distribute the same;
each Lender to make such payments to the Administrative Agent and to pay to the
counsel, and any other amounts due the Administrative Agent under Section 11.03.
to authorize or consent to or accept or adopt on behalf of any Lender any plan
of reorganization, arrangement, adjustment or composition affecting the
Obligations or the rights of any Lender or to authorize the Administrative Agent
to vote in respect of the claim of any Lender in any such proceeding.
10.10 Authority of Administrative Agent to Release Collateral, Liens and
Guarantors. Each Lender hereby authorizes the Administrative Agent (a) to
release any Collateral that is permitted to be sold or released pursuant to the
terms of the Loan Documents, (b) to release any Guarantor if 100% of the Equity
Interests in such Guarantor are sold in a transaction permitted under the Loan
Documents and (c) to subordinate (or release) any Lien on any Property granted
to or held by the Administrative Agent under any Loan Document to any Lien on
such Property that is permitted by Section 8.02(b). Each Lender hereby
authorizes the Administrative Agent to execute and deliver to the Borrower, at
the Borrower’s sole cost and expense, any and all releases of Liens, termination
statements, assignments or other documents reasonably requested by the Borrower
in connection with any sale or other disposition of Property to the extent such
sale or other disposition is permitted by the terms of Section 8.07 or is
59
ARTICLE XI.
MISCELLANEOUS
11.01 Notices.
(a) Except in the case of notices and other communications expressly
permitted to be given by telephone (and subject to Section 11.01(b)), all
notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by facsimile, as follows:
(i)
if to Borrower, to it at:
PetroShare Corp.
9635 Maroon Circle, Suite 400
Englewood, CO 80112
Attention:
Stephen J. Foley
Facsimile:
(303) 770-6885
E-Mail: sfoley@petrosharecorp.com
(ii)
if to the Administrative Agent or Providence, to it at:
Providence Wattenberg, LP
16400 North Dallas Parkway, Ste. 400
Dallas, Texas 75248
Attention: Luke Allen, Vice President
E-Mail: lallen@providence-energy.com
Providence Wattenberg, LP
Dallas, Texas 75248
Attention: Mark L. Nastri
Email: mnastri@providence-energy.com
(iii)
if to 5NR, to it at:
5NR Wattenberg, LLC
16400 Dallas Pkwy, Ste. 400
Dallas, Texas 75248
Attention: Joe Drysdale
E-Mail: jdrysdale@fifthpartners.com
5NR Wattenberg, LLC
60
Dallas, Texas 75248
Attention: Gregory Schulz
E-Mail: gschulz@fifthpartners.com
All such notices and other communications (i) sent by hand or overnight courier
service, or mailed by certified or registered mail, shall be deemed to have been
given when received or (ii) sent by facsimile shall be deemed to have been given
when sent, provided that if not given during normal business hours for the
recipient, shall be deemed to have been given at the opening of business on the
next Business Day for the recipient.
(including e-mail and internet or intranet websites) pursuant to procedures
approved by the Administrative Agent; provided that the foregoing shall not
apply to notices pursuant to Article II or Article III unless otherwise agreed
by the Administrative Agent and the applicable Lender. The Administrative Agent
or the Borrower (on behalf of the Loan Parties) 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. All such
notices and other communications sent to an e-mail address shall be deemed
received upon the sender’s receipt of an acknowledgement from the intended
recipient (such as by the “return receipt requested” function, as available,
return e-mail or other written acknowledgement), provided that if not given
during the normal business hours of the recipient, shall be deemed to have been
given at the opening of business on the next Business Day for the recipient.
facsimile number for notices and other communications hereunder by notice to the
other parties hereto.
11.02 Waivers; Amendments.
(a) No failure or delay by the Administrative
rights and remedies of the Administrative Agent and the Lenders hereunder and
under any other Loan Document are cumulative and are not exclusive of any rights
or remedies that they would otherwise have. No waiver of any provision of any
Loan Document or consent to any departure by any Loan Party therefrom shall in
any event be effective unless the same shall be permitted by clause (b) of this
Section, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given.
(b) Neither this Agreement nor any other Loan
Document nor any other provision hereof or thereof may be waived, amended or
by the Loan Party or Loan Parties that are party thereto and the Lenders or by
the Loan Party or Loan Parties that are party thereto and the Administrative
Agent with the consent of the Lenders.
61
11.03 Expenses, Indemnity; Damage Waiver.
(a) Borrower shall pay (i) all reasonable fees,
costs and expenses incurred by the Administrative Agent, each Lender and their
respective Affiliates, including, without limitation, the reasonable fees and
expenses of counsel for the Administrative Agent and each Lender, the reasonable
travel, photocopy, mailing, courier, telephone and other similar expenses, and
the cost of environmental audits and surveys and appraisals, in connection with
the preparation, negotiation, execution, delivery and administration both before
Administrative Agent and each Lender with respect thereto of this Agreement and
the other Loan Documents and any amendments, modifications or waivers of or
consents related to the provisions hereof or thereof (whether or not the
transactions contemplated hereby or thereby shall be consummated), (ii) all
reasonable costs, expenses, Taxes, assessments and other charges incurred by the
Administrative Agent and each Lender in connection with any filing,
registration, recording or perfection of any security interest contemplated by
this Agreement or any Security Instrument or any other document referred to
therein, and (iii) following the occurrence and during the continuance of an
Event of Default, all expenses incurred by the Administrative Agent and each
Lender, including the fees, charges and disbursements of any counsel for the
Administrative Agent and each Lender, in connection with the enforcement or
protection of its rights in connection with this Agreement or any other Loan
Document, including its rights under this Section 11.03, or in connection with
the Loans made hereunder, including, without limitation, all such expenses
incurred during any workout, restructuring or negotiations in respect of such
Loans.
(b) BORROWER SHALL INDEMNIFY THE ADMINISTRATIVE
AGENT, THE LENDERS, AND EACH RELATED PARTY OF SUCH PERSONS (EACH SUCH PERSON
BEING CALLED AN “INDEMNITEE”) AGAINST, AND DEFEND AND HOLD EACH INDEMNITEE
HARMLESS FROM, ANY AND ALL LOSSES, CLAIMS, DAMAGES, LIABILITIES AND RELATED
EXPENSES, INCLUDING THE REASONABLE FEES, CHARGES AND DISBURSEMENTS OF ANY
COUNSEL FOR ANY INDEMNITEE, INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE
ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF (i) THE EXECUTION OR
DELIVERY OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY AGREEMENT OR
INSTRUMENT CONTEMPLATED HEREBY OR THEREBY, THE PERFORMANCE BY THE PARTIES HERETO
OR THE PARTIES TO ANY OTHER LOAN DOCUMENT OF THEIR RESPECTIVE OBLIGATIONS
HEREUNDER OR THEREUNDER OR THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED
HEREBY OR BY ANY OTHER LOAN DOCUMENT, (ii) THE FAILURE OF BORROWER OR ANY OF ITS
SUBSIDIARIES TO COMPLY WITH THE TERMS OF ANY LOAN DOCUMENT, INCLUDING THIS
AGREEMENT, OR WITH ANY LAW, (iii) ANY INACCURACY OF ANY REPRESENTATION OR ANY
BREACH OF ANY WARRANTY OR COVENANT OF BORROWER OR ANY GUARANTOR SET FORTH IN ANY
OF THE LOAN DOCUMENTS OR ANY INSTRUMENTS, DOCUMENTS OR CERTIFICATIONS DELIVERED
IN CONNECTION THEREWITH, (iv) ANY LOAN OR THE USE OF THE PROCEEDS THEREFROM,
(v) ANY OTHER ASPECT OF THE LOAN DOCUMENTS, (vi) THE OPERATIONS OF THE BUSINESS
OF BORROWER AND ITS SUBSIDIARIES BY BORROWER AND ITS SUBSIDIARIES, (vii) THE
BREACH OR NON-COMPLIANCE BY BORROWER, ANY OF ITS SUBSIDIARIES OF ANY
ENVIRONMENTAL LAW
62
APPLICABLE TO BORROWER OR ITS SUBSIDIARIES OR ANY OF THEIR PROPERTIES, INCLUDING
WITHOUT LIMITATION, THE PRESENCE, GENERATION, STORAGE, RELEASE, THREATENED
RELEASE, USE, TRANSPORT, DISPOSAL, ARRANGEMENT OF DISPOSAL OR TREATMENT OF OIL,
OIL AND GAS WASTES, SOLID WASTES OR HAZARDOUS SUBSTANCES ON ANY OF THEIR
PROPERTIES, (viii) THE PAST OWNERSHIP BY BORROWER OR ANY OF ITS SUBSIDIARIES OF
ANY OF THEIR PROPERTIES OR PAST ACTIVITY ON ANY OF THEIR PROPERTIES WHICH,
THOUGH LAWFUL AND FULLY PERMISSIBLE AT THE TIME, COULD RESULT IN PRESENT
LIABILITY, (ix) THE PRESENCE, USE, RELEASE, STORAGE, TREATMENT, DISPOSAL,
GENERATION, THREATENED RELEASE, TRANSPORT, ARRANGEMENT FOR TRANSPORT OR
ARRANGEMENT FOR DISPOSAL OF OIL, OIL AND GAS WASTES, SOLID WASTES OR HAZARDOUS
SUBSTANCES ON OR AT ANY OF THE PROPERTIES OWNED OR OPERATED BY BORROWER OR ANY
OF ITS SUBSIDIARIES OR ANY ACTUAL OR ALLEGED PRESENCE OR RELEASE OF HAZARDOUS
MATERIALS ON OR FROM ANY PROPERTY OWNED OR OPERATED BY BORROWER OR ANY OF ITS
SUBSIDIARIES, (x) ANY ENVIRONMENTAL LIABILITY RELATED IN ANY WAY TO BORROWER OR
ANY OF ITS SUBSIDIARIES, OR (xi) ANY OTHER ENVIRONMENTAL, HEALTH OR SAFETY
CONDITION IN CONNECTION WITH THE LOAN DOCUMENTS, OR (xii) ANY ACTUAL OR
PROSPECTIVE CLAIM, LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO ANY OF
REGARDLESS OF WHETHER ANY INDEMNITEE IS A PARTY THERETO; PROVIDED THAT SUCH
INDEMNITY SHALL NOT, AS TO ANY INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH
LOSSES, CLAIMS, DAMAGES, LIABILITIES OR RELATED EXPENSES ARE DETERMINED BY A
COURT OF COMPETENT JURISDICTION BY FINAL AND NON-APPEALABLE JUDGMENT TO HAVE
RESULTED FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE.
(c) To the extent that any Loan Party fails to pay any amount required
to be paid by it to the Administrative Agent under clause (a) or (b) of this
Section, each Lender severally agrees to pay to the Administrative Agent such
unreimbursed expense or indemnity payment is sought) of such unpaid amount;
penalty, liability or related expense, as the case may be, was incurred by or
asserted against the Administrative Agent in its capacity as such.
(d) To the extent permitted by applicable Law, Borrower shall not
proceeds thereof.
(e) All amounts due under this Section 11.03 shall be payable upon
demand.
63
11.04 Successors and Assigns.
(a) The provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that Borrower may not assign or otherwise transfer any
of its rights or obligations hereunder or under any other Loan Document without
the prior written consent of the Administrative Agent and the Lenders (and any
attempted assignment or transfer by Borrower without such consent shall be null
and void). Nothing in this Agreement, expressed or implied, shall be construed
to confer upon any Person other than the parties hereto, their respective
successors and assigns permitted hereby (and, to the extent expressly
contemplated hereby, the Related Parties of Lender) any legal or equitable
(b) Upon not less than 5 days’ advance written notice to Borrower,
Lenders may assign all or any portion of their rights and obligations under this
Agreement (including all or a portion of any commitment to lend under any
Tranche hereunder, if any, and the Loans at the time owing to it) without the
prior written consent of any Person.
(c) Each Lender may at any time pledge or assign a security interest
in all or any portion of its rights under this Agreement to secure obligations
of Lender; provided that no such pledge or assignment of a security interest
shall release Lender from any of its obligations hereunder or substitute any
such pledgee or assignee for Lender as a party hereto.
(d) Notwithstanding any other provisions of this Section 11.04, no
transfer or assignment of the interests or obligations of any Lender or any
grant of participations therein shall be permitted if such transfer, assignment
or grant would require Borrower and the Guarantors to file a registration
statement with the SEC or to qualify the Loans under the “Blue Sky” Laws of any
state.
11.05 Survival; Revival; Reinstatement.
(a) All covenants, agreements, representations and warranties made by
Borrower herein and in the certificates or other instruments delivered in
connection with or pursuant to this Agreement or any other Loan Document shall
be considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any
Loans, regardless of any investigation made by any such other party or on its
behalf and notwithstanding that Lender may have had notice or knowledge of any
payable under this Agreement is outstanding and so long as the Termination Date
has not occurred. The provisions of Section 5.01(x), Section 7.14,
Section 7.15, Section 7.16, Section 7.17, Section 7.18, Section 7.19, Article X,
Section 11.03, this Section 11.05, Section 11.11 and Section 11.13 shall survive
termination of any commitment to lend under any Tranche hereunder, if any, or
the termination of this Agreement, any other Loan Document or any provision
hereof or thereof.
(b) To the extent that any payments on the Obligations or proceeds of
any Collateral are subsequently invalidated, declared to be fraudulent or
preferential, set aside or
64
required to be repaid to a trustee, debtor in possession, receiver or other
Person under any Debtor Relief Law or equitable cause, then to such extent, the
Obligations so satisfied shall be revived and continue as if such payment or
proceeds had not been received and Lender’s Liens, security interests, rights,
powers and remedies under this Agreement and each Loan Document shall continue
in full force and effect. In such event, each Loan Document shall be
automatically reinstated and Borrower shall take such action as may be
reasonably requested by Lender to effect such reinstatement.
11.06 Counterparts; Integration; Effectiveness.
(a) 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.
(b) This Agreement and the other Loan Documents constitute the entire
contract among the parties hereto relating to the subject matter hereof and
thereof and supersede any and all previous agreements and understandings, oral
or written, relating to the subject matter hereof and thereof. THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES
(c) This Agreement shall become effective when it shall have been
executed by Lender and when Lender shall have received counterparts hereof
which, when taken together, bear the signatures of each of the other parties
hereto, and thereafter shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. 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.
11.07 Severability. In case one or more provisions of this Agreement or
the other Loan Documents shall be invalid, illegal or unenforceable, (a) the
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
other jurisdiction.
11.08 Right of Setoff. If an Event of Default shall have occurred and be
continuing, the Administrative Agent, each Lender and each of their Affiliates
permitted 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 obligations at
any time owing by the Administrative Agent, such Lender or Affiliate to or for
the credit or the account of Borrower or any of its Subsidiaries against any and
all of the obligations of Borrower or any of its Subsidiaries owed to the
Administrative Agent or such Lender now or hereafter existing under this
Agreement or any other Loan Document, irrespective of whether or
65
not the Administrative Agent or such Lender shall have made any demand under
this Agreement or any other Loan Document and although such obligations may be
unmatured. The rights of the Administrative Agent and the Lenders under this
Section 11.08 are in addition to other rights and remedies (including other
rights of setoff) which such Persons or their Affiliates may have. The
Administrative Agent and each Lender agrees to give Borrower prompt notice of
any such offset made by such Person or any Affiliate of such Person following
the occurrence thereof.
11.09 GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS.
(a) THIS AGREEMENT AND THE NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF COLORADO.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THE LOAN DOCUMENTS
MAY BE BROUGHT IN THE STATE AND FEDERAL COURTS LOCATED IN DALLAS, TEXAS, AND, BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY HEREBY ACCEPTS FOR ITSELF
AND (TO THE EXTENT PERMITTED BY LAW) IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION
TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN
SUCH RESPECTIVE JURISDICTIONS.
(c) EACH PARTY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY
OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT THE
ADDRESS SPECIFIED IN SECTION 11.01 OR SUCH OTHER ADDRESS AS IS SPECIFIED
PURSUANT TO SECTION 11.01, SUCH SERVICE TO BECOME EFFECTIVE THREE (3) DAYS AFTER
SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF A PARTY OR ANY HOLDER OF
A NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE
LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANOTHER PARTY IN ANY OTHER
JURISDICTION.
(d) EACH PARTY HEREBY (i) IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN; (ii) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT
PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH
LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES
OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; (iii) CERTIFIES THAT NO PARTY
HERETO NOR ANY REPRESENTATIVE, OR AGENT OF COUNSEL FOR ANY PARTY HERETO HAS
REPRESENTED, EXPRESSLY OR
66
OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (iv) ACKNOWLEDGES THAT IT HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT, THE LOAN DOCUMENTS AND THE TRANSACTIONS
CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS CONTAINED IN THIS SECTION 11.09.
11.10 Headings. Article and Section headings and the Table of Contents
11.11 Confidentiality. Each Lender agrees to maintain the confidentiality
confidential), (b) to the extent required by applicable Laws or by any subpoena
or similar legal process, (c) to any other party to this Agreement or any other
Loan Document, (d) in connection with the exercise of any remedies hereunder or
thereunder, but only to the extent required to exercise those rights, (e) with
the consent of Borrower or (f) to the extent such Information (i) becomes
publicly available other than as a result of a breach of this Section 11.11 or
(ii) becomes available to Lender on a non-confidential basis from a source other
than Borrower without breach of any confidentiality agreement. For the purposes
of this Section 11.11, “Information” means all information received from
Borrower or any of its Subsidiaries relating to Borrower or any of its
Subsidiaries and their businesses, other than any such information that is
available to Lender on a non-confidential basis prior to disclosure by Borrower
or any of its Subsidiaries. Any Person required to maintain the confidentiality
of Information as provided in this Section 11.11 shall be considered to have
complied with its obligation to do so if such Person has exercised the same
degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information. Neither party will
issue (or allow the issuance of) any press release or other public announcement
relating to the Loans which expressly names the other party without the prior
written consent of the other party unless required by applicable law; but each
of them may each publish a customary “tombstone” announcements regarding the
Loans, including without limitation, the parties to the transaction and
aggregate committed amount.
11.12 Interest Rate Limitation. It is the intention of the parties hereto
that the Lenders shall conform strictly to usury Laws applicable to them.
Accordingly, if the Transactions contemplated hereby would be usurious as to any
Lender under Laws applicable to it (including the Laws of the United States of
America and the State of Colorado or any other jurisdiction whose Laws may be
as security for the Note, it is agreed as follows: (i) the aggregate of all
consideration which constitutes interest under Law applicable to such Lender
that is contracted for, taken, reserved, charged or received by such Lender
under any of the Loan Documents or agreements or otherwise in connection with
the
67
Note shall under no circumstances exceed the maximum amount allowed by such
applicable Law, and any excess shall be canceled automatically and if
Obligations (or, to the extent that the principal amount of the Obligations
shall have been or would thereby be paid in full, refunded by such Lender to
prepayment, then such consideration that constitutes interest under Law
applicable to such Lender may never include more than the maximum amount allowed
by such applicable Law, and excess interest, if any, provided for in this
Agreement or otherwise shall be canceled automatically by such Lender as of the
date of such acceleration or prepayment and, if theretofore paid, shall be
credited by such Lender on the principal amount of the Obligations (or, to the
extent that the principal amount of the Obligations shall have been or would
thereby be paid in full, refunded by such Lender to Borrower). All sums paid or
agreed to be paid to such Lender for the use, forbearance or detention of sums
due hereunder shall, to the extent permitted by Law applicable to such Lender,
be amortized, prorated, allocated and spread throughout the stated term of the
Loans evidenced by the Note until payment in full so that the rate or amount of
interest on account of any Loans hereunder does not exceed the maximum amount
allowed by such applicable Law. If at any time and from time to time (i) the
amount of interest payable to such Lender on any date shall be computed at the
Highest Lawful Rate applicable to such Lender pursuant to this Section 11.12 and
interest otherwise payable to such Lender would be less than the amount of
interest payable to such Lender computed at the Highest Lawful Rate applicable
to such Lender, then the amount of interest payable to such Lender in respect of
such subsequent interest computation period shall continue to be computed at the
Highest Lawful Rate applicable to such Lender until the total amount of interest
payable to such Lender shall equal the total amount of interest which would have
been payable to such Lender if the total amount of interest had been computed
without giving effect to this Section 11.12. The parties hereto hereby
acknowledge that, as of the Closing Date, the value of the Lenders’ Option and
Warrants cannot determined by a mathematical computation.
11.13 EXCULPATION PROVISIONS. EACH OF THE PARTIES HERETO SPECIFICALLY
AGREES THAT IT HAS A DUTY TO READ THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
AND AGREES THAT IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS OF THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS; THAT IT HAS IN FACT READ THIS AGREEMENT
AND IS FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF THE TERMS, CONDITIONS
AND EFFECTS OF THIS AGREEMENT; THAT IT HAS BEEN REPRESENTED BY INDEPENDENT LEGAL
COUNSEL OF ITS CHOICE THROUGHOUT THE NEGOTIATIONS PRECEDING ITS EXECUTION OF
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND HAS RECEIVED THE ADVICE OF ITS
ATTORNEY IN ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND THAT
IT RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS RESULT IN ONE PARTY ASSUMING THE LIABILITY INHERENT IN SOME ASPECTS OF
THE TRANSACTION AND RELIEVING THE OTHER PARTY OF ITS RESPONSIBILITY FOR SUCH
VALIDITY OR ENFORCEABILITY OF ANY EXCULPATORY PROVISION OF THIS AGREEMENT
68
AND THE OTHER LOAN DOCUMENTS ON THE BASIS THAT THE PARTY HAD NO NOTICE OR
KNOWLEDGE OF SUCH PROVISION OR THAT THE PROVISION IS NOT “CONSPICUOUS.”
11.14 No Third Party Beneficiaries. This Agreement, the other Loan
Documents, and the agreement of Lender to make Loans are solely for the benefit
of Borrower, and no other Person (including, without limitation, any Subsidiary
of Borrower, any obligor, contractor, subcontractor, supplier or materialman)
shall have any rights, claims, remedies or privileges hereunder or under any
other Loan Document against Lender for any reason whatsoever. There are no
third party beneficiaries.
11.15 USA Patriot Act Notice. Lender hereby notifies Borrower that
pursuant to the requirements of the Act, it is required to obtain, verify and
record information that identifies Borrower, which information includes the name
and address of Borrower and other information that will allow Lender to identify
Borrower in accordance with the Act.
11.16 Termination; Limited Survival. Upon the occurrence of Security
Termination, Lender agrees to, as soon as reasonably practical, execute and
deliver all necessary instruments to reflect and effect such termination of the
Loan Documents and to release any Liens created by the Security Instruments.
11.17 No Fiduciary Duty. Each Lender and their Affiliates (collectively,
solely for purposes of this Section 11.17, the “Lenders”), may have economic
interests that conflict with those of the Loan Parties and their respective
Subsidiaries and their stockholders and/or their affiliates. Each Loan Party,
for itself and on behalf of its Subsidiaries, agrees that nothing in this
Agreement or the Loan Documents or otherwise will be deemed to create an
advisory, fiduciary or agency relationship or fiduciary or other implied duty
between any Lender, on the one hand, and any Loan Party or its Subsidiaries,
their stockholders or their affiliates, on the other. Each Loan Party, for
itself and on behalf of its Subsidiaries, acknowledges and agrees that (i) the
transactions contemplated by the Loan Documents (including the exercise of
rights and remedies hereunder and thereunder) are arm’s-length commercial
transactions between the Lenders, on the one hand, and the Loan Parties and
their Subsidiaries, on the other, and (ii) in connection therewith and with the
process leading thereto, (x) no Lender has assumed an advisory or fiduciary
responsibility in favor of any Loan Party or its Subsidiaries, their
stockholders or their affiliates with respect to the transactions contemplated
hereby (or the exercise of rights or remedies with respect thereto) or the
process leading thereto (irrespective of whether any Lender has advised, is
currently advising or will advise any Loan Party or its Subsidiaries, their
stockholders or their affiliates on other matters) or any other obligation to
any Loan Party or any of its Subsidiaries except the obligations expressly set
forth in the Loan Documents and (y) each Lender is acting solely as principal
and not as the agent or fiduciary of any Loan Party or any of its Subsidiaries,
their management, stockholders, creditors or any other Person. Each Loan Party,
for itself and its Subsidiaries, acknowledges and agrees that it has consulted
its own legal and financial advisors to the extent it deemed appropriate and
that it is responsible for making its own independent judgment with respect to
such transactions and the process leading thereto. Each Loan Party, for itself
and its Subsidiaries, agrees that it will not claim that any Lender has rendered
advisory services of any nature or respect, or owes a fiduciary or similar duty
to such Loan Party or Subsidiary, in connection with such transaction or the
process leading thereto.
69
70
BORROWER:
PETROSHARE CORP.
By:
/s/ Stephen J. Foley
Name:
Stephen J. Foley
Title:
Chief Executive Officer
Signature Page To Secured Term Credit Agreement
PROVIDENCE WATTENBERG, LP, as the
Administrative Agent and a Lender
By: Providence Wattenberg GP, LLC, its general
partner
By
/s/ Michael Allen
Name:
Michael Allen
Title:
Manager
By
/s/ Joseph Drysdale
Name:
Joseph Drysdale
Title:
Manager
Annex A
COMMITMENTS
Name of Lender
Applicable
Percentage
Commitments*
Providence Wattenberg, LP
50
%
$
12,500,000
5NR Wattenberg, LLC
50
%
$
12,500,000
TOTAL
100
%
$
25,000,000
* Includes applicable portion of Tranche A advanced to Borrower prior to the
Closing Date.
Annex B
Oil and Gas Properties
[follows this cover page]
Lease
Lessor Name
Lessee Name
Eff Date
Rec County
Book
Page
Entry
Legal Description
Gross Acres
Net Acres
PSC Net Acres
100000A
CLARICE E SHOOK, INDIVIDUALLY AND AS GUARDIAN OF THE ESTATE OF LORETTA W MOORE
LEONARD REED
12/18/84
ADAMS
2934
979
B537477
T1S R67W
SEC 3: W2SESE
20.0000
4.4000
2.2000
100001A
COBANK, FCB A FEDERALLY CHARTERED INSTRUMENTALITY OF THE UNITED STATES
PETROSHARE CORP
11/23/15
ADAMS
20160000017856
T1S R67W
SEC 10: W2NE
80.0000
40.0000
20.0000
FROM THE TOP OF THE J SAND FORMATION TO THE BASE OF THE SUSSEX FORMATION
100001AA
EUGENE J DAY AND JOAN M DAY
AMOCO PRODUCTION COMPANY
07/29/75
ADAMS
2014
816
T1S R67W
SEC 10: THAT PART OF THE W2NE IN HI-LAND ACRES
0.5180
0.2590
0.1295
SECOND FILING DESCRIBED AS:
BLOCK 3, LOT 1
LIMITED TO THOSE DEPTHS AND FORMATIONS BELOW THE BASE OF THE SUSSEX
100001AB
ESEQUIO W CARILLO AND ANNETTE J CARILLO
AMOCO PRODUCTION COMPANY
ADAMS
2016
585
T1S R67W
0.5020
0.2510
0.1255
BLOCK 1, LOT 3
100001AC
HAROLD F ZINN AND DONNA D ZINN
AMOCO PRODUCTION COMPANY
ADAMS
2016
587
T1S R67W
1.3000
0.6500
0.3250
THIRD FILING DESCRIBED AS
BLOCK 9, LOTS 5 & 6
100001AD
JACKIE M CRAWFORD AND BARBARA A CRAWFORD
AMOCO PRODUCTION COMPANY
ADAMS
2016
589
T1S R67W
0.7700
0.3850
0.1925
THIRD FILING DESCRIBED AS
BLOCK 14, LOT 5
100001AE
HERMAN J REIGENBORN AND EULA F REIGENBORN
AMOCO PRODUCTION COMPANY
ADAMS
2016
591
T1S R67W
0.5220
0.2610
0.1305
BLOCK 2, LOT 1
100001AF
WILLIAM L GALEY JR AND BONITA A GALEY
AMOCO PRODUCTION COMPANY
ADAMS
2106
593
T1S R67W
0.6030
0.3015
0.1507
1
Lease
Lessor Name
Lessee Name
Eff Date
Rec County
Book
Page
Entry
Legal Description
Gross Acres
Net Acres
PSC Net Acres
THIRD FILING DESCRIBED AS
BLOCK 9, LOT 7
100001AG
BAYSINGER BROTHERS CONSTRUCTION CO
AMOCO PRODUCTION COMPANY
ADAMS
2016
595
T1S R67W
0.6030
0.3015
0.1507
BLOCK 3, LOT 5
100001AH
BERNICE C REID
AMOCO PRODUCTION COMPANY
ADAMS
2016
597
T1S R67W
0.6030
0.3015
0.1507
THIRD FILING DESCRIBED AS
BLOCK 14, LOT 3
100001AI
EMILIO L BRITO AND CORINE BRITO
AMOCO PRODUCTION COMPANY
ADAMS
2019
858
T1S R67W
0.7030
0.3515
0.1757
BLOCK 4, LOT 4
100001AJ
DONALD R WARD AND VAGOLA B WARD
AMOCO PRODUCTION COMPANY
ADAMS
2019
860
T1S R67W
1.9080
0.9540
0.4770
BLOCK 7, LOTS 6, 7, 8
100001AK
CARL H ROLFSMEYER AND LOIS J ROLFSMEYER
AMOCO PRODUCTION COMPANY
ADAMS
2019
862
T1S R67W
0.5020
0.2510
0.1255
BLOCK 3, LOT 2
100001AL
GEORGE H DOUGLAS AND BARBARA E DOUGLAS
AMOCO PRODUCTION COMPANY
ADAMS
2019
864
T1S R67W
0.7030
0.3515
0.1757
BLOCK 6, LOT 8
2
Lease
Lessor Name
Lessee Name
Eff Date
Rec County
Book
Page
Entry
Legal Description
Gross Acres
Net Acres
PSC Net Acres
100001AM
LYNN C NICK AND WILMA J NICK
AMOCO PRODUCTION COMPANY
ADAMS
2019
866
T1S R67W
3.4200
1.7100
0.8550
THIRD FILING DESCRIBED AS
BLOCK 10, LOT 1 & 8 AND BLOCK 11, LOT 1
100001AN
HOWARD G HERBACK
AMOCO PRODUCTION COMPANY
ADAMS
2019
868
T1S R67W
0.7030
0.3515
0.1757
BLOCK 1, LOT 2
100001AO
MAURICE L WAKEFIELD AND LINDA F WAKEFIELD
AMOCO PRODUCTION COMPANY
ADAMS
2019
870
T1S R67W
0.5220
0.2610
0.1305
BLOCK 1, LOT 4
100001AP
CARROLL A KAATZ AND JUNE L KAATZ
AMOCO PRODUCTION COMPANY
ADAMS
2023
916
T1S R67W
1.3660
0.6830
0.3415
BLOCK 1, LOTS 3 & 4
100001AQ
JEROME L JARMIN AND CATHERINE SUE JARMIN
AMOCO PRODUCTION COMPANY
ADAMS
2023
918
T1S R67W
0.7450
0.3725
0.1862
BLOCK 4, LOT 1
100001AR
TOM S YAMAMOTO AND GEORGE K YAMAMOTO
AMOCO PRODUCTION COMPANY
ADAMS
2023
920
T1S R67W
0.7030
0.3515
0.1757
3
Lease
Lessor Name
Lessee Name
Eff Date
Rec County
Book
Page
Entry
Legal Description
Gross Acres
Net Acres
PSC Net Acres
100001AS
FRANCIS A PETTY AND ROSEMARY E PETTY
AMOCO PRODUCTION COMPANY
ADAMS
2029
530
T1S R67W
1.2050
0.6025
0.3013
BLOCK 4, LOTS 2 & 3
100001AT
VINCENT L LANGFIELD AND MARY L LANGFIELD
AMOCO PRODUCTION COMPANY
ADAMS
2029
532
T1S R67W
0.7670
0.8535
0.1918
THIRD FILING DESCRIBED AS
BLOCK 14, LOT 4
100001AU
LEON J DLUG AND PATRICIA L DLUG
AMOCO PRODUCTION COMPANY
ADAMS
2029
534
T1S R67W
0.6030
0.3015
0.1507
THIRD FILING DESCRIBED AS
BLOCK 5, LOT 7
100001AV
PLEASANT D VICKREY AND KAREN J VICKREY
AMOCO PRODUCTION COMPANY
ADAMS
2029
536
T1S R67W
0.7030
0.3515
0.1757
BLOCK 3, LOT 4
100001AW
RONALD V BAKER AND MARGARET S BAKER
AMOCO PRODUCTION COMPANY
ADAMS
2029
538
T1S R67W
1.2800
0.6400
0.3200
THIRD FILING DESCRIBED AS
BLOCK 13, LOTS 1 & 8 EXCEPT VACANT STREET ON
WEST, AND INCLUDING VACANT
STREET ON THE SOUTH SIDE OF LOT 8
100001AX
TERUAKI YAMAMOTO
AMOCO PRODUCTION COMPANY
ADAMS
2029
540
T1S R67W
0.6030
0.3015
0.1507
BLOCK 8, LOT 4
100001AY
ALFRED B FEDERICO AND MARY S FEDERICO
AMOCO PRODUCTION COMPANY
ADAMS
2029
542
T1S R67W
1.3660
0.6830
0.3415
4
Lease
Lessor Name
Lessee Name
Eff Date
Rec County
Book
Page
Entry
Legal Description
Gross Acres
Net Acres
PSC Net Acres
BLOCK 6, LOTS 5 & 6
100001AZ
HI-LAND ACRES WATER AND SANITATION DISTRICT
AMOCO PRODUCTION COMPANY
ADAMS
2029
544
T1S R67W
6.7200
3.3600
1.6800
THIRD FILING DESCRIBED AS
BLOCK 12, ALL (BEING THE SOUTH 440’ OF THE EAST
635' OF W2NE)
100001B
JESS PAUL HALLER AND GEORGIA HALLER
AMOCO PRODUCTION COMPANY
ADAMS
2019
872
T1S R67W
5.3482
2.6741
1.3371
SEC 10: PART OF THE N2 AS MORE PARTICULARLY
DESCRIBED BY THE LEASE
AS TO THAT PORTION OF THE ABOVE TRACT IN THE NWNE OF SECTION 10 (5.0597 ACRES):
LIMITED TO THOSE DEPTHS AND FORMATIONS BELOW THE BASE OF THE SHANNON FORMATION.
AS TO THAT PORTION OF THE ABOVE TRACT IN THE NENW OF SECTION 10 (.2884 ACRES):
LIMITED TO THOSE DEPTHS AND FORMATIONS BELOW THE BASE OF THE SUSSEX FORMATION.
100001BA
DARRELL D CARVER AND JEANNETTE L CARVER
AMOCO PRODUCTION COMPANY
ADAMS
2046
101
T1S R67W
1.2050
0.6025
0.3013
THIRD FILING DESCRIBED AS
BLOCK 10, LOT 2 & 7
100001BB
ROBERT L O’TOOLE AND LINDA J O’TOOLE
AMOCO PRODUCTION COMPANY
ADAMS
2046
103
T1S R67W
0.5020
0.2510
0.1255
BLOCK 2, LOT 2
100001BC
GROVER O LELLY AND WILMA J KELLY, HUSBAND
AMOCO PRODUCTION COMPANY
ADAMS
2056
68
T1S R67W
0.7030
0.3515
0.1757
5
Lease
Lessor Name
Lessee Name
Eff Date
Rec County
Book
Page
Entry
Legal Description
Gross Acres
Net Acres
PSC Net Acres
AND WIFE
BLOCK 2, LOT 3
LIMITED TO THOSE DEPTHS AND FORMATIONS BELOW THE
BASE OF THE SUSSEX
100001BD
STEVEN W PIPER AND JANET C PIPER
AMOCO PRODUCTION COMPANY
ADAMS
2058
11
T1S R67W
0.6030
0.3015
0.1507
BLOCK 8, LOT 3
BASE OF THE SUSSEX
100001BE
KENNETH L KUHNS AND HIS WIFE, ELIZABETH BOOZ KUHNS
AMOCO PRODUCTION COMPANY
ADAMS
2835
416
T1S R67W
1.4000
0.7000
0.3500
THIRD FILING DESCRIBED AS
BLOCK 14, LOT 1 & 8
BASE OF THE SUSSEX
100001BF
FREDERICK H BRINKERHOFF AND HIS WIFE, ELLEN R BRINKERHOFF
AMOCO PRODUCTION COMPANY
12/02/83
ADAMS
2835
418
484134
T1S R67W
0.6000
0.3000
0.1500
BLOCK 3, LOT 6
BASE OF THE SUSSEX
100001BG
JERRY SATRIANO AND HIS WIFE, MARISA G STRIANO
AMOCO PRODUCTION COMPANY
ADAMS
2835
420
484135
T1S R67W
3.8000
1.9000
0.9500
BLOCK 8, LOT 1
BASE OF THE SUSSEX
100001BH
CHARLES E AUER AND HIS WIFE, MARY F AUER
AMOCO PRODUCTION COMPANY
ADAMS
2843
904
488745
T1S R67W
0.6000
0.3000
0.1500
BLOCK 5, LOT 2
BASE OF THE SUSSEX
100001C
THE FEDERAL LAND BANK OF WICHITA
THE ANSCHUTZ CORPORATION, INC
11/18/70
ADAMS
1650
107
T1S R67W
80.0000
40.0000
20.0000
6
Lease
Lessor Name
Lessee Name
Eff Date
Rec County
Book
Page
Entry
Legal Description
Gross Acres
Net Acres
PSC Net Acres
SEC 10: W2NE
LIMITED TO THE “J” SANDSTONE FORMATION
100001D
FAIRES S WEINANT AND KAY WEINANT
AMOCO PRODUCTION COMPANY
ADAMS
2013
431
T1S R67W
0.6030
0.3015
0.1507
THIRD FILING DESCRIBED AS
BLOCK 14, LOT 2
BASE OF THE SUSSEX
100001E
VIRGIL L KUSKIE AND ERNA L KUSKIE
AMOCO PRODUCTION COMPANY
ADAMS
2013
436
T1S R67W
0.7560
0.3780
0.1890
THIRD FILING DESCRIBED AS
BLOCK 14, LOT 7
BASE OF THE SUSSEX
100001F
GAYLE D FORTIN AND ELNA F FORTIN
AMOCO PRODUCTION COMPANY
ADAMS
2013
438
T1S R67W
1.6500
0.8250
0.4125
THIRD FILING DESCRIBED AS
BLOCK 14, LOT 6
BASE OF THE SUSSEX
100001G
CURTIS B GRIEBEL AND LOIS I GRIEBEL
AMOCO PRODUCTION COMPANY
ADAMS
2013
440
T1S R67W
0.6030
0.3015
0.1507
THIRD FILING DESCRIBED AS
BASE OF THE SUSSEX
100001H
EMIL MARIUCCI AND FLORENCE M MARIUCCI
AMOCO PRODUCTION COMPANY
ADAMS
2013
442
T1S R67W
0.7580
0.3790
0.1895
BLOCK 7, LOT 4
BASE OF THE SUSSEX
100001I
ROBERT D WILLOX AND JEANETTE K WILLOX
AMOCO PRODUCTION COMPANY
ADAMS
2013
444
T1S R67W
1.2030
0.6015
0.3008
BLOCK 7, LOTS 2 & 3
BASE OF THE SUSSEX
7
Lease
Lessor Name
Lessee Name
Eff Date
Rec County
Book
Page
Entry
Legal Description
Gross Acres
Net Acres
PSC Net Acres
100001J
CALVIN W CAYWOOD AND JOAN E CAYWOOD
AMOCO PRODUCTION COMPANY
ADAMS
2013
448
T1S R67W
5.2800
2.6400
1.3200
THIRD FILING DESCRIBED AS
BLOCK 4, LOTS 5-8 AND BLOCK 9, LOTS 1-4
BASE OF THE SUSSEX
100001K
JOHN F HARTNER AND LINDA D HARTNER
AMOCO PRODUCTION COMPANY
ADAMS
2013
450
T1S R67W
1.6530
0.8265
0.4133
THIRD FILING DESCRIBED AS
BLOCK 13, LOTS 4 & 5 AS MORE PARTICULARLY
DESCRIBED BY THE LEASE
BASE OF THE SUSSEX
100001L
W FRED WILDER AND MABEL T WILDER
AMOCO PRODUCTION COMPANY
ADAMS
2013
452
T1S R67W
0.6000
0.3000
0.1500
BLOCK 6, LOT 7
BASE OF THE SUSSEX
100001M
KENNETH W WALKER AND LAWANNA D WALKER
AMOCO PRODUCTION COMPANY
ADAMS
2013
454
T1S R67W
0.7030
0.3515
0.1757
BLOCK 5, LOT 1
BASE OF THE SUSSEX
100001N
OTTO A BODE AND CLARA A BODE
AMOCO PRODUCTION COMPANY
ADAMS
2013
456
T1S R67W
0.6030
0.3015
0.1507
THIRD FILING DESCRIBED AS
BASE OF THE SUSSEX
100001O
MARGARET M JANICH
AMOCO PRODUCTION COMPANY
ADAMS
2013
458
T1S R67W
0.6030
0.3015
0.1507
THIRD FILING DESCRIBED AS
BLOCK 5, LOT 6
BASE OF THE SUSSEX
100001P
ROBERT L YALE AND JOAN G YALE
AMOCO PRODUCTION COMPANY
ADAMS
2013
460
T1S R67W
0.7640
0.3820
0.1910
8
Lease
Lessor Name
Lessee Name
Eff Date
Rec County
Book
Page
Entry
Legal Description
Gross Acres
Net Acres
PSC Net Acres
THIRD FILING DESCRIBED AS
BLOCK 5, LOT 5
BASE OF THE SUSSEX
100001Q
WILLIAM DURAN AND MARY C DURAN
AMOCO PRODUCTION COMPANY
ADAMS
2013
462
T1S R67W
1.2900
0.6450
0.3225
THIRD FILING DESCRIBED AS
BLOCK 13, LOTS 2 & 7 AS MORE PARTICULARLY
DESCRIBED BY THE LEASE
BASE OF THE SUSSEX
100001R
DON A JONES AND MARJORIE J JONES
AMOCO PRODUCTION COMPANY
ADAMS
2014
798
T1S R67W
7.9400
3.9700
1.9850
BLOCK 6, LOTS 1-4 AND BLOCK 7, LOT 5; AND IN
HI-LAND ACRES THIRD FILING
DESCRIBED AS BLOCK 11, LOT 2 AND A PORTION OF
PLOT 1011 AS MORE
PARTICULARLY DESCRIBED BY THE LEASE
BASE OF THE SUSSEX
100001S
DAVID DONALD MOORE AND SARAH C MOORE
AMOCO PRODUCTION COMPANY
ADAMS
2014
800
T1S R67W
0.7430
0.3715
0.1857
THIRD FILING DESCRIBED AS
BLOCK 9, LOT 8
BASE OF THE SUSSEX
100001T
GEORGE Z JANICH AND DOROTHY J ZANICH (JANICH)
AMOCO PRODUCTION COMPANY
ADAMS
2014
802
T1S R67W
1.6360
0.8180
0.4090
THIRD FILING DESCRIBED AS
BLOCK 10, LOTS 3 & 6 AND BLOCK 11, THE NORTH 100’
OF LOT 3
BASE OF THE SUSSEX
100001U
GUY M SMITH AND GRACE E SMITH
AMOCO PRODUCTION COMPANY
ADAMS
2014
804
T1S R67W
0.7000
0.3500
0.1750
THIRD FILING DESCRIBED AS
BLOCK 5, LOT 8
9
Lease
Lessor Name
Lessee Name
Eff Date
Rec County
Book
Page
Entry
Legal Description
Gross Acres
Net Acres
PSC Net Acres
BASE OF THE SUSSEX
100001V
HERBERT TAYLOR AND LOETTA B TAYLOR
AMOCO PRODUCTION COMPANY
ADAMS
2014
806
T1S R67W
4.1800
2.0900
1.0450
BLOCK 1, LOT 1 AND BLOCK 2 LOTS 4, 5, 6
BASE OF THE SUSSEX
100001W
TOM S YAMAMOTO AND ELIZABETH T YAMAMOTO
AMOCO PRODUCTION COMPANY
ADAMS
2014
808
T1S R67W
0.7030
0.3515
0.1757
BLOCK 8, LOT 5
BASE OF THE SUSSEX
100001X
WILLIAM P RENNER JR AN SANDRA S RENNER
AMOCO PRODUCTION COMPANY
ADAMS
2014
810
T1S R67W
0.7030
0.3515
0.1757
BLOCK 3, LOT 3
BASE OF THE SUSSEX
100001Y
WALTER L SMITH AND JACQUELINE SMITH
AMOCO PRODUCTION COMPANY
ADAMS
2014
812
T1S R67W
1.2910
0.6455
0.3227
THIRD FILING DESCRIBED AS
BLOCK 13, LOTS 3 & 6 AND VACANT STREET ADJACENT
TO LOT 6 TO THE SOUTH
BASE OF THE SUSSEX
100001Z
DON D HAZARD AND DOROTHY L HAZARD
AMOCO PRODUCTION COMPANY
ADAMS
2014
814
T1S R67W
0.7450
0.3725
0.1862
BLOCK 3, LOT 7
BASE OF THE SUSSEX
100003A
MARCUS A AND SOPHIA S DEGENHART, HUSBAND AND WIFE
ROCKY MOUNTAIN OIL & GAS COMPANY, INC
06/01/70
ADAMS
1611
128
895351
T1S R67W
360.9480
324.8532
162.4266
SEC 5: NW, NE, PART OF THE SW AND SE AS MORE
PARTICULARLY DESCRIBED BY THE
LEASE
10
Lease
Lessor Name
Lessee Name
Eff Date
Rec County
Book
Page
Entry
Legal Description
Gross Acres
Net Acres
PSC Net Acres
100004A
RALPH J SMITH AND JOHN T LANE
HILIGHT DRILLING CO
03/31/70
ADAMS
1593
232
889440
T1S R67W
SEC 5: W2SESW, EXCLUDING A PARCEL AS MORE
PARTICULARLY DESCRIBED BY THE
LEASE
16.8920
15.2028
7.6014
100010
LORETTA W MOORE, FORMERLY KNOWN AS LORETTA W RUCKER, A MARRIED WOMAN DEALING IN
HER SOLE AND SEPARATE PROPERTY
AMOCO PRODUCTION COMPANY
12/05/74
ADAMS
1972
465
T1S R67W
SEC 10: E2NE
BASE OF THE SUSSEX
FORMATION
80.0000
80.0000
40.0000
100011
JOHN H EHLER
AMOCO PRODUCTION COMPANY
02/21/75
ADAMS
1972
467
T1S R67W
SEC 10: W2NESE, W2SE, SESE
BASE OF THE SHANNON
FORMATION
140.0000
140.0000
70.0000
100012
ROBERT E KORSA AND MERNA M KORSA, HUSBAND AND WIFE
PAUL V HOOVER
03/26/71
ADAMS
1692
211
T1S R67W
SEC 10: E2NESE
LIMITED, FROM THE TOP OF THE “D” SANDSTONE
FORMATION TO THE BASE OF THE
“J” SANDSTONE FORMATION
20.0000
20.0000
10.0000
100013
ANADARKO LAND CORP, A NEBRASKA CORPORATION AND ANADARKO E&P ONSHORE LLC, A
DELAWARE LIMITED LIABILITY COMPANY
KERR-MCGEE OIL & GAS ONSHORE LP, A DELAWARE LIMITED PARTNERSHIP
02/22/16
ADAMS
2016000014318
T1S R67W
SEC 10: THE EAST 40.00 FEET OF THE NESE
FROM SURFACE TO TOP OF D SAND AND ALL DEPTHS
BELOW BASE OF J SAND
1.2200
1.2200
0.6100
100019A
LILLIAN H HILL
PETROGULF ENERGY COMPANY
05/13/82
BROOMFIELD
2646
667
378777
T1S 68W
SEC 15: NENW AND THAT PART OF HE N2NE NORTH AND
WEST OF THE RIGHT-OF-WAY OF
THE BULL CANAL
120.0000
24.0000
0.8247
100019B
AVICE H KERR
PETROGULF ENERGY COMPANY
BROOMFIELD
2646
667
378777
T1S 68W
THE BULL CANAL
120.0000
24.0000
0.8247
100019C
DARRELL R AND MARY DOUGHTY, HUSBAND AND WIFE
PETROGULF ENERGY COMPANY
06/29/82
BROOMFIELD
2663
270
388069
T1S 68W
THE BULL CANAL
120.0000
24.0000
0.8247
100019D
JAMES L REESE AND DOREY REESE, HUSBAND AND WIFE
PETROGULF ENERGY COMPANY
06/01/82
BROOMFIELD
2663
261
388065
T1S R68W
SEC 15: NENW AND THAT PART OF THE N2NE NORTH AND
120.0000
24.0000
0.8247
11
Lease
Lessor Name
Lessee Name
Eff Date
Rec County
Book
Page
Entry
Legal Description
Gross Acres
Net Acres
PSC Net Acres
THE BULL CANAL
100019E
SOLON E THORNTON AND MILDRED THORNTON, HUSBAND AND WIFE
PETROGULF ENERGY COMPANY
BROOMFIELD
2660
273
386464
T1S 68W
THE BULL CANAL
120.0000
24.0000
0.8247
100020
NORMA C MATHENA ROBERT F BOLTON AND MARY M WEIGANDT, JOINT TENANTS
PETROGULF ENERGY COMPANY
04/05/82
BROOMFIELD
2648
770
379880
T1S R68W
SEC 15: A PART OF THE NW AS MORE PARTICULARLY
DESCRIBED BY THE LEASE
47.0000
47.0000
1.6150
100021
MILTON W FONAY AND VIRGINIA M FONAY, HUSBAND AND WIFE
VESSELS OIL & GAS COMPANY
01/29/90
ADAMS ADAMS
3644
3698
806
959
927006
957736
T1S R68W
SEC 22: S2NW
80.0000
80.0000
8.4799
100022
FRONT RANGE INVESTMENT CORPORATION OF COLORADO
ROCKY MOUNTAIN OIL AND GAS COMPANY
01/14/71
ADAMS
1657
61
910296
T1S R67W
SEC 18: E2NE, W2NE
E2NE: FROM THE TOP OF THE DAKOTA TO THE BASE OF THE DAKOTA
FROM THE TOP OF THE SURFACE TO THE TOP OF THE DAKOTA
W2NE: FROM THE TOP OF THE DAKOTA TO THE BASE OF THE DAKOTA
160.0000
160.0000
60.0000
100023
ABNER GUTHRIE AND VIOLET GUTHRIE, HUSBAND AND WIFE
TOM VESSELS
05/07/70
ADAMS
1601
50
INSOFAR AND ONLY INSOFAR AS LEASE COVERS:
T1S R67W
SEC 2: N2
285.2600
285.2600
70.4050
100024
UNION PACIFIC RAILROAD COMPANY
PAN AMERICAN PETROLEUM CORPORATION
08/06/70
ADAMS
1623
66
T2S R64W
SEC 15: S2
320.0000
320.0000
160.0000
100025
MOUNTAIN VIEW WATER USERS ASSOCIATION
ROCKY MOUNTAIN GAS AND OIL PRODUCERS
02/02/72
ADAMS
1781
504
950828
T1S R67W
SEC 4: PART OF THE SW AS MORE PARTICULARLY
DESCRIBED BY THE LEASE
0.2290
0.2290
0.1145
100026
THE COLORADO NATIONAL BANK OF DENVER, TRUSTEE
HILIGHT DRILLING CO
08/27/70
ADAMS
1627
131
900605
T1S R67W
SEC 4: PART OF THE W2 AS MORE PARTICULARLY
DESCRIBED BY THE LEASE
221.7140
221.7140
110.8570
100027A
NOEL AND PAULA HUBERT
ROCKY MOUNTAIN GAS AND OIL PRODUCERS, INC
01/26/72
ADAMS
1779
447
949531
T1S R67W
SEC 4: PART OF THE E2W2 AS MORE PARTICULARLY
DESCRIBED BY THE LEASE, PART
OF THE NWSE AS MORE PARTICULARLY DESCRIBED BY THE
LEASE
14.8845
7.4423
3.7212
100027B
EDITH B MCCLINTOCK AND THE FIRST NATIONAL BANK OF DENVER, CO-SUCCESSOR
TESTAMENTARY TRUSTEE OF THE ESTATE OF T E MCCLINTOCK, DECEASED
MARTIN J FREEDMAN
07/15/70
ADAMS
1666
308
T1S R67W
SEC 4: PART OF THE NENW, NWSE, NESW AS MORE
31.0424
15.5213
7.7607
100027C
PAUL E AND NORMA L EDWARDS
ROCKY MOUNTAIN OIL AND GAS CO
06/17/70
ADAMS
1618
71
897590
T1S R67W
SEC 4: A PART OF THE NENW AS MORE PARTICULARLY
DESCRIBED BY THE LEASE
16.1579
8.0790
4.0395
12
Lease
Lessor Name
Lessee Name
Eff Date
Rec County
Book
Page
Entry
Legal Description
Gross Acres
Net Acres
PSC Net Acres
100028A
HERBERT H CHAMPLIN
NORTH AMERICAN RESOURCES COMPANY
05/08/95
ADAMS
4541
902
T3S R64W
SEC 8: W2SW LESS THOSE TRACTS MORE PARTICULARLY
DESCRIBED IN THE LEASE
70.3510
46.9007
23.4504
100028B
JACK D DANFORD
NORTH AMERICAN RESOURCES COMPANY
05/04/95
ADAMS
4532
380
T3S R64W
DESCRIBED IN THE LEASE
70.3510
23.4503
11.7251
100029
DANFORD CHAMPLIN FARMS LTD
NORTH AMERICAN RESOURCES
ADAMS
4532
383
T3S W64W
SEC 8: A TRACT OF LAND IN THE SW4 MORE
PARTICULARLY DESCRIBED IN THE LEASE
9.1940
9.1940
4.5970
100030
THE BOARD OF COUNTY COMMISSIONERS, COUNTY OF ADAMS, STATE OF COLORADO
NORTH AMERICAN RESOURCES COMPANY
06/06/95
ADAMS
4541
899
C0086537
T3S R64W
SEC 8: THE NORTH 15 FEET OF THE SOUTH 45 FEET OF
THE SW4 AS DESCRIBED
ONBOOK 2835 PAGE 822 AND RE-RECORDED IN BOOK 2838
PAGE 545
0.9720
0.9720
0.4860
100031
LAWRENCE E AND DONNA M WAILES, HUSBAND AND WIFE
MACEY AND MERSHON OIL INC
03/23/82
ADAMS
2633
289
371009
T2S R63W
SEC 8: NE
160.0000
160.0000
80.0000
100032
ADAMS
2633
285
371008
T2S R63W
SEC 8: SE
160.0000
160.0000
80.0000
100033
ADALINE DINSMORE CHAPMAN, A MARRIED WOMAN DEALING IN HER SOLE AND SEPARATE
PROPERTY
W B MACEY AND PAYL M MERSHON, JR
04/15/80
ADAMS
2468
874
271732
T1S R64W
SEC 28: N2SE, NE
240.0000
240.0000
120.0000
100034A
JAMES M WORTZ, A MARRIED MAN DEALING WITH HIS SOLE AND SEPARATE PROPERTY
WILLIAM URBAN JR
03/26/82
ADAMS
2634
496
T2S R64W
SEC 22: NENW, NWNW, SWNW, SENW
160.0000
20.0000
10.0000
100034B
ADA MCCAULEY HILL, WIDOW OF GEORGE A HILL
WILLIAM URBAN JR
ADAMS
2637
94
T2S R64W
160.0000
20.0000
10.0000
100034C
JAMES H WORTZ AKA JAMES WORTZ AND ELEANOR THOMPSON WORTZ, HUSBAND AND WIFE
05/26/82
ADAMS
2658
856
T2S R64W
160.0000
20.0000
10.0000
100034D
CHARLES S THOMPSON, AKA SANTFORD THOMPSON, A MARRIED MAN DEALING IN HIS SOLE AND
SEPARATE PROPERTY
ADAMS
2658
852
T2S R64W
160.0000
20.0000
10.0000
13
Lease
Lessor Name
Lessee Name
Eff Date
Rec County
Book
Page
Entry
Legal Description
Gross Acres
Net Acres
PSC Net Acres
100034E
JOHN W HASSELL AND MARY K HASSELL, HUSBAND AND WIFE
ADAMS
2658
860
T2S R64W
160.0000
40.0000
20.0000
100034F
EDITH D MARLATT AND IRA MARLATT, WIFE AND HUSBAND
04/22/83
ADAMS
2739
586
T2S R64W
160.0000
40.0000
20.0000
100035
THE SMITH FARMS, A PARTNERSHIP
C K HOEFLE, INC
08/12/91
ADAMS
3810
435
T2S R64W
SEC 22: NWNE, SW
200.0000
200.0000
60.0000
100036A
KALCEVIC FARMS INC
07/30/91
ADAMS
3810
440
T2S R64W
SEC 22: S2SE
80.0000
40.0000
12.0000
100036B
ROBERT E HALVERSON, A MARRIED MAN DEALING IN HIS SOLE AND SEPARATE PROPERTY
C K HOEFLE INC
ADAMS
3810
444
T2S R64W
SEC 22: S2SE
80.0000
20.0000
6.0000
100036C
RAYMOND D HALVERSON, A SINGLE MAN
C K HOEFLE INC
ADAMS
3810
442
T2S R64W
SEC 22: S2SE
80.0000
20.0000
6.0000
100037
JOHN H EHLER AND J GAYLE EHLER, HUSBAND AND WIFE
M E THRASH
05/05/70
ADAMS
1602
241
T1S R67W
SEC 4: NWSE PART OF, SESE PART OF
68.7600
68.7600
34.3800
100038
MELVIN F PORTERFIELD AND PATRICIA ANN PORTERFIELD, HUSBAND AND WIFE
ENERGY MINERALS CORP
04/08/75
ADAMS
1990
970
T1S R67W
SEC 4: PART OF THE SE AS MORE PARTICULARLY
DESCRIBED BY THE LEASE
5.0100
5.0100
2.5050
100039
ADAMS COUNTY, A POLITICAL SUBDIVISION OF THE STATE OF COLORADO, ACTING BY AND
THROUGH ITS DULY AUTHORIZED BOARD OF COUNTY COMMISSIONERS
ENERGY MINERAL CORPS
04/14/75
ADAMS
1995
2
T1S R67W
SEC 4: A PART OF THE SE AS MORE PARTICULARLY
DESCRIBED BY THE LEASE
1.8300
1.8300
0.9150
100040
SIGNAL RESERVOIR AND IRRIGATION COMPANY
HIGHLIGHT DRILLING CO., INC.
06/06/70
ADAMS
1604
126
T1S R67W
SEC 4: THAT PART OF THE NW OF SEC 4 SURROUNDING
AND ENCOMPASSING THE SIGNAL
RESERVOIR
68.0470
68.0470
0.0000
100041
BRYCE L BREDEHOFT, TRUSTEE UNDER THE WILL OF GEORGE F BROWN, BRYCE L BREDEHOFT,
TRUSTEE UNDER THE WILL OF PEARL E BROWN, BRYCE L BREDEHOFT A/K/A BRYCE L
BREDERHOFT
PAUL V HOOVLER
11/03/71
ADAMS
1762
476
944133
T1S R67W
SEC 6: PART OF THE SW AND A PARCEL IN THE NWNWSE
AS MORE PARTICULARLY DESCRIBED BY THE LEASE
NWSW: FROM THE TOP OF SURFACE TO TOP OF JSAND AND BASE OF JSAND TO BASE OF
DAKOTA
NESW: FROM THE BASE OF SUSSEX TO TOP OF JSAND AND BASE OF JSAND TO BASE OF
DAKOTA
DAKOTA
155.7440
155.7440
50.5100
14
Lease
Lessor Name
Lessee Name
Eff Date
Rec County
Book
Page
Entry
Legal Description
Gross Acres
Net Acres
PSC Net Acres
100042
ELMER E OESTMAN AND KAY A OESTMAN, HIS WIFE
BYRON OIL INDUSTRIES, INC
02/20/79
ADAMS
2322
776
B184519
T1S R67W
SEC 6: PARTS OF THE SWSW AND SESW AS MORE PARTICULARLY DESCRIBED BY THE LEASE
5.0400
5.0400
0.1260
100043
ARTHUR G EGAN AND EDNA EGAN
CHAPARRAL RESOURCES, INC
08/04/76
ADAMS
2095
905
B0044624
T1S R67W
SEC 6: PART OF THE SESW AS MORE PARTICULARLY
DESCRIBED BY THE LEASE
FROM BASE OF SUSSEX TO TOP JSAND AND BASE JSAND
TO BASE DAKOTA
13.3300
13.3300
6.6650
100044
CLAYTON E WYMAN AND GRETTA WYMAN
ALAN J BYRON D/B/A BYRON OIL INDUSTRIES
12/12/73
ADAMS
1904
131
25002
T1S R67W
SEC 6: PART OF THE NWSE AS MORE PARTICULARLY
DESCRIBED BY THE LEASE
SWSE, SESE: FROM TOP OF SURFACE TO TOP OF JSAND AND BASE OF JSAND TO BASE OF
DAKOTA
NESE: FROM BASE OF SUSSEX TO TOP OF JSAND AND BASE OF JSAND TO BASE OF DAKOTA
148.4419
148.4419
58.7210
100045
CASPER SACK AND MOLLY SACK, HUSBAND AND WIFE
T S PACE
03/02/70
ADAMS
1588
224
887712
T1S R67W
SEC 6: PART OF THE NWSE, SWSE AND S2NW AS MORE PARTICULARLY DESCRIBED BY
THE LEASE PART OF THE SWSE AS MORE PARTICULARLY
DESCRIBED BY THE LEASE
SWSE: FROM TOP OF THE SURFACE TO TOP OF JSAND AND BASE OF JSAND TO BASE OF
DAKOTA
S2NW: FROM TOP OF THE SUSSEX TO BASE OF DAKOTA
84.6800
84.6800
39.8400
100046A
JAMES A CORCILIUS AND LYDA M CORCILIUS, HUSBAND AND WIFE
PAUL V HOOVLER
01/12/71
ADAMS
1675
345
916182
T1S R67W
SEC 6: N2NW, LOT 1, 2, 3, 4, 5, 6, 7 CORCILIUS ACRES
FROM THE TOP OF SUSSEX TO BASE OF DAKOTA
66.7400
33.3700
16.6850
100046B
LUCY V TRUJILLO
PAUL V HOOVLER
04/26/71
ADAMS
1696
423
922923
T1S R67W
66.7400
33.3700
16.6850
100047
ALBERT SACK AND ANN Y SACK, HUSBAND AND WIFE
T S PACE
ADAMS
1588
230
T1S R67W
SEC 6: NE
148.2500
148.2500
0.0000
100048
KATHERINE J SACK AND GEORGE E SACK
AMOCO PRODUCTION COMPANY
01/28/75
ADAMS
1979
275
T1S R67W
SEC 6: PART OF THE NE AS MORE PARTICULARLY DESCRIBED BY THE LEASE
2.0700
2.0700
0.0000
100049
ANTHONY PALIZZI AND VERA L PALIZZI, HUSBAND
DAN H SEBASTIAN
10/14/70
ADAMS
1676
74
916326
T1S R67W
10.7200
10.7200
1.0050
15
Lease
Lessor Name
Lessee Name
Eff Date
Rec County
Book
Page
Entry
Legal Description
Gross Acres
Net Acres
PSC Net Acres
AND WIFE
SEC 18: A PARCEL OF LAND IN THE SW AS MORE
FROM THE BASE OF THE SUSSEX TO THE TOP OF THE JSAND
100050
ROBERT M WILLSEY AND PATRICIA J WILLSEY, HUSBAND AND WIFE
DAN H SEBASTIAN
ADAMS
1676
69
T1S R67W
9.4900
9.4900
0.8897
SEC 18: TWO PARCELS OF LAND IN THE SW AS MORE
100051
FRANK VERNON VAN DEUSEN AND GERTRUDE M VAN DEUSEN, HUSBAND AND WIFE
DAN H SEBASTIAN
02/18/71
ADAMS
1678
107
917015
T1S R67W
22.4100
22.4100
2.1009
100052
DONALD VAN DEUSEN AND BARBARA L VAN DEUSEN
DAN J SEBASTIAN
ADAMS
1678
110
917016
T1S R67W
2.5600
2.5600
0.2400
100053
ADAMS COUNTY BOARD OF COMMISSIONERS
03/17/71
ADAMS
1683
357
918821
5.1200
5.1200
0.4800
T1S R67W
SEC 18: LOT 21, BLOCK 1 OF THE LAYTON SUBDIVISION
100054
LAUREN C STRASSBURG AND JANICE K STRASSBURG, HUSBAND AND WIFE
DAN H SEBASTIAN
ADAMS
1663
404
T1S R67W
5.0200
5.0200
0.4706
SEC 18: SW BLOCK 2, LOTS 13, 14, 15, 16 OF THE
LAYTON SUBDIVISION
100055
MUNIR F IBRAHIM AND ARDELLA N IBRAHIM
04/07/71
ADAMS
1691
198
921184
T1S R67W
11.0700
11.0700
1.0378
SEC 18: SE, BLOCK 2, LOTS 12, 13, 14, 15, 16, 17,
18, 19 OF THE LAYTON SUBDIVISION
100056
DONALD J SHELLEY AND PATRICIA JO ANNE SHELLY, HUSBAND AND WIFE
DAN H SEBASTIAN
ADAMS
1663
414
4.8800
4.8800
0.4575
T1S R67W
SEC 18: BLOCK 1, LOTS 5, 6, 7, 8 OF THE LAYTON SUBDIVISION
100057
LOUIS A CARICATO AND BETTE JEAN CARICATO, HUSBAND AND WIFE
DAN H SEBASTIAN
ADAMS
1676
78
916328
T1S R67W
SEC 18: SW, BLOCK 1, LOTS 9, 10, 11, 12 OF THE LAYTON SUBDIVISION
5.0700
5.0700
0.4753
100058
JOE A HOLEMAN AND IONE S HOLEMAN, HUSBAND AND WIFE
DAN H SEBASTIAN
ADAMS
411
912374
5.2300
5.2300
0.4903
T1S R67W
SEC 18: SW, BLOCK 1, LOTS 1, 2, 3, 4 OF THE
LAYTON SUBDIVISION
100059
SAMUEL L DUNHAM AND CARMA J DUNHAM, HUSBAND AND WIFE
DAN H SEBASTIAN
ADAMS
1663
401
912368
T1S R67W
5.0700
5.0700
0.4753
SEC 18: SW, BLOCK 2, LOTS 5, 6, 7, 8 OF THE
LAYTON SUBDIVISION
100060
CHARLES D HOYT AND JEANNETTE L HOYT, HUSBAND AND WIFE
DAN H SEBASTIAN
11/04/70
ADAMS
1663
408
912372
5.0300
5.0300
0.4716
T1S R67W
SEC 18: BLOCK 2, LOT 1, 2, 3, 4 OF THE LAYTON
16
Lease
Lessor Name
Lessee Name
Eff Date
Rec County
Book
Page
Entry
Legal Description
Gross Acres
Net Acres
PSC Net Acres
SUBDIVISION
100061
TERYL J RICHMAN AND CARYLON J RICHMAN, HUSBAND AND WIFE
DAN H SEBASTIAN
ADAMS
1663
421
912379
T1S R67W
5.0300
5.0300
0.4716
SEC 18: SW, BLOCK 2, LOTS 9, 10, 11 OF THE LAYTON
SUBDIVISION
100062
D GEORGE LAYTON AND EDNA E LAYTON, HUSBAND AND WIFE
DAN H SEBASTIAN
ADAMS
1676
63
916322
47.7900
47.7900
4.4803
T1S R67W
SEC 18: A PORTION OF THE SW AS MORE PARTICULARLY
DESCRIBED BY THE LEASE
100063
GARY H WEBER AND GAYLIA A WEBER, HUSBAND AND WIFE
CREST OIL AND GAS COMPANY
06/06/72
ADAMS
1864
652653
T1S R67W
5.4700
5.4700
0.5128
DESCRIBED BY THE LEASE
100064
06/16/72
ADAMS
1864
654
916322
T1S R67W
0.3500
0.3500
0.0328
SEC 18: IN THE SW, A STRIP OF LAND BEGINNING IN
THE SE CORNER OF SAID SW,
THENCE 20 FEET WEST, THENCE RUNNING NORTH 760.00
FEET, THENCE EAST 20 FEET
TO THE BORDER LINE OF SAID SW, THENCE SOUTH TO
THE POINT OF BEGINNING
100065
FIRST INTERSTATE BANK OF DENVER, SUCCESSOR TRUSTEE OF JOSEPH A LEISLE
MARTINEX CORPORATION
01/09/85
ADAMS
2962
432
R552153
T1S R67W
160.0000
160.0000
80.0000
SEC 8: NE
BASE OF THE SUSSEX TO BASE OF THE DAKOTA
100066
FRANCIS I TSUZUKI AND CALVIN C MCCREGOR
SANDS-AMERICAN CORP
04/26/73
ADAMS
1870
392
T1S R67W
150.0000
150.0000
75.0000
SEC 28: NE, EXCEPT A PARCEL AS MORE PARTICULARLY
DESCRIBED BY THE LEASE
100068A
BROMLEY & BUCKLEY LLC
PETROSHARE CORP
10/26/16
ADAMS
2016000095806
T1S R66W
237.6600
118.8300
59.4150
SEC 17: A PORTION OF THE NE AS MORE PARTICULARLY
DESCRIBED BY THE LEASE
100068B
CASE 238 LLC
PETROSHARE CORP
ADAMS
201600095808
T1S R66W
237.6600
118.8300
59.4150
DESCRIBED BY THE LEASE
100069
CLARKE D CARLSON, A MARRIED MAN DEALING IN HIS SOLE AND SEPARATE PROPERTY
PETROSHARE CORP
ADAMS
2016000095807
T1S R66W
2.2195
2.2195
1.1098
SEC 17: THAT PART OF THE NE AS MORE PARTICULARLY
DESCRIBED BY THE LEASE
100070A
SABLE LAND LLC
PETROSHARE CORP
ADAMS
2016000095809
T1S R66W
129.7037
69.4841
34.7420
SEC 31: A PARCEL OF LAND IN THE NW AS MORE
PARTICULARLY DESCRIBED BY THE
LEASE
100075
CHAMPLIN PETROLEUM COMPANY
AMOCO PRODUCTION COMPANY
05/01/72
ADAMS
671
9690269
INSOFAR AND ONLY INSOFAR AS LEASE COVERS: T1S R65W
613.7600
613.7600
227.5874
17
Lease
Lessor Name
Lessee Name
Eff Date
Rec County
Book
Page
Entry
Legal Description
Gross Acres
Net Acres
PSC Net Acres
SEC 15: S2SE
SEC 19: SE, E2SW, LOT 2 (53.76 acres ADA W2SW4)
SEC 23: SW, W2SE
100076
UNION PACIFIC RAILROAD
PAN AMERICAN PETROLEUM CORPORATION
ADAMS
1623
63
899244
475.0200
475.0200
166.2570
T1S R64W
SEC 17: W2NW, N2SE
SEC 19: LOT 1 (76.36, ADA W2NW), E2NW, S2 LOT 2
(38.66, ADA SWSW), SESW
SEC 29: N2NW
100077
CHAMPLIN PETROLEUM COMPANY
AMOCO PRODUCTION COMPANY, A DELAWARE CORPORATION
ADAMS
1807
160
966651
T2S R64W
880.0000
880.0000
308.0000
SEC 21: NESE, S2SE, NWSE, NW
SEC 23: N2SW
SEC 25: N2SE
SEC 27: NW,SE
T2S R65W
SEC 13: W2NW
100078
CHAMPLIN PETROLEUM COMPANY
AMOCO PRODUCTION COMPANY
06/30/77
ADAMS
2167
15
1280.8000
1280.8000
448.2800
T1S R59W
SEC 33: S2
T2S R59W
SEC 5: SW, NWSE, S2SE, NESE
T2S R60W
SEC 13: SW, NW
SEC 3: LOT 3(40.30), LOT 4(40.50), S2NW, SW
100079
CHAMPLIN PETROLEUM COMPANY
AMOCO PRODUCTION COMPANY
ADAMS
1723
140
931331
1120.0000
1120.0000
392.0000
T2S R63W
SEC 3: S2NW, N2SE, S2SW
SEC 15: W2 (LIMITED TO DEPTHS BELOW THE BASE OF
THE “J” SANDSTONE
FORMATION)
SEC 21: SWSW, NW(LIMITED TO THE BASE OF THE “J”
SANDSTONE FORMATION)
SEC 27: NESE, SWNW, W2SW, SESW, SESE, NWSE, NESW,
SWSE
100080
UNION PACIFIC RAILROAD COMPANY
PAN AMERICAN PETROLEUM COMPANY
ADAMS
1623
66
899245
160.0000
160.0000
56.0000
T1S R64W
SEC 35: SW
100081A
WALT HABEL, INC
JOHN W MCKNAB
07/05/69
ADAMS
1535
425
870137
840.0000
837.5000
293.1250
T2S R62W
SEC 22: W2
SEC 23: W2NW, SW, N2SE, SESE
SEC 34: E2NW, NESW, SESW LIMITED TO DEPTHS BELOW
18
Lease
Lessor Name
Lessee Name
Eff Date
Rec County
Book
Page
Entry
Legal Description
Gross Acres
Net Acres
PSC Net Acres
7270'
100081B
JOHN T BURCH
JOHN W MCKNAB
07/28/69
ADAMS
1536
72
870246
40.0000
2.5000
0.8750
T2S R62W
SEC 23:SWSW
100082
CHAMPLIN PETROLEUM COMPANY
AMOCO PRODUCTION COMPANY
03/14/72
ADAMS
1793
445
958256
200.0000
200.0000
70.0000
T2S R62W
SEC 23: E2NW
T3S R62W
SEC 5: S2SE
SEC 9: NWSW
100083
STATE OF COLORADO
ROBERT L BAYLESS, AGENT
03/30/89
ADAMS
3564
613
B882077
320.0000
320.0000
152.4179
T1S R65W
SEC 16: E2
100084
CHAMPLIN PETROLEUM COMPANY
AMOCO PRODUCTION COMPANY
10/05/77
ARAPAHOE
2685
496
1686706
679.6300
679.6300
237.8705
T5S R62W
SEC 29: NWNW, W2SE, S2SW, N2SW, S2NW
T5S R63W
SEC 1: LOT 2 (79.63 ADA N2NW), S2NW, S2
100085
CHAMPLIN PETROLEUM COMPANY
AMOCO PRODUCTION COMPANY
07/02/76
ARAPAHOE
2477
29
320.0000
320.0000
112.0000
T4S 63W
SEC 35: SW, S2NW, SWSE, NWSE
100086
CHAMPLIN PETROLEUM COMPANY
AMOCO PRODUCTION COMPANY
08/01/77
ELBERT
309
187
720.0000
720.0000
252.0000
T6S R64W
SEC 15: W2SE, SESE
SEC 17: NESW, W2SE, NESE, S2SW, SESE
SEC 19: W2SE, W2NE, SESE, NESE
SEC 21: NWNW, SWNW
100087
LORENA M NORDMAN ESTATE BY
ROCKY MOUNTAIN PRODUCTION COMPANY
08/18/82
ELBERT
349
955
243425
320.0000
320.0000
112.0000
T6S R64W
SEC 20: E2
100088
CHAMPLIN PETROLEUM COMPANY
AMOCO PETROLEUM COMPANY
12/12/77
WELD
821
1742594
1680.0000
1680.0000
607.5472
T1N R64W
SEC 27: SESE (LIMITED TO 7754’), SW (LIMITED TO
7852’), S2NW (LIMITED TO
7879'), W2SE, NESE (LIMITED TO 7754');
SEC 33: W2SW, E2SW, SE (LIMITED TO “J” SANDSTONE
FORMATION)
SEC 35: NW, N2SW (LIMITED TO 7730’)
SEC 31: E2W2, W2SE
T1N 63W
19
Lease
Lessor Name
Lessee Name
Eff Date
Rec County
Book
Page
Entry
Legal Description
Gross Acres
Net Acres
PSC Net Acres
SEC 29: NWNW, NENW, S2NW, SW
SEC 31: N2SE, E2SW
100089A
RAYMOND L KISSLER AND MILDREDR KISSLER, HUSBAND AND WIFE
CENTENNIAL PETROLEUM, INC
03/19/82
WELD
967
861
01890931
30.6900
15.3450
6.1953
T4N R66W
SEC 21: THAT PORTION OF THE N2NW LYING EAST OF
THE EASTERLY RIGHT-OF-WAY
LINE OF THE WESTERN MUTUAL COMPANY DITCH,
CONTAINING 30.69 ACRES, MORE OR LESS
100089B
LILLIE M ECKHARDT ESTATE
CENTENNIAL PETROLEUM INC
05/01/82
WELD
970
01895211
30.6900
7.6725
3.0976
T4N R66W
100089C
FLORENCE C MILLER, A WIDOW
CENTENNIAL PETROLEUM INC
04/19/82
WELD
970
1895212
30.6900
7.6725
3.0976
T4N R66W
100090
UNION PACIFIC RAILROAD COMPANY
PAN AMERICAN PETROLEUM CORPORATION
08/11/70
ADAMS
1623
299
899402
T3S R61W
234.3500
234.3500
82.0225
SEC 9: NWSE
SEC 15: E2SW
SEC 17: SWNW
SEC 19: LOT 2 (34.35 ADA SWNW), SENW
100091
UNION PACIFIC RAILROAD COMPANY
PAN AMERICAN PETROLEUM CORPORATION
11/09/70
ADAMS
1651
6
908336
560.0000
560.0000
196.0000
T2S 63W
SEC 1: E2SW, W2SE
SEC 11: E2W2, SE
SEC 25: W2NW
100092
UNION PACIFIC RAILROAD COMPANY
PAN AMERICAN PETROLEUM CORPORATION
01/04/71
ADAMS
1666
52
913126
320.0000
320.0000
112.0000
T1S R63W
SEC 7: E2NW
T1S R64W
SEC 1: NWSW, NESW
SEC 5: NWSE, NESE
SEC 9: W2SE
100093
CHAMPLIN PETROLEUM COMPANY
AMOCO PRODUCTION COMPANY
08/02/71
ADAMS
1743
178
937830
120.0000
120.0000
42.0000
T2S 61W
SEC 15: N2SW
SEC 19: SWSE
100094
CHAMPLIN PETROLEUM COMPANY
AMOCO PRODUCTION COMPANY
10/25/71
ADAMS
1767
180
360.0000
360.0000
174.7803
20
Lease
Lessor Name
Lessee Name
Eff Date
Rec County
Book
Page
Entry
Legal Description
Gross Acres
Net Acres
PSC Net Acres
T2S R66W
SEC 9: W2
SEC 11: SWSW
100095
CHAMPLIN PETROLEUM COMPANY
AMOCO PRODUCTION COMPANY
10/31/75
ADAMS
2041
119
B010058
T2S R64W
SEC 31: E2SW
80.0000
80.0000
28.0000
100096
CHAMPLIN PETROLEUM COMPANY
AMOCO PRODUCTION COMPANY
01/30/76
ADAMS
2082
672
B036256
120.0000
120.0000
42.0000
T3S R62W
SEC 21: S2SW
SEC 23: SWNW
100097
CHAMPLIN PETROLEUM COMPANY
AMOCO PRODUCTION COMPANY
10/01/76
ADAMS
WELD
2122
1284
257
2235518
640.0000
640.0000
218.6000
T1S R65W
SEC 3: S2
T1N R65W
SEC 21: S2
100098
CHAMPLIN PETROLEUM COMPANY
AMOCO PRODUCTION COMPANY
06/13/77
ADAMS
2163
127
B086114
1369.2800
1369.2800
479.2480
T1S R62W
SEC 21: S2
SEC 31: LOT 2 (89.28), E2SW ADA SW, (LIMITED TO
DEPTHS BELOW 7578’)
SEC 33: SW, NWSE, S2SE
T1S R63W
SEC 15: E2W2, N2SE, SWSE
SEC 25: SW, N2SE, SWSE, SESE
100099
CHAMPLIN PETROLEUM COMPANY
AMOCO PRODUCTION COMPANY
06/17/77
ADAMS
2161
407
B085078
960.0000
960.0000
336.0000
T1S R61W
SEC 3: S2
SEC 27: W2
SEC 35: SW, NW
100100
CHAMPLIN PETROLEUM COMPANY
AMOCO PRODUCTION COMPANY
04/01/77
ADAMS
2147
154
B076338
200.0000
200.0000
70.0000
T2S R61W
SEC 11: S2SW, W2NW, NWSW
100101
CHAMPLIN PETROLEUM COMPANY
AMOCO PRODUCTION COMPANY
03/03/77
ELBERT
306
140
213950
160.0000
160.0000
56.0000
T6S R62W
SEC 1: N2SW, SWSW, SESW
100102
CHAMPLIN PETROLEUM COMPANY
AMOCO PRODUCTION COMPANY
10/11/76
WELD
787
1709361
T1N R64W
SEC 15: E2NW, W2SW, W2SE
240.0000
240.0000
84.0000
100103A
OLIN J THOMPSON AND MYRTLE E THOMPSON, WIFE
THE COLTON COMPANY
05/09/81
ADAMS
2535
186
B311665
80.0000
40.0000
14.0000
T3S R61W
SEC 10: S2SW
21
Lease
Lessor Name
Lessee Name
Eff Date
Rec County
Book
Page
Entry
Legal Description
Gross Acres
Net Acres
PSC Net Acres
100103B
CLARA A PRICE, WIDOW
THE COLTON COMPANY
ADAMS
2535
184
B311664
80.0000
40.0000
14.0000
T3S R61W
SEC 10: S2SW
100104
CHARLES T HEINRICY AND DAVEDA M HEINRICY
JOHN W MCKNAB
07/07/69
ADAMS
1534
196
869650
80.0000
80.0000
28.0000
T3S R62W
SEC 22: N2NE
100105
THE WESTERN MUTUAL DITCH COMPANY, FORMERLY
CENTENNIAL PETROLEUM INC
09/07/82
WELD
977
1903523
2.6500
2.6500
1.0699
THE WESTERN DRAINAGE AND WATER SUPPLY COMPANY
T4N R66W
SEC 21: THAT PORTION OF THE WESTERN MUTUAL DITCH
COMPANY DITCH LYING IN THE
N2NW4, CONTAINING 2.65 ACRES, MORE OR LESS.
100106
JAMES D KISSLER AND MARILEE KISSLER, HUSBAND AND WIFE
CENTENNIAL PETROLEUM, INC
WELD
967
1890933
T4N R66W
46.6600
46.6600
18.8382
SEC 21:THAT PORTION OF THE N2NW4 LYING WEST OF
THE WESTERLY RIGHT-OF-WAY
LINE OF THE WESTERN MUTUAL DITCH COMPANY DITCH,
CONTAINING 46.66 ACRES,
MORE OR LESS, BEING A PORTION OF TRACT B OF
RECORDED EXEMPTION NO.
1057-21-1-RE4805, ACCORDING TO THE MAP THEREOF
RECORDED JULY 30,2008 UNDER
RECEPTION NO. 3569377, RECORD OF WELD COUNTY,
COLORADO.
100112
ANNINO L MARSELLA AND FRANCESCA MARSELLA AS JOINT TENANTS
PETROSHARE CORP
01/06/17
ADAMS
2017000009646
T1S R66W
16.9800
16.9800
8.4900
SEC 20: A PART OF THE NE AS MORE PARTICULARLY
DESCRIBED BY THE LEASE
100113
MICHAEL R MCCRORY
PETROSHARE CORP
01/11/17
ADAMS
2017000009645
1S 66W
2.2397
2.2397
1.1199
SEC 20: LOT 3A, A RESUBDIVISION OF MEADOW LARK
ACRES, ACCORDING TO THE PLAT
RECORDED 02-14-1980 AT RECEPTION NO B248850
100114A
THE EGIDIO AND CLARA SERAFINI TRUST DATED FEBRUARY 24, 2013
PETROSHARE CORP
12/21/16
ADAMS
20017000018012
T1S R66W
5.0467
2.5234
1.2617
SEC 17: LOT 3, BAECHLER TRACT
100114B
THE FRANCO AND TERASA SERAFINI TRUST DATED FEBRUARY 24, 2013
PETROSHARE CORP
ADAMS
2017000018013
T1S R66W
5.0467
2.5234
1.2617
100115
FORTERRA INVESTMENTS, LTD
PETROSHARE CORP
02/01/17
ADAMS
2017000017176
T1S R66W
42.2839
42.2839
21.1420
SEC 20: A PARCEL OF LAND IN THE NE AND THE W2SE AS
MORE PARTICULARLY DESCRIBED BY THE LEASE
100116
FORTERRA INVESTMENTS, LTD
PETROSHARE CORP
ADAMS
2017000017177
T1S R66W
10.0080
10.0080
5.0040
SEC 20: A TRACT OF LAND IN THE NWSE AS MORE
100117
FORTERRA INVESTMENTS, LTD
PETROSHARE CORP
ADAMS
2017000017178
T1S R66W
1.5890
1.5890
0.7945
SEC 20: A TRACT OF LAND IN THE SE AS MORE
22
Lease
Lessor Name
Lessee Name
Eff Date
Rec County
Book
Page
Entry
Legal Description
Gross Acres
Net Acres
PSC Net Acres
100118
DAVID B ATKINS AND RENEE J ATKINS, AS JOINT TENANTS
PETROSHARE CORP
12/08/16
ADAMS
2017000015507
T1S R66W
5.0460
5.0460
2.5230
SEC 17: LOT 2 BAECHLER TRACT
100120A
COBANK, FCB, SUCCESSOR TO US AGBANK FCB
MORNING GUN EXPLORATION, LLC
10/08/14
WELD
4055676
T7N R59W
SEC 26: N2NE
80.0000
40.0000
20.0000
100121A
MORNING GUN EXPLORATION LLC
03/19/15
WELD
4097343
T7N R63W
160.8000
80.4000
40.2000
SEC 2: NE (LOTS 1, 2, S2NE)
LIMITED TO DEPTHS AND FORMATIONS FROM THE SURFACE
TO 50’ ABOVE THE TOP OF
THE J SAND FORMATION
100122A
MORNING GUN EXPLORATION LLC
WELD
4097190
T7N R63W
160.5600
80.2800
40.1400
SEC 2: NW (LOTS 3, 4, S2NW)
THE J SAND FORMATION
100123A
KENT HAMILTON
MORNING GUN EXPLORATION LLC
07/02/15
WELD
4144911
T7N R63W
320.0000
49.0560
24.5280
SEC 11: S2
TO 50’ ABOVE THE TOP OF THE J SAND FORMATION
100123B
THE NAOMI H WARD REVOCABLE TRUST DATED 6/17/2011, NAOMI H WARD, ALSO KNOW AS
NAOMI D WARD, AS TRUSTEE
MORNING GUN EXPLORATION LLC
07/07/15
WELD
4144912
T7N R63W
320.0000
49.0560
24.5280
SEC 11: S2
100123C
SANDRA G HARPER, A MARRIED WOMAN DEALING IN HER SOLE AND SEPARATE PROPERTY
MORNING GUN EXPLORATION LLC
WELD
4144913
T7N R63W
320.0000
49.0560
24.5280
SEC 11: S2
100123D
SUSAN M BOULTER TRUST DATED NOVEMBER 25, 1997 A/K/A SUSAN M DAVIS, SCOTT L
DAVIS, AS TRUSTEE
MORNING GUN EXPLORATION LLC
02/01/16
WELD
4201768
T7N R63W
320.0000
160.0000
80.0000
SEC 11: S2
THE J SAND FORMATION
100124A
MORNING GUN EXPLORATION LLC
09/16/15
WELD
4167516
T7N R63W
160.0000
80.0000
40.0000
SEC 24: NW
THE J SAND FORMATION
23
Lease
Lessor Name
Lessee Name
Eff Date
Rec County
Book
Page
Entry
Legal Description
Gross Acres
Net Acres
PSC Net Acres
100125
BCK HEATH PROPERTY, LLC, A COLORADO LIMITED LIABILITY COMPANY, BURTON C KROSS,
MANAGER
MORNING GUN EXPLORATION LLC
09/29/15
WELD
4179264
T7N R63W
160.0000
160.0000
80.0000
SEC 11:NE
100126
MANAGER
MORNING GUN EXPLORATION LLC
WELD
4167517
T7N R63W
160.0000
160.0000
80.0000
SEC 10: SW
100127
GRANT MYERS, TRUSTEE AND HIS SUCCESSORS IN TRUST UNDER THE GRANT G MYERS
REVOCABLE TRUST, DATED JUNE 24, 2015
MORNING GUN EXPLORATION LLC
09/08/15
WELD
4167518
T7N R63W
160.0000
160.0000
80.0000
SEC 3: SW
THE J SAND FORMATION
100128A
KEVIN P BRUMLEY AND FAITH I BRUMLEY, HUSBAND AND WIFE
MORNING GUN EXPLORATION LLC
10/29/15
WELD
4177054
T7N R63W
154.5800
77.2900
38.6450
SEC 11: LOTS A, B, C, AND D OF RECORDED EXEMPTION
NO 0713-11-2 RE-4642,
ALSO DESCRIBED AS THE NW/4
THE J SAND FORMATION
100129A
THE KAREN R HALEY REVOCABLE TRUST DATED FEBRUARY 8, 2002, KAREN R HALEY, AS
TRUSTEE
MORNING GUN EXPLORATIONS LLC
02/26/16
WELD
4201767
T7N R63W
200.0000
40.0000
20.0000
SEC 2: E2E2SW, SE
THE J SAND FORMATION
100129B
WAYNE BALL, ALSO KNOWN AS WAYNE E BALL ADN JUANITA J BALL, HUSBAND AND WIFE
MORNING GUN EXPLORATION LLC
02/17/16
WELD
4201769
T7N R63W
200.0000
100.0000
50.0000
THE J SAND FORMATION
100129C
GARLAND R BALL, A SINGLE MAN
MORNING GUN EXPLORATION LLC
WELD
4225558
T7N R63W
200.0000
5.0000
2.5000
100129D
TODD G BALL, A MARRIED MAN DEALING IN HIS SOLE AND SEPARATE PROPERTY
MORNING GUN EXPLORATION LLC
WELD
4225559
T7N R63W
200.0000
5.0000
2.5000
24
Lease
Lessor Name
Lessee Name
Eff Date
Rec County
Book
Page
Entry
Legal Description
Gross Acres
Net Acres
PSC Net Acres
100130A
COBANK FCB, A FEDERALLY CHARTERED INSTRUMENT OF THE UNITED STATES
MORNING GUN EXPLORATION LLC
11/13/15
ADAMS
2016000005856
T1S R67W
160.0000
80.0000
40.0000
SEC 8: NW
TO THE BASE OF THE SUSSEX
FORMATION
100131A
ADAMS
2014000073208
T2S R61W
SEC 6: LOTS 3, 4, 5, SENW
160.0400
80.0200
40.0100
100132A
ADAMS
2014000073208
T2S R61W
SEC 6: NE
160.0000
80.0000
40.0000
100133A
ADAMS
2014000073208
T2S R61W
SEC 6: SW
160.0000
80.0000
40.0000
100134A
ADAMS
2014000073208
T2S R61W
SEC 6: SE
160.0000
80.0000
40.0000
100135A
ADAMS
2014000073208
T2S R61W
SEC 18: LOTS 1, 2, E2NW
159.6700
79.8350
39.9175
100136A
ADAMS
2014000073208
T2S R61W
SEC 18: NE
160.0000
80.0000
40.0000
100137A
ADAMS
2014000073208
T2S R62W
160.0000
80.0000
40.0000
SEC 12: NW
100137B
ADAMS
2014000073208
T2S R62W
SEC 12: NE
160.0000
80.0000
40.0000
100137C
SMITH DONNA ET VIR
MORNING GUN EXPLORATION LLC
04/28/15
ADAMS
2014000051116
T2S R62W
SEC 12: ALL
640.0000
3.7500
1.8751
100137D
SHARON MCCORMICK
MORNING GUN EXPLORATION LLC
ADAMS
2014000051115
T2S R62W
SEC 12: ALL
640.0000
3.7500
1.8751
100137E
LYNN FLOYD, A SINGLE WOMAN
MORNING GUN EXPLORATION LLC
05/07/15
ADAMS
2015000051114
T2S R62W
SEC 12: ALL
640.0000
3.7500
1.8751
100137F
CRAIG MCCORMICK, A SINGLE MAN
MORNING GUN EXPLORATION LLC
ADAMS
2015000051113
T2S R62W
SEC 12: ALL
640.0000
3.7500
1.8751
100137G
PATRICIA ELDER, A SINGLE WOMAN
MORNING GUN EXPLORATION LLC
05/27/15
ADAMS
2015000051117
T2S R62W
SEC 12: ALL
640.0000
15.0000
7.5000
100137H
JOSEPH SANDERS, A WIDOWER
MORNING GUN EXPLORATION LLC
05/15/15
ADAMS
2015000051118
T2S R62W
SEC 12: ALL
640.0000
15.0000
7.5000
25
Lease
Lessor Name
Lessee Name
Eff Date
Rec County
Book
Page
Entry
Legal Description
Gross Acres
Net Acres
PSC Net Acres
100137I
KATHLEEN GAIL HILTON WENDELIN AND BRIAN MITCHELL WENDELIN, HUSBAND AND WIFE
MORNING GUN EXPLORATION LLC
06/25/15
ADAMS
2015000057962
T2S R62W
SEC 12: ALL
640.0000
15.0000
7.5000
100139A
ADAMS
2014000073208
T2S R62W
SEC 31: SE
160.0000
40.0000
20.0000
100140A
ADAMS
2014000073208
T2S R62W
SEC 31: S2NE
80.0000
20.0000
10.0000
100141A
ADAMS
2014000073208
T2S R63W
SEC 18: NW
160.0000
80.0000
40.0000
100142A
ADAMS
2014000073208
T2S R63W
SEC 18: NE
160.0000
80.0000
40.0000
100143A
ADAMS
2014000073208
T2S R63W
SEC 26: NE
160.0000
80.0000
40.0000
100144A
ADAMS
2014000073208
T2S R63W
SEC 26: SW
160.0000
80.0000
40.0000
100145A
ADAMS
2014000073208
T3S R62W
SEC 6: NW (LOTS 3, 4, 5, SENW)
157.1200
78.5600
39.2800
100146A
ADAMS
2014000073208
T3S R62W
SEC 6: SW (LOTS 6, 7, E2SE)
156.7800
78.3900
39.1950
100147A
ADAMS
2014000073208
T3S R62W
SEC 6: SE
160.0000
80.0000
40.0000
100148A
MORNING GUN EXPLORATION LLC
02/25/15
ADAMS
2015000016239
T3S R62W
SEC 2: SE
160.0000
80.0000
40.0000
100149A
MORNING GUN EXPLORATION LLC
ADAMS
2015000016239
T3S R62W
SEC 8: SW
160.0000
80.0000
40.0000
100150A
MORNING GUN EXPLORATION LLC
ADAMS
2015000016239
T3S R62W
SEC 8: NW
160.0000
80.0000
40.0000
100151A
MORNING GUN EXPLORATION LLC
ADAMS
2015000016239
T3S R62W
SEC 24: N2SW
80.0000
40.0000
20.0000
100152A
MORNING GUN EXPLORATION LLC
ADAMS
2015000016239
T3S R62W
SEC 24: S2NW
80.0000
40.0000
20.0000
100153A
MORNING GUN EXPLORATION LLC
ADAMS
2015000016239
T3S R62W
SEC 24: NENW
40.0000
20.0000
10.0000
100154A
MORNING GUN EXPLORATION LLC
ADAMS
2015000016239
T3S R62W
SEC 24: NWNE
40.0000
20.0000
10.0000
26
Lease
Lessor Name
Lessee Name
Eff Date
Rec County
Book
Page
Entry
Legal Description
Gross Acres
Net Acres
PSC Net Acres
100165A
SAM WAGNER AND IRENE W WAGNER, HUSBAND AND WIFE
PETROSHARE CORP
03/14/17
ADAMS
217000031919
T1S R65W
320.0000
80.0000
40.0000
SEC 26: E2
100166A
PETROSHARE CORP
ADAMS
2017000031920
T1S R65W
320.0000
80.0000
40.0000
SEC 10:E2
100166B
CLIFFORD WAGNER
PETROSHARE CORP
04/11/17
ADAMS
2017000035461
T1S R65W
320.0000
26.6666
13.3333
SEC 10:E2
100166C
JUNE K SULFFRIDGE
PETROSHARE CORP
04/17/17
ADAMS
2017000037679
T1S R65W
320.0000
32.0000
16.0000
SEC 10:E2
100166D
LIANA M GIFFORD
PETROSHARE CORP
ADAMS
2017000035463
T1S R65W
320.0000
32.0000
16.0000
SEC 10:E2
100166E
BETTY L BULLARD
PETROSHARE CORP
ADAMS
2017000035462
T1S R65W
320.0000
32.0000
16.0000
SEC 10:E2
100166F
KENNETH A HARRIS
PETROSHARE CORP
ADAMS
2017000048264
T1S R65W
320.0000
32.0000
16.0000
SEC 10:E2
100166G
BETH A TRIBELHORN
PETROSHARE CORP
04/24/17
ADAMS
201700048266
T1S R65W
320.0000
6.4000
3.2000
SEC 10:E2
100166H
JOHN S GETTMAN
PETROSHARE CORP
ADAMS
20017000048262
T1S R65W
320.0000
6.4000
3.2000
SEC 10:E2
100166I
BARBARA K SCHILDT
PETROSHARE CORP
ADAMS
201700048265
T1S R65W
320.0000
6.4000
3.2000
SEC 10:E2
100166J
JAMES K GETTMAN
PETROSHARE CORP
05/08/17
ADAMS
2017000048261
T1S R65W
320.0000
6.4000
3.2000
SEC 10:E2
100166K
BONNIE J GROVES
PETROSHARE CORP
ADAMS
2017000048263
T1S R65W
320.0000
6.4000
3.2000
SEC 10:E2
100167
RODGER BAILEY, POA FOR THELMA I BAILEY
PETROSHARE CORP
04/10/17
ADAMS
2017000049438
T1S R67W
2.5000
2.5000
1.2500
SEC 28: SENE
100168A
DOUG E WERBACH, A SINGLE MAN
PETROSHARE CORP
03/23/17
ADAMS
2017000049436
T1S R66W
3.2090
1.6045
0.8023
SEC 20: SE
100168B
CYNTHIA B WERBACK, A SINGLE WOMAN
PETROSHARE CORP
ADAMS
2017000049437
T1S R66W
3.2090
1.6045
0.8023
SEC 20: SE
100169
JOSE DE JESUS DE LUNA AND MARTHA H DE LUNA, AS JOINT TENANTS
PETROSHARE CORP
03/10/17
ADAMS
201700023467
T1S R66W
4.4559
4.4559
2.2279
SEC 17: SESW
100175
JAMES R VAN METER AND JOYCE L VAN METER, AS JOINT TENANTS
PETROSHARE CORP
02/07/17
ADAMS
2017000029699
T1S R67W
0.2404
0.2404
0.1202
SEC 28: BLOCK 1, LOT 6 OF THE VILLAGES AT
RIVERDALE FILING #1
27
Lease
Lessor Name
Lessee Name
Eff Date
Rec County
Book
Page
Entry
Legal Description
Gross Acres
Net Acres
PSC Net Acres
100176
JANET E WEAR, A TENANT IN SEVERALTY
PETROSHARE CORP
ADAMS
2017000029701
T1S R67W
0.3076
0.3076
0.1538
SEC 28: BLOCK 3, LOT 24 OF THE VILLAGES AT
RIVERDALE FILING #1
100177
MARY M FILSINGER, A TENANT IN SEVERALTY
PETROSHARE CORP
02/15/17
ADAMS
2017000029690
T1S R67W
0.3013
0.3013
0.1507
SEC 28: BLOCK 2, LOT 9A OF THE VILLAGES AT
RIVERDALE FILING #2, AMENDMENT #1
100178
ROBERT C HADDEN AND LINDA C HADDEN, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000030296
T1S R67W
0.1970
0.1970
0.0985
SEC 28: BLOCK 4, LOT 5 OF THE VILLAGES AT
RIVERDALE FILING #1
100179
ARIC SANCHEZ
PETROSHARE CORP
ADAMS
2017000029697
T1S R67W
0.3091
0.3091
0.1545
SEC 28: BLOCK 3, LOT 20 OF THE VILLAGES AT
RIVERDALE FILING #1
100180
RONALD LEE PEARMAN II AND DANIELLE PEARMAN
PETROSHARE CORP
ADAMS
2017000029695
T1S R67W
0.1722
0.1722
0.0861
SEC 28: BLOCK 6, LOT 3 OF THE VILLAGES AT
RIVERDALE FILING #1
100181
GUADALUPE BAUTISTA AND CELIA BAUTISTA, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000029687
T1S R67W
0.2911
0.2911
0.1456
SEC 28: BLOCK 1, LOT 20 OF THE VILLAGES AT
RIVERDALE FILING #1
100182
CRAIG S MAURER AND MICHELLE A MILLIGAN, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000029692
T1S R67W
0.2108
0.2108
0.1054
SEC 28: BLOCK 2, LOT 7A OF THE VILLAGES AT
100183
ROBERT WALKER ADN ASAKO TSUTSUI, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000037680
T1S R67W
0.1721
0.1721
0.0861
SEC 28: BLOCK 5, LOT 19 OF THE VILLAGES AT
RIVERDALE FILING #2
100184
RICHARD P PHILLIPS
PETROSHARE CORP
ADAMS
2017000029696
T1S R67W
0.1721
0.1721
0.0861
SEC 28: BLOCK 6, LOT 5 OF THE VILLAGES AT
RIVERDALE FILING #1
100186
KATIE RAMIREZ, A TENANT IN SEVERALTY
PETROSHARE CORP
ADAMS
2017000030301
T1S R67W
0.1928
0.1928
0.0964
SEC 28: BLOCK 3, LOT 38 OF THE VILLAGES AT
RIVERDALE FILING #1
100187
LANTZIA C THAO AND OMEE THAO
PETROSHARE CORP
ADAMS
2017000029698
T1S R67W
0.2726
0.2726
0.1363
SEC 28: BLOCK 6, LOT 15 OF THE VILLAGES AT
RIVERDALE FILING #1
100188
LAURA L BINGAMAN
PETROSHARE CORP
ADAMS
2017000029688
T1S R67W
0.1722
0.1722
0.0861
SEC 28: BLOCK 5, LOT 21 OF THE VILLAGES AT
RIVERDALE FILING #2
100189
PATRICIA NIEHOFF AND JAMES NIEHOFF, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000029694
T1S R67W
0.3083
0.3083
0.1542
SEC 28: BLOCK 1, LOT 17 OF THE VILLAGES AT
28
Lease
Lessor Name
Lessee Name
Eff Date
Rec County
Book
Page
Entry
Legal Description
Gross Acres
Net Acres
PSC Net Acres
RIVERDALE FILING #1
100190
RIEM SON AND SANA T THACH, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000030302
T1S R67W
0.3199
0.3199
0.1600
SEC 28: BLOCK 5, LOT 1 OF THE VILLAGES AT
RIVERDALE FILING #1
100191
ALEXANDER WELLS AND DAWN WELLS, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000029702
T1S R67W
0.1722
0.1722
0.0861
SEC 28: BLOCK 5, LOT 14 OF THE VILLAGES AT
RIVERDALE FILING #1
100192
AMY NAFTOLIN AND DAN WESTER, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000029693
T1S R67W
0.2080
0.2080
0.1040
SEC 28: BLOCK 3, LOT 3A OF THE VILLAGES AT
100193
DARRELL DOBSON AND KIMBERLY K DOBSON AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000029689
T1S R67W
0.3022
0.3022
0.1511
SEC 28: BLOCK 2, LOT 4 OF THE VILLAGES AT
RIVERDALE FILING #2
100194
ROBERT O KIRKLAND AND CHERYL A KIRKLAND AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000030298
T1S R67W
0.2385
0.2385
0.1192
SEC 28: BLOCK 1, LOT 18 OF THE VILLAGES AT
RIVERDALE FILING #1
100195
TROY J BUSTAMANTE
PETROSHARE CORP
ADAMS
2017000030294
T1S R67W
0.2049
0.2049
0.1024
SEC 28: BLOCK 5, LOT 38 OF THE VILLAGES AT
RIVERDALE FILING #2
100196
BLAINE L FANNING
PETROSHARE CORP
ADAMS
2017000030295
T1S R67W
0.1722
0.1722
0.0861
SEC 28: BLOCK 5, LOT 5 OF THE VILLAGES AT
RIVERDALE FILING #2
100197
DAVID M HENDRICKS AND AMY B HENDRICKS AS JOINT TENANT
PETROSHARE CORP
ADAMS
2017000030297
T1S R67W
0.1890
0.1890
0.0945
SEC 28: BLOCK 5, LOT 7 OF THE VILLAGES AT
RIVERDALE FILING #2
100198
MICHAEL J LAGE AND BUFFI K LAGE, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000041897
T1S R67W
0.2106
0.2106
0.1053
SEC 28: BLOCK 2, LOT 3A OF THE VILLAGES AT
100199
CHARLES B HODGES AND MOLLY M HODGES, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000068989
T1S R67W
0.1903
0.1903
0.0951
SEC 28: BLOCK 5, LOT 6 OF THE VILLAGES AT
RIVERDALE FILING #2
100200
NOAH A SHEPARD AND ABBY M SHEPARD, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000037678
T1S R67W
0.2726
0.2726
0.1363
SEC 28: BLOCK 5, LOT 16 OF THE VILLAGES AT
RIVERDALE FILING #1
100201
HESTER FAMILY TRUST
PETROSHARE CORP
04/13/17
ADAMS
2017000041895
T1S R67W
0.3517
0.3517
0.1759
SEC 28: BLOCK 2, LOT 5 OF THE VILLAGES AT
RIVERDALE FILING #1
100202
ADAM BROOKHART AND ROBIN BROOKHART, AS JOINT
PETROSHARE CORP
04/19/17
ADAMS
2017000035432
T1S R67W
0.2001
0.2001
0.1001
29
Lease
Lessor Name
Lessee Name
Eff Date
Rec County
Book
Page
Entry
Legal Description
Gross Acres
Net Acres
PSC Net Acres
TENANTS
SEC 28: BLOCK 4, LOT 4 OF THE VILLAGES AT
RIVERDALE FILING #1
100203
AMANDA VAN BLARICOM
PETROSHARE CORP
ADAMS
2017000035433
T1S R67W
0.3883
0.3883
0.1941
RIVERDALE FILING #2
100204
ANDREW J PALMGREN, A TENANT IN SEVERALTY
PETROSHARE CORP
ADAMS
2017000035434
T1S R67W
0.1722
0.1722
0.0861
SEC 28: BLOCK 6, LOT 4 OF THE VILLAGES AT
RIVERDALE FILING #1
100205
BENJAMIN M YOST AND JENNIFER A YOST, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000035435
T1S R67W
0.3281
0.3281
0.1641
SEC 28: BLOCK 9, LOT 10 OF THE VILLAGES AT
RIVERDALE FILING #2
100206
BRENT W BOWERS AND ELLEN G BOWERS, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000035436
T1S R67W
0.2089
0.2089
0.1045
SEC 28: BLOCK 2, LOT 12A OF THE VILLAGES AT
RIVERDALE FILING #3, AMENDMENT #1
100207
CONNIE S EBERLE
PETROSHARE CORP
ADAMS
2017000035437
T1S R67W
0.2970
0.2970
0.1485
SEC 28: BLOCK 5, LOT 37 OF THE VILLAGES AT
RIVERDALE FILING #2
100208
CURT E FENDERSON JR AND FAYE L FENDERSON, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000035438
T1S R67W
0.1997
0.1997
0.0998
SEC 28: BLOCK 7, LOT 11 OF THE VILLAGES AT
RIVERDALE FILING #2
100209
DANIELLE MORALES AND NICHOLAS P MORALES, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000035439
T1S R67W
0.2109
0.2109
0.1055
SEC 28: BLOCK 2, LOT 8A OF THE VILLAGES AT
100210
DARIN K HELGESON AND NICHELE A HELGESON, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000035440
T1S R67W
0.1794
0.1794
0.0897
RIVERDALE FILING #3
100211
DARREN SHANK AND CRYSTAL K SHANK, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000035441
T1S R67W
0.1945
0.1945
0.0973
SEC 28: BLOCK 4, LOT 3 OF THE VILLAGES AT
RIVERDALE FILING #1
100212
DARRIN J KUNSELMAN AND JILL M KUNSELMAN, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000035442
T1S R67W
0.2727
0.2727
0.1363
SEC 28: BLOCK 5, LOT 24 OF THE VILLAGES AT
RIVERDALE FILING #2
100213
DARYL L FLANAGAN AND LINDSAY M FLANAGAN, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000035443
T1S R67W
0.3129
0.3129
0.1565
SEC 28: BLOCK 5, LOT 36 OF THE VILLAGES AT
RIVERDALE FILING #2
100214
DENISE SWIEKATUN
PETROSHARE CORP
ADAMS
2017000035444
T1S R67W
0.2097
0.2097
0.1048
SEC 28: BLOCK 9, LOT 2 OF THE VILLAGES AT
RIVERDALE FILING #3
30
Lease
Lessor Name
Lessee Name
Eff Date
Rec County
Book
Page
Entry
Legal Description
Gross Acres
Net Acres
PSC Net Acres
100215
DOMENICK MIHAICH AND BRENDA C PRENTUP
PETROSHARE CORP
ADAMS
2017000035445
T1S R67W
0.3610
0.3610
0.1805
SEC 28: BLOCK 11, LOT 2 OF THE VILLAGES AT
RIVERDALE FILING #3
100216
DONALD CLIFFORD AND DARLENE CLIFFORD, AS A JOINT TENANT
PETROSHARE CORP
ADAMS
2017000035446
T1S R67W
0.1791
0.1791
0.0896
SEC 28: BLOCK 3, LOT 5 OF THE VILLAGES AT
RIVERDALE FILING #2
100217
DOUGLAS STINTON
PETROSHARE CORP
ADAMS
2017000035447
T1S R67W
0.2410
0.2410
0.1205
SEC 28: BLOCK 1, LOT 2A OF THE VILLAGES AT
100218
ERIK L COX AND TAHLEA COX, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000035448
T1S R67W
0.2901
0.2901
0.1451
SEC 28: BLOCK 9, LOT 11 OF THE VILLAGES AT
RIVERDALE FILING #2
100219
GEORGE N MEDINA
PETROSHARE CORP
ADAMS
2017000035449
T1S R67W
0.1726
0.1726
0.0863
SEC 28: BLOCK 3, LOT 3 OF THE VILLAGES AT
RIVERDALE FILING #1
100220
HOPE K ANDERSON
PETROSHARE CORP
ADAMS
2017000035450
T1S R67W
0.2726
0.2726
0.1363
SEC 28: BLOCK 7, LOT 9 OF THE VILLAGES AT
RIVERDALE FILING #1
100221
HOUA LOR AND CHAI VANG, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000035451
T1S R67W
0.3130
0.3130
0.1565
SEC 28: BLOCK 3, LOT 31 OF THE VILLAGES AT
RIVERDALE FILING #1
100222
JAMISON P MARTIN AND COURTNEY A MARTIN, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000035452
T1S R67W
0.1722
0.1722
0.0861
SEC 28: BLOCK 6, LOT 6 OF THE VILLAGES AT
RIVERDALE FILING #1
100223
JARRED M RATZLAFF AND SARA E RATZLAFF
PETROSHARE CORP
ADAMS
2017000035453
T1S R67W
0.1722
0.1722
0.0861
SEC 28: BLOCK 5, LOT 22 OF THE VILLAGES AT
RIVERDALE FILING #2
100224
JEFFREY DOLPH AND HEATHER A DOLPH, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000035454
T1S R67W
0.2708
0.2708
0.1354
SEC 28: BLOCK 9, LOT 8 OF THE VILLAGES AT
RIVERDALE FILING #2
100225
JENNIFER D TIERNEY
PETROSHARE CORP
ADAMS
2017000035455
T1S R67W
0.1860
0.1860
0.0930
SEC 28: BLOCK 5, LOT 2 OF THE VILLAGES AT
RIVERDALE FILING #3
100226
JOHN M OLIVER II AND MARY F OLIVER, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000035456
T1S R67W
0.2224
0.2224
0.1112
SEC 28: BLOCK 3, LOT 5A OF THE VILLAGES AT
100227
JOSEPH R HOUSWORTH AND EMILY A HOUSWORTH, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000035457
T1S R67W
0.3348
0.3348
0.1674
SEC 28: BLOCK 5, LOT 9 OF THE VILLAGES AT
RIVERDALE FILING #3
31
Lease
Lessor Name
Lessee Name
Eff Date
Rec County
Book
Page
Entry
Legal Description
Gross Acres
Net Acres
PSC Net Acres
100228
JOYCE M ORR, A TENANT IN SEVERALTY
PETROSHARE CORP
ADAMS
2017000035458
T1S R67W
0.2080
0.2080
0.1040
SEC 28: BLOCK 3, LOT 7 OF THE VILLAGES AT
RIVERDALE FILING #1
100229
JUSTIN PYLES
PETROSHARE CORP
ADAMS
2017000035459
T1S R67W
0.2410
0.2410
0.1205
SEC 28: BLOCK 1, LOT 5A OF THE VILLAGES AT
100230
KEVIN SCHROEDER AND JULIE M SCHROEDER, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000035404
T1S R67W
0.1912
0.1912
0.0956
RIVERDALE FILING #2
100231
KIRSTEN J ANDERSON, A TENANT IN SEVERALTY
PETROSHARE CORP
ADAMS
2017000035405
T1S R67W
0.1722
0.1722
0.0861
SEC 28: BLOCK 4, LOT 18 OF THE VILLAGES AT
RIVERDALE FILING #1
100232
KRISTINE L ROPER
PETROSHARE CORP
ADAMS
2017000035406
T1S R67W
0.1865
0.1865
0.0932
SEC 28: BLOCK 5, LOT 18 OF THE VILLAGES AT
RIVERDALE FILING #1
100233
LARRY D DURAN AND RENEE Y DURAN, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000035407
T1S R67W
0.2089
0.2089
0.1045
SEC 28: BLOCK 6, LOT 8 OF THE VILLAGES AT
RIVERDALE FILING #3
100234
LESLIE A THORN, A TENANT IN SEVERALTY
PETROSHARE CORP
ADAMS
2017000035408
T1S R67W
0.1722
0.1722
0.0861
RIVERDALE FILING #1
100235
MANUEL J URDIALES
PETROSHARE CORP
ADAMS
2017000035409
T1S R67W
0.1753
0.1753
0.0877
SEC 28: BLOCK 4, LOT 27 OF THE VILLAGES AT
RIVERDALE FILING #1
100236
MARK J ZEBROWSKI AND KENDRA L FRIESEN
PETROSHARE CORP
ADAMS
2017000035410
T1S R67W
0.2906
0.2906
0.1453
SEC 28: BLOCK 2, LOT 35 OF THE VILLAGES AT
RIVERDALE FILING #2
100237
MAROYA FAIED AND JAHED NABIYAR, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000035411
T1S R67W
0.2107
0.2107
0.1053
SEC 28: BLOCK 2, LOT 4A OF THE VILLAGES AT
100238
MICHAEL ANTHONY BOCHERT AND DARLENE J BOCHERT, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000035412
T1S R67W
0.2226
0.2226
0.1113
SEC 28: BLOCK 3, LOT 8 OF THE VILLAGES AT
RIVERDALE FILING #1
100239
MICHAEL E PLANSKER AND RACHAEL L MONK, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000035413
T1S R67W
0.1826
0.1826
0.0913
SEC 28: BLOCK 6, LOT 22 OF THE VILLAGES AT
RIVERDALE FILING #1
100240
MICHELE M NORDAHL
PETROSHARE CORP
ADAMS
2017000035414
T1S R67W
0.1832
0.1832
0.0916
SEC 28: BLOCK 4, LOT 22 OF THE VILLAGES AT
32
Lease
Lessor Name
Lessee Name
Eff Date
Rec County
Book
Page
Entry
Legal Description
Gross Acres
Net Acres
PSC Net Acres
RIVERDALE FILING #1
100241
NATHAN T DOUGHERTY AND DARCI M DOUGHERTY, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000035415
T1S R67W
0.2448
0.2448
0.1224
SEC 28: BLOCK 10, LOT 10 OF THE VILLAGES AT
RIVERDALE FILING #3
100242
NICOLE M SHAVER AND BRANDON J SHAVER, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000035416
T1S R67W
0.1722
0.1722
0.0861
SEC 28: BLOCK 5, LOT 12 OF THE VILLAGES AT
RIVERDALE FILING #2
100243
OKE IVAR JOHNSON III AND ELIZABETH ASYA JOHNSON, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000035417
T1S R67W
0.1793
0.1793
0.0896
RIVERDALE FILING #3
100244
PATRICK O BREWER AND KATHI G BREWER, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000035418
T1S R67W
0.1933
0.1933
0.0966
SEC 28: BLOCK 4, LOT 21 OF THE VILLAGES AT
RIVERDALE FILING #1
100245
RICHARD J KRAMER AND CHRISTINE A KRAMER, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000035419
T1S R67W
0.1722
0.1722
0.0861
SEC 28: BLOCK 5, LOT 40 OF THE VILLAGES AT
RIVERDALE FILING #2
100246
RICHARD P KEIL AND LINDA M KEIL, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000035420
T1S R67W
0.1722
0.1722
0.0861
SEC 28: BLOCK 4, LOT 25 OF THE VILLAGES AT
RIVERDALE FILING #1
100247
ROGER J ANDERSON, A TENANT IN SEVERALTY
PETROSHARE CORP
ADAMS
2017000035421
T1S R67W
0.1722
0.1722
0.0861
SEC 28: BLOCK 4, LOT 24 OF THE VILLAGES AT
RIVERDALE FILING #1
100248
RYAN L PASKO, A TENANT IN SEVERALTY
PETROSHARE CORP
ADAMS
2017000035422
T1S R67W
0.2149
0.2149
0.1075
SEC 28: BLOCK 2, LOT 6A OF THE VILLAGES AT
100249
RYAN W FUNCHION AND HANNAH L FUNCHION, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000035423
T1S R67W
0.2344
0.2344
0.1172
SEC 28: BLOCK 2, LOT 1 OF THE VILLAGES AT
RIVERDALE FILING #2
100250
SARAH J RODRIGUEZ AND CHRISTOPHER J RODRIGUEZ, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000035424
T1S R67W
0.1722
0.1722
0.0861
SEC 28: BLOCK 4, LOT 26 OF THE VILLAGES AT
RIVERDALE FILING #1
100251
SEAN THOMAS CASSADY AND TAMARA CASSADY
PETROSHARE CORP
ADAMS
2017000035425
T1S R67W
0.3645
0.3645
0.1822
SEC 28: BLOCK 3, LOT 19 OF THE VILLAGES AT
RIVERDALE FILING #1
100252
SUE ANN CRUTCHFIELD
PETROSHARE CORP
ADAMS
2017000035426
T1S R67W
0.1722
0.1722
0.0861
SEC 28: BLOCK 5, LOT 41 OF THE VILLAGES AT
RIVERDALE FILING #2
100253
SUSAN PREISENDORF
PETROSHARE CORP
ADAMS
2017000035427
T1S R67W
0.1722
0.1722
0.0861
33
Lease
Lessor Name
Lessee Name
Eff Date
Rec County
Book
Page
Entry
Legal Description
Gross Acres
Net Acres
PSC Net Acres
SEC 28: BLOCK 6, LOT 23 OF THE VILLAGES AT
RIVERDALE FILING #1
100254
TAB LYNN DAVIS JR AND MEGAN E DAVIS, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000035428
T1S R67W
0.3869
0.3869
0.1935
SEC 28: BLOCK 9, LOT 1 OF THE VILLAGES AT
RIVERDALE FILING #2
100255
TAMARA L DAVIS AND KEVIN S DAVIS, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000035429
T1S R67W
0.1722
0.1722
0.0861
SEC 28: BLOCK 6, LOT 12 OF THE VILLAGES AT
RIVERDALE FILING #1
100256
THE JOHN ERIC KRAMER AND REBECCA LYNN KRAMER JOINT LIVING TRUST, DATED 10/15/12
PETROSHARE CORP
ADAMS
2017000035430
T1S R67W
0.1792
0.1792
0.0896
SEC 28: BLOCK 6, LOT 7 OF THE VILLAGES AT
RIVERDALE FILING #3
100257
THE VILLAGES AT RIVERDALE HOMEOWNERS ASSOCIATION, INC., AKA VILLAGES AT
RIVERDALE HOMEOWNERS ASSOCIATION
PETROSHARE CORP
ADAMS
2017000035460
T1S R67W
36.3344
36.3344
18.1672
SEC 28: THE VILLAGES AT RIVERDALE FILING #1,
TRACTS A, B, C, D, E, F, K, L, M, N
THE VILLAGES AT RIVERDALE FILING #2,
TRACTS B, C, D, E, F, G, H, J, K, L, M, N
100258
TIMOTHY P HEWITT
PETROSHARE CORP
ADAMS
2017000035431
T1S R67W
0.2970
0.2970
0.1485
SEC 28: BLOCK 9, LOT 7 OF THE VILLAGES AT
RIVERDALE FILING #2
100259
CHRISTOPHER E DIEDA AND VERONICA DIEDA, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000041891
T1S R67W
0.1723
0.1723
0.0862
SEC 28: BLOCK 9, LOT 14 OF THE VILLAGES AT
RIVERDALE FILING #2
100260
KEITH LUGO AND TAMARA ANN LUGO, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000041898
T1S R67W
0.2769
0.2769
0.1384
SEC 28: BLOCK 5, LOT 29 OF THE VILLAGES AT
RIVERDALE FILING #1
100261
JEFFREY A MEISTER AND TERRA M MEISTER, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000041899
T1S R67W
0.1722
0.1722
0.0861
SEC 28: BLOCK 5, LOT 4 OF THE VILLAGES AT
RIVERDALE FILING #1
100262
CHRISTOPHER A HEPBURN
PETROSHARE CORP
ADAMS
2017000041894
T1S R67W
0.1793
0.1793
0.0896
RIVERDALE FILING #3
100263
NICOLE CONNER F/K/A NICOLE R STAFF AND JUSTIN T CONNER, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000041890
T1S R67W
0.1903
0.1903
0.0951
SEC 28: BLOCK 2, LOT 7 OF THE VILLAGES AT
RIVERDALE FILING #2
100264
GARRY M UPTON AND DIANA T UPTON, AS JOINT TENANTS
PETROSHARE CORP
04/28/17
ADAMS
2017000041901
T1S R67W
0.1975
0.1975
0.0988
SEC 28: BLOCK 10, LOT 7 OF THE VILLAGES AT
RIVERDALE FILING #3
100265
JASON A KNIGHT AND MICHELLE R KNIGHT AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000041896
T1S R67W
0.3311
0.3311
0.1656
SEC 28: BLOCK 3, LOT 1A OF THE VILLAGES AT
34
Lease
Lessor Name
Lessee Name
Eff Date
Rec County
Book
Page
Entry
Legal Description
Gross Acres
Net Acres
PSC Net Acres
100266
CASEY J NELSON
PETROSHARE CORP
ADAMS
2017000041900
T1S R67W
0.3020
0.3020
0.1510
SEC 28: BLOCK 4, LOT 1 OF THE VILLAGES AT
RIVERDALE FILING #1
100267
ROBERT E WINDHOLZ AND CONNIE
D WINDHOLZ, AS
JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000041902
T1S R67W
0.1722
0.1722
0.0861
RIVERDALE FILING #2
100268
JOHN ALKHATIB AND JACLYN
ALKHATIB, AS JOINT
TENANTS
PETROSHARE CORP
ADAMS
2017000041889
T1S R67W
0.1791
0.1791
0.0896
RIVERDALE FILING #2
100269
NICHOLAS ALDEN HOFFMAN AND ALYSSA KAY HOFFMAN F/K/A ALYSSA KAY GOODSON, AS JOINT
TENANTS
PETROSHARE CORP
ADAMS
2017000055718
T1S R67W
0.1722
0.1722
0.0861
RIVERDALE FILING #2
100270
RICHARD EDDIE PHILLIPS AND BRITTANY MICHELLE PHILLIPS, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000053196
T1S R67W
0.1819
0.1819
0.0910
SEC 28: BLOCK 6, LOT 20 OF THE VILLAGES AT
RIVERDALE FILING #1
100271
JENNIFER E GARRUS AND MICHAEL A ELLISON, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000041892
T1S R67W
0.4257
0.4257
0.2129
SEC 28: BLOCK 2, LOT 34 OF THE VILLAGES AT
RIVERDALE FILING #2
100272
PAUL L HEBINCK AND LISA K HEBINCK
PETROSHARE CORP
ADAMS
2017000041893
T1S R67W
0.3260
0.3260
0.1630
SEC 28: BLOCK 7, LOT 10 OF THE VILLAGES AT
RIVERDALE FILING #2
100273
JACOB G PERROTTO AND BRITTANY L PERROTTO, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000055713
T1S R67W
0.3294
0.3294
0.1647
SEC 28: BLOCK 2, LOT 2 OF THE VILLAGES AT
RIVERDALE FILING #2
100274
GALINA POPOVA
PETROSHARE CORP
05/02/17
ADAMS
2017000053195
T1S R67W
0.1794
0.1794
0.0897
SEC 28: BLOCK 6, LOT 2 OF THE VILLAGES AT
RIVERDALE FILING #3
100275
THE SHARON K ALBERS TRUST
PETROSHARE CORP
ADAMS
2017000053199
T1S R67W
0.1727
0.1727
0.0863
SEC 28: BLOCK 3, LOT 2 OF THE VILLAGES AT
RIVERDALE FILING #1
100276
ALICIA L HELGESON AND MICHAEL J HELGESON, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000053194
T1S R67W
0.2109
0.2109
0.1055
SEC 28: BLOCK 1, LOT 16A OF THE VILLAGES AT
100277
SARA A GREEN, A TENANT IN SEVERALTY
PETROSHARE CORP
ADAMS
2017000053197
T1S R67W
0.3717
0.3717
0.1858
SEC 28: BLOCK 1, LOT 15 OF THE VILLAGES AT
RIVERDALE FILING #1
100278
XAYSAKANH SAYCOCIE AND SHERYL SAYCOCIE
PETROSHARE CORP
ADAMS
2017000053200
T1S R67W
0.2441
0.2441
0.1221
35
Lease
Lessor Name
Lessee Name
Eff Date
Rec County
Book
Page
Entry
Legal Description
Gross Acres
Net Acres
PSC Net Acres
RIVERDALE FILING #2
100279
SHELLEY RAGLAND, A TENANT IN SEVERALTY
PETROSHARE CORP
05/22/17
ADAMS
2017000053198
T1S R67W
0.3460
0.3460
0.1730
SEC 28: BLOCK 1, LOT 13 OF THE VILLAGES AT
RIVERDALE FILING #1
100280
ADAM L NORMAN
PETROSHARE CORP
05/10/17
ADAMS
2017000055710
T1S R67W
0.1992
0.1992
0.0996
SEC 28: BLOCK 1, LOT 3 OF THE VILLAGES AT
RIVERDALE FILING #2
100281
ROBERT J COLEMAN AND ASHLEY D COLEMAN, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000055720
T1S R67W
0.1722
0.1722
0.0861
SEC 28: BLOCK 6, LOT 25 OF THE VILLAGES AT
RIVERDALE FILING #1
100282
MICHAEL R ENGLISH AND SHELLEY ADEL ENGLISH, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000055717
T1S R67W
0.2082
0.2082
0.1041
RIVERDALE FILING #3
100283
JAMES J WITT AND LYNNE F WITT AS JOINT TENANTS
PETROSHARE CORP
05/30/17
ADAMS
2017000055714
T1S R67W
0.1791
0.1791
0.0896
SEC 28: BLOCK 10, LOT 8 OF THE VILLAGES AT
RIVERDALE FILING #3
100284
HEATHER M LONG
PETROSHARE CORP
ADAMS
2017000055712
T1S R67W
0.2283
0.2283
0.1142
SEC 28: BLOCK 3, LOT 9 OF THE VILLAGES AT
RIVERDALE FILING #2
100285
RODNEY A EVANS, A TENANT IN SEVERALTY
PETROSHARE CORP
ADAMS
2017000055721
T1S R67W
0.1722
0.1722
0.0861
SEC 28: BLOCK 5, LOT 11 OF THE VILLAGES AT
RIVERDALE FILING #1
100286
KENNETH WILLIAMS AND KAREN WILLIAMS, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000055716
T1S R67W
0.1722
0.1722
0.0861
SEC 28: BLOCK 1, LOT 26 OF THE VILLAGES AT
RIVERDALE FILING #1
100287
WARLENE ALVAREZ
PETROSHARE CORP
ADAMS
2017000055722
T1S R67W
0.2004
0.2004
0.1002
SEC 28: BLOCK 10, LOT 6 OF THE VILLAGES AT
RIVERDALE FILING #3
100288
DWIGHT L FORTSON AND GAIL S FORTSON, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000055711
T1S R67W
0.1860
0.1860
0.0930
RIVERDALE FILING #3
100289
KEITH MCNAIL AND KATHRYN M MCNAIL, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000055715
T1S R67W
0.2245
0.2245
0.1123
SEC 28: BLOCK 10, LOT 11 OF THE VILLAGES AT
RIVERDALE FILING #3
100290
JOHN P HOGG AND PAULA M HOGG, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000057591
T1S R67W
0.2009
0.2009
0.1004
SEC 28: BLOCK 3, LOT 8A OF THE VILLAGES AT
36
Lease
Lessor Name
Lessee Name
Eff Date
Rec County
Book
Page
Entry
Legal Description
Gross Acres
Net Acres
PSC Net Acres
100291
JASON M WALLACE AND EMILY M WALLACE, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000057590
T1S R67W
0.2531
0.2531
0.1265
SEC 28: BLOCK 4, LOT 9 OF THE VILLAGES AT
RIVERDALE FILING #3
100292
CHANG W LEE AND KYUNG S LEE AND KISUN LEE AND LINDA S LEE, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000057587
T1S R67W
0.2914
0.2914
0.1457
SEC 28: BLOCK 1, LOT 14 OF THE VILLAGES AT
RIVERDALE FILING #1
100293
SALVATORE DISALLE AND MELITA J DISALLE, AS JOINT TENANTS
PETROSHARE CORP
07/26/17
ADAMS
2017000068990
T1S R67W
0.4229
0.4229
0.2114
SEC 28: BLOCK 9, LOT 9 OF THE VILLAGES AT
RIVERDALE FILING #2
100294
DEAN RUSSELL MAGNUSON
PETROSHARE CORP
06/21/17
ADAMS
2017000057588
T1S R67W
0.3992
0.3992
0.1996
SEC 28: BLOCK 3, LOT 10 OF THE VILLAGES AT
RIVERDALE FILING #1
100295
JASON GARNER AND MELISSA GARNER, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000057589
T1S R67W
0.1791
0.1791
0.0896
SEC 28: BLOCK 3, LOT 6 OF THE VILLAGES AT
RIVERDALE FILING #2
100296
STEVEN MEEHAN AND BEATRIZ L MEEHAN, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000057593
T1S R67W
0.1865
0.1865
0.0932
SEC 28: BLOCK 4, LOT 6 OF THE VILLAGES AT
RIVERDALE FILING #1
100297
BRIANNE M HOGUE AND CHRISTOPHER M HOGUE, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000057586
T1S R67W
0.2019
0.2019
0.1009
SEC 28: BLOCK 5, LOT 13 OF THE VILLAGES AT
RIVERDALE FILING #3
100298
MATTHEW DUNSCOMB AND KATHRYN DUNSCOMB, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000057592
T1S R67W
0.2082
0.2082
0.1041
SEC 28: BLOCK 5, LOT 15 OF THE VILLAGES AT
RIVERDALE FILING #3
100299
JASON BERSANO AND JILL BERSANO
PETROSHARE CORP
ADAMS
2017000068138
T1S R67W
0.1815
0.1815
0.0907
RIVERDALE FILING #1
100300
AMY STRATTON
PETROSHARE CORP
ADAMS
2017000068134
T1S R67W
0.4370
0.4370
0.2185
SEC 28: BLOCK 2, LOT 3 OF THE VILLAGES AT
RIVERDALE FILING #2
100301
ANGELA R ALVARADO AND ANDREW ALVARADO
PETROSHARE CORP
ADAMS
2017000068135
T1S R67W
0.2081
0.2081
0.1041
SEC 28: BLOCK 1, LOT 11 OF THE VILLAGES AT
RIVERDALE FILING #1
100302
SARAH SHEPHARD MCCARTNEY AND ANDREW MCCARTNEY
PETROSHARE CORP
ADAMS
2017000068140
T1S R67W
0.1795
0.1795
0.0897
SEC 28: BLOCK 6, LOT 1 OF THE VILLAGES AT
RIVERDALE FILING #3
100303
MADDHOUSE LLC
PETROSHARE CORP
ADAMS
2017000068139
T1S R67W
0.2904
0.2904
0.1452
RIVERDALE FILING #3
37
Lease
Lessor Name
Lessee Name
Eff Date
Rec County
Book
Page
Entry
Legal Description
Gross Acres
Net Acres
PSC Net Acres
100304
BRETT HENDERSON
PETROSHARE CORP
ADAMS
2017000068136
T1S R67W
0.1744
0.1744
0.0872
SEC 28: BLOCK 3, LOT 4 OF THE VILLAGES AT
RIVERDALE FILING #1
100305
TANGUY GORE AND DELPHINE GORE
PETROSHARE CORP
06/26/17
ADAMS
20017000068449
T1S R67W
0.1819
0.1819
0.0910
SEC 28: BLOCK 1, LOT 27 OF THE VILLAGES AT
RIVERDALE FILING #1
100306
DANEYA D ROMERO AND ARRAN H FAIRFIELD
PETROSHARE CORP
ADAMS
2017000068446
T1S R67W
0.2114
0.2114
0.1057
SEC 28: BLOCK 1, LOT 14A OF THE VILLAGES AT
100307
ERIC ALLEN CARRICO AND PATRICIA LYNN CARRICO, AS JOINT TENANTS
PETROSHARE CORP
03/26/17
ADAMS
2017000049832
T1S R67W
0.6664
0.6664
0.3332
SEC 28: GLENEAGLE ESTATES SUBDIVISION, AMENDMENT
2, BLOCK 6, LOT 3
100308
SCOTT STANTON AND DEBBIE STANTON, JOINT TENANTS
PETROSHARE CORP
04/14/17
ADAMS
2017000048599
T1S R67W
1.0863
1.0863
0.5432
1, BLOCK 11, LOT 4
100309
MATTHEW J CARTWRIGHT AND DIANE L CARTWRIGHT, JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000048602
T1S R67W
1.0553
1.0553
0.5276
1, BLOCK 13, LOT 9
100310
KNUDSEN FAMILY TRUST DATED 8/30/96
PETROSHARE CORP
04/03/17
ADAMS
2017000045376
T1S R67W
1.0812
1.0812
0.5406
1, BLOCK 13, LOT 4
100311
DAVID YOUNG AND DENISE YOUNG, JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000052871
T1S R67W
1.2707
1.2707
0.6353
1, BLOCK 3, LOT 3
100312
CAROL ANNE AHRENS AND SEAN PATRICK AHRENS, JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000045402
T1S R67W
1.3224
1.3224
0.6612
1, BLOCK 1, LOT 1
100313
DALE R ALGRIM II AND DIONE S ALGRIM, JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000048589
T1S R67W
1.1041
1.1041
0.5521
1, BLOCK 4, LOT 3
100314
DOUGLAS J ENRIGHT AND LUCINDA M FERNANDEZ, AS JOINT TENANTS
PETROSHARE CORP
04/21/17
ADAMS
2017000048598
T1S R67W
1.5576
1.5576
0.7788
7, BLOCK 3, LOT 4A
100315
DOUGLAS L VUNDER AND DIXIE VUNDER, JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000048612
T1S R67W
0.5358
0.5358
0.2679
2, BLOCK 6, LOT 22
100316
ROGER L GEER AND LINDA L GEER, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000048603
T1S R67W
1.2472
1.2472
0.6236
38
Lease
Lessor Name
Lessee Name
Eff Date
Rec County
Book
Page
Entry
Legal Description
Gross Acres
Net Acres
PSC Net Acres
1, BLOCK 2, LOT 11
100317
DOUGLAS J SPICER, TRUSTEE OF THE DOUGLAS J SPICER REVOCABLE TRUST AND LOIS JEAN
SPICER, TRUSTEE OF THE LOIS JEAN SPICER REVOCABLE TRUST
PETROSHARE CORP
ADAMS
2017000048605
T1S R67W
1.1513
1.1513
0.5756
1, BLOCK 2, LOT 6
100318
STEVEN DANIEL WOLFE AND LORI ELIZABETH WOLFE, JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000048607
T1S R67W
1.2780
1.2780
0.6390
1, BLOCK 5, LOT 1
100319
ROBERT E CASEY AS TRUSTEE OF THE ROBERT E CASEY REVOCABLE TRUST, UTA 11/06/2015;
ROBERT E CASEY AS TRUSTEE OF THE LINDA C CASEY REVOCABLE TRUST, UTA 11/06/2015;
LINDA C CASEY AS TRUSTEE OF THE ROBERT E CASEY REVOCABLE TRUST, UTA 11/06/2015;
AND LINDA C CASEY AS TRUSTEE OF THE LINDA C CASEY REVOCABLE TRUST, UTA
11/06/2015
PETROSHARE CORP
ADAMS
2017000048594
T1S R67W
1.1049
1.1049
0.5524
7, BLOCK 3, LOT 5A
100320
TOM C MOSCHETTI, A SINGLE MAN
PETROSHARE CORP
ADAMS
2017000045383
T1S R67W
0.7890
0.7890
0.3945
2, BLOCK 6, LOT 17
100321
GLENN J GLASSER, TRUSTEE OF THE GLENN J GLASSER TRUST DATED 10/28/15 AND PAMELA
N GLASSER, TRUSTEE OF THE PAMELA N GLASSER TRUST DATED 10/28/15, EQUALLY AS
TENANTS IN COMMON
PETROSHARE CORP
ADAMS
2017000059386
T1S R67W
0.8087
0.8087
0.4043
2, BLOCK 7, LOT 5
100322
ERNESTO AVENA AND LAZARO BAROCIO, JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000048608
T1S R67W
0.6537
0.6537
0.3268
2, BLOCK 6, LOT 16
100323
JOEL SCHWARTZ AND DORIS SCHWARTZ, JOINT TENANTS
PETROSHARE CORP
04/20/17
ADAMS
2017000049269
T1S R67W
1.5002
1.5002
0.7501
4, BLOCK 6, LOT 24A
100324
MARK A BROSS, AS TRUSTEE OF THE MARK A BROSS TRUST AND PATRICIA ANN BROSS, AS
TRUSTEE OF THE PATRICIA ANN BROSS TRUST
PETROSHARE CORP
ADAMS
2017000048592
T1S R67W
1.0739
1.0739
0.5370
1, BLOCK 1, LOT 5
100325
SUSAN L MCCORMICK, A MARRIED WOMAN
PETROSHARE CORP
ADAMS
2017000048601
T1S R67W
1.3517
1.3517
0.6758
1, BLOCK 3, LOT 8
100326
KEITH KOHTZ AND TANYA KOHTZ
PETROSHARE CORP
ADAMS
2017000048593
T1S R67W
1.2422
1.2422
0.6211
1, BLOCK 11, LOT 1
100327
BEVERLY OTTEN
PETROSHARE CORP
ADAMS
2017000046495
T1S R67W
1.1070
1.1070
0.5535
39
Lease
Lessor Name
Lessee Name
Eff Date
Rec County
Book
Page
Entry
Legal Description
Gross Acres
Net Acres
PSC Net Acres
1, BLOCK 3, LOT 2
100328
CHRIS BUTLER AND TONI BUTLER, JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000045380
T1S R67W
0.5763
0.5763
0.2882
2, BLOCK 8, LOT 5
100329
CRAIG W WILHOYTE AND DEBRA K BABB, JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000045395
T1S R67W
1.1383
1.1383
0.5692
1, BLOCK 1, LOT 4
100330
GEOFFREY M LEOPOLD AND TARA LEIGH LEOPOLD, JOINT TENANTS
PETROSHARE CORP
04/27/17
ADAMS
2017000045373
T1S R67W
1.2858
1.2858
0.6429
1, BLOCK 13, LOT 3
100331
JAMES A BRIX AND ERICA A BRIX, JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000045389
T1S R67W
0.8223
0.8223
0.4112
2, BLOCK 6, LOT 8
100332
JOHN G BALLMAN AND DEBORAH A BALLMAN, JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000045377
T1S R67W
1.2947
1.2947
0.6473
1, BLOCK 9, LOT 1
100333
JOHN HOFMANN AND JESSICA HOFMANN, JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000045427
T1S R67W
1.0892
1.0892
0.5446
1, BLOCK 4, LOT 1
100334
MICHAEL J DEMATTEE AND KELLY J DEMATTEE, JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000045394
T1S R67W
0.7734
0.7734
0.3867
2, BLOCK 6, LOT1
100335
MOHANA GOPALAKRISHNA AND SUPRIVA UMADEVI, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000045398
T1S R67W
1.0285
1.0285
0.5142
1, BLOCK 2, LOT 8
100336
RICHARD D WHITE AND LINDA M WHITE, JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000045382
T1S R67W
0.6365
0.6365
0.3182
6, BLOCK 8, LOT 2B
100337
SEYED H KALANTAR AND MAHASTI KALANTAR, JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000045400
T1S R67W
1.2090
1.2090
0.6045
1, BLOCK 1, LOT 2
100338
WAYNE L SUMMONS
PETROSHARE CORP
ADAMS
2017000045396
T1S R67W
1.1012
1.1012
0.5506
1, BLOCK 3, LOT 7
100339
GREGORY D SCHRINER AND MINDY E SCHRINER, JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000046659
T1S R67W
1.2452
1.2452
0.6226
1, BLOCK 9, LOT 5
40
Lease
Lessor Name
Lessee Name
Eff Date
Rec County
Book
Page
Entry
Legal Description
Gross Acres
Net Acres
PSC Net Acres
100340
DOUGLAS D NEDVED, A TENANT IN SEVERALTY
PETROSHARE CORP
ADAMS
2017000045387
T1S R67W
1.0955
1.0955
0.5477
1, BLOCK 2, LOT 5
100341
JAMES R FRITZ AND SHEILA K FRITZ, AS JOINT TENANTS
PETROSHARE CORP
05/03/17
ADAMS
2017000045388
T1S R67W
1.2701
1.2701
0.6351
2, BLOCK 1, LOT 6
100342
JASON CURTIS AND STEFANIE CURTIS, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000045378
T1S R67W
1.2449
1.2449
0.6224
1, BLOCK 11, LOT 3
100343
JOHN F AND STACY R SILVA, JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000045391
T1S R67W
0.6693
0.6693
0.3347
2, BLOCK 6, LOT 6
100344
JUDY K TERRANOVA
PETROSHARE CORP
05/04/17
ADAMS
2017000045386
T1S R67W
0.8022
0.8022
0.4011
2, BLOCK 6, LOT 13
100345
WADE BALLIET AND MICHELLE BALLIET, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000045392
T1S R67W
0.9737
0.9737
0.4869
2, BLOCK 6, LOT 4
100346
VICTOR A DOMENICO AND MONICA A DOMENICO, JOINT TENANTS
PETROSHARE CORP
04/26/17
ADAMS
2017000048611
T1S R67W
1.8622
1.8622
0.9311
5, BLOCK 7, LOT 1A
100347
KURT LUDWIG ZUGER, TRUSTEE OF THE KURT AND MARCIA ZUGER FAMILY TRUST DATED
07/16/02 AND MARCIA JEAN ZUGER, TRUSTEE OF THE KURT AND MARCIA ZUGER FAMILY
TRUST DATED 07/16/02
PETROSHARE CORP
ADAMS
2017000046660
T1S R67W
2, BLOCK 6, LOT 11
0.6113
0.6113
0.3056
100348
ALBERT KENDRICK AND JENNIFER KENDRICK, JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000048595
T1S R67W
1.4464
1.4464
0.7232
1, BLOCK 9, LOT 2
100349
DARREL RAY WILMOTH AND BARBARA JANEL WILMOTH, JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000049433
T1S R67W
0.8001
0.8001
0.4001
2, BLOCK 6, LOT 15
100350
ARTURO RODRIGUEZ CANO
PETROSHARE CORP
ADAMS
2017000048604
T1S R67W
1.0955
1.0955
0.5477
1, BLOCK 10, LOT 2
100351
JEFFREY W BARR AND PAMELA J BARR, JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000045390
T1S R67W
0.6690
0.6690
0.3345
2, BLOCK 6, LOT 7
100352
JERRY ARAGON AND DANETTE ARAGON, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000045375
T1S R67W
1.2016
1.2016
0.6008
41
Lease
Lessor Name
Lessee Name
Eff Date
Rec County
Book
Page
Entry
Legal Description
Gross Acres
Net Acres
PSC Net Acres
1, BLOCK 11, LOT 6
100353
JOANNE H LEE
PETROSHARE CORP
ADAMS
2017000045397
T1S R67W
1.2934
1.2934
0.6467
1, BLOCK 2, LOT 9
100354
RUSSELL N WATTERSON, TRUSTEE OF THE NILA J WATTERSON DECLARATION OF TRUST, DATED
4/18/05
PETROSHARE CORP
ADAMS
2017000045401
T1S R67W
1.0637
1.0637
0.5319
1, BLOCK 2, LOT 4
100355
JUAN RODRIGUEZ, TRUSTEE OF THE JUAN AND JOANN RODRIGUEZ LIVING TRUST DATED
4/24/13 AND JOANN RODRGIUEZ, TRUSTEE OF THE JUAN AND JOANN RODRIGUEZ LIVING
TRUST DATED 4/24/13
PETROSHARE CORP
ADAMS
2017000045385
T1S R67W
0.9778
0.9778
0.4889
2, BLOCK 7, LOT 8
100356
MARK CLINTON GUNN AND JENNIFER MARIE GUNN, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000048600
T1S R67W
1.0848
1.0848
0.5424
1, BLOCK 2, LOT 13
100357
P NICOLE NELSON
PETROSHARE CORP
ADAMS
2017000048606
T1S R67W
1.2770
1.2770
0.6385
1, BLOCK 4, LOT 4
100358
MICHAEL C TSOU
PETROSHARE CORP
ADAMS
2017000045393
T1S R67W
0.6900
0.6900
0.3450
2, BLOCK 6, LOT 2
100359
CHIP L BEAN AND SUSAN L BEAN, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000045372
T1S R67W
1.0248
1.0248
0.5124
1, BLOCK 13, LOT 7
100360
DOUGLAS ROBERTS AND TINA ROBERTS, JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000045426
T1S R67W
1.2562
1.2562
0.6281
1, BLOCK 10, LOT 3
100361
EISSA HIZHLEY AND SANDRA K HIZHLEY, JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000045379
T1S R67W
0.7887
0.7887
0.3943
3, BLOCK 8, LOT 3A
100362
LAWRENCE L LIGON AND SUSAN J DAVIS, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000045399
T1S R67W
1.3071
1.3071
0.6535
1, BLOCK 2, LOT 7
100363
GHAZANFAR KHAN
PETROSHARE CORP
ADAMS
2017000045374
T1S R67W
1.0934
1.0934
0.5467
1, BLOCK 12, LOT 1
100364
JOSE LAGUNA AND PAULINA LAGUNA, JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000045384
T1S R67W
0.7620
0.7620
0.3810
2, BLOCK 7, LOT 7
42
Lease
Lessor Name
Lessee Name
Eff Date
Rec County
Book
Page
Entry
Legal Description
Gross Acres
Net Acres
PSC Net Acres
100365
WILLIAM A WHITE AND SHERRYE D WHITE, JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000045371
T1S R67W
1, BLOCK 13, LOT 10
1.2387
1.2387
0.6193
100366
WILLIAM R PERSICHETTE JR AND VALERIE PERSICHETTE, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000045370
T1S R67W
1, BLOCK 13, LOT 8
1.1120
1.1120
0.5560
100367
ROBERT R FEIS AND MALINDA M FEIS, JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000046496
T1S R67W
3, BLOCK 8, LOT 1A
0.7914
0.7914
0.3957
100368
JUDITH A GIAMPIERI, TRUSTEE OF THE JUDITH A GIAMPIERI TRUST
PETROSHARE CORP
06/01/17
ADAMS
2017000050798
T1S R67W
1, BLOCK 13, LOT 1
1.1606
1.1606
0.5803
100369
NOEL PORTILLO
PETROSHARE CORP
06/09/17
ADAMS
2017000050797
T1S R67W
2, BLOCK 6, LOT 14
0.6837
0.6837
0.3418
100370
EDWIN E OLIVAS AND BRENDA Y RODRIGUEZ, JOINT TENANTS
PETROSHARE CORP
06/12/17
ADAMS
2017000050800
T1S R67W
6, BLOCK 14, LOT 5A
1.0930
1.0930
0.5465
100371
LANCE R TOEPPER AND JULIE A TOEPPER, JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000055153
T1S R67W
2, BLOCK 6, LOT 10
0.5601
0.5601
0.2801
100372
COLE H GAUGER AND KIMBERLY J GAUGER, JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000055655
T1S R67W
2, BLOCK 8, LOT 6
0.5708
0.5708
0.2854
100373
FERNANDO CORRALES AND LORENA CORRALES, JOINT TENANTS
PETROSHARE CORP
06/06/17
ADAMS
2017000059038
T1S R67W
2, BLOCK 7, LOT 3
0.6766
0.6766
0.3383
100374
JIM BRADY AND LEANN BRADY, AS JOINT TENANTS
PETROSHARE CORP
07/10/17
ADAMS
2017000064997
T1S R67W
1, BLOCK 3, LOT 1
1.2878
1.2878
0.6439
100375
JORGE ESCALERA AND MARGARITA ESCALERA, JOINT TENANTS
PETROSHARE CORP
07/06/17
ADAMS
2017000065000
T1S R67W
1, BLOCK 1, LOT 3
1.1112
1.1112
0.5556
100376
ANDREW GONZALES AND JEAN GONZALES, JOINT TENANTS
PETROSHARE CORP
06/29/17
ADAMS
2017000065063
T1S R67W
2, BLOCK 6, LOT 9
0.6579
0.6579
0.3290
100377
STEVEN D NORTON JR AND CRISTAL K NORTON, AS JOINT TENANTS
PETROSHARE CORP
07/12/17
ADAMS
2017000068823
T1S R67W
2, BLOCK 6, LOT 19
0.5660
0.5660
0.2830
43
Lease
Lessor Name
Lessee Name
Eff Date
Rec County
Book
Page
Entry
Legal Description
Gross Acres
Net Acres
PSC Net Acres
100378
HOLLY OSGOOD
PETROSHARE CORP
06/13/17
ADAMS
2017000068137
T1S R67W
2, BLOCK 13, LOT 2
1.2461
1.2461
0.6230
100379
JEFFREY ALAN STINNETT AND LAURA ERIN STINNETT, JOINT TENANTS
PETROSHARE CORP
06/20/17
ADAMS
2017000062262
T1S R67W
1, BLOCK 11, LOT 2
1.0546
1.0546
0.5273
100380
DANIEL R SATRIANA, JR
PETROSHARE CORP
ADAMS
2017000062476
T1S R67W
1, BLOCK 5, LOT 2
1.2713
1.2713
0.6357
100381
DONALD L SHRIVER AND JANICE E SHIVER, AS JOINT TENANTS
PETROSHARE CORP
07/20/17
ADAMS
2017000066519
T2S R66W
SEC 2: E2E2SWSE
10.0000
10.0000
5.0000
100382A
ROBERT J YOUNGER
PETROSHARE CORP
08/08/17
ADAMS
2017000080552
T2S R66W
SEC 2: S2N2NESE
AND
SEC 2: SHADY TREES SUBDIVISION BLOCK 2
20.0000
10.0000
5.0000
100382B
MERLE D LEE
PETROSHARE CORP
08/31/17
ADAMS
2017000080144
T2S R66W
10.0000
5.0000
2.5000
100382C
ROBERT E DAVIS
PETROSHARE CORP
08/10/17
ADAMS
2017000080133
T2S R66W
SEC 2: S2N2NESE
10.0000
5.0000
2.5000
100384
ART L POLLARD
PETROSHARE CORP
ADAMS
2017000080139
T2S R66W
SEC 2: LOT 1, KURTZ TRACT
5.0000
5.0000
2.5000
100385
J C KOPECKY
PETROSHARE CORP
ADAMS
2017000080131
T2S R66W
SEC 2: N2NENESE
10.0000
10.0000
5.0000
100387
SHIRLEY STRAWMIER
PETROSHARE CORP
ADAMS
2017000080140
T2S R66W
SEC 2: A PORTION OF THE SE BEING ALBECK
SUBDIVISION LOT 1
5.0000
5.0000
2.5000
100388
JUAN PEREZ-GUTIERREZ
PETROSHARE CORP
ADAMS
2017000080130
T2S R66W
SEC 2: A SECTION OF THE SE BEING KURTZ TRACT LOT 2
5.0000
5.0000
2.5000
100389
JOE L BAKER AND SHARLENE K BAKER, JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000080132
T2S R66W
SEC 2: LOT 1, CHAPMAN TRACT NO 2
5.0000
5.0000
2.5000
100390
DALE J QUILLEN TRUSTEE AND ELSIE M QUILLEN TRUSTEE OF THE QUILLEN FAMILY TRUST
DATED APRIL 20, 2011
PETROSHARE CORP
ADAMS
2017000080499
T2S R66W
SEC 2: A PORTION OF THE E2W2SWSE METES AND BOUNDS
PARCEL MORE PARTICULARLY DESCRIBED IN THE LEASE
4.1330
4.1330
2.0665
100391
JONATHAN QUILLEN AND BRENNA QUILLEN, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000080134
T2S R66W
SEC 2: E2W2SWSE, EXCEPT A METES AND BOUNDS PARCEL
MORE PARTICULARLY DESCRIBED IN THE LEASE
5.9346
5.9346
2.9673
44
Lease
Lessor Name
Lessee Name
Eff Date
Rec County
Book
Page
Entry
Legal Description
Gross Acres
Net Acres
PSC Net Acres
100392
KENNETH QUILLEN AND PAMELA QUILLEN, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000080135
T2S R66W
SEC 2: E2W2W2SWSE
5.0344
5.0344
2.5172
100393A
HASSAN SAM NEKOUIE
PETROSHARE CORP
ADAMS
2017000087574
T2S R66W
SEC 2: S2NWSE
20.0000
13.3333
6.6666
100393B
TROY A EID
PETROSHARE CORP
ADAMS
2017000087575
T2S R66W
SEC 2: S2NWSE
20.0000
6.6667
3.3333
100394
CAROLYN SUE DAVIS AND ROBERT GLENN GOLLIHER, JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000080138
T2S R66W
SEC 2: BLOCK 1 SHADY TREES SUBDIVISION
10.0000
10.0000
0.5000
100395
HOWARD L JONES
PETROSHARE CORP
08/29/17
ADAMS
2017000089092
T2S R66W
SEC 2: A PORTION OF THE SE BEING CHAPMAN TRACT NO
2 LOT 2
5.0000
5.0000
2.5000
100397
BEN L MORAN
PETROSHARE CORP
09/01/17
ADAMS
2017000080143
T2S R66W
SEC 2: A PORTION OF THE SE BEING LOTS 1, 2, 3, 4,
2A, 3A, 4A AND 3B OF CHAPMAN TRACT NO 1
2.5000
2.5000
1.2500
100398
KENNETH W FINLEY, TRUSTEE OF THE KENNETH W AND PATRICIA A FINLEY TRUST DATED
09-20-2002
PETROSHARE CORP
09/06/17
ADAMS
2017000096715
T2S R66W
SEC 2: E2W2SESE
10.3670
10.3670
5.1835
100400
JORGE MARTINEZ AND EDITH MELENDEZ
PETROSHARE CORP
09/19/17
ADAMS
2017000086714
T1S R67W
2, BLOCK 7, LOT 6
0.8251
0.8251
0.4125
100401
MARY PAULINE QUINBY, A/K/A MARY P QUINBY, A/K/A M PAULINE QUINBY
PETROSHARE CORP
08/25/17
ADAMS
2017000086407
T2S R66W
SEC 2: S2E2E2SESE
5.0300
5.0300
2.5150
100402
WILLIAM R DALKE
PETROSHARE CORP
ADAMS
2017000093481
T1S R67W
RIVERDALE FILING #3
0.1943
0.1943
0.0972
100403
KENNETH W FINLEY, WIDOWER AND THE SURVIVING JOINT TENANT OF PATRICIA A FINLEY
PETROSHARE CORP
ADAMS
2017000086419
T2S R66W
SEC 2: E2W2W2SESE
5.0000
5.0000
2.5000
100404
RYAN M DANTINO AND KERRI L DANTINO, AS JOINT TENANTS
PETROSHARE CORP
11/02/17
ADAMS
2017000098777
T1S R67W
RIVERDALE FILING #1
0.1933
0.1933
0.0966
100405
CHRISTOPHER R ANDREGG AND JAMI ANDREGG F/K/A JAMI SEVERANCE, AS JOINT TENANTS
PETROSHARE CORP
ADAMS
2017000098776
T1S R67W
SEC 28: BLOCK 2, LOT 10A OF THE VILLAGES AT
0.2089
0.2089
0.1045
100406
EVA E TOEDTLI, BY MARK W TOEDTLI ATTORNEY IN FACT
PETROSHARE CORP
10/31/17
ADAMS
2018000002803
T2S R66W
SEC 2: W2W2W2SWSE
5.0000
2.5000
1.2500
100407
DEBRA K YOUNG
PETROSHARE CORP
11/01/17
ADAMS
2017000104731
T1S R67W
RIVERDALE FILING 3
0.1793
0.1793
0.0896
45
Lease
Lessor Name
Lessee Name
Eff Date
Rec County
Book
Page
Entry
Legal Description
Gross Acres
Net Acres
PSC Net Acres
100408
ANDREW J BARGA AND REBECCA BARGA, AS JOINT TENANTS
PETROSHARE CORP
10/23/17
ADAMS
2017000105259
T1S R67W
SEC 28: BLOCK 9, LOT 3 OF THE VILLAGES AT
RIVERDALE FILING #2, AMENDMENT #0
0.2400
0.2400
0.1200
100409
STATE CO 70/8160-S
PAN AMERICAN PETROLEUM CORPORATION
06/02/70
ADAMS
1974
711
68588
T2S R66W
SEC 16: SWNE, NESW, N2SE, SWSE
200.0000
0.0000
0.0000
100410
UNION PACIFIC RESOURCES COMPANY
ENERGY MINERALS CORPORATION
03/24/92
ADAMS
B1075551
T1S R65W
SEC 9: SE (LIMITED TO DEPTHS FROM THE SURFACE OF
THE EARTH TO 8154’ SUB SURFACE)
160.0000
160.0000
56.0000
100411
AMOCO PRODUCTION COMPANY
CHAMPLIN PETROLEUM COMPANY
05/24/72
ADAMS
969029
T1S R65W
SEC 17: NW
160.0000
160.0000
56.0000
100412
JOSEPH A MURRAY
MID-CONTINENT ENERGY, LLC
01/27/17
ADAMS
2017000008279
T1S R66W
SEC 17: W2SWSE
20.0000
20.0000
7.5000
100413
ED JORDAN AND JULIE A JORDAN, AS JOINT TENANTS
MORNING GUN EXPLORATION LLC
WELD
4316511
T7N R63W
SEC 24: W2NW, LESS A TRACT OF LAND BEING THE
EASTERLY 200 FEET OF THE SOUTHERLY 400 FEET OF THE
W2NW; ALSO A TRACT OF LAND BEING THE WESTERLY 200
FEET OF THE NORTHERLY 400 FEET OF THE E2NW
80.0000
40.0000
20.0000
100414
NEW DIRECTION IRA FBO JULIE A JORDAN IRA 05070772
MORNING GUN EXPLORATION LLC
WELD
4316510
T7N R63W
SEC 24: THAT PART OF THE E2NW AS MORE
80.0000
80.0000
40.0000
100415
LARS T ROESCH AND SYLVIA ROESCH, HUSBAND AND WIFE
MORNING GUN EXPLORATION LLC
WELD
4312247
T7N R63W
SEC 14: N2
320.0000
320.0000
160.0000
46
Surface
Well Name
API #
County
Twp
Rng
Sec
Loc
Operator
ABBOTT LANDS #21-35
05-123-11459
WELD
1N
64W
35
NENW
PETROSHARE CORP
ABBOTT LANDS #3
05-123-11147
WELD
1N
64W
35
SWNW
PETROSHARE CORP
AMBUSH 13-22
05-001-09092
ADAMS
2S
64W
22
NWSW
PETROSHARE CORP
AMBUSH 23-22
05-001-09052
ADAMS
2S
64W
22
NESW
PETROSHARE CORP
AMBUSH 24-22
05-001-09106
ADAMS
2S
64W
22
SESW
PETROSHARE CORP
AMBUSH 31-22 N/C
05-001-09126
ADAMS
2S
64W
22
NWNE
HRM RESOURCES II LLC
AMBUSH 34-22
05-001-09070
ADAMS
2S
64W
22
SWSE
PETROSHARE CORP
AMBUSH 44-22
05-001-09072
ADAMS
2S
64W
22
SESE
PETROSHARE CORP
AMOCO STATE 41-16
05-001-09558
ADAMS
1S
65W
16
NENE
PETROSHARE CORP
AMOCO STATE 42-16
05-001-08669
ADAMS
1S
65W
16
SENE
PETROSHARE CORP
AMOCO STATE 43-16
05-001-08703
ADAMS
1S
65W
16
NESE
PETROSHARE CORP
ANTELOPE FARMS 23-27
05-001-08697
ADAMS
2S
63W
27
NESW
PETROSHARE CORP
BEISEL 42-1
05-001-09293
ADAMS
1S
68W
1
SENE
PETROSHARE CORP
BRADBURY A-1
05-001-08138
ADAMS
2S
60W
13
NWNW
PETROSHARE CORP
BREDEHOFT 13-6
05-001-09291
ADAMS
1S
67W
6
NWSW
PETROSHARE CORP
BRIGHTON LAKES 20-17-1NAH
05-001-10087
ADAMS
1S
66W
20
SESW
PETROSHARE CORP
BRIGHTON LAKES 20-17-1NBH
05-001-10086
ADAMS
1S
66W
20
SESW
PETROSHARE CORP
ADAMS
1S
66W
20
SESW
PETROSHARE CORP
BRIGHTON LAKES 20-17-2CDH
05-001-10084
ADAMS
1S
66W
20
SESW
PETROSHARE CORP
BRIGHTON LAKES 20-17-2NBH
05-001-10085
ADAMS
1S
66W
20
SESW
PETROSHARE CORP
BRIGHTON LAKES 20-17-2NCH
05-001-10089
ADAMS
1S
66W
20
SESW
PETROSHARE CORP
BRIGHTON LAKES 20-17-3NBH
05-001-10088
ADAMS
1S
66W
20
SESW
PETROSHARE CORP
BRNAK 33-31
05-123-11906
WELD
1N
63W
31
NWSE
PETROSHARE CORP
BRUCHEZ 1
05-005-06531
ARAPAHOE
4S
63W
35
NWSE
PETROSHARE CORP
CARLSON 12-18 N/C
05-001-09709
ADAMS
1S
67W
18
SWNW
GREAT WESTERN OPERATING COMPANY LLC
CHAPMAN 1
05-001-07810
ADAMS
1S
64W
28
NWSE
PETROSHARE CORP
COMPTON 34-27
05-001-08733
ADAMS
2S
63W
27
SWSE
PETROSHARE CORP
CORCILIUS 6E-203
05-001-09916
ADAMS
1S
67W
6
NWNW
PETROSHARE CORP
CORCILIUS 6E-223
05-001-09919
ADAMS
1S
67W
6
NWNW
PETROSHARE CORP
CORCILIUS 6E-323
05-001-09914
ADAMS
1S
67W
6
NWNW
PETROSHARE CORP
CORCILIUS 6J-203
05-001-09920
ADAMS
1S
67W
6
NWNW
PETROSHARE CORP
CORCILIUS 6J-303
05-001-09917
ADAMS
1S
67W
6
NWNW
PETROSHARE CORP
CORCILIUS 6J-443
05-001-09918
ADAMS
1S
67W
6
NWNW
PETROSHARE CORP
CORCILIUS 6M-243
05-001-09921
ADAMS
1S
67W
6
NWNW
PETROSHARE CORP
CORCILIUS 6M-343
05-001-09915
ADAMS
1S
67W
6
NWNW
PETROSHARE CORP
DANFORD-CHAMPLIN 14-8
05-001-09321
ADAMS
3S
64W
8
SWSW
PETROSHARE CORP
E. MILLER TRUST 44-17
05-039-06581
ELBERT
6S
64W
17
SESE
PETROSHARE CORP
EHLER 44-4
05-001-09379
ADAMS
1S
67W
4
SESE
PETROSHARE CORP
EVERITT 43-19
05-039-06506
ELBERT
6S
64W
19
NESE
PETROSHARE CORP
FRONT RANGE 4
05-001-08750
ADAMS
1S
67W
18
NWNE
PETROSHARE CORP
GASPAR 11-1
05-001-09396
ADAMS
1S
68W
1
NWNW
PETROSHARE CORP
GUTHRIE 12-2
05-001-09564
ADAMS
1S
67W
2
SWNW
PETROSHARE CORP
GUTHRIE 21-2
05-001-09463
ADAMS
1S
67W
2
NENW
PETROSHARE CORP
GUTHRIE 22-2
05-001-09389
ADAMS
1S
67W
2
SENW
PETROSHARE CORP
GUTHRIE 31-2
05-001-09541
ADAMS
1S
67W
2
NWNE
PETROSHARE CORP
GUTHRIE 41-2
05-001-09540
ADAMS
1S
67W
2
NENE
PETROSHARE CORP
GUTHRIE 42-2
05-001-09563
ADAMS
1S
67W
2
SENE
PETROSHARE CORP
GUTHRIE ABNER 1
05-001-06251
ADAMS
1S
67W
2
SWNE
PETROSHARE CORP
HABEL A-1
05-001-06571
ADAMS
2S
62W
22
SENW
PETROSHARE CORP
HABEL A-2
05-001-09429
ADAMS
2S
62W
22
NWSW
PETROSHARE CORP
HABEL B-1
05-001-06615
ADAMS
2S
62W
23
SWNW
PETROSHARE CORP
HAREN K 21-28
05-123-28122
WELD
4N
66W
16
SESW
NOBLE ENERGY INC
HAREN K 21-29
05-123-28123
WELD
4N
66W
16
SWSW
NOBLE ENERGY INC
HARTNAGLE 14-35
05-001-08473
ADAMS
1S
64W
35
SWSW
PETROSHARE CORP
JACOBUCCI 32K-243
05-123-41170
ADAMS
1N
67W
32
NWSW
PDC ENERGY, INC
JACOBUCCI 32K-323
05-123-41168
ADAMS
1N
67W
32
NWSW
PDC ENERGY, INC
JACOBUCCI 32K-403
05-123-41169
ADAMS
1N
67W
32
NWSW
PDC ENERGY, INC
JACOBUCCI 32K-443
05-123-41250
ADAMS
1N
67W
32
NWSW
PDC ENERGY, INC
JACOBUCCI 32O-203
05-123-41184
ADAMS
1N
67W
32
NESW
PDC ENERGY, INC
JACOBUCCI 32O-303
05-123-41191
ADAMS
1N
67W
32
NESW
PDC ENERGY, INC
JACOBUCCI 32O-423
05-123-41193
ADAMS
1N
67W
32
NESW
PDC ENERGY, INC
JACOBUCCI 32O-443
05-123-41190
ADAMS
1N
67W
32
NESW
PDC ENERGY, INC
JACOBUCCI 32S-203
05-123-41941
ADAMS
1N
67W
32
NWSE
PDC ENERGY, INC
JACOBUCCI 32S-303
05-123-41942
ADAMS
1N
67W
32
NWSE
PDC ENERGY, INC
JACOBUCCI 32S-323
05-123-41940
ADAMS
1N
67W
32
NWSE
PDC ENERGY, INC
JACOBUCCI 32S-343
05-123-41944
ADAMS
1N
67W
32
NWSE
PDC ENERGY, INC
JACOBUCCI 32S-403
05-123-41943
ADAMS
1N
67W
32
NWSE
PDC ENERGY, INC
JACOBUCCI 32S-423
05-123-42023
ADAMS
1N
67W
32
NWSE
PDC ENERGY, INC
KALCEVIC 22-3
05-001-08362
ADAMS
2S
63W
3
SENW
PETROSHARE CORP
KALCEVIC 24-3
05-001-08506
ADAMS
2S
63W
3
SESW
PETROSHARE CORP
KALCEVIC 33-3
05-001-08480
ADAMS
2S
63W
3
NWSE
PETROSHARE CORP
KISSLER 1
05-123-10935
WELD
4N
66W
21
NENW
PETROSHARE CORP
KISSLER 2
05-123-23527
WELD
4N
66W
21
NWNW
PETROSHARE CORP
KISSLER K21-18D
05-123-31502
WELD
4N
66W
21
NESW
NOBLE ENERGY INC
KOWACH #3-25
05-081-07779
MOFFAT
6N
90W
6
LOT 11
PETROSHARE CORP
LAYTON GREEN 1 N/C
05-001-06281
ADAMS
1S
67W
18
SWSW
LEISLE 8-5
05-001-08696
ADAMS
1S
67W
8
NENE
PETROSHARE CORP
LW MOORE GAS UNIT #1
05-001-07074
ADAMS
1S
67W
10
NENE
PETROSHARE CORP
MARCUS LD 11-374HC N/C
05-123-42585
ADAMS
1S
67W
11
SESE
MARCUS LD 11-374HN N/C
05-123-41121
ADAMS
1S
67W
11
SESE
MARCUS LD 11-376HN N/C
05-123-42588
ADAMS
1S
67W
11
SESE
MARCUS LD 11-377HC N/C
05-123-41131
ADAMS
1S
67W
11
SESE
MARCUS LD 11-377HN N/C
05-123-42586
ADAMS
1S
67W
11
SESE
MARCUS LD 11-378HN N/C
05-123-42584
ADAMS
1S
67W
11
SESE
MARCUS LD 11-379HC N/C
05-123-42587
ADAMS
1S
67W
11
SESE
MARCUS LD 11-379HN
05-123-42867
ADAMS
1S
67W
11
SESE
MARCUS LD 11-380HN
05-123-42866
ADAMS
1S
67W
11
SESE
MARLATT 1
05-001-08275
ADAMS
2S
64W
22
NWNW
PETROSHARE CORP
MARLATT 12-22
05-001-09078
ADAMS
2S
64W
22
SWNW
PETROSHARE CORP
MARLATT 21-22
05-001-09127
ADAMS
2S
64W
22
NENW
PETROSHARE CORP
MARLATT 22-22
05-001-09108
ADAMS
2S
64W
22
SENW
PETROSHARE CORP
MATHENA 1-15
05-014-08666
BROOMFIELD
1S
68W
15
NWNW
EXTRACTION OIL & GAS LLC
MUNDELL 12-21
05-001-08415
ADAMS
2S
64W
21
SWNW
PETROSHARE CORP
MUNDELL 23-15
05-001-09186
ADAMS
2S
64W
15
NESW
PETROSHARE CORP
MUNDELL 24-15
05-001-09130
ADAMS
2S
64W
15
SESW
PETROSHARE CORP
NORDMAN TRUST 32-20
05-039-06502
ELBERT
6S
64W
20
SWNE
PETROSHARE CORP
NORDMAN TRUST 33-20
05-039-06524
ELBERT
6S
64W
20
NWSE
PETROSHARE CORP
NORDMAN TRUST 41-20
05-039-06553
ELBERT
6S
64W
20
NENE
PETROSHARE CORP
NORDMAN TRUST 42-20X
05-039-06541
ELBERT
6S
64W
20
SENE
PETROSHARE CORP
NORTH HURON 1-22
05-001-09035
ADAMS
1S
68W
22
NWNW
NORTH HURON 1-22 CN
ADAMS
1S
68W
22
NWNW
OTTER 1
05-001-08510
ADAMS
2S
66W
2
NESW
PETROSHARE CORP
OWENS K 21-30D
05-123-28167
WELD
4N
66W
17
SESE
NOBLE ENERGY INC
RHINE 01
05-005-06815
ARAPAHOE
5S
62W
29
NWSW
PETROSHARE CORP
RIVERDALE 15-2-11HC
05-001-09926
ADAMS
1S
67W
14
NWSW
WARD PETROLEUM CORPORATION
RUNNING CREEK 11-21
05-039-06558
ELBERT
6S
64W
21
NWNW
PETROSHARE CORP
SACK 11-6
05-001-09464
ADAMS
1S
67W
6
NWNW
PETROSHARE CORP
SACK 12-6
05-001-09391
ADAMS
1S
67W
6
SWNW
PETROSHARE CORP
SACK 23-6
05-001-09578
ADAMS
1S
67W
6
SENW
PETROSHARE CORP
SELTZER G U 2-4
05-001-09025
ADAMS
1S
67W
4
NWSE
PETROSHARE CORP
SHOOK 3-10-1CDH
05-001-09968
ADAMS
1S
67W
3
NWSE
PETROSHARE CORP
SHOOK 3-10-1NAH
05-001-09978
ADAMS
1S
67W
3
NWSE
PETROSHARE CORP
SHOOK 3-10-1NBH
05-001-09970
ADAMS
1S
67W
3
NWSE
PETROSHARE CORP
SHOOK 3-10-1NCH
05-001-09975
ADAMS
1S
67W
3
NWSE
PETROSHARE CORP
SHOOK 3-10-2CDH
05-001-09973
ADAMS
1S
67W
3
NWSE
PETROSHARE CORP
SHOOK 3-10-2NAH
05-001-09972
ADAMS
1S
67W
3
NWSE
PETROSHARE CORP
SHOOK 3-10-2NBH
05-001-09971
ADAMS
1S
67W
3
NWSE
PETROSHARE CORP
SHOOK 3-10-2NCH
05-001-09980
ADAMS
1S
67W
3
NWSE
PETROSHARE CORP
SHOOK 3-10-3CDH
05-001-09969
ADAMS
1S
67W
3
NWSE
PETROSHARE CORP
SHOOK 3-10-3NBH
05-001-09977
ADAMS
1S
67W
3
NWSE
PETROSHARE CORP
SHOOK 3-10-4CDH
05-001-09974
ADAMS
1S
67W
3
NWSE
PETROSHARE CORP
SHOOK 3-10-4NBH
05-001-09976
ADAMS
1S
67W
3
NWSE
PETROSHARE CORP
SHOOK 3-10-5CDH
05-001-09979
ADAMS
1S
67W
3
NWSE
PETROSHARE CORP
SHOOK 3-10-6CDH
05-001-09981
ADAMS
1S
67W
3
NWSE
PETROSHARE CORP
STATE OF COLORADO AB 1
05-001-06455
ADAMS
2S
66W
16
NESE
PETROSHARE CORP
STERKEL 21-1
05-001-09438
ADAMS
1S
68W
1
NENW
PETROSHARE CORP
STEVENS 34-15
05-001-08741
ADAMS
1S
65W
15
SWSE
PETROSHARE CORP
STONEHOCKER 32-8
05-001-09387
ADAMS
1S
67W
8
SWNE
PETROSHARE CORP
TSUZUKI 1
05-001-06713
WELD
4N
66W
21
NENE
PETROSHARE CORP
UNRUH 13-23
05-001-09430
ADAMS
1S
65W
23
NWSW
PETROSHARE CORP
UNRUH 23-23
05-001-08340
ADAMS
1S
65W
23
NESW
PETROSHARE CORP
VOLOSHIN #3-25
05-081-07778
MOFFAT
6N
90W
25
LOT 11
PETROSHARE CORP
WAGNER 12-19
05-001-08361
ADAMS
1S
64W
19
SWNW
PETROSHARE CORP
WAILES 1
05-001-08210
ADAMS
2S
63W
8
NESE
PETROSHARE CORP
WAILES FARM 2-8
05-001-09033
ADAMS
2S
63W
8
SWNE
PETROSHARE CORP
WEIGANDT 43-3
05-001-09095
ADAMS
1S
67W
3
NESE
PETROSHARE CORP
WILLIAMS 44-27
05-001-08393
ADAMS
2S
64W
27
SESE
PETROSHARE CORP
WILLOW BEND LD 18-22HC N/C
05-001-09774
ADAMS
1S
67W
18
NENE
WILLOW BEND LD 18-22HN N/C
05-001-09772
ADAMS
1S
67W
18
NENE
WILLOW BEND LD 18-23HC N/C
05-001-09776
ADAMS
1S
67W
18
NENE
WILLOW BEND LD 18-23HN N/C
05-001-09773
ADAMS
1S
67W
18
NENE
WILLOW BEND LD 18-361HC N/C
05-001-09841
ADAMS
1S
67W
18
NENE
WILLOW BEND LD 18-361HN N/C
05-001-09832
ADAMS
1S
67W
18
NENE
WILLOW BEND LD 18-366HC N/C
05-001-09777
ADAMS
1S
67W
18
NENE
WILLOW BEND LD 18-37HN N/C
05-001-09775
ADAMS
1S
67W
18
NENE
WYMAN 34-6
05-001-09292
ADAMS
1S
67W
6
SWSE
PETROSHARE CORP
ZABKA K 21-31
05-123-26944
WELD
4N
66W
20
NENE
NOBLE ENERGY INC
ZARLENGO 14-4
05-001-09384
ADAMS
1S
67W
4
SWSW
PETROSHARE CORP
ZARLENGO 2
05-001-08810
ADAMS
1S
67W
4
NWNW
PETROSHARE CORP
ZARLENGO 21-4
05-001-09468
ADAMS
1S
67W
4
NENW
PETROSHARE CORP
ZARLENGO 23-4
05-001-09555
ADAMS
1S
67W
4
NESW
PETROSHARE CORP
ZARLENGO 24-4
05-001-09377
ADAMS
1S
67W
4
SESW
PETROSHARE CORP
MARCUS LD 11-361HNX
05-123-45381
ADAMS
1N
67W
34
SESE
MARCUS LD 11-361HN
05-123-43945
ADAMS
1N
67W
34
SESE
MARCUS LD 11-362HC
05-123-43991
ADAMS
1N
67W
34
SESE
MARCUS LD 11-362HN
05-123-43946
ADAMS
1N
67W
34
SESE
MARCUS LD 11-365HNX
05-123-45386
ADAMS
1N
67W
34
SESE
MARCUS LD 11-368HNX
05-123-45384
ADAMS
1N
67W
34
SESE
MARCUS LD 11-371HNX
05-123-45383
ADAMS
1N
67W
34
SESE
MARCUS LD 11-373HNX
05-123-45380
ADAMS
1N
67W
34
SESE
MARCUS LD 11-376HNX
05-123-45385
ADAMS
1N
67W
34
SESE
MARCUS LD 11-378HNX
05-123-45387
ADAMS
1N
67W
34
SESE
MARCUS LD 11-380HNX
05-123-45388
ADAMS
1N
67W
34
SESE
OCHO LD 17-363HN
05-001-10002
ADAMS
1S
67W
8
NENW
OCHO LD 17-364HC
05-001-09996
ADAMS
1S
67W
8
NENW
OCHO LD 17-364HN
05-001-10006
ADAMS
1S
67W
8
NENW
OCHO LD 17-365HC
ADAMS
1S
67W
8
NENW
OCHO LD 17-365HN
05-001-10001
ADAMS
1S
67W
8
NENW
OCHO LD 17-367HC
05-001-09993
ADAMS
1S
67W
8
NENW
OCHO LD 17-367HN
05-001-09994
ADAMS
1S
67W
8
NENW
OCHO LD 17-368HN
05-001-09997
ADAMS
1S
67W
8
NENW
OCHO LD 17-369HC
05-001-10000
ADAMS
1S
67W
8
NENW
OCHO LD 17-369HN
05-001-09998
ADAMS
1S
67W
8
NENW
OCHO LD 17-370HN
05-001-09987
ADAMS
1S
67W
8
NENW
OCHO LD 17-372HC
05-001-09986
ADAMS
1S
67W
8
NENW
OCHO LD 17-373HN
05-001-09990
ADAMS
1S
67W
8
NENW
OCHO LD 17-374HC
ADAMS
1S
67W
8
NENW
OCHO LD 17-374HN
ADAMS
1S
67W
8
NENW
OCHO LD 17-375HN
05-001-09992
ADAMS
1S
67W
8
NENW
OCHO LD 17-377HC
05-001-09989
ADAMS
1S
67W
8
NENW
OCHO LD 17-377HN
05-001-09991
ADAMS
1S
67W
8
NENW
OCHO LD 17-378HN
05-001-09988
ADAMS
1S
67W
8
NENW
KALLSEN A-1
05-001-09073
ADAMS
1S
65W
9
SWSE
PETROSHARE CORP
CHAVEZ 7-17
05-001-09524
ADAMS
1S
65W
17
SWNE
PETROSHARE CORP
MARCUS LD 11-363HN
05-123-44053
ADAMS
1N
67W
34
SESE
MARCUS LD 11-364HN
05-123-43994
ADAMS
1N
67W
34
SESE
MARCUS LD 11-365HC
05-123-43993
ADAMS
1N
67W
34
SESE
MARCUS LD 11-365HN
05-123-43995
ADAMS
1N
67W
34
SESE
MARCUS LD 11-367HN
05-123-44037
ADAMS
1N
67W
34
SESE
MARCUS LD 11-367HC
05-123-44038
ADAMS
1N
67W
34
SESE
MARCUS LD 11-368HN
05-123-44036
ADAMS
1N
67W
34
SESE
MARCUS LD 11-369HN
05-123-44041
ADAMS
1N
67W
34
SESE
MARCUS LD 11-370HC
05-123-44042
ADAMS
1N
67W
34
SESE
MARCUS LD 11-371HN
05-123-44040
ADAMS
1N
67W
34
SESE
MARCUS LD 11-372HN
05-123-44043
ADAMS
1N
67W
34
SESE
B FARM LD 18-034HC
05-001-10098
ADAMS
1S
67W
7
LOT1
B FARM LD 18-034HN
05-001-10095
ADAMS
1S
67W
7
LOT1
B FARM LD 18-036HN
05-001-10092
ADAMS
1S
67W
7
LOT1
B FARM LD 18-037HC
05-001-10091
ADAMS
1S
67W
7
LOT1
B FARM LD 18-039HC
05-001-10090
ADAMS
1S
67W
7
LOT1
MARCUS LD 11-372HC
05-123-44039
WELD
1N
67W
34
SESE
MARCUS LD 11-373HN
WELD
41
67W
34
SESE
EXHIBIT A
FORM OF PROMISSORY NOTE
$[ ]
February 1, 2018
FOR VALUE RECEIVED, PETROSHARE CORP., a Colorado corporation (the “Borrower”),
hereby promises to pay to the order of [ ] (the “Lender”), the
principal sum of [TWENTY-FIVE MILLION DOLLARS ($25,000,000)] (or such lesser
amount as shall equal the aggregate unpaid principal amount of the Loans made by
the Lender to the Borrower under the Credit Agreement, as hereinafter defined),
in lawful money of the United States of America and in immediately available
funds, on the dates and in the principal amounts provided in the Credit
Agreement, and to pay interest on the unpaid principal amount of each such Loan,
at such office, in like money and funds, for the period commencing on the date
of such Loan until such Loan shall be paid in full, at the rates per annum and
on the dates provided in the Credit Agreement.
This Promissory Note (this “Note”) is the Note referred to in, and is subject to
the terms of, the Secured Term Credit Agreement dated as of February 1, 2018
between the Borrower, the Lender, each other lender party thereto, and
Providence Wattenberg, LP, as administrative agent to such lenders (in such
capacity, the “Agent”), and evidences the Loan made by the Lender thereunder
(such Credit Agreement as the same may be amended, amended and restated,
Capitalized terms used in this Note have the respective meanings assigned to
This Note is issued pursuant to the Credit Agreement and is entitled to the
benefits provided for in the Credit Agreement and the other Loan Documents. The
Credit Agreement, among other things, (a) provides for the making of the Loans
by the Lender to the Borrower in an aggregate amount not to exceed at any time
outstanding the dollar amount first above mentioned, the indebtedness of the
Borrower resulting from each such Loan being evidenced by this Note, and
(b) provides for the acceleration of the maturity of this Note upon the
occurrence of certain events, for prepayments of Loans upon the terms and
conditions specified therein and other provisions relevant to this Note.
Both principal and interest are payable in lawful money of the United States of
America to the Lender (or to the Agent on behalf of the Lender) at the location
or address specified in writing by the Lender (or the Agent) to the Borrower in
same day funds. The date, amount, interest rate, and payment period of each
Loan made by the Lender to the Borrower, and each payment made on account of the
principal thereof, shall be recorded by the Lender on its books and, prior to
any transfer of this Note, may be endorsed by the Lender on the schedules
attached hereto or any continuation thereof or on any separate record maintained
by the Lender. Failure to make any such notation or to attach a schedule shall
not affect any Lender’s or the Borrower’s rights or obligations in respect of
such Loans or affect the validity of such transfer by any Lender of this Note.
This Note is secured by the Security Instruments.
1
Except as specifically provided in the Credit Agreement, the Borrower hereby
waives presentment, demand, protest, notice of intent to accelerate, notice of
acceleration, and any other notice of any kind. No failure to exercise, and no
delay in exercising, any rights hereunder on the part of the holder of this Note
shall operate as a waiver of such rights. In the event of any explicit or
implicit conflict between any provision of this Note and any provision of the
Credit Agreement, the terms of the Credit Agreement shall be controlling.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL
LAWS OF THE STATE OF COLORADO.
This Note and the other Loan Documents represent the final agreement among the
parties and may not be contradicted by evidence of prior, contemporaneous, or
subsequent oral agreements of the parties. There are no unwritten oral
agreements among the parties.
2
EXECUTED as of the day and year first above written.
PETROSHARE CORP.,
a Colorado corporation
By:
Name:
Title:
3
EXHIBIT B
FORM OF COMPLIANCE CERTIFICATE
For the Period From , 20 to , 20 (“Calculation
Period”)
The undersigned hereby certifies that he/she is the [ ] of PETROSHARE
CORP., a Colorado corporation (the “Borrower”), and that as such he/she is
authorized to execute this certificate on behalf of the Borrower. With
reference to the Secured Term Credit Agreement dated as of February 1, 2018 (as
amended, restated, amended and restated, supplemented or otherwise modified from
time to time, the “Agreement”) between the Borrower and Providence Wattenberg,
LP, as Administrative Agent and Lender, and 5NR Wattenberg, LLC, as the lender,
the Borrower represents and warrants as follows (each capitalized term used
herein having the same meaning given to it in the Agreement unless otherwise
specified):
There exists no Default or Event of Default [or specify Default, describe and
describe any steps taken to rectify default].
Attached hereto as Schedule A is a detailed spreadsheet reflecting the
calculations and computations necessary to determine whether the Borrower is in
compliance with the Total Leverage Ratio and the PDP PV Coverage Ratio, as
reflected in this certificate.
COMPLIANCE WITH TOTAL LEVERAGE RATIO YES NO
COMPLIANCE WITH PDP PV COVERAGE RATIO YES NO
[There has been no change in the application of GAAP to the financial statements
being delivered in connection with this Compliance Certificate since the date of
the most recently delivered financial statements.][The following changes have
been made in the application of GAAP to the financial statements being delivered
in connection with this Compliance Certificate, which changes have had the
following effects on such financial statements: [ ].]
1
IN WITNESS THEREOF, I have hereto signed my name to this Compliance Certificate,
in my capacity as a Financial Officer of the Borrower and not individually, as
of , 20 .
PETROSHARE CORP.,
a Colorado corporation
By:
Name:
Title:
Signature Page to Compliance Certificate
SCHEDULE A
EXHIBIT C
LIST OF SECURITY INSTRUMENTS
Deed of Trust, Mortgage, Assignment of Production, Security Agreement and
Financing Statement
Exhibit D
Form of Disbursement Request
EXAMPLE ONLY
Attached to that certain Credit Agreement by and between
PetroShare Corp (Borrower) and PEO/FNR (Lenders)
dated January 31, 2018.
EXCESS LIMIT AMOUNT $ 1,000,000
Category
General Description
Vendor
Invoice Date
Due Date
Terms
Amount
Aging
G&A
General Monthly G&A per Budget
Various
3/1/2018
0
$
550,000
0
LOAN INTEREST EXPENSE
Monthly Secured Loan Interest Due
PEO/Fifth
0
$
340,000
0
EXCESS LIMIT REQUEST - G&A
N/A
N/A
NET 15
$
—
0
EXCESS LIMIT REQUEST - DEBT PAYOFF
N/A
N/A
NET 15
$
—
0
DISTRIBUTION REQUEST - G&A and INTEREST
$
890,000
Category
General Description
Vendor
Invoice Date
Due Date
Terms
Amount
Aging
LAND
Lease Acquisition - Wakeman Pad
40 acres @ $5000/acre
Company X
3/15/2018
3/31/2018
NET15
$
200,000
15
EXCESS LIMIT REQUEST - LAND
Lease Acquisition
Company Y
NET30
$
—
0
DISTRIBUTION REQUEST - LAND
$
200,000
Category
General Description
Vendor
Invoice Date
Due Date
Terms
Amount
Aging
OPERATIONS
Working Capital & Op Expense
Various
NET30
$
200,000
15
OPERATIONS
Drilling, Completion & Workover
Various
NET15
$
200,000
15
EXCESS LIMIT REQUEST - OPER
Halliburton - Stimulation - Shook
Halliburton
NET30
$
1,500,000
30
Drilling Contractor - Brighton Lakes
Precision
NET30
$
1,000,000
30
Tubulars
CTAP
NET30
$
1,600,000
30
DISTRIBUTION REQUEST - OPERATING
$
4,500,000
TOTAL MONTHLY DISTRIBUTION REQUEST
$
5,590,000
Comments:
Date:
(Insert Date)
For Month Ended:
(Insert Month Ended)
Amount Requested:
5,590,000
The Borrower hereby certififies that there is currently no Default under the
Credit Agreement and that no Default will result from the Distribution.
Respectfully submitted,
Paul D. Maniscalco
Chief Financial Officer
PetroShare Corp.
1
EXHIBIT E
Credit Agreement by and between PetroShare Corp (Borrower) and PEO/5NR
(Lender(s)
PetroShare Corp
Coverage Ratio Report Date:
August 31, 2018
Effective Reserve Report Date:
June 30, 2018
PDP Coverage Ratio:
Total Term Loan Balance
25,000,000
PDP - PV10 per Reserve Report as updated
30,000,000
Ratio
1.20
Credit Agreement PDP PV Ratio Requirement
1.10
Excess Coverage (Deficit)
0.10
Frederick J. Witsell
President
PetroShare Corp
EXHIBIT F
NOTICE OF CONVERSION
To: PETROSHARE CORP.
The undersigned hereby elects to convert $ principal amount of
the Loans (as defined in the Credit Agreement between PetroShare, as Borrower,
Providence Wattenberg, LP as Administrative Agent and Lender, and 5NR
Wattenberg, LLC as Lender dated as of February 1, 2018) into shares of common
stock of the PetroShare (“Common Stock”). Capitalized terms used herein and not
defined are defined in the Credit Agreement.
The undersigned further elects that the maximum principal amount permitted under
the Credit Agreement be converted at the Minimum Conversion Price and the
remainder be converted at the Maximum Conversion Price. The undersigned
understands that if the Common Stock into which the Loans are converted has not
been registered under the Securities Act of 1933, as amended, and applicable
state securities laws that the certificate representing the Common Stock will
bear a restrictive legend as required by the provisions of those laws.
Please issue a certificate or certificates representing said shares of Common
Stock in the name of the undersigned or in such other name as is specified
below:
(Name)
(Address)
Dated:
Signature
EXHIBIT G
NOTICE OF EXERCISE
The undersigned hereby elects to exercise its option to purchase shares of
Common Stock (the “Common Stock”) of PETROSHARE CORP. (the “Company”), pursuant
to the terms of Section 7.15(a) of the Credit Agreement between PetroShare, as
Borrower, Providence Wattenberg, LP as Administrative Agent and Lender, and 5NR
Wattenberg, LLC as Lender, dated as of February 1, 2018. Please notify the
undersigned as to the purchase price per share of Common Stock as determined in
the Credit Agreement and the aggregate sales price of the Common Stock. The
undersigned hereby promises to pay to the Company the purchase price within 30
days of the date hereof.
The undersigned understands that if the Common Stock has not been registered
under the Securities Act of 1933, as amended, and applicable state securities
laws that the certificate representing the Common Stock will bear a restrictive
legend as required by the provisions of those laws.
below:
(Name)
(Address)
Dated:
Signature
EXHIBIT H
NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN
REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION (THE
“COMMISSION”) OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER SECTION 4(A)(2) OF THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”) AND/OR REGULATION D PROMULGATED THEREUNDER.
NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF MAY BE SOLD,
PLEDGED, TRANSFERRED OR ASSIGNED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS,
OR IN A TRANSACTION WHICH IS EXEMPT FROM REGISTRATION UNDER THE PROVISIONS OF
THE SECURITIES ACT AND UNDER PROVISIONS OF APPLICABLE STATE SECURITIES LAWS.
Warrant 2018 P-
STOCK PURCHASE WARRANT
To Purchase [1,500,000] Shares of Common Stock of
PETROSHARE CORP.,
a Colorado corporation
THIS CERTIFIES that, for value received, , or assigns (the
“Holder”), is entitled, upon the terms and subject to the conditions hereinafter
set forth, at any time or from time to time on or after the date of issuance of
this Warrant (the “Initial Exercise Date”) and on or prior to 5 P.M. Denver time
on February 1, 2020 (the “Expiration Date”) but not thereafter, to subscribe for
and purchase from PetroShare Corp., a Colorado corporation (the “Company”), up
to [One Million Five Hundred Thousand (1,500,000)] shares (the “Warrant Shares”)
of common stock, $0.001 par value per share of the Company (the “Common
Stock”). The purchase price of one share of Common Stock (as may be adjusted in
accordance with the provisions hereof, the “Exercise Price”) under this Warrant
shall be $0.01.
1. Transferability of Warrant. Prior to the expiration hereof and
subject to compliance with applicable laws, this Warrant and all rights
hereunder are transferable, in whole or in part, at the office or agency of the
Company by the Holder in person or by duly authorized attorney, upon surrender
of this Warrant together with the Assignment Form annexed hereto properly
endorsed.
2. Authorization of Shares. The Company covenants that all shares
of Common Stock which may be issued upon the exercise of rights represented by
this Warrant will, upon exercise of the rights represented by this Warrant and
payment of the then-applicable Exercise Price, be duly authorized, validly
issued, fully paid and non-assessable and free from all liens and charges in
respect of the issue thereof (other than charges in respect of any transfer
occurring contemporaneously with such issue).
3. Exercise of Warrant. Exercise of the purchase rights represented
by this Warrant may be made at any time or times on or after the Initial
Exercise Date, and before the Expiration Date, by the surrender of this Warrant
and the Notice of Exercise Form annexed hereto duly executed at the office of
by notice in writing to the Holder at the address of such Holder appearing on
the books of the Company) and upon payment of the Exercise Price of the shares
thereby purchased in the manner provided for herein. Upon such exercise, the
Holder shall be entitled to receive a certificate for the number of shares of
Common Stock so purchased. Certificates for shares purchased hereunder shall be
delivered to the Holder within five (5)
business days after the date on which this Warrant shall have been exercised as
aforesaid. This Warrant shall be deemed to have been exercised and such
certificate or certificates shall be deemed to have been issued, and Holder or
Warrant has been exercised, provided such date is a day on which the NYSE is
conducting business and provided that the Notice of Exercise and payment are
received by the Company on or before 5:00 P.M. Mountain Time, and if not, on the
next succeeding business day. If this Warrant shall have been exercised in
part, the Company shall, at the time of delivery of the certificate or
certificates representing Warrant Shares, deliver to Holder a new Warrant
evidencing the rights of Holder to purchase the remaining shares of Common Stock
identical with this Warrant.
4. Manner of Payment. The exercise price of each Warrant shall be
paid in cash, certified funds, wire transfer or other collectible funds at the
time the Warrant is exercised.
5. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. As to any fraction of a share which Holder would otherwise be entitled
to purchase upon such exercise, the Company shall round the number of shares to
be issued to the next highest number.
6. Charges, Taxes and Expenses. Issuance of certificates for
Warrant Shares upon the exercise of this Warrant shall be made without charge to
however, that in the event certificates for shares of Common Stock are to be
hereto duly executed by the Holder; and provided further, that upon any transfer
involving the issuance or delivery of any certificates for shares of Common
Stock, the Company may require, as a condition thereto, the payment of a sum
sufficient to reimburse it for any transfer tax incidental thereto and an
opinion of counsel that such assignment is permissible under applicable
securities laws.
7. Closing of Books. The Company will not close its shareholder
Warrant.
8. Transfer, Division and Combination.
(a) Subject to compliance with any applicable securities laws
(including the provision to the Company of an opinion of counsel for the
assignor of this Warrant), transfer of this Warrant and all rights hereunder, in
whole or in part, shall be registered on the books of the Company to be
maintained for such purpose, upon surrender of this Warrant at the principal
office of the Company, together with the Assignment Form attached hereto duly
executed by Holder or its agent or attorney, funds sufficient to pay any
transfer taxes payable upon the making of such transfer and an opinion of
counsel that such assignment is permissible under applicable securities laws.
Upon such surrender and, if required, such payment, the Company shall execute
and in the denomination specified in such instrument of assignment, and shall
so assigned, and this Warrant shall promptly be cancelled. A Warrant, if
properly assigned, may be exercised by a new Holder for the purchase of shares
of Common Stock without having a new Warrant issued.
2
(b) This Warrant may be divided or combined with other Warrants upon
to be issued, signed by Holder or its agent or attorney. Subject to compliance
with Paragraph 8(a), as to any transfer which may be involved in such division
with such notice.
(c) The Company shall prepare, issue and deliver at its own expense
(other than transfer taxes) the new Warrant or Warrants under this paragraph 8.
(d) The Company agrees to maintain, at its aforesaid office, books for
the registration and the registration of transfer of the Warrants.
9. No Rights as Shareholder until Exercise. This Warrant does not
entitle the Holder to any voting rights or other rights as a shareholder of the
Company prior to the exercise hereof. Upon the exercise (as described in
paragraph 3), the Warrant Shares so purchased shall be and be deemed to be
issued to such holder as the record owner of such shares as of the close of
business on such date.
10. Loss, Theft, Destruction or Mutilation of Warrant. The Company
represents and warrants that upon receipt by the Company of evidence reasonably
certificate or any stock certificate relating to the Warrant Shares, and in case
to it, and upon surrender and cancellation of such Warrant or stock certificate,
Warrant or stock certificate.
11. Saturdays, Sundays, Holidays, etc. If the last or appointed day
herein shall be a Saturday, Sunday or a legal holiday, then such action may be
taken or such right may be exercised on the next succeeding day not a Saturday,
Sunday or legal holiday.
12. Adjustments of Exercise Price and Number of Warrant Shares.
(a) Stock Splits, etc. The number and kind of securities purchasable
upon the exercise of this Warrant and the Exercise Price shall be subject to
adjustment from time to time upon the happening of any of the following (each,
an “Adjustment Event”): The Company shall (i) pay a dividend in shares of Common
Stock or make a distribution in shares of Common Stock to holders of its
outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock
into a greater number of shares of Common Stock, (iii) combine its outstanding
shares of Common Stock into a smaller number of shares of Common Stock or
(iv) issue any shares of its capital stock in a reclassification of the Common
Stock. Upon the occurrence of an Adjustment Event, the number of Warrant Shares
purchasable upon exercise of this Warrant immediately prior thereto shall be
adjusted so that the Holder shall be entitled to receive the kind and number of
Warrant Shares or other securities of the Company which he would have owned or
have been entitled to receive had such Warrant been exercised in advance
thereof. Upon each such adjustment of the kind and number of Warrant Shares or
other securities of the Company which are purchasable hereunder, the Holder
shall thereafter be entitled to purchase the number of Warrant Shares or other
securities resulting from such adjustment at an Exercise Price per such Warrant
3
Share or other security obtained by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of Warrant Shares purchasable
pursuant hereto immediately prior to such adjustment and dividing by the number
of Warrant Shares or other securities of the Company resulting from such
adjustment. An adjustment made pursuant to this paragraph shall become
effective immediately after the effective date of such event retroactive to the
record date, if any, for such Adjustment Event.
(b) Reorganization, Reclassification, Merger, Consolidation or
Disposition of Assets. In case (i) the Company shall (A) reorganize its
capital, (B) reclassify its capital stock, consolidate or merge with or into
another corporation (where the Company is not the surviving corporation or where
there is a change in or distribution with respect to the Common Stock of the
Company), or (C) sell, transfer or otherwise dispose of all or substantially all
its property, assets or business to another corporation (a “Fundamental Change”)
and, (ii) pursuant to the terms of such Fundamental Change, shares of common
stock of the successor or acquiring corporation, or any cash, shares of stock or
other securities or property of any nature whatsoever (including warrants or
other subscription or purchase rights) in addition to or in lieu of common stock
of the successor or acquiring corporation (“Other Property”), are to be received
by or distributed to the holders of Common Stock of the Company, then the Holder
shall have the right thereafter to receive, upon exercise of this Warrant, the
number of shares of common stock of the successor or acquiring corporation or of
the Company, if it is the surviving corporation, and Other Property receivable
upon or as a result of such Fundamental Change by a holder of the number of
shares of Common Stock for which this Warrant is exercisable immediately prior
to such event. In case of any such reorganization, reclassification, merger,
consolidation or disposition of assets, the successor or acquiring corporation
(if other than the Company) shall expressly assume the due and punctual
observance and performance of each and every covenant and condition of this
Warrant to be performed and observed by the Company and all the obligations and
liabilities hereunder, subject to such modifications as may be deemed
appropriate (as determined by resolution of the Board of Directors of the
Company) in order to provide for adjustments of shares of Common Stock for which
this Warrant is exercisable which shall be as nearly equivalent as practicable
to the adjustments provided for in this Section 12. For purposes of this
Paragraph 12, “common stock of the successor or acquiring corporation” shall
include stock of such corporation of any class which is not preferred as to
dividends or assets over any other class of stock of such corporation and which
is not subject to redemption and shall also include any evidences of
indebtedness, shares of stock or other securities which are convertible into or
exchangeable for any such stock, either immediately or upon the arrival of a
specified date or the happening of a specified event and any warrants or other
rights to subscribe for or purchase any such stock. The foregoing provisions of
this Paragraph 12 shall similarly apply to successive Fundamental Changes.
(c) No Adjustment for Small Amounts. Anything in this Section 12 to
the contrary notwithstanding, the Company shall not be required to give effect
to any adjustment in the Exercise Price unless and until the net effect of one
or more adjustments, determined as above provided, shall have required a change
of the Exercise Price by at least one-hundredth of one cent ($0.0001), but when
the cumulative net effect of more than one adjustment so determined shall be to
change the actual Exercise Price by at least one cent, such change in the
Exercise Price shall thereupon be given effect.
13. Voluntary Adjustment by the Company. The Company may at any time
during the term of this Warrant, (i) extend the Expiration Date or (ii) reduce
the then current Exercise Price to any amount and for any period of time deemed
appropriate by the Board of Directors of the Company.
4
14. Notice of Adjustment. Whenever the number of Warrant Shares or
number or kind of securities or other property purchasable upon the exercise of
this Warrant or the Exercise Price is adjusted, as herein provided, the Company
shall promptly mail by registered or certified mail, return receipt requested,
to the Holder notice of such adjustment or adjustments setting forth the number
of Warrant Shares (and other securities or property) purchasable upon the
exercise of this Warrant and the Exercise Price of such Warrant Shares (and
other securities or property) after such adjustment, setting forth a brief
statement of the facts requiring such adjustment and setting forth the
computation by which such adjustment was made. Such notice, in absence of
manifest error, shall be conclusive evidence of the correctness of such
adjustment.
15. Notice of Corporate Action. If at any time:
(a) the Company shall take a record of the
dividend or other distribution, or any right to subscribe for or purchase any
securities or property, or to receive any other right, or
(b) any Fundamental Change; or
(c) there shall be a voluntary or involuntary dissolution, liquidation
or winding up of the Company;
then, in any one or more of such cases, the Company shall give to Holder (i) at
least 10 days’ prior written notice of the record date for such dividend,
distribution or right, Fundamental Change or liquidation or winding up, and
(ii) in the case of any Fundamental Change or any such dissolution, liquidation
or winding up, at least 30 days’ prior written notice of the date when the same
shall take place. Such notice in accordance with the foregoing clause also
shall specify (i) the date on which the holders of Common Stock shall be
entitled to any such dividend, distribution or right, and the amount and
character thereof, and (ii) the date on which any Fundamental Change or any such
dissolution, liquidation or winding up is to take place and the time, if any
such time is to be fixed, as of which the holders of Common Stock shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such Fundamental Change or dissolution, liquidation or
winding up. Each such written notice shall be sufficiently given if addressed
to Holder at the last address of Holder appearing on the books of the Company
and delivered in accordance with Section 17(d).
16. Authorized Shares. The Company covenants that during the period
Warrant Shares upon the exercise of any purchase rights under this Warrant. The
Company further covenants that its issuance of this Warrant shall constitute
certificates to execute and issue the necessary certificates for the Warrant
Shares upon the exercise of the purchase rights under this Warrant. The Company
Warrant Shares may be issued as provided herein without violation of any
applicable law or regulation or any domestic securities exchange upon which the
Common Stock may be listed.
5
17. Miscellaneous.
(a) Jurisdiction. This Warrant shall be binding upon any successors or
assigns of the Company. This Warrant shall constitute a contract under the laws
of the State of Colorado without regard to its conflict of law principles or
rules.
(b) Restrictions. The Holder acknowledges that the Warrant Shares
acquired upon the exercise of this Warrant, if not registered, will have
restrictions upon resale imposed by state and federal securities laws.
(c) Non-waiver. No waiver of any breach of this Warrant shall act as
a waiver of any preceding or succeeding breach of any of the same or any other
covenant contained herein.
(d) Notices. Any notice, request or other document required or
permitted to be given or delivered to the Holder hereof by the Company shall be
deemed delivered if delivered in person, by recognized overnight courier or
registered or certified mail, postage prepaid. Notice shall be effective when
delivered in person, one day after placing the notice with the overnight courier
or three days after mailing. Notice shall be delivered to the Holder at the
address maintained in the Company’s records.
(e) Limitation of Liability. No provision hereof, in the absence of
affirmative action by Holder to purchase shares of Common Stock, and no
enumeration herein of the rights or privileges of Holder hereof, shall give rise
by creditors of the Company.
(f) Remedies. Holder, in addition to being entitled to exercise all
specific performance of its rights under this Warrant. The Company agrees that
monetary damages would not be adequate compensation for any loss incurred by
waive the defense in any action for specific performance that a remedy at law
would be adequate.
(g) Successors and Assigns. Subject to applicable securities laws,
benefit of and be binding upon the successors of the Company and the successors
and permitted assigns of Holder. The provisions of this Warrant are intended to
be for the benefit of all Holders from time to time of this Warrant and shall be
enforceable by any such Holder or holder of Warrant Shares.
(h) Cooperation. The Company shall cooperate with Holder in supplying
such information as may be reasonably necessary for Holder to complete and file
any information reporting forms presently or hereafter required by the SEC as a
condition to the availability of an exemption from the Securities Act for the
sale of any Warrant or any Warrant Shares.
(i) Amendment. This Warrant may be modified or amended or the
provisions hereof waived only with the written consent of the Company and the
Holder.
(j) Severability. Wherever possible, each provision of this Warrant
of such prohibition or invalidity, without invalidating the remainder of such
provisions or the remaining provisions of this Warrant.
6
(k) Headings. The headings used in this Warrant are for the
of this Warrant.
officer thereunto duly authorized.
Dated: February 1, 2018
PETROSHARE CORP.,
a Colorado corporation
By:
Stephen J. Foley, Chief Executive Officer
7
NOTICE OF EXERCISE
The undersigned hereby elects to purchase shares of Common Stock (the
“Common Stock”), of PETROSHARE CORP., pursuant to the terms of the attached
Warrant, and tenders herewith payment of the exercise price in full, together
with all applicable transfer taxes or charges, if any.
below:
(Name)
(Address)
Dated:
Signature
ASSIGNMENT FORM
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)
hereby
assigned to whose
address is
.
Dated: ,
Holder’s Signature:
Holder’s Address:
Signature Guaranteed:
NOTE: The signature to this Assignment Form must correspond with the name as it
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.
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Exhibit 10.16
Fiscal 2007 Director Compensation Guidelines
Directors’ compensation is established by the board of directors upon the
recommendation of the Governance and Nominating Committee. In March 2007, the
Governance and Nominating Committee recommended that compensation for
non-employee directors remain the same for the year following the annual
meeting, except to adjust the number of restricted stock units granted for the
year. As of the date of the Form 10-K with respect to which this Exhibit is
being filed (the “Form 10-K”), no determination has been made with respect to a
2007 grant of restricted stock units to non-employee directors, although this
matter is expected to be considered by the board prior to the annual meeting. A
director who is an employee does not receive payment for service as a director.
For fiscal 2007, the following compensation guidelines are in effect for
non-employee directors, with cash retainers payable quarterly in arrears:
• $30,000 as an annual retainer
• Chairs of the Compensation, Executive and Governance and Nominating Committees
each received an additional $7,500 annual retainer
• Chair of the Audit Committee received an additional $12,500 annual retainer
• $1,500 fee for each board meeting attended, or each day of such meeting if
such meeting was over multiple days, and $1,000 for each committee meeting
attended, regardless of whether serving as a member of the committee
• Reimbursement of customary expenses (such as travel expenses, meals and
lodging) for attending board, committee and shareholder meetings.
We also carry liability insurance and travel accident insurance that covers our
directors. We do not maintain a directors’ retirement plan or a directors’
legacy or charitable giving plan, although directors are permitted to
participate in our employee matching gift program on the same terms as
employees, thereby providing a match for charitable giving to institutions of
higher education and arts and cultural organizations aggregating up to $5,000
per year per individual. Directors do not participate in the Company’s pension
plan, Supplemental Executive Retirement Plan (SERP), annual cash incentive plan
or performance share plan.
The restricted stock units are granted to non-employee directors pursuant to a
Restricted Stock Unit Agreement under our Incentive and Stock Compensation Plan
of 2002, amended. The units are the economic equivalent of a grant of restricted
stock; however, no actual shares of stock are issued at the time of grant or
upon payment. Rather, the award entitles the non-employee director to receive
cash, at a future date, equal to the future market value of one share of our
common stock for each restricted stock unit, subject to satisfaction of a
one-year vesting requirement. The units vest in full one year after the date of
grant, and the payout will be on the date that service as director terminates or
such earlier date as a non-employee director may elect. In the event of a
“change in control” or “disability” as those terms are defined in the restated
plan, or upon a director’s death, all unvested restricted stock units
immediately vest. Dividend equivalents are paid on restricted stock units at the
same rate as dividends on the Company’s common stock, and are automatically
re-invested in additional restricted stock units as of the payment date for the
dividend. The Restricted Stock Unit Agreement and related plan are listed as
exhibits 10.5f and 10.5a-10.5c, respectively, to the Form 10-K, and the
foregoing description is qualified in its entirety by reference to such
documents.
1
Non-employee directors are also eligible to participate in a deferred
compensation plan for non-employee directors. Under the plan, we credit each
participating director’s account with the number of “phantom units” that is
equal to the number of shares of our stock which the participant could purchase
or receive with the amount of the deferred compensation, based upon the fair
market value (calculated as the average of the high and low price) of our stock
on the last trading day of the fiscal quarter when the cash compensation was
earned. Dividend equivalents are paid on phantom stock units at the same rate as
dividends on the Company’s common stock, and are re-invested in additional
phantom stock units at the next fiscal quarter-end. When the participating
director terminates his or her service as a director, we will pay the cash value
of the deferred compensation to the director or (or to the designated
beneficiary in the event of death) in annual installments over a five-year or
ten-year period, or in a lump sum, at the director’s election. The plan also
provides for earlier payment of a participating director’s account if the board
determines that the participant has a demonstrated financial hardship. The plan,
as amended, is listed as exhibit 10.7a and 10.7b to the Form 10-K, and the
foregoing description is qualified in its entirety by reference to such plan.
2
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Archer Daniels Midland Company 4666 Faries Parkway Decatur, IL62525 T 217.424.5200 January 27, 2009 VIA FACSIMILE (202)772-9368 and filed on EDGAR Mr. Karl Hiller Branch Chief Division of Corporate Finance United States Securities and Exchange Commission 100 F Street, N.E. Washington, D.C.20549-7010 Re:Archer-Daniels-Midland Company Form 10-K for Fiscal Year Ended June 30, 2008 Filed August 29, 2008 Form 10-Q for Fiscal Quarter Ended September 30, 2008 Filed November 10, 2008 Response Letter Dated December 23, File No. 001-00044 Dear Mr.
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 6-K REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934 For the month of November, 2010 VUANCE LTD. (Translation of registrant’s name into English) Sagid House “Hasharon Industrial Park” P.O. Box 5039 Qadima 60920, ISRAEL (Address of principal executive office) Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F. Form 20-FxForm 40-F¨ Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):¨ Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):¨ Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934. Yes¨Nox If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):82- Sale of Business Unit Further to the reorganization of Vuance Ltd. (the “Company”), the Company sold its entire equity interest in its wholly owned Hong Kong subsidiary, SuperCom Asia Pacific Limited (the “Subsidiary”),in consideration of a payment in the amount of $1 pursuant to a purchase agreement entered into on or about October 21, 2010.As part of this sale, the Company assigned to the purchaser certain outstanding loans due to the Company by the Subsidiary in the amount of $1.4 million. As result of the sale of the Subsidiary, the Company may realize a capital gain of approximately $300,000 to be recognized in the fourth quarter of 2010. CEO Appointment Also further to the Company’s reorganization, Arie Trabelsi, a director on the Company’s board of directors appointed to represent shareholder Sigma Wave Ltd., has resignedfrom his position as a director, and has been appointed as the Company’s Chief Executive Officer, effective October 28, 2010.Mr. Trabelsi replaces former Chief Executive Officer, Ron Peer, who shall continue to be employed by the Company during a short term transition period. 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. Vuance Ltd. By: /s/Arie Trabelsi Name: Arie Trabelsi Title: Chief Executive Officer Date: November 3, 2010
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Exhibit COMPENSATION COMMITTEE CHARTER The Compensation Committee (the Committee) shall consist of not less than three, and not more thanseven independent, non-management directors. Members shall be appointed by the Company’s Board of directors (the Board) upon the recommendation of the Company’s Nominating Committee and may be removed singly or in multiples by a majority vote of the non-management directors. The Committee shall carry out the Board’s overall responsibility relating to compensation of senior executives of the Company and its subsidiaries and determine the overall compensation policies for all Company employees. The Committee shall have the following authority: 1.
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): September 23, 2010 Casey’s General Stores, Inc. (Exact name of registrant as specified in its charter) Commission File Number: 001-34700 Iowa (State or other jurisdiction of incorporation) 42-0935283 (IRS Employer Identification No.) One Convenience Blvd. P.O. Box 3001 Ankeny, IA 50021 (Address of principal executive offices, including zip code) (515) 965-6100 (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 8.01.Other Events. On September 23, 2010, Casey’s General Stores, Inc. issued a press release, distributed a communication to its employeesand delivered a slide presentation at its Annual Meeting of Shareholders.Copies of the press release, employee communicationand slide presentation areattached hereto as Exhibits 99.1, 99.2and 99.3, respectively,andare incorporated by reference into this Item 8.01. Item 9.01.Financial Statements and Exhibits. (d)Exhibits Exhibit No. Description Press release issued by Casey’s General Stores, Inc., dated September 23, 2010. Employee communication, dated September 23, 2010. Slide presentation by Casey's General Stores, Inc., dated September 23, 2010. 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. CASEY'S GENERAL STORES, INC. Date: September 23, 2010 By: /s/Robert J. Myers Name: Robert J. Myers Title:President and Chief Executive Officer Exhibit Index The following exhibitsare filed herewith: Exhibit No. Description Press release issued by Casey’s General Stores, Inc., dated September 23, 2010. Employee communication, dated September 23, 2010. Slide presentation by Casey's General Stores, Inc., dated September 23, 2010.
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Exhibit 10.5
BRYN MAWR BANK CORPORATION
RESTRICTED STOCK UNIT AGREEMENT FOR NON-EMPLOYEES
(SERVICE/PERFORMANCE-BASED)
SUBJECT TO THE 2010 LONG TERM INCENTIVE PLAN
Grantee:
Date of Grant:
Number of RSUs:
Vesting Period:
Performance Goal: Certain conditions
and goals as determined according to Exhibit A hereto
AGREEMENT, dated as of the Date of Grant set forth above by and between BRYN
MAWR BANK CORPORATION (the “Corporation”) and the Grantee named above (the
1. The Plan. This Agreement is subject to the terms and conditions of the Bryn
Mawr Bank Corporation 2010 Long Term Incentive Plan (the “Plan”) as approved by
the Board of Directors of the Corporation on February 26, 2010 and by the
Corporation’s shareholders on April 28, 2010. Except as otherwise specified
herein, all capitalized terms used in this Agreement shall have the meanings
given to them in the Plan. The term “Corporation” as used in this Agreement with
reference to service shall include service provided to any Subsidiary of the
Corporation.
2. Grant of Restricted Stock Units.
a. Subject to the terms and conditions of the Plan and this Agreement, and the
Grantee’s acceptance of same by execution of this Agreement, the Corporation’s
Compensation Committee (“Compensation Committee”) hereby grants to the Grantee
the number of Restricted Stock Units set forth above (the “RSUs”).
b. Upon vesting of the RSUs and satisfaction of all of the other terms and
conditions in this Agreement, the Corporation will issue stock representing the
shares underlying the vested RSUs to be issued to Grantee as soon as
practicable.
3. Terms and Conditions. The Grant is subject to the following terms and
conditions:
a. Service Period Requirements. Vesting of the RSUs is subject to the completion
of continued service by the Grantee from the Date of Grant to
(such date, the “Vesting Date” and such period, the “Vesting
Period”). The RSUs will vest upon expiration of the applicable Vesting Period
and achievement of the Performance Goals as defined in subsection 3(b), but only
if the Grantee provides continuous service to the Corporation through the end of
the applicable Vesting Period or as otherwise provided herein.
b. Performance Goals. The RSUs are subject to the performance goals
(“Performance Goals”) set forth on Exhibit A and shall only vest if the
Performance Goals are achieved and the service requirements set forth in
subsection 3(a) have been fulfilled. The Compensation Committee shall determine
within 75 days after the Vesting Date whether the Performance Goals have been
achieved in accordance with Exhibit A attached hereto. Any fractional shares
shall be rounded to the nearest whole numbers of shares. No vesting shall be
deemed to have occurred unless and until the Compensation Committee certifies in
writing which Performance Goals have been achieved. The Compensation Committee
shall make such certification no later than 75 days after the Vesting Date. The
date on which the Compensation Committee certifies whether a Performance Goal
has been achieved that results in the vesting of some or all of the RSUs is
referred to in this Agreement as the “Vesting Date”.
c. No Rights as a Shareholder. Prior to the Vesting Date, Grantee will have none
of the rights and privileges of a shareholder with respect to the shares
underlying the RSUs, including but not limited to, the right to vote the shares.
d. Dividend-Equivalents. At the time of issuance of shares underlying RSUs
pursuant to subsection 2(b) above, the Corporation shall also pay to Grantee an
amount equal to the aggregate amount of all dividends declared and paid by the
Corporation based on dividend record dates falling between the Date of Grant and
the date of issuance in accordance with the number of shares issued. The
computation set forth in this subparagraph is separate and distinct from the
calculations and concepts set forth on Exhibit “A” hereto and the calculations
and concepts set forth on Exhibit “A” hereto have no applicability to the
calculation of the amount of dividends to be paid by the Corporation pursuant to
this subparagraph.
4. Forfeiture.
a. Forfeiture. All RSUs that have not vested at the Vesting Date in accordance
with subsections 3(a) and 3(b) and Exhibit A attached hereto shall be forfeited
in their entirety.
b. Forfeiture of Unvested RSUs and Payment to the Corporation for Issued Shares
Resulting from Vested RSUs If Grantee Engages in Certain Activities. The
provisions of this subsection 4. b. will apply to all RSUs granted to Grantee
under the Plan and to any shares issued to the Grantee upon vesting of RSUs. If,
at any time during the Vesting Period, or (ii) two (2) years after termination
of Grantee’s service with the Corporation, Grantee engages in any activity
inimical, contrary or harmful to the interests of the Corporation including, but
not limited to (A) conduct related to Grantee’s service for which either
criminal or civil penalties against Grantee may be brought, (B) violation of the
Corporation’s policies including, without limitation, the Corporation’s insider
trading policy, (C) soliciting of any customer of the Corporation for business
which would result in such customer terminating their relationship with the
Corporation; soliciting or inducing any individual who is an employee or
director of the Corporation to leave the Corporation or otherwise terminate
their relationship with the Corporation, (D) disclosing or using any
confidential information or material concerning the Corporation, or
(E) participating in a hostile takeover attempt, then (x) all RSUs that have not
vested effective as of the date on which Grantee engages in such activity,
unless forfeited sooner by operation of another term or condition of this
Agreement or the Plan, shall be forfeited in their entirety, and (y) for any
shares underlying vested RSUs which have been issued to Grantee, the Grantee
shall pay to the Corporation the market value of the shares on the date of
issuance or the date Grantee engages in such activity, whichever is greater. The
term “confidential information” as used in this Agreement includes, but is not
limited to, records, lists, and knowledge of the Corporation’s clients, methods
of operation, processes, trade secrets, methods of determination of prices,
prices or fees, financial condition, profits, sales, net income, and
indebtedness, as the same may exist from time to time.
c. Right of Setoff. By accepting this Agreement, Grantee consents to the
deduction, to the extent permitted by law, from any amounts that the Corporation
owes Grantee from time to time owed to Grantee the amounts Grantee owes the
Corporation under subsection 4(b) above. Whether or not the Corporation elects
to make any setoff in whole or in part, if the Corporation does not recover by
means of setoff the full amount Grantee owes it, calculated as set forth above,
Grantee agrees to immediately pay the unpaid balance to the Corporation.
d. Compensation Committee Discretion. Grantee may be released from Grantee’s
obligations under subsections 4(b) and 4(c) only if the Compensation Committee,
or its duly appointed agent, determines in its sole discretion that such action
is in the best interest of the Corporation.
5. Death, Disability or Retirement. In the event the Grantee shall cease to
provide service to the Corporation by reason of: (A) normal or late retirement;
(B) with the consent of the Compensation Committee, early retirement or a
transfer of the Grantee in a spinoff; (C) death; or (D) total and permanent
disability as determined by the Compensation Committee, then the service-period
requirement on a fraction of Grantee’s RSUs will be deemed to have been
fulfilled. The numerator of such fraction with respect to the RSUs shall be the
number of full calendar months that have elapsed in the Vesting Period prior to
the death, disability or retirement of the Grantee and the denominator shall be
the total number of months in the Vesting Period. Any remaining RSUs for which
the service-period requirements have not been fulfilled, as provided in this
section 5, shall be forfeited. The terms of subsection 2(b) shall continue to
apply to the RSUs for which the service-period requirements have been fulfilled
as provided in this section 5.
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6. Termination. If the Grantee terminates the Grantee’s service obligation with
the Corporation or if the Corporation terminates the Grantee’s service
requirements with the Corporation with or without Cause, other than as described
in section 5 above, any RSUs that have not yet vested at the date of termination
shall automatically be forfeited.
7. Change of Control. In the event of a Change of Control, a fraction of
Grantee’s outstanding RSUs will be deemed to have vested and any shares
underlying such RSUs not previously issued shall be issued within ten days after
the Change of Control. The numerator of such fraction shall be the number of
months that have elapsed in the Vesting Period prior to the Change in Control
and the denominator shall be the total number of months in the Vesting Period.
Any remaining RSUs which have not vested, as provided in this section 7, shall
be forfeited.
8. Change Adjustments. The Compensation Committee shall make appropriate
adjustments to give effect to adjustments made in the number of shares of the
Corporation’s common stock through a merger, consolidation, recapitalization,
reclassification, combination, spinoff, common stock dividend, stock split or
other relevant change as the Compensation Committee deems appropriate to prevent
dilution or enlargement of the rights of the Grantee. Any adjustments or
substitutions pursuant to this section shall meet the requirements of
shall be final and binding upon the Grantee.
9. Compliance with Law and Regulations. The grant of RSUs and the issuance of
shares underlying vested RSUs shall be subject to all applicable federal and
state laws, the rules and regulations and to such approvals by any government or
regulatory agency as may be required. The Corporation shall not be required to
register any securities pursuant to the Securities Act of 1933, as amended, or
to list such shares under the stock market or exchange on which the common stock
of the Corporation may then be listed, or to take any other affirmative action
in order to cause the issuance or delivery of shares underlying vested RSUs to
comply with any law or regulation of any governmental authority.
10. Notice. Any notice which either party hereto may be required or permitted to
give to the other shall be in writing, and may be delivered personally or by
mail, postage prepaid, addressed as follows: to the Corporation, Attention:
Corporate Secretary, at its office at 801 Lancaster Avenue, Bryn Mawr, PA 19010
or to the Grantee at her/his address on the records of the Corporation or at
such other addresses as the Corporation, or Grantee, may designate in writing
from time to time to the other party hereto.
11. Incorporation by Reference. This Restricted Stock Unit Award is granted
pursuant and subject to the terms and conditions of the Plan, the provisions of
which are incorporated herein by reference. If any provision of this Agreement
conflicts with any provision of the Plan in effect on the Date of Grant, the
terms of the Plan shall control. This Agreement shall not be modified after the
Date of Grant except by written agreement between the Corporation and the
Grantee; provided, however, that such modification shall (a) not be inconsistent
with the Plan, and (b) be approved by the Committee.
12. Severability. If any one or more of the provisions contained in this
Agreement are invalid, illegal or unenforceable, the other provisions of this
13. Compliance with Internal Revenue Code Section 409A. It is the intention of
the parties that the RSUs and the Agreement comply with the provisions of
Section 409A of the Code to the extent, if any, that such provisions are
applicable to the Agreement and the Agreement will be administered by the
Compensation Committee in a manner consistent with this intent. If any payments
or benefits may be subject to taxation under Section 409A of the Code, Grantee
agrees that the Compensation Committee may, without the consent of Grantee,
modify this Agreement to the extent and in the manner that the Compensation
Committee deems necessary or advisable or take any other action or actions,
including an amendment or action with retroactive effect that the Compensation
Committee determines is necessary or appropriate to exempt any payments or
benefits from the application of Section 409A or to provide such payments or
benefits in the manner that complies with the provisions of Section 409A such
that they will not be taxable thereunder.
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14. Choice of Law. The provisions of this Agreement shall be construed in
accordance with the laws of the Commonwealth of Pennsylvania, without regard to
any conflict of law provision that would apply the law of another jurisdiction.
15. Interpretation. The interpretation and construction or any terms or
conditions of the Plan or this Agreement by the Compensation Committee shall be
final and conclusive.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be executed by
a duly authorized officer, and the Grantee has hereunto set his/her hand and
seal, effective as of the Date of Grant set forth above.
BRYN MAWR BANK CORPORATION By: Print Name: Geoffrey L. Halberstadt Print
Title: Corporate Secretary
(Signature of Grantee)
(Print Name of Grantee)
(Address of Grantee)
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EXHIBIT A
TO RESTRICTED STOCK UNIT AGREEMENT DATED AS OF
All of the terms and conditions of the Restricted Stock Unit Agreement dated as
of to which this Exhibit is attached are incorporated herein
by reference.
Date of Grant:
Name of Grantee:
Number of RSUs:
Calculation of Relative Total Shareholder Return
“Relative Total Shareholder Return” means the Corporation’s TSR relative to the
TSR of the NASDAQ Community Bank Index at the end of the Restricted Period based
on the following formula:
Vesting Amount = 100% - (NASDAQ Community Bank Index TSR- Corporation’s TSR) x
3.33%.
Provided however, if the Corporation’s TSR is negative, no Restricted Stock
Units (“RSUs”) will vest. If the Corporations TSR is greater than the NASDAQ
Community Bank Index TSR and greater than zero, one hundred percent of the RSUs
will vest. For every 100 basis points (1%) that the Corporation’s TSR is behind
the NASDAQ Community Bank Index, the Vesting Amount is decreased by 3.33%.
In the event that the NASDAQ Community Bank Index ceases to be published and if
the Corporation’s TSR is positive, then the Corporation shall be deemed to have
outperformed the Index and 100% of the RSUs will vest.
“TSR” means, for the Corporation, the Corporation’s total shareholder return,
which will be calculated by dividing (i) the Closing Average Share Value by
(ii) the Opening Average Share Value.
Note: A summary of the current award for Bryn Mawr Bank Corporation can be
obtained from the PeerTracker website at
https://www.radford.com/peertracker/3/bmtc/calculated_values_summary.aspx?id=MzE2,
by clicking on “ .”
“Opening Average Share Value” means the average, over the trading days in the
Opening Average Period, of the closing price of a company’s stock multiplied by
the Accumulated Shares for each trading day during the Opening Average Period.
“Opening Average Period” means the 20 trading days preceding
.
“Accumulated Shares” for purposes of the calculation of Relative Shareholders
Returns only means, for a given trading day, the sum of (i) one (1) share and
(ii) a cumulative number of shares of the company’s common stock purchased with
the dividends declared on a company’s common stock, assuming same day
reinvestment of the dividends in the common stock of a company at the closing
price on the ex-dividend date, for ex-dividend dates between the start of the
Opening Average Period and the trading day.
“Closing Average Share Value” means the average, over the trading days in the
Closing Average Period, of the closing price of the company’s stock multiplied
by the Accumulated Shares for each trading day during the Closing Average
Period.
“Closing Average Period” means (i) in the absence of a Change in Control (as
defined in the 2010 Plan), the 20 trading days preceding ;
or (ii) in the case of a Change of Control, the trading days during the period
beginning thirty (30) calendar days prior to the Change in Control; and ending
on the Accelerated End Date.
“Accelerated End Date” means the date five (5) calendar days (or such shorter
period as may be established by the Compensation Committee in its sole
discretion) prior to the Change in Control.
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Exhibit 99.2 SANUWAVE HEALTH, INC. CONFERENCE CALL TO DISCUSS SECOND QUARTER 2016 FINANCIAL RESULTS AND PROVIDE A BUSINESS UPDATE Monday, August 15, 2016 11 :00 a.m. Eastern Time Operator Welcome to the SANUWAVE Health Inc.’s second quarter 2016 financial results and business update conference call. At this time, all participants are in listen only mode. Following management’s prepared remarks we will hold a Q&A session. To ask a question please press star followed by one on your touchtone phone. If anyone has difficulty hearing the conference please press star zero for operator assistance. As a reminder, this conference is being recorded. I would now like to turn the conference over to Lisa Sundstrom, SANUWAVE’s Chief Financial Officer, please go ahead. Lisa Sundstrom Good morning. We appreciate your interest in SANUWAVE and in today’s call. SANUWAVE will now provide an update of our activities during the quarter as well as our preliminary second quarter 2016 financial results. Our Quarterly Report on Form 10-Q with the SEC will be filed shortly. If you would like to be added to the Company’s distribution list, please call SANUWAVE at (678) 578-0103 or go to the Investor Relations section of our website at www.sanuwave.com. Before we begin, I would like to caution that comments made during this conference call by management will contain forward-looking statements that involve risks and uncertainties regarding the operations and future results of SANUWAVE. We encourage you to review the Company’s filings with the Securities and Exchange Commission including, without limitation, our Forms 10-K and 10-Q, which identify specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements. Furthermore, the content of this conference call contains time-sensitive information that is accurate only as of the date of the live broadcast, August 15, 2016. SANUWAVE undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call. With that said, I would like to turn the call over to our Chairman of the board, Kevin Richardson. 1 Kevin Richardson Good morning everyone and thank you for joining us. We had a Fantastic and Event-filled second quarter. The team will spend time going over their area of concentration with Pete Stegagno discussing regulatory and international, Iulian discussing our continued innovation and R&D, and Lisa reviewing the financials and discussing our efforts to improve cash flows and capital. With smaller medical device technology companies there always needs to be a thoughtful balance between product development, innovation, sales growth and capital provided by our shareholders and owners. During the second quarter the team exemplified the balance necessary for success as a small operation with aspirations for growth. The five highlights we want to focus on are the following - We successfully submitted our DFU study to the FDA, which Pete will discuss in detail - We continued to innovate with 2 new patents and presented at the Mt. State BioFilm conference which Iulian detail. - On the capital front we successfully completed an offering, extended our debt with Healthtronics, which was no small feat, and replaced our convertible debenture with a new provider and with greater flexibility. - Fourth, we were able to make a transition to the cloud from an IT perspective and a physical office move. Both actions will save the company $100k/year. These actions also allow for scalability and expansion capability, and also consolidates R&D. - Finally, we reworked our international distribution and production supply agreements to set ourselves up for the future with better economics for distributors and for SANUWAVE. Pete will go into detail about these relationships, but it is evidenced with a strong growth in our order book, and our expansion from 7 to 10 countries. With that let me turn it over to Pete to discuss the FDA submission, Pete Pete Stegagno SANUWAVE recently announced that it has submitted to the U.S. Food and Drug Administration (FDA) a de novo petition requesting Agency review and classification of the dermaPACE device for treating Diabetic Foot Ulcers (DFU) as a Class II device. Through the course of two trials, 336 patients were randomized in double-blind, parallel group, sham controlled, multicenter, 24-week pivotal clinical trials that were designed to quantify the safety and effectiveness of the noninvasive procedures with dermaPACE. In April 2016, SANUWAVE met with FDA to discuss the safety and effectiveness results of the trial as well as to discuss various submission strategies. Specifically, we discussed the applicability of the dermaPACE device and the associated clinical trial results in regard to FDA’s de novo review process. We concluded the meeting by informing FDA that we intended to submit the results under the de novo process. 2 Working with Musculoskeletal Clinical Research Associates (MCRA), SANUWAVE submitted to FDA on July 23, 2016 a de novo petition. Due to the strong safety profile of dermaPACE and the efficacy of the data showing statistical significance for wound closure for dermaPACE subjects at 20 weeks and out to 24 weeks, SANUWAVE believes that the dermaPACE device should appropriately be considered for classification into Class II as there is no legally marketed predicate device and that there is not an existing Class III classification regulation or one or more approved. Should FDA determine that the regulatory criteria are met, FDA can decide to grant the de novo , in which case the dermaPACE will be classified as Class II and may be marketed immediately. There were several reasons SANUWAVE decided to not submit a Pre-Market Approval (PMA) as opposed to having submitted a PMA in 2011 after the completion of the first dermaPACE trial in treating DFUs. First, there was no Class II predicate device cleared for treating DFUs that also had equivalent technical characteristics to dermaPACE. Secondly the clinical evidence for safety, while strong, was based upon a lower number of subjects. And thirdly, in 2011, the de novo process was in its early stages. In 2014, a draft guidance was released by FDA that added an alternative pathway for devices to be considered under the de novo process. Under the new de novo pathway, if a person believes their device is appropriate for classification into Class I or Class II and determines there is no legally marketed predicate device, they may submit a de novo without a preceding 510(k) and Not Substantially Equivalent (NSE) decision. Clinical Results A combined total of 336 patients entered the dermaPACE studies at 37 sites. The patients in the studies were followed for a total of 24 weeks. The studies’ primary endpoint, wound closure, was defined as “successful” if the skin was 100% re-epithelialized at 12 weeks without drainage or dressing requirements confirmed at two consecutive study visits. SANWUAVE believes the data demonstrates that dermaPACE® provides an assurance of safety and effectiveness in the treatment of diabetic foot ulcers. The overall safety profile is very positive with no adverse events definitely related to the dermaPACE® system and comparable adverse event rates between the two study groups. Additionally, the effectiveness results demonstrate superiority in wound closure of dermaPACE® compared to the control at 20 and 24 weeks, as well as, the additional supporting analyses. In both studies, the primary endpoint was to assess the effectiveness (incidence of complete wound closure) of the dermaPACE® and sham-control groups 12 weeks post-initial application. Superiority was demonstrated at 20 weeks and 24 weeks post-initial application, and, while not statistically significant, the percentage of dermaPACE® subjects with wound closure is higher at 12 weeks compared to the control. These results demonstrate a reasonable assurance of effectiveness at the later time points when using dermaPACE. Reviewing the effectiveness at 20 weeks also is consistent with FDA guidance on chronic wound studies. 3 In addition to the strong safety and effectiveness data, the de novo petition also contains a discussion of device benefits, device risks, and risk mitigations. Additionally, the petition includes recommendations for special controls to provide guidelines for future assessment of devices that may follow. These guidelines include specific technical and clinical requirements which other devices must conform to in order to provide reasonable assurance of safety and effectiveness for future reviews by FDA. We expect to have initial feedback from FDA by Q4 of this year. We will keep the investor community accordingly. And now I’ll turn it back to Kevin Kevin Richardson Thank you Pete. As you can hear from Pete, we are extremely excited about where we stand in the FDA process and we are now gearing up in anticipation of approval in the next six months. Let me now turn it over to Iulian, Iulian… Iulian Cioanta Thank you Kevin and good morning everyone. Innovation is a fundamental activity at SANUWAVE and we are constantly looking to improve the intellectual coverage of our proprietary shock wave technology. From this point of view, SANUWAVE continued to receive new patents. U.S. Patent and Trademark Office has issued to our company the US patent number 9,161,768 entitled “Extracorporeal Pressure Shock Wave Devices with Reversed Applicators and Methods for Using These Devices”. The patent claims are related to the special construction of the reversed applicators that have their aperture along the large axis of the reflector, instead of the classic construction of pressure shock wave applicators that have their aperture along their small axis of the reflector. This construction gives the advantage to treat a larger area in one position of the applicator, based on the fact that the targeted area is intersecting the applicator’s focal volume on its longitudinal plane and not transversal, as it happens with the classic design. Furthermore, these new applicators are capable of sending into the targeted tissue both focused pressure shock waves and radial pressure waves that are emerging at the point of origin of acoustic pressure shock waves. These hybrid shock waves, when combined with larger treatment area, give a significant increase in the applicators’ efficiency. The reversed applicators can be used for treating heart, for breaking fibrotic tissue, for repairing hypertrophic lesions or organ adhesions or capsular contracture or damaged tissue, for treating infections, for stimulation, proliferation and differentiation of stem cells, for gene therapy, for regeneration or stimulation or repair of nerve cells and for treating bone spurs and heterotopic ossifications. 4 Another patent that was awarded to SANUWAVE is the US patent number 9,198,825 entitled “Increase Electrode Life in Devices Used for Extracorporeal Shockwave Therapy (ESWT)”. The patent has claims related to the special construction of the spark gap electrodes used to generate electrohydraulic shock waves. These novel electrodes have a larger surface of the electrode tip that translates in slower electrode tip erosion during their use, allowing a longer life for the electrodes when compared to classic electrode designs. The bore found at the tip of this new electrode also assures a much better heat dissipation, which further decreases electrode erosion and consequently increases their longevity. The claims of this patent are also covering a special liquid mixture containing different additives that allow the recombination of active radicals generated during high voltage discharge in between aforementioned electrodes, which also translates in a longer life for these electrodes. In conclusion, this new design allows a much more efficient utilization of our devices and can produce a significant increase the useful life of our applicators. As mentioned in our previous conference calls, SANUWAVE is also conducting research studies referring to the influence of acoustic pressure shock wave technology on planktonic/individual bacteria suspended in fluids at University of Georgia and on bacterial biofilms at the Center for Biofilm Engineering from Montana State University . The studies from University of Georgia showed that our proprietary technology is killing 97% of staph bacteria and 78% of E-coli when 5 million colony forming units of bacteria were present in each milliliter of fluid that was slowly circulated in the shock wave action zone or the focal zone. The results of our tests from the Center for Biofilm Engineering from Montana State University on Staph aureus and on Pseudomonas medical biofilms showed a log reduction in between 3 and 4, which translates in 99.9% to 99.99% reduction or removal of the biofilm. We also demonstrated a log reduction in between 4 and 5 (99.99% to 99.999%) in marine biofilms created by seawater organisms. These very promising results were presented at the Center for Biofilm Engineering’s 2016 Biofilm Science and Technology Meeting held at Montana State University in Bozeman, Montana on July 19-21, 2016. The podium presentation of our results was very well received by audience and raised the interest of participant companies for potential collaboration in the field of biofilms eradication. For the future, the company plans to continue these studies with University of Georgia and University of Montana on new species of virulent bacteria, to prove the efficacy and usefulness of acoustic pressure shock waves in cleaning biofilms and eradicate bacteria in specific medical and industrial applications. Kevin. Kevin Richardson Thanks Iulian. As you can hear from Iulian, we are continuing to invest and expand our R&D efforts and leading the shock wave industry on these initiatives. We hope to have more to report on this on the next call as the activity from Mt. State has been robust. Now let’s hear from Lisa on the financials, Lisa…. 5 Lisa Sundstrom Thank you, Kevin. Revenues for the three months ended June 30, 2016 were $203,000, a decrease of $37,000, or 15% from the prior year. Our revenues result primarily from sales in Europe, Asia and Asia/Pacific of our orthoPACE and dermaPACE devices and related applicators. The decrease in revenues for 2016 was due to higher sales of new orthoPACE devices and applicators in Europe and Asia/Pacific in 2015, there were four new devices sold in 2015 and two new devices and two demonstration devices sold in 2016. Research and development expenses for the three months ended June 30, 2016 were $476,000, an increase of $19,000, or 4% from the prior year. Research and development expenses increased due to higher travel expenses, non-cash stock based compensation expense due to stock option issuance during the quarter and higher consulting expenses related to the pre-submission package to the FDA. This is partially offset by lower payments to third party clinical sites participating in the dermaPACE clinical study as the patient enrollment was completed in 2015 and lower consulting related costs as the data results were also completed in 2015. General and administrative expenses for the three months ended June 30, 2016 were $590,000, a decrease of $47,000, or 7% from the prior year. The decrease in general and administrative expenses is primarily due to reduced salary and related costs as a result of reduction in headcount in July 2015 and is partially offset by higher professional and legal fees related to equity offering in 2016 and higher non-cash stock based compensation expense due to stock option issuance during the quarter. Net loss for the three months ended June 30, 2016 was $1.1 million, or ($0.01) per share, compared to a net loss of $1.5 million, or ($0.02) per share, for the same period in 2015, a decrease in the net loss of $399,000, or 26%. The decrease in the net loss for 2016 was primarily due to the gain on the warrant valuation. Looking at cash flows, as of June 30, 2016, we had cash on hand of $123,000, compared with $153,000 at December 31, 2015. Net cash used by operating activities was $1.7 million for 2016, compared with $1.9 million for 2015. The decrease for 2016 in cash used for operations was primarily due to lower operating expenses in 2016 and it partially offset by higher non-cash stock based compensation expense due to stock option issuance. We continue to project that our cash burn-rate from operations will be approximately $175,000 to $225,000 per month in 2016 as funds will be utilized for an office relocation and upgrade of our information technology platform, preparation of any additional analysis of the clinical data results as requested by the FDA and preparation of the launch of the dermaPACE upon FDA approval. Now, let me turn the call back to Kevin. 6 Kevin Richardson Thanks Lisa, as we mentioned earlier, the quarterly fluctuations will remain until we develop a strong order book, which should be starting in September. The Q2 numbers were impacted because we basically froze our distributors as they waited for new contracts. But you can also see we managed cash well and set ourselves up for future success. Before we turn it to Pete let me discuss our international strategy briefly. Historically, we did not put any resources into international as a way to save money. We also previously, has an approach that was quite frankly, very American and very standard. What we have realized over the past 12 months and implemented in the past 3 months is each country is different and we need to pay attention to each country. Some countries are using mobile services, some use in office, some use lots of shocks per visit, others use many visits, it varies country by country. We have partnered with country wound experts and let them decide the best economics for both of us. We also lowered price, reworked our refurbishment arrangements, and laid a path out for product development. With these changes we have also added 3 new countries. We expect to add more countries by year end as well. Lastly, we will be providing order guidance in the future and throughout 2017, but only through 2017. We feel this will help investors understand the progress and business shape we have made internationally. We will provide an update on orders in the near future. When we provide these updates know that we only count definitive orders which will lead to revenue within a year. They will most likely also have a deposit paid to us, so we are not on the hook. With that, let me turn it back to Pete to discuss international then we will conclude and be open to Q&A Pete Stegagno Thank you Kevin. As Kevin mentioned, A SANUWAVE management team literally went around the world visiting our most active distributors. Between Kevin, Iulian, and myself, we visited South Korea, Italy, Belgium, Romania, Sweden, the Middle East, and with a stop in Switzerland to visit our contract manufacturer. The past number of years has seen SANUWAVE singularly focused on the clinical operations and submission process for our dermaPACE device. And even though we have maintained continuous contact with our distributor base via telephone and e-mail, there is no substitute for face-to-face meetings; especially when faced with language barriers. These meetings we had with these distributors was very beneficial for both sides. We had very open and frank discussions which resulted in our ability to better understand the opportunities and obstacles each region faces. For example, in Korea, the user base for wound indication will primarily be university hospital based. In Italy, that is very different. That distributor is developing a mobile/daily rental model in addition to his standard hospital and clinician model. Our talks in Belgium helped identify some key operational and logistical opportunities which may help with improved delivery times and cost reductions. As a result of these meetings, we have begun to rework our distribution agreements, opening up competitive avenues that were not available to these distributors prior to our visits. We have expanded the number of countries we are actively present in from 7 to 10, and we expect this to increase over the next 6 -12 months. As Kevin has already mentioned, we will be updating you with our order book progress as our initiatives begin to take hold (and after most of Europe begins to return from their summer holidays). I’ll turn it back to Kevin. 7 Kevin Richardson Thanks Pete Before Q&A let me repeat the highlights - FDA submission - Restructured debt with Healthtronics - Refinanced convertible note - Office move and IT transition to save money and allow for expansion - Presented at Montana State and moved our IP portfolio forward - International re-ignition and restructuring leading to order growth Q&A Operator Q&A. I will now turn the call back to Mr. Kevin Richardson for closing remarks. Kevin Richardson 8
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FOR IMMEDIATE RELEASE Contact: Laura Lee Stewart, President & CEO Laurie.stewart@soundcb.com Telephone: 800-458-5585 Ext 306 SOUND FINANCIAL, INC. ANNOUNCES FIRST QUARTER DIVIDEND ADMINISTRATIVE OFFICES 2005 Fifth Avenue 2nd Floor Seattle, WA 98121 800-458-5585 MAILING ADDRESS P.O. Box 34155 Seattle, WA 98124 Sound Financial Inc (OTCBB:SNFL) the holding company for Sound Community Bank today announced its first quarterly dividend of 4 cents per share. The cash dividend is payable on July 25th to shareholders of record as of July 15th.This represents the first quarterly dividend paid by Sound Financial Inc since its initial public offering in January 2008. Sound Financial Inc is headquartered in Seattle Washington and operates five full-service retail offices in Clallam, King, Pierce and Snohomish counties in Washington through Sound Community Bank, its wholly-owned subsidiary.
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CHANGE IN CONTROL SEVERANCE AGREEMENT BETWEEN
VALLEY FINANCIAL CORPORATION
AND ANDREW B. AGEE
This Change in Control Severance Agreement ("Agreement") is made and entered
into as of October 18, 2013 between Valley Financial Corporation ("Company"), a
Virginia corporation, and Andrew B. Agee ("Employee").
WHEREAS, Employee is employed as Executive Vice President and Chief Lending
Officer of Valley Bank (“Employer”) which is either the Company or a Subsidiary
of the Company; and
WHEREAS, Company desires to provide Employee with certain benefits in the event
that Employee's employment with Employer is terminated under the circumstances
specified in this Agreement;
WHEREAS, Employee desires to continue employment with Employer and to accept
Company's offer of the benefits specified in this Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants and
agreements hereinafter set forth, the parties hereto agree as follows:
SECTION 1. DEFINITIONS. As used in this Agreement, the following capitalized
terms have the indicated meanings unless the context clearly requires otherwise:
1.01. "Applicable Federal Rate" has the meaning ascribed to that term in
Section 1274(b)(2)(B) of the Code.
1.02. "Board" means the Board of Directors of the Company, unless otherwise
specified.
1.03. "Cause" means (a) the continued failure (after notice from Employee’s
supervisor or officer having superior authority over Employee) by Employee to
perform his duties as an employee of Employer (other than any such failure
resulting from his incapacity due to physical or mental illness); or (b) the
violation of a lawful directive from Employee’s supervisor or officer having
superior authority over Employee; or (c) a breach of Employee’s fiduciary duty;
or (d) the engaging by the Employee in any conduct which has a material adverse
financial effect on or is materially injurious to the Company or any Subsidiary
and which was not done or omitted to be done in good faith and in the best
interests of the Company or any Subsidiary; or (e) the engaging by Employee in
any conduct which is illegal or dishonest either in connection with Employee’s
duties as an employee of Employer or, if not so connected, which reflects in a
materially adverse way on Employee’s fitness to serve in the capacity employed
by Employer; or (f) the issuance of a removal order or similar order by a
governmental regulatory agency with appropriate jurisdiction prohibiting
Employee from participating in the affairs of the Company or any Subsidiary. For
purposes of determining the existence of “Cause” under either clause 1.03(a) or
1.03(b) above any act or failure to act based upon authority given pursuant to a
resolution duly adopted in the case of clause 1.03(a) above by the Board of
Directors of the Employer or, in the case of clause 1.03(c) above, by the Board
of Directors of either the Employer or the Company, if different, or, in the
case of either clause 1.03(a) or 1.03(c) above, based upon the advice of counsel
for the Company shall be conclusively presumed not to constitute “Cause”. In
addition, Employee’s attention to matters not directly related to the business
of the Employer shall not provide a basis for termination for Cause under either
clause 1.03(a) or (c) above so long as either the Board of the Employer or
Company, if different, has approved Employee’s engagement in such activities.
1.04. “Change in Control” means the date that (i) any Person is or becomes
the "beneficial owner" (as defined in Rule 13d-3 or Rule 13d-5 under the
Securities Exchange Act of 1934, as amended), directly or indirectly, of 20% or
more of the combined voting power of the Employer's voting securities; (ii) the
Incumbent Board ceases for any reason to constitute at least the majority of the
Board, provided that any person becoming a director subsequent to the date
hereof whose election, or nomination for election by the Employer's
shareholders, was approved by a vote of at least 75% of the directors comprising
the Incumbent Board (either by a specific vote or by approval of the proxy
statement of the Employer in which such person is named as a nominee for
director, without objection to such
nomination) shall be, for purposes of this clause (ii) considered as though such
person were a member of the Incumbent Board; (iii) all or substantially all of
the assets of the Employer or the assets of the Bank are sold, transferred or
conveyed by any means, including but not limited to direct purchase or merger,
if the transferee is not controlled by the Employer, control meaning the
ownership of more than 50% of the combined voting power of such entity's voting
securities; or (iv) the Employer is merged or consolidated with another
corporation or entity and as a result of such merger or consolidation less than
75% of the outstanding voting securities of the surviving or resulting
corporation or entity shall be owned in the aggregate by the former shareholders
of the Employer. Notwithstanding anything in the foregoing to the contrary, no
Change in Control shall be deemed to have occurred for purposes of this
Agreement by virtue of any transaction (i) which results in the Employee or a
group of Persons which includes the Employee, acquiring, directly or indirectly,
20% or more of the combined voting power of the Employer's voting securities;
(ii) arranged or caused by a federal bank regulatory agency possessing
appropriate jurisdiction on the grounds of failing financial condition of the
Employer or Bank which results in the acquisition, directly or indirectly, of
20% or more of the combined voting power of the Employer's voting securities by
any Person or (iii) which results in the Employer, any subsidiary of the
Employer or any profit-sharing plan, employee stock ownership plan or employee
benefit plan of the Employer or any of its subsidiaries (or any trustee of or
fiduciary with respect to any such plan acting in such capacity) acquiring,
Employer's voting securities.
1.05 "Code" means the Internal Revenue Code of 1986, as amended from time to
time.
1.06 "Date of Termination" means the date of Employee’s “separation from
service” within the meaning of Code section 409A and Treasury Regulations
thereunder.
1.07 "Disability" means the earlier of the following events: either (a) as a
result of Employee's inability due to physical or mental illness, Employee shall
have been absent from the full-time performance of his duties with the Employer
for six (6) consecutive months, and (ii) within thirty (30) days after Notice of
Termination is given Employee shall not have returned to the full-time
performance of his duties; or (b) the Employee qualifies for full time
disability benefits under any disability insurance policy provided by or through
the Company as a Plan.
1.08 "Effective Date" means the date in the first paragraph of this
Agreement.
1.09 "Employer" or “Company” includes any corporation or other entity which
is the surviving or continuing entity in respect of any merger, consolidation or
form of business combination in which the Employer or Company ceases to exist.
1.10 “Good Reason” means, on or after a Change in Control, (a) the failure by
the Company to pay Employee any compensation due Employee (which failure is not
cured within 5 days after notice describing such failure and setting forth the
amount owed); (b) a material diminution in the Employee’s base compensation; (c)
a material diminution in the Employee’s authority, duties, title, or
responsibilities, (d) a material change in the geographic location at which the
Participant must perform the services, or (e) any other action or inaction that
constitutes a material breach by the Company of this Agreement. Employee must
provide notice to the Company of the existence of the condition on which a Good
Reason termination would be based within sixty (60) days after the initial
existence of the condition, upon the notice of which the Company shall have
thirty (30) days during which it may remedy the condition without having to pay
the amounts described in this Agreement.
1.11 "Notice of Termination" means a written notice that sets out the
specific termination provision of this Agreement set forth in Section II relied
upon for termination. No Notice of Termination is required hereunder in the
event of the Employee’s death.
1.12 "Plan" means any compensation plan such as an incentive, bonus, stock
option or restricted stock plan, any pension or profit sharing plan or any
welfare benefit plan (including, but not limited to health, life or disability
insurance).
1.13 "Subsidiary" means any entity that the Company, directly or indirectly,
has the practical ability to control.
SECTION 2. TERMINATION OF EMPLOYMENT AND SEVERANCE.
2.01 Termination Not Providing for Severance. Upon termination of employment
after the Effective Date: (a) by the Employee for other than Good Reason; or (b)
by the Employer for Cause; or (c) by the Employer for any reason prior to a
Change in Control; or (d) by the Employer on account of Employee’s Disability;
or (e) by virtue of Employee’s death, the Company shall pay or cause to be paid
to the Employee an amount equal to Employee’s accrued salary through the Date of
Termination at the rate in effect at the time Notice of Termination is given (if
required). Employee shall not be entitled to any bonus or other discretionary
compensation which has not been received by Employee prior to the Notice of
Termination unless provided for under the specific terms of any Plan. In the
event of Employee's death and the foregoing amounts shall be determined on the
date of death without any requirement for Notice of Termination. Notwithstanding
any other provision of this Agreement, the severance pay described in Section
2.02 below shall not be payable upon termination of Employee’s employment for
any reason before a Change in Control.
2.02 Termination Providing for Severance. Upon termination of Employee's
employment on or after a Change in Control, if such termination is not one of
the types described in Section 2.01, the Company shall pay or cause to be paid
to Employee (in addition to the amount determined under Section 2.01) an amount
equal to two (2) times the Employee's annual salary at the rate in effect (i) at
the time Notice of Termination is given, if Notice of Termination is required,
or (ii) on the Date of Termination, if no Notice of Termination is required.
Such payment shall be made within thirty (30) days of the Date of Termination,
if Employee is not a “specified employee” for purposes of Code Section 409A on
the Date of Termination. If Employee is a “specified employee” for purposes of
Code Section 409A on the Date of Termination, the payment shall be made (i)
within thirty (30) days of the Date of Termination to the extent the payment is
permitted to be treated as exempt “separation pay” for purposes of Code Section
409A and Treasury Regulations thereunder; and (ii) on the first day of the month
following the six-month anniversary of the Date of Termination to the extent the
payment is not permitted to be treated as exempt “separation pay” for purposes
of Code Section 409A and Treasury Regulations thereunder. If such payment is
required to be made on the first day of the month following the six-month
anniversary of the Employee’s Date of Termination, interest shall accrue on the
payment from Employee’s Date of Termination through the date of payment at the
Prime Rate of Interest in effect on the Date of Termination and as reported in
the Wall Street Journal.
2.03 Offset and Recovery. The amount of any payment provided for in this
Section II shall not be reduced, offset or subject to recovery by the Company by
reason of any compensation earned by Employee as the result of employment by
another employer after the Date of Termination, or otherwise but any sums paid
to Employee hereunder which were not properly payable to such Employee may be
recovered by or in right of the Company, together with interest at the
Applicable Federal Rate.
SECTION 3. TERM; BINDING AGREEMENT.
3.01 This Agreement shall continue in effect until the first anniversary of
the Effective Date; provided, however, that beginning with the first anniversary
of the Effective Date and each anniversary thereafter, the term of this
Agreement shall automatically be extended for one additional year unless at
least one hundred twenty (120) days prior to such anniversary date, the Company
or the Employee shall have given written notice that this Agreement shall not be
extended, and provided further, anything in this Agreement to the contrary
notwithstanding, this Agreement shall continue in effect for at least a period
of twelve (12) months beyond the date of a Change in Control, if one shall have
occurred (i) during the term of this Agreement, and (ii) prior to a Notice of
Termination, except a Notice of Termination given by the Company other than for
Cause or Disability after any regulatory filing has been made in contemplation
of a Change in Control.
3.02 This Agreement shall be binding upon and inure to the benefit of and be
enforceable by Employee's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees; provided
that the Employee may not assign this Agreement or any right hereunder without
the express prior written consent of the Company. This Agreement shall be
binding upon and (in addition to the intended third party beneficiaries pursuant
to Section 11) inure to the benefit of the Company and its successors and
assigns, whether by merger, consolidation or transfer of all or substantially
all of the Company’s assets, in which case the “Company” as used herein shall
mean such successor or assignee.
SECTION 4. FEES AND EXPENSES.
4.01 Except as provided in Section 7, each party shall pay its own legal fees
and related or other expenses incurred in connection with this Agreement
including, without limitation all such fees and expenses, if any, incurred in
contesting or disputing any termination or seeking to obtain or enforce any
right or benefit provided by this Agreement, whether or not such party prevails.
SECTION 5. TAXES.
5.01 All payments to be made to Employee under this Agreement will be subject
to required withholding of federal, state and local and employment and other
taxes.
SECTION 6. MISCELLANEOUS.
6.01 Survival. The respective obligations of, and benefits afforded to, the
parties in Sections 2, 4, 5, 6, 7, 10, and 11 of this Agreement shall survive
6.02 Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given by Company when delivered to Employee or by
Employee when delivered to the President/Chief Executive Officer of Company or
when mailed by United States registered mail, return receipt requested, postage
prepaid and addressed, in the case of Company, to the attention of the
President/Chief Executive Officer at the following address:
Valley Financial Corporation
36 Church Avenue, SW
Roanoke, Virginia 24011
or, in the case of Employee, to the address set forth below the Employee's
signature, provided that all notices may be sent to such other address as either
party may have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon receipt.
6.03 Modification; Waiver; Governing Law. No provision of this Agreement may
be modified, waived or discharged unless such modification, waiver or discharge
is agreed to in writing signed by Employee and the President/Chief Executive
Officer of Company. No waiver by either party hereto at any time of any breach
this Agreement to be performed by such other party shall be deemed a waiver of a
interpretation, construction and performance of this Agreement shall be governed
by the laws of the Commonwealth of Virginia (excluding its principles of
conflict of laws).
6.04 Validity. The invalidity or unenforceability of any provision of this
6.05 Jurisdiction and Venue and JURY WAIVER. All disputes and legal or other
litigation proceedings by any party hereto in connection with or relating to
this Agreement, in whole or part, its enforcement or any matters described or
contemplated herein shall be instituted only in the courts of Virginia or of the
United States sitting in Virginia. Each party promises to commence any legal
proceeding only in such courts and each party irrevocably submits to the
exclusive jurisdiction of such courts in any such disputes or litigation. Each
party irrevocably waives the rights to trial by jury in connection with any
matter arising hereunder to the fullest extent permitted by law, any defense or
objection it may now or hereafter have to the laying of venue of any such
proceeding brought in such courts and any claim that any proceeding brought in
any such courts has been brought in an inconvenient forum.
6.06 At Will Employment. Employee acknowledges and agrees that Employee is an
“at-will” employee and nothing herein or in any general or specific written or
oral policies of Company or Employer or statements made to Employee at any time,
whether written or oral or any assignment of “Due Cause” to any action or
inaction of Employee shall or shall be deemed to change or restrict this at-will
relationship.
SECTION 7. CONFIDENTIALITY; COVENANT NOT TO COMPETE.
7.01 Confidentiality. Employee agrees that during and subsequent to his
period of employment with Employer, Employee will not at any time communicate or
disclose to any person or entity, without the consent of the Company or Employer
(which shall be in writing if after termination of employment) or use or take
benefit from or assist any other person or entity to use or benefit from, any
proprietary or other confidential information concerning the Company or any
Subsidiary of the Company, their joint and several operations, assets,
personnel, finances, business methodologies, policies, procedures and plans and
strategies, it being understood, however, that the obligations of this Section
shall not apply to the extent that the aforesaid matters (a) are disclosed in
circumstances where Employee is legally required to do so or (b) become
generally known to and available for use by the public otherwise than by the
Employee's act or omission.
7.02 Covenant Not to Compete. If the Employee's employment with the Employer
is terminated under circumstances entitling Employee to severance compensation
under Section 2.2 of this Agreement, the Employee agrees that for a period of 2
(two) years from the date employment is terminated, Employee will not, without
the prior, written consent of the President/Chief Executive Officer of the
Company, become an officer, employee, agent, partner, director, or substantial
stockholder of any entity engaged in the commercial or retail banking business
within a 100 mile radius of the City of Roanoke, Virginia, or become associated
in any substantial manner with any entity in the process of formation to engage
in the retail or commercial banking business, or any group that intends to form
any such entity in the geographical area described above.
7.03 Relief. In the event of Employee's actual or threatened breach of this
Section, the Company and/or Employer shall be entitled to a preliminary
restraining order and an injunction restraining the Employee from violating its
provisions. Notwithstanding Section 4, in the event the Employee is in breach of
this Section, Employee shall be liable for all costs and expenses incurred by
the Company and/or Employer, including but not limited to reasonable legal fees
and expert witness fees, in obtaining any equitable or legal relief in
connection with such a breach.
7.04 Other Remedies. Nothing in this Agreement shall be construed to prohibit
the Company or Employer from pursuing any other available remedies for such
breach or threatened breach, including the recovery of damages from the
Employee. If at the time of enforcement of this Section a court holds that the
duration, scope or area restrictions stated herein are unreasonable under the
circumstances then existing and, thus, unenforceable, the Company and Employee
agree that the maximum duration, scope or area reasonable under such
circumstances shall be substituted for the stated duration, scope or area.
SECTION 8. RELATED AGREEMENTS.
8.01 To the extent that any provision of any other agreement between Company
or any of its Subsidiaries and Employee shall limit, qualify or be inconsistent
with any provision of this Agreement, then for purposes of this Agreement, while
such other agreement shall remain in force, the provision of this Agreement
shall control and such provision of such other agreement shall be deemed to have
been superseded, and to be of no force or effect, as if such other agreement had
been formally amended to the extent necessary to accomplish such purpose.
SECTION 9. COUNTERPARTS.
9.01 This Agreement may be executed in several counterparts, each of which
shall be deemed to be an original but all of which together will constitute one
SECTION 10. RESERVED
SECTION 11. THIRD PARTY BENEFICIARIES.
11.01 Employer is an intended third party beneficiary of the rights and
benefits of Section 7, with full power to enforce in its own name alone or in
conjunction with Company.
11.02 The Company and its Subsidiaries and their respective officers,
directors, employees, members, managers, agents, independent contractors,
representatives, shareholders, successors and assigns are each intended third
party beneficiaries of the rights and benefits of Section 10, with full power to
enforce in their own name alone or in conjunction with the Company or any other
third party beneficiary.
IN WITNESS WHEREOF, the parties have executed this Agreement as of October 18,
2013.
VALLEY FINANCIAL CORPORATION
(Registrant)
Date:
October 18, 2013
By:
/s/ Ellis L. Gutshall
Ellis L. Gutshall
/s/ Andrew B. Agee
Andrew B. Agee
2311 Rosalind Avenue
Roanoke, VA 24014
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Exhibit 11 Bronicki Investments Ltd. Resolution of the Board of Directors The following resolution was approve by the Board of Directors on November 12, 2015: To authorize Ms. Yehudit Bronicki to prepare, execute, acknowledge, deliver and file in the name and on behalf of Bronicki Investments Ltd. Schedule 13D (including any amendments thereto) or Schedule 13G (including any amendments thereto) with respect to the securities of Ormat Technologies, Inc., a company incorporated in the State of Delaware, with the U.S. Securities and Exchange Commission, and perform in the name and on behalf of Bronicki Investments Ltd. any and all other acts which in the discretion of Ms. Bronicki are considered necessary or advisable under Section 13(d) of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
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Exhibit 10.2
AMENDMENT TO INDEPENDENT CONTRACTOR CONSULTANCY AGREEMENT
This Amendment to Independent Contractor Consultancy Agreement (the “Amendment”)
is made and entered into as of July 30, 2019 and effective June 1, 2019 (the
“Effective Date”) by and between Ross Stores, Inc. (“Company” or “Ross”) and
Norman A. Ferber, an individual (“Contractor” or “Ferber”), and amends the
Amended and Restated Independent Contractor Consultancy Agreement entered into
by the Company and Contractor effective as of January 6, 2010 and subsequently
amended effective January 30, 2012, February 17, 2015, March 1, 2017, and
February 1, 2018 (collectively, the “Agreement”) as follows:
1.
Section 2.1 of the Agreement is hereby amended by replacing the phrase
“$1,875,000” with the phrase “$2,250,000”.
2.
Section 2.3 of the Agreement is hereby amended by replacing both references
therein to the phrase “May 31, 2020” with the phrase “May 31, 2021”.
3.
Section 8.1 of the Agreement is hereby amended by replacing the phrase “May 31,
2020” with the phrase “May 31, 2021”.
4.
Except as so amended, the Agreement remains in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment to the Agreement as
of the first date first written above.
Company:
Contractor:
ROSS STORES, INC.
NORMAN A. FERBER
By:
/s/George P. Orban
/s/Norman A. Ferber
George P. Orban
Chairman, Compensation Committee
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-Q QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED MANAGEMENT INVESTMENT COMPANY Investment Company Act file number 811-6606 Dreyfus BASIC U.S. Government Money Market Fund (Exact name of Registrant as specified in charter) c/o The Dreyfus Corporation 200 Park Avenue New York, New York 10166 (Address of principal executive offices) (Zip code) Janette E. Farragher, Esq. 200 Park Avenue New York, New York 10166 (Name and address of agent for service) Registrant's telephone number, including area code: (212) 922-6000 Date of fiscal year end: 2/28 Date of reporting period: 11/30/11 FORM N-Q Item 1. Schedule of Investments. STATEMENT OF INVESTMENTS Dreyfus BASIC U.S. Government Money Market Fund November 30, 2011 (Unaudited) Annualized Yield on Date Principal U.S. Government Agencies34.8% of Purchase (%) Amount ($) Value ($) Federal Home Loan Bank: 1/20/12 0.04 10,000,000 9,999,514 4/20/12 0.09 25,000,000 24,991,677 Federal Home Loan Mortgage Corp. 3/12/12 0.09 10,000,000 a 9,997,592 Federal National Mortgage Association: 12/14/11 0.14 5,000,000 a 4,999,747 2/1/13 0.40 10,000,000 a,b 10,000,000 Total U.S. Government Agencies (cost $59,988,530) U.S. Treasury Notes5.8% 2/29/12 0.28 5,000,000 5,007,245 6/15/12 0.08 5,000,000 5,048,106 Total U.S. Treasury Notes (cost $10,055,351) Repurchase Agreements59.1% Barclays Capital, Inc. dated 11/30/11, due 12/1/11 in the amount of $17,000,047 (fully collateralized by $11,370,400 U.S. Treasury Bonds, 6.88%-7.25%, due 8/15/22-8/15/25, value $17,340,029) 0.10 17,000,000 17,000,000 Credit Agricole CIB dated 11/30/11, due 12/1/11 in the amount of $15,000,046 (fully collateralized by $14,991,500 U.S. Treasury Notes, 1.75%, due 10/31/18, value $ 0.11 15,000,000 15,000,000 Credit Suisse Securities LLC dated 11/30/11, due 12/1/11 in the amount of $25,000,069 (fully collateralized by $61,715,000 U.S. Treasury Strips, due 5/15/40, value $25,500,021) 0.10 25,000,000 25,000,000 HSBC USA Inc. dated 11/30/11, due 12/1/11 in the amount of $25,000,063 (fully collateralized by $20,270,000 U.S. Treasury Bonds, 4.25%, due 5/15/39, value $25,502,932) 0.09 25,000,000 25,000,000 RBS Securities, Inc. dated 11/30/11, due 12/1/11 in the amount of $20,000,050 (fully collateralized by $20,325,000 Federal National Mortgage Association, 0.65%-1.25%, due 10/24/14-3/27/15, value $20,400,364) 0.09 20,000,000 20,000,000 Total Repurchase Agreements (cost $102,000,000) Total Investments (cost $172,043,881) % Cash and Receivables (Net) .3 % Net Assets % a The Federal Housing Finance Agency ("FHFA") placed Federal Home Loan Mortgage Corporation and Federal National Mortgage Association into conservatorship with FHFA as the conservator. As such, the FHFA oversees the continuing affairs of these companies. b Variable rate securityinterest rate subject to periodic change. At November 30, 2011, the cost of investments for federal income tax purposes was substantially the same as the cost for financial reporting purposes. The following is a summary of the inputs used as of November 30, 2011 in valuing the fund's investments: Valuation Inputs Short-Term Investments ($)+ Level 1 - Unadjusted Quoted Prices - Level 2 - Other Significant Observable Inputs 172,043,881 Level 3 - Significant Unobservable Inputs - Total + See Statement of Investments for additional detailed categorizations. 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. Portfolio valuation: Investments in securities are valued at amortized cost in accordance with Rule 2a-7 of the Act, which has been determined by the Board of Directors to represent the fair value of the fund’s investments. 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. For example, money market securities are valued using amortized cost, in accordance with rules under the Act. Generally, amortized cost approximates the current fair value of a security, but since the value is not obtained from a quoted price in an active market, such securities are reflected as Level 2. The fund may enter into repurchase agreements with financial institutions, deemed to be creditworthy by the Manager, subject to the seller’s agreement to repurchase and the fund’s agreement to resell such securities at a mutually agreed upon price. Securities purchased subject to repurchase agreements are deposited with the fund’s custodian and, pursuant to the terms of the repurchase agreement, must have an aggregate market value greater than or equal to the repurchase price plus accrued interest at all times. If the value of the underlying securities falls below the value of the repurchase price plus accrued interest, the fund will require the seller to deposit additional collateral by the next business day. If the request for additional collateral is not met, or the seller defaults on its repurchase obligation, the fund maintains its right to sell the underlying securities at market value and may claim any resulting loss against the seller. 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 BASIC U.S.
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4. Cooperation between committees (amendment of Rule 47) (vote)
- Report: Corbett
- Before the vote on Amendment 3:
(DE) Mr President, the issue here is the adoption without a vote of an amendment from the committee asked for an opinion. It is generally understood to be clear that the adoption of an amendment from a committee whose opinion is sought can be automatic only when that amendment falls under the exclusive competence of that committee. The word 'exclusive' is missing in this instance. For the sake of greater precision, I have agreed with the rapporteur that the term 'exclusive competences' be added to this sentence.
rapporteur. - Mr President, as rapporteur I can accept the oral amendment.
(The oral amendment was accepted)
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Securities Purchase Agreement
Spyglass Energy Group, LLC
By and Between
Nadel and Gussman, LLC,
Charles W. Wickstrom,
Shane E. Matson,
As Sellers
And
Bandolier Energy, LCC,
As Purchaser
Effective as of January 1, 2014
Table of Contents
Section 1. Agreement of Sale and Purchase of the Membership
Interests 1 2. Purchase Price; Closing 1 3. Inspection and
Acceptance of Assets; Disclaimer of Warranties 6 4. Sellers’
Representations And Warranties 6 5. Sellers’ Representations and
Warranties Concerning the Company 7 6. Purchaser’s Representations and
Warranties 13 7. Independent Evaluation; Access 15 8.
Operation of Business 15 9. Other Covenants 17 10.
Conditions to Proceed with Closing 20 11. Actions to be Taken At
Closing 22 12. Expiration of Representations, Warranties and Covenants
23 13. Release and Indemnification 23 14. Termination of
Agreement 27 15. General Provisions 28 16. Definitions 31
i
Table of Contents
Section Exhibits, Schedules and Closing Deliverables Exhibit
A Sellers, Membership Interests, Distribution Amounts and Sharing Ratios
Exhibit B Assets, Leases and Wells Exhibit C Form of Spousal Consent Exhibit
D Map of Prospect Interests Area Exhibit E Form of Assignment of Membership
Interests Exhibit F Company Certificate of Good Standing and Form of
Incumbency Certificate Exhibit G Form of Disclaimers and Stipulations of
Interest Exhibit H Form of Transition Services Agreement Exhibit I Form of
Sellers’ Closing Tax Certificates Schedule 2(c)(iii)(C) Oil in the Tanks
Schedule 2(c)(vii) Preliminary Settlement Statement Schedule 4(b) Required
Authorizations and Consents Schedule 5(a) Company Governing Documents Schedule
5(e) Events Subsequent to Effective Date Schedule 5(h) Material Agreements
Schedule 5(i) Litigation Proceedings Schedule 5(k) Insurance Policies and
Bonds Schedule 5(p) Preferential Rights and Restrictions on Transfer Schedule
5(u) Additional Liabilities Schedule 5(v) Environmental Matters Schedule
5(x) Equitable and Beneficial Interests Schedule 8(g) Excluded Assets
Schedule 10(b)(ii) Sellers’ Closing Certificates Schedule 10(c)(ii)
Purchaser’s Closing Certificate Schedule 10(c)(iii) Purchaser’s Evidence of
Insurance and Bonds
ii
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (“Agreement”) is made and entered into this
___ day of May, 2014 effective as of January 1, 2014 (“Effective Date”), among
the parties identified on Exhibit A (collectively, the “Sellers”, and
individually a “Seller”); Spyglass Energy Group, LLC, an Oklahoma limited
liability company (“Company”); and Bandolier Energy, LLC, a Delaware limited
liability company (“Purchaser”). The Sellers, the Company and the Purchaser are
each sometimes referred to herein as a “Party” and are sometimes collectively
referred to herein as the “Parties”.
RECITALS
A. The Sellers own all of the issued and outstanding membership interests,
units, warrants, options and any other rights to acquire membership interests in
the Company (collectively, the “Membership Interests”), such Membership
Interests being owned by the Sellers in the respective amounts set forth next to
the Sellers’ names on Exhibit A.
B. The Purchaser desires to purchase all, and not less than all, of the
Membership Interests, and the Sellers desire to sell all, and not less than all,
of the Membership Interests for the Aggregate Purchase Price, subject to and in
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals, the agreements
1. Agreement of Sale and Purchase of the Membership Interests. Subject to the
terms and conditions contained in Sections 2 and 10 below, the Sellers shall
sell to the Purchaser, and the Purchaser shall purchase from the Sellers, the
Membership Interests as of the Effective Date.
2. Purchase Price; Closing.
(a) Purchase Price. Subject to the terms and conditions contained in this
Agreement, on the Closing Date, the Purchaser shall pay to the Sellers, in the
aggregate, an amount equal to [***] (the “Aggregate Purchase Price”), subject to
adjustment as provided in Section 2(c). The Aggregate Purchase Price as adjusted
pursuant to Section 2(c) is herein referred to as the “Adjusted Purchase Price”.
Certain information in this agreement has been omitted and filed separately with
the Securities and Exchange Commission. [***] indicates that text has been
omitted and is the subject of a confidential treatment request.
1
(b) Performance Deposit. On or before the date that this Agreement is fully
executed by all Parties, Purchaser shall pay, by wire transfer of immediately
available funds to Sellers’ designated account, the sum of [***] (the
“Performance Deposit”). If the Closing occurs, the Performance Deposit shall be
applied as a credit toward the Preliminary Adjusted Purchase Price on the
Preliminary Settlement Statement. If the Closing does not occur solely as a
result of the breach by Purchaser of the terms of this Agreement and there has
been no breach by Sellers of the terms of this Agreement, the Sellers shall have
the right, as their sole remedy, to retain the Performance Deposit as liquidated
damages (and not as a penalty). The Parties acknowledge and agree that the
actual damages for such a breach would be difficult or impossible to ascertain
with reasonable certainty, and that the Performances Deposit would be a
reasonable liquidated damages amount. If the closing does not occur for any
other reason (other than Purchaser’s breach), the Performance Deposit shall be
immediately returned to Purchaser.
(c) Adjustments to Aggregate Purchase Price. The Aggregate Purchase Price shall
be adjusted to arrive at the Adjusted Purchase Price according to this Section
2(c) without duplication.
(i) For the purposes of this Agreement:
(A) “Property Costs” means all capital expenses pertaining to the Assets
(including costs incurred subsequent to the Effective Date and prior to the
Closing Date for drilling, developing, completing, equipping and plugging and
abandoning Wells), insurance costs, other expenses, joint interest billings,
lease operating expenses, lease rental and maintenance costs, royalties,
overriding royalties, leasehold payments, severance Taxes, drilling expenses,
workover expenses, geological, geophysical and any other exploration or
development expenditures chargeable under applicable operating agreements or
other agreements consistent with the standards established by the Council of
Petroleum Accountants Society that are attributable to the maintenance and
operation of the Assets; provided, however, that for purposes of this Agreement,
the following costs shall not be included in this calculation: the Lease Bonus
Payment made to the BIA for and on behalf of the Osage Tribe on January 27,
2014, in the amount of $[***].
2
(B) For purposes of allocating production (and proceeds and accounts receivable
with respect thereto) to the Assets, under this Section 2(c), (1) the term
“incurred” shall be interpreted in accordance with Council of Petroleum
Accountants Society standards, except as otherwise specified herein, (2) liquid
Hydrocarbons shall be deemed to be “from or attributable to” the Assets when
they pass through the pipeline connecting into the storage facilities into which
they are run; and (3) gaseous Hydrocarbons shall be deemed to be “from or
attributable to” the Assets when they pass through the royalty measurement
meters, delivery point sales meters or custody transfer meters on the gathering
lines or pipelines through which they are transported (whichever meter is
closest to the well).
(ii) Proration of Costs and Revenues.
(A) All proceeds from the sale of any production of Hydrocarbons from or
attributable to the Assets prior to the Effective Date (net of (A) all amounts
payable as royalties, overriding royalties, net profits interests and other
similar burdens on or measured by production; and (B) all applicable severance
Taxes) shall be the property of the Sellers, and in the event the Company
receives any of those proceeds after the Closing (or before the Closing if the
Aggregate Purchase Price has not been adjusted therefor), Purchaser will cause
the Company to remit those proceeds to Sellers within 45 days after such
receipt, or the Aggregate Purchase Price shall be increased by such amount if
received prior to Closing. All proceeds from the sale of any production of
Hydrocarbons from or attributable to the Assets on or subsequent to the
Effective Date (net of (1) all amounts payable as royalties, overriding
royalties, net profits interests and other similar burdens on or measured by
production; and (2) all applicable severance Taxes shall be the property of the
Company for the benefit of Purchaser, and in the event Sellers receive any of
those proceeds after the Closing (or before the Closing if the Aggregate
Purchase Price has not be adjusted therefor), Sellers will remit those proceeds
to the Company for the benefit of the Purchaser within 45 days after such
receipt, or the Aggregate Purchase Price shall be reduced by such amount if
received prior to Closing.
(B) The Company shall be responsible for all costs and expenses that are
attributable to the Assets, including without limitation Property Costs,
incurred prior to the Effective Date, and the Aggregate Purchase Price shall be
decreased by those costs and expenses to the extent any of those costs and
expenses are not paid by the Company or the Sellers before the Closing.
Purchaser shall be responsible for all costs and expenses that are attributable
to the Assets, including without limitation Property Costs incurred on or after
the Effective Date, and the Aggregate Purchase Price shall be increased by those
costs and expenses to the extent any of those costs and expenses are paid by the
Company or the Sellers before the Closing.
3
(iii) Upward Adjustments. In addition to the adjustments called for in Section
2(c)(ii) above, the Aggregate Purchase Price shall be adjusted upward by the
following:
(A) an amount equal to (1) all direct and actual expenses attributable to the
Assets, including without limitation Property Costs, incurred by or for the
benefit of the Company, (2) all royalties, overriding royalties, net profit
interests and similar burdens on or measured by production, and (3) all
applicable severance Taxes, in each case attributable to the Assets from and
after the Effective Date that were paid by the Company or the Sellers;
(B) an amount equal to all prepaid expenses (including pre-paid bonuses,
rentals, cash calls and advances to operators for expenses not yet incurred,
prepaid Taxes, and scheduled payments) attributable to the ownership or
operation of the Assets from and after the Effective Date that were incurred and
paid by the Company or the Sellers, and;
(C) an amount equal to the value of all oil in the storage tanks for the Wells
at the Effective Date, calculated and as set forth in Schedule 2(c)(iii)(C); and
(D) any other amount expressly provided for in this Agreement or otherwise
agreed to in writing by the Parties.
(iv) Downward Adjustments. In addition to the adjustments called for in Section
2(c)(ii) above, the Aggregate Purchase Price shall be adjusted downward by the
following:
Assets, including without limitation Property Costs, incurred and by the
Company, (2) all royalties, overriding royalties, net profit interests and
similar burdens on or measured by production, and (3) all applicable severance
Taxes, in each case attributable to the Assets prior to the Effective Date that
were paid by the Purchaser;
operation of the Assets prior to the Effective Date that were incurred and paid
by the Purchaser, and;
(C) any other amount expressly provided in this Agreement or otherwise agreed to
(v) Other Adjustments. The Aggregate Purchase Price may also be adjusted by the
written agreement of the Parties with respect to the costs, expenses and
revenues associated with the Excluded Assets between the Effective Date and the
Closing Date.
4
(vi) Performance Deposit. The Adjusted Purchase Price shall be adjusted
downwards as provided in Section 2(b) to give effect to the Performance Deposit
having been previously paid by Purchaser.
(vii) Preliminary Settlement Statement. On or before the day that is five
Business Days prior to Closing, Sellers shall deliver to Purchaser a statement
in the form of Schedule 2(c)(vii) (the “Preliminary Settlement Statement”)
setting forth Sellers’ good faith calculations of the adjustments to the
Aggregate Purchase Price set forth in Section 2(c) (the Aggregate Purchase
Price, as so adjusted “Preliminary Adjusted Purchase Price”), prepared in good
faith using the best information reasonably available to Sellers at the Closing
Date, along with such data in Sellers’ possession as is reasonably necessary to
support such calculations. The Preliminary Settlement Statement also shall set
forth Sellers’ designated accounts for purposes of Purchaser’s payment of the
Adjusted Purchase Price. The Parties shall attempt to agree in writing upon the
Adjusted Purchase Price prior to Closing, and in the event the Parties cannot
agree upon the Adjusted Purchase Price prior to Closing, Purchaser shall pay the
Preliminary Adjusted Purchase Price to Sellers at Closing, and the Parties shall
engage in good faith negotiations to agree on the Adjusted Purchase Price. If
the Adjusted Purchase Price is not agreed to by the Parties within 30 days after
the Closing Date, the dispute shall be submitted to arbitration in accordance
with Section 15(f). Within 10 Business Days after final agreement or
determination of the Adjusted Purchase Price, (A) the Purchaser shall pay to the
Sellers, based upon their Sharing Ratios, the amount (if any) by which the
Adjusted Purchase Price exceeds the Preliminary Adjusted Purchase Price paid to
the Sellers at Closing, or (B) the Sellers shall pay, based upon their Sharing
Ratios, the amount (if any) by which the Preliminary Adjusted Purchase Price
paid to the Sellers at Closing exceeds the Adjusted Purchase Price.
(d) Closing. The closing of this transaction shall be held at 9:00 a.m. on May
22, 2014, or, if the conditions set forth in Section 10 have not been satisfied
by that date, two Business Days after the date on which the last of the
conditions set forth in Section 10 shall have been satisfied or waived, in the
offices of the Company at 15 East 5th Street, Suite 3400, Tulsa, Oklahoma 74103,
or at such other time, place or method to be mutually agreed upon by the Parties
(the “Closing” or “Closing Date”).
5
3. Inspection and Acceptance of Assets; Disclaimer of Warranties. Prior to the
execution of this Agreement, Purchaser has been given full access and
opportunity to complete and has completed its due diligence investigation of the
Company and the Assets, including physical and environmental inspections of the
Wells (including without limitation a Phase I Environmental Assessment and
equipment inventory) and to visit with Company personnel, including Matson, who
is an executive officer of Purchaser and who is also a Seller. Matson was
actively involved on behalf of the Company in the development and operation of
the Assets. Matson participated in Purchaser’s due diligence investigation and
also aided Sellers in preparing the Schedules to this Agreement. Except for the
representations, warranties and covenants of the Sellers set forth in Section 4,
and the special warranty of title set forth in Section 9(i), Purchaser
acknowledges that the Assets are being sold “as is, where is” and with all
faults, and Purchaser waives for all purposes all objections associated with the
condition (environmental, physical, contractual or otherwise) of the Assets, and
Purchaser assumes all risks of any kind whatsoever relating to the Assets
including, without limitation, risks of changes in condition to the Assets,
changes in law, and physical and environmental conditions. Purchaser further
acknowledges, except for the representations, warranties and covenants of the
Sellers set forth in Section 4, and the special warranty of title set forth in
Section 9(i), as follows:
(a) NEITHER SELLERS, THE COMPANY NOR ANY OF THEIR RESPECTIVE REPRESENTATIVES,
NOR ANY PERSON ACTING ON BEHALF OF SELLERS OR THE COMPANY, HAS MADE, AND SELLERS
AND THE COMPANY HEREBY EXPRESSLY DISCLAIM AND NEGATE, ANY REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, RELATING TO THE CONDITION OF ANY OF THE ASSETS
(INCLUDING, WITHOUT LIMITATION, ANY IMPLIED OR EXPRESS WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, PATENT OR TRADEMARK
INFRINGEMENT, AND ANY AND ALL OTHER IMPLIED WARRANTIES EXISTING UNDER APPLICABLE
LAW).
(b) SELLERS AND THE COMPANY HEREBY EXPRESSLY NEGATE AND DISCLAIM, AND PURCHASER
HEREBY WAIVES AND ACKNOWLEDGES THAT NONE OF THE SELLERS, THE COMPANY, THEIR
RESPECTIVE REPRESENTATIVES, AND NO PERSON ACTING ON BEHALF OF SELLERS OR THE
COMPANY, HAS MADE, AND PURCHASER IS NOT RELYING UPON, ANY REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, OR OTHER ASSURANCE RELATING TO (I) THE ACCURACY,
COMPLETENESS OR MATERIALITY OF ANY INFORMATION, DATA OR OTHER MATERIALS (WRITTEN
OR VERBAL), NOW, HERETOFORE, OR HEREAFTER FURNISHED TO PURCHASER BY OR ON BEHALF
OF SELLERS OR THE COMPANY, OR (II) PRODUCTION RATES, RECOMPLETION OPPORTUNITIES,
DECLINE RATES, GEOLOGICAL OR GEOPHYSICAL DATA OR INTERPRETATIONS, THE QUALITY,
QUANTITY, RECOVERABILITY OR COST OF RECOVERY OF ANY HYDROCARBON RESERVES, ANY
PRODUCT PRICING ASSUMPTIONS, OR THE ABILITY TO SELL OR MARKET ANY HYDROCARBONS
AFTER THE CLOSING.
4. Sellers’ Representations And Warranties. Each Seller hereby severally and not
jointly represents and warrants to Purchaser, with respect to
itself/himself/herself, as of the date hereof and at Closing as follows:
(a) Organization and Standing. To the extent Seller is a corporation,
partnership, limited liability company, trust or other entity formed under the
laws of any state, Seller is duly organized, validly existing and in good
standing under the laws of the state of its organization and in such other
jurisdictions necessary for the consummation of this Agreement.
6
(b) Power. Seller has all requisite power and authority to carry on its business
as presently conducted and to enter into and perform its obligations under this
Agreement. The execution and delivery of this Agreement does not, and the
fulfillment of and compliance with the terms and conditions hereof will not,
violate, or be in conflict with, any provision of its governing documents, to
the extent applicable. Except as set forth in Schedule 4(b), Seller is not
required to give any notice to, make any filing with, or obtain any
authorization, consent or approval of, any third party or any governmental
authority in order to execute and deliver this Agreement or consummate the
transactions contemplated hereby, except for such authorizations, consents or
approvals as shall have been obtained or such notices or filings as shall have
been accepted before the Closing Date.
(c) Authorization and Enforceability. The execution, delivery and performance of
this Agreement and the transactions contemplated hereby have been duly and
validly authorized by all requisite actions of the Seller. This Agreement
constitutes the legal, valid and binding obligation of the Seller and is
enforceable in accordance with its terms, subject, however, to the effects of
bankruptcy, insolvency, reorganization, moratorium and other laws for the
protection of creditors generally, as well as to general principles of equity,
regardless of whether such enforceability is considered in a proceeding in
equity or at law.
(d) Title to Membership Interests. Seller owns the Membership Interests
indicated in Exhibit A, and at Closing, will convey to Purchaser good and
marketable title to the Membership Interests free and clear of any and all
liens, mortgages, claims, encumbrances, pledges or security interests and all
other defects of title, adverse claims or other matters whatsoever (other than
those arising under federal and state securities laws).
(e) Brokers’ Fees. Seller has not incurred any liability, contingent or
otherwise, for brokers’ or finders’ fees relating to the transactions
contemplated by this Agreement for which the Purchaser or the Company shall have
any responsibility.
5. Sellers’ Representations and Warranties Concerning the Company. Each Seller
severally and not jointly represents and warrants to the Purchaser as of the
date hereof and at Closing as follows:
(a) Organization and Standing. The Company is a limited liability company duly
Oklahoma set forth on Schedule 5(a) is a complete listing of the Certificate or
Articles of Organization and the Operating Agreement of the Company, and all
amendments thereto, copies of which have previously been made available to the
Purchaser.
7
(b) Power. The Company has all requisite power and authority to carry on its
business as presently conducted and to enter into and perform its obligations
under this Agreement. The execution and delivery of this Agreement does not, and
the consummation of the transactions contemplated by this Agreement will not:
(i) violate or conflict with any provision of its Certificate or Articles of
Organization or Operating Agreement, as amended from time to time; (ii) violate
or conflict with any judgment, decree, order, statute, rule or regulation as in
effect at the Closing Date to which the Company is subject; or (iii) violate,
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
cancel or receive any payment under, require any notice of consent under, or
result in the imposition of any lien, claim or encumbrance upon any of the
Assets under any agreement, contract, lease, license, instrument or other
arrangement to which the Company is a party, by which the Company is bound or to
which the Assets are subject.
(c) Capitalization. All outstanding Membership Interests have been validly
issued, are fully paid and non-assessable, were not issued in violation of the
terms of any contract binding upon the Company and were issued in compliance
with all governing documents of the Company. There are no outstanding
subscriptions, options, warrants, conversion rights, convertible securities,
preemptive rights, preferential rights (contractual or otherwise), “phantom”
stock rights, or agreements, understandings or arrangements of any kind relating
to equity securities, obligating the Company to issue or sell any Membership
Interests now or in the future. At Closing, the Purchaser will acquire all of
the issued and outstanding Membership Interests of the Company.
(d) Financial Information. All financial information which has been provided to
Purchaser with respect to the Company has been, and is, true and correct in all
respects, and while not maintained or prepared in accordance with GAAP are
complete and accurate. Other than the Tax Returns and associated work papers,
such financial information is limited to the Assets. Except for lease operating
statements reflecting operating income and expenses for the Assets (which is
reported on an 8/8ths basis), such financial information (including the Tax
Returns) is further limited to the Company’s 39.149128% interest in the Assets
which it owned immediately prior to the Effective Date and prior to acquiring
the remaining aggregate 60.850872% interests of other Persons in and to the
Assets. Purchaser acknowledges that much of the financial information is
comprised of raw data derived from the Company’s accounting records.
(e) Events Subsequent to Effective Date. Except as set forth in the financial
information provided to Purchaser or on Schedule 5(e), since the Effective Date
there have not been any changes in the Assets, condition, affairs (financial or
otherwise) or business prospects of the Company, in each case limited to the
Assets, which have had or would be reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect.
(f) Legal Compliance. The Company: (i) to the Knowledge of Sellers, is in
compliance with all applicable federal, state, local, tribal or foreign laws
(including statutes, rules, regulations, codes, plans, writs, injunctions,
judgments, orders, decrees, rulings, and charges thereunder) in effect as of the
Closing Date (collectively, “Laws”); (ii) has not received any notice, charge,
claim or action of any filed, commenced or to the Knowledge of Sellers
threatened action alleging any violation of Laws; and (iii) has not received any
notice that any permit, license, certificate of authority, order and approval
of, all federal, state, local, tribal and foreign regulatory bodies required as
of the Closing Date for the Company to carry on its current operations in the
Ordinary Course of Business (collectively, “Permits”) will be terminated or
modified or cannot be renewed in the Ordinary Course of Business, and Sellers
have no Knowledge of any reasonable basis for any such termination, modification
or non-renewal.
8
(g) Tax Matters. To the Knowledge of Sellers,
(i) the Company has filed timely with the appropriate taxing authorities all Tax
Returns required to be filed by the Company; each such Tax Return is true,
correct and complete in all material respects; and all Taxes of the Company that
are due and payable through and including the Effective Date, have been timely
paid in full;
(ii) there is no action, suit, proceeding, investigation, audit, claim or
assessment pending or threatened with respect to the Company with respect to a
liability for Taxes or with respect to any Tax Return; no deficiency for any Tax
has been assessed with respect to the Company which has not been paid in full;
and there are no liens for Taxes upon the Assets other than liens for Taxes not
yet due and payable;
(iii) the Company has withheld all Taxes required to have been withheld and paid
in connection with amounts paid or owing to any employee, independent
contractor, creditor, member or other third party;
(iv) there are no outstanding waivers or comparable consents regarding the
application of the statute of limitations with respect to any Taxes or Tax
Returns of the Company;
(v) the Company is not a party to, is not bound by, and does not have any
obligation under, any Tax sharing agreement, Tax indemnification agreement or
similar contract or arrangement; the Company does not have any potential
liabilities or obligations to any Person as a result of, or pursuant to, any
such agreement, contract or arrangement; and the Company does not have any
liability for Taxes of another Person by contract or otherwise;
(vi) the Company is, and has been since its inception, classified as a
partnership for federal Tax purposes under Treasury Regulations Sections
301.7701-2 and -3, and any comparable provision of applicable law of state and
local jurisdictions that permit such treatment; and
(vii) the Sellers shall, at Sellers’s sole cost and expense, cause all state and
federal income Tax Returns for the Company for calendar year 2013 to be timely
filed (as extended), and shall promptly provide copies thereof (together with
all schedules thereto) to the Company. Sellers shall provide Purchaser with
copies of all associated work papers, schedules and accounting records necessary
to support the 2013 Tax Return.
9
(h) Material Agreements. Schedule 5(h) lists: (i) the Concession Agreement and
the Leases; (ii) all agreements and contracts (whether oral or written) with
Persons who are or will be Affiliates of the Company or Affiliates of the
Sellers immediately prior to Closing that will be binding on the Company or the
Assets after Closing; (iii) agreements for the sale or purchase of Hydrocarbons
produced from or attributable to the Assets; (iv) instruments that create any
area of mutual interest, or that materially restrain, limit or impede the
Company’s ability to compete with or conduct its business as currently
conducted, including geographic limitations on the Company’s activities, in each
case limited to the Assets; (v) contracts to which the Company is a party, the
performance of which will involve consideration in excess of $50,000 per year;
or (vi) any other agreement not described in (i) through (v) above the existence
or loss of which has had or would be reasonably likely to have a Material
Adverse Effect on the Company (collectively, the “Material Agreements”).
Additionally, all of the Material Agreements are still in effect and there has
been no notice of termination from any third party or their affiliate. With
respect to each Material Agreement, the Company is not in material breach or
default of the terms and conditions of any Material Agreement.
(i) Litigation. Except as set forth on Schedule 5(i) (which are part of the
Retained Liabilities), (A) there is no action, suit, proceeding, hearing, audit,
citation, summons, subpoena, inquiry or investigation of any nature, civil,
criminal, or regulatory, in law or in equity, by or before any court or
quasi-judicial or administrative agency of any jurisdiction or arbitrator
(“Proceeding”) pending, or, to the Knowledge of Sellers, threatened, against,
relating to or naming as a party thereto the Company, any of the Assets or any
of the Company’s members, managers or officers (in their capacities as such),
(B) there is no agreement, order, judgment, decree, injunction or award of any
governmental authority or arbitrator against and/or binding upon the Company,
any of the Assets or any of the Company’s members, managers or officers (in
their capacities as such), and (iii) there is no Proceeding that the Company has
pending against other Persons.
(j) Brokers’ Fees. The Company has not incurred any liability, contingent or
any responsibility.
(k) Insurance. Schedule 5(k) describes all contracts of insurance and bonds
maintained by or for the benefit of the Company, which are in full force and
effect, and all premiums due and owing in connection with such policies have
been paid. To the Knowledge of Sellers, the Company has given notice or has
otherwise presented every material claim known to the Company to be covered by
insurance under its insurance policies or contracts in a timely fashion, except
for policies directly related to the Assets and set forth on Schedule 5(k). Each
of the policies will terminate as of the Closing Date, and Purchaser will be
required to have replacement policies in place prior to the Closing.
(l) Employee Benefit Plans. The Company has no Benefit Plans, and the Company
has made no agreement with any Person including, but not limited to, any
employee, manager, officer or any Seller, regarding the Tax treatment of the
Membership Interests.
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(m) Hedging Transactions. The Company has no obligations in respect of any
futures, hedges, swaps, collars, puts, calls, floors, caps, options, forward
sales, forward purchases or other contracts or derivative securities that are
intended to benefit from, relate to or reduce or eliminate the risk of
fluctuations in the price of commodities (including, without limitation,
Hydrocarbons), interest rates, currencies or securities with respect to the
Assets or the Wells (collectively, “Hedge Transactions”).
(n) Imbalances. There are no aggregate production, pipeline transportation or
processing imbalances or penalties existing with respect to the Wells, and the
Company has not received a deficiency payment under any Hydrocarbon contracts
for which any party has a right to take deficiency Hydrocarbons from the Company
with respect to the Wells, nor has the Company received any payments for
production which are subject to refund or recoupment out of future production
from the Wells.
(o) Prepaid Obligations. The Company is not subject to any “take or pay”
which require it to deliver or to suffer the delivery of Hydrocarbons produced
in connection with the Wells or the Assets at some future time (or make a cash
payment in lieu thereof) without then or thereafter receiving full payment
therefor and without deduction or credit on account of such arrangement from the
price that would otherwise be received.
(p) Preferential Rights; Restrictions on Transfer. Except as set forth in
Schedule 5(p), there are no preferential rights to purchase or other similar
rights or restrictions on assignment, including requirements for consents from
third parties to assignment, affecting the Assets that would be applicable to,
or required for the consummation of, the transactions contemplated by this
Agreement, and the transactions contemplated by this Agreement will not create
in any individual or entity any option to purchase, preferential right to
purchase or similar rights with respect to the Assets.
(q) Calls on Production. There are no calls on production (whether or not
exercised) or other similar marketing restrictions affecting the Wells or the
Assets, nor will the transactions contemplated by this Agreement create any such
calls on production.
(r) Operation of Wells. Although the Company owns the Leases and the Wells, the
Company does not operate any of the Wells or any other wells. To the Knowledge
of Sellers, all the Wells have been drilled, operated and produced in accordance
in all material respects with reasonable, prudent oil and gas field practices
and in compliance in all material respects with the applicable Leases and
applicable Law.
(s) Proceeds of Production. All of the proceeds from the sale of the Company’s
interest in Hydrocarbons produced from the Wells (net of mineral owner royalty)
are being received by the Company in a timely manner and are not being held in
suspense for any reason.
(t) Title to the Leases and the Assets. The Company has Defensible Title to the
Leases and the Assets free and clear of all Liens, except for Permitted
Encumbrances. To the knowledge of Sellers, the Leases and the Concession
Agreement are in full force and effect, the rentals, royalties and other
payments due thereunder have been properly and timely paid and there is no
existing default (or event that, with notice or lapse of time or both, would
become a default) thereunder.
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(u) No Undisclosed Liabilities. To the Knowledge of Sellers, except for
liabilities incurred or paid (i) after the Effective Date but before the date of
this Agreement; and (ii) after the date of this Agreement that do not violate
Section 8 below, there are no liabilities, debts or obligations of the Company
of any kind, whether accrued, absolute, contingent, inchoate or otherwise (and
there is no basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand against the Company giving
rise to any such debt, liability or obligation) including any Taxes which are
due and payable as of the date hereof or any governmental charges or penalties,
interest or fines, except as reflected in the financial information provided to
Purchaser or for liabilities set forth on Schedule 5(u).
(v) Environmental Matters. Except as set forth in Schedule 5(v):
(i) the Company has complied, and the Company is in compliance, with all
applicable Environmental Laws, which compliance includes the possession of all
permits required under applicable Environmental Laws and compliance with the
terms and conditions thereof and the making and filing with all applicable
governmental authorities of all reports, forms and documents and the maintenance
of all records required to be made, filed or maintained by it under any
Environmental Law;
(ii) there are no Environmental Claims pending or threatened against the Company
or any Person whose liability for any Environmental Claim the Company has
retained, assumed or indemnified, either contractually or by operation of Law;
(iii) the Company is not subject to any liability or obligation (accrued,
contingent or otherwise) to cleanup, correct, abate or to take any response,
remedial or corrective action under or pursuant to any Environmental Laws,
relating to (A) environmental conditions on, under, or about any of the Wells or
the Assets, including the air, soil, surface water and groundwater conditions
at, on, under, from or near such properties, or (B) the use, management,
handling, transport, treatment, generation, storage, disposal or Release of any
Hazardous Substances, whether on-site on any of the Assets or with respect to
the Assets at any off-site location; and the Company has provided or made
available to Purchaser copies of all studies, assessments, reports, data,
results of investigations or audits, analyses and test results, in the
possession, custody or control of the Company relating to (x) the environmental
conditions on, under or about any of the Assets and (y) any Hazardous Substances
used, managed, handled, transported, treated, generated, stored or Released by
any Person on, under, about or from, any of the Assets;
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(iv) there are no past or present actions, activities, circumstances,
conditions, events or incidents in violation of Environmental Laws related to
the Assets (including the Release, emission, discharge, presence or disposal of
any Hazardous Substance in violation of Environmental Laws), that would be
reasonably likely to form the basis of any Environmental Claim against the
Company or against any Person whose liability for such Environmental Claim the
Company has retained or assumed either contractually or by operation of law.
(w) Employees. The Company has never had any employees and there are no Persons
currently claiming to be an employee of the Company.
(x) Equitable Interests. At the Closing, there are no Persons except those
listed on Schedule 5(x), that have a legal or equitable interest in the Assets
including back-ins, overriding royalty interests, and net profit interests in
third parties (including Sellers).
(y) Water Injection Wells. To the Knowledge of Sellers, all water injection
wells within the Assets have been properly permitted, drilled, equipped and
operated in accordance with applicable Laws.
6. Purchaser’s Representations and Warranties. Purchaser represents and warrants
to Sellers and the Company as of the date hereof and at Closing as follows:
(a) Organization and Standing. Purchaser is a limited liability company, formed
under the laws of the state of Delaware, and is duly organized, validly existing
and in good standing under the laws of Delaware and Oklahoma.
(b) Power. Purchaser has all requisite power and authority to carry on its
the fulfillment of and compliance with the terms and conditions hereof will not,
violate, or be in conflict with, any provision of its governing documents, as
applicable, or any material provision of any agreement, instrument, decree or
order to which it is a party or by which it is bound. The Purchaser is not
transactions contemplated hereby except for such authorizations, consents or
validly authorized by all requisite action of the Purchaser. This Agreement
constitutes the legal, valid and binding obligation of the Purchaser, and is
regardless whether such enforceability is considered in a proceeding in equity
or at law.
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(d) Absence of Litigation. There is no Proceeding pending, or to the Knowledge
of the Purchaser, threatened, that questions the legality or propriety of the
transactions contemplated by this Agreement or that would reasonably be expected
to prevent, hinder or delay the consummation of the transactions contemplated
hereby.
(e) Solvency. As of the Closing Date, the Purchaser will not be insolvent
(either because its financial condition is such that the sum of its debts is
greater than the fair value of its assets or because the present fair salable
value of its assets will be less than the amount required to pay its probable
liability on its debts as they become absolute and matured) and will, in
Purchaser’s opinion, have sufficient working capital to own and operate the
Assets.
(f) Financial Ability. As of the Closing Date, the Purchaser will have available
funds in cash or cash equivalents to pay the Aggregate Purchase Price, as
adjusted pursuant to this Agreement, and to effect the transactions contemplated
hereby. In no event shall the receipt by, or the availability of any funds or
financing to, the Purchaser or any of its Affiliates or any other financing be a
condition to the Purchaser’s obligation to consummate the transactions
(g) Investment Representations.
(i) The Purchaser is acquiring the Membership Interests purchased hereunder for
its own account with the present intention of holding such securities for
purposes of investment, and the Purchaser has no intention of selling such
securities in a public distribution in violation of the federal securities Laws
or any applicable state securities Laws.
(ii) The Purchaser is an “accredited investor” as defined in Rule 501 of
Regulation D promulgated by the Securities and Exchange Commission under the
(h) Restriction on Transfers. Purchaser acknowledges that the Membership
Interests are not registered under the Securities Act. Purchaser will not sell,
transfer or otherwise dispose of the Membership Interests in violation of the
Securities Act, the Securities Exchange Act of 1934, as amended, or the rules
promulgated thereunder, including Rule 144 under the Securities Act.
(i) Brokers’ Fees. Purchaser has not incurred any liability, contingent or
otherwise, for brokers’ or finders’ fees relating to the transaction
contemplated by this Agreement for which any Seller shall have any
responsibility.
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7. Independent Evaluation; Access. Purchaser represents and warrants to Sellers
that Purchaser is experienced and knowledgeable in the oil and gas business.
Purchaser is aware of risks associated with the oil and gas business and,
specifically, the Company’s businesses, operations with respect to the Assets
and has formed its own judgment as to the value of the Membership Interests,
independent of the Excluded Assets and Retained Liabilities. Purchaser is
relying upon its own judgment and decision in entering into and consummating the
transactions contemplated by this Agreement. Between the execution date and the
Closing Date, the Sellers shall cause the Company to continue to make available
for Purchaser’s examination all of its files, records, weekly accounts payable
check runs, minute books, information and data regarding the Assets
(collectively, the “Records”). Except as provided in Sections 5(a), 5(d), 5(g),
5(h), 5(u), Purchaser acknowledges and agrees that none of the Company, Sellers
or their respective Affiliates, managers, officers, members, employees, agents
or representatives have made any representations or warranties, express or
implied, written or oral, as to the accuracy of the Records. Except for the
representations and warranties of Sellers contained in this Agreement, no
representations or warranties have been made to Purchaser, including any
estimate with respect to the value of the Assets or reserves or any projections
as to production or other events that could or could not occur in the future. In
entering into this Agreement, Purchaser acknowledges and affirms that it has
relied and will rely solely on the terms, representations and warranties of this
Agreement and upon its independent analysis, evaluation and investigation of,
and judgment with respect to, the business, economic, legal, tax or other
consequences of this transaction including its own estimate and appraisal of the
extent and value of the petroleum, natural gas and other reserves attributable
to the Assets. Except as provided in Section 13(c), no Seller shall have any
liability to Purchaser or its Affiliates, managers, officers, members,
employees, agents or representatives resulting from any use, authorized or
unauthorized, of the Records or other information related to the Company or the
Assets other than as related to Purchaser’s evaluation of the Assets and the
Company for the purpose of acquiring the Membership Interests. Nothing contained
in this Section 7 shall serve to mitigate or modify the operation of Section 3
or the scope or effect of the representations and warranties set forth in
Sections 4 or 5 in any respect. Purchaser has not evaluated the Excluded Assets
or the Retained Liabilities.
8. Operation of Business. From the date hereof until the Closing Date, the
Sellers shall not permit the Company to, and the Company will not without the
written consent of Purchaser (which consent shall not be unreasonably withheld,
conditioned or delayed), except as expressly contemplated by this Agreement,
engage in any practice, take any action, or enter into any transaction with
respect to the Assets that is outside the Ordinary Course of Business. Without
limiting the generality of the foregoing, from the date hereof until the Closing
Date, the Company will not without the written consent of Purchaser (which
consent shall not be unreasonably withheld, conditioned or delayed), do any of
the following:
(a) amend or otherwise change its Certificate or Articles of Organization or
Operating Agreement or equivalent governing documents;
(b) make or commit to make any capital expenditure or group of any capital
expenditures in excess of $25,000 individually or $100,000 in the aggregate (as
used herein, “capital expenditures” means customary and reasonable costs and
expenses incurred by the Company in connection with certain major repairs,
replacements and improvements of the Assets);
15
(c) issue, sell, pledge, exchange, dispose of, grant, lease, mortgage,
hypothecate, encumber or authorize the issuance, sale, pledge, exchange,
disposition, grant, lease, mortgage, hypothecation or encumbrance of (i) any
Membership Interests or any other direct or indirect ownership or participation
interest in the Company, or (ii) any of the Assets, except for (A) sales of
Hydrocarbons in the Ordinary Course of business consistent with past practices,
provided, however, that the Sellers shall be free to sell, transfer or convey
out of the Company to any third party or to themselves the Excluded Assets.
(d) acquire (including, without limitation, by merger, consolidation or
acquisition of stock or assets) any corporation, partnership or other business
organization or any division thereof or any material amount of assets;
(e) incur any indebtedness for borrowed money or issue any debt securities or
assume, guarantee or endorse, or otherwise as an accommodation become
responsible for, the obligations of any individual or entity, or make any loans
or advances;
(f) enter into any employment, bonus, finder’s fee, consulting or severance
agreement with, any Person, or establish, adopt, enter into or amend any Benefit
Plan or any employment, termination, severance or other plan, agreement, trust,
fund, policy or arrangement for the benefit of any manager, officer, employee or
consultant;
(g) declare, set aside or pay any dividend or make any other distribution in
respect of its Membership Interests, other than (i) distributions of cash and
(ii) the conveyance of the Excluded Assets described in Schedule 8(g);
(h) amend in any material respect any Material Agreement or terminate any
Material Agreement prior to the expiration of the term thereof;
(i) commence or file any Proceeding; provided that the Company may enter into
any consent or settlement with respect to any Proceeding;
(j) pay, discharge or satisfy any material claims, liabilities or obligations
(absolute, accrued, contingent or otherwise) other than in the Ordinary Course
of Business;
(k) make, change or rescind any express or deemed election relating to Taxes, or
except as may be required by applicable Law, make any change to any of its Tax
accounting methods, policies or procedures; provided that the Company may enter
into any consent or settlement with respect to any Proceeding relating to Taxes;
(l) enter into any new sales contract or supply contract which cannot be
cancelled on 30 days’ prior notice;
(m) fail to maintain in full force and effect the existing insurance policies or
insurance policies with substantially comparable terms and coverages covering
the Company and the Assets, except to the extent such policies cease to be
available on commercially reasonable terms (other than bonds or similar
instruments in the ordinary course of business); or
(n) commit or agree to any of the foregoing.
Each of the Sellers agrees to cause the Company to promptly inform the Purchaser
of any practices, activities or transactions that might require consent by the
Purchaser hereunder and will afford Purchaser reasonable access to any books and
Records necessary for such consent to be made on an informed basis.
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9. Other Covenants.
(a) Transition Services Agreement. NG and Company shall at the Closing execute
and deliver the Transition Services Agreement in the form attached as Exhibit H,
for the purpose of transitioning operations of the Assets to Purchaser in an
orderly manner.
(b) Excluded Assets. The Parties acknowledge that it may not be possible for the
Company to complete the distribution and transfer of all the Excluded Assets to
the Sellers (or other Persons entitled thereto) prior to the Closing. The
Excluded Assets, and all rights, titles, interests, claims, revenues, expenses,
liabilities, rights and obligations relating thereto are and shall remain the
sole property and responsibility of the Sellers (including as nominee for other
Persons entitled thereto). The Purchaser, at no cost or liability to Purchaser
or the Company, shall fully cooperate with the Sellers to ensure that the
Company distributes and transfers all the Excluded Assets to the Sellers (or to
other Persons as directed by the Sellers), including without limitation all
property and proceeds thereof received by the Company or the Purchaser after the
Effective Date. The Excluded Assets which have not yet been transferred at the
date of execution of this Agreement are listed in Schedule 8(g).
(c) Further Assurances. Subject to the terms and conditions herein provided,
each Party shall take, or cause to be taken, all actions and shall do, or cause
to be done, all things necessary, appropriate or desirable under any applicable
Laws or under applicable governing agreements to consummate and make effective
the transactions contemplated by this Agreement, including using reasonable
efforts to obtain all necessary waivers, consents and approvals. Each Party
shall take, or cause to be taken, all action or shall do, or cause to be done,
all things necessary, appropriate or desirable to cause the covenants and
conditions applicable to the transactions contemplated hereby to be performed or
satisfied as soon as practicable. In addition, if any governmental authority
shall have issued any order, decree, ruling or injunction, or taken any other
action that would have the effect of restraining, enjoining or otherwise
prohibiting or preventing the consummation of the transactions contemplated
hereby, each of the Parties shall use reasonable efforts to have such order,
decree, ruling or injunction or other action declared ineffective as soon as
practicable. With respect to all actions required to be taken by the Company
pursuant to this Agreement (including, without limitation, under Sections 8 and
9), each of the Sellers shall take, or cause to be taken, all action and shall
do, or cause to be done, all things necessary, appropriate or desirable to cause
the Company to take those actions.
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(d) Employment Matters; Non-Solicitation. No employees of the Company, the
Sellers or their respective Affiliates are to be hired by the Purchaser at the
Closing. Purchaser agrees that for a period of two years following the Closing
Date, Purchaser shall not, nor permit any Person controlled by the Purchaser to,
offer to hire or hire (whether as employees, contractors or consultants to such
Persons) Persons who are at the date of this Agreement employees of the Company,
the Sellers, or their respective Affiliates, managers, officers and members.
(e) Confidentiality Obligation. From the date of this Agreement until two years
after the Closing Date, none of the Sellers or their respective Affiliates shall
disclose, and each Seller shall cause its Affiliates, managers, officers,
members, employees, agents and representatives not to disclose, except to the
extent permitted in Section 9(e)(i) or (ii) below, any geological, geophysical,
technical, contractual or other information of any nature or kind (written,
verbal, electronic, digital, or otherwise) consisting of, or involving,
concerning or pertaining in any manner to the Assets (including drilling or
testing operations or results) (“Confidential Information”). Notwithstanding the
foregoing, any Party may make any public disclosure it believes in good faith is
required by applicable law (in which case the disclosing Party will use its
reasonable best efforts to advise the other Parties prior to making the
disclosure).
(i) Sellers may disclose Confidential Information to any Person who Sellers have
engaged to represent or assist Sellers in the negotiation or preparation of this
Agreement, or to advise Sellers with respect thereto, and to any employee of
Sellers who is involved in assisting Sellers with respect to the purchase and
sale contemplated by this Agreement, but only if such Person (including legal
counsel) has agreed to a non-disclosure agreement containing the same disclosure
prohibitions as set forth above in this Section 9(e).
(ii) Notwithstanding the disclosure prohibitions set forth in Section 9(e)(i),
Sellers shall not be liable for disclosure of any Confidential Information if
the same: (A) is now in or hereafter comes into the public domain without breach
of this Agreement and through no fault of the receiving Party, including any
public disclosure made by Purchaser which it believes in good faith is required
by applicable law; or (B) is properly and lawfully known to any of the Sellers
or their respective Affiliates prior to disclosure hereunder as evidenced by its
written records; or (C) subsequent to disclosure hereunder, is lawfully received
by the Sellers or their respective Affiliates from a third party whose rights
therein are without any restriction to disseminate the Confidential Information;
or (D) is developed by Sellers or their respective Affiliates independently of
and without reference to any Confidential Information as shown by tangible
evidence; or (E) is lawfully required to be disclosed by the disclosing party to
a duly constituted governmental or judicial body, provided that the disclosing
party shall, prior to disclosure, notify the other party of such requirement and
shall use reasonable efforts to obtain reliable assurance that confidential
treatment will be accorded such Confidential Information.
18
(f) Non-Compete. From the Closing Date until two years after the Closing Date,
none of the Sellers nor their respective Affiliates shall directly or indirectly
obtain or acquire, or cause to be obtained or acquired, any legal or beneficial
interest in the lands set forth on Exhibit D (the “Prospect Interests”), and
Sellers shall cause each of its respective managers, officers, and employees not
to obtain or acquire, or cause to be obtained or acquired, any legal or
beneficial interest therein.
(g) Closing Tax Certificate. On the Closing Date, each Seller shall deliver to
the Purchaser a certificate in the form of Exhibit I (the “Closing Tax
Certificate”) signed under penalties of perjury (i) stating that it is not a
foreign person, (ii) providing its taxpayer identification number, and (iii)
providing its address, all pursuant to Section 1445 of the Code.
(h) Cooperation on Tax Matters. The Sellers shall, at Sellers’s sole cost and
expense, cause all state and federal income Tax Returns for the Company for
calendar year 2013 to be timely filed (as extended), and shall promptly provide
copies thereof (together with all schedules thereto) to the Company. The Parties
shall cooperate fully, as and to the extent reasonably requested by the other
party, in connection with the filing of Tax Returns and any Proceeding with
respect to Taxes (each, a “Tax Proceeding”). Such cooperation shall include the
retention and (upon the other party’s request) the provision of records and
information that are reasonably relevant to any such Tax Proceeding and making
employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder. The Parties
agree (A) to retain all books and records with respect to Tax matters pertinent
to the Company to any taxable period beginning before the Closing Date until the
expiration of the statute of limitations (and, to the extent notified by
Purchaser or the Sellers, any extensions thereof) of the respective taxable
taxing authority, and (B) to give the other Parties reasonable written notice
if any other Party so requests, shall allow such Party to take possession of
such books and records. The Purchaser shall not have any liability for adverse
claims that may be asserted on the Company by the Internal Revenue Service for
any Tax Filings made by the Company for periods prior to the Effective Date or
for the Excluded Assets for periods prior to, on or after the Effective Date.
(i) Special Warranty of Title by Sellers. Notwithstanding anything to the
contrary herein, Sellers shall warrant and defend title to the Leases and the
Wells against all claims and demands of Persons claiming by, through or under
the Sellers and the Company, but not otherwise.
(j) Certain Post-Closing Liabilities.
(i) Osage Land and Cattle. The Company is as of the date of execution of this
Agreement engaged in negotiations with Osage Land & Cattle Co. and Osage Buck
Creek, L.L.C. (collectively, “OL&C”), (A) to settle surface damages for
operations conducted by the Company prior to the Effective Date on OL&C’s lands,
and (B) for a Master Surface Use Agreement to govern the Company’s operations on
and after the Effective Date on OL&C’s lands. The Parties covenant and agree
resolution of item (A) above in Sellers’ sole and absolute discretion, and all
obligations and payments related thereto shall be a Retained Liability. The
Parties further covenant and agree that the Buyer, as agent for the Company,
shall have the exclusive right and obligation to negotiate resolution of item
(B) above in the Buyer’s sole and absolute discretion, and all obligations and
payments related thereto shall be the sole responsibility of the Company (and
the Sellers shall have no obligations under this Agreement therefor) without any
adjustment to the Aggregate Purchase Price.
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(ii) Reed Litigation. The Company is as of the date of execution of this
Agreement a party to certain Proceedings styled (A) Nadel and Gussman, LLC, et
al., Plaintiffs, vs. Jimmie W. Reed, Trustee, et al., Defendants, Case No.
4:13-cv-00570-TCK-TLW, in the United States District Court for the Northern
District of Oklahoma, as on appeal, Case No. 14-5028, in the United States Court
of Appeals for the Tenth Circuit, and (B) Nadel and Gussman, LLC, et al.,
Plaintiffs, vs. Reed Family Ranch LLC, et al., Defendants, Case No.
CV-2014-00016, in the District Court of Osage County, Oklahoma (collectively,
the “Reed Litigation”). The Reed Litigation is a dispute regarding compensation
for surface damages from operations conducted by the Company prior to the
Effective Date on lands owned by the Reed Litigation defendants. A potential
settlement of the Reed Litigation would require the Company to agree that the
settlement payment may be used as evidence of the value of surface damages for
future operations on lands owned by the Reed Litigation defendants. The Parties
covenant and agree that the Sellers shall have the exclusive right and
obligation to settle or litigate the Reed Litigation in the Sellers’ sole and
absolute discretion, so long as such settlement or litigation does not restrict
the future ingress and egress of the Company in and to the Reed Property or
otherwise impose any physical (vs. financial) limitation on its current right to
conduct ongoing or future oil and gas operations on same. All obligations and
payments related to the Reed Litigation shall be a Retained Liability.
10. Conditions to Proceed with Closing. The obligation of the Parties to proceed
with Closing shall be subject to the satisfaction or waiver, on or before the
Closing Date, of the following conditions:
(a) Conditions to the Parties’ Obligation to Proceed with Closing. The
obligation of the Sellers and the Purchaser to proceed with Closing shall be
subject to the satisfaction or waiver, on or before the Closing Date, of the
following conditions:
(i) All authorizations, consents, orders, declarations or approvals of, or
filings with any governmental or regulatory authority, which the failure to
obtain, make or occur would have the effect of making the transactions
contemplated by this Agreement illegal or would have (or would be reasonably
likely to have) a Material Adverse Effect on any of the Company, the Assets or
the Purchaser assuming the transactions contemplated by this Agreement had taken
place, shall have been obtained, made or occurred on or before the Closing Date.
20
(ii) The Company shall have closed the purchase from its joint venture partners
of all working interests in the Assets not owned by the Company prior to the
date of this Agreement, so that the Company shall own 100% of the working
interests in the Assets at the Closing Date and effective immediately prior to
the Effective Date.
(b) Conditions to the Purchaser’s Obligation to Proceed with Closing. The
obligation of the Purchaser to proceed with Closing shall be subject to the
satisfaction or waiver, on or before the Closing Date, of the following
conditions:
(i) The representations and warranties set forth in Sections 4 and 5 shall be
true and correct in all respects at Closing, and the Company and the Sellers
shall have complied in all material respects with those covenants contained in
this Agreement that are applicable to them.
(ii) The Purchaser shall have received from each Seller an unqualified
certificate covering those items addressed in Section 10(b)(i) (each, a
“Seller’s Closing Certificate”).
(iii) Each manager and officer of the Company shall have delivered to the
Purchaser a letter of voluntary resignation from such positions with the Company
effective as of the Closing.
(iv) None of the Wells nor the other Assets shall have been damaged or destroyed
by any natural event (including, without limitation, any storm, flood,
hurricane, washout, landslide, earthquake, lightning, fire or other act of God)
or other casualty or been taken in condemnation or under right of eminent
domain, except for such destructions, casualties or takings as would not,
individually or in the aggregate, constitute a Material Adverse Change.
(v) Except as would not, individually or in the aggregate, constitute a Material
Adverse Change, the Company shall not have received any demand or notice with
respect to any Environmental Claims or non-compliance with Environmental Laws
(“Environmental Defects”); provided, the existence of any of the foregoing,
together with any other Environmental Defects, that would not reasonably be
estimated to represent an aggregate liability equal to or less than $50,000.00,
shall not be deemed to represent a Material Adverse Change solely due to the
estimated cost of such liabilities.
(vi) To the extent that any Seller that is an individual or their spouse is
currently a resident or subject to the family, estate or probate laws of any
state that is a community property state, the spouse of such Seller shall have
executed and delivered to the Purchaser a written instrument substantially the
form attached hereto as Exhibit C.
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(vii) The Purchaser shall have received from the Company a Certificate of Good
Standing from the State of Oklahoma and an Incumbency Certificate from the
Manager of the Company in the form attached as Exhibit F attached hereto.
(viii) Except for the Excluded Assets listed in Schedule 8(g), Sellers shall
have conveyed out of the Company all Excluded Assets to the satisfaction of
Purchaser.
(ix) Sellers shall have procured executed Disclaimers and Stipulations of
Interest in the form attached as Exhibit G attached hereto from NG, HB&R Oil
Company, LLC, Murfin Drilling Company, Inc., Staghorn Energy, LLC, and the
owners of all overriding royalties and other burdens carved out of the working
interest.
(c) Conditions to the Sellers’ Obligation to Proceed with Closing. The
obligation of the Sellers to proceed with Closing shall be subject to the
satisfaction or waiver, on or before the Closing Date, of the following:
(i) The representations and warranties set forth in Section 6 shall be true and
correct in all respects at Closing and the Purchaser shall have complied in all
material respects with those covenants contained in this Agreement that are
applicable to it.
(ii) The Sellers shall have received from Purchaser an unqualified certificate
covering those items addressed in Section 10(c)(i) (“Purchaser’s Closing
Certificate”).
(iii) The Sellers shall have received evidence acceptable to Sellers that
Purchaser has secured for the Company suitable replacements for all contracts of
insurance and bonds listed in Schedule 5(k) effective as of the Effective Date.
11. Actions to be Taken At Closing.
(a) Sellers’ Actions at Closing. At the Closing, each Seller shall execute,
acknowledge and (upon payment of the Adjusted Purchase Price or Preliminary
Adjusted Purchase Price, as applicable) deliver to the Purchaser the following:
(i) An Assignment of Membership Interests in the form of Exhibit E;
(ii) Its respective Seller’s Closing Certificate;
(iii) Its respective Closing Tax Certificate; and
(iv) All other instruments as may be reasonably required to consummate the
agreements of the Parties hereunder, including execution and delivery by NG of
the Transition Services Agreement.
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(b) Purchaser’s Actions at Closing. At Closing (upon the assignment of all of
the Membership Interests), Purchaser shall execute, acknowledge and deliver to
Sellers the following:
(i) Pay to the Sellers, by wire transfers of immediately available funds, the
Adjusted Purchase Price or the Preliminary Adjusted Purchase Price, as
applicable, to the accounts set forth in the Preliminary Settlement Statement;
(ii) The Purchaser’s Closing Certificate; and
(iii) All other instruments as may be reasonably required to consummate the
agreements of the Parties hereunder including execution and delivery to NG of
12. Expiration of Representations, Warranties and Covenants. All
representations, warranties, covenants and indemnities of the Parties contained
herein, and any certificate delivered hereunder, to the extent that such
certificate relates to such representations and warranties concerning the
Assets, shall survive for a period of two years after the Closing Date, except
that (a) the covenants set forth in Sections 8, 9(a), 9(g) and 10 shall expire
at Closing and (b) the representations, warranties, covenants and indemnities
set forth in Section 13(c) with respect to the Excluded Assets and the Retained
Liabilities, the obligation set forth in Section 5(g)(vii), and the obligations
contained in Sections 9(b), (c), (h), (i) and (j) shall survive indefinitely
(the covenants and other agreements which shall survive the Closing being
referred to as the “Surviving Covenants”).
13. Release and Indemnification.
(a) Release of Sellers. Except for the indemnification obligations of Sellers as
set forth in Section 13(b) and Section 13(c) below, Purchaser hereby releases,
remises, and forever discharges Sellers and their respective Affiliates,
managers, officers, directors, members, employees, agents and representatives
from any and all claims, damages, actions, suits, proceedings, demands,
assessments, adjustments, losses, liabilities, diminutions of value, costs and
expenses (including, without limitation, reasonable attorneys’ fees)
(collectively, “Losses”), in law or in equity, known or unknown, which Purchaser
might now or subsequently may have, based on, relating to, or arising out of
this Agreement or any other agreement, contract or instrument contemplated
herein with respect to the Company’s ownership, use, or operation of the Assets,
or the condition, quality, status, or nature of the Assets, INCLUDING RIGHTS TO
CONTRIBUTION OR COST RECOVERY UNDER ALL ENVIRONMENTAL LAWS, BREACHES OF
STATUTORY AND IMPLIED WARRANTIES, NUISANCE OR OTHER TORT ACTIONS, RIGHTS TO
PUNITIVE DAMAGES, COMMON LAW RIGHTS OF CONTRIBUTION, ANY RIGHTS UNDER INSURANCE
POLICIES ISSUED OR UNDERWRITTEN BY SELLER OR ANY OF SELLER’S AFFILIATES (IN EACH
CASE) EVEN IF CAUSED IN WHOLE OR IN PART BY THE NEGLIGENCE (WHETHER ACTIVE,
PASSIVE, SIMPLE, SOLE, JOINT OR CONCURRENT), STRICT LIABILITY OR OTHER LEGAL
FAULT OF ANY RELEASED PERSON, INVITEE OR THIRD PERSON, OR BY A PREEXISTING
CONDITION.
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(b) Indemnification by Sellers. Each Seller jointly and severally covenants and
agrees that it will indemnify, defend and hold harmless the Purchaser, the
Company and their respective managers, officers, directors, members, employees,
agents, representatives and Affiliates (collectively, the “Purchaser Indemnified
Parties”) from and against all Losses arising directly or indirectly from, as a
result of or in connection with (i) any breach of the representations and
warranties of Sellers that by their terms survive the Closing, (ii) any breach
by Sellers of the Surviving Covenants. In respect of the indemnification
obligation set forth in the immediately preceding sentence, (x) no Seller shall
be liable for any other Seller’s breach of Section 4(d) or the Seller’s Closing
Certificate delivered by any other Seller, or for fraud committed by any other
Seller, (y) the liability of each Seller for all Losses hereunder shall be
limited to the amount labeled “Distribution Amount” on Exhibit A for each Seller
(subject to adjustment to the Aggregate Purchase Price pursuant to Section 2(c))
and (z) the liability of each Seller for all Losses hereunder shall be limited
to the amount of such Losses multiplied by such Seller’s Sharing Ratio. Any
claim for indemnification pursuant to this Section 13(b) based on the breach of
a representation, warranty or Surviving Covenant that survives the Closing for a
finite period must be asserted by the Purchaser or a Purchaser Indemnified Party
on or before the expiration of such finite period for such claim to be
enforceable.
(c) Indemnification by the Sellers on the Excluded Assets and Retained
Liabilities. Each Seller jointly and severally covenants and agrees that it will
indemnify, defend, and hold harmless the Purchaser, the Company and their
respective managers, officers, directors, members, employees, agents,
representatives, and Affiliates (collectively the “Purchaser Indemnified
Parties”), from and against all Losses arising directly or indirectly from, as a
result of or in connection with, any of the Excluded Assets and Retained
Liabilities, together with any tax obligation/loss or encumbrance pertaining to
said Excluded Assets and/or Retained Liabilities, with no monetary limit. The
indemnification granted herein shall be without regard to any representation or
warranty or surviving covenant contained elsewhere in this Agreement and this
indemnification is intended to survive the Closing. Further, the Sellers do
hereby indemnify the Purchaser Indemnified Parties from and against any and all
liability for income taxes, interest, late penalties, or other penalties imposed
by the Internal Revenue Service or the State of Oklahoma or any other state
having jurisdiction pertaining to the taxation of the Company and/or its
members, with respect for the Excluded Assets for all time periods prior to, on
or after, the Effective Date.
(d) Indemnification by Purchaser. After the Closing Date, the Purchaser agrees
that it will indemnify, defend and hold harmless the Sellers and their
respective Affiliates, managers, officers, directors, employees, agents,
representatives (collectively, the “Seller Indemnified Parties”) from any and
all from and against all Losses arising after the Closing Date as a result of or
in connection with the Assets or the Company, and any Environmental Claims
arising after the Closing relating to the Assets, but in no event will the
Purchaser offer such indemnity to any claim or losses pertaining to the Excluded
Assets and the Retained Liabilities.
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(e) Certain Limitations on Indemnity Obligations.
(i) No claim of Purchaser or any of the Purchaser Indemnified Parties pursuant
to Section 13(b) shall be made hereunder until such claim exceeds an amount
equal to $5,000.00 (each, an “Individual Claim”).
(ii) In addition, no claim of Purchaser or any of the Purchaser Indemnified
Parties pursuant to Section 13(b) shall be made hereunder until the total of all
Individual Claims exceeds $100,000 (the “Basket”). If the total amount of all
Individual Claims exceeds the Basket, then Sellers’ obligations under Section
13(b) shall be limited to the amount by which the aggregate amount of such
Individual Claims exceeds the Basket; provided, however, claims of Purchaser or
any of the Purchaser Indemnified Parties pursuant to Section 13(c) above shall
not be subject to the Individual Claim limitation or the Basket.
(iii) In addition, the Sellers shall not be required to pay an aggregate amount
to Purchaser or the Purchaser Indemnified Parties pursuant to Section 13(b) in
excess of the Adjusted Purchase Price (the “Indemnity Cap”); provided, however,
none of the limitations set forth in this Section 13(e)(iii) will apply to (A)
claims of Purchaser or any of the Purchaser Indemnified Parties pursuant to
Section 13(c) above or (B) claims based upon fraud of any of the Sellers.
(iv) The amount of any indemnification under Section 13(b) or (d) shall be net
of any amounts actually recovered by the indemnified party under insurance
policies.
(f) Exclusive Remedy for Breaches of Representations, Warranties and Covenants.
Except as specifically set forth in Section 13(b) and Section 13(c), effective
upon the Closing, in the absence of fraud on the part of a Seller in connection
with the negotiation, execution or delivery of this Agreement or the
consummation of the transactions contemplated hereby (to the extent determined
by a final judgment of a court of competent jurisdiction), the Purchaser, on
behalf of itself and the Purchaser Indemnified Parties, waives any rights or
claims it or any other Purchaser Indemnified Party may have against any Seller,
whether in law or equity (except as relates to adjustments to the Aggregate
Purchase Price in accordance with Section 2(c) and except for the obligations of
Sellers contained in Section 13(c) above) for any Seller’s breach of a
representation or warranty contained in this Agreement and for breaches of any
covenant or other agreement, including, without limitation, claims for
contribution or other rights of recovery arising out of or relating to any
Environmental Laws, claims for breach of contract, breach of implied covenants,
negligent misrepresentation and all other claims for breach of duty. For the
avoidance of doubt, except for fraud, Articles 13 and 14 set forth the exclusive
remedies available to the Purchaser or the Purchaser Indemnified Parties for any
breach by the Sellers of this Agreement.
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(g) Procedure for Indemnification.
(i) Promptly after receipt by an indemnified Party under Section 13(b), (c) or
(d) of a claim for Losses or notice of the commencement of any Proceeding
against it, such indemnified Party shall, if a claim is to be made against an
indemnifying Party under such Section, give notice to the indemnifying Party of
the commencement of such claim. The failure of any indemnified Party to give
notice of a claim shall not relieve the indemnifying Party of its obligations
under this Article 13 except to the extent such failure materially prejudices
the indemnifying Party. A claim for indemnification for any matter not involving
a third-party claim may be asserted by notice to the Party from whom
indemnification is sought.
(ii) If any Proceeding referred to in Section 13(g)(i) is brought against an
indemnified Party and it gives notice to the indemnifying Party of the
commencement of such Proceeding, the indemnifying Party shall be entitled to
participate in such Proceeding and, to the extent that it wishes (unless (i) the
indemnifying Party is also a party to such Proceeding and the indemnified party
determines in good faith that joint representation would be inappropriate, or
(ii) the indemnifying Party fails to provide reasonable assurance to the
indemnified party of its financial capacity to defend such Proceeding and
provide indemnification with respect to such Proceeding), to assume the defense
of such Proceeding with counsel reasonably satisfactory to the indemnified party
and, after notice from the indemnifying Party to the indemnified Party of its
election to assume the defense of such Proceeding, the indemnifying Party shall
not, as long as it diligently conducts such defense, be liable to the
indemnified party under this Article 13 for any fees of other counsel or any
other expenses with respect to the defense of such Proceeding, in each case
subsequently incurred by the indemnified party in connection with the defense of
such Proceeding. If the indemnifying Party assumes the defense of a Proceeding,
no compromise or settlement of such claims may be effected by the indemnifying
Party without the indemnified party’s consent unless (A) there is no finding or
admission of any violation of legal requirements or any violation of the rights
of any Person and no effect on any other claims that may be made against the
indemnified Party, and (B) the sole relief provided is monetary damages that are
paid in full by the indemnifying Party, and (C) the indemnified Party shall have
no liability with respect to any compromise or settlement of such claims
effected without its consent and (D) the indemnified Party is provided a full
and unconditional release of liability.
(iii) Notwithstanding the foregoing, if an indemnified Party determines in good
faith that there is a reasonable probability that a Proceeding may adversely
affect it or its Affiliates other than as a result of monetary damages for which
it would be entitled to indemnification under this Agreement, the indemnified
party may, by notice to the indemnifying Party, assume the exclusive right to
defend, compromise, or settle such Proceeding, but the indemnifying Party shall
not be bound by any determination of a Proceeding so defended or any compromise
or settlement effected without its consent (which may not be unreasonably
withheld).
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(h) No Waiver of Fraud. NOTHING RELATING TO (I) THE EXPIRATION OF ANY
REPRESENTATION, WARRANTY, COVENANT OR AGREEMENT SET FORTH IN THIS AGREEMENT,
(II) THE INDEMNIFICATION PROVISIONS SET FORTH IN THIS AGREEMENT, (III) THE
EXCLUSIVENESS OF ANY REMEDIES UNDER THIS AGREEMENT OR (IV) ANY OTHER MATTER
SHALL BE DEEMED TO BE A WAIVER OF ANY RIGHT OR CLAIM THAT ANY PARTY MAY HAVE
AGAINST ANY OTHER PARTY IN RESPECT OF SUCH PARTY’S FRAUD.
14. Termination of Agreement. This Agreement may be terminated as provided
below:
(a) by mutual written consent of the Purchaser and a Majority of the Sellers at
any time prior to the Closing;
(b) by the Purchaser if the Closing shall not have occurred on or before May 22,
2014, for any reason not attributable to the breach by the Purchaser of any
representations, warranties or covenants contained in this Agreement;
(c) by the Purchaser if the Sellers have breached any representation or warranty
in any material respect, the Purchaser has notified the Sellers of the breach,
and the breach has continued without cure for a period of 10 Business Days after
the notice of breach;
(d) by the Majority of Sellers if the Closing shall not have occurred on or
before May 22, 2014, for any reason not attributable to the breach by the
Sellers or the Company of any representations, warranties or covenants contained
in this Agreement;
(e) by the Majority of Sellers if the Purchaser has breached any representation,
warranty, or covenant contained in this Agreement in any material respect, the
Sellers have notified the Purchaser of the breach, and the breach has continued
without cure for a period of 10 Business Days after the notice of breach;
(f) by the Purchaser if the Sellers have not made available to Purchaser all of
the Company’s files and records in accordance with Section 7 above, and the
Purchaser has requested such access in writing; or
(g) by the Purchaser if Sellers do not produce the Disclaimers and Stipulations
of Ownership as provided in Section 10(b)(ix).
If this Agreement is terminated by mutual written consent of the Purchaser and a
Majority of the Sellers pursuant to Section 14(a), then all rights and
obligations of the Parties hereunder shall terminate without any liability of
any Party to any other Party. If this Agreement is terminated for any reason
other than that described in Section 14(d) above, Sellers shall immediately
return the Performance Deposit to the Purchaser. If this Agreement is terminated
by Sellers for the reason described in Section 14(e) above, Sellers shall retain
the Performance Deposit and Purchaser shall forfeit all rights thereto.
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15. General Provisions.
(a) Entire Agreement. This Agreement together with the Schedules and Exhibits
contains the entire understanding of the Parties with regard to the subject
matter hereof and no warranties, representations, promises or agreements have
been made between the Parties other than as expressly herein set forth. This
Agreement supersedes any previous agreement or understanding between the Parties
and cannot be modified or amended except in a writing executed by the Purchaser
and the Majority of Sellers.
(b) Assignments, Successors and Third Party Beneficiaries. No Party may assign
any of its rights under this Agreement without the prior written consent of all
other Parties, such consent not to be unreasonably withheld. Subject to the
foregoing sentence, upon execution, this Agreement shall be binding and fully
enforceable and shall inure to the benefit of the Parties hereto, their
successors, permitted assigns, personal representatives and heirs. This
Agreement shall not confer any rights or remedies upon any Person other than the
Parties and their respective heirs, personal representatives, successors and
permitted assigns.
(c) Notices. All notices as may be required by this Agreement shall be deemed
given if delivered personally or sent by electronic mail (with confirmation of
receipt) during normal business hours of the recipient, the next Business Day if
sent by overnight courier, or upon receipt if sent by U.S. Mail to the
respective parties at the addresses set forth below:
To Sellers: See Exhibit A To Purchaser: Bandolier Energy, LLC 624
S. Boston Ave., Suite 230 Tulsa, Oklahoma 74119 Attn: Shane E. Matson
E-mail: shanematson@gmail.com
(d) Severability. In the event that any of the provisions, or portions thereof,
of this Agreement are held to be unenforceable or invalid by any court of
competent jurisdiction, the validity and enforceability of the remaining
provisions, or portions thereof, shall not be affected thereby and effect shall
be given to the intent manifested by the provisions, or portions thereof, held
to be enforceable and valid.
(e) Governing Law; Waiver of Jury Trial. This Agreement shall be governed by and
construed under the laws of the State of Oklahoma without regard to its choice
of law provisions that would apply the law of any other state. EACH OF THE
PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY
IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
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(f) Arbitration of Net Defect Amount Disputes. After Closing, disputes regarding
the Adjusted Purchase Price (“Arbitrable Disputes”) shall be submitted to
binding arbitration conducted in accordance with the Commercial Arbitration
Rules of the American Arbitration Association (the “AAA”), as supplemented to
the extent necessary to determine any procedural appeal questions arising under
the Federal Arbitration Act (Title 9 of the United States Code). If there is any
inconsistency between this Section 15(f) and the Commercial Arbitration Rules or
the Federal Arbitration Act, then this Section 15(f) shall control. Arbitration
shall be initiated by the Claimant (as defined below) serving written notice on
the Respondent (as defined below) that the Claimant elects to refer the
Arbitrable Dispute to binding arbitration. Unless otherwise agreed by the
Parties, a single neutral arbitrator will decide the Arbitrable Dispute. The
Parties shall select the arbitrators as follows: the Claimant shall request the
administrator of the Dallas, Texas office of the AAA to provide the Parties with
an arbitrator. The arbitrator must (x) be a neutral person who has never been
officer, director, employee, or consultant or had other business relationships
with the Parties or any of their Affiliates, officers, directors or employees,
and (y) have not less than fifteen (15) years recent experience in the U.S. oil
and gas accounting. The arbitration hearing will be conducted in Tulsa,
Oklahoma, and shall commence as soon as practicable after the selection of the
arbitrator. If the Parties are unable to agree on a single arbitrator, then any
Party may petition the Presiding Judge of the District Court of Osage County,
Oklahoma to appoint an arbitrator. The Parties and the arbitrator shall proceed
diligently and in good faith so that the arbitrator’s determination can be made
as promptly as possible. The arbitrator may consult with and engage
disinterested third parties to advise the arbitrator, including, without
limitation, petroleum engineers, petroleum landmen, and environmental engineers
writing, including findings of fact and conclusions of law, within 45 days after
submission of the matters in dispute. Judgment may be entered on the award, and
the award may be judicially enforced. Except as provided in the Federal
Arbitration Act, the decision of the arbitrator shall be binding on and
non-appealable by the Parties. The arbitrator shall act for the limited purpose
of resolving the specific Arbitrable Disputes and may not award damages, costs
(including attorneys’ fees), interest or penalties with respect to any matter.
Further, the arbitrator shall have no right or authority to grant or award
indirect, consequential, punitive or exemplary damages of any kind. The Parties
shall each bear their own legal fees and other costs of presenting their case.
The Sellers, on the one hand, and the Purchaser, on the other hand, shall each
pay 50% of the fees and expenses of the arbitrator.
(g) Counterparts; Facsimile Signatures. This Agreement may be executed in any
number of counterparts and each such counterpart shall be considered an original
and an enforceable agreement. Facsimile and electronic signatures to this
Agreement shall be valid.
(h) Notice of Developments. Each Party will give prompt written notice to the
others of any material breach of any of its representations, warranties and
covenants contained herein.
29
(i) Exclusivity. Prior to the earlier to occur of (i) the Closing and (ii) the
termination of this Agreement, Sellers will not (and the Sellers will not cause
or permit the Company or any of its or their representatives, advisors, agents
or controlled affiliates to) intentionally solicit, initiate, or encourage the
submission of any proposal or offer from any Person relating to the acquisition
of any of the Membership Interests of the Company, or assets of the Company
(except for sales permitted pursuant to Section 8) (including any acquisition
structured as a merger, consolidation, share exchange or other business
combination or recapitalization).
(j) Other Post-Closing Covenants. After Closing, if any further action is
take such further action as any other Party reasonably may request, all at the
sole cost and expense of the requesting Party. If any Party is contesting or
defending against any action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand in connection with any transaction on or prior to
the Closing Date involving the Company, each of the other Parties shall
cooperate with it and its counsel in the defense or contest, all at the sole
cost and expense of the contesting or defending Party.
(k) Press Releases and Public Announcements. No Party shall issue, or permit the
Company to issue, any press release or make any public announcement relating to
the subject matter of this Agreement prior to the Closing without the prior
written approval of the other Parties, which approval shall not be unreasonably
withheld; provided, however, that any Party may make any public disclosure it
believes in good faith is required by applicable law, or any listing or trading
agreement concerning its publicly-traded securities (in which case the
disclosing Party will use its reasonable best efforts to advise the other
Parties prior to making the disclosure).
(l) Expenses. Notwithstanding anything contained herein, all fees, costs, and
expenses for investment advisors, attorneys and accountants retained by the
Sellers or the Company to facilitate the transactions contemplated by this
Agreement shall be paid by the Sellers, respectively based on their pro rata
share of the Aggregate Purchase Price. All fees, costs, and expenses incurred by
the Purchaser in connection with the transactions contemplated by this Agreement
shall be paid by the Purchaser.
(m) Limitation of Damages; Enforcement of Agreement. There shall be no liability
under this Agreement for consequential, special, punitive or exemplary damages.
The Parties agree that irreparable damage may occur in the event that any of the
provisions of this Agreement were not performed in accordance with its specific
terms. Accordingly, the Parties agree that each Party may be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to
specifically enforce the terms and provisions of this Agreement in any
appropriate court, the foregoing being in addition to (and not to the exclusion
of) any other remedy to which a Party may be entitled at law or in equity.
30
16. Definitions.
(a) “AAA” is defined in Section 15(f).
(b) “Adjusted Purchase Price” is defined in Section 2(a).
(c) “Affiliate” shall mean, when used with respect to a specified Person, any
other Person directly or indirectly controlling or controlled by or under direct
or indirect common control with the specified Person as of the time or for the
time periods during which such determination is made. For purposes of this
definition “control”, when used with respect to any specified Person, means the
power to direct the management and policies of the Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms “controlling” and “controlled” have the meanings
(d) “Aggregate Purchase Price” is defined in Section 2(a).
(e) “Agreement” is defined in the introductory paragraph.
(f) “Arbitrable Dispute” is defined in Section 15(f).
(g) “Assets” means all of the Company’s right, title and interest (of whatever
kind or character, whether legal or beneficial, and whether vested or
contingent) in and to the following:
(i) all oil, gas and other minerals in and under and that may be produced from
the lands covered by the Concession Agreement and the Leases including, without
limitation, interests in oil, gas and/or mineral leases covering any part of the
lands (and all renewals, extensions, ratifications, and amendments thereof,
together with all rights, interests, and benefits in, derived or carved from, or
appurtenant or attributable to, those leases including royalties, excess
royalties, overriding royalty interests, net profits interests, production
payments, working interests, leasehold cost-bearing interests, and similar
interests), overriding royalty interests, production payments, and net profits
interests in any part of the lands or leases, fee royalty interests, fee mineral
interests, and other interests in oil, gas and other minerals in any part of the
lands, whether the lands are described in Exhibit B or by reference to another
instrument for description, even though the Company’s interests may be
incorrectly described in, or omitted from, Exhibit B;
(ii) all the lands described in the Concession Agreement and the Leases;
(iii) the oil and gas wells described in Exhibit B and all wells located on a
Lease (or on any acreage spaced, pooled and/or unitized with a Lease) including,
without limitation, (A) all oil, gas or condensate wells and wellbores (whether
producing, not producing or temporarily abandoned); and (B) all water source,
water injection and other injection or disposal wells and systems;
(iv) all facilities, pipelines, gathering systems, equipment, fixtures,
inventory, spare parts, tools and other personal property appurtenant to the
wells described in (g) (iii) above and dedicated to operations on a Lease;
31
(v) all surface and subsurface rights, easements, rights-of-way, usage rights,
licenses, leases, and rights of access, ingress and egress pertaining to the
lands covered by the Leases;
(vi) the Concession Agreement and all Material Agreements primarily used or
primarily held for use in connection with the production, gathering, treatment,
processing, storage, sale, disposal and other handling of Hydrocarbons or
produced water from the Leases;
(vii) all Permits, orders and authorizations issued by governmental authorities,
and any written or oral contract or agreement (including farm-in and farm-out
agreements, participation, exploration and development agreements, drilling
contracts and service agreements, crude oil, condensate and natural gas purchase
and sale, gathering, transportation and marketing agreements, joint operating
agreements, balancing agreements, unitization agreements, Unit operating
agreements; processing agreements, facilities or equipment leases, and other
similar contracts), but only insofar as each (A) affects, covers, includes or
pertains to the Assets, including the ownership, use or exploitation thereof;
and/or (B) provides any right or benefit, or contains or results in any
undertaking, liability or obligation with respect to, the Assets; and
(viii) all files, records, and data relating to the Assets described in clauses
(i) through (vii) above, which records shall include: lease records; well
records; division order records; well files; title records (including abstracts
of title, title opinions and memoranda, and title curative documents);
engineering records; geological and geophysical data (including seismic data)
and all technical evaluations, interpretive data and technical data and
information relating to the other Assets; maps; production records; electric
logs; core data; pressure data; decline curves and graphical production curves;
reserve reports; environmental reports and records; appraisals, joint interest
billing decks and other partner details, archeological surveys, surface damage
agreements, right of ways, electrical supply agreements, lease operating
statements and Asset Tax records; provided, however, that all e-mails and other
electronic files on the Company’s servers and networks relating to the items
referenced in this clause (viii) and in clauses (i) through (vii) above, in each
case, shall be excluded.
(h) “Basket” is defined in Section 13(e)(ii).
(i) “Benefit Plan(s)” means (i) any Pension Plan, Welfare Plan, bonus, deferred
compensation, incentive compensation, stock ownership, stock purchase, stock
option, stock appreciation, phantom stock, retirement, vacation, leave of
absence, severance, salary continuation, disability, death benefit,
hospitalization, medical, dependent care, cafeteria, employee assistance,
scholarship, employment, fringe benefit or other similar agreement, plan,
program, arrangement or understanding (whether or not covered under Section 3(3)
of ERISA and whether or not legally binding) that is sponsored, maintained,
contributed to or required to be contributed to by the Company and as to which
the Company has or may have any obligation or liability, contingent or
otherwise, thereunder to or for current or former partners, employees, directors
or individual consultants and (ii) all employment, consulting, non-competition,
employee non-solicitation, employee loan or other compensation agreements or
arrangements.
32
(j) “Business Day” means any day other than Saturday, Sunday or any other day on
which banks located in the State of Oklahoma are authorized or obligated to
close.
(k) “capital expenditures” is defined in Section 8(b).
(l) “Claimant” is defined in Section 15(f).
(m) “Closing” and “Closing Date” shall have the meaning set forth in Section
2(d).
(n) “Closing Tax Certificate” shall have the meaning set forth in Section 9(g).
(o) “Code” means the Internal Revenue Code of 1986, as amended.
(p) “Company” is defined in the introductory paragraph.
(q) “Concession Agreement” means the Lease Acquisition and Exploration
Agreement, made and entered into as of September 21, 2005, by and between the
Osage Tribe of Indians of Oklahoma and the Company as approved by Tribal
Resolution No. 31-1240, as amended from time to time.
(r) “Confidential Information” is defined in Section 9(e).
(s) “Defensible Title” means, as to an Asset, such title of the Company that:
(i) is deducible of record from the records of the county in which the property
is located, and in the case of tribal leases, from the records of the applicable
office of the Bureau of Indian Affairs; and (ii) is free and clear of liens and
material encumbrances and defects, except for Permitted Encumbrances.
(t) “Distribution Amount” is set forth in Exhibit A.
(u) “Effective Date” means January 1, 2014.
(v) “Environmental Claim” means any claim, demand, suit, action, cause of
action, proceeding, investigation or notice to the Company by any Person or
entity alleging any potential liability (including potential liability for
investigatory costs, cleanup costs, governmental response costs, natural
resource damages, personal injuries, or penalties) arising out of, based on, or
resulting from (i) the presence, or Release into the environment, of any
Hazardous Substance at any location, whether or not owned, leased, operated or
used by the Company, and (ii) circumstances forming the basis of any violation,
or alleged violation, of any applicable Environmental Law.
(w) “Environmental Defect” has the meaning provided in Section 10(b)(v).
33
(x) “Environmental Laws” means all applicable federal, state or local laws,
statutes, codes, ordinances, permits, licenses, rules, regulations and common
law in effect as of the date hereof, and any judicial or administrative
interpretation thereof, including any judicial or administrative order, consent
decree or judgment, relating to the environment or to the emission, discharge,
release, threatened release, use, treatment, storage, disposal, transportation
or handling of pollutants, contaminants or industrial, toxic or hazardous
substances, wastes or materials. Environmental Laws include, but are not limited
to: the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, the Resource Conservation and Recovery Act, the Toxic Substances Control
Act, the Clean Water Act, the Clean Air Act, the Federal Water Pollution Control
Act, the Oil Pollution Control Act, the Endangered Species Act, and the Safe
Drinking Water Act, as such acts may have been amended or supplemented from time
to time, the state and local counterparts or equivalents of all such acts, and
all rules, regulations and orders adopted under any such statutes.
(y) “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended.
(z) “Excluded Assets” means all real and personal property of the Company which
is not an Asset as defined herein and all rights, titles, liabilities and
interests related thereto. In particular, all cash held by or for the benefit of
the Company derived from production from the Assets for periods prior to the
Effective Date shall remain the property of the Sellers.
(aa) “from and attributable” is defined in Section 2(c)(i)(B).
(bb) “Hazardous Substance” means (i) chemicals, pollutants, contaminants,
wastes, toxic and hazardous substances, and oil and petroleum products, (ii) any
substance that is or contains asbestos, urea formaldehyde foam insulation,
polychlorinated biphenyls, petroleum or petroleum-derived substances or wastes,
chlorides, radon gas or related materials or lead or lead-based paint or
materials, (iii) any substance, material or waste that requires investigation,
removal or remediation under any Environmental Law, or is defined, listed or
identified as hazardous, toxic or otherwise dangerous under any Environmental
Laws or (iv) any substance that is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic, or otherwise hazardous.
(cc) “Hedge Transactions” is defined in Section 5(m).
(dd) “Hydrocarbons” means oil, bitumen and products derived therefrom, synthetic
crude oil, petroleum, natural gas, natural gas liquids, coal bed methane, and
any and all other substances produced in association with any of the foregoing,
whether liquid, solid, or gaseous.
(ee) “incurred” is defined in Section 2(c)(i)(B).
(ff) “Indemnity Cap” is defined in Section 13(e)(iii).
34
(gg) “Individual Claim” is defined in Section 13(e)(i).
(hh) “IRS” means the Internal Revenue Service.
(ii) “Knowledge of Sellers” of a fact or matter means the knowledge of any of
the Sellers, or an employee of Sellers (including, without limitation, Matson)
who has devoted substantial attention to matters of such nature during the
ordinary course of his employment with the Sellers.
(jj) “Laws” is defined in Section 5(f).
(kk) “Leases” means the Oil and Gas Leases issued pursuant to the Concession
Agreement and described in Exhibit B.
(ll) “Lien” means any lien, mortgage, pledge, security interest,
clouds-on-title, options, or imperfections of title.
(mm) “Losses” is defined in Section 13(a).
(nn) “Majority of Sellers” means Sellers representing greater than fifty percent
(50%) of the voting Membership Interests.
(oo) “Material Adverse Change” means any actions, suits, arbitrations,
proceedings, facts, circumstances, events, conditions or developments that,
individually or in the aggregate, have had or would be reasonably likely to have
(pp) “Material Adverse Effect” means any material adverse effect on the
business, operations, assets, financial condition or business prospects of the
Person referenced, taken as a whole, which shall exceed $50,000, except for (i)
any such effects resulting from changes affecting the United States economy,
financial and capital markets or the oil and gas industry in general, or (ii)
changes in the prices generally paid for oil, natural gas or equivalents.
(qq) “Material Agreements” is defined in Section 5(h).
(rr) “Matson” means Shane E. Matson.
(ss) “Membership Interests” is defined in the recitals.
(tt) “NG” means Nadel and Gussman, LLC.
(uu) “OL&C” is defined in Section 9(j)(i).
(vv) “Ordinary Course of Business” means in the ordinary course of business
consistent with past custom and practice.
(ww) “Party” and “Parties” shall have the meaning provided in the introductory
paragraph.
35
(xx) “Pension Plan(s)” means any “employee pension benefit plan as such term is
defined in Section 3(2) of ERISA (whether or not covered by Section 3(20 of
ERISA).
(yy) “Performance Deposit” shall have the meaning set forth in Section 2(b).
(zz) “Permit” shall have the meaning set forth in Section 5(f).
(aaa) “Permitted Encumbrances” means, with respect to any Asset, any and all of
the following, in regard to (i), (ii) and (iii) below only insofar as such were
in effect on or before the Effective Date (whether or not filed of record): (i)
royalties, overriding royalties, production payments, reversionary interests,
convertible interests, net profits interests and similar burdens encumbering an
Asset; (ii) consents to assignment and similar contractual provisions affecting
transfer of the Asset, provided that such consents, if applicable, have been
obtained prior to Closing; (iii) preferential rights to purchase and similar
contractual provisions affecting the Asset, provided that such preferential
rights, if applicable, have expired or been waived prior to Closing; (iv) rights
reserved to or vested in a governmental authority having jurisdiction to control
or regulate the Asset, and all applicable Laws of such governmental authorities;
(v) easements, rights-of-way, servitudes, sub-surface leases, equipment,
pipelines, and utility lines on, over and through the Asset, provided that they
do not materially interfere with the operation of the Asset in the manner such
operations were conducted as of the Closing; (vi) terms and conditions of
unitization, communitization, and pooling agreements, and any other similar
agreements affecting the Asset; (vii) terms and conditions of governmental
licenses and Permits affecting the Asset; (viii) Liens for Taxes or assessments
not yet delinquent or, if delinquent, being contested in good faith in the
Ordinary Course of Business; (ix) Liens of operators, mechanics and materialmen
relating to obligations not yet delinquent or, if delinquent, being contested in
good faith in the Ordinary Course of Business; (x) Liens created by surface
owners that do not materially interfere with the use or ownership of the Assets;
(xi) zoning Laws, restrictions, surface usage covenants and restrictions, and
building and other land use Laws; and (xii) all other Liens, contracts,
obligations, defects and irregularities affecting the Assets, provided that the
cumulative effect of such items does not materially interfere with the
ownership, operation, value or use of the Asset affected thereby and that would
not be considered material when applying general standards in the oil and gas
industry.
(bbb) “Person” means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, enterprise,
unincorporated organization, or governmental authority.
(ccc) “Phase I Environmental Assessment” means an assessment of the Company’s
compliance with Environmental Laws consisting of examination of the Company’s
files and public documents, interviews of personnel of the Company and of other
appropriate persons, visual inspection of Company’s property, and NORM and
asbestos surveys.
(ddd) “Preliminary Adjusted Purchase Price” is defined in Section 2(c)(vii).
36
(eee) “Preliminary Settlement Statement” is defined in Section 2(c)(vii).
(fff) “Proceeding” is defined in Section 5(i).
(ggg) “Property Costs” is defined in Section 2(c)(i)(A).
(hhh) “Prospect Interests” mean all the lands depicted on Exhibit D.
(iii) “Purchaser” is defined in the introductory paragraph.
(jjj) “Purchaser’s Closing Certificate” is defined in Section 10(c)(ii).
(kkk) “Purchaser Indemnified Parties” is defined in Section 13(b).
(lll) “Records” is defined in Section 7.
(mmm) “Reed Litigation” is defined in Section 9(j)(ii).
(nnn) “Release” means any release, disposal, discharge, injection, spill, leak,
pumping, dumping, emission, escape, dispersal, leaching, migration or placing
into, through or upon the environment, including any land, soil, surface water,
ground water or air.
(ooo) “Respondent” is defined in Section 15(f).
(ppp) “Retained Liabilities” means all Losses arising out of, incident to or in
connection with the ownership, operation, use, exploitation or maintenance of
any of the Excluded Assets and, except as provided in Section 9(j), all costs,
expenses and liabilities relating in any way to the matters set forth on
Schedule 5(i).
(qqq) “Securities Act” is defined in Section 6(g)(ii).
(rrr) “Sellers” is defined in the introductory paragraph.
(sss) “Seller Indemnified Parties” is defined in Section 13(d).
(ttt) “Seller’s Closing Certificate” is defined in Section 10(b)(ii).
(uuu) “Sharing Ratio” shall be as set forth in Exhibit A.
(vvv) “Surviving Covenants” is defined in Section 12.
(www) “Tax” or “Taxes” means any and all taxes, including any interest, fines,
penalties or other additions to tax that may become payable in respect thereof,
imposed by any federal, state, local or foreign government or any agency or
political subdivision of any such government, which taxes shall include, without
limiting the generality of the foregoing, all income or profits taxes, payroll
and employee withholding taxes, unemployment insurance taxes, social security
taxes, severance taxes, license charges, taxes on stock, sales and use taxes, ad
valorem taxes, excise taxes, franchise taxes, gross receipts taxes, business
license taxes, occupation taxes, real and personal property taxes, stamp taxes,
environmental taxes, transfer taxes, workers’ compensation and other obligations
of the same or of a similar nature to any of the foregoing.
37
(xxx) “Tax Proceeding” is defined in Section 9(h).
(yyy) “Tax Return” means any report, return (including any information return),
declaration, statement, bill, schedule, claim for refund or written information
required to be supplied to a federal, state, local or foreign taxing authority
in connection with Taxes, including any amendments thereof or any schedule or
attachment thereto.
(zzz) “Transition Services Agreement” is defined in Section 9(a).
(aaaa) “Welfare Plan(s)” means any employee welfare benefit plan” as such term
is defined in Section 3(1) of ERISA (whether or not covered by Section 3(1) of
ERISA).
(bbbb) “Wells” means all wells for the purpose of discovering or producing
Hydrocarbons or disposing of fluids produced in connection with the production
of Hydrocarbons located on the Leases, including the Wells described on Exhibit
B.
[Signatures Appear On Following Pages]
38
IN WITNESS WHEREOF, the undersigned parties have executed this Agreement as of
the date first set forth above.
PURCHASER: BANDOLIER ENERGY, LLC By: /s/ Shane E. Matson Name: Shane E.
Matson Title: President
SELLERS: NADEL AND GUSSMAN, LLC By: Nadel and Gussman Management, LLC,
Its Manager
By: /s/ James F. Adelson James F. Adelson, Manager
/s/ Charles Wickstrom CHARLES W. WICKSTROM
/s/ Shane E. Matson SHANE E.MATSON
COMPANY: SPYGLASS ENERGY GROUP, LLC By: Nadel and Gussman Management,
LLC, its Manager
39
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No 1.)* OPTi Inc. (Name of Issuer) Common Stock,no par value (Title of Class of Securities) (CUSIP Number) Don C. Whitaker Don C. Whitaker, Jr. Don C. Whitaker, Inc. 16 Collingwood Aliso Viejo, CA 92656 949-831-4124 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) July 26, 2010 (Date of Event which Requires Filling of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1 (f) or 240.13d-1(g), check the following box.¨ Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See § 240.13d-7 for other parties to whom copies are to be sent. ·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). SCHEDULE 13D CUSIP No. 683960108 1. Names of Reporting Persons. Don C. Whitaker I.R.S. Identification No. 2. Check the Appropriate Box if a Member of a Group* (a.)x(b.)¨ 3. SEC USE ONLY 4. Source of Funds* PF 5. Check if Disclosure of Legal Proceedings Is Required Pursuant to items 2(d) or 2(e)o 6. Citizenship or Place of Organization USA Number of Shares Beneficially Owned by Each Reporting Person With 7. Sole Voting Power637,294 8. Shared Voting Power None 9. Sole Dispositive Power637,294 Shared Dispositive Power None Aggregate Amount Beneficially Owned by Each Reporting Person Check if the Aggregate Amount Represented by Amount in Row (11) Excludes Certain Shares (See Instructions)¨ Percent of Class Represented by Amount in Row (11) 5.474% Type of Reporting Person IN 2 SCHEDULE 13D CUSIP No. 683960108 1. Names of Reporting Persons. Don C. Whitaker, Inc. I.R.S. Identification No. 2. Check the Appropriate Box if a Member of a Group* (a.)x(b.)¨ 3. SEC USE ONLY 4. Source of Funds* WC 5. Check 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 8. Shared Voting Power None 9. Sole Dispositive Power None Shared Dispositive Power None Aggregate Amount Beneficially Owned by Each Reporting Person None Check if the Aggregate Amount Represented by Amount in Row (11) Excludes Certain Shares (See Instructions)¨ Percent of Class Represented by Amount in Row (11) Zero Type of Reporting Person CO 3 SCHEDULE 13D CUSIP No. 683960108 1. Names of Reporting Persons. Don C. Whitaker, Jr. I.R.S. Identification No. 2. Check the Appropriate Box if a Member of a Group* (a.)x(b.)¨ 3. SEC USE ONLY 4. Source of Funds* PF 5. Check if Disclosure of Legal Proceedings Is Required Pursuant to items 2(d) or 2(e)o 6. Citizenship or Place of Organization USA Number of Shares Beneficially Owned by Each Reporting Person With 7. Sole Voting Power 8. Shared Voting Power None 9. Sole Dispositive Power Shared Dispositive Power None Aggregate Amount Beneficially Owned by Each Reporting Person Check if the Aggregate Amount Represented by Amount in Row (11) Excludes Certain Shares (See Instructions)¨ Percent of Class Represented by Amount in Row (11) 1.788% Type of Reporting Person IN 4 Item 1. Security and Issuer Common stock of OPTi Inc. 3430 W. Bayshore Dr. Suite 103 Palo Alto, CA 94303 Item 2. Identity and Background. (a) Name:Don C. Whitaker (b) Residence or business address:21 Golf Crest Ct, Henderson, NV 89052 5 (c) Present Principal Occupation or Employment:President Don C. Whitaker, Inc. 16 Collingwood Aliso Viejo,CA 92656 (d) Criminal Conviction:No (e) Court or Administrative Proceedings:No (f) Citizenship:USA Item 3. Source and Amount of Funds or Other Consideration: Personal, and retirement funds of the individuals involved.All transactions were open market transactions.For Don C. Whitaker and his 637,294 shares, his cost basis using a last in first out accountingbasis (LIFO) and adjusting for the dividend of 50 cts/sh on 4/8/2007 and the dividend expected of 75 cts/sh on 8/12/2010,is an adjusted .09457/sh or a total of $60,268.89. For Don C. Whitaker, Jr. and his 208,200 shares, his cost basis is $344,444.69 after adjusting for the above mentioned dividend with an average price of 1.654/sh. Item 4. Purpose of Transaction State the purpose or purposes of the acquisition of securities of the issuer. Describe any plans or proposals which the reporting persons may have which relate to or would result in: The above described purchases and sales were done for investment purposes. Since our original 13-D filing on August 4, 2003, the company has been successful in its patent infringement claim lawsuits for certain of its patents. It was our original intent to participate in either a possible liquidation or dividends from these suits. Since our initial involvement, the company paid 50cts/sh 4/8/2007 and is due to pay 75cts/sh on 8/12/2010.It is anticipated that there will be future dividends from settlements already arrived at but not paid yet and from other claims that are either being contested, arbitrated, or presently in the courts. This is in addition to possible settlements from suits that are taken to court when OPTi is aware of patent infringements that are brought to light in the future. The Whitakers will of course re-evaluate their options which may include the purchase of additional securities of OPTi or disposal of some or all of the securities they presently own acquire in the future depending on market conditions in general and of OPTi specifically, availability of funds and other considerations. See Item 3. This party has no plans or proposals which relates to or would result in any action specified in clauses (a) through (h) of Item 4 of Schedule 13D. 6 (a)The acquisition by any person of additional securities of the issuer, or the disposition of securities of the issuer; No (b)An extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the issuer or any of its subsidiaries; Other than mentioned in “Purpose of Transaction”. (c)A sale or transfer of a material amount of assets of the issuer or any of its subsidiaries; Other than mentioned in “Purpose of Transaction”. (d) Any change in the present board of directors or management of the issuer, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the board; Not at the present time (e) Any material change in the present capitalization or dividend policy of the issuer; Other than mentioned in “Purpose of Transaction”. (f) Any other material change in the issuer's business or corporate structure including but not limited to, if the issuer is a registered closed-end investment company, any plans or proposals to make any changes in its investment policy for which a vote is required by section 13 of the Investment Company Act of 1940; No (g) Changes in the issuer's charter, bylaws or instruments corresponding thereto or other actions which may impede the acquisition of control of the issuer by any person; Not at the present time 7 (h) Causing a class of securities of the issuer to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; If a liquidation and/or sale of remaining businesses and assets were to happen then it is possible that the corporation would cease to exist. (i) A class of equity securities of the issuer becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Act; or See “H” above (j)Any action similar to any of those enumerated above. See “H” above Item 5. Interest in Securities of the Issuer. (a)Ownership of7.262% ofCommon Stock of the Company. Don C. Whitaker % Don C. Whitaker, Inc. None Zero Don C. Whitaker, Jr. % Total % (b)Don C. Whitaker has sole power to vote and dispose of his shares. Don C. Whitaker, Jr. has the sole responsibility to vote and dispose of his shares. (c)During the last 60 days, Don C. Whitaker. net sold 29,706 shares for total consideration of $93,073.96. ci) Transaction Date (Shares Purchased(Sold) Price per Share 6/30/2010 7/1/2010 7/7/2010 7/7/2010 7/12/2010 7/12/2010 7/12/2010 7/13/2010 7/15/2010 7/15/2010 7/16/2010 7/19/2010 7/20/2010 8 7/20/2010 7/21/2010 7/21/2010 7/21/2010 7/23/2010 7/23/2010 7/26/2010 7/26/2010 7/26/2010 7/26/2010 7/27/2010 2.7cts 7/27/2010 2.87 XD 75 cts 7/27/2010 2.9cts 7/27/2010 2.96 XD 75 cts 7/27/2010 2.92 XD 75 cts 7/29/2010 7/29/2010 7/29/2010 3 7/30/2010 7/30/2010 8/2/2010 8/2/2010 8/3/2010 3 8/3/2010 During the last 60 days Don C. Whitaker, Inc net sold 32,500 shares for a net consideration of approximately $111,055.20. 7/26/2010 7/26/2010 7/29/2010 3 During the past 60 days Don C. Whitaker, Jr., net purchased200 shares for a total consideration of$757. 7/21/2010 (d) None (e)N/A Item 6. Contracts,Arrangements, Understandings or Relationships with Respect to Securities of the Issuer. None Item 7. Material to be Filed as Exhibits. None 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. Date: August 4, 2010 Don C. Whitaker By:/s/ Don C. Whitaker Don C. Whitaker Title: Individual Don C. Whitaker, Inc. By: /s/ Don C. Whitaker Don C. Whitaker Title: President Don C. Whitaker, Jr. By: /s/ Don C. Whitaker, Jr. Title: Individual 10
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Exhibit 10.1
INDIA GLOBALIZATION CAPITAL, INC.
Common Stock
ATM AGENCY AGREEMENT
October 13, 2009
Enclave Capital LLC
708 Third Avenue
Ladies and Gentlemen:
INDIA GLOBALIZATION CAPITAL, INC., a Maryland corporation (the “Company”),
proposes, subject to the terms and conditions stated herein, to issue and sell
from time to time through ENCLAVE CAPITAL LLC, as sales agent (the “Agent”),
shares of the Company’s common stock, par value $.0001 per share (the “Common
Shares”), having an aggregate offering price of up to $4,000,000 on the terms
set forth in this agreement (this “Agreement”).
ARTICLE I
DEFINITIONS
Section 1.01 Certain Definitions. For purposes of this Agreement, capitalized
terms used herein and not otherwise defined shall have the following respective
meanings:
“Actual Sold Amount” means the number of Shares that the Agent has sold during
the Selling Period.
“Affiliate” of a Person means another Person that directly or indirectly,
common control with, such first- mentioned Person. The term “control” (including
the terms “controlling,” “controlled by” and “under common control with”) means
ownership of voting securities, by contract or otherwise.
“Agency Period” means the period commencing on the Effective Date and expiring
on the earliest to occur of (x) the date on which the Agent shall have sold the
Maximum Program Amount pursuant to this Agreement, (y) the date this Agreement
is terminated pursuant to Article VII and (z) the third anniversary of the date
of the Effective Date.
“Agent” has the meaning set forth in the introductory paragraph of this
Agreement.
“Agreement” has the meaning set forth in the introductory paragraph of this
Agreement.
“Annual Report” has the meaning set forth in Section 3.02.
“Base Prospectus” has the meaning set forth in Section 3.01.
“Code” has the meaning set forth in Section 3.21.
“Commission” means the U.S. Securities and Exchange Commission.
“Common Shares” has the meaning set forth in the introductory paragraph of this
Agreement.
“Company” has the meaning set forth in the introductory paragraph of this
Agreement.
“Debt Repayment Triggering Event” has the meaning set forth in Section 3.15.
1
“Default” has the meaning set forth in Section 3.15.
“Effective Date” has the meaning set forth in Section 2.01(b).
“Engagement Letter” has the meaning set forth in Section 2.04.
“Environmental Laws” has the meaning set forth in Section 3.28.
“ERISA” has the meaning set forth in Section 3.29.
“ERISA Affiliate” has the meaning set forth in Section 3.29.
rules and regulations of the Commission thereunder.
“Existing Instrument” has the meaning set forth in Section 3.15.
“FINRA” has the meaning set forth in Section 3.15.
“Floor Price” means the minimum price set by the Company in the Issuance Notice
below which the Agent shall not sell Shares during the applicable Selling
Period, which may be adjusted by the Company at any time during the Selling
Period by delivering written notice of such change to the Agent and which in no
event shall be less than $1.00 without the prior written consent of the Agent,
which may be withheld in the Agent’s sole discretion.
“Free Writing Prospectus” has the meaning set forth in Section 2.03.
“Governmental Licenses” has the meaning set forth in Section 3.19.
“Hazardous Materials” has the meaning set forth in Section 3.28.
“Governmental Licenses” has the meaning set forth in Section 3.18.
“Issuance” means each occasion on which the Company elects to exercise its right
to deliver an Issuance Notice requiring the Agent to use its commercially
reasonable efforts to sell the Common Shares as specified in such Issuance
Notice, subject to the terms and conditions of this Agreement.
“Issuance Amount” means the aggregate Sales Price of the Shares to be sold by
the Agent with respect to any Issuance.
“Issuance Date” means any Trading Day during the Agency Period that an Issuance
Notice is delivered pursuant to Section 2.03(b).
“Issuance Notice” means a written notice delivered to the Agent by the Company
in accordance with this Agreement in the form attached hereto as Exhibit A that
is executed by its Chief Executive Officer, the President or the Chief Financial
Officer.
“Issuance Price” means the Sales Price less the Selling Commission.
“Issuance Supplement” has the meaning set forth in Section 3.01.
“Intellectual Property Rights” has the meaning set forth in Section 3.17.
“Investment Company Act” has the meaning set forth in Section 3.21.
“Material Adverse Change” has the meaning set forth in Section 3.07.
“Maximum Program Amount” means Common Shares with an aggregate Sales Price of
the lesser of (1) $4,000,000 and (2) the aggregate amount of Shares registered
under the Registration Statement.
“Money Laundering Laws” has the meaning set forth in Section 3.33.
2
“OFAC” has the meaning set forth in Section 3.34.
“Original Registration Statement” has the meaning set forth in Section 3.01.
“PCAOB” has the meaning set forth in Section 3.08.
“Person” means an individual or a corporation, partnership, limited liability
company, trust, incorporated or unincorporated association, joint venture, joint
stock company, governmental authority or other entity of any kind.
“preliminary prospectus” has the meaning set forth in Section 3.01.
“Principal Market” means the NYSE Amex or such other national securities
exchange on which the Common Shares, including any Shares, are then listed.
“Prospectus” has the meaning set forth in Section 3.01.
“PTO” has the meaning set forth in Section 3.17.
“Registration Statement” has the meaning set forth in Section 3.01.
“Regulation M” has the meaning set forth in Section 3.23.
“Related Judgment” has the meaning set forth in Section 8.02.
“Related Proceedings” has the meaning set forth in Section 8.02.
“Representation Date” has the meaning set forth in the introductory paragraph of
Article III.
“Rule 102” has the meaning set forth in the introductory paragraph of this
Agreement.
“Sales Price” means the actual sale execution price of each Share placed by the
Agent pursuant to this Agreement, whether on the Principal Market in the case of
ordinary brokers’ transactions or as otherwise agreed by the parties in other
methods of sale.
regulations of the Commission thereunder.
“Selling Commission” means 3% of the aggregate proceeds received by the Company
pursuant to the sale of Shares hereunder.
“Selling Period” means the period of one to twenty consecutive Trading Days (as
determined by the Company in the Company’s sole discretion and specified in the
applicable Issuance Notice) following the Trading Day on which an Issuance
“Settlement Date” means the third (3rd) business day following each Trading Day
during the Selling Period on which Shares are sold pursuant to this Agreement,
when the Company shall deliver to the Agent the amount of Shares sold on such
Trading Day and the Agent shall deliver to the Company the Issuance Price
received on such sales.
“Shares” shall mean the Company’s Common Shares issued or issuable pursuant to
this Agreement.
“Side Letter” has the meaning set forth in the definition of Selling Commission.
“Subsidiary” or “Subsidiaries” has the meaning set forth in Section 3.12.
“Specified Courts” has the meaning set forth in Section 8.02.
“Trading Day” means any day on which the Principal Market is open for trading.
“Triggering Event” has the meaning set forth in Section 4.13.
3
ARTICLE II
ISSUANCE AND SALE OF COMMON SHARES
Section 2.01 (a) Agreement Regarding Issuance and Sale of Shares. Upon the
terms and subject to the conditions of this Agreement, the Company may issue
Shares through the Agent and the Agent shall use its commercially reasonable
efforts to place such Shares, with an aggregate Sales Price of up to the Maximum
Program Amount, based on and in accordance with such Issuance Notices as the
Company may deliver to the Agent, during the Agency Period.
(b) Agreement Effectiveness. This Agreement shall be deemed effective
on the date on which each of the following conditions has been satisfied (the
(i)
the execution and delivery of this Agreement by the parties hereto; and
(ii)
the satisfaction by the Company of the conditions set forth in Section 5.01,
with the understanding that the form and substance of (A) the comfort letters
required by Section 5.01(e) shall be in the forms contained in Exhibit F and (B)
the legal opinions required by Section 5.01(f) shall be in the forms contained
in Exhibits B through E.
Section 2.02 Mechanics of Issuances.
(a) Issuance Notice. Upon the terms and subject to the conditions set
forth herein, on any Trading Day during the Agency Period on which the
conditions set forth in Sections 5.01 and 5.02 shall have been satisfied, the
Company may exercise its right to request an Issuance by the delivering to the
Agent an Issuance Notice; provided, however, that (i) in no event may the
Company deliver an Issuance Notice to the extent that (I) the sum of (x) the
Sales Price of the requested Issuance Amount, plus (y) the aggregate Sales Price
of all Shares issued under all previous Issuances effected pursuant to this
Agreement, would exceed the Maximum Program Amount; and (ii) prior to delivery
of any Issuance Notice, the Selling Period for any previous Issuance Notice
shall have expired or been terminated. An Issuance Notice shall be considered
delivered on the Trading Day that it is received by e-mail to the persons
identified in Section 8.04 and confirmed by the Company by telephone (including
a voicemail message to the persons identified in Section 8.04), with the
understanding that, with adequate prior written notice, the Agent may modify the
list of such persons from time to time.
(b) Agent Efforts. Upon the terms and subject to the
conditions set forth in this Agreement, upon the receipt of an Issuance Notice,
the Agent will use its commercially reasonable efforts consistent with its
normal sales and trading practices to place the Shares, subject to, and in
accordance with the information specified in, the Issuance Notice into the
Principal Market and otherwise in accordance with the terms of such Issuance
Notice, unless the sale of the Shares described therein has been suspended,
cancelled or otherwise terminated in accordance with the terms of this
Agreement. For the avoidance of doubt, the parties to this Agreement may modify
an Issuance Notice at any time provided they both agree in writing to any such
modification.
(c) Method of Offer and Sale. The Shares may be offered and sold (i)
in privately negotiated transactions (if and only if the parties hereto have so
agreed in writing) or (ii) by any other method or payment permitted by law
deemed to be an “at the market” offering as defined in Rule 415 under the
Securities Act, including sales made directly on the Principal Market or sales
made to or through a market maker or through an electronic communications
network. Nothing in this Agreement shall be deemed to require either party to
agree to the method of offer and sale specified in the preceding sentence, and
the method of placement of any Shares by the Agent shall be at the Agent’s
discretion.
(d) Confirmation to the Company. The Agent will provide written
confirmation to the Company pursuant to Section 8.04 no later than the opening
of the Trading Day next following the Trading Day on which it has placed Shares
hereunder setting forth the number of shares sold on such Trading Day, the
corresponding Sales Price and the Issuance Price payable to the Company in
respect thereof.
(e) Settlement. Each Issuance will be settled on the applicable
Settlement Date for such Issuance and, subject to the provisions of Article V,
on or before each Settlement Date, the Company will, or will cause its transfer
agent to, electronically transfer the Shares being sold by crediting the Agent
or its designee’s account at The Depository Trust Company through its
Deposit/Withdrawal At Custodian (DWAC) System, or by such other means of
delivery as may be mutually agreed upon by the parties hereto and, upon receipt
of such Shares, which in all cases shall be freely tradeable, transferable,
registered shares in good deliverable form, the Agent will deliver the related
Issuance Price in same day funds delivered to an account designated by the
Company prior to the Settlement Date.
4
(f) Suspension or Termination of Sales. Consistent with standard
market settlement practices, the Company or the Agent may, upon notice to the
other party hereto in writing or by telephone (confirmed immediately by
verifiable email pursuant to Section 8.04), suspend any sale of Shares, and the
Selling Period shall immediately terminate; provided, however, that (i) such
suspension and termination shall not affect or impair either party’s obligations
with respect to any Shares placed or sold hereunder prior to the receipt of such
notice; (ii) if the Company suspends or terminates any sale of Shares after the
Agent confirms such sale, the Company shall still be obligated to comply with
Section 2.03 regarding the payment of the applicable Selling Commission and
reimbursement of the Agent’s expenses; and (iii) if the Company defaults in its
obligation to deliver Shares on a Settlement Date, the Company agrees that it
will hold the Agent harmless against any loss, claim, damage or expense
(including, without limitation, penalties, interest and reasonable legal fees
and expenses), as incurred, arising out of or in connection with such default by
the Company. The parties hereto acknowledge and agree that, in performing its
obligations under this Agreement, the Agent may borrow Common Shares from stock
lenders, and may use the Shares to settle or close out such borrowings. The
Company agrees that no such notice shall be effective against the Agent unless
it is made to one of the individuals named in Section 8.04.
(g) No Guarantee of Placement, Etc. The Company acknowledges and
agrees that (i) there can be no assurance that the Agent will be successful in
placing Shares and (ii) the Agent will incur no liability or obligation to the
Company or any other Person if it does not sell Shares. In acting hereunder,
the Agent will not be obligated to purchase any Shares for its own account or
otherwise and will be acting as agent for the Company and not as principal.
Section 2.03 Use of Free Writing Prospectus. Neither the Company nor the Agent
has prepared, used, referred to or distributed, or will prepare, use, refer to
or distribute, without the other party’s prior written consent, any “written
communication” that constitutes a “free writing prospectus” as such terms are
defined in Rule 405 under the Securities Act with respect to the offering
contemplated by this Agreement (any such free writing prospectus being referred
to herein as a “Free Writing Prospectus”).
Section 2.04 Fees & Reimbursement of Expenses. (a) Fees. As compensation for
services rendered, on or before the any Settlement Date, the Company shall pay
to the Agent the Selling Commission regarding the applicable Issuance Amount
(including with respect to any suspended or terminated sale pursuant to Section
2.01(f)), by wire transfer of immediately available funds to an account or
accounts designated by the Agent.
(b) Reimbursement of Expenses. The Company agrees, whether or not any
Shares are placed or sold pursuant to this Agreement, to pay all costs, fees and
expenses incurred in connection with the performance of its obligations
hereunder and, from time to time upon receipt of an invoice, to reimburse the
Agent for its reasonable expenses (including out-of-pocket expenses and the fees
and expenses of counsel to the Agent) as set forth in the Side Letter, provided
that all such expenses that have accrued by the Agreement Closing Date shall be
paid on such date. The payment of the Agent’s expenses pursuant to this
paragraph shall be paid by wire transfer of immediately available funds to an
account or accounts designated by the Agent.
5
ARTICLE III
The Company represents and warrants to the Agent that as of (1) the Effective
Date, (2) each Issuance Date, (3) each Settlement Date and (4) any time that the
Registration Statement or the Prospectus shall be amended or supplemented (each
of the times referenced above is referred to herein as a “Representation Date”),
except as may be disclosed in the Prospectus (including any documents
incorporated by reference therein and any supplements thereto) on or before a
Representation Date:
Section 3.01 Registration Statement. The Company has prepared and filed with
the Commission a shelf registration statement on Form S-3 (File No. 333-160993)
that contains a base prospectus (the “Base Prospectus”). Such registration
statement registers the issuance and sale by the Company of the Shares under the
Securities Act. Such registration statement (and any further registration
statements that may be filed by the Company for the purpose of registering
additional Shares to be sold pursuant to this Agreement), including any
information deemed to be a part thereof pursuant to Rule 430B under the
Securities Act, including all documents incorporated or deemed to be
incorporated therein by reference pursuant to Item 12 of Form S-3 under the
Securities Act as from time to time amended or supplemented, is herein referred
to as the “Registration Statement,” and the prospectus constituting a part of
such registration statement, together with any prospectus supplement and any
pricing supplement filed with the Commission pursuant to Rule 424(b) under the
Securities Act relating to a particular issuance of the Shares (each, an
“Issuance Supplement”), including all documents incorporated or deemed to be
Securities Act, in each case, as from time to time amended or supplemented, is
referred to herein as the “Prospectus,” except that if any revised prospectus is
provided to the Agent by the Company for use in connection with the offering of
the Shares that is not required to be filed by the Company pursuant to Rule
424(b) under the Securities Act, the term “Prospectus” shall refer to such
revised prospectus from and after the time it is first provided to the Agent for
such use. The Registration Statement at the time it originally became effective
is herein called the “Original Registration Statement.” As used in this
Agreement, the terms “amendment” or “supplement” when applied to the
Registration Statement or the Prospectus shall be deemed to include the filing
by the Company with the Commission of any document under the Exchange Act after
the date hereof that is or is deemed to be incorporated therein by reference.
All references in this Agreement to financial statements and schedules and other
information which is “contained,” “included” or “stated” in the Registration
Statement or the Prospectus (and all other references of like import) shall be
deemed to mean and include all such financial statements and schedules and other
information which is or is deemed to be incorporated by reference in or
otherwise deemed under the Securities Act to be a part of or included in the
Registration Statement or the Prospectus, as the case may be, as of any
specified date; and all references in this Agreement to amendments or
supplements to the Registration Statement or the Prospectus shall be deemed to
mean and include, without limitation, the filing of any document under the
Exchange Act which is or is deemed to be incorporated by reference in or
specified date.
Section 3.02 Compliance with Registration Requirements. (a) At the time the
Registration Statement was originally declared effective and at the time the
Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2009
(the “Annual Report”) was filed with the Commission, the Company met the then
applicable requirements for use of Form S-3 under the Securities Act. The
Company meets the requirements for use of Form S-3 under the Securities Act
specified in FINRA Rule 5110(b)(7)(C)(i).
(b) The Original Registration Statement has been declared effective by
the Commission. The Company has complied to the Commission’s satisfaction with
all requests of the Commission for additional or supplemental information. No
stop order suspending the effectiveness of the Registration Statement is in
effect and no proceedings for such purpose have been instituted or are pending
or, to the knowledge of the Company, are contemplated or threatened by the
Commission, and any request on the part of the Commission for additional
information has been complied with. The Registration Statement is not the
subject of a pending proceeding or examination under Section 8(d) or
Section 8(e) of the Securities Act, and the Company is not the subject of a
pending proceeding under Section 8A of the Securities Act in connection with the
offering and sale of the Shares.
(c) The Registration Statement, as amended complies in all material
respects with the requirements of the Securities Act, and the Registration
Statement, as amended, does not contain an untrue statement of a material fact
make the statements therein not misleading. The Prospectus, as amended or
supplemented, conforms in all material respects to the requirements of the
Securities Act and does not contain an untrue statement of a material fact or
no contracts or other documents required to be described in the Prospectus or to
be filed as exhibits to the Registration Statement that have not been described
or filed as required.
The representations and warranties in this Section 3.02 shall not apply to
statements in or omissions from the Registration Statement or any post-effective
amendment thereto or the Prospectus or any amendments or supplements thereto
made in reliance upon and in conformity with information furnished to the
Company in writing by the Agent expressly for use in the Registration Statement
or any post-effective amendment thereto or the Prospectus or any amendment or
supplement thereto.
(d) Ineligible Issuer Status. At the time of filing the Original
Registration Statement, at the earliest time thereafter that the Company or
another offering participant made a bona fide offer (within the meaning of Rule
164(h)(2) under the Securities Act) of the Shares, and at the date hereof, the
Company was not and is not an “ineligible issuer,” as defined in Rule 405 under
the Securities Act.
6
Section 3.03 Incorporated Documents. The documents incorporated or deemed to be
incorporated by reference in the Registration Statement and the Prospectus, at
comply in all material respects with the requirements of the Exchange Act, as
applicable, and, when read together with the other information in the
Prospectus, (i) at the time the Original Registration Statement became
effective, (ii) at the Effective Date, (iii) at each Issuance Date and (iv) at
each Settlement Date did not, do not and will not contain an untrue statement of
which they were made, not misleading.
Section 3.04 Authorization, Execution, Delivery. This Agreement has been duly
authorized, executed and delivered by the Company.
Section 3.05 Authorization of the Shares. The Shares have been duly authorized
for issuance and sale pursuant to this Agreement and, when issued and delivered
by the Company pursuant to this Agreement, will be validly issued, fully paid
and nonassessable; the Shares conform in all material respects to the
description thereof in the Registration Statement and the Prospectus, and such
description conforms to the rights set forth in the Company’s Amended and
Restated Articles of Incorporation and By-Laws; no holder of the Shares shall be
subject to any personal liability solely by reason of being such a holder; and
the issuance and sale of the Shares is not subject to any preemptive rights,
rights of first refusal or other similar rights to subscribe for or purchase the
Shares
Section 3.06 No Applicable Registration or Other Similar Rights. Except as set
forth in the Registration Statement and the Prospectus, there are no persons
with registration or other similar rights to have any equity or debt securities
registered for sale under the Registration Statement or included in the offering
Section 3.07 No Material Adverse Change. Except as otherwise disclosed in the
Registration Statement and the Prospectus, subsequent to the respective dates as
of which information is given in the Registration Statement and the Prospectus:
(i) there has been no material adverse change, or any development that could
reasonably be expected to result in a material adverse change, in the condition,
financial or otherwise, or in the earnings, business, operations or prospects,
whether or not arising from transactions in the ordinary course of business, of
the Company and the Subsidiaries, considered as one entity (any such change is
called a “Material Adverse Change”); (ii) the Company and the Subsidiaries,
considered as one entity, have not incurred any material liability or
obligation, indirect, direct or contingent, not in the ordinary course of
business or entered into any material transaction or agreement not in the
ordinary course of business; and (iii) there has been no dividend or
distribution of any kind declared, paid or made by the Company or, except for
dividends paid to the Company or other Subsidiaries, any of the Subsidiaries on
any class of capital stock or repurchase or redemption by the Company or any of
the Subsidiaries of any class of capital stock.
Section 3.08 Independent Accountants. Yoganandh & Ram, who have expressed their
opinion with respect to the financial statements (which term as used in this
Agreement includes the consolidated financial statements of the Company and the
related notes thereto) and supporting schedules filed with the Commission as a
part of the Registration Statement and included in the Prospectus, are, to the
knowledge of the Company, after due inquiry, (i) independent public or certified
public accountants as required by the Securities Act and the Exchange Act, (ii)
in compliance with the applicable requirements relating to the qualification of
accountants under Rule 2-01 of Regulation S-X and (iii) a registered public
accounting firm as defined by the Public Company Accounting Oversight Board (the
“PCAOB”) whose registration has not been suspended or revoked and who has not
requested such registration to be withdrawn.
Section 3.09 Preparation of the Financial Statements. The financial statements
filed with the Commission as a part of the Registration Statement and included
in the Prospectus present fairly, in all material respects, the consolidated
financial position of the Company and its subsidiaries as of and at the dates
indicated and the results of their operations and cash flows for the periods
specified. The supporting schedules included in the Registration Statement
present fairly, in all material respects, the information required to be stated
therein. Such financial statements and supporting schedules have been prepared
in conformity with generally accepted accounting principles as applied in the
United States applied on a consistent basis throughout the periods involved,
except as may be expressly stated in the related notes thereto. No other
financial statements or supporting schedules are required to be included in the
incorporated by reference into the Prospectus under the caption “Selected
Financial Data” fairly presents, in all material respects, the information set
forth therein on a basis consistent with that of the audited financial
statements contained in the Registration Statement and the Prospectus. To the
knowledge of the Company, no person who has been suspended or barred from being
associated with a registered public accounting firm, or who has failed to comply
with any sanction pursuant to Rule 5300 promulgated by the PCAOB, has
participated in or otherwise aided the preparation of, or audited, the financial
statements, supporting schedules or other financial data filed with the
Commission as a part of the Registration Statement and included in the
Prospectus.
Section 3.10 Company’s Accounting System. The Company and each of its
subsidiaries make and keep accurate books and records and maintain a system of
internal accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management’s general or
specific authorization; (ii) transactions are recorded as necessary to permit
accounting principles as applied in the United States and to maintain
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. There has not been and is no material weakness in the Company’s
internal control over financial reporting (whether or not remediated) and since
March 31, 2009, there has been no change in the Company’s internal control over
financial reporting that has materially and adversely affected, or is reasonably
likely to materially and adversely affect, the Company’s internal control over
financial reporting. The Company is not an “accelerated filer” as defined in
Rule 12b-2 under the Exchange Act.
Section 3.11 Incorporation and Good Standing of the Company. The Company has
been duly incorporated and is validly existing as a corporation in good standing
under the laws of the State of Maryland and has the power and authority
(corporate or other) to own, lease and operate its properties and to conduct its
business as described in the Prospectus and to enter into and perform its
obligations under this Agreement. The Company is duly qualified as a foreign
leasing of property or the conduct of business, except where the failure to be
so qualified and in good standing would not, individually or in the aggregate,
result in a Material Adverse Change.
7
Section 3.12 Incorporation and Good Standing of the Company’s
Subsidiaries. Each “significant subsidiary” of the Company (as such term is
defined in Rule 1-02 of Regulation S-X) (each a “Subsidiary” and, collectively,
the “Subsidiaries”) has been duly organized and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Prospectus and is
standing in each jurisdiction in which such qualification is required, whether
except where the failure so to qualify or to be in good standing has not
resulted, or would not reasonably be expected to result, in a Material Adverse
Change; except as otherwise disclosed in or contemplated by the Prospectus, all
of the issued and outstanding capital stock of each such Subsidiary has been
duly authorized and validly issued, is fully paid and non assessable and is
security interest, mortgage, pledge or lien that reasonably would be expected to
result in a Material Adverse Change; none of the outstanding shares of capital
stock of any Subsidiary was issued in violation of the preemptive or similar
rights of any securityholder of such Subsidiary that reasonably would be
expected to result in a Material Adverse Change. The only subsidiaries of the
Company are the subsidiaries listed in the section titled “India Globalization
Capital, Inc. – Background of India Globalization Capital, Inc.” in the Base
Prospectus The only Subsidiaries of the Company are Sricon Infrastructure
Private Limited, Techni Bharathi Limited and India Globalization Capital,
Mauritius, Limited.
Section 3.13 Capitalization and Other Capital Stock Matters. The authorized,
issued and outstanding capital stock of the Company is as set forth in the
Prospectus, as of the date so presented (other than for subsequent issuances, if
any, pursuant to employee benefit plans described in the Prospectus or upon the
exercise of outstanding options or warrants described in the Prospectus). The
capital stock of the Company, including the Shares, conforms in all material
respects to the description thereof contained in the Prospectus. All of the
issued and outstanding shares of Common Stock have been duly authorized and
validly issued, are fully paid and nonassessable and have been issued in
compliance with federal and state securities laws. None of the outstanding
shares of Common Stock was issued in violation of any preemptive rights, rights
of first refusal or other similar rights to subscribe for or purchase securities
of the Company. There are no authorized or outstanding options, warrants,
preemptive rights, rights of first refusal or other rights to purchase, or
equity or debt securities convertible into or exchangeable or exercisable for,
any capital stock of the Company other than those accurately described in the
Prospectus. The description of the Company’s stock option, stock bonus and
other stock plans or arrangements, and the options or other rights granted
thereunder, set forth in the Prospectus accurately and fairly presents the
information required to be shown with respect to such plans, arrangements,
options and rights.
Section 3.14 Stock Exchange Listing. The Common Shares are duly listed, and
admitted and authorized for trading on the NYSE Amex, and the Shares are or,
upon issuance, will be duly listed, and admitted and authorized for trading on
the NYSE Amex, subject only to official notice of issuance.
Section 3.15 Non-Contravention of Existing Instruments; No Further
Authorizations or Approvals Required. Neither the Company nor any of the
Subsidiaries is in violation of its charter or by-laws or operating agreement or
similar organizational document, as applicable, or is in default (or, with the
giving of notice or lapse of time, would be in default) (“Default”) under any
indenture, mortgage, loan or credit agreement, note, contract, franchise, lease
or other instrument to which the Company or any of the Subsidiaries is a party
or by which it or any of them may be bound (including, without limitation, any
credit agreement, indenture, pledge agreement, security agreement or other
instrument or agreement evidencing, guaranteeing, securing or relating to
indebtedness of the Company or any of the Subsidiaries), or to which any of the
property or assets of the Company or any of the Subsidiaries is subject (each,
an “Existing Instrument”), except for such Defaults as would not, individually
or in the aggregate, result in a Material Adverse Change. The Company’s
execution, delivery and performance of this Agreement, consummation of the
transactions contemplated hereby and by the Prospectus and the issuance and sale
of the Shares (i) have been duly authorized by all necessary corporate action
and will not result in any violation of the provisions of the charter or
by-laws, operating agreement or similar organizational document of the Company
or any Subsidiary, as applicable, (ii) will not conflict with or constitute a
breach of, or Default or a Debt Repayment Triggering Event (as defined below)
encumbrance upon any property or assets of the Company or any of the
Subsidiaries pursuant to, or require the consent of any other party to, any
Existing Instrument, except for such conflicts, breaches, Defaults or Debt
Repayment Triggering Events as would not, individually or in the aggregate,
result in a Material Adverse Change and (iii) will not result in any violation
of any law, administrative regulation or administrative or court decree
applicable to the Company or any Subsidiary. No consent, approval,
authorization or other order of, or registration or filing with, any court or
other governmental or regulatory authority or agency, is required for the
Company’s execution, delivery and performance of this Agreement and consummation
of the transactions contemplated hereby and by the Prospectus, except such as
have been obtained or made by the Company and are in full force and effect under
the Securities Act, applicable state securities or blue sky laws; provided,
however, the Company does not make any representation as to any required
consent, approval, authorization or other order of, or registration or filing
with, the Financial Industry Regulatory Authority, Inc. (“FINRA”). As used
herein, a “Debt Repayment Triggering Event” means any event or condition that
gives, or with the giving of notice or lapse of time would give, the holder of
repayment of all or a portion of such indebtedness by the Company or any of the
Subsidiaries.
Section 3.16 No Material Actions or Proceedings. Except as otherwise disclosed
in the Prospectus, there are no legal or governmental actions, suits,
investigations, inquiries or proceedings pending or, to the Company’s knowledge,
threatened (i) against or affecting the Company or any of the Subsidiaries,
(ii) which have as the subject thereof property owned or leased by, or to the
Company’s knowledge, any officer or director of, the Company or any of the
Subsidiaries or (iii) relating to environmental or discrimination matters, where
in any such case (A) any such action, suit or proceeding, if so determined
adversely, would reasonably be expected to result in a Material Adverse Change
or adversely affect the consummation of the transactions contemplated by this
Agreement or (B) any such action, suit or proceeding is or would be material in
the context of the sale of Shares. No material labor dispute with the employees
of the Company or any of the Subsidiaries, or, to the Company’s knowledge, with
the employees of any principal supplier, manufacturer, customer or contractor of
the Company, exists or, to the Company’s knowledge, is threatened or imminent.
8
Section 3.17 Intellectual Property Rights. The Company and the Subsidiaries own,
possess or can acquire on reasonable terms sufficient trademarks, servicemarks,
trade names, patents, copyrights, and any registrations and applications for any
of the foregoing, domain names, licenses, approvals, trade secrets, know-how,
inventions, technology and other similar rights (collectively, “Intellectual
Property Rights”) reasonably necessary to conduct their respective businesses as
now conducted as set forth in the Prospectus (including the commercialization of
products or services described therein), except where the failure to own,
possess or acquire such rights would not, individually or in the aggregate,
result in a Material Adverse Change. There are no third parties who have or, to
the Company’s knowledge, will be able to establish rights to any Intellectual
Property Rights owned by the Company or any Subsidiary, except for, and to the
extent of, the ownership rights of the owners of the Intellectual Property
Rights which the Prospectus discloses are licensed to the Company. There are no
pending actions, suits, claims or proceedings that have been asserted or, to the
Company’s knowledge, threatened against the Company or any Subsidiary
challenging the Company’s or any Subsidiary’s rights in or to any Intellectual
Property Rights, and the Company is unaware of any facts which would form a
reasonable basis for any such action, suit, claim or proceeding. There are no
pending or, to the Company’s knowledge, threatened actions, suits, claims, or
proceedings challenging the validity, enforceability or scope of any
Intellectual Property Rights owned by the Company or any Subsidiary, and the
Company is unaware of any facts which could form a reasonable basis for any such
action, suit, claim or proceeding. There are no pending or, to the Company’s
knowledge, threatened actions, suits, claims or proceedings that the Company or
any Subsidiary infringes or otherwise violates, or would, upon the
commercialization of any product or service described in the Prospectus as under
development, infringe or violate, any Intellectual Property Rights of others,
and the Company is unaware of any facts which could form a reasonable basis for
any such action, suit, claim or proceeding. The Company and the Subsidiaries
have complied in all material respects with the terms of each agreement pursuant
to which Intellectual Property Rights have been licensed to the Company or any
Subsidiary under valid and enforceable license agreements, and all such
agreements are in full force and effect. To the Company’s knowledge, there is
no patent or patent application that contains claims that interfere with the
issued or pending claims of any of the Intellectual Property Rights owned by the
Company or any Subsidiary or that challenges the validity, enforceability or
scope of any of the Intellectual Property Rights owned by the Company or any
Subsidiary. To the Company’s knowledge, there is no prior art that may render
any patent application filed by the Company or a Subsidiary within the
Intellectual Property unpatentable that has not been disclosed to the U.S.
Patent and Trademark Office (the “PTO”). The Company and the Subsidiaries have
duly and properly filed or caused to be filed with the PTO or foreign and
international patent authorities all patent applications disclosed in the
Prospectus as owned by the Company or the Subsidiaries.
Section 3.18 All Necessary Permits, etc. The Company and each Subsidiary possess
such valid and current certificates, permits, licenses, approvals, consents and
appropriate state, federal or foreign regulatory agencies or bodies necessary to
conduct their respective businesses, except where failure to possess any such
Governmental License would not, individually or in the aggregate, result in a
Material Adverse Change; the Company and its Subsidiaries are in compliance with
failure so to comply would not, individually or in the aggregate, result in a
Material Adverse Change; all of the Governmental Licenses are valid and in full
not, individually or in the aggregate, result in a Material Adverse Change; and
neither the Company nor any Subsidiary has received, or has any reason to
believe that it will receive, any notice of proceedings relating to the
revocation or modification of, or non-compliance with, any such Governmental
License, which, individually or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, could result in a Material Adverse
Change.
Section 3.19 Title to Properties. The Company and each of the Subsidiaries have
good and marketable title to all of the real and personal property and other
assets reflected as owned in the financial statements referred to in
Section 3.09 above in each case free and clear of any security interests,
mortgages, liens, encumbrances, equities, adverse claims and other defects,
except such as do not materially and adversely affect the value of such property
and do not materially interfere with the use made or proposed to be made of such
property by the Company or such Subsidiary. The real property, improvements,
equipment and personal property held under lease by the Company or any
Subsidiary are held under valid and enforceable leases, with such exceptions as
are not material and do not materially interfere with the use made or proposed
to be made of such real property, improvements, equipment or personal property
by the Company or such Subsidiary.
Section 3.20 Tax Law Compliance. The Company and the Subsidiaries have filed all
necessary federal, state and local and foreign income and franchise tax returns
required to be filed through the date hereof and have paid all taxes due thereon
and, if due and payable, any related or similar assessment, fine or penalty
levied against any of them, except as may be being contested in good faith and
by appropriate proceedings, and no tax deficiency has been determined adversely
to the Company or any of the Subsidiaries which has had, nor does the Company
have any knowledge of any tax deficiency which, if determined adversely to the
Company or any of the Subsidiaries, would reasonably be expected to result in, a
Material Adverse Change. The Company has made adequate charges, accruals and
reserves in the applicable financial statements referred to in Section 3.09
above in respect of all federal, state and foreign income and franchise taxes
for all periods as to which the tax liability of the Company or any of the
Subsidiaries has not been finally determined.
Section 3.21 Company Not an “Investment Company.” The Company is not, and will
not be, either after receipt of payment for the Shares or after the application
of the proceeds therefrom as described under “Use of Proceeds” in the
Prospectus, (i) an “investment company” (or a company controlled by an
“investment company”) within the meaning of the Investment Company Act of 1940,
as amended (the “Investment Company Act”); or (ii) a “passive foreign investment
company” as such term is defined in the Internal Revenue Code of 1986, as
amended, and the regulations and published interpretations thereunder (the
“Code”).
Section 3.22 Insurance. Each of the Company and the Subsidiaries are insured by
recognized, financially sound and reputable institutions with policies in such
amounts and with such deductibles and covering such risks as are generally
deemed adequate and customary for their businesses including, but not limited
to, policies covering real and personal property owned or leased by the Company
and the Subsidiaries against theft, damage, destruction and acts of vandalism
and policies covering the Company and the Subsidiaries for product liability
claims. The Company has no reason to believe that it or any Subsidiary will not
be able (i) to renew its existing insurance coverage as and when such policies
expire or (ii) to obtain comparable coverage from similar institutions as may be
that would not result in a Material Adverse Change.
Section 3.23 No Price Stabilization or Manipulation; Compliance with Regulation
M. Neither the Company nor any Affiliate of the Company has taken, directly or
indirectly, any action designed to or that might be reasonably expected to cause
or result in stabilization or manipulation of the price of the Shares or any
other “reference security” (as defined in Rule 100 of Regulation M under the
Exchange Act (“Regulation M”)) whether to facilitate the sale or resale of the
Shares or otherwise, and has taken no action which would directly or indirectly
violate Regulation M. The Company acknowledges that the Agent may engage in
passive market making transactions in the Shares on the Nasdaq Global Market in
accordance with Regulation M.
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Section 3.24 Related Party Transactions. There are no business relationships or
related-party transactions involving the Company or any of the Subsidiaries or
any other person required to be described in the Prospectus that have not been
described as required.
Section 3.25 Statistical and Market-Related Data. The statistical, demographic
and market-related data included in the Registration Statement and the
Prospectus are based on or derived from sources that the Company believes to be
reliable and accurate or represent the Company’s good faith estimates that are
made on the basis of data derived from such sources.
Section 3.26 No Unlawful Contributions or Other Payments. Neither the Company
nor any of the Subsidiaries nor, to the Company’s knowledge, any employee or
agent of the Company or any Subsidiary, has made any contribution or other
payment to any official of, or candidate for, any federal, state or foreign
office in violation of any law or of the character required to be disclosed in
the Registration Statement and the Prospectus.
Section 3.27 Disclosure Controls and Procedures; Deficiencies in or Changes to
Internal Control Over Financial Reporting. The Company has established and
maintains disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)), which (i) are designed to ensure that material
made known to the Company’s principal executive officer and its principal
financial officer by others within those entities, particularly during the
periods in which the periodic reports required under the Exchange Act are being
prepared; (ii) have been evaluated by management of the Company for
effectiveness as of the end of the Company’s most recent fiscal quarter; and
(iii) are effective in all material respects to perform the functions for which
they were established. Based on the most recent evaluation of its disclosure
controls and procedures, the Company is not aware of (i) any significant
deficiencies or material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect
the Company’s ability to record, process, summarize and report financial
information or (ii) any fraud, whether or not material, that involves management
or other employees who have a significant role in the Company’s internal control
over financial reporting. The Company is not aware of any change in its
internal control over financial reporting that has occurred during its most
materially affect, the Company’s internal control over financial reporting.
Section 3.28 Compliance with Environmental Laws. Except as described in each
the Prospectus or except as would not, singly or in the aggregate, result in a
Material Adverse Change, (i) neither the Company nor any of the Subsidiaries is
administrative interpretation thereof, including any judicial or administrative
without limitation, laws and regulations relating to the release or threatened
hazardous substances, petroleum or petroleum products, asbestos-containing
materials or molds (collectively, “Hazardous Materials”) or to the manufacture,
handling of Hazardous Materials (collectively, “Environmental Laws”), (ii) the
Company and the Subsidiaries have all permits, authorizations and approvals
required under any applicable Environmental Laws and are each in compliance with
their requirements, (iii) there are no pending or threatened administrative,
notices of noncompliance or violation, investigation or proceedings relating to
any Environmental Law against the Company or any of the Subsidiaries and (iv)
there are no events or circumstances that might reasonably be expected to form
proceeding by any private party or governmental body or agency, against or
affecting the Company or any of the Subsidiaries relating to Hazardous Materials
or any Environmental Laws.
Section 3.29 ERISA Compliance. The Company and the Subsidiaries and any
“employee benefit plan” (as defined under the Employee Retirement Income
Security Act of 1974, as amended, and the regulations and published
interpretations thereunder (collectively, “ERISA”)) established or maintained by
the Company, the Subsidiaries or their “ERISA Affiliates” (as defined below) are
in compliance in all material respects with ERISA. “ERISA Affiliate” means,
with respect to the Company or a Subsidiary, any member of any group of
organizations described in Sections 414(b), (c), (m) or (o) of the Code of which
the Company or such Subsidiary is a member. No “reportable event” (as defined
under ERISA) has occurred or is reasonably expected to occur with respect to any
Subsidiaries or any of their ERISA Affiliates. No “employee benefit plan”
established or maintained by the Company, the Subsidiaries or any of their ERISA
Affiliates, if such “employee benefit plan” were terminated, would have any
“amount of unfunded benefit liabilities” (as defined under ERISA). Neither the
Company, the Subsidiaries nor any of their ERISA Affiliates has incurred or
reasonably expects to incur any liability under (i) Title IV of ERISA with
(ii) Sections 412, 4971, 4975 or 4980B of the Code. Each “employee benefit
plan” established or maintained by the Company, the Subsidiaries or any of their
ERISA Affiliates that is intended to be qualified under Section 401(a) of the
Code is so qualified and nothing has occurred, whether by action or failure to
act, which would cause the loss of such qualification.
Section 3.30 Brokers. Except pursuant to this Agreement, the Engagement Letter
and the Side Letter, there is no broker, finder or other party that is entitled
commission as a result of any transactions contemplated by this Agreement.
Section 3.31 Dividend Restrictions. No Subsidiary is prohibited or restricted,
directly or indirectly, from paying dividends to the Company, or from making any
other distribution with respect to such Subsidiary’s equity securities or from
repaying to the Company or any other Subsidiary any amounts that may from time
to time become due under any loans or advances to such Subsidiary from the
Company or from transferring any property or assets to the Company or to any
other Subsidiary.
Section 3.32 Foreign Corrupt Practices Act. Neither the Company nor any of its
associated with or acting on behalf of the Company or any of its subsidiaries,
has used any corporate funds for any unlawful contribution, gift, entertainment
or other unlawful expense relating to political activity; made any direct or
employee from corporate funds; violated or is in violation of any provision of
the Foreign Corrupt Practices Act of 1977; or made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment, except for payments or
violations that, individually or in the aggregate, would not reasonably be
expected to result in a Material Adverse Change.
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Section 3.33 Money Laundering Laws. The operations of the Company and the
Subsidiaries are, and have been conducted at all times, in compliance, in all
material respects, with applicable financial recordkeeping and reporting
amended, the money laundering statutes of all applicable jurisdictions, the
rules and regulations thereunder and any related or similar applicable rules,
regulations or guidelines, issued, administered or enforced by any governmental
agency (collectively, the “Money Laundering Laws”) and no action, suit or
proceeding by or before any court or governmental agency, authority or body or
any arbitrator involving the Company or any of the Subsidiaries with respect to
the Money Laundering Laws is pending or, to the knowledge of the Company,
threatened.
Section 3.34 OFAC. Neither the Company nor any of the Subsidiaries nor, to the
knowledge of the Company, any director, officer, agent, employee, Affiliate or
person acting on behalf of the Company or any of the Subsidiaries is currently
subject to any U.S. sanctions administered by the Office of Foreign Assets
Control of the U.S. Treasury Department (“OFAC”); and the Company will not
directly or indirectly use the proceeds of this offering, or lend, contribute or
otherwise make available such proceeds to any subsidiary, joint venture partner
or other person or entity, for the purpose of financing the activities of any
person currently subject to any U.S. sanctions administered by OFAC.
Section 3.35 Sarbanes-Oxley. The Company is in compliance, in all material
respects, with all applicable provisions of the Sarbanes-Oxley Act of 2002 and
Section 3.36 Duties, Transfer Taxes, Etc. No stamp or other issuance or
transfer taxes or duties and no capital gains, income, withholding or other
taxes are payable by the Agent in the United States, the Republic of Korea, or
any political subdivision or taxing authority thereof or therein in connection
with the execution, delivery or performance of this Agreement by the Company or
the sale and delivery by the Company of the Shares.
Section 3.37 No Association with FINRA. Neither the Company nor any of its
Affiliates directly, or indirectly through one or more intermediaries, controls,
or is controlled by, or is under common control with, or is a person associated
with any member firm of FINRA.
Any certificate signed by any officer or representative of the Company or any of
its subsidiaries and delivered to the Agent or counsel for the Agent in
connection with an Issuance shall be deemed a representation and warranty by the
Company to the Agent as to the matters covered thereby on the date of such
certificate.
The Company acknowledges that the Agent and, for purposes of the opinions to be
delivered pursuant to Section 4.13 hereof, counsel to the Company and counsel to
the Agent, will rely upon the accuracy and truthfulness of the foregoing
representations and hereby consents to such reliance.
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ARTICLE IV
COVENANTS
The Company covenants and agrees with the Agent as follows, in addition to any
other covenants and agreements made elsewhere in this Agreement:
Section 4.01 Periodic Reporting Obligations; Exchange Act Compliance. During
the Agency Period, the Company shall file, on a timely basis, with the
Commission all reports and documents required to be filed under the Exchange Act
in the manner and within the time periods required by the Exchange Act.
Section 4.02 Securities Act Compliance. After the date of this Agreement
through the last time that a prospectus is required by the Securities Act
(including, without limitation, pursuant to Rule 173(d)) to be delivered in
connection with sales of the Shares, the Company shall promptly advise the Agent
in writing (i) of the receipt of any comments of, or requests for additional or
supplemental information from, the Commission, (ii) of the time and date of any
filing of any post-effective amendment to the Registration Statement or any
amendment or supplement to the Prospectus or any document incorporated by
reference therein, (iii) of the time and date that any post-effective amendment
to the Registration Statement becomes effective and (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or any post-effective amendment thereto, any amendment or supplement
to the Prospectus or of any order preventing or suspending the use of the
Prospectus, or of any proceedings to remove, suspend or terminate from listing
or quotation the Shares from any securities exchange upon which they are listed
for trading or included or designated for quotation, or of the threatening or
initiation of any proceedings for any of such purposes. If the Commission shall
enter any such stop order at any time, the Company will use its best efforts to
obtain the lifting of such order at the earliest possible moment. Additionally,
the Company agrees that it shall comply with the provisions of Rule 424(b) and
Rule 433, as applicable, under the Securities Act and will use its reasonable
efforts to confirm that any filings made by the Company under such Rule 424(b)
or Rule 433 were received in a timely manner by the Commission.
Section 4.03 Amendments and Supplements to the Prospectus and Other Securities
Act Matters. If, after the Effective Date through the last time that a
prospectus is required by the Securities Act (including, without limitation,
pursuant to Rule 173(d)) to be delivered in connection with sales of the Shares,
any event shall occur or condition exist as a result of which it is necessary to
amend or supplement the Prospectus (including any documents incorporated by
reference therein) so that the Prospectus does not include an untrue statement
the statements therein, in the light of the circumstances when the Prospectus is
delivered to a purchaser, not misleading, or if in the opinion of the Agent or
counsel for the Agent it is otherwise necessary to amend or supplement the
Prospectus to comply with applicable law, including the Securities Act and the
Exchange Act, the Company agrees (subject to Section 4.04) to promptly prepare,
file with the Commission and furnish at its own expense to the Agent, amendments
or supplements to the Prospectus so that the statements in the Prospectus as so
amended or supplemented will not include an untrue statement of a material fact
therein, in the light of the circumstances when the Prospectus is delivered to a
purchaser, not misleading or so that the Prospectus, as amended or supplemented,
will comply with applicable law including the Securities Act. Neither the
Agent’s consent to, nor delivery of, any such amendment or supplement shall
constitute a waiver of any of the Company’s obligations under Sections 4.04.
Section 4.04 Agent’s Review of Proposed Amendments and Supplements. After the
Effective Date through the last time that a prospectus is required by the
Securities Act (including, without limitation, pursuant to Rule 173(d)) to be
delivered in connection with sales of the Shares, prior to amending or
supplementing the Registration Statement or the Prospectus (including any
amendment or supplement through incorporation of any report filed under the
Exchange Act), the Company shall furnish to the Agent for review, a reasonable
amount of time prior to the proposed time of filing or use thereof, a copy of
each such proposed amendment or supplement, and the Company shall not file or
use any such proposed amendment or supplement to which the Agent, after
receiving reasonable advanced notice, objects prior to such filing or use.
Section 4.05 Free Writing Prospectuses. The Company shall furnish to the Agent
for review, a reasonable amount of time prior to the proposed time of filing or
use thereof, a copy of each proposed free writing prospectus or any amendment or
supplement thereto to be prepared by or on behalf of, used by, or referred to by
the Company and the Company shall not file, use or refer to any proposed free
writing prospectus or any amendment or supplement thereto to which the Agent,
after receiving reasonable advanced notice, objects prior to such filing or
use. The Company shall furnish to the Agent, without charge, as many copies of
any free writing prospectus prepared by or on behalf of, or used by the Company,
as the Agent may reasonably request. If at any time when a prospectus is
required by the Securities Act (including, without limitation, pursuant to
Rule 173(d)) to be delivered in connection with sales of the Shares (but in any
event if at any time through and including the Closing Date) there occurred or
occurs an event or development as a result of which any free writing prospectus
prepared by or on behalf of, used by, or referred to by the Company conflicted
or would conflict with the information contained in the Registration Statement
therein, in the light of the circumstances prevailing at that subsequent time,
not misleading, the Company shall promptly amend or supplement such free writing
prospectus to eliminate or correct such conflict or so that the statements in
such free writing prospectus as so amended or supplemented will not include an
prevailing at such subsequent time, not misleading, as the case may be;
provided, however, that prior to amending or supplementing any such free writing
prospectus, the Company shall furnish to the Agent for review, a reasonable
such proposed amended or supplemented free writing prospectus and the Company
shall not file, use or refer to any such amended or supplemented free writing
prospectus to which the Agent, after receiving reasonable advanced notice,
objects prior to such filing or use.
Section 4.06 Filing of Agent Free Writing Prospectuses. The Company shall not
take any action that would result in the Agent or the Company being required to
file with the Commission pursuant to Rule 433(d) under the Securities Act a free
writing prospectus prepared by or on behalf of the Agent that the Agent
otherwise would not have been required to file thereunder.
Section 4.07 Copies of Registration Statement and Prospectus. After the
delivered in connection with sales of the Shares, the Company agrees to furnish
the Agent with copies (which may be electronic copies) of the Registration
Statement and each amendment thereto, and with copies of the Prospectus and each
amendment or supplement thereto in the form in which it is filed with the
Commission pursuant to the Securities Act or Rule 424(b) under the Securities
Act, both in such quantities as the Agent may reasonably request from time to
time; and, if the delivery of a prospectus is required under the Securities Act
or under the blue sky or securities laws of any jurisdiction at any time on or
prior to the applicable Settlement Date for any Selling Period in connection
with the offering or sale of the Shares and if at such time any event has
occurred as a result of which the Prospectus as then amended or supplemented
would include an untrue statement of a material fact or omit to state any
the circumstances under which they were made when such Prospectus is delivered,
not misleading, or, if for any other reason it is necessary during such same
period to amend or supplement the Prospectus or to file under the Exchange Act
any document incorporated by reference in the Prospectus in order to comply with
the Securities Act or the Exchange Act, to notify the Agent and to request that
the Agent suspend offers to sell Shares (and, if so notified, the Agent shall
cease such offers as soon as practicable); and if the Company decides to amend
or supplement the Registration Statement or the Prospectus as then amended or
supplemented, to advise the Agent promptly by telephone (with confirmation in
writing) and to prepare and cause to be filed promptly with the Commission an
amendment or supplement to the Registration Statement or the Prospectus as then
amended or supplemented that will correct such statement or omission or effect
such compliance; provided, however, that if during such same period the Agent is
required to deliver a prospectus in respect of transactions in the Shares, the
Company shall promptly prepare and file with the Commission such an amendment or
supplement.
12
Section 4.08 Blue Sky Compliance. The Company shall reasonably cooperate with
the Agent and counsel for the Agent to qualify or register the Shares for sale
under (or obtain exemptions from the application of) the state securities or
blue sky laws or Canadian provincial securities laws of those jurisdictions
reasonably designated by the Agent, shall comply with such laws and shall
continue such qualifications, registrations and exemptions in effect so long as
required for the distribution of the Shares. The Company shall not be required
to qualify as a foreign corporation or to take any action that would subject it
to general service of process in any such jurisdiction where it is not presently
qualified or where it would be subject to taxation as a foreign
corporation. The Company will advise the Agent promptly of the suspension of
the qualification or registration of (or any such exemption relating to) the
Shares for offering, sale or trading in any jurisdiction or any initiation or
threat of any proceeding for any such purpose, and in the event of the issuance
of any order suspending such qualification, registration or exemption, the
Company shall use its commercially reasonable efforts to obtain the withdrawal
thereof at the earliest possible moment.
Section 4.09 Rule 158. To make generally available to its holders of the Shares
as soon as practicable, but in any event not later than 18 months after the
effective date of the Registration Statement (as defined in Rule 158(c) under
the Securities Act), an earnings statement of the Company and its consolidated
subsidiaries (which need not be audited) complying with Section 11(a) of the
Securities Act (including the option of the Company to file periodic reports in
order to make generally available such earnings statement, to the extent that it
is required to file such reports under Section 13 or Section 15(d) of the
Exchange Act, pursuant to Rule 158 under the Securities Act).
Section 4.10 Listing; Reservation of Shares; Transfer Agent. The Company shall
(a) use its best efforts to list, subject to notice of issuance, the Shares on
the Nasdaq Global Market and to maintain the listing of the Shares on the Nasdaq
Global Market; (b) shall reserve and keep available at all times, free of
preemptive rights, Shares for the purpose of enabling the Company to satisfy its
obligations under this Agreement; and (c) engage and maintain, at its expense, a
registrar and transfer agent for the Shares.
Section 4.11 Due Diligence. On each Representation Date, in connection with any
Issuance and otherwise from time to time at the reasonable request of the Agent,
the Company shall permit and assist representatives of the Agent and counsel to
the Agent to conduct due diligence with the appropriate business, financial and
legal representatives and directors of the Company, consistent with such
parties’ due diligence prior to the date hereof and otherwise appropriate under
the circumstances in the reasonable discretion of the Agent, including but not
limited to due diligence regarding the business and financial condition of the
Company, reasonable requests for documents, conference calls regarding these
matters and conference calls with representatives of the Company's internal and
outside counsel providing legal opinions pursuant to this Agreement and with
representatives of the Company's registered independent accounting firms
providing comfort letters pursuant to this Agreement. Prior to the filing of
any document with the Commission that would constitute a Triggering Event
specified in Section 4.13, the Company shall furnish to the Agent for review, a
reasonable amount of time prior to the proposed time of filing or use thereof, a
copy of each such document, and the Company shall not file or use any such
document to which the Agent, after receiving reasonable advanced notice, objects
prior to such filing or use.
Section 4.12 Representations and Warranties. The Company acknowledges that each
delivery of an Issuance Notice and each delivery of Shares on a Settlement Date
shall be deemed to be (i) an affirmation to the Agent that the representations
and warranties of the Company contained in or made pursuant to this Agreement
are true and correct as of the date of such Issuance Notice or of such
Settlement Date, as the case may be, as though made at and as of each such date,
incorporated by reference therein and any supplements thereto), and (ii) an
undertaking that the Company will advise the Agent if any of such
representations and warranties will not be true and correct as of the Settlement
Date for the Shares relating to such Issuance Notice, as though made at and as
of each such date (except that such representations and warranties shall be
deemed to relate to the Registration Statement and the Prospectus as amended and
supplemented relating to such Shares).
Section 4.13 Deliverables upon a Triggering Event. The Company agrees that,
during the term of this Agreement, upon
(a) the amendment or supplement of any Registration Statement or Prospectus,
including any document incorporated by reference therein,
(b) the filing with the Commission of an Annual Report on Form 10-K or a
Quarterly Report on Form 10-Q (or an amendment thereto) or
(c) the filing with the Commission of a Current Report on Form 8-K of the
Company that is material to the offering of securities of the Company, in the
reasonable discretion of the Agent,
(any such event, a “Triggering Event”), then the Company shall deliver or cause
to be delivered to the Agent on the date of such Triggering Event, the
following:
(x) the written legal opinions of Seyfarth Shaw LLP counsel to the
Company, dated the date of delivery in the form of Exhibit B, or, in the
discretion of the Agent, a reliance letter from such counsel to the Agent,
permitting the Agent to rely on a previously delivered opinion letter, modified
as appropriate for any passage of time or Triggering Event (except that
statements in such prior opinion shall be deemed to relate to the Registration
Statement and the Prospectus as amended or supplemented as of such
Representation Date);
(y) comfort letters, dated the date of delivery, of Yoganandh & Ram,
the independent registered public accounting firm who has audited the financial
statements included or incorporated by reference in the Registration Statement,
in form and substance consistent with the comfort letters such accounting firms
have agreed to deliver on the Effective Date in Exhibit C and in form and
substance reasonably satisfactory to the Agent; it being understood that any
such comfort letters will only be required for the Triggering Event specified in
clause (c) above to the extent that it contains financial statements filed with
the Commission under the Exchange Act and incorporated or deemed to be
incorporated by reference into a Prospectus;
13
(d) a certificate executed by the Secretary of the Company, signing in
such capacity, dated the Applicable Time (A) certifying that attached thereto
are true and complete copies of the resolutions duly adopted by the Board of
Directors of the Company authorizing the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
(including, without limitation, the issuance of the Shares pursuant to this
Agreement), which authorization shall be in full force and effect on and as of
the date of such certificate, and (B) certifying and attesting to the office,
incumbency, due authority and specimen signatures of each Person who executed
this Agreement for or on behalf of the Company; and
(e) a certificate executed by the Chief Executive Officer, the
President or any Executive or Senior Vice President of the Company and by the
Chief Financial Officer of the Company, signing in such respective capacities,
confirming that the representations and warranties of the Company contained in
this Agreement are true and correct and that the Company has performed all of it
obligations hereunder to be performed on or prior to the Effective Date and as
to the matters set forth in Section 5.01(a) hereof;
Section 4.14 Investment Limitation. The Company shall not invest or otherwise
use the proceeds received by the Company from its sale of any Shares in such a
manner as would require the Company or any of the Subsidiaries to register as an
investment company under the Investment Company Act. The Company will conduct
its business in a manner so that it will not become subject to the Investment
Company Act.
Section 4.15 Market Activities. The Company will not take, directly or
or result in stabilization or manipulation of the price of the shares of Common
Stock or any other reference security, whether to facilitate the sale or resale
of the Shares or otherwise, and the Company will, and shall cause each of its
Affiliates to, comply with all applicable provisions of Regulation M. If the
limitations of Rule 102 of Regulation M (“Rule 102”) do not apply with respect
to the Shares or any other reference security pursuant to any exception set
forth in Section (d) of Rule 102, then promptly upon notice from the Agent (or,
if later, at the time stated in the notice), the Company will, and shall cause
each of its Affiliates to, comply with Rule 102 as though such exception were
not available but the other provisions of Rule 102 (as interpreted by the
Commission) did apply.
ARTICLE V
CONDITIONS TO DELIVERY OF ISSUANCE
NOTICES AND TO SETTLEMENT
Section 5.01 Conditions Precedent to the Right of the Company to Deliver an
Issuance Notice and the Obligation of the Agent to Sell Shares During the
Selling Period(s). The right of the Company to deliver an Issuance Notice
hereunder is subject to the satisfaction, on the date of delivery of such
Issuance Notice, and the obligation of the Agent to use its commercially
reasonable efforts to place Shares during the applicable Selling Period is
subject to the satisfaction, on the applicable Settlement Date, of each of the
following conditions:
(a) Accuracy of the Company’s Representations and Warranties; Performance by
the Company. The representations and warranties of the Company shall be true
and correct as of the each applicable Representation Date as though made at such
time. The Company shall have performed, satisfied and complied with all
covenants, agreements and conditions required by this Agreement to be performed,
satisfied or complied with by the Company at or prior to such date.
(b) No Injunction. No statute, rule, regulation, executive order, decree,
by any court or governmental authority of competent jurisdiction or any
hereby that prohibits or directly and materially adversely affects any of the
transactions contemplated by this Agreement, and no proceeding shall have been
commenced that may have the effect of prohibiting or materially adversely
affecting any of the transactions contemplated by this Agreement.
(c) Material Adverse Changes. Since the Effective Date, no event that had or
would reasonably be expected to have a Material Adverse Change shall have
occurred that has not been disclosed in the Registration Statement or the
Prospectus (including the documents incorporated by reference therein and any
supplements thereto).
(d) No Suspension of Trading In or Delisting of Common Shares; Other
Events. The trading of the Common Shares (including without limitation the
Shares) shall not have been suspended by the Commission, the Principal Market or
FINRA since the immediately preceding Settlement Date or, if there has been no
Settlement Date, the Effective Date, and the Shares (including without
limitation the Shares) shall have been approved for listing or quotation on and
shall not have been delisted from the Principal Market. There shall not have
occurred (and be continuing in the case of occurrences under clauses (i) and
(ii) below) any of the following: (i) if trading generally on the American
Stock Exchange, the New York Stock Exchange or The Nasdaq Stock Market has been
suspended or materially limited, or minimum and maximum prices for trading have
exchanges or by such system or by order of the Commission, FINRA or any other
governmental authority, or a material disruption has occurred in commercial
(ii) a general moratorium on commercial banking activities in New York declared
by either federal or New York state authorities; or (iii) any material adverse
change in the financial markets in the United States or in the international
financial markets, any outbreak or escalation of hostilities or other calamity
or crisis involving the United States or the declaration by the United States of
a national emergency or war or any change or development involving a prospective
change in national or international political, financial or economic conditions,
if the effect of any such event specified in this clause (iii) in the sole
judgment of the Agent makes it impracticable or inadvisable to proceed with the
sale of Shares of the Company.
14
(e) Comfort Letters. The independent registered public accounting firms who
have audited the financial statements included or incorporated by reference in
the Registration Statement shall have furnished to the Agent a letter required
to be delivered pursuant to Section 4.13 on or before the date on which
satisfaction of this condition is determined.
(f) Legal Opinions. The counsel specified in Section 4.13 shall have
furnished to the Agent their written opinions required to be delivered pursuant
to Section 4.13 on or before the date on which satisfaction of this condition is
determined. Counsel to the Agent shall have furnished to the Agent, upon
request, a written opinion with respect to such matters as the Agent may
reasonably request.
(g) Officers’ Certificate. The Company shall have furnished or caused
to be furnished to the Agent an officers’ certificate executed by the Chief
Executive Officer, the President or any Executive or Senior Vice President of
the Company and by the Chief Financial Officer of the Company, signing in such
respective capacities, required to be delivered pursuant to Section 4.13 on or
before the date on which satisfaction of this condition is determined.
(h) Other Documents. On the Effective Date and prior to each Issuance Date
and Settlement Date, the Agent and its counsel shall have been furnished with
such documents as they may reasonably request in order to evidence the accuracy
and completeness of any of the representations or warranties, or the fulfillment
of the conditions, herein contained; and all proceedings taken by the Company in
connection with the issuance and sale of the Shares as herein contemplated shall
be satisfactory in form and substance to the Agent and its counsel.
Section 5.02 Documents Required to be Delivered on each Issuance Date. The
Agent’s obligation to use its commercially reasonable efforts to place Shares
pursuant to an Issuance hereunder shall additionally be conditioned upon the
delivery to the Agent on or before the Issuance Date of a certificate in form
and substance reasonably satisfactory to the Agent, executed by the Chief
Executive Officer, the President or the Chief Financial Officer of the Company,
to the effect that all conditions to the delivery of such Issuance Notice shall
have been satisfied as at the date of such certificate (which certificate shall
not be required if the foregoing representations shall be set forth in the
Issuance Notice).
ARTICLE VI
INDEMNIFICATION AND CONTRIBUTION
Section 6.01 Indemnification of the Agent. The Company agrees to indemnify and
hold harmless the Agent, its officers and employees, and each person, if any,
who controls the Agent within the meaning of the Securities Act or the Exchange
Act against any loss, claim, damage, liability or expense, as incurred, to which
the Agent or such officer, employee or controlling person may become subject,
under the Securities Act, the Exchange Act, other federal or state statutory law
or regulation, or the laws or regulations of foreign jurisdictions where Shares
have been offered or sold or at common law or otherwise (including in settlement
of any litigation), insofar as such loss, claim, damage, liability or expense
(or actions in respect thereof as contemplated below) arises out of or is based
contained in the Registration Statement, or any amendment thereto, including any
information deemed to be a part thereof pursuant to Rule 430A under the
Securities Act, or the omission or alleged omission therefrom of a material fact
misleading; (ii) any untrue statement or alleged untrue statement of a material
fact contained in any free writing prospectus that the Company has used,
referred to or filed, or is required to file, pursuant to Rule 433(d) of the
Securities Act or the Prospectus (or any amendment or supplement thereto), or
the omission or alleged omission therefrom of a material fact necessary to make
made, not misleading; (iii) information or statements provided by the Company to
the media; or (iv) any act or failure to act or any alleged act or failure to
act by the Agent in connection with, or relating in any manner to, the Shares or
the offering contemplated hereby, and which is included as part of or referred
to in any loss, claim, damage, liability or action arising out of or based upon
any matter covered by clause (i), (ii) or (iii) above, provided that the Company
shall not be liable under this clause (iv) to the extent that a court of
competent jurisdiction shall have determined by a final and non-appealable
judgment that such loss, claim, damage, liability or action resulted directly
from any such acts or failures to act undertaken or omitted to be taken by the
Agent through its bad faith, willful misconduct or gross negligence; and to
reimburse the Agent and each such officer, employee and controlling person for
any and all expenses (including the fees and disbursements of counsel chosen by
the Agent) as such expenses are reasonably incurred by the Agent or such
officer, employee or controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action. The indemnity agreement set forth in this
Section 6.01 shall be in addition to any liabilities that the Company may
otherwise have.
Section 6.02 Notifications and Other Indemnification Procedures. Promptly after
receipt by an indemnified party under this Article VI of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party under this Article VI,
notify the indemnifying party in writing of the commencement thereof, but the
omission so to notify the indemnifying party will not relieve the indemnifying
party from any liability which it may have to any indemnified party for
contribution under Section 6.04 below or otherwise under the indemnity agreement
contained in this Article VI except to the extent such indemnifying party is
materially prejudiced as a result of such failure. In case any such action is
brought against any indemnified party and such indemnified party seeks or
intends to seek indemnity from an indemnifying party, the indemnifying party
will be entitled to participate in, and, to the extent that it shall elect,
jointly with all other indemnifying parties similarly notified, by written
notice delivered to the indemnified party promptly after receiving the aforesaid
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded,
based upon written advice of counsel, that a conflict may arise between the
positions of the indemnifying party and the indemnified party in conducting the
otherwise participate in the defense of such action on behalf of such
indemnified party or parties. Upon receipt of notice from the indemnifying
party to such indemnified party of such indemnifying party’s election so to
under this Article VI for any legal expenses subsequently incurred by such
proviso to the preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the fees and expenses of more than
one separate firm of attorneys (together with local counsel), representing the
indemnified parties who are parties to such action), which counsel (together
with any local counsel) for the indemnified parties shall be selected by the
Agent, (ii) the indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of commencement of the action, or (iii) the
indemnifying party authorizes the indemnified party in writing to employ
separate counsel at the indemnifying party’s expense, in each of which cases the
reasonable fees and expenses of counsel shall be at the expense of the
indemnifying party and shall be paid as they are incurred.
15
Section 6.03 Settlements. The indemnifying party under this Article VI shall
not be liable for any settlement of any proceeding effected without its written
consent (such consent not to be unreasonably withheld, delayed or conditioned),
but if settled with such consent or if there be a final judgment for the
plaintiff, the indemnifying party agrees to indemnify the indemnified party
against any loss, claim, damage, liability or expense by reason of such
settlement or judgment. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement, compromise or consent
to the entry of judgment in any pending or threatened action, suit or proceeding
in respect of which any indemnified party is or could have been a party and
indemnity was or could have been sought hereunder by such indemnified party,
unless such settlement, compromise or consent includes an unconditional release
of such indemnified party from all liability on claims that are the subject
matter of such action, suit or proceeding.
Section 6.04 Contribution. If the indemnification provided for in this Article
VI is for any reason held to be unavailable to or otherwise insufficient to hold
harmless an indemnified party in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then the indemnifying party shall
contribute to the aggregate amount paid or payable by such indemnified party, as
incurred, as a result of any losses, claims, damages, liabilities or expenses
referred to therein (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company, on the one hand, and the Agent, on
the other hand, from the offering contemplated hereby or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company, on the one
hand, and the Agent, on the other hand, in connection with the statements or
omissions that resulted in such losses, claims, damages, liabilities or
benefits received by the Company, on the one hand, and the Agent, on the other
hand, in connection with the offering of the Shares shall be deemed to be in the
Shares (before deducting expenses) received by the Company bear to the total
commissions received by the Agent. The relative fault of the Company, on the one
hand, and the Agent, on the other hand, shall be determined by reference to,
to information supplied by the Company, on the one hand, or the Agent, on the
other hand, and the parties’ relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in Section 6.02, any legal or other fees or
expenses reasonably incurred by such party in connection with investigating or
defending any action or claim. The provisions set forth in Section 6.02 with
respect to notice of commencement of any action shall apply if a claim for
contribution is to be made under this Section 6.04; provided, however, that no
additional notice shall be required with respect to any action for which notice
has been given under Section 6.02 for purposes of indemnification.
The Company and the Agent agree that it would not be just and equitable if
contribution pursuant to this Section 6.04 were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in this Section 6.04.
Notwithstanding the provisions of this Section 6.04, the Agent shall not be
required to contribute any amount in excess of the agent fees received by the
Agent in connection with the offering contemplated hereby. No person guilty of
guilty of such fraudulent misrepresentation. For purposes of this Section 6.04,
each officer and employee of the Agent and each person, if any, who controls the
Agent within the meaning of the Securities Act or the Exchange Act shall have
the same rights to contribution as the Agent, and each director of the Company,
person, if any, who controls the Company with the meaning of the Securities Act
and the Exchange Act shall have the same rights to contribution as the Company.
ARTICLE VII
TERMINATION & SURVIVAL
Section 7.01 Term. Subject to the provisions of this Article VII, the term of
this Agreement shall continue from the Effective Date until the end of the
Agency Period, unless earlier terminated by the parties to this Agreement
pursuant to this Article VI.
Section 7.02 Termination; Survival Following Termination. Either party may
terminate this Agreement prior to the end of the Agency Period by giving one
Trading Day’s written notice to the other party; provided that, (a) the Company
shall remain obligated hereunder in respect of sales of Shares effected prior to
the effectiveness of such termination pursuant to any then outstanding Issuance
Notices and shall remain obligated to pay any Selling Commissions to the Agent
and to reimburse the Agent for any expenses pursuant to Sections 2.02(f) and
2.03 and (b) Articles III, VI, VII and VIII shall survive termination of this
Agreement.
Section 7.03 Other Survival Provisions. In addition to the survival provision
of Section 6.02, the respective indemnities, agreements, representations,
warranties and other statements of the Company, of its officers set forth in or
made pursuant to this Agreement will remain in full force and effect, regardless
of any investigation made by or on behalf of the Agent or the Company or any of
its or their partners, officers or directors or any controlling person, as the
case may be, and, anything herein to the contrary notwithstanding, will survive
delivery of and payment for the Shares sold hereunder.
16
ARTICLE VIII
MISCELLANEOUS
Section 8.01 Press Releases and Disclosure. The Company may issue a press
release describing the material terms of the transactions contemplated hereby as
soon as practicable following the Effective Date, and may file with the
Commission a Current Report on Form 8-K, with this Agreement attached as an
exhibit thereto, describing the material terms of the transactions contemplated
hereby, and the Company shall consult with the Agent prior to making such
disclosures, and the parties hereto shall use all commercially reasonable
efforts, acting in good faith, to agree upon a text for such disclosures that is
reasonably satisfactory to all parties hereto. No party hereto shall issue
thereafter any press release or like public statement (including, without
limitation, any disclosure required in reports filed with the Commission
pursuant to the Exchange Act) related to this Agreement or any of the
transactions contemplated hereby without the prior written approval of the other
party hereto, except as may be necessary or appropriate in the reasonable
opinion of the party seeking to make disclosure to comply with the requirements
of applicable law or stock exchange rules. If any such press release or like
public statement is so required, the party making such disclosure shall consult
with the other party prior to making such disclosure, and the parties shall use
all commercially reasonable efforts, acting in good faith, to agree upon a text
for such disclosure that is reasonably satisfactory to all parties hereto.
Section 8.02 No Advisory or Fiduciary Relationship. The Company acknowledges
and agrees that (a) the transactions contemplated by this Agreement are an
arm’s-length commercial transactions, (b) in connection with the transactions
contemplated by this Agreement and the process leading to such transactions, the
Agent is and has been acting solely as a principal and is not the agent or
fiduciary of any of the Company, or its stockholders, creditors, employees or
any other party, (c) the Agent has not assumed nor will assume an advisory or
fiduciary responsibility in favor of the Company with respect to the
transactions contemplated by this Agreement or the process leading thereto
(irrespective of whether the Agent has advised or is currently advising the
Company on other matters) and the Agent shall not have any obligation to the
Company with respect to the transactions contemplated by this Agreement except
the obligations expressly set forth in this Agreement, (d) the Agent and its
interests that differ from those of the Company, and (e) the Agent has not
provided any legal, accounting, regulatory or tax advice with respect to the
transactions contemplated by this Agreement and the Company has consulted its
own legal, accounting, regulatory and tax advisors to the extent it deemed
appropriate. In addition, each of the parties hereto acknowledges that it is a
sophisticated business person who was adequately represented by counsel during
negotiations regarding the provisions hereof, including, without limitation, the
indemnification and contribution provisions of Article VI, and is fully informed
regarding said provisions, and that the provisions of Article VI hereto fairly
allocate the risks in light of the ability of the parties to investigate the
Company, its affairs and its business in order to assure that adequate
disclosure has been made in the Registration Statement and the Prospectus (and
any amendments and supplements thereto), as required by the Securities Act and
the Exchange Act.
Section 8.03 Research Analyst Independence. The Company acknowledges that the
Agent’s research analysts and research departments are required to and should be
independent from their respective investment banking divisions and are subject
to certain regulations and internal policies, and as such the Agent’s research
publish research reports with respect to the Company or the offering that differ
from the views of their respective investment banking divisions. The Company
understands that the Agent is a full service securities firm and as such from
time to time, subject to applicable securities laws, may effect transactions for
its own account or the account of its customers and hold long or short positions
in debt or equity securities of the companies that may be the subject of the
17
Section 8.04 Notices. All communications hereunder shall be in writing, shall
be effective upon actual receipt by the intended recipient and (except to the
extent other forms of delivery are specified in this Agreement) shall be mailed,
hand delivered or telecopied and confirmed to the parties hereto as follows:
Enclave Capital LLC
708 Third Avenue
19th Floor
Attn: Rory Rohan
Tel: (646) 454-8600
Facsimile: (646) 454-8699
For purposes of Section 2.02(a), the following persons are designated as those
individuals to whom Issuance Notices should be delivered pursuant to Section
2.02(a), with their email addresses and telephone numbers corresponding to their
names below:
Rory Rohan, rrohan@enclavecapital.com, (646) 454-8600
Steve Inglis, singlis@enclavecapital.com, (646) 454-8600
Robert Mazzeo, rmazzeo@enclavecapital.com, (646) 454-8600
Mazzeo Song & Bradham LLP
708 Third Avenue
Facsimile: (212) 599-8400
Attention: David Song, Esq
India Globalization Capital, Inc.
4336 Montgomery Ave
Bethesda, Maryland 20814
Facsimile: (240) 465-0273
Attention: Ram Mukunda
Seyfarth Shaw LLP
2 Seaport Lane
Boston, MA 02210
Facsimile: (617) 946-4801
Attention: Mark A. Katzoff, Esq
For purposes of Section 2.02(d), the following persons are designated as those
2.02(d), with their email addresses and telephone numbers corresponding to their
names below:
Ram Mukunda, ram@indiaglobalcap.com, (301) 983-0998
Seyfarth Shaw LLP
2 Seaport Lane
Boston, MA 02210
18
Any party hereto may change the address for receipt of communications by giving
written notice to the others in accordance with this Section 8.06.
Section 8.05 Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto, and to the benefit of the employees, officers
and directors and controlling persons referred to in Article VI, and in each
case their respective successors, and no other person will have any right or
obligation hereunder.
Section 8.06 Partial Unenforceability. The invalidity or unenforceability of
any Section, paragraph or provision of this Agreement shall not affect the
validity or enforceability of any other Section, paragraph or provision
hereof. If any Article, Section, paragraph or provision of this Agreement is
for any reason determined to be invalid or unenforceable, there shall be deemed
to be made such minor changes (and only such minor changes) as are necessary to
make it valid and enforceable.
Section 8.07 Governing Law Provisions. This Agreement shall be governed by and
applicable to agreements made and to be performed in such state. Any legal
transactions contemplated hereby (“Related Proceedings”) may be instituted in
the federal courts of the United States of America located in the Borough of
Manhattan in the City of New York or the courts of the State of New York in each
case located in the Borough of Manhattan in the City of New York (collectively,
the “Specified Courts”), and each party irrevocably submits to the exclusive
jurisdiction (except for proceedings instituted in regard to the enforcement of
a judgment of any such court (a “Related Judgment”), as to which such
jurisdiction is non-exclusive) of such courts in any such suit, action or
proceeding. Service of any process, summons, notice or document by mail to such
suit, action or other proceeding brought in any such court. The parties
irrevocably and unconditionally waive any objection to the laying of venue of
any suit, action or other proceeding in the Specified Courts and irrevocably and
unconditionally waive and agree not to plead or claim in any such court that any
such suit, action or other proceeding brought in any such court has been brought
in an inconvenient forum.
With respect to any Related Proceeding, each party irrevocably waives, to the
fullest extent permitted by applicable law, all immunity (whether on the basis
of sovereignty or otherwise) from jurisdiction, service of process, attachment
(both before and after judgment) and execution to which it might otherwise be
entitled in the Specified Courts, and with respect to any Related Judgment, each
party waives any such immunity in the Specified Courts or any other court of
competent jurisdiction, and will not raise or claim or cause to be pleaded any
such immunity at or in respect of any such Related Proceeding or Related
Judgment, including, without limitation, any immunity pursuant to the United
States Foreign Sovereign Immunities Act of 1976, as amended.
Section 8.08 General Provisions. This Agreement constitutes the entire
agreement of the parties to this Agreement and supersedes all prior written or
oral and all contemporaneous oral agreements, understandings and negotiations
with respect to the subject matter hereof. This Agreement may be executed in
two or more counterparts, each one of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument,
and may be delivered by facsimile transmission or by electronic delivery of a
portable document format (PDF) file. This Agreement may not be amended or
modified unless in writing by all of the parties hereto, and no condition herein
(express or implied) may be waived unless waived in writing by each party whom
the condition is meant to benefit. The Article and Section headings herein are
for the convenience of the parties only and shall not affect the construction or
by the undersigned, thereunto duly authorized, as of the date first set forth
above.
By:
Name:
Title:
ENCLAVE CAPITAL LLC
By:
Name:
Title:
19
EXHIBIT A
ISSUANCE NOTICE
[Date]
Enclave Capital LLC
Attn: [__________]
Reference is made to the ATM Agency Agreement between INDIA GLOBALIZATION
CAPITAL, INC. (the “Company”) and Enclave Capital LLC (the “Agent”) dated as of
October 13, 2009. The Company confirms that all conditions to the delivery of
this Issuance Notice are satisfied as of the date hereof.
Effective Date of Delivery of Issuance Notice (determined pursuant to
Section 2.02(a)): _______________________
Issuance Amount (equal to the total Sales Price for such Shares):
$
Number of Days in Selling Period:
First Date of Selling Period:
Last Date of Selling Period:
Settlement Date(s) if other than standard T+3 settlement
Floor Price Limitation (in no event less than $1.00 without the prior written
consent of the Agent, which consent may be withheld in the Agent’s sole
discretion): $ ____ per share
Comments:
By:
Name:
Title:
20
EXHIBIT B
Form of Opinion of _______________ counsel to the Company
References to the Prospectus in this Exhibit B include any amendments and
supplements thereto at the Effective Date.
(i) The Company is a corporation duly incorporated under the laws of the State
of Maryland and, to our knowledge, with corporate power and authority to own,
Prospectus and to enter into and perform its obligations under the Agreement.
(ii) The Company is validly existing and in good standing under the laws of the
State of Maryland and, to our Knowledge, is qualified to do business as a
foreign corporation and is in good standing in every jurisdiction in which such
qualification is required, except for such jurisdictions where the lack of
qualification would not result in a Material Adverse Change.
(iii) The form of certificate used to evidence the Shares is in due and proper
form and complies with all applicable requirements of the articles of
incorporation and by-laws of the Company and the Maryland General Corporation
Law.
(iv) No stockholder of the Company or any other person has any preemptive right
or right of first refusal to subscribe for or purchase securities of the Company
arising solely by operation of the articles of incorporation or by-laws of the
Company or the Maryland General Corporation Law.
(v) The Agreement has been duly authorized, executed and delivered by the
Company, and constitutes a legal, valid and binding obligation of the Company,
(vi) The Registration Statement has been declared effective by the Commission
under the Securities Act. To our knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued under the Securities
Act and no proceedings for such purpose have been instituted, are pending or, to
our knowledge, are contemplated or threatened by the Commission. The Prospectus
has been filed with the Commission pursuant to Rule 424(b) under the Securities
Act in the manner and within the time period required by such rule.
(vii) As of the date hereof, the Company is permitted to sell up to ________
shares of its common stock under the Registration Statement while still meeting
the eligibility requirements of Instruction I.B.6. of Form S-3.
(viii) Based on advice received from the NYSE Amex, the Shares have been
approved for listing on the NYSE Amex.
(ix) The statements in the Prospectus under the captions “Description of Common
Stock,” and “Securities We May Offer,” in each case insofar as such statements
purport to describe certain provisions of documents, instruments, agreements,
statutes, regulations or the subject legal proceedings referred to therein, are
accurate in all material respects.
(x) The company is not in violation of its articles of incorporation or by-laws,
except for such violation or Default as would not, individually or in the
aggregate, result in a Material Adverse Change.
(xi) To our knowledge, there are no legal or governmental actions, suits or
proceedings pending or threatened that are required to be disclosed in the
Registration Statement and are not so disclosed.
(xii) Other than as specifically described in the Registration Statement, there
are no persons with the right to have any securities registered for sale under
the Registration Statement.
(xiii) To our knowledge, (i) there are no Existing Instruments required to be
described or referred to in the Registration Statement or to be filed as
exhibits thereto other than those described or referred to therein, or filed or
incorporated by reference as exhibits thereto; (ii) the descriptions thereof and
references thereto are accurate in all material respects; and (iii) the Company
is not in Default under any Existing Instrument.
(xiv) No consent, approval, authorization or other order of, or registration or
filing with, any court or other governmental or regulatory authority or agency,
is required for the consummation of the transactions contemplated by the
Agreement, except such as have been obtained or made by the Company and are in
full force and effect under the Securities Act or applicable state securities
laws.
21
(xv) The Company is not, and after receipt of payment for the Shares will not
be, an “investment company” within the meaning of the Investment Company Act
(xvi) Each document filed pursuant to the Exchange Act (other than the financial
statements and financial schedules and other financial data included therein, as
to which we express no opinion) and incorporated or deemed to be incorporated by
reference in the Prospectus complied when so filed as to form in all material
respects with the Exchange Act.
(xvii) The execution and delivery of the Agreement by the Company, the
performance by the Company of its obligations thereunder (other than performance
by the Company of its obligations under the indemnification section of the
Agreement, as to which we render no opinion) and the issuance and sale of the
Shares (i) will not constitute a breach of, or Default or a Debt Repayment
Triggering Event under, or result in the creation or imposition of any lien,
Subsidiaries pursuant to any material Existing Instrument; and (ii) will not
result in any violation of New York State or U.S. federal law or, to our
knowledge, any administrative regulation or administrative or court decree,
applicable to the Company.
(xviii) To our knowledge, no shareholder of the Company or any other person has
any preemptive right or right of first refusal to subscribe for or purchase
In addition to the opinions expressed above, we hereby inform you that (A) the
Registration Statement and the Prospectus (except for the financial statements,
financial schedules and other financial data included therein, as to which we
express no view) appear on their face to be appropriately responsive in all
material respects to the requirements of the Securities Act, and (B) nothing has
come to our attention that causes us to believe that (i) the Registration
Statement (except for the financial statements, financial schedules and other
financial data included therein, as to which we express no view), at the time
the Registration Statement became effective, contained any untrue statement of a
or necessary to make the statements therein not misleading, (ii) the Base
Prospectus (except for the financial statements, financial schedules and other
financial data included therein, as to which we express no view), as of the date
on which it was filed, contained any untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements
misleading, (iii) the Prospectus (except for the financial statements, financial
schedules and other financial data included therein, as to which we express no
view), as of its date, contained or (as amended or supplemented, if applicable,
as of the Effective Date) contains any untrue statement of a material fact or
omitted or (as amended or supplemented, if applicable, as of the Effective Date)
misleading., or (iv) the Prospectus together with any free writing prospectus
and any pricing information (the “Time of Sale Information”) (except for the
financial statements, financial schedules and other financial data included
therein, as to which we express no view), as of the Issuance Date, contained any
22
EXHIBIT C
[Form of Comfort Letters]
We have audited the consolidated balance sheets of India Globalization Capital,
Inc. (the “Company”) and subsidiaries as of March 31, 2009 and 2008, and the
consolidated statements of operations, stockholders’ equity (deficit), and cash
flows for each of the two years in the period ended March 31, 2009 and 2008,
respectively, included in the company’s annual report on Form 10-K for the year
ended March 31, 2009 (the “Consolidated Financial Statements”), and incorporated
by reference in the Registration Statement (No. [ ]) on Form S-3, as
amended, the related prospectus dated [ ] and the related
prospectus supplement dated October [13], 2009 (collectively, the “Registration
Statement”) filed by the Company under the Securities Act of 1933, as amended
(the “Act”).
In connection with the Registration Statement:
We are independent certified public accountants with respect to the
Company within the meaning of the Act and the applicable rules and regulations
thereunder and pursuant to guidelines prescribed by the Public Company
Accounting Oversight Board (the “PCAOB”) adopted by the Securities and Exchange
Commission (the “SEC”).
In our opinion, the Consolidated Financial Statements audited by us and
incorporated by reference in the Registration Statement comply as to form in all
material respects with the applicable accounting requirements of the Act and the
related rules and regulations thereunder adopted by the SEC.
We have not audited any financial statements of the Company as of any date or
for any period subsequent to March 31, 2009; although we have conducted an audit
for the year ended March 31, 2009, the purpose (and therefore the scope) of
which was to enable us to express our opinion on the Consolidated Financial
Statements as of March 31, 2009, and for the year then ended, but not on the
financial statements for any interim period within that year.
For purposes of this letter, we have read the minutes of meetings of the Board
of Directors (including Audit, Compensation, and Nominating and Corporate
Governance Committees) of, and of the Company and its subsidiaries since March
31, 2009, as set forth in the respective minute books at ________, 2009
officials of the company having advised us that the minutes of all such meetings
through that date were set forth therein; we have also carried out other
procedures to _________, 2009, as follows (our work did not extend to the period
from ___________, 2009 to ___________, 2009, inclusive).
With respect to the three month periods ended June 30, 2009 and September 30,
2009,
(i) we have performed the procedures specified by the PCAOB for a review of
interim financial information as described in Statement of Accounting Standards
No. 100, Interim Financial Information, on the unaudited consolidated financial
statements for the periods then ended; and
(ii) we have inquired of certain officials of the Company who have
responsibility for financial and accounting matters whether the unaudited
consolidated financial statements for the periods then ended comply as to form
in all material respects with the applicable accounting requirements of the Act
and the related rules and regulations of the SEC.
The foregoing procedures do not constitute an audit conducted in accordance with
the standards of the PCAOB and would not necessarily reveal matters of
significance. Accordingly, we make no representation about the sufficiency of
such procedures for your purposes.
We have inquired of certain officials of the Company who have responsibility
for financial and accounting matters regarding whether, at October __, 2009,
there was any change in the capital stock, increase in long-term debt or any
decreases in consolidated net current assets or stockholders’ equity of the
consolidated companies as compared with amounts shown on the March 31, 2009,
audited consolidated balance sheet included in the Form 10-K which is
incorporated by reference in the Registration Statement or (b) for the period
from March 31, 2009 to October __, 2009, there were any decreases, as compared
with the corresponding period in the preceding year, in consolidated net sales
or in the total or per-share amounts of income before extraordinary items or of
net income. On the basis of these inquiries and our reading of the minutes as
described in paragraph 4 above, nothing came to our attention that caused us to
believe that there was any such change, increase, or decrease, except in all
instances for changes, increases, or decreases that the Form 10-K which is
incorporated by reference in the Registration Statement discloses have occurred
or may occur.
Our audit of the Consolidated Financial Statements for the periods referred to
in the introductory paragraph of this letter comprised audit tests and
procedures deemed necessary for the purpose of expressing an opinion on such
financial statements taken as a whole. For none of the periods referred to
therein, nor for any other period, did we perform audit tests for the purpose of
expressing an opinion on individual balances of accounts or summaries of
selected transactions such as those enumerated above, and, accordingly, we
express no opinion thereon.
It should be understood that we make no representations regarding questions of
legal interpretation and make no representations regarding the adequacy of
disclosure in the Form 10-K which is incorporated by reference in the
Registration Statement and or regarding whether any material facts have been
omitted therefrom.
This letter is solely for the information of the addressees to assist in
conducting and documenting their investigation of the affairs of India
Globalization Capital, Inc. in connection with the offering of the securities
covered by the Registration Statement, and it is not to be used, circulated,
quoted, or otherwise referred to within or without the placement group for any
other purpose, including but not limited to the registration, purchase, or sale
of securities, nor is it to be filed with or referred to in whole or in part in
the Registration Statement or any other document, except that reference may be
made to it in the placement agency agreement or in any list of closing documents
pertaining to the offering of the securities covered by the Registration
Statement.
23
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John L. Reizian Assistant Vice President and Associate General Counsel Lincoln Life & Annuity Company of New York 350 Church Street Hartford, Connecticut 06103-1106 Telephone: (860) 466-1539 Facsimile:(860) 466-2550 John.Reizian@lfg.com October 14, 2016 U. S. Securities and Exchange Commission treet, N. E. Washington, D.C. 20549-0506 Re:LLANY Separate Account R for Flexible Premium Variable Life Insurance (the “Account”) Lincoln Life & Annuity Company of New York File No. 333-141768; 811-08651; CIK: 0001055225 Post-Effective Amendment No. 15, Form N-6, Rule 485(b) Dear Sir or Madam: As Assistant Vice President and Associate General Counsel of Lincoln Life & Annuity Company of New York (“LLANY”), I am familiar with the actions of the Board of Directors of LLANY, establishing the Account and its method of operation and authorizing the filing of a Registration Statement under the Securities Act of 1933, (and amendments thereto) for the securities to be issued by the Account and the Investment Company Act of 1940 for the Account itself. In the course of preparing this opinion, I have reviewed the Charter and the By-Laws of the Company, the Board actions with respect to the Account, and such other matters as I deemed necessary or appropriate.Based on such review, I am of the opinion that the variable life insurance policies (and interests therein) which are the subject of the Registration Statement under the Securities Act of 1933, as amended, for the Account will, when issued, be legally issued and will represent binding obligations of the Company, the depositor for the Account. I further consent to the use of this opinion as an Exhibit to said Post-Effective Amendment No. 15 to theRegistration Statement and to the reference to me under the heading “Experts” in said Registration Statement, as amended. Sincerely, /s/ John L. Reizian John L. Reizian Assistant Vice President and Associate General Counsel
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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):March 28, 2012 WNC Housing Tax Credit FundVI, L.P., Series 5 (Exact name of registrant as specified in its charter) California 0-24855 33-0745418 (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 17782 Sky Park Circle, Irvine, CA92614 (Address of principal executive offices)(Zip Code) Registrant's telephone number, including area code: (714) 662-5565 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 (see General Instruction A.2. below): [] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02Results of Operations and Financial Condition. The registrant mailed a letter dated March 28, 2012 to its limited partners which provides certain summary and updated information concerning the registrant’s operations. A copy of the letter is attached to this report as Exhibit 20.1. The letter attached to this report as Exhibit 20.1 contains forward-looking statements. All statements other than statements of historical fact may be forward-looking statements. These include statements regarding the registrant's future financial results, operating results, business strategies, projected costs and capital expenditures, products, competitive positions, and plans and objectives of management for future operations. Forward-looking statements may be identified by the use of words such as "may," "will," "should," "expect," "plan," "anticipate," "believe," "estimate," "predict," "intend" and "continue," or the negative of these terms, and include the assumptions that underlie such statements. The registrant's actual results could differ materially from those expressed or implied in these forward-looking statements as a result of various risks and uncertainties, including those set forth in the registrant's annual report on Form 10-K for the year ended March 31, 2011 under Item 1A, "Risk Factors." All forward-looking statements in the letter attached to this report are based on information available to the registrant as of the date hereof and the registrant assumes no obligation to update any such statements. Item 9.01.Financial Statements and Exhibits (d) Exhibits Exhibit 20.1Letter to Shareholders dated March 28, 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. Dated:March 28, 2012 WNC Housing Tax Credit FundVI, L.P., Series 5 By:/s/ MELANIE WENK Name:Melanie Wenk Title:Vice President – Chief Financial Officer of WNC & Associates, Inc.,General Partner of registrant
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EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as of the 20th day
of March, 2008 (the “Effective Date”), by and between Global Clean Energy
Holdings, Inc., a Utah corporation (the “Company”), and Bruce K. Nelson
(hereinafter, “Executive,” and collectively with the Company, the “Parties”).
WHEREAS, Executive has expertise in the financial management of public
companies.
WHEREAS, the Company desires to employ Executive, and Executive desires to
accept such employment with the Company.
WHEREAS, the Company and Executive agree to a ninety (90) day initial probation
period.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth,
the parties hereto agree as follows:
ARTICLE I
EMPLOYMENT; TERM; DUTIES
1.1 Employment. Pursuant to the terms and conditions hereinafter set forth, the
Company hereby employs Executive, and Executive hereby accepts such employment.
Until March 30, 2008, Executive shall be employed as an employee to provide
accounting and financial planning and analysis services. Effective April 1,
2008, Executive shall be appointed as the Executive Vice President and Chief
Financial Officer (“CFO”) of the Company and shall thereafter provide all
services set forth herein.
1.2 Term. Unless otherwise terminated earlier in accordance with the provisions
of this Agreement, Executive’s employment with the Company shall commence on the
Effective Date, and shall continue for a period of two (2) consecutive one-year
terms from the Effective Date (the foregoing two-year period is herein referred
to as the “Initial Employment Term”). Upon expiration of the Initial Employment
Term, the Term shall automatically renew for successive one-year periods every
year thereafter (“Successive Terms”) on the same terms and conditions set forth
herein unless either Party provides the other with written notice of its
intention not to renew the Term at least sixty (60) days prior to the end of the
then-current term. Notwithstanding the foregoing, either Party may terminate
this Agreement for any reason or no reason, without liability to the other,
effective on the first anniversary of this Agreement by giving the other Party
written notice no less than 30 days prior to the first anniversary.
1.3 Probation Period. The Company and Executive agree to an initial ninety (90)
day probation period, beginning on the Effective day. At any time during and up
to the end of the ninetieth (90th) day following the Effective Date, either
Executive or the Company may terminate this Agreement without any cause or
reason and the entire Agreement will be null and void. If this Agreement is
terminated by either Party during the initial ninety (90) day probation period,
Executive will have no on-going obligation to the Company and the Company will
have no on-going obligation to Executive, and all Initial and Incentive Stock
Options (as defined below) will be cancelled.
1.4 Duties and Responsibilities. Executive, as CFO, shall perform such duties
and functions as are customarily performed by a CFO of a public corporation the
size and nature of the Company, including SEC reporting, financial planning,
budgeting, treasury, accounting and reporting activities, assisting in
acquisition efforts (including involvement in the due diligence process and
negotiations), integration of acquired companies, involvement in strategic
decision making and business plan execution, assisting in the management of
personnel and oversight of certain technology and systems development, and such
other duties and functions from time to time assigned to him by the Company’s
Chief Executive Officer that are consistent with such title and position. In
addition, Executive agrees to serve, if requested by the Company’s Board of
Directors (the “Board”), as an officer of any other direct or indirect
subsidiary of the Company, at no additional compensation. However, Executive
will only be required to serve as an officer of any direct or indirect
subsidiary of the Company if (i) Executive will be indemnified by the Company
and (ii) director’s and officers’ liability insurance, in an amount deemed
adequate by Executive, is available to cover Executive’s services for that
entity.
1
1.5 Exclusive Employment. Executive agrees to devote the necessary amount of
Executive’s business time, energy and efforts to the business of the Company
(and its subsidiaries if and when directed by the Board), and to use Executive’s
best efforts and abilities faithfully and diligently to promote the business
interests of the Company (and its subsidiaries if and when directed by the
Board).
1.6 Other Obligations. The Company and Executive acknowledge that Executive is
currently a Director of several other businesses, including M-Wave, Inc.,
MetroPacific Bank and Newport Bay Hospital (the “Other Positions”). Executive
represents that his obligations to the Other Positions will not impinge on or
conflict with his duties and obligations to Company under this Employment
Agreement.
1.7 Indemnification and Insurance. The Company agrees to indemnify the
Executive and maintain directors’ and officers’ liability insurance covering
Executive for services rendered to the Company (and its subsidiaries if and when
directed by the Board) covering the period that Executive is an officer of the
Company. Executive will be indemnified and will be covered by the Company’s
officer and director liability insurance policies to the same extent, and in the
same amounts, as the CEO.
1.8 Covenants of Executive
1.8.1 Best Efforts. Executive shall report directly to the Chief Executive
Officer and will have a direct reporting responsibility to the Board for certain
functions requested by the Board. Executive shall devote his best efforts to the
business and affairs of the Company (and its subsidiaries if and when directed
by the Board). Executive shall perform his duties, responsibilities and
functions to the Company hereunder to the best of his abilities in a diligent,
trustworthy, professional and efficient manner and shall comply, in all material
respects, with all rules, regulations of the Company (and special instructions
of the Board, if any) and all other rules, regulations, guides, handbooks,
procedures and policies applicable to the Company and its business in connection
with his duties hereunder.
1.8.2 Records. Executive shall use his best efforts and skills to truthfully,
accurately, and promptly prepare, maintain, and preserve all records and reports
that the Company may, from time to time, request or require, fully account for
all money, records, equipment, materials, or other property belonging to the
Company of which he may have custody, and promptly pay and deliver the same
whenever he may be directed to do so by the Chief Executive Officer or the
Board.
1.8.3 Compliance. Executive shall use his best efforts to maintain the
Company’s compliance with all SEC rules, regulations and reporting requirements
for publicly traded companies, including, without limitation, overseeing, and
preparing and filing with the SEC all periodic reports the Company is required
to file under the Act and the Exchange Act of 1934 (as amended, the “Exchange
Act”). Executive shall at all times comply, and cause the Company to comply,
with the then-current good corporate governance standards and practices as
prescribed by the SEC, any exchange on which the Company’s capital stock or
other securities may be traded and any other applicable governmental entity,
agency or organization.
2
1.8.4 Code of Conduct. For such period as when Executive is employed hereunder,
Executive shall at all times conduct himself with the highest ethical standards,
and shall at all times adhere to Code of Conduct attached hereto as Exhibit A or
such other code of ethics that the Company may, from time to time, adopt.
1.8.5 Opportunities. Executive shall make available to the Company and present
to the Board all business opportunities of which he becomes aware, which are
relevant to the business of the Company (and its subsidiaries), and to no other
person or entity or to himself individually.
ARTICLE II
COMPENSATION AND OTHER BENEFITS
2.1 Base Salary. For the duration of the Term, for all services rendered by
Executive hereunder and all covenants and conditions undertaken by the Parties
pursuant to this Agreement, the Company shall pay, and Executive shall accept,
as compensation, an annual base salary (“Base Salary”) of $175,000. The Base
Salary shall be payable in regular installments in accordance with the normal
payroll practices of the Company, in effect from time to time, but in any event
no less frequently than on a monthly basis. Beginning on the first anniversary
of the commencement of Executive’s employment with the Company, and on each
anniversary thereafter during the Term, the Base Salary shall be increased by
the amount of the Consumer Price Index (“CPI”), for the immediately prior
12-month period, as published in the Wall Street Journal.
2.2 Bonus Compensation. For each year during the Term, Executive will be
eligible to earn an annual bonus (the “Bonus”), which Bonus shall be based on
Executive’s achievement of certain performance criteria established by the
Compensation Committee of the Board (“Compensation Committee”) and provided to
Executive as soon as practicable following the commencement of each such year.
The target amount, and maximum amount, of the Bonus for any given employment
year, assuming that all of the target milestones are met, shall be an amount
equal to one hundred percent (100%) of the Base Salary in effect for the
applicable year. In connection with the award of any Bonus pursuant to this
Section 2.2, Executive’s performance will be reviewed by the Compensation
Committee on no less than an annual basis. Notwithstanding anything herein to
the contrary, the Parties hereby acknowledge and agree that the Compensation
Committee shall, in accordance with NASDAQ rules and regulations for publicly
traded companies, comprise independent directors of the Board only. In the event
that the Company has not established a Compensation Committee, the independent
directors of the Board shall establish the annual target amount of any Bonus to
be awarded hereunder and shall determine whether the target milestones have been
satisfied.
2.3 Initial Options. Concurrently with the execution of this Agreement, the
Company shall grant Executive an option (the “Initial Option”) to purchase
2,000,000 shares of the Company’s common stock at an exercise price equal to the
fair market price of the Company’s common stock on the Effective Date. The
Initial Option shall vest according to the schedule set forth below, and will
expire ten (10) years after the date of grant. If Executive is still employed by
the Company under this Agreement on the following dates, options for the
purchase of 500,000 shares (25% of the Initial Options, as appropriately
adjusted for stock splits, stock dividends, etc) shall vest and become
exercisable:
2.3.1 Upon the expiration of the ninety (90) day initial probation period, and;
3
2.3.2 Nine (9) months after the Effective Date, and;
2.3.3 Fifteen (15) months after the Effective Date, and;
2.3.4 At the end of the Initial Employment Term.
2.4 Incentive Option. Concurrently with the execution of this Agreement, the
Company shall grant Executive an option (the “Incentive Option”) to purchase
2,500,000 shares of the Company’s common stock at an exercise price equal to the
fair market price of the Company’s common stock on the Effective Date. Executive
must be an Employee of the Company at the time of the Market Capitalization
event which will allow for vesting. The Incentive Option shall vest according to
the schedule set forth below, and will expire five (5) years after the Effective
Date:
2.4.1 When the Company’s Market Capitalization reaches $75 million, the
Incentive Option shall vest with respect to 1,250,000 shares (such shares, the
“First Tranche”) of the Company’s common stock subject thereunder; and
2.4.2 When the Company’s Market Capitalization reaches or exceeds $120 million,
the Incentive Option shall vest with respect to the remaining 1,250,000 (such
shares, the “Second Tranche”) shares of the Company’s common stock subject
thereunder.
For purposes of the Agreement, the term “Market Capitalization” shall mean the
product of the number of shares of common stock issued and outstanding at the
time Market Capitalization is calculated, multiplied by the average closing
price of the common stock for the thirty (30) consecutive trading days prior to
the date of calculation of Market Capitalization as reported on the principal
securities trading system on which the Company’s common stock is then listed for
trading, including the Pink Sheets, the NASDAQ Stock Market, the OTC Bulletin
Board, or any other applicable stock exchange.
2.5 Business Expenses. During the Initial Term and all Successive Terms
thereafter, the Company shall reimburse Executive for all reasonable,
out-of-pocket business expenses incurred in the performance of his duties
hereunder consistent with the Company’s policies and procedures, in effect from
time to time, with respect to travel, entertainment and other business expenses
customarily reimbursed to senior executives of the Company in connection with
the performance of their duties on behalf of the Company. Such reimbursement
shall be made by Company to Executive no later than fifteen (15) days after
submission of written expense reports by Executive to Company.
2.6 Other Benefits. During the term of Executive’s employment with the Company,
Executive shall be entitled to the following benefits:
2.6.1 Executive shall be entitled to participate in the Company’s employee
stock option plan, life, health, accident, disability insurance plans, pension
plans and retirement plans, in effect from time to time, to the extent and on
such terms and conditions as the Company customarily makes such plans available
to its senior executives; and
2.6.2 Executive shall be entitled to receive coverage for services rendered to
the Company (and its subsidiaries if and when directed by the Board) while
Executive is a director or officer of the Company under any director and officer
liability insurance policy(s) maintained by the Company from time to time; and
4
2.6.3 Company shall pay on behalf of Executive the full cost of Executive’s and
Executive’s family health insurance plan. Until a Company plan is established,
or a replacement plan is put in place, the Company shall pay towards Executive’s
policy premium up to $1,000.00 per month.
2.7 Vacation. Executive shall be entitled to two weeks vacation time with full
pay in his first year of employment and four (4) weeks vacation time for every
calendar year thereafter, with full pay.
2.8 Withholding. The Company may deduct from any compensation payable to
Executive (including payments made pursuant to this Article II or in connection
with the termination of employment pursuant to Article III of this Agreement)
amounts sufficient to cover Executive’s share of applicable federal, state
and/or local income tax withholding, social security payments, state disability
and other insurance premiums and payments.
ARTICLE III
TERMINATION OF EMPLOYMENT
3.1 Termination of Employment
Executive’s employment pursuant to this Agreement shall terminate on the
earliest to occur of the following:
3.1.1 upon the death of Executive;
3.1.2 upon the delivery to Executive of written notice of termination by the
Company if Executive shall suffer a physical or mental disability which renders
Executive, in the reasonable judgment of the Board, unable to perform his duties
and obligations under this Agreement for either 90 consecutive days or 180 days
in any 12-month period; or
3.1.3 upon the expiration of the Initial Term (or, if the Initial Term has been
extended, upon the expiration of the then-current Successive Term); or
3.1.4 upon delivery to Executive of written notice of termination by the
Company for Cause; or
3.1.5 upon delivery of written notice from Executive to the Company for Good
Reason.
3.2 Certain Definitions. For purposes of this Agreement, the following terms
3.2.1 In connection with Paragraph 3.1 herein, “Cause” shall mean any of the
following:
(a) Executive materially breaches any obligation, duty, or covenant under this
Agreement, which breach is not cured or corrected within thirty (30) days of
receipt by Executive of written notice thereof from the Company (except for
breaches of Article IV of this Agreement, which cannot be cured and for which
the Company need not give any opportunity to cure); or
5
(b) Executive commits any act of misappropriation of funds or embezzlement; or
(c) Executive commits any act of fraud; or
(d) Executive is convicted of, or pleads guilty or nolo contendere to any
charge of theft, fraud, a crime involving moral turpitude, or a felony under
federal or state law; or
(e) Executive breaches the Company’s Code of Conduct attached hereto as Exhibit
A or code of ethics as in effect from time to time.
3.2.2 In connection with Paragraph 3.1 herein, “Good Reason” shall mean: (a)
without Executive’s consent, the Company changes Executive’s position or duties
to such an extent that his duties are no longer consistent with the positions of
CFO of the Company, or (b) Company materially breaches any term of this
Agreement which breach continues uncured following thirty (30) days written
notice by Executive to the Company of such breach.
3.2.3 “Termination Date” shall mean the date on which Executive’s employment
with the Company hereunder is terminated.
3.3 Effect of Termination
3.3.1 If Executive’s employment is terminated by Executive for Good Reason or
by Company other than for Cause, Executive shall be entitled to the following
(the “Severance Payments”):
(a) If the Company terminates the Employment of Executive pursuant to Section
1.2 effective on the first anniversary of this Agreement, the Employee will
receive three (3) additional months salary following the date of his
termination; or
(b) If the Company terminates Executive before the first anniversary date of
this Agreement (other than pursuant to Section 1.2 on the first anniversary of
this Agreement), (i) the Company shall, on date of termination, pay Executive an
amount equal to his unpaid salary through the first anniversary of this
Agreement, plus fifty percent (50%) of the target Bonus in effect on the
Termination Date, and (ii) fifty percent (50%) of the Incentive Options granted
to Executive pursuant to Section 2.3 shall vest; or
(c) If employment is terminated after the first anniversary, then Executive
shall be paid an amount equal to the salary he would have received through the
end of the Term, and all Initial Options granted under Section 2.3 shall fully
vest, to the extent not already vested.
At such time when Executive’s employment with the Company is terminated, and as
a condition to Executive’s right to receive any benefits pursuant to this
Section 3.3.1, Executive shall execute and deliver to the Company a written
release in a form mutually acceptable to the Company and Executive.
3.3.2 Notwithstanding the reason for termination of Executive’s employment,
(a) all benefits payable under applicable benefit plans in which Executive is
entitled to participate pursuant to Section 2.5 hereof through the Termination
Date, subject to and in accordance with the terms of such plans; and
6
(b) any accrued but unused vacation earned by Executive through the Termination
Date pursuant to Section 2.6 hereof, paid out in accordance with legal
requirements; and
(c) reimbursement for any business expenses incurred by Executive prior to
Termination Date in accordance with Section 2.4 of this Agreement.
If Executive’s employment is terminated for death, disability, by Executive
other than for Good Reason or by the Company for Cause, Executive shall be
entitled to no severance or other post-employment benefits (including, without
limitation, the Severance Payments) except as provided in Section 3.3.2 of this
Agreement.
3.3.3 Executive hereby acknowledges that in the event of termination of his
employment for any reason, Executive shall not be entitled to any severance,
payment or other compensation from the Company except as specifically provided
in this Section 3.3.
ARTICLE IV
INVENTIONS; CONFIDENTIAL/TRADE SECRET INFORMATION AND RESTRICTIVE COVENANTS
4.1 Inventions. All processes, technologies and inventions relating to the
business of the Company (and its subsidiaries) (collectively, “Inventions”),
including new contributions, improvements, ideas, discoveries, trademarks and
trade names, conceived, developed, invented, made or found by Executive, alone
or with others, during his employment by the Company, whether or not patentable
and whether or not conceived, developed, invented, made or found on the
Company’s time or with the use of the Company’s facilities or materials, shall
be the property of the Company and shall be promptly and fully disclosed by
Executive to the Company. Executive shall perform all necessary acts (including,
without limitation, executing and delivering any confirmatory assignments,
documents or instruments requested by the Company) to assign or otherwise to
vest title to any such Inventions in the Company and to enable the Company, at
its sole expense, to secure and maintain domestic and/or foreign patents or any
other rights for such Inventions.
4.2 Confidential/Trade Secret Information/Non-Disclosure.
4.2.1 Confidential/Trade Secret Information Defined. During the course of
Executive’s employment, Executive will have access to various Confidential/Trade
Secret Information of the Company and information developed for the Company
(including information developed by Mobius in its capacity as a consultant to
the Company). For purposes of this Agreement, the term “Confidential/Trade
Secret Information” is information that is not generally known to the public
and, as a result, is of economic benefit to the Company in the conduct of its
business, and the business of the Company’s subsidiaries. Executive and the
Company agree that the term “Confidential/Trade Secret Information” includes but
is not limited to all information developed or obtained by the Company,
including its affiliates, and predecessors, and comprising the following items,
whether or not such items have been reduced to tangible form (e.g., physical
writing, computer hard drive, disk, tape, etc.): all methods, techniques,
processes, ideas, research and development, product designs, engineering
designs, plans, models, production plans, business plans, add-on features, trade
names, service marks, slogans, forms, pricing structures, menus, business forms,
marketing programs and plans, layouts and designs, financial structures,
operational methods and tactics, cost information, the identity of and/or
contractual arrangements with suppliers and/or vendors, accounting procedures,
and any document, record or other information of the Company relating to the
above. Confidential/Trade Secret Information includes not only information
directly belonging to the Company which existed before the date of this
Agreement, but also information developed by Executive for the Company,
including its subsidiaries, affiliates and predecessors, during the term of
Executive’s employment with the Company. Confidential/Trade Secret Information
does not include any information which (a) was in the lawful and unrestricted
possession of Executive prior to its disclosure to Executive by the Company, its
subsidiaries, affiliates or predecessors, (b) is or becomes generally available
to the public by lawful acts other than those of Executive after receiving it,
or (c) has been received lawfully and in good faith by Executive from a third
party who is not and has never been an executive of the Company, its
subsidiaries, affiliates or predecessors, and who did not derive it from the
Company, its subsidiaries, affiliates or predecessors.
7
4.2.2 Restriction on Use of Confidential/Trade Secret Information. Executive
agrees that his use of Confidential/Trade Secret Information is subject to the
following restrictions for an indefinite period of time so long as the
Confidential/Trade Secret Information has not become generally known to the
public:
(a) Non-Disclosure. Executive agrees that he will not publish or disclose, or
allow to be published or disclosed, Confidential/Trade Secret Information to any
person without the prior written authorization of the Company unless pursuant to
or in connection with Executive’s job duties to the Company under this
Agreement.
(b) Non-Removal/Surrender. Executive agrees that he will not remove any
Confidential/Trade Secret Information from the offices of the Company or the
premises of any facility in which the Company is performing services, except
pursuant to his duties under this Agreement. Executive further agrees that he
shall surrender to the Company all documents and materials in his possession or
control which contain Confidential/Trade Secret Information and which are the
property of the Company upon the termination of this Agreement, and that he
shall not thereafter retain any copies of any such materials.
4.2.3 Prohibition Against Unfair Competition/ Non-Solicitation of Customers.
Executive agrees that at no time after his employment with the Company will he
engage in competition with the Company while making any use of the
Confidential/Trade Secret Information, or otherwise exploit or make use of the
Confidential/Trade Secret Information. Executive agrees that during the twelve
month period following the Termination Date, he will not directly or indirectly
accept or solicit, in any capacity, the business of any customer of the Company
with whom Executive worked or otherwise had access to the Confidential/Trade
Secret Information pertaining to the Company’s business with such customer
during the last year of Executive’s employment with the Company, or solicit,
directly or indirectly, or encourage any of the Company’s customers or suppliers
to terminate their business relationship with the Company, or otherwise
interfere with such business relationships.
4.3 Non-Solicitation of Employees. Employee agrees that during the twelve month
period following the Termination Date, he shall not, directly or indirectly,
solicit, directly or indirectly, or otherwise encourage any employees of the
Company to leave the employ of the Company, or solicit, directly or indirectly,
any of the Company’s employees for employment.
4.4 Non-Solicitation During Employment. During his employment with the Company,
Executive shall not: (a) interfere with the Company’s business relationship with
its customers or suppliers, (b) solicit, directly or indirectly, or otherwise
encourage any of the Company’s customers or suppliers to terminate their
business relationship with the Company, or (c) solicit, directly or indirectly,
or otherwise encourage any employees of the Company to leave the employ of the
Company, or solicit any of the Company’s employees for employment.
8
4.5 Conflict of Interest. During Executive’s employment with the Company,
Executive must not engage in any work, paid or unpaid, that creates an actual
conflict of interest with the Company.
4.6 Breach of Provisions. If Executive breaches any of the provisions of this
Article IV, or in the event that any such breach is threatened by Executive, in
addition to and without limiting or waiving any other remedies available to the
Company at law or in equity, the Company shall be entitled to immediate
injunctive relief in any court, domestic or foreign, having the capacity to
grant such relief, to restrain any such breach or threatened breach and to
enforce the provisions of this Article IV.
4.7 Reasonable Restrictions. The Parties acknowledge that the foregoing
restrictions, as well as the duration and the territorial scope thereof as set
forth in this Article IV, are under all of the circumstances reasonable and
necessary for the protection of the Company and its business.
4.8 Special Definition. For purposes of this Article IV, the term “Company”
shall be deemed to include any subsidiary of the Company.
ARTICLE V
MISCELLANEOUS
5.1 Binding Effect; Assignment. This Agreement shall be binding upon and inure
to the benefit of the Parties and their respective legal representatives, heirs,
distributees, successors and assigns. Executive may not assign any of his rights
and obligations under this Agreement. The Company may assign its rights and
obligations under this Agreement to any successor entity.
5.2 Notices. Any notice provided for herein shall be in writing and shall be
deemed to have been given or made (a) when personally delivered or (b) when sent
by telecopier and confirmed within 48 hours by letter mailed or delivered to the
party to be notified at its or his/hers address set forth herein; or three (3)
days after being sent by registered or certified mail, return receipt requested,
(or by equivalent currier with delivery documentation such as FEDEX or UPS) to
the address of the other party set forth or to such other address as may be
specified by notice given in accordance with this section 5.2:
Global Clean Energy Holdings, Inc.
6033 W. Century Blvd, Suite 1090
Los Angeles, CA 90045
Phone: 310-378-8529
Fax: 310-378-7620
Troy & Gould
1801 Century Park East, 26th Floor
Attention: Istvan Benko, Esq.
Telecopy No.: (310) 789-1490
If to Executive:
Bruce K. Nelson
10 Foxglen
Irvine, CA 92614
Phone: 949-786-6940
9
5.3 Severability. If any provision of this Agreement, or portion thereof, shall
be held invalid or unenforceable by a court of competent jurisdiction, such
invalidity or unenforceability shall attach only to such provision or portion
thereof, and shall not in any manner affect or render invalid or unenforceable
any other provision of this Agreement or portion thereof, and this Agreement
shall be carried out as if any such invalid or unenforceable provision or
portion thereof were not contained herein. In addition, any such invalid or
unenforceable provision or portion thereof shall be deemed, without further
action on the part of the parties hereto, modified, amended or limited to the
extent necessary to render the same valid and enforceable.
5.4 Waiver. No waiver by a party hereto of a breach or default hereunder by the
other party shall be considered valid, unless expressed in a writing signed by
such first party, and no such waiver shall be deemed a waiver of any subsequent
breach or default of the same or any other nature.
5.5 Entire Agreement. This Agreement sets forth the entire agreement between
the Parties with respect to the subject matter hereof, and supersedes any and
all prior agreements between the Company and Executive, whether written or oral,
relating to any or all matters covered by and contained or otherwise dealt with
in this Agreement. This Agreement does not constitute a commitment of the
Company with regard to Executive’s employment, express or implied, other than to
5.6 Amendment. No modification, change or amendment of this Agreement or any of
its provisions shall be valid, unless in writing and signed by the Parties.
5.7 Authority. The Parties each represent and warrant that it/he has the power,
authority and right to enter into this Agreement and to carry out and perform
the terms, covenants and conditions hereof.
5.8 Attorneys’ Fees. If either party hereto commences an arbitration or other
action against the other party to enforce any of the terms hereof or because of
the breach by such other party of any of the terms hereof, the prevailing party
shall be entitled, in addition to any other relief granted, to all actual
out-of-pocket costs and expenses incurred by such prevailing party in connection
with such action, including, without limitation, all reasonable attorneys’ fees,
and a right to such costs and expenses shall be deemed to have accrued upon the
commencement of such action and shall be enforceable whether or not such action
is prosecuted to judgment.
5.9 Captions. The captions, headings and titles of the sections of this
Agreement are inserted merely for convenience and ease of reference and shall
not affect or modify the meaning of any of the terms, covenants or conditions of
this Agreement.
5.10 Governing Law. This Agreement, and all of the rights and obligations of
the Parties in connection with the employment relationship established hereby,
shall be governed by and construed in accordance with the substantive laws of
the State of California without giving effect to principles relating to
conflicts of law.
5.11 Arbitration.
5.11.1 Scope. To the fullest extent permitted by law, Executive and the Company
agree to the binding arbitration of any and all controversies, claims or
disputes between them arising out of or in any way related to this Agreement,
the employment relationship between the Company and Executive and any disputes
upon termination of employment, including but not limited to breach of contract,
tort, , constitutional claims; and any claims for violation of any local, state
or federal law, statute, regulation or ordinance or common law, excluding any
claim for wages under the California Labor Code ,or any claim relating to the
Company’s failure to pay wages. For the purpose of this agreement to arbitrate,
references to “Company” include all subsidiaries or related entities and their
respective executives, supervisors, officers, directors, agents, pension or
benefit plans, pension or benefit plan sponsors, fiduciaries, administrators,
affiliates and all successors and assigns of any of them, and this agreement to
arbitrate shall only apply to them to the extent Executive’s claims arise out of
or relate to their actions on behalf of the Company.
10
5.11.2 Arbitration Procedure. To commence any such arbitration proceeding, the
party commencing the arbitration must provide the other party with written
notice of any and all claims forming the basis of such right in sufficient
detail to inform the other party of the substance of such claims. In no event
shall this notice for arbitration be made after the date when institution of
legal or equitable proceedings based on such claims would be barred by the
applicable statute of limitations. The arbitration will be conducted in Los
Angeles, California, by a single neutral arbitrator and in accordance with the
then-current rules for resolution of employment disputes for Judicial
Arbitration and Mediation Services (“JAMS”). The Arbitrator is to be selected by
the mutual agreement of the Parties. If the Parties cannot agree, the Superior
Court will select the arbitrator. The parties are entitled to representation by
an attorney or other representative of their choosing. The arbitrator shall have
the power to enter any award that could be entered by a judge of the trial court
of the State of California, and only such power, and shall follow the law. The
award shall be binding, and the Parties agree to abide by and perform any award
rendered by the arbitrator. The arbitrator shall issue the award in writing, and
therein state the essential findings and conclusions on which the award is
based. Judgment on the award may be entered in any court having jurisdiction
thereof. In the event Company initiates the arbitration proceeding, Company
shall bear the total cost of the arbitration filing, hearing fees, and the cost
of the arbitrator. In the event Executive initiates the arbitration proceeding,
Executive shall bear the total cost of the arbitration filing, hearing fees, and
the cost of the arbitrator.
5.12 Survival. The termination of Executive’s employment with the Company
pursuant to the provisions of this Agreement shall not affect Executive’s
obligations to the Company hereunder which by the nature thereof are intended to
survive any such termination, including, without limitation, Executive’s
obligations under Article IV of this Agreement.
a Utah corporation
By:
Name: Richard Palmer Title: President & Chief Executive Officer
11
Bruce K. Nelson
12
EXHIBIT A
CODE OF CONDUCT
Honesty and Integrity
Our business is based on mutual trust, honesty and integrity in all of our
affairs, both internally and externally. This philosophy must be respected at
all times. Each of us must be truthful in our business dealings with each other,
and with our auditors, legal counsel, regulators and loan review and compliance
staffs. Illegal, dishonest and fraudulent acts are grounds for termination.
Making false statements or otherwise misleading internal or external auditors,
attorneys, regulators or loan review and compliance personnel is prohibited. You
must never withhold or fail to communicate fully information that is requested
in connection with an appropriately authorized investigation or review. Any
concealment of information is a violation of your employment agreement, which
may result in termination of your employment with the Company and could
constitute a criminal act.
Protecting Corporate Assets
You are responsible for safeguarding the assets of the Company. Company assets
must not be used for personal benefit. The Company’s assets include, but is not
limited to, all of its properties, including intellectual properties, business
information, cash, and securities. Misappropriation of Company assets is a
violation of your employment agreement, which may result in termination of your
employment with the Company and could constitute a criminal act.
Accuracy of Company Records and Reports
The Company is committed to maintaining records, data and information that are
accurate and complete so as to permit the Company to make timely and accurate
disclosures to its regulators and to its shareholders. You are personally
responsible for the integrity of the information, reports and records under your
control. Records must be maintained in sufficient detail so as to reflect
accurately the Company’s transactions and activities. Our financial statements
must be prepared in accordance with generally accepted accounting principles
(“GAAP”) and fairly present, in all material respects, the financial condition
and results of the Company. To accomplish full, fair, and accurate reporting,
you must ensure that financial reports issued by the Company are timely,
accurate, understandable, and complete.
Compliance With Laws
The Company’s activities shall always be in full compliance with all applicable
laws and regulations. When such laws or regulations are ambiguous or difficult
to interpret, you should seek advice from the Company’s outside legal counsel.
Conflicts Of Interest
You must conduct your private, business, and personal activities in a manner
that avoids conflict with, or even the appearance of conflict with, your ability
to act solely in the interests of the Company. A conflict of interest arises if
you have interests of any nature that compromise your ability to act objectively
and in the best interests of the Company. Conflicts can arise directly or
through your family members or through business or other entities in which you
or your family members have an interest. At no time may you, on behalf of the
Company, transact personal business, the business of an immediate family member,
or the business of a for profit entity in which you or a member of your
immediate family has an interest (other than an interest not exceeding 1% in a
publicly traded company (a “Permitted Public Company Interest”)), with the
Company. In all such situations, you must disqualify yourself from involvement
with any transaction or relationship between that person and the Company except
as set forth in Section 1.6 herein.
13
Business Ventures with Customers
You may not enter into or participate with the Company’s customers in business
ventures without the approval of a majority of the Governance & Compliance
Acting as a Fiduciary
Officers may not assume the responsibility of executor, administrator, trustee,
guardian, custodian, attorney-in-fact under a power of attorney, or any other
fiduciary capacity (except with respect to matters involving direct family
relationships) without the approval of a majority of the Governance & Compliance
Company Opportunities
You must not take for yourself any opportunity that belongs to the Company.
Whenever the Company has been seeking a particular business opportunity, or the
opportunity has been offered to the Company, or the Company’s funds, facilities
or personnel have been used in developing the opportunity, that opportunity
rightfully belongs to the Company and not to its employees.
Investments in Customers or Suppliers
Because investments are an area in which conflicts of interest can very easily
develop, you should obtain prior approval from a majority of the Governance &
Compliance Committee of the Board before investing directly or indirectly in the
business of a customer or supplier of the Company, other than a Permitted Public
Company Interest, as defined above. Under no circumstances should you acquire an
equity interest in a company that is a customer or supplier at a price which is
more favorable than the price offered to the general public. If you own a direct
or indirect interest in a business or other entity that becomes a customer or
supplier, you should notify a majority of the Governance & Compliance Committee
of the Board of the Board as soon as the underlying facts are known to you.
Business Expenses
You must have all business-related expenses approved by the Chairman of the
Board of Directors or the Chief Executive Officer of the Company. You must
carefully observe expense account regulations and guidelines. Falsification of
an expense account is considered to be a misappropriation of corporate funds and
constitutes grounds for dismissal.
Bequests from Customers
You may not accept a bequest or legacy from a customer, unless the customer is
your immediate family member. However, there may be an occasional instance when
a bequest from a non-relative customer is based upon a relationship other than
the normal business relationship, which arises between you and a customer. In
such a situation, full consideration by a majority of disinterested members of
the Governance & Compliance Committee of the Board, will be given to approving
receipt of the bequest.
Gifts from Customers
You shall not solicit or accept for yourself, or for a third party, anything of
value in return for, or in connection with, any business, service, or activity
of the Company. You shall not accept a gift in circumstances in which it could
appear that his or her business judgment was influenced by such gift. You shall
not allow an immediate family member or business associate to accept a gift,
services, loans or preferential treatment in exchange for a past, current, or
future business relationship with the Company.
14
You shall immediately disclose to a majority of disinterested members of the
Governance & Compliance Committee of the Board all situations that possess a
potential for conflict of interest.
Political Donations
You are prohibited from making any contribution to political candidates on
behalf of the Company. You also may not make any contributions of anything of
value in connection with any federal, state or local candidate’s election. The
Company makes, and discloses fully, contributions in state and local elections
for the purpose of supporting ballot propositions that are in the interests of
the Company and its several constituencies. Any proposal for political
contributions on behalf of the Company or a group of Company employees should be
referred for approval to a majority of disinterested members of the Governance &
Compliance Committee of the Board.
Confidential Information
You shall not use confidential and nonpublic information in any manner for
personal advantage or to provide advantage to others.
Insider Trading
You must at all times comply with all laws and regulations concerning insider
trading. In general, you are prohibited by applicable law from trading in the
securities of any company while in possession of material, nonpublic information
(also known as “inside information”) regarding that company. This prohibition
applies to the Company’s securities as well as to the securities of other
companies, including the Company’s customers and suppliers, and to transactions
for any account of the Company, client account or personal account. It is also
illegal to “tip” or pass on inside information to any other person if you know
or reasonably suspect that the person receiving such information from you will
misuse such information by trading in securities or passing such information on
further, even if you do not receive any monetary benefit.
Investment Prudence
You must not use your position at the Company to obtain leverage with respect to
any investment, including investments in publicly traded securities, and should
not accept preferential treatment of any kind based on your position with the
Company in connection with your investments.
Cross - Selling Services/Tying Restrictions.
“Tying” arrangements, whereby customers are required to purchase or provide one
product or service as a condition for another being made available, are unlawful
in certain instances. You should consult the Company’s outside legal counsel for
advice on tying restrictions. The Company prohibits any such unlawful
requirements.
Anti - Competitive Practices.
The Company is subject to complex laws (known as “antitrust laws”) designed to
preserve competition among enterprises and to protect consumers from unfair
business arrangements and practices. You should avoid discussion of
competitively sensitive topics, such as prices, pricing policies, costs and
marketing strategies (except as reasonably required by your job duties).
Anti - Money Laundering Compliance.
Money laundering is the process of converting illegal proceeds so that funds are
made to appear legitimate, and it is not limited to cash transactions. The
Company is obligated by law to join with governments, international
organizations and members of the financial services industry to help prevent
money laundering. You must follow all of anti-money laundering policies and
procedures.
15
Nondiscrimination.
The Company endeavors to make all decisions responsibly, constructively and
equitably without bias as to race, color, creed, religion, national origin, sex,
marital status, age, veteran’s status or membership in any other protected class
or receipt of public assistance. Failure to do so is against Company policy.
Misleading Statements.
You shall not make false or misleading remarks about suppliers, customers, or
competitors, or their products and services.
Corporate Gifts to Others.
You must use care in connection with gifts to others. If a gift could be viewed
as consideration for business, you should not make the gift.
Entertainment.
Legitimate entertainment of reasonable value is an accepted practice to the
extent that it meets all standards of ethical business conduct and involves no
element of concealment.
Other Remuneration.
In the conduct of the Company’s business, no bribes, kickbacks or similar
remuneration or consideration of any kind are to be given or offered to any
individual or organization for any reason whatsoever.
Equal Employment Opportunity.
The Company is an equal opportunity employer and you are expected to comply with
all laws concerning discriminatory employment practices. Advancement at the
Company is based on talent and performance. In addition, retaliation against
individuals for raising claims of discrimination is prohibited.
Harassment and Intimidation.
The Company prohibits sexual or any other kind of harassment or intimidation by
any Employee, Officer, or Director of the Company. Harassment, whether based on
a person’s race, gender, religion, national origin, disability, sexual
orientation, or socioeconomic status, is completely inconsistent with our
tradition of providing a respectful, professional workplace. You must never use
company systems to transmit or receive electronic images or text of a sexual
nature or containing ethnic slurs, racial epithets or any other material of a
harassing, offensive or lewd nature.
16
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 AMENDED SCHEDULE 13D/A (Amendment No. 2) Under the Securities Exchange Act of 1934 NATION ENERGY, INC. (Name of Issuer) Common Stock, $0.001 Par Value (Title of Class of Securities) 632383 105 (CUSIP Number) copy to: John Hislop PO Box 7814 Ringwood, UK BH24 9FF Telephone: 011-44-7928-367315 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) March 16, 2015 (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box[]. Note:Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits.See 240.13d-7(b) for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). CUSIP No. 632383 105 1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Privateer Capital Corporation 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[] (b)[] 3 SEC USE ONLY 4 SOURCE OF FUNDS (See Instructions) OO 5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) [] 6 CITIZENSHIP OR PLACE OF ORGANIZATION British Virgin Islands NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 7 SOLE VOTING POWER 8 SHARED VOTING POWER Nil 9 SOLE DISPOSITIVE POWER 10 SHARED DISPOSITIVE POWER Nil 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,487,300 shares of common stock 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) 15.53% based on 16,020,000 common shares outstanding as of March 17, 2015 14 TYPE OF REPORTING PERSON (See Instructions) CO 2 Item 1.Security and Issuer This Statement relates to shares of common stock with $0.001 par value per share of Nation Energy, Inc. (the “Issuer”).The principal executive offices of the Issuer are located at, RPO 60610 Granville Park, Vancouver, BCV6H 4B9. Item 2.Identity and Background (a) Name: Privateer Capital Corporation (“Privateer” or the “Reporting Person”) (b) Residence or business address: Berry Knoll, Coach Hill Lane, Burley Street, Hants, BH24 4HN, UK (c) Privateer is a private company incorporated pursuant to the laws of British Virgin Islands. (d) Privateer, nor its directors and officers, have not, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanours). (e) Privateer, nor its directors and officers, have not, during the last five years, 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, federal or state securities laws or finding any violation with respect to such laws. Item 3.Source and Amount of Funds or Other Considerations Between February 11, 2015 and March 16, 2015, Privateer acquired an aggregate of 385,300 shares of the Issuer on the open market as follows: Date Quantity Price 02/11/2015 02/23/2015 02/24/2015 02/24/2015 02/24/2015 02/24/2015 02/24/2015 02/24/2015 02/24/2015 02/25/2015 02/25/2015 02/25/2015 02/26/2015 02/26/2015 02/26/2015 02/27/2015 03/06/2015 03/09/2015 03/12/2015 03/13/2015 03/16/2015 03/16/2015 03/16/2015 03/16/2015 TOTAL 3 Item 4.Purpose of Transaction The Reporting Persons acquired the securities of the Issuer for investment purposes, but may transfer or sell such securities as necessary and in accordance with applicable securities laws. As of the date hereof, except as described above, the Reporting Person does not have any plans or proposals which relate to or would result in: • The acquisition by any person of additional securities of the issuer, or the disposition of securities of the Issuer; • An extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Issuer or any of its subsidiaries; • A sale or transfer of a material amount of assets of the Issuer or any of its subsidiaries; • Any change in the present board of directors or management of the Issuer, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the board; • Any material change in the present capitalization or dividend policy of the Issuer; • Any other material change in the issuer's business or corporate structure, including but not limited to, if the Issuer is a registered closed-end investment company, any plans or proposals to make any changes in its investment policy for which a vote is required by Section 13 of the Investment Company Act of 1940; • Changes in the Issuer's charter, bylaws or instruments corresponding thereto or other actions which may impede the acquisition of control of the issuer by any person; • Causing a class of securities of the Issuer to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; • A class of equity securities of the Issuer becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Act; or • Any action similar to any of those enumerated above. Item 5.Interest in Securities of the Issuer (a) The aggregate number and percentage of common stock of the Issuer owned by Privateer is 2,487,300 shares, or approximately 15.53% of outstanding common stock of the Issuer, based on 16,020,000 shares of common stock outstanding as March 17, 2015. (b) Privateer has the sole dispositive power to vote or direct the vote, and to dispose or direct the disposition of 2,487,300 shares of common stock of the Issuer. (c) The response to Item 3 is responsive to this Item. (d) Not applicable (e) Not applicable Item 6.Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer Except as set forth above or set forth in the exhibits, there are no contracts, arrangements, understandings or relationships between the Reporting Persons and any other person with respect to any securities of the Issuer. Item 7.Material to Be Filed as Exhibits None 4 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:March 19, 2015 PRIVATEER CAPITAL CORPORATION /s/ Barbara Peat Authorized Signatory The original statement shall be signed by each person on whose behalf the statement is filed or his authorized representative.If the statement is signed on behalf of a person by his authorized representative (other than an executive officer or general partner of this filing person), evidence of the representative’s authority to sign on behalf of such person shall be filed with the statement, provided, however, that a power of attorney for this purpose which is already on file with the Commission may be incorporated by reference.The name and any title of each person who signs the statement shall be typed or printed beneath his signature. Attention:Intentional misstatements or omissions of fact constitute Federal criminal violations (See 18 U.S.C. 1001). 5
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EXHIBIT 10.1
EXCHANGE AND PURCHASE AGREEMENT
THIS EXCHANGE AGREEMENT (this “Agreement”) is made and entered into as of
November 26, 2008 by and among Finlay Fine Jewelry Corporation, a Delaware
corporation (the “Company”), and each of the undersigned beneficial holders
(each a “Holder” and collectively, the “Holders”) of the Company’s 8-3/8% Senior
Notes due June 1, 2012 (the “Notes”), which were issued pursuant to an Indenture
(the “Notes Indenture”), dated as of June 3, 2004, between the Company and HSBC
Bank USA, National Association (as successor to HSBC Bank USA), as trustee (the
“Trustee”).
RECITALS
WHEREAS, the Company has issued and outstanding $200 million aggregate principal
amount of Notes pursuant to the Notes Indenture;
WHEREAS, the Company and the Holders have reached an agreement for the exchange
of certain of the Notes held by the Holders (totaling approximately 70% of the
aggregate amount outstanding of the Notes) (the “Exchange Notes”) for third lien
secured PIK notes of the Company (the “Third Lien Notes”);
WHEREAS, the Company and the Holders have agreed, subject to and on the terms
and conditions set forth in this Agreement, that each Holder shall exchange the
principal amount of the Exchange Notes owned by it as listed on Schedule I
hereto for $1,000 principal amount of Third Lien Notes per $1,000 principal
amount at maturity of Exchange Notes exchanged;
WHEREAS, the Company, as issuer, and Finlay Enterprises, Inc. (“FEI”) and the
Company’s subsidiaries, as guarantors (collectively, the “Guarantors”) and the
Trustee are entering into a new indenture which shall govern the Third Lien
Notes, a copy of which is attached hereto as Exhibit A (the “Third Lien
Indenture”), and related collateral documents, copies of which are attached
hereto as Exhibit B (the “Third Lien Collateral Documents”);
WHEREAS, the Company and the Holders have also reached an agreement for the
Holders to purchase $20 million aggregate principal amount of new second lien
secured PIK notes issued by the Company and guaranteed by the Guarantors (the
“Second Lien Notes” and together with the Third Lien Notes, the “Secured
Notes”);
WHEREAS, the Company, as issuer, the Guarantors and the Trustee are entering
into a new indenture which shall govern the Second Lien Notes, a copy of which
is attached hereto as Exhibit C (the “Second Lien Indenture”), and related
collateral documents, copies of which are attached hereto as Exhibit D (the
“Second Lien Collateral Documents”);
WHEREAS, concurrently with the execution of the Second Lien Indenture and the
Third Lien Indenture, General Electric Capital Corporation (“GECC”), the Third
Lien Agent named therein, the Second Lien Agent named therein and the borrowers
and obligors named therein are entering into an Intercreditor Agreement (the
“Intercreditor Agreement”), a copy of which is attached hereto as Exhibit E;
Third Lien Indenture, the Company, the Guarantors, GECC and other Credit Parties
named therein are entering into Amendment No. 1 (the “Credit Agreement
Amendment”) to the Fourth Amended and Restated Credit Agreement dated as of
November 9, 2007 (the “Credit Agreement”), a copy of which is attached hereto as
Exhibit F;
ARTICLE I – EXCHANGE AND ISSUANCE OF SECURITIES;
CONSENT TO AMENDMENTS AND
WAIVER OF COMPLIANCE WITH THE NOTES INDENTURE
Section 1.01. Authorization of Issue. Prior to the Closing (as defined below),
the Company and the Guarantors shall have duly authorized the delivery to each
Holder the principal amount of Second Lien Notes and Third Lien Notes set forth
opposite such Holder’s name on Schedule I hereto, and the Guarantors’ respective
guarantees thereof pursuant to the Second Lien Indenture and Third Lien
Indenture.
Section 1.02. Exchange of Notes. Subject to the terms and conditions set forth
in this Agreement, each Holder hereby agrees to exchange at the Closing (the
“Exchange”) the principal amount of the Exchange Notes held by such Holder, as
set forth opposite such Holder’s name on Schedule I hereto, for the principal
amount of Third Lien Notes set forth opposite such Holder’s name on Schedule I
hereto. In addition, in exchange for the right to receive pay-in-kind interest
accruing from and including June 1, 2008 to but excluding December 1, 2008 under
the terms of the Third Lien Notes, each Holder waives all rights to receive the
interest payment scheduled for December 1, 2008 on its Exchange Notes. The
Exchange Notes exchanged pursuant to this Agreement shall be cancelled. The
principal amount of the Third Lien Notes to be issued shall be rounded to the
nearest $1,000.
Section 1.03. Issuance of Notes. The Company hereby agrees, on the basis of
the representations, warranties and agreements of the Holders contained herein
and subject to all the terms and conditions set forth herein, to issue and sell
to the Holders (the “Second Lien Issuance”) and, upon the basis of the
representations, warranties and agreements of the Company and the Guarantors
herein contained and subject to all the terms and conditions set forth herein,
the Holders agree, severally and not jointly, to purchase from the Company, at a
purchase price of 100% of the principal amount thereof, the principal amount of
Second Lien Notes set forth opposite the name of such Holder on Schedule I
hereto. The principal amount of the Second Lien Notes to be issued shall be
rounded to the nearest $1,000. The Company shall not be obligated to deliver any
of the Second Lien Notes to be delivered hereunder except upon payment for all
of such Second Lien Notes to be purchased as provided herein. The Second Lien
Notes will be offered and sold to the Holders without registration under the
Securities Act of 1933, as amended (the “Securities Act”), in reliance on an
exemption under the Securities Act.
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Section 1.04. Legend on Notes. Each certificate issued at the Closing
representing Secured Notes shall be endorsed with a legend in substantially the
form as provided in the Second Lien Indenture and Third Lien Indenture, as
applicable.
Section 1.05.
Registration.
(a) If on the 6 month anniversary of the Closing, the Secured Notes cannot
be resold pursuant to Rule 144 of the Securities Act, without regard to transfer
restrictions or volume limitations, the Company shall, at its expense, use
commercially reasonable efforts to (i) have filed by such 6 month anniversary of
the date hereof a registration statement on Form S-3 (or any successor form to
Form S-3) or any available registration statement (a “Resale Shelf”), for a
public offering of such Secured Notes, (ii) have such Resale Shelf declared
effective as soon as practicable thereafter and (iii) keep such Resale Shelf
continuously effective, supplemented and amended as required by the Securities
Act, and shall use commercially reasonable efforts to promptly eliminate any
stop order or other limitation on resales under such Resale Shelf, for so long
as such Secured Notes are subject to the transfer restrictions and volume
limitations of Rule 144 of the Securities Act. The Company may suspend the use
of the Resale Shelf for not more than 15 days in any single instance and not
more than 45 days in any calendar year if the Company, FEI or any of their
respective Subsidiaries are engaged in confidential negotiations or other
confidential business activities, disclosure of which would be required in such
registration statement (but would not be required if such registration statement
were not filed), and the Board of Directors of the Company determines in good
faith and with the advice of outside counsel that such disclosure would be
materially detrimental to the Company. The Company shall no less than 10 days
prior to the filing of such registration statement, give written notice of such
proposed registration to all other Holders and, as soon as practicable, shall
use its commercially reasonable efforts to cause such Secured Notes to be
registered on such form for the offering together with all or such portion of
the Secured Notes of any Holders joining in such request as are specified in a
written request received by the Company within 20 days after receipt of such
written notice from the Company; provided, however, that the Company shall not
be required to effect more than one such registration pursuant to this Section
1.05(a).
(b) Subject to the next sentence below, the Company shall not be required
to file a Resale Shelf if the security arrangements (as may be amended) for the
Third Lien Notes or the Second Lien Notes (“Security Arrangements”) would impose
on the Company the obligation to prepare stand alone subsidiary financial
statements as part of such Resale Shelf registration or on an ongoing basis
under Rule 3-10 or 3-16 of Regulation S-X or significant ongoing opinion
requirements under Section 314 of the Trustee Indenture Act of 1939, as amended
(together, the “Reporting and Opinion Obligations”). The Holders shall have a
right to amend the Security Arrangements so that the filing of a Resale Shelf
does not trigger the Company’s Reporting and Opinion Obligations, in which case
the Company will remain subject to its obligation to file the Resale Shelf in
accordance with Section 1.05(a).
(c) The Company may defer the filing (but not the preparation) of a
registration statement required by Section 1.05(a) until a date not later than
45 days after the 6 month anniversary of the date hereof if (i) on the 6 month
anniversary of the date hereof, the Company, Finlay Enterprises, Inc. or any of
their respective Subsidiaries are engaged in
3
confidential negotiations or other confidential business activities, disclosure
of which would be required in such registration statement (but would not be
required if such registration statement were not filed), and the Board of
Directors of the Company determines in good faith and with the advice of outside
counsel that such disclosure would be materially detrimental to the Company and
its stockholders or (ii) prior to the 6 month anniversary of the date hereof,
the Board of Directors had determined to effect a registered underwritten public
offering of the Company’s debt securities for the Company’s account and the
Company had taken substantial steps (including, but not limited to, selecting a
managing underwriter for such offering) and is proceeding with reasonable
diligence to effect such offering and the Company determines in good faith that
the filing of the Resale Shelf would materially interfere with the Company’s
ability to conduct the offering. A deferral of the filing of a registration
statement pursuant to this Section 1.05(c) shall be lifted, and the requested
registration statement shall be promptly filed forthwith, if, in the case of a
deferral pursuant to clause (i) of the preceding sentence, the negotiations or
other activities are disclosed or terminated, or, in the case of a deferral
pursuant to clause (ii) of the preceding sentence, the proposed registration for
the Company’s account is abandoned. In order to defer the filing of a
registration statement pursuant to this Section 1.05(c), the Company shall
promptly (but in any event within 10 days), upon determining to seek such
deferral, deliver to each Holder a certificate signed by an executive officer of
the Company stating that the Company is deferring such filing pursuant to this
Section 1.05(c) and a general statement of the reason for such deferral and an
approximation of the anticipated delay.
(d) The right of the Holders to have their Secured Notes included in a
registration statement may be assigned by the initial Holder to a subsequent
holder of at least $10.0 million principal amount of Second Lien Notes or $20.0
million of Third Lien Notes and such succeeding Holder shall have the rights of
a Holder set forth in this Section 1.05 and Section 6.02.
(e) The Company shall indemnify the Holders with respect to the Resale
Shelf as set forth in Section 6.02.
ARTICLE II - CLOSING DATE; DELIVERY
Section 2.01. Closing and Location. The closing of the Exchange and the Second
Lien Issuance (the “Closing”) shall take place on the date hereof, or on such
other date as shall be mutually agreed to by the Company and the Holders owning
at least a majority (in principal dollar amount at maturity) of the Exchange
Notes owned on the date hereof (the “Required Holders”) (the “Closing Date”) at
the offices of Paul, Weiss, Rifkind, Wharton & Garrison LLP, 1285 Avenue of the
Americas, New York, New York, or such other place as shall be mutually agreed to
by the Company and the Required Holders.
Section 2.02. Delivery. At the Closing, (a) the Company shall deliver to the
Depository Trust Company (“DTC”) or its custodian (i) a global certificate
representing the aggregate principal amount of Second Lien Notes being issued in
the Second Lien Issuance against payment by or on behalf of the Holders of the
purchase price therefor by wire transfer in immediately available funds and (ii)
a global certificate representing the aggregate principal amount of Third Lien
Notes being issued in the Exchange, or, at the request of any Holder, the
Company shall deliver to such Holder certificates representing the principal
amount of Second
4
Lien Notes or Third Lien Notes set forth opposite such Holder’s name on Schedule
I hereto and registered in such names and in such denominations as such Holder
requests and (b) each Holder shall effect by book entry, in accordance with the
applicable procedures of DTC and the terms of the applicable indenture, the
delivery to the Company (or to their respective designee which may be the
Trustee for the benefit of the Company), the Exchange Notes held by such Holder
as set forth opposite such Holder’s name on Schedule I and such Exchange Notes
shall be cancelled or the amount outstanding under global certificates
representing the Notes shall be decreased by the respective amounts of Exchange
Notes delivered.
Section 2.03. Consummation of Closing. All acts, deliveries and confirmations
comprising the Closing, regardless of chronological sequence, shall be deemed to
occur contemporaneously and simultaneously upon the occurrence of the last act,
delivery or confirmation of the Closing and none of such acts, deliveries or
confirmations shall be effective unless and until the last of same shall have
occurred.
Section 2.04. No Transfer of Notes After the Closing; No Further Ownership
Rights in the Notes. Upon consummation of the Closing, all Exchange Notes (or
interests therein) exchanged pursuant to this Agreement shall cease to be
transferable and there shall be no further registration of any transfer of any
such Exchange Notes or interests therein. From and after the Closing, the
Holders shall cease to have any rights with respect to such Exchange Notes,
including any payments of accrued and unpaid interest,except as otherwise
provided for herein or by applicable law.
ARTICLE III - REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations and Warranties of the Company. The Company
represents and warrants to each of the Holders that the following statements are
true, correct and complete as of the date hereof:
(a) Organization and Good Standing. It and each Guarantor is a corporation
state of incorporation and has all requisite corporate power and authority, as
the case may be, to own, lease and operate its properties and to carry on its
business. It and each Guarantor is duly qualified or authorized to do business
as a foreign corporation and is in good standing under the laws of each
jurisdiction in which it leases real property and each other jurisdiction in
which the conduct of its business or the ownership of its properties requires
such qualification or authorization, except where the failure so to be qualified
or authorized would not have a material adverse effect on the Company, FEI and
its subsidiaries taken as a whole.
(b) Power and Authority. It has all requisite power and authority to enter
into this Agreement and to carry out the transactions contemplated by, and
perform its respective obligations under, this Agreement. Each Guarantor has all
requisite power and authority to issue its guarantee with respect to each of the
Second Lien Notes pursuant to the Second Lien Indenture, and the Third Lien
Notes pursuant to the Third Lien Indenture.
(c) Authorization. The execution and delivery of this Agreement and the
necessary action
5
on its part. The execution and delivery of the guarantees with respect to the
Notes pursuant to the Third Lien Indenture have been duly authorized by all
necessary action on the part of each Guarantor.
(d) Binding Obligation. This Agreement is the legally valid and binding
obligation of it, enforceable against it in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws relating to or limiting creditors’ rights generally or by
equitable principles relating to enforceability.
(e) No Conflicts. The execution, delivery and performance by it of this
Agreement do not and shall not (i) violate any provision of law, rule or
regulation applicable to it or its certificate of incorporation or by-laws (or
other organizational document) or (ii) conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any
material contractual obligation to which it is a party or under its certificate
of incorporation or by-laws (or other organizational documents).
(f) Governmental Consents. The execution, delivery and performance by it
of this Agreement do not and shall not require any registration or filing with,
federal, state or other governmental authority or regulatory body other than
pursuant to the Exchange Act, assuming the accuracy of the representations and
warranties herein of the Holders.
(g) DTC and PORTAL. The Secured Notes are eligible for clearance and
settlement through the DTC and the NASD PORTAL MarketSM (“PORTAL”).
Section 3.02. Representations and Warranties of the Holders. Each of the
Holders severally represents and warrants to the Company and each of the other
Holders that the following statements are true, correct and complete as of the
date hereof:
(a) Power and Authority. It has all requisite power and authority to enter
(b) Authorization. The execution and delivery of this Agreement and the
(c) Binding Obligation. This Agreement is the legally valid and binding
(d) No Conflicts. The execution, delivery and performance by it of this
6
under any material contractual obligation to which it is a party or under its
certificate of incorporation or by-laws (or other organizational documents).
(e) Governmental Consents. The execution, delivery and performance by it
of this Agreement do not and shall not require any registration or filing by it
with any federal, state or other governmental authority or regulatory body.
(f) Ownership of Notes. The principal amount of Exchange Notes held by
such Holder as set forth on Schedule I hereto is an accurate amount and such
Holder is the beneficial owner thereof, free and clear of all liens (other than
obligations pursuant to this Agreement).
(g) Purchase Entirely for Own Account. It is acquiring the Second Lien
Notes and Third Lien Notes for its own account, for investment purposes and not
with a view to the distribution thereof, except in compliance with the
Securities Act. It understands that the Second Lien Notes and Third Lien Notes
issued to it may not be resold except pursuant to an effective registration
statement filed under the Securities Act or pursuant to an exemption from
registration thereunder.
(h) Investment Experience. It has such knowledge and experience in
financial and business affairs that such Holder is capable of evaluating the
merits and risks of an investment in the Second Lien Notes and Third Lien Notes.
It is either a “qualified institutional buyer” as defined in Rule 144A under the
Securities Act or an “accredited investor” as defined in Regulation D under the
Securities Act. Such Holder acknowledges that no representations, express or
implied, are being made with respect to the Company, the Second Lien Notes, the
Third Lien Notes, or otherwise, other than those expressly set forth herein. In
making its decision to invest in the Second Lien Notes and Third Lien Notes
hereunder, such Holder has relied upon independent investigations made by such
Holder and, to the extent believed by such Holder to be appropriate, such
Holder’s representatives, including such Holder’s own professional, tax and
other advisors. Such Holder and its representatives have been given the
opportunity to examine all documents and to ask questions of, and to receive
answers from, the Company and its respective representatives concerning the
terms and conditions of the investment in the Second Lien Notes and Third Lien
Notes.
(i) Restricted Securities. It has been advised by the Company that (i)
the offer and sale of the Second Lien Notes and Third Lien Notes has not been
registered under the Securities Act; (ii) the offer and sale of the Second Lien
Notes and Third Lien Notes is intended to be exempt from registration under the
Securities Act pursuant to either Rule 144A or Regulation D under the Securities
Act; and (iii) there is no established market for the Second Lien Notes and
Third Lien Notes, and it is not anticipated that there will be any active public
market for the Second Lien Notes and Third Lien Notes in the foreseeable future.
It is familiar with Rule 144 promulgated by the Securities and Exchange
Commission under the Securities Act (“Rule 144”), as presently in effect, and
understands the resale limitations imposed thereby and by the Securities Act. It
will only sell or otherwise transfer the Second Lien Notes in accordance with
the Second Lien Indenture, and the Third Lien Notes in accordance with the Third
Lien Indenture.
7
ARTICLE IV – COVENANTS
Section 4.01. Covenants of the Company. The Company hereby covenants and
agrees with the Holders as follows:
(a) Rule 144 Tolling. The Issuer shall not, and shall not permit any of
their “affiliates” (as defined in Rule 144 under the Securities Act) to, resell
any of the Secured Notes which constitute “restricted securities” under Rule 144
that have been reacquired by any of them.
(b) Investment Limitation. The Company shall not invest or otherwise use
the proceeds received by the Company from its sale of the Second Lien Notes in
such a manner as would require the Company, the Guarantors or any of their
subsidiaries to register as an investment company under the Investment Company
Act of 1940, as amended.
ARTICLE V - CONDITIONS TO CLOSING
Section 5.01. Holders’ Conditions to Closing. The obligations of the Holders
to exchange the Exchange Notes for the Third Lien Notes and to purchase the
Second Lien Notes shall be subject to (A) the accuracy of the representations
and warranties of the Company and the Guarantors contained herein as of the date
of this Agreement (B) the accuracy of the statements of the Company and each of
the Guarantors made in any certificates pursuant to the provisions hereof, (C)
the performance by the Company and the Guarantors of their obligations hereunder
and (D) the following additional conditions (any of which may be waived):
(a) There shall not be in effect any injunction or other order that prohibits
the Exchange, the Second Lien Issuance or any of the transactions contemplated
by this Agreement.
(b) Both (i) the Company and the Trustee, with the consent of the Holders and
with the requisite consents required by the Notes Indenture, shall have entered
into a supplemental indenture to the indenture governing the Existing Notes to
permit the issuance of the Secured Notes, and such indenture shall be in full
force and effect and (b) the Company has, in accordance with the terms of the
Notes Indenture, provided the Trustee with a notice of waiver of compliance with
all relevant provisions of the Notes Indenture, including any relevant default
provisions, which would otherwise prevent the consummation of the Exchange, the
Second Lien Issuance (the “Waiver”).
(c) The Company, the Guarantors and the Second Lien Indenture Trustee shall have
entered into the Second Lien Indenture and the Second Lien Collateral Documents
and such indenture and Second Lien Collateral Documents shall be in full force
and effect.
(d) The Company, the Guarantors and the Third Lien Indenture Trustee shall have
entered into the Third Lien Indenture and the Third Lien Collateral Documents
and such indenture and Third Lien Collateral Documents shall be in full force
and effect and the security interests granted in the Second Lien Collateral and
the Third Lien Collateral are perfected.
(e) GECC and the other parties thereto shall have entered into the
Intercreditor Agreement, in form and substance satisfactory to the Holders.
8
(f) Following the receipt of the Waiver by the Company, the Company, the
Guarantors, GECC and other parties thereto shall have entered into the Credit
Agreement Amendment, in form and substance satisfactory to the Holders.
(g) The reasonable fees, costs and expenses of Paul, Weiss, Rifkind, Wharton &
Garrison LLP incurred in connection with the Exchange, Second Lien Issuance and
Credit Agreement Amendment shall have been paid in full by the Company, to the
extent invoices therefor have been received by the Company and, to the extent
not yet received, will be paid by the Company after the Closing promptly
following such receipt.
(h) The Company shall have requested and caused Weil, Gotshal & Manges LLP,
outside legal counsel to the Company to furnish to the Holders its opinions,
dated the Closing Date and addressed to the Holders and the Trustee, in form and
substance satisfactory to the Holders.
(i) The Secured Notes shall have been declared eligible for clearance and
settlement through DTC and PORTAL.
(j) On or prior to the Closing Date, the Company and each of the Guarantors
shall have furnished to the Holders a certificate of the Company or the
Guarantors, respectively, signed by or on behalf of its respective secretary,
dated the Closing Date, which shall include, among other things, (i) the
Certificate of Incorporation and By-laws or similar constitutive documents of
the Company or the Guarantor, respectively, (ii) resolutions authorizing the
issuance of the Exchange and Second Lien Issuance or the issuance of the
Guarantee, respectively, and (iii) such other information as the Holders may
reasonably require.
(k) On or prior to the Closing Date, the Company should have furnished to the
Holders certificate of insurance, title insurance and notice of additional
agents in form and substance satisfactory to the Holders.
(l)
The Closing shall have occurred no later than the close of business on the date
hereof.
Section 5.02. Company’s Conditions to Closing. The Company’s obligations to
exchange the Third Lien Notes for the Exchange Notes and to sell the Second Lien
Notes shall be subject to (i) the accuracy of the representations and warranties
of the Holders and (ii) the Holders holding not less than 65% of the principal
amount outstanding of the Notes having executed this Agreement and having
delivered the requisite principal amount of Exchange Notes to DTC in accordance
with Section 2.02 hereof.
ARTICLE VI – MISCELLANEOUS
Section 6.01. Release. Each party hereto, on behalf of itself and its
predecessors, successors and assigns, hereby unequivocally, irrevocably and
unconditionally releases, surrenders, acquits and forever discharges each other
party hereto, their subsidiaries and the respective directors, officers,
stockholders, members, partners, employees, affiliates, agents, advisors,
attorneys (except with respect to legal opinions delivered on the Closing Date),
successors and assigns (collectively, the “Released Parties”), from any and all
actions, causes of action, claims, suits, covenants, contracts, controversies,
agreements, promises, indemnities, damages, judgments, remedies, demands and
liabilities, of any nature whatsoever, in law, at
9
equity or otherwise incurred prior to and as of the date hereof (collectively,
the “Claims”), whether direct, derivative or otherwise, which have been, may be
or ever could be asserted against any of the Released Parties, either for itself
or otherwise for or on behalf of any other Person, including in connection with
the Exchange Notes, the Notes Indenture and the negotiations relating to and
consummation of this Agreement and the transactions contemplated thereby, other
than any Claims arising under this Agreement or the instruments and agreements
contemplated hereby.
Section 6.02.
Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each Holder and its
affiliates covered by the Resale Shelf, its directors, officers, employees and
agents, and each person, if any, who controls any Holder or such affiliates
within the meaning of the Securities Act or the Exchange Act (each, an
“Indemnified Holder”), against any loss, claim, damage, liability or expense, as
incurred, or any action in respect thereof (including, but not limited to, any
loss, claim, damage, liability or expense relating to resales of the Secured
Notes pursuant to the Resale Shelf) (collectively, “Losses”), to which such
Indemnified Holder may become subject, insofar as any such Loss arises out of or
is based upon any untrue statement or alleged untrue statement of a material
fact contained in the Resale Shelf as originally filed or in any amendment
thereof, the omission or alleged omission to state therein any material fact
misleading; and to reimburse each Indemnified Holder for any and all expenses,
including the fees and disbursements of counsel, as such expenses are reasonably
incurred by such Indemnified Holder in connection with investigating, defending,
settling, compromising or paying any such Loss; provided, however, that the
foregoing indemnity agreement shall not apply to any Loss to the extent, but
only to the extent, arising out of or based upon any untrue statement or alleged
untrue statement or omission or alleged omission made in reliance upon and in
such Holder (or its related Indemnified Holder) expressly for use therein. The
indemnity agreement set forth in this Section 6.02(a) shall be in addition to
any liabilities that the Company may otherwise have.
(b) Promptly after receipt by the Indemnified Holder under this Section
6.02 of notice of the commencement of any action, such Indemnified Holder will,
if a claim in respect thereof is to be made against the Company under this
Section 6.02, notify the Company in writing of the commencement thereof, but the
failure to notify the Company (i) will not relieve it from liability under
paragraph (a) above unless and to the extent it did not otherwise learn of such
action and such failure results in the forfeiture by the Company of substantial
rights and defenses and (ii) will not, in any event, relieve the Company from
any obligations to any Indemnified Holder other than the indemnification
obligation provided in paragraph (a) above. In case any such action is brought
against any Indemnified Holder and such Indemnified Holder seeks or intends to
seek indemnity from the Company, the Company will be entitled to participate in,
and, to the extent that it shall elect, jointly with any other indemnifying
parties similarly notified, by written notice delivered to the Indemnified
Holder promptly after receiving the aforesaid notice from such Indemnified
Holder, to assume the defense thereof with counsel satisfactory to such
Indemnified Holder; provided, however, if the defendants in any such action
include both the Indemnified Holder and the Company and the Company shall have
reasonably concluded that a conflict may arise between the positions of the
Company and the Indemnified
10
Holder in conducting the defense of any such action or that there may be legal
defenses available to it and/or other Indemnified Holders that are different
from or additional to those available to the Company, the Indemnified Holder or
Holders shall have the right to select separate counsel to assume such legal
such Indemnified Holder or Holders. Upon receipt of notice from the Company to
such Indemnified Holder of the Company’s election so to assume the defense of
such action and approval by the Indemnified Holder of counsel, the Company will
not be liable to such Indemnified Holder for any legal or other expenses
subsequently incurred by such Indemnified Holder in connection with the defense
thereof unless (i) the Indemnified Holder shall have employed separate counsel
in accordance with the proviso to the preceding sentence (it being understood,
however, that the Company shall not be liable for the expenses of more than one
separate counsel (other than local counsel), reasonably approved by the Company,
representing the Indemnified Holders who are parties to such action) or (ii) the
Company shall not have employed counsel satisfactory to the Indemnified Holder
to represent the Indemnified Holder within a reasonable time after notice of
counsel shall be at the expense of the Company.
(c) The Company shall not be liable for any settlement of any proceeding
effected without its written consent, which shall not be withheld unreasonably,
but if settled with such consent or if there is a final judgment for the
plaintiff, the Company agrees to indemnify the Indemnified Holder against any
Loss by reason of such settlement or judgment. Notwithstanding the foregoing
sentence, if at any time the Indemnified Holder shall have requested the Company
to reimburse the Indemnified Holder for fees and expenses of counsel as
contemplated by Section 6.02(c) hereof, the Company agrees that it shall be
if (i) such settlement is entered into more than 30 days after receipt by the
Company of the aforesaid request and (ii) the Company shall not have reimbursed
the Indemnified Holder in accordance with such request prior to the date of such
settlement. The Company shall not, without the prior written consent of the
Indemnified Holder, effect any settlement, compromise or consent to the entry of
judgment in any pending or threatened action, suit or proceeding in respect of
which any Indemnified Holder is or could have been a party and indemnity was or
could have been sought hereunder by such Indemnified Holder, unless such
settlement, compromise or consent (x) includes an unconditional release of such
Indemnified Holder from all liability on claims that are the subject matter of
such action, suit or proceeding and (y) does not include a statement as to or an
admission of fault, culpability or a failure to act, by or on behalf of any
Indemnified Holder.
(d) If the indemnification provided for in this Section 6.02 is for any
reason unavailable to or otherwise insufficient to hold harmless the Indemnified
Holder in respect of any Loss referred to therein, then the Company shall
contribute to the aggregate amount paid or payable by such Indemnified Holder,
as incurred, as a result of any Loss referred to therein:
received by the Company, on the one hand, and the Holders, on the other hand,
from the offering and sale of the Secured Notes pursuant to this Agreement and
resale of the Secured Notes pursuant to a Resale Shelf, on the one hand, and a
Holder with respect to the resale by such Holder of the Secured Notes pursuant
to a Resale Shelf, on the other hand, or
11
(ii) if the allocation provided by Section 6.02(d)(i) above is not
only the relative benefits referred to in Section 6.02(d)(i) above but also the
relative fault of the Company, on the one hand, and the Holders, on the other
hand, in connection with the statements or omissions or alleged statements or
omissions that resulted in such Loss, as well as any other relevant equitable
considerations.
The relative benefits received by the Company, on the one hand, and the Holders,
on the other hand, in connection with such offering and such resale of the
Secured Notes pursuant to a Resale Shelf shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Secured Notes exchanged or purchased under this Agreement (before deducting
expenses) received by the Company and the total proceeds received by the Holders
with respect to their resale of the Secured Notes pursuant to a Resale Shelf.
Company, on the one hand, or the Holders, on the other hand, and the parties’
prevent such statement or omission. The Company and the Holders agree that it
would not be just and equitable if contribution pursuant to this Section 6.02(d)
were determined by pro rata allocation (even if the Holders were treated as one
entity for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in this Section 6.02.
The amount paid or payable by a party as a result of the Loss referred to above
shall be deemed to include, subject to the limitations set forth in Section
6.02(b), any legal or other fees or expenses reasonably incurred by such party
in connection with investigating or defending any action or claim.
Notwithstanding the provisions of this Section 6.02, in no event will any Holder
be required to undertake liability to any person under this Section 6.02 for any
amounts in excess of the dollar amount of the proceeds to be received by such
Holder from the sale of such Holder’s Secured Notes (after deducting any fees,
discounts and commissions applicable thereto) pursuant to any Resale Shelf under
which such Secured Notes are to be registered under the Securities Act. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Holders’
obligations to contribute as provided in this Section 6.02(d) are several and
not joint.
(e) The provisions of this Section 6.02 shall remain in full force and
effect, regardless of any investigation made by or on behalf of any Holder, the
Company or any of the officers, directors or employees, agents or controlling
persons referred to in Section 6.02 hereof, and will survive the sale by a
Holder of Secured Notes.
12
Section 6.03. Successors and Assigns. This Agreement is intended to bind and
inure to the benefit of the parties hereto and their respective permitted
successors and assigns (including any debtor-in-possession of such party).
Section 6.04. Entire Agreement. This Agreement constitutes the entire
understanding and agreement among the parties hereto with regard to the subject
matter hereof and supersedes all prior agreements with respect thereto.
Section 6.05. Effectiveness; Amendments. This Agreement shall not become
effective and binding on a party hereto unless and until a counterpart signature
page to this Agreement has been executed and delivered by such party. Once
effective, this Agreement may not be modified, amended or supplemented, nor may
any of the conditions to Closing be waived, except in a writing signed by the
Company and the Holders.
Section 6.06. Severability. Any provision of this Agreement which is
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
Section 6.07. Counterparts. This Agreement may be executed in one or more
together shall constitute one and the same Agreement. Delivery of an executed
signature page of this Agreement by telecopier or e-mail shall be effective as
delivery of a manually executed signature page of this Agreement.
Section 6.08. Headings. The headings of the sections and subsections of this
Agreement are inserted for convenience only and shall not affect the
interpretation hereof.
Section 6.09. Representations, Indemnities and Releases to Survive. The
respective agreements, representations, warranties, indemnities and other
statements of the Company and the Guarantors or its or their officers and of the
Holders set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation made by or on behalf of the
Holders or the Company and the Guarantors or any of the indemnified persons
referred to in Section 6.02, and will survive delivery of and payment for the
Secured Notes. The provisions of Section 6.01 and Section 6.02 shall survive the
termination or cancellation of this Agreement.
Section 6.10. Governing Law; Jurisdiction. This Agreement shall be governed
of conflict of laws of the State of New York. The parties hereby irrevocably
submit to the non-exclusive jurisdiction of any federal or state court located
within the borough of Manhattan of the City, County and State of New York over
transactions contemplated hereby. The parties hereby irrevocably waive, to the
fullest extent permitted by applicable law, jury trial and any objection which
they may now or hereafter have to the laying of venue of any such dispute
brought in such court or any defense of inconvenient forum for the maintenance
of such dispute. Each of the parties hereto agrees that a judgment in any such
13
dispute may be enforced in other jurisdictions by suit on the judgment or in any
other manner provided by law.
Section 6.11. Notices. All demands, notices, requests, consents and
duly given if personally delivered by courier service, messenger, telecopy, or
if duly deposited in the mails, by certified or registered mail, postage
prepaid-return receipt requested, to the following addresses, or such other
addresses as may be furnished hereafter by notice in writing, to the following
parties:
(a)
Finlay Fine Jewelry Corporation
529 Fifth Avenue, Fifth Floor
Facsimile No.: (212) 808-2946
Attn: Bruce E. Zurlnick, Senior Vice President, Treasurer and Chief Financial
Officer
with a copy to (which copy shall not constitute notice):
767 Fifth Avenue
Facsimile No.: (212) 310-8007
Attn: Lori Fife and Corey Chivers
(b) If to a Holder, to its address set forth on the signature pages hereto
or such other address as provided to the parties in writing:
Paul, Weiss, Rifkind, Wharton & Garrison LLP
New York, NY 10019-6064
Facsimile No.: (212) 757-3990
Attn: Raphael M. Russo
Section 6.12. Specific Performance. Each party hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other parties to sustain damages for which such
parties would not have an adequate remedy at law for money damages, and
therefore each party hereto agrees that in the event of any such breach the
other parties may seek the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief in addition to any other
remedy to which such parties may be entitled, at law or in equity.
14
Section 6.13. Remedies Cumulative. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise of any right,
power or remedy thereof by any party shall not preclude the simultaneous or
later exercise of any other such right, power or remedy by such party.
Section 6.14. No Waiver. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance.
Section 6.15. No Third Party Beneficiaries. Except as provided in Section
1.05, this Agreement is not intended to be for the benefit of, and shall not be
enforceable by, any person who or which is not a party hereto.
Section 6.16. Representation by Counsel. The Company and each Holder
acknowledges that it has been represented by counsel in connection with this
Agreement and the transactions contemplated by this Agreement. Accordingly, any
rule of law or any legal decision that would provide any party with a defense to
the enforcement of the terms of this Agreement against such party based upon
lack of legal counsel shall have no application and is expressly waived.
Section 6.17. Several, Not Joint, Obligations. The agreements, representations
and obligations of the parties under this Agreement are, in all respects,
15
FINLAY FINE JEWELRY CORPORATION
By:
/s/ Arthur E. Reiner
Name: Arthur E. Reiner
SIGNATURE PAGE TO EXCHANGE AND PURCHASE AGREEMENT
Schedule I
Noteholder
Principal Amount Of Exchange Notes
Total Principal Amount of Third Lien Notes Exchanged for Exchange Notes
Total Principal Amount of Second Lien
Notes Issued
$115,283,000
$115,283,000
$16,511,000
$24,357,000
$24,357,000
$3,489,000
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Exhibit 10.34 DEFERRAL AGREEMENT Kimberly S. Greene The TVA Board of Directors has approved your participation in TVA’s Long-Term Deferred Compensation Plan (Plan) under the following terms: Vesting Date(s) Vesting Amount Duration of deferral agreement: 3 years and 1 month First compensation credit: $280,000 (09/04/2007) 09/04/2007 $280,000 Second compensation credit: $100,000 (10/01/2008) 09/30/2011 Balance of account Third compensation credit: $100,000 (10/01/2009) 09/30/2011 Balance of account Fourth and final compensation credit: $100,000 (10/01/2010) 09/30/2011 Balance of account Total credits over deferral period: $580,000 Expiration date: 09/30/2011 Please read the following provisions carefully and indicate your approval by signing at the designated place below. As a participant in the Plan, I hereby agree to be bound by the following terms and conditions: Annual deferred compensation credits as stated above will be made to an account in my name to cover a service period of three years and one month, beginning on September 4, 2007, and ending on September 30, 2011, provided that I remain employed by TVA through September 30, 2011.I shall be entitled to compensation credits including interest and returns on the vesting dates as stated in the above schedule provided that I remain employed by TVA through the vesting periods.The first credit shall be made directly to an account in TVA’s Merit Incentive Supplemental Retirement Income Plan (MISRIP) and will be paid out to me, upon termination of my employment with TVA, in five annual installments.Upon expiration of this agreement, the balance of the account, including interest and return as provided below, will be transferred to my TVA deferred compensation account and all credits from this agreement will be paid out to me, upon termination of my employment with TVA, in five annual installments. I understand that I must be an employee of TVA at the time of the vesting dates stated above or no payments or transfers under the Plan will be made by TVA and any credits to my account will be extinguished.However, in the event that TVA terminates my employment during the term of this agreement through no act or delinquency of my own, this agreement is terminated as of the date of my termination and no further credits will be made under it and any credits in my account from this agreement, including interest or return as provided below, at the time of termination will become vested.The balance of my account will be transferred to my TVA MISRIP account and all credits from this agreement will be paid out to me in five annual installments or in accordance with otherwise applicable IRS rules.If TVA terminates my employment for cause prior to the expiration of this agreement, no further credits will be made and my unvested account balance will be forfeited.In the event of my death during the term of this agreement, my account balance will be paid to the person identified on my beneficiary designation form or, in the absence of such designation, to my estate, in a manner permitted by applicable IRS rules. Interest will be credited to the balance reflected in my deferral account on the same basis as interest is calculated and credited under MISRIP.In the alternative, I may choose to have my balance adjusted based on the return of the funds I select under the same conditions as are contained in MISRIP.I understand that I am solely responsible for the risk associated with any return elections that I make. I understand that nothing contained in this agreement shall be construed as conferring the right to continue in the employment of TVA as an executive or in any other capacity and that the payment election I have made is final (not revocable). /s/Kimberly S. Greene 9/4/07 Kimberly S. Greene Date /s/John E. Long, Jr.9/4/07 Chief Officer Date
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 SCHEDULE 13D (Rule 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-l(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a) (Amendment No.2) MERISEL, INC. (Name of Issuer) Common Stock, $0.01 Par Value Per Share (Title of Class of Securities) (CUSIP number) Robert Keppler Saints Capital Granite, L.P. 475 Sansome Street, Suite 1850 San Francisco, CA 94111 (415) 773-2080 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) February 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 Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box ¨. *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 (the “Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act. CUSIP No. 589849108 13D Page 2 of6 pages 1. NAMES OF REPORTING PERSONS Saints Capital Granite, L.P. 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)¨ (b)¨ 3. SEC USE ONLY 4. SOURCE OF FUNDS OO 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e)o 6. CITIZENSHIP OR PLACE OF ORGANIZATION Delaware NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 7. SOLE VOTING POWER 8. SHARED VOTING POWER 0 9. SOLE DISPOSITIVE POWER SHARED DISPOSITIVE POWER 0 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES¨ PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11 69.3% TYPE OF REPORTING PERSON PN CUSIP No. 589849108 13D Page3 of6 pages 1. NAMES OF REPORTING PERSONS Saints Capital Granite, LLC 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)¨ (b)¨ 3. SEC USE ONLY 4. SOURCE OF FUNDS OO 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e)o 6. CITIZENSHIP OR PLACE OF ORGANIZATION Delaware NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 7. SOLE VOTING POWER 8. SHARED VOTING POWER 0 9. SOLE DISPOSITIVE POWER SHARED DISPOSITIVE POWER 0 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES¨ PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11 69.3% TYPE OF REPORTING PERSON OO CUSIP No. 589849108 13D Page4 of6 pages SCHEDULE 13D This Amendment No. 2 (this “Amendment”) to Schedule 13D is filed by the undersigned to amend and supplement the Schedule13D, filed on May20, 2011, as amended by Amendment No. 1 thereto, filed on December28, 2011 (as amended, the “Amended Schedule 13D”), with respect to the common stock, $0.01 par value per share (“Common Stock”), of Merisel, Inc., a Delaware corporation (“Merisel”), which has its principal executive offices at 127 West 30th Street, 5th Floor, New York, New York 10001.Defined terms used in this Amendment but not otherwise defined herein shall have the meanings ascribed to them in the Original Schedule 13D. Item 4.Purpose of the Transaction The response set forth in Item 4 of the Amended Schedule 13D is hereby amended and supplemented by adding the following two sentences: On February8, 2012, SCGLP delivered a letter to the special committee of the board of directors of Merisel in which it notified the special committee that it was withdrawing its previous proposal to acquire the remaining 30.7% of the shares of Common Stock that it does not already own.The original proposal was set forth in a letter dated December28, 2011 to the special committee.A copy of the February8, 2012 letter to the special committee from SCGLP is attached hereto as Exhibit 1 and incorporated herein by reference. Item 7.Material to be Filed as Exhibits The response set forth in Item 7 of the Amended Schedule 13D is hereby amended and restate in its entirety as follows: Exhibit 1 Letter to the Special Committee of the Board of Directors of Merisel, Inc., dated February8, 2012, from Saints Capital Granite, L.P. Exhibit 2 Joint Filing Agreement, dated May 20, 2011, by and between Saints Capital Granite, L.P. and Saints Capital Granite, LLC (previous filed as Exhibit 1 to the Schedule 13D of Saints Capital Granite, L.P. and Saints Capital Granite, LLC filed on May 20, 2011 and incorporated herein by reference). CUSIP No. 589849108 13D Page5 of6 pages SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Amendment No.1 to Schedule 13D is true, complete and correct. Date:February8, 2012 SAINTS CAPITAL GRANITE, L.P. By: SAINTS CAPITAL GRANITE, LLC, a Delaware limited liability company, its general partner By: /s/ Kenneth B. Sawyer Name: Kenneth B. Sawyer Title: Managing Member SAINTS CAPITAL GRANITE, LLC, a Delaware limited liability company By: /s/ Kenneth B. Sawyer Name: Kenneth B. Sawyer Title: Managing Member CUSIP No. 589849108 13D Page6 of6 pages Exhibit 1 Saints Capital Granite, L.P. 475 Sansome Street, Suite 1850 San Francisco, CA 94111 February8, 2012 Merisel, Inc. 127 W. 30th Street, 5th Floor New York, NY 10001 Attn:Special Committee of the Board of Directors To the Special Committee: We write this letter to inform you that, effective immediately, we are withdrawing our previous proposal to acquire the outstanding shares of common stock of Merisel, Inc. not currently owned by Saints Capital Granite, L.P. (Saints Capital) at a cash purchase price of $1.35 per share.The proposal was communicated to the Special Committee in a letter dated December28, 2011. Our prior letter made clear that we would not move forward with our proposed transaction in the event the process became the subject of shareholder litigation.It was our intent to provide our shareholders with an opportunity to cash their shares out at a fair price in what is otherwise a highly illiquid market for the company’s stock.We believed, and continue to believe, that our original proposal presented an attractive opportunity for the company’s shareholders.The offer price represented a premium in excess of 100% to the average closing price of Merisel common stock for the 20 trading days ending on December 27, 2011, the day prior to the day on which our original proposal was delivered to the Special Committee.Unfortunately, a small subset of the company’s shareholders have deemed it appropriate to bring claims against the company and its board in an attempt to block the transaction from moving forward, even prior to the time that any definitive terms for the transaction have been negotiated or set by the parties.While we believe the contentions made in the lawsuits are entirely without merit and are not grounded in fact, the estimated costs and delay associated with addressing these claims have caused us to conclude that we should not move forward with the transaction at this time. We thank the Special Committee for its time and consideration in reviewing our proposal.Saints Capital will continue to evaluate its options in connection with its investment in Merisel as it moves forward.Note that we will be filing an amendment to our Schedule 13D with the Securities and Exchange Commission to reflect the withdrawal of our proposal. Sincerely, /s/ Joseph Yang Joseph Yang Saints Capital Granite, L.P.
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported):October 1, 2007 OLIN CORPORATION (Exact name of registrant as specified in its charter) Virginia 1-1070 13-1872319 (State or Other Jurisdiction of Incorporation) (Commission File Number) (IRS Employer Identification No.) 190 Carondelet Plaza, Suite 1530 Clayton, MO (Address of principal executive offices) 63105-3443 (Zip Code) (314) 480-1400 (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): [] 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 (17CFR 240.14d-2(b)) [] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17CFR 240.13e-4(c)) Item 7.01.Regulation FD Disclosure. In accordance with General Instruction B.2. of Form 8-K, the following information shall not be deemed to be “filed” for purposes of Section18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended. Olin disclaims any intention or obligation to update or revise this information. Attached as Exhibit 99.1 and incorporated herein by reference, is a copy of the slides which will be presented at the CIBC World Markets 2nd Annual Industrials Conference in New York, NY on October 2, 2007.Copies of the presentation slides for the conference will also be available prior to the presentation to all investors, news media and the general public on Olin’s web site www.olin.com in the Investor section under Recent Press Releases and Speeches. Item 9.01.Financial Statements and Exhibits. Exhibit No. Exhibit 99.1 Presentation slides for meeting on October 2, 2007 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. OLIN CORPORATION By:/s/ George H. Pain Name:George H. Pain Title:Vice President, General Counsel and Secretary Date:October 1, 2007 EXHIBIT INDEX Exhibit No. Exhibit 99.1 Presentation slides for meeting on October 2, 2007
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Exhibit L LIMITED POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person or entity whose signature appears below constitutes and appoints each of Joel F. Herold, Stephanie R. Gallina and Margaret R. Markman of Cravath, Swaine & Moore LLP its true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for it and in its name, place, and stead, in any and all capacities, to sign and file this Statement on Schedule 13D and any and all amendments to the same, with all exhibits thereto, and other documents in connection therewith, with the U.S. Securities and Exchange Commission, granting 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, as fully to all intents and purposes as it might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, and his substitute or substitutes, may lawfully do or cause to be done by virtue thereof. TRACTORS AND FARM EQUIPMENT LIMITED, by: /s/Mallika Srinivasan Name: Mallika Srinivasan Title: Chairman TAFE MOTORS AND TRACTORS LIMITED, by: /s/Mallika Srinivasan Name: Mallika Srinivasan Title: Chairman /s/Mallika Srinivasan Mallika Srinivasan Dated: August 30, 2014.
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q/A X.QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period endedJune 30, 2013 .TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number001-35821 US-DADI Fertilizer Industry International, Inc. (Exact name of registrant as specified in its charter) California 45-2725352 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 699 Serramonte Blvd., Ste. 212, Daly City, CA 94015 (Address of principal executive offices) (Zip Code) (650) 530-0699 (Registrant’s telephone number, including area code) Copies of Communications to: Harold P. Gewerter, Esq. Harold P. Gewerter, Esq. Ltd. 5536 S. Ft. Apache #102 Las Vegas, NV 89148 (702) 382-1714 Fax (702) 382-1759 E-mail: harold@gewerterlaw.com Indicate by check mark whether the issuer (1) 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. YesX.No. Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YesX.No. 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 Ruble 12b-2 of the Exchange Act. Large accelerated filer . Accelerated filer . Non-accelerated filer .(Do not check if a smaller reporting company) Smaller reporting company X. Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YesX.No. The number of shares of Common Stock, $0.001 par value, outstanding on August 1, 2013 was 55,000,000 shares. EXPLANATORY NOTE The purpose of this Amendment No. 1 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2013, filed with the Securities and Exchange Commission on August 13, 2013 (the "Form 10-Q"), is solely to furnish Exhibit 101 to the Form 10-Q. Exhibit 101 provides the financial statements and related notes from the Form 10-Q formatted in XBRL (eXtensible Business Reporting Language). No other changes have been made to the Form 10-Q. This Amendment No. 1 to the Form 10-Q continues to speak as of the original filing date of the Form 10-Q, does not reflect events that may have occurred subsequent to the original filing date, and does not modify or update in any way disclosures made in the original Form 10-Q. Pursuant to rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Act of 1934, as amended, and otherwise are not subject to liability under those sections. Item 6. Exhibits Exhibit Number Description 31.1* Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002* 31.2* Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002* 32.1* Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002* 101 Interactive Data Files of Financial Statements and Notes contained in this Quarterly Report on Form 10-Q. *Previously filed. 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. US-DADI FERTILIZER INDUSTRY INTERNATIONAL , INC. Date: November 18, 2013 By: /s/ Haitao Liu HAITAO LIU Chief Executive Officer (Principal Executive Officer and duly authorized signatory)
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Exhibit 10.1
[SECOND AMENDED AND RESTATED] CHANGE-OF-CONTROL EMPLOYMENT
AGREEMENT
AGREEMENT, effective as of the [ ] day of [ ], 20[ ], by and between
Smith International, Inc., a Delaware Corporation (the “Company”) and
[ ] (the “Executive”).
[WHEREAS, the Executive and the Company are parties to that certain
[amended and restated] change-of-control employment agreement dated [ ]
(the “Previous Agreement”); and
WHEREAS, the Executive and the Company desire to amend and restate the
Previous Agreement; and]
WHEREAS, the Board of Directors of the Company (the “Board”), has
determined that it is in the best interests of the Company and its shareholders
to assure that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company. The Board believes it is imperative to diminish
the inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change of Control and
to encourage the Executive’s full attention and dedication to the Company
currently and in the event of any threatened or pending Change of Control, and
to provide the Executive with compensation and benefits arrangements upon a
Change of Control which ensure that the compensation and benefits expectations
of the Executive will be satisfied and which are competitive with those of other
corporations. Therefore, in order to accomplish these objectives, the Board has
caused the Company to enter into this Agreement.
1. Certain Definitions. (a) The “Effective Date”, shall mean the first date
during the Change of Control Period (as defined in Section l (b)) on which a
Change of Control (as defined in Section 2) occurs. Anything in this Agreement
to the contrary notwithstanding, if a Change of Control occurs and if the
Executive’s employment with the Company is terminated by the Company within the
12 months prior to the date on which the Change of Control occurs, which Change
of Control is a “change in control event” within the meaning of Section 409A of
the Code, and if it is reasonably demonstrated by the Executive that such
termination of employment (i) was at the request of a third party who has taken
steps reasonably calculated to effect such Change of Control or (ii) otherwise
arose in connection with or anticipation of such Change of Control (such a
termination of employment, an “Anticipatory Termination”), then for all purposes
of this Agreement the “Effective Date” shall mean the date immediately prior to
the date of such termination of employment. Notwithstanding the foregoing, the
Executive and the Company acknowledge that, except as may otherwise be provided
under this Agreement or any other written agreement between the Executive and
the Company, the employment of the Executive by the Company is “at will.”
(b) The “Change of Control Period” shall mean the period commencing on the
date hereof and ending on the third anniversary of the date hereof; provided,
however, that commencing on the date one year after the date hereof, and on each
annual anniversary of such date (such date and each annual anniversary thereof
shall be hereinafter referred to as the “Renewal Date”), unless previously
terminated, the Change of Control Period shall be automatically extended so as
to terminate three years from such Renewal Date, unless at least 60 days prior
to the Renewal Date the Company shall give notice to the Executive that the
Change of Control Period shall not be so extended.
2. Change of Control. For the purpose of this Agreement, a “Change of
Control” shall mean:
amended (the “Exchange Act”)) (a "Person”) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of
either (i) the then outstanding shares of common stock of the Company (the
“Outstanding Company Common Stock”) or (ii) the combined voting power of the
then outstanding voting securities of the Company entitled to vote generally in
provided, however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change of Control: (i) any acquisition
directly from the Company, (ii) any acquisition by the Company, (iii) any
maintained by the Company or any corporation controlled by the Company or
(iv) any acquisition pursuant to a transaction which complies with clauses (i),
(ii) and (iii) of subsection (c) of this Section 2; or
(b) Individuals who, as of the date hereof, constitute the Board (the
Board; provided, however, that any individual becoming a director subsequent to
the date hereof whose election, or nomination for election by the Company’s
then comprising the Incumbent Board shall be considered as though such
individual was a member of the Incumbent Board, but excluding, for this purpose,
any such individual whose initial assumption of office occurs as a result of an
directors or other actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board; or
consolidation or similar transaction involving the Company or any of its
assets of the Company, or the acquisition of assets or stock of another entity
by the Company or any of its subsidiaries (each, a “Business Combination”), in
each case, unless, following such Business Combination, (i) all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and Outstanding Company
outstanding shares of common stock (or, for a non-corporate entity, equivalent
securities) and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors (or, for a
non-corporate entity, equivalent securities), as the case may be, of the
corporation resulting from such Business
-2-
of the Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (ii) no Person (excluding any entity resulting
of the Company or such entity resulting from such Business Combination)
beneficially owns, directly or indirectly, 30% or more of, respectively, the
then outstanding shares of common stock (or, for a non-corporate entity,
equivalent securities) of the entity resulting from such Business Combination or
the combined voting power of the then outstanding voting securities (or, for a
non-corporate entity, equivalent securities) of such entity except to the extent
a majority of the members of the board of directors (or, for a non-corporate
entity, equivalent governing body) of the entity resulting from such Business
the initial agreement, or of the action of the Board, providing for such
Business Combination; or
(d) Approval by the shareholders of the Company of a complete liquidation
or dissolution of the Company.
3. Employment Period. The Company hereby agrees to continue the Executive
in its employ, and the Executive hereby agrees to remain in the employ of the
Company subject to the terms and conditions of this Agreement, for the period
commencing on the Effective Date and ending on the third anniversary of such
date (the “Employment Period”).
4. Terms of Employment. (a) Position and Duties. (i) During the Employment
Period, (A) the Executive’s position (including status, offices, titles and
reporting requirements), authority, duties and responsibilities shall be at
least commensurate in all material respects with the most significant of those
held, exercised and assigned at any time during the 120-day period immediately
preceding the Effective Date and (B) the Executive’s services shall be performed
at the location where the Executive was employed immediately preceding the
Effective Date or any office or location less than 35 miles from such location.
and sick leave to which the Executive is entitled, the Executive agrees to
devote reasonable attention and time during normal business hours to the
business and affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Executive hereunder, to use the Executive’s
reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a violation of
this Agreement for the Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (C) manage personal investments, so long
as such activities do not significantly interfere with the performance of the
Executive’s responsibilities as an employee of the Company in accordance with
this Agreement. It is expressly understood and agreed that to the extent that
any such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto)
-3-
subsequent to the Effective Date shall not thereafter be deemed to interfere
with the performance of the Executive’s responsibilities to the Company.
(b) Compensation. (i) Base Salary. During the Employment Period, the
Executive shall receive an annual base salary (“Annual Base Salary”), which
shall be paid at a monthly rate, at least equal to 12 times the highest monthly
base salary paid or payable, including any base salary which has been earned but
deferred, to the Executive by the Company and its affiliated companies in
respect of the twelve-month period immediately preceding the month in which the
Effective Date occurs. During the Employment Period, the Annual Base Salary
shall be reviewed no more than 12 months after the last salary increase awarded
to the Executive prior to the Effective Date and thereafter at least annually.
Any increase in Annual Base Salary shall not serve to limit or reduce any other
obligation to the Executive under this Agreement. Annual Base Salary shall not
be reduced after any such increase and the term Annual Base Salary as utilized
in this Agreement shall refer to Annual Base Salary as so increased. As used in
this Agreement, the term “affiliated companies” shall include any company
controlled by, controlling or under common control with the Company.
(ii) Annual Bonus. In addition to Annual Base Salary, the Executive shall
be awarded, for each fiscal year ending during the Employment Period, an annual
bonus (the “Annual Bonus”) in cash (i) under the Company’s annual incentive plan
based upon meeting the targets in the Annual Incentive Plan, provided that the
Executive’s target bonus percentage shall be at least equal to the Executive’s
target bonus percentage for the fiscal year prior to the Effective Date or equal
to an increase in the target bonus percentage given to any similarly situated
executive after the Effective Date, or, if higher, (ii) under any annual
incentive plan or discretionary award by the Company to similarly situated
executives which is enacted or approved after the Effective Date. Each such
Annual Bonus shall be paid no later than two and a half months after the end of
the fiscal year next following the fiscal year for which the Annual Bonus is
awarded, unless the Executive shall elect to defer the receipt of such Annual
Bonus pursuant to an arrangement that meets the requirements of Section 409A of
(iii) Incentive, Savings and Retirement Plans. During the Employment
Period, the Executive shall be entitled to participate in all incentive, savings
and retirement plans, practices, policies and programs applicable generally to
other peer executives of the Company and its affiliated companies, but in no
event shall such plans, practices, policies and programs provide the Executive
with incentive opportunities (measured with respect to both regular and special
incentive opportunities, to the extent, it any, that such distinction is
applicable), savings opportunities and retirement benefit opportunities, in each
case, less favorable, in the aggregate, than the most favorable of those
provided by the Company and its affiliated companies for the Executive under
such plans, practices, policies and programs as in effect at any time during the
120-day period immediately preceding the Effective Date or if more favorable to
the Executive, those provided generally at any time after the Effective Date to
other peer executives of the Company and its affiliated companies.
(iv) Welfare Benefit Plans. During the Employment Period, the Executive
and/or the Executive’s-family, as the case may be, shall be eligible for
participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the
-4-
Company and its affiliated companies (including, without limitation, medical,
prescription, dental, disability, employee life, group life, accidental death
and travel accident insurance plans and programs) to the extent applicable
generally to other peer executives of the Company and its affiliated companies,
but in no event shall such plans, practices, policies and programs provide the
Executive with benefits which are less favorable, in the aggregate, than the
most favorable of such plans, practices, policies and programs in effect for the
Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, those provided generally
at any time after the Effective Date to other peer executives of the Company and
its affiliated companies.
(v) Expenses. During the Employment Period, the Executive shall be entitled
to receive prompt reimbursement for all reasonable expenses incurred by the
Executive in accordance with the most favorable policies, practices and
procedures of the Company and its affiliated companies in effect for the
Effective Date or, if more favorable to the Executive, as in effect generally at
any time thereafter with respect to other peer executives of the Company and its
affiliated companies.
(vi) Fringe Benefits. During the Employment Period, the Executive shall be
entitled to fringe benefits, including, without limitation, tax and financial
planning services, payment of club dues, and, if applicable, use of an
automobile and payment of related expenses, in accordance with the most
favorable plans, practices, programs and policies of the Company and its
affiliated companies in effect for the Executive at any time during the 120-day
period immediately preceding the Effective Date or, if more favorable to the
peer executives of the Company and its affiliated companies.
(vii) Office and Support Staff. During the Employment Period, the Executive
shall be entitled to an office or offices of a size and with furnishings and
other appointments, and to exclusive personal secretarial and other assistance,
at least equal to the most favorable of the foregoing provided to the Executive
by the Company and its affiliated companies at any time during the 120-day
Executive, as provided generally at any time thereafter with respect to other
(viii) Vacation. During the Employment Period, the Executive shall be
entitled to paid vacation in accordance with the most favorable plans, policies,
programs and practices of the Company and its affiliated companies as in effect
for the Executive at any time during the 120-day period immediately preceding
the Effective Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer executives of the
Company and its affiliated companies.
5. Termination of Employment. (a) Death or Disability. The Executive’s
employment shall terminate automatically upon the Executive’s death during the
Employment Period. If the Company determines in good faith that the Disability
of the Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it may give to the Executive written
notice in accordance with Section 11(b) of this Agreement
-5-
of its intention to terminate the Executive’s employment. In such event, the
Executive’s employment with the Company shall terminate effective on the 30th
day after receipt of such notice by the Executive (the “Disability Effective
Date”), provided that, within the 30 days after such receipt, the Executive
shall not have returned to full-time performance of the Executive’s duties. For
purposes of this Agreement, “Disability” shall mean the absence of the Executive
from the Executive’s duties with the Company on a full-time basis for 180
consecutive business days as a result of incapacity due to mental or physical
illness which is determined to be total and permanent by a physician selected by
the Company or its insurers and acceptable to the Executive or the Executive’s
legal representative.
(b) Cause. The Company may terminate the Executive’s employment during the
Employment Period for Cause. For purposes of this Agreement, “Cause” shall mean:
substantially the Executive’s duties with the Company or one of its affiliates
(other than any such failure resulting from incapacity due to physical or mental
illness), after a written demand for substantial performance is delivered to the
Executive by the Board or the Chief Executive Officer of the Company which
specifically identifies the manner in which the Board or Chief Executive Officer
duties, or
(ii) the willful engaging by the Executive in illegal conduct or gross
misconduct which is materially and demonstrably injurious to the Company.
Executive’s action or omission was in the best interests of the Company. Any
act, or failure to act, based upon (A) authority given pursuant to a resolution
duly adopted by the Board or, if the Company is not the ultimate parent of a
group of affiliated companies and is not publicly-traded, the board of directors
or equivalent governing body of the ultimate parent of the Company (the
“Applicable Board”), [(B) the instructions of the Chief Executive Officer or a
senior officer of the Company]1 or (C) the advice of counsel for the Company
Executive in good faith and in the best interests of the Company. The cessation
of employment of the Executive shall not be deemed to be for Cause unless and
until there shall have been delivered to the Executive a copy of a resolution
duly adopted by the affirmative vote of not less than three-quarters of the
Applicable Board (excluding the Executive, if the Executive is a member of the
Applicable Board) at a meeting of the Applicable Board called and held for such
purpose (after reasonable notice is provided to the Executive and the Executive
is given an opportunity, together with counsel, to be heard before the
Applicable Board), finding that, in the good faith opinion of the Applicable
Board, the Executive is guilty of the conduct described in subparagraph (i) or
(ii) above, and specifying the particulars thereof in detail.
(c) Good Reason. The Executive’s employment may be terminated by the
Executive for Good Reason. For purposes of this Agreement, “Good Reason” shall
mean:
1 For all but CEO.
-6-
(i) the assignment to the Executive of any duties inconsistent in any
respect with the Executive’s position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities as contemplated
by Section 4(a) of this Agreement, or any other action by the Company which
results in a diminution in such position, authority, duties or responsibilities
(including as a result of the Company’s ceasing to be a publicly traded entity),
excluding for this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company promptly after receipt
of notice thereof given by the Executive;
Section 4(b) of this Agreement, other than an isolated, insubstantial and
inadvertent failure not occurring in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the Executive;
(iii) the Company’s requiring the Executive to be based at any office or
location other than as provided in Section 4(a)(i)(B) hereof or to travel on
Company business to a substantially greater extent than required immediately
prior to the Effective Date;
(iv) any purported termination by the Company of the Executive’s employment
otherwise than as expressly permitted by this Agreement; or
(v) any failure by the Company to comply with and satisfy Section 10(c) of
this Agreement.
For purposes of this Section 5(c), any good faith determination of “Good
Reason” made by the Executive shall be conclusive. Anything in this Agreement to
the contrary notwithstanding, a termination by the Executive for any reason
during the 30-day period immediately following the first anniversary of the
Effective Date shall be deemed to be a termination for Good Reason for all
purposes of this Agreement. The Executive’s mental or physical incapacity
following the occurrence of any of the circumstances described in clauses
(i) through (v) shall not affect the Executive’s ability to terminate employment
for Good Reason and the Executive’s death following delivery of a Notice of
Termination for Good Reason shall not affect the Executive’s estate’s
entitlement to severance payments and benefits provided hereunder upon a
termination of employment for Good Reason. Notwithstanding anything herein to
the contrary, the Executive’s resignation under this Agreement with or without
Good Reason shall in no way affect the Executive’s ability to terminate
employment by reason of the Executive’s retirement or to be eligible to receive
benefits under any retirement or pension plan of the Company and its affiliates.
the Executive for Good Reason, shall be communicated by Notice of Termination to
the other party hereto given in accordance with Section 11(b) of this Agreement.
For purposes of this Agreement, a "Notice of Termination” means a written notice
which indicates the specific termination provision in this Agreement relied
and circumstances claimed to provide a basis for termination of the Executive’s
the termination date
-7-
(which date shall be not more than thirty days after the giving of such notice).
The failure by the Executive or the Company to set forth in the Notice of
Termination any fact or circumstance which contributes to a showing of Good
Reason or Cause shall not waive any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or the Company, respectively,
from asserting such fact or circumstance in enforcing the Executive’s or the
Company’s rights hereunder.
(e) Date of Termination. “Date of Termination” means (i) if the Executive’s
employment is terminated by the Company for Cause, or by the Executive for or
without Good Reason, the date of receipt of the Notice of Termination or any
later date specified therein, as the case may be, (ii) if the Executive’s
employment is terminated by the Company other than for Cause or Disability, the
Date of Termination shall be the date on which the Company notifies the
Executive of such termination and (iii) if the Executive’s employment is
terminated by reason of death or Disability, the Date of Termination shall be
the date of death of the Executive or the Disability Effective Date, as the case
may be. Notwithstanding the foregoing, unless mutually agreed in writing by the
Company and the Executive, in no event shall the Date of Termination occur until
the Executive experiences, and the Company and the Executive shall take all
steps necessary (including with regard to any post-termination services by the
Executive) to ensure that any termination described in this Section 5
constitutes a “separation from service” within the meaning of Section 409A of
the Code, and notwithstanding anything contained herein to the contrary, the
date on which such separation from service takes place shall be the “Date of
Termination.”
6. Obligations of the Company upon Termination. (a) Good Reason; Other Than
for Cause, Death or Disability. If, during the Employment Period, the Company
shall terminate the Executive’s employment other than for Cause or Disability or
the Executive shall terminate employment for Good Reason:
(i) the Company shall pay to the Executive in a lump sum in cash within
30 days after the Date of Termination the aggregate of the following amounts:
A. the sum of (1) the Executive’s Annual Base Salary through the Date of
Termination to the extent not theretofore paid, (2) the product of (x) the
higher of (I) the highest Annual Bonus paid to the Executive for the last three
full fiscal years prior to the Effective Date and (II) the Annual Bonus paid or
payable, including any bonus or portion thereof which has been earned but
deferred (and annualized for any fiscal year consisting of less than twelve full
months or during which the Executive was employed for less than twelve full
months), for the most recently completed fiscal year during the Employment
Period, if any (such higher amount being referred to as the “Highest Annual
Bonus”) and (y) a fraction, the numerator of which is the number of days in the
current fiscal year through the Date of Termination, and the denominator of
which is 365 (the “Pro-Rata Bonus”) and (3) any accrued vacation pay, in each
case to the extent not theretofore paid (the sum of the amounts described in
clauses (1) and (3) shall be hereinafter referred to as the “Accrued
Obligations”); provided, that notwithstanding the foregoing, if the Executive
has made an irrevocable election under any deferred compensation arrangement
subject to Section 409A of the Code to defer any
-8-
portion of the Annual Base Salary Bonus described in clause (1) above, then for
all purposes of this Section 6 (including, without limitation, Sections 6(b)
through 6(d)), such deferral election, and the terms of the applicable plan,
agreement, or other arrangement shall apply to the same portion of the amount
described in such clause (1), and such portion shall not be considered as part
of the “Accrued Obligations” but shall instead be an “Other Benefit” (as defined
below); and
B. the amount equal to the product of (1) the Termination Multiple (as
defined below) and (2) the sum of (x) the Executive’s Annual Base Salary and
(y) the Highest Annual Bonus; and
C. an amount equal to the excess of (a) the actuarial equivalent of the
benefit under any excess or supplemental retirement plan in which the Executive
participates (the “SERP”) which the Executive would receive if the Executive’s
employment continued for a number of years after the Date of Termination equal
to the Termination Multiple, assuming for this purpose that all accrued benefits
are fully vested, and, assuming that the Executive’s compensation in each of
such years is that required by Section 4(b)(i) and Section 4(b)(ii), over
(b) the actuarial equivalent of the Executive’s actual benefit (paid or
payable), if any, under the SERP as of the Date of Termination (the “Additional
SERP Payment”);
(ii) for a number of years after the Executive’s Date of Termination equal
to the Termination Multiple, or such longer period as may be provided by the
terms of the appropriate plan, program, practice or policy (the “Benefits
Continuation Period”), the Company shall continue health care and life insurance
benefits to the Executive and/or the Executive’s family at least equal to those
which would have been provided to them in accordance with the plans, programs,
practices and policies described in Section 4(b)(iv) of this Agreement if the
Executive’s employment had not been terminated or, if more favorable to the
peer executives of the Company and its affiliated companies and their families;
provided, however, that, the health care benefits provided during the Benefit
Continuation Period shall be provided in such a manner that such benefits (and
the costs and premiums thereof) are excluded from the Executive’s income for
federal income tax purposes and, if the Company reasonably determines that
providing continued coverage under one or more of its health care benefit plans
contemplated herein could be taxable to the Executive, the Company shall provide
such benefits at the level required hereby through the purchase of individual
insurance coverage; provided, however, that if the Executive becomes reemployed
with another employer and is eligible to receive medical or other welfare
benefits under another employer provided plan, the medical and other welfare
benefits described herein shall be secondary to those provided under such other
plan during such applicable period of eligibility. For purposes of determining
eligibility (but not the time of commencement of benefits) of the Executive for
retiree benefits pursuant to such plans, practices, programs and policies, the
Executive shall be considered to have remained employed until a number of years
after the Date of Termination equal to the Termination Multiple and to have
retired on the last day of such period and the Company shall take such actions
as are necessary to cause the Executive to commence in the applicable retiree
benefit plans as of the applicable benefit commencement date;
-9-
(iii) the Company shall, at its sole expense as incurred, provide the
Executive with outplacement services the scope and provider of which shall be
selected by the Executive in his sole discretion; provided, that such
outplacement benefits shall end not later than the last day of the second
calendar year that begins after the Date of Termination; and
(iv) to the extent not theretofore paid or provided, the Company shall
timely pay or provide to the Executive any other amounts or benefits required to
be paid or provided or which the Executive is eligible to receive under any
plan, program, policy or practice or contract or agreement of the Company and
its affiliated companies (such other amounts and benefits shall be hereinafter
referred to as the “Other Benefits”).
Notwithstanding the foregoing provisions of Section 6(a)(i), and except as
otherwise provided in Section 11(h) with respect to an Anticipatory Termination,
in the event that the Executive is a “specified employee” within the meaning of
Section 409A of the Code (as determined in accordance with the methodology
established by the Company as in effect on the Date of Termination) (a
“Specified Employee”), amounts that constitute “nonqualified deferred
compensation” within the meaning of Section 409A of the Code and that would
otherwise be payable under this Section 6(a)(i) during the six-month period
immediately following the Date of Termination (other than the Accrued
Obligations) shall instead be paid, with interest on any delayed payment at the
applicable federal rate provided for in Section 7872(f)(2)(A) of the Code
(“Interest”), or provided on the first business day after the date that is six
months following the Executive’s “separation from service” within the meaning of
Section 409A of the Code (the “Delayed Payment Date”).
For purposes of this Section 6, “Termination Multiple” shall mean (x) three, if
the Date of Termination occurs on or prior to the first anniversary of the
Effective Date, (y) two, if the Date of Termination occurs after the first
anniversary of the Effective Date and on or prior to the second anniversary of
the Effective Date and (z) one, if the Date of Termination occurs after the
second anniversary of the Effective Date and on or prior to the third
anniversary of the Effective Date.
(b) Death. If the Executive’s employment is terminated by reason of the
Executive’s death during the Employment Period, this Agreement shall terminate
without further obligations to the Executive’s legal representatives under this
Agreement, other than for payment of Accrued Obligations, payment of the
Pro-Rata Bonus and the timely payment or provision of Other Benefits. Accrued
Obligations (subject to the proviso set forth in Section 6(a)(i)(A) to the
extent applicable) and the Pro-Rata Bonus shall be paid to the Executive’s
estate or beneficiary, as applicable, in a lump sum in cash within 30 days of
the Date of Termination. With respect to the provision of Other Benefits, the
term Other Benefits as utilized in this Section 6(b) shall include, without
limitation, and the Executive’s estate and/or beneficiaries shall be entitled to
receive, benefits at least equal to the most favorable benefits provided by the
Company and affiliated companies to the estates and beneficiaries of peer
executives of the Company and such affiliated companies under such plans,
programs, practices and policies relating to death benefits, if any, as in
effect with respect to other peer executives and their beneficiaries at any time
during the 120-day period immediately preceding the Effective Date or, if
more-favorable to the Executive’s estate and/or the Executive’s beneficiaries,
as in effect on the date of the Executive’s
-10-
death with respect to other peer executives of the Company and its affiliated
companies and their beneficiaries.
(c) Disability. If the Executive’s employment is terminated by reason of
the Executive’s Disability during the Employment Period, this Agreement shall
terminate without further obligations to the Executive, other than for payment
of Accrued Obligations and the timely payment or provision of Other Benefits.
the extent applicable) and the Pro-Rata Bonus shall be paid to the Executive in
a lump sum in cash within 30 days of the Date of Termination; provided, that in
the event that the Executive is a Specified Employee, the Pro-Rata Bonus shall
be paid, with Interest, to the Executive on the Delayed Payment Date. With
respect to the provision of Other Benefits, the term Other Benefits as utilized
in this Section 6(c) shall include, and the Executive shall be entitled after
the Disability Effective Date to receive, disability and other benefits at least
equal to the most favorable of those generally provided by the Company and its
affiliated companies to disabled executives and/or their families in accordance
with such plans, programs, practices and policies relating to disability, if
any, as in effect generally with respect to other peer executives and their
families at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive and/or the Executive’s
family, as in effect at any time thereafter generally with respect to other peer
executives of the Company and its affiliated companies and their families.
(d) Cause; Other than for Good Reason. If the Executive’s employment shall
be terminated for Cause during the Employment Period, this Agreement shall
terminate without further obligations to the Executive other than the obligation
to pay to the Executive (x) his Annual Base Salary through the Date of
extent applicable) and (y) Other Benefits, in each case to the extent
theretofore unpaid. If the Executive voluntarily terminates employment during
the Employment Period, excluding a termination for Good Reason, this Agreement
shall terminate without further obligations to the Executive, other than for
payment of the Accrued Obligations and the Pro-Rata Bonus and the timely payment
or provision of Other Benefits. In such case, all Accrued Obligations (subject
to the proviso set forth in Section 6(a)(i)(A) to the extent applicable) and the
Pro-Rata Bonus shall be paid to the Executive in a lump sum in cash within
30 days of the Date of Termination; provided, that in the event that the
Executive is a Specified Employee, the Pro-Rata Bonus shall be paid, with
Interest, to the Executive on the Delayed Payment Date.
7. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or
limit the Executive’s continuing or future participation in any plan, program,
policy or practice provided by the Company or any of its affiliated companies
and for which the Executive may qualify, nor, subject to Section 11(g), shall
anything herein limit or otherwise affect such rights as the Executive may have
under any contract or agreement with the Company or any of its affiliated
companies. Amounts which are vested benefits or which the Executive is otherwise
entitled to receive under any plan, policy, practice or program of or any
contract or agreement with the Company or any of its affiliated companies at or
plan, policy, practice or program or contract or agreement except as explicitly
modified by this Agreement.
-11-
8. Full Settlement. The Company’s obligation to make the payments provided
for in this Agreement and otherwise to perform its obligations hereunder shall
not be affected by any setoff, counterclaim, recoupment, defense or other claim,
right or action which the Company may have against the Executive or others. In
no event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement and such amounts shall not be reduced
whether or not the Executive obtains other employment. The Company agrees to pay
as incurred (within 10 days following the Company’s receipt of an invoice from
the Executive) at any time from the Effective Date of this Agreement through the
Executive’s remaining lifetime (or, if longer, through the 20th anniversary of
the Effective Date), to the full extent permitted by law, all legal fees and
expenses which the Executive may reasonably incur as a result of any contest
(regardless of the outcome thereof) by the Company, the Executive or others of
the validity or enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof (including as a result of any
contest by the Executive about the amount of any payment pursuant to this
Agreement), plus in each case Interest. In order to comply with Section 409A of
the Code, in no event shall the payments by the Company under this Section 8 be
made later than the end of the calendar year next following the calendar year in
which such fees and expenses were incurred, provided, that the Executive shall
have submitted an invoice for such fees and expenses at least 10 days before the
end of the calendar year next following the calendar year in which such fees and
expenses were incurred. The amount of such legal fees and expenses that the
Company is obligated to pay in any given calendar year shall not affect the
amount of legal fees and expenses that the Company is obligated to pay in any
other calendar year, and the Executive’s right to have the Company pay such
legal fees and expenses may not be liquidated or exchanged for any other
benefit.
9. Confidential Information. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its affiliated companies,
and their respective businesses, which shall have been obtained by the Executive
during the Executive’s employment by the Company or any of its affiliated
companies and which shall not be or become public knowledge (other than by acts
by the Executive or representatives of the Executive in violation of this
Agreement). After termination of the Executive’s employment with the Company,
the Executive shall not, without the prior written consent of the Company or as
may otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the provisions of
this Section 9 constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.
10. Successors. (a) This Agreement is personal to the Executive and without
the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive’s
legal representatives.
Company and its successors and assigns.
-12-
business and/or assets of the Company to assume expressly and agree to perform
be required to perform it if no such succession had taken place. As used in this
11. Miscellaneous. (a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas, without reference to principles
of conflict of laws. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect. This Agreement may not be
amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.
[ ]
at the address set forth in his personnel file at Smith International, Inc.
Smith International, Inc.
1310 Rankin Road
Houston, TX 77073
Fax: (281) 233-5996
Attention: General Counsel
shall not affect the validity or enforceability of any other provision of this
Agreement.
(d) The Company may withhold from any amounts payable under this Agreement
such Federal, state, local or foreign taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
(e) The Executive’s or the Company’s failure to insist upon strict
right the Executive or the Company may have hereunder, including, without
limitation, the right of the Executive to terminate employment for Good Reason
pursuant to Section 5(c)(i)-(v) of this Agreement, shall not be deemed to be a
waiver of such provision or right or any other provision or right of this
Agreement.
-13-
(f) The Agreement is intended to comply with the requirements of
Section 409A of the Code or an exemption or exclusion therefrom and, with
respect to amounts that are subject to Section 409A of the Code, shall in all
respects be administered in accordance with Section 409A of the Code. Each
payment under this Agreement shall be treated as a separate payment for purposes
of Section 409A of the Code. In no event may the Executive, directly or
indirectly, designate the calendar year of any payment to be made under this
Agreement. If the Executive dies following the Date of Termination and prior to
the payment of any amounts delayed on account of Section 409A of the Code, such
amounts shall be paid to the personal representative of the Executive’s estate
within 30 days after the date of the Executive’s death. All reimbursements and
in-kind benefits provided under this Agreement that constitute deferred
compensation within the meaning of Section 409A of the Code shall be made or
provided in accordance with the requirements of Section 409A of the Code,
including, without limitation, that (i) in no event shall reimbursements by the
Company under this Agreement be made later than the end of the calendar year
next following the calendar year in which the applicable fees and expenses were
incurred, provided, that the Executive shall have submitted an invoice for such
fees and expenses at least 10 days before the end of the calendar year next
following the calendar year in which such fees and expenses were incurred;
(ii) the amount of in-kind benefits that the Company is obligated to pay or
provide in any given calendar year shall not affect the in-kind benefits that
the Company is obligated to pay or provide in any other calendar year; (iii) the
Executive’s right to have the Company pay or provide such reimbursements and
in-kind benefits may not be liquidated or exchanged for any other benefit; and
(iv) in no event shall the Company’s obligations to make such reimbursements or
to provide such in-kind benefits apply later than the Executive’s remaining
lifetime (or if longer, through the 20th anniversary of the Effective Date).
Prior to the Effective Date but within the time period permitted by the
applicable Treasury Regulations or other applicable guidance, the Company may,
in consultation with the Executive, modify the Agreement, in the least
restrictive manner necessary and without any diminution in the value of the
payments to the Executive, in order to cause the provisions of the Agreement to
comply with the requirements of Section 409A of the Code, so as to avoid the
imposition of accelerated tax, additional tax and/or penalties on the Executive
pursuant to Section 409A of the Code.
(g) Subject to Section 1(a), the Executive’s employment may be terminated
by either the Executive or the Company at any time prior to the Effective Date,
in which case the Executive shall have no further rights under this Agreement.
From and after the Effective Date, except as specifically provided herein, this
Agreement shall supersede any other agreement between the parties with respect
to the subject matter hereof[;provided, that the terms of the Amended and
Restated Employment Agreement by and between the Company and the Executive dated
as of December 31, 2008 (the “Employment Agreement”), without giving effect to
any amendments entered into thereto prior to the Effective Date shall remain in
full force and effect; provided, further, that in the event of a Change of
Control or an Anticipatory Termination, the terms of this Agreement shall
control, except with respect to any Accrued Obligations (as defined herein)].
(h) Notwithstanding any provision in this Agreement to the contrary, in the
event of an Anticipatory Termination, any payments that are deferred
compensation within the meaning of Section 409A of the Code that the Company
shall be required to pay pursuant to Section 6(a)(i) of this Agreement shall be
paid on the date of such Change of Control and any
-14-
payments or benefits that are not deferred compensation within the meaning of
Section 409A of the Code that the Company shall be required to pay or provide
pursuant to Section 6(a) of this Agreement shall be paid or shall commence being
provided on the date of the Change of Control. Interest with respect to the
period, if any, from the date of the Change of Control through the actual date
of payment shall be paid on any delayed cash amounts.
-15-
IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand
and, pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
[Executive]
SMITH INTERNATIONAL, INC.
By:
-16-
|
Exhibit 10.2(g)
AMENDED AND RESTATED
CenturyLink
2005 MANAGEMENT INCENTIVE COMPENSATION PLAN
1. Purpose. The purpose of the Amended and Restated 2005 Management
Incentive Compensation Plan (this “Plan”) of CenturyTel, Inc. (“CenturyLink”) is
to increase shareholder value and to advance the interests of CenturyLink and
its subsidiaries (collectively, the “Company”) by furnishing a variety of equity
incentives (the “Incentives”) designed to attract, retain, and motivate
officers, employees, consultants, and advisors and to strengthen the mutuality
of interests between such persons and CenturyLink’s shareholders. Incentives
may consist of options to purchase shares of CenturyLink’s common stock, $1.00
par value per share (the “Common Stock”), stock appreciation rights, shares of
restricted stock, restricted stock units, or other stock-based awards the value
of which is based upon the value of the Common Stock, all on terms determined
under this Plan. As used in this Plan, the term “subsidiary” means any
corporation, limited liability company or other entity of which CenturyLink owns
(directly or indirectly) within the meaning of Section 424(f) of the Internal
Revenue Code of 1986, as amended (the “Code”), 50% or more of the total combined
voting power of all classes of stock, membership interests, or other equity
interests issued thereby.
2. Administration.
2.1 Composition. This Plan shall be administered by the compensation
committee of the Board of Directors of CenturyLink, or by a subcommittee of the
compensation committee. The committee or subcommittee that administers this
Plan shall hereinafter be referred to as the “Committee.” The Committee shall
consist of not fewer than two members of the Board of Directors, each of whom
shall (a) qualify as a “non-employee director” under Rule 16b-3 under the
Securities Exchange Act of 1934 (the “1934 Act”), or any successor rule, and (b)
qualify as an “outside director” under Section 162(m) of the Code and the
regulations thereunder (collectively, “Section 162(m)”).
2.2 Authority. The Committee shall have authority to award Incentives
under this Plan, to interpret this Plan, to establish any rules or regulations
relating to this Plan that it determines to be appropriate, to enter into
agreements with or provide notices to participants as to the terms of the
Incentives (the “Incentive Agreements”), and to make any other determination
that it believes necessary or advisable for the proper administration of this
Plan. Its decisions concerning matters relating to this Plan shall be final,
conclusive and binding on the Company and participants. The Committee may
delegate its authority hereunder to the extent provided in Section 3
hereof. The Committee shall not have authority to award Incentives under this
Plan to directors in their capacities as such.
3. Eligible Participants. Employees and officers of the Company
(including officers who also serve as directors of the Company) and consultants
and advisors to the Company shall become eligible to receive Incentives under
this Plan when designated by the Committee. Employees may be designated
individually or by groups or categories, as the Committee deems
appropriate. With respect to participants not subject to Section 16 of the 1934
Act or Section 162(m), (i) the Committee may delegate to the chief executive
officer of CenturyLink its authority to designate participants, to determine the
type, size and terms of the Incentives to be received by these participants, to
determine any performance objectives for these participants, and to approve or
authorize the form of Incentive Agreement governing such Incentives and (ii)
following any grants of Incentives pursuant to such delegated authority, the
chief executive officer of CenturyLink or any officer designated by him may
exercise any powers of the Committee under this Plan to accelerate vesting or
exercise periods, to terminate restricted periods, to waive compliance with
specified provisions, or to otherwise make determinations contemplated hereunder
with respect to such Incentives; provided, however, that in no event may (A) the
chief executive officer grant stock options at an exercise price other than the
Fair Market Value of a share of Common Stock on the later of the date of grant
or the date the participant commences employment with the Company, unless
otherwise determined by the Committee (subject to the limitations in Section
5.1), (B) any person other than the Committee make any of the determinations set
forth in Section 4.5, 11.11 or Section 11.12 of this Plan, or (C) any person
take any action that the Committee lacks the authority to take hereunder.
4. Shares Subject to this Plan. The shares of Common Stock with
respect to which Incentives may be granted under this Plan shall be subject to
the following:
4.1 Type of Common Stock. The shares of Common Stock with respect to
which Incentives may be granted under this Plan may be currently authorized but
unissued shares or shares currently held or subsequently acquired by the Company
transactions.
4.2 Maximum Number of Shares. Subject to the other provisions of this
Section 4, the maximum number of shares of Common Stock that may be delivered to
participants and their beneficiaries under this Plan shall be 4,000,000 shares
of Common Stock.
4.3 Share Counting. To the extent any shares of Common Stock covered
by an Incentive are not delivered to a participant or beneficiary because the
Incentive is forfeited or canceled, or the shares of Common Stock are not
delivered because the Incentive is paid or settled in cash, such shares shall
number of shares of Common Stock available for delivery under Section 4.2 or
4.4(c) of this Plan. In the event that shares of Common Stock are issued as
Incentives and thereafter are forfeited or reacquired by the Company pursuant to
rights reserved upon issuance thereof, such forfeited and reacquired Shares may
again be issued under this Plan. All shares to which a stock appreciation right
relates (not only the net shares) shall be counted against the shares issuable
through the Plan, except as otherwise provided above.
4.4 Limitations on Number of Shares. Subject to Section 4.5, the
following additional limitations are imposed under this Plan:
(a) The maximum number of shares of Common Stock that may be issued
upon exercise of stock options intended to qualify as incentive stock options
under Section 422 of the Code shall be 4,000,000 shares.
(b) The maximum number of shares of Common Stock that may be covered
by Incentives granted under this Plan to any one individual during any one
calendar-year period shall be 600,000.
(c) The maximum number of shares of Common Stock that may be issued as
restricted stock, restricted stock units, or Other Stock-Based Awards (as
defined below) shall be 2,000,000 shares. Such Incentives shall be subject to
the minimum vesting periods provided herein, with respect to restricted stock,
restricted stock units and Other Stock-Based Awards, except that restricted
stock, restricted stock units and Other Stock-Based Awards with respect to an
aggregate of 200,000 shares of Common Stock may be granted without compliance
with the minimum vesting periods provided in Sections 6.2, 7.2 and 9.2.
(d) If, after shares have been earned under an Incentive, the delivery
is deferred, any additional shares attributable to dividends paid during the
deferral period shall be disregarded for purposes of the limitations of this
Section 4.
4.5 Adjustment.
(a) In the event of any recapitalization, reclassification, stock
dividend, stock split, combination of shares or other change in the Common
Stock, all limitations on numbers of shares of Common Stock provided in this
Section 4 and the number of shares of Common Stock subject to outstanding
Incentives shall be equitably adjusted in proportion to the change in
outstanding shares of Common Stock. In addition, in the event of any such
change in the Common Stock, the Committee shall make any other adjustment that
it determines to be equitable, including adjustments to the exercise price of
any option or the base price of any stock appreciation right and any per share
performance objectives of any Incentive in order to provide participants with
the same relative rights before and after such adjustment.
(b) If the Company merges, consolidates, sells all of its assets or
dissolves and such transaction is not a Change of Control, as defined in Section
11.12 (each of the foregoing a “Fundamental Change”), then thereafter upon any
exercise or payout of an Incentive theretofore granted the participant shall be
entitled to receive (i) in lieu of shares of Common Stock previously issuable
thereunder, the number and class of shares of stock and securities to which the
participant would have been entitled pursuant to the terms of the Fundamental
Change if, immediately prior to such Fundamental Change, the participant had
been the holder of record of the number of shares of Common Stock subject to
such Incentive or (ii) in lieu of payments based upon Common Stock previously
payable thereunder, payments based on any formula that the Committee determines
to be equitable in order to provide participants with substantially equivalent
rights before and after the Fundamental Change. In the event any such
Fundamental Change causes a change in the outstanding Common Stock, the
aggregate number of shares available under the Plan may be appropriately
adjusted by the Committee in its sole discretion, whose determination shall be
conclusive.
5. Stock Options. The Committee may grant incentive stock options (as
such term is defined in Section 422 of the Code) or non-qualified stock options.
Any option that is designated as a non-qualified stock option shall not be
treated as an incentive stock option. Each stock option granted by the
Committee under this Plan shall be subject to the following terms and
conditions:
5.1 Price. The exercise price per share shall be determined by the
Committee, subject to adjustment under Section 4.5; provided that in no event
shall the exercise price be less than the Fair Market Value (as defined below)
of a share of Common Stock on the date of grant, except in the case of a stock
option granted in assumption of or in substitution for an outstanding award of a
company acquired by the Company or with which the Company combines.
5.2 Number. The number of shares of Common Stock subject to the
option shall be determined by the Committee, subject to the limitations and
adjustments provided in Section 4 hereof.
5.3 Duration and Time for Exercise. Subject to earlier termination as
provided in Sections 11.4 and 11.12, the term of each stock option shall be
determined by the Committee, but may not exceed ten years. Each stock option
shall become exercisable at such time or times during its term as shall be
determined by the Committee. The Committee may accelerate the exercisability of
any stock option at any time.
5.4 Conditions to Exercise. The Committee may, in its discretion,
provide that a stock option cannot be exercised unless one or more performance
goals are achieved, including any of those specified in Section 10.
5.5 Manner of Exercise.
(a) A stock option may be exercised, in whole or in part, by giving
written notice to the Company, specifying the number of shares of Common Stock
to be purchased. The exercise notice shall be accompanied by tender of the full
purchase price for such shares, which may be paid or satisfied by (i) cash; (ii)
check; (iii) delivery of shares of Common Stock, which shares shall be valued
for this purpose at the Fair Market Value on the business day immediately
preceding the date such option is exercised and, unless otherwise determined by
the Committee, shall have been held by the optionee for at least six months;
(iv) delivery of irrevocable written instructions to a broker approved by the
Company (with a copy to the Company) to immediately sell a portion of the shares
issuable under the option and to deliver promptly to the Company the amount of
sale proceeds (or loan proceeds if the broker lends funds to the participant for
delivery to the Company) to pay the exercise price; (v) in such other manner as
may be authorized from time to time by the Committee; or (vi) any combination of
the preceding, equal in value to the full amount of the exercise price; provided
that all such payments shall be made or denominated in United States dollars.
(b) Notice under the preceding paragraph may be delivered by telecopy,
electronic mail or any similar form of transmission, provided that the exercise
price of such shares is received by the Company via wire transfer or other means
on or before the day such transmission is received by the Company. The notice
shall specify the manner in which any certificates for such shares are to be
delivered.
(c) An option to purchase shares of Common Stock in accordance with
this Plan shall be deemed to have been exercised immediately prior to the close
of business on the first business date on which the Company has received both
(i) written notice of such exercise and (ii) payment in full of the exercise
price for the number of shares for which options are being exercised.
(d) In the case of delivery of an uncertified check, no shares shall
be issued until the check has been paid in full.
(e) Prior to the issuance of shares of Common Stock upon the exercise
of a stock option, a participant shall have no rights as a shareholder.
5.6 Repricing. Except for adjustments pursuant to Section 4.5 or
actions permitted to be taken by the Committee under Section 11.12(c) in the
event of a Change of Control, unless approved by the shareholders of the
Company, (a) the exercise price for any outstanding option granted under this
Plan may not be decreased after the date of grant and (b) an outstanding option
that has been granted under this Plan may not, as of any date that such option
has an exercise price that is greater than the then current Fair Market Value of
a share of Common Stock, be surrendered to the Company as consideration for
anything of value, including the grant of a new option with a lower exercise
price, another Incentive, a cash payment or Common Stock.
5.7 Incentive Stock Options. Notwithstanding anything in this Plan to
the contrary, each of the following additional provisions shall apply to the
grant of stock options that are intended to qualify as incentive stock options:
(a) Any incentive stock option authorized under this Plan shall
contain such other provisions as the Committee shall deem advisable, but shall
in all events be consistent with and contain or be deemed to contain all
provisions required in order to qualify the options as incentive stock options.
(b) All incentive stock options must be granted within ten years from
the date on which this Plan was adopted by the Board of Directors.
(c) No incentive stock option shall be granted to any participant who,
at the time such option is granted, would own (within the meaning of Section 422
of the Code) stock possessing more than 10% of the total combined voting power
of all classes of stock of the corporation that employs such participant or its
parent or subsidiary corporation.
(d) The aggregate Fair Market Value (determined with respect to each
incentive stock option as of the time such incentive stock option is granted) of
the Common Stock with respect to which incentive stock options are exercisable
for the first time by a participant during any calendar year (under this Plan or
any other plan of the Company) shall not exceed $100,000. To the extent that
such limitation is exceeded, such options shall not be treated, for federal
income tax purposes, as incentive stock options.
6. Restricted Stock.
6.1 Grant of Restricted Stock. An award of restricted stock may be
subject to the attainment of specified performance goals or targets,
restrictions on transfer, forfeitability provisions and such other terms and
conditions as the Committee may determine, subject to the provisions of this
Plan. To the extent restricted stock is intended to qualify as
“performance-based compensation” under Section 162(m), it must be granted
subject to the attainment of performance goals as described in Section 10 and
meet the additional requirements by imposed by Section 162(m).
6.2 Restricted Period. At the time an award of restricted stock is
made, the Committee shall establish a period of time during which the transfer
of the shares of restricted stock shall be restricted (the “Restricted
Period”). Each award of restricted stock may have a different Restricted
Period. Except as provided in Section 4.4(c), a Restricted Period of at least
three years is required, except that if vesting of the shares is subject to the
attainment of specified performance goals, the Restricted Period may be one year
or more. Incremental periodic vesting of portions of the award during the
Restricted Period is permitted. Unless otherwise provided in the Incentive
Agreement, the Committee may in its discretion declare the Restricted Period
terminated upon a participant’s death, disability, retirement or other
termination by the Company and permit the sale or transfer of the restricted
stock. The expiration of the Restricted Period shall also occur as provided
under Section 11.12 upon a Change of Control of the Company.
6.3 Escrow. The participant receiving restricted stock shall enter
into an Incentive Agreement with the Company setting forth the conditions of the
grant. Any certificates representing shares of restricted stock shall be
registered in the name of the participant and deposited with the Company,
together with a stock power endorsed in blank by the participant. Each such
certificate shall bear a legend in substantially the following form:
The transferability of this certificate and the shares of Common Stock
represented by it is subject to the terms and conditions (including conditions
of forfeiture) contained in the Amended and Restated CenturyLink 2005 Management
Incentive Compensation Plan (the “Plan”) and an agreement entered into between
the registered owner and CenturyLink thereunder. Copies of this Plan and the
agreement are on file and available for inspection at the principal office of
CenturyLink.
If the shares awarded under the Plan are represented by book or electronic entry
rather than a certificate, the Company shall take steps to restrict transfer of
the shares as it deems necessary or advisable to comply with applicable law.
6.4 Dividends on Restricted Stock. Any and all cash and stock
dividends paid with respect to the shares of restricted stock shall be subject
to any restrictions on transfer, forfeitability provisions or reinvestment
requirements as the Committee may, in its discretion, prescribe in the Incentive
Agreement.
6.5 Forfeiture. In the event of the forfeiture of any shares of
restricted stock under the terms provided in the Incentive Agreement (including
any additional shares of restricted stock that may result from the reinvestment
of cash and stock dividends, if so provided in the Incentive Agreement), such
forfeited shares shall be surrendered and any certificates cancelled. The
participants shall have the same rights and privileges, and be subject to the
same forfeiture provisions, with respect to any additional shares received
pursuant to Section 4.5 due to a recapitalization, stock split or other change
in capitalization described therein.
6.6 Expiration of Restricted Period. Upon the expiration or
termination of the Restricted Period and the satisfaction of any other
conditions prescribed by the applicable Incentive Agreement or at such earlier
time as provided for in Section 6.2, the restrictions applicable to the
restricted stock shall lapse and a stock certificate for the number of shares of
restricted stock with respect to which the restrictions have lapsed shall be
delivered, free of all such restrictions and legends other than those required
by law, to the participant or the participant’s estate, as the case may be.
6.7 Rights as a Shareholder. Subject to the restrictions imposed
under the terms and conditions of this Plan and subject to any other
restrictions that may be imposed in the Incentive Agreement, each participant
receiving restricted stock shall have all the rights of a shareholder with
respect to shares of Common Stock during any period in which such shares are
subject to forfeiture and restrictions on transfer, including the right to vote
such shares.
7. Restricted Stock Units.
7.1 Grant of Restricted Stock Units. A restricted stock unit, or RSU,
represents the right to receive from the Company on the scheduled vesting date
or other specified payment date for such RSU, one share of Common Stock. An
award of restricted stock units may be subject to the attainment of specified
performance goals or targets, forfeitability provisions and such other terms and
Plan. To the extent an award of restricted stock units is intended to qualify
meet the additional requirements imposed by Section 162(m).
7.2 Vesting Period. At the time an award of restricted stock units is
made, the Committee shall establish a period of time during which the restricted
stock units shall vest (the “Vesting Period”). Each award of restricted stock
units may have a different Vesting Period. Except as provided in Section
4.4(c), a Vesting Period of at least three years is required, except that if
vesting of the RSUs is subject to the attainment of specified performance goals,
the Vesting Period may be one year or more. Incremental periodic vesting of
portions of the award during the Vesting Period is permitted. The acceleration
of the expiration of the Vesting Period shall occur as provided under Section
11.12(b) upon a Change of Control of the Company and may also occur as provided
under Section 11.4 in the event of termination of employment under the
circumstances provided in the Incentive Agreement.
7.3 Dividend Equivalent Accounts. Subject to the terms and conditions
of this Plan and the applicable Incentive Agreement, as well as any procedures
established by the Committee, prior to the expiration of the applicable Vesting
Period of an RSU granted to a participant hereunder, the Company shall establish
an account for the participant and deposit into that account any securities,
cash or other property comprising any dividend or property distribution with
respect to the shares of Common Stock underlying the RSU. The participant shall
have no rights to the amounts or other property in such account until the
applicable RSU vests.
7.4 Rights as a Shareholder. Each participant receiving restricted
stock units shall have no rights as a shareholder with respect to such
restricted stock units until such time as shares of Common Stock are issued to
the participant.
8. Stock-Settled Stock Appreciation Rights.
8.1 Grant of Stock-Settled Stock Appreciation Rights. A stock-settled
stock appreciation right, or SAR, is a right to receive, without payment to the
Company, a number of shares of Common Stock, the number of which is determined
pursuant to the formula set forth in Section 8.5. Each SAR granted by the
Committee under the Plan shall be subject to the terms and conditions provided
in this Section 8:
8.2 Number. Each SAR granted to any participant shall relate to such
number of shares of Common Stock as shall be determined by the Committee,
subject to adjustment as provided in Section 4.5.
8.3 Duration. The term of each SAR shall be determined by the
Committee, but shall not exceed a maximum term of 10 years. The Committee may
in its discretion accelerate the exercisability of any SAR at any time in its
discretion.
8.4 Exercise. A SAR may be exercised, in whole or in part, by giving
written notice to the Company, specifying the number of SARs which the holder
wishes to exercise. The date that the Company receives such written notice
shall be referred to herein as the “Exercise Date.” The Company shall, within
30 days of an Exercise Date, deliver to the exercising holder any certificates
for the shares of Common Stock to which the holder is entitled pursuant to
Section 8.5.
8.5 Payment. The number of shares of Common Stock which shall be
issuable upon the exercise of a SAR shall be determined by dividing:
(a) the number of shares of Common Stock as to which the SAR is
exercised, multiplied by the amount of the appreciation in each such share (for
this purpose, the “appreciation” shall be the amount by which the Fair Market
Value of the Common Stock subject to the SAR on the business day preceding the
Exercise Date exceeds the “Base Price,” which is an amount, not less than the
Fair Market Value of a share of Common Stock on the date of grant, which shall
be determined by the Committee at the time of grant, subject to adjustment under
Section 4.5); by
(b) the Fair Market Value of a share of Common Stock on the Exercise
Date.
8.6 No Fractional Shares. No fractional shares of Common Stock shall
be issued upon the exercise of a SAR. In lieu thereof, the holder of a SAR shall
be entitled to purchase the portion necessary to make a whole share at its Fair
Market Value on the Exercise Date.
8.7 Repricing. Except for adjustments pursuant to Section 4.5 or
Company, (a) the Base Price for any outstanding SAR granted under this Plan may
not be decreased after the date of grant and (b) an outstanding SAR that has
been granted under this Plan may not, as of any date that such SAR has a per
share Base Price that is greater than the then current Fair Market Value of a
anything of value, including the grant of a new SAR with a lower Base Price,
another Incentive, a cash payment or Common Stock.
9. Other Stock-Based Awards.
9.1 Grant of Other Stock Based Awards. Subject to the limitations
described in Section 9.2 hereof, the Committee may grant to eligible
participants “Other Stock Based Awards,” which shall consist of awards, other
than options, restricted stock, restricted stock units or SARs provided for in
Sections 5 through 8, the value of which is based in whole or in part on the
value of shares of Common Stock. Other Stock Based Awards may be awards of
shares of Common Stock or may be denominated or payable in, valued in whole or
in part by reference to, or otherwise based on or related to, shares of, or
appreciation in the value of, Common Stock (including securities convertible or
exchangeable into or exercisable for shares of Common Stock), as deemed by the
Committee consistent with the purposes of this Plan. The Committee shall
determine the terms and conditions of any Other Stock Based Award (including
which rights of a shareholder, if any, the recipient shall have with respect to
Common Stock associated with any such award) and may provide that such award is
payable in whole or in part in cash. An Other Stock-Based Award may be subject
to the attainment of such specified performance goals or targets as the
Committee may determine, subject to the provisions of this Plan. To the extent
that an Other Stock-Based Award is intended to qualify as “performance-based
compensation” under Section 162(m), it must be granted subject to the attainment
of performance goals as described in Section 10 and meet the additional
requirements imposed by Section 162(m).
9.2 Vesting Terms. Except as otherwise provided in Section 4.4(c),
other Stock-Based Awards granted under this Section 9 shall be subject to a
vesting period of at least three years, except that if vesting of the award is
subject to the attainment of specified performance goals, a minimum vesting
period of one year is allowed. Incremental periodic vesting of portions of the
award over the required vesting period is permitted.
10. Section 162(m) Awards. To the extent that shares of restricted
stock, restricted stock units or Other Stock-Based Awards granted under the Plan
are intended to qualify as “performance-based compensation” under Section
162(m), the vesting, grant or payment of such awards shall be conditioned on the
achievement of one or more performance goals and must satisfy the other
requirements of Section 162(m). The performance goals pursuant to which such
awards shall vest, be granted or be paid out shall be any or a combination of
the following performance measures applied to the Company or one or more of its
divisions, subsidiaries or lines of business: return on equity, cash flow,
assets or investment; shareholder return; changes in revenues, operating income,
cash flow, cash provided by operating activities, earnings or earnings per
share; customer growth; customer satisfaction or an economic value added
measure. The performance goals may be subject to such adjustments as are
specified in advance by the Committee, including adjustments made pursuant to
written guidelines that are approved or confirmed in advance by the
Committee. For any performance period, the performance objectives may
be measured on an absolute basis or relative to a group of peer companies
selected by the Committee, relative to internal goals or industry benchmarks,
or relative to levels attained in prior years.
11. General.
11.1 Duration. No Incentives may be granted under the Plan later than
May 1, 2015; provided, however, that Incentives granted prior to such date shall
remain in effect until (i) all such Incentives granted under this Plan have
either been satisfied by the issuance of shares of Common Stock or the payment
of cash or been terminated under the terms of this Plan or the applicable
Incentive Agreement and (ii) all restrictions imposed on shares of Common Stock
in connection with their issuance under this Plan have lapsed.
11.2 Transferability of Incentives.
(a) No Incentive granted hereunder may be transferred, pledged,
assigned or otherwise encumbered by the holder thereof except:
(i) by will;
(ii) by the laws of descent and distribution;
(iii) pursuant to a domestic relations order, as defined in the Code;
or
(iv) in the case of stock options only, if permitted by the Committee
and so provided in the Incentive Agreement, (A) to Immediate Family Members (as
defined below), (B) to a partnership in which the participant and/or Immediate
Family Members, or entities in which the participant and/or Immediate Family
Members are the sole owners, members or beneficiaries, as appropriate, are the
sole partners, (C) to a limited liability company in which the participant
and/or Immediate Family Members, or entities in which the participant and/or
Immediate Family Members are the sole owners, members or beneficiaries, as
appropriate, are the sole members, or (D) to a trust for the sole benefit of the
participant and/or Immediate Family Members. “Immediate Family Members” means
the spouse and natural or adopted children or grandchildren of the participant
and their respective spouses. To the extent that an incentive stock option is
permitted to be transferred during the lifetime of the participant, it shall be
treated thereafter as a non-qualified stock option.
(b) No such transfer of any Incentive under paragraph (a) shall be
effective to bind the Company unless the Company shall have been furnished with
written notice thereof and a copy of such evidence as the Committee may deem
necessary to establish the validity of the transfer and the acceptance by the
transferee or transferees of the terms and conditions of this Plan and the
applicable Incentive Agreement.
(c) Any attempted assignment, transfer, pledge, hypothecation or other
disposition of an Incentive, or levy of attachment or similar process upon the
Incentive not specifically permitted herein, shall be null and void and without
effect.
11.3 Dividend Equivalents. In the sole and complete discretion of the
Committee, an Incentive may provide the holder thereof with dividends or
dividend equivalents, payable in cash, shares, other securities or other
property on a current or deferred basis.
11.4 Effect of Termination of Employment or Death. In the event that
a participant ceases to be an employee of the Company for any reason, including
death, disability, early retirement or normal retirement, any outstanding
Incentives then held by such participant may be exercised, may vest or may
expire at such times or in such manner as is set forth in the Incentive
Agreement. In its discretion, the Committee may resolve any questions under
this Plan or any Incentive Agreement as to whether and when there has been a
termination of employment and the cause or nature of such termination.
11.5 Additional Conditions. Anything in this Plan to the contrary
notwithstanding:
(a) the Company may, if it shall determine it necessary or desirable
for any reason, at the time of award of any Incentive or the issuance of any
shares of Common Stock pursuant to any Incentive, require the recipient of the
Incentive, as a condition to the receipt thereof or to the receipt of shares of
Common Stock issued pursuant thereto, to deliver to the Company a written
representation of present intention to acquire the Incentive or the shares of
Common Stock issued pursuant thereto for his own account for investment and not
for distribution; and
(b) if at any time the Company further determines, in its sole
discretion, that the listing, registration or qualification (or any updating of
any such document) of any Incentive or the shares of Common Stock issuable
pursuant thereto is necessary on any securities exchange or under any federal or
state securities or blue sky law, or that the consent or approval of any
governmental regulatory body is necessary or desirable as a condition of, or in
connection with the award of any Incentive, the issuance of shares of Common
Stock pursuant thereto, or the removal of any restrictions imposed on such
shares, such Incentive shall not be awarded or such shares of Common Stock shall
not be issued or such restrictions shall not be removed, as the case may be, in
whole or in part, unless such listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Company.
11.6 Incentive Agreements. An Incentive under this Plan shall be
subject to such terms and conditions, not inconsistent with this Plan, as the
Committee may, in its sole discretion, prescribe and set forth in the Incentive
Agreement. Such terms and conditions may provide for the forfeiture of an
Incentive or the gain associated with an Incentive under certain circumstances
to be set forth in the Incentive Agreement, including if the participant
competes with the Company or engages in other activities that are harmful to the
Company. In connection with all grants of Incentives under this Plan, the
Committee shall authorize and approve a form of Incentive Agreement governing
the terms and conditions of such Incentive that apply to all similarly-situated
award recipients, and cause the Company to prepare an individual agreement with
or notice to each award recipient that reflects the actual number of shares of
Common Stock to which the Incentive of such recipient relates. A copy of such
document shall be provided to each such award recipient, and the Committee may,
but need not, require that such award recipient duly execute and deliver to the
Company a copy of such document as a condition precedent to the effectiveness of
the grant of the Incentive. Such document is referred to in this Plan as an
“Incentive Agreement” regardless of whether a participant’s signature is
required.
11.7 Withholding.
(a) The Company shall have the right to withhold from any payments or
stock issuances under this Plan, or to collect as a condition of payment, any
taxes required by law to be withheld.
(b) If so provided in the applicable Incentive Agreement, a
participant will have the right to satisfy his or her withholding tax obligation
in whole or in part by electing (an “Election”) to deliver currently owned
shares of Common Stock or to have the Company withhold from the shares the
participant otherwise would receive shares of Common Stock having a value equal
to the minimum amount required to be withheld, with the value of the shares to
be delivered or withheld being based on the Fair Market Value of the Common
Stock on the date that the amount of tax to be withheld is determined (the “Tax
Date”). Each Election must be made prior to the Tax Date. Notwithstanding
anything to the contrary in this Plan or any Incentive Agreement, the Committee
may disapprove of any Election or suspend or terminate the right to make
Elections.
11.8 No Continued Employment. No participant under this Plan shall
have any right, because of his or her participation, to continue in the employ
of the Company for any period of time or to any right to continue his or her
present or any other rate of compensation.
11.9 Deferral Permitted. Payment of cash or distribution of any shares
of Common Stock to which a participant is entitled under any Incentive shall be
made as provided in the Incentive Agreement. Payment may be deferred at the
option of the participant if provided in the Incentive Agreement.
11.10 Amendment or Discontinuance of this Plan. The Board may amend
or discontinue this Plan at any time; provided, however, that no such amendment
may:
(a) without the approval of the shareholders, (i) increase, subject to
adjustments permitted herein, the maximum number of shares of Common Stock that
may be issued through this Plan, (ii) materially increase the benefits accruing
to participants under this Plan, (iii) materially expand the classes of persons
eligible to participate in this Plan, (iv) materially expand the types of awards
available for grant under the Plan, (v) amend Section 11.1 to permit grants of
Incentives hereunder later than May 1, 2015, (vi) materially change the method
of determining the Base price of options or the Base Price of SARs, or (vii)
amend Section 5.6 or 8.7 to permit repricing of options or SARs, respectively,
or
(b) materially impair, without the consent of the recipient, an
Incentive previously granted, except (i) as otherwise provided in Section 11.16
and (ii) that the Company retains all rights to take action under Section 11.12
and to include in Incentive Agreements provisions authorizing the Committee in
its discretion to cancel unvested or unexercisable Incentives.
11.11 Definition of Fair Market Value. Whenever the “Fair Market
Value” of Common Stock or some other specified security must be determined for
purposes of this Plan, it shall be determined as follows: (i) if the Common
Stock or other security is listed on an established stock exchange or any
automated quotation system that provides sale quotations, the closing sale price
for a share thereof on such exchange or quotation system on the applicable date
or, if shares are not traded on such day, on the next preceding trading date;
(ii) if the Common Stock or other security is not listed on any exchange or
quotation system, but bid and asked prices are quoted and published, the mean
between the quoted bid and asked prices on the applicable date or, if bid and
asked prices are not available on such day, on the next preceding day on which
such prices were available; and (iii) if the Common Stock or other security is
not regularly quoted, the fair market value of a share thereof on the applicable
date as established by the Committee in good faith and in accordance with
Section 409A. Notwithstanding the foregoing, if so determined by the Committee,
“Fair Market Value” may be determined as an average selling price during a
period specified by the Committee that is within thirty days before or thirty
days after the date of grant, provided that the commitment to grant the stock
right based on such valuation method must be irrevocable before the beginning of
the specified period, and such valuation method must be used consistently for
grants of stock rights under the same and substantially similar programs.
11.12 Change of Control.
(a) Unless otherwise provided in the Incentive Agreement, a Change of
Control shall mean:
(i) the acquisition by any person of beneficial ownership of 30% or
more of the outstanding shares of the Common Stock or 30% or more of the
combined voting power of CenturyLink’s then outstanding securities entitled to
vote generally in the election of directors; provided, however, that for
purposes of this subsection (i), the following acquisitions shall not constitute
a Change of Control:
(A) any acquisition (other than a Business Combination (as defined
below) which constitutes a Change of Control under Section 11.12(a)(iii) hereof)
of Common Stock directly from the Company,
(B) any acquisition of Common Stock by the Company,
(C) any acquisition of Common Stock by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any corporation
controlled by the Company, or
(D) any acquisition of Common Stock by any corporation pursuant to a
Business Combination that does not constitute a Change of Control under Section
11.12(a)(iii) hereof; or
(ii) individuals who, as of February 23, 2010, constituted the Board
of Directors of CenturyLink (the “Incumbent Board”) cease for any reason to
constitute at least a majority of the Board of Directors; provided, however,
that any individual becoming a director subsequent to such date whose election,
or nomination for election by CenturyLink’s shareholders, was approved by a vote
shall be considered a member of the Incumbent Board, unless such individual’s
person other than the Incumbent Board; or
(iii) consummation of a reorganization, share exchange, merger or
consolidation (including any such transaction involving any direct or indirect
subsidiary of CenturyLink) or sale or other disposition of all or substantially
all of the assets of the Company (a “Business Combination”); provided, however,
that in no such case shall any such transaction constitute a Change of Control
if immediately following such Business Combination:
(A) the individuals and entities who were the beneficial owners of
CenturyLink’s outstanding Common Stock and CenturyLink’s voting securities
entitled to vote generally in the election of directors immediately prior to
such Business Combination have direct or indirect beneficial ownership,
respectively, of more than 50% of the then outstanding shares of common stock,
and more than 50% of the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors of the
surviving or successor corporation, or, if applicable, the ultimate parent
company thereof (the “Post-Transaction Corporation”), and
(B) except to the extent that such ownership existed prior to the
Business Combination, no person (excluding the Post-Transaction Corporation and
any employee benefit plan or related trust of either CenturyLink, the
Post-Transaction Corporation or any subsidiary of either corporation)
beneficially owns, directly or indirectly, 20% or more of the then outstanding
shares of common stock of the corporation resulting from such Business
Combination or 20% or more of the combined voting power of the then outstanding
voting securities of such corporation, and
(C) at least a majority of the members of the board of directors of
the Post-Transaction Corporation were members of the Incumbent Board at the time
of the execution of the initial agreement, or of the action of the Board of
Directors, providing for such Business Combination; or
(iv) approval by the shareholders of CenturyLink of a complete
liquidation or dissolution of CenturyLink.
For purposes of this Section 11.12, the term “person” shall mean a natural
person or entity, and shall also mean the group or syndicate created when two or
more persons act as a syndicate or other group (including a partnership or
limited partnership) for the purpose of acquiring, holding, or disposing of a
security, except that “person” shall not include an underwriter temporarily
holding a security pursuant to an offering of the security.
(b) Upon a Change of Control, all outstanding Incentives granted
pursuant to this Plan shall automatically become fully vested and exercisable,
all restrictions or limitations on any Incentives shall automatically lapse and,
unless otherwise provided in the Incentive Agreement, all performance criteria
and other conditions relating to the payment of Incentives shall be deemed to be
achieved at the target level without the necessity of action by any person.
(c) No later than 30 days after a Change of Control of the type
described in subsections (a)(i) or (a)(ii) of this Section 11.12 and no later
than 30 days after the approval by the Board of a Change of Control of the type
described in subsections (a)(iii) or (a)(iv) of this Section 11.12, the
Committee, acting in its sole discretion without the consent or approval of any
participant (and notwithstanding any removal or attempted removal of some or all
of the members thereof as directors or Committee members), may act to effect one
or more of the alternatives listed below, which may vary among individual
participants and which may vary among Incentives held by any individual
participant; provided, however, that no such action may be taken if it would
result in the imposition of a penalty on the participant under Section 409A of
the Code as a result thereof:
(i) require that all outstanding options, SARs or Other Stock-Based
Awards be exercised on or before a specified date (before or after such Change
of Control) fixed by the Committee, after which specified date all unexercised
options, SARs and Other Stock-Based Awards and all rights of participants
thereunder shall terminate,
(ii) make such equitable adjustments to Incentives then outstanding as
the Committee deems appropriate to reflect such Change of Control and provide
participants with substantially equivalent rights before and after such Change
of Control (provided, however, that the Committee may determine in its sole
discretion that no adjustment is necessary),
(iii) provide for mandatory conversion or exchange of some or all of
the outstanding options, SARs, restricted stock units or Other Stock-Based
Awards held by some or all participants as of a date, before or after such
Change of Control, specified by the Committee, in which event such Incentives
shall be deemed automatically cancelled and the Company shall pay, or cause to
be paid, to each such participant an amount of cash per share equal to the
excess, if any, of the Change of Control Value of the shares subject to such
option, SAR, restricted stock unit or Other Stock-Based Award, as defined and
calculated below, over the per share exercise price or base price of such
Incentive or, in lieu of such cash payment, the issuance of Common Stock or
securities of an acquiring entity having a Fair Market Value equal to such
excess, or
(iv) provide that thereafter, upon any exercise or payment of an
Incentive that entitles the holder to receive Common Stock, the holder shall be
entitled to purchase or receive under such Incentive, in lieu of the number of
shares of Common Stock then covered by such Incentive, the number and class of
shares of stock or other securities or property (including cash) to which the
holder would have been entitled pursuant to the terms of the agreement providing
for the reorganization, share exchange, merger, consolidation or asset sale, if,
immediately prior to such Change of Control, the holder had been the record
owner of the number of shares of Common Stock then covered by such Incentive.
(d) For the purposes of conversions or exchanges under paragraph (iii)
of Section 11.12(c), the “Change of Control Value” shall equal the amount
determined by whichever of the following items is applicable:
(i) the per share price to be paid to holders of Common Stock in any
such merger, consolidation or other reorganization,
(ii) the price per share offered to holders of Common Stock in any
tender offer or exchange offer whereby a Change of Control takes place, or
(iii) in all other events, the fair market value of a share of Common
Stock, as determined by the Committee as of the time determined by the Committee
to be immediately prior to the effective time of the conversion or exchange.
(e) In the event that the consideration offered to shareholders of
CenturyLink in any transaction described in this Section 11.12 consists of
anything other than cash, the Committee shall determine the fair cash equivalent
of the portion of the consideration offered that is other than cash.
11.13 Repurchase. Upon approval of the Committee, the Company may
repurchase all or a portion of a previously granted Incentive from a participant
by mutual agreement by payment to the participant of cash or Common Stock or a
combination thereof with a value equal to the value of the Incentive determined
in good faith by the Committee; provided, however, that in no event will this
section be construed to grant the Committee the power to take any action in
violation of Section 5.6 or 8.7.
11.14 Liability.
(a) Neither CenturyLink, its affiliates or any of their respective
directors or officers shall be liable to any participant relating to the
participant’s failure to (i) realize any anticipated benefit under an Incentive
due to the failure to satisfy any applicable conditions to vesting, payment or
settlement, including the failure to attain performance goals or to satisfy the
conditions specified in Section 11.5 or (ii) realize any anticipated tax benefit
or consequence due to changes in applicable law, the particular circumstances of
the participant, or any other reason.
(b) No member of the Committee (or officer of the Company exercising
delegated authority of the Committee under Section 3 thereof) will be liable for
any action or determination made in good faith with respect to this Plan or any
Incentive.
11.15 Interpretation.
(a) Unless the context otherwise requires, (i) all references to
Sections are to Sections of this Plan, (ii) the term “including” means including
without limitation, (iii) all references to any particular Incentive Agreement
shall be deemed to include any amendments thereto or restatements thereof, and
(iv) all references to any particular statute shall be deemed to include any
amendment, restatement or re-enactment thereof or any statute or regulation
substituted therefore.
(b) The titles and subtitles used in this Plan or any Incentive
construing or interpreting this Plan or the Incentive Agreement.
(c) All pronouns contained in this Plan or any Incentive Agreement,
and any variations thereof, shall be deemed to refer to the masculine, feminine
or neutral, singular or plural, as the identities of the parties may require.
(d) Whenever any provision of this Plan authorizes the Committee to
take action or make determinations with respect to outstanding Incentives that
have been granted or awarded by the chief executive officer of CenturyLink under
Section 3(i) hereof, each such reference to “Committee” shall be deemed to
include a reference to any officer of the Company that has delegated
administrative authority under Section 3(ii) of this Plan (subject to the
limitations of such section).
11.16 Compliance with Section 409A. It is the intent of the Company
that this Plan comply with the requirements of Section 409A of the Code with
respect to any Incentives that constitute non-qualified deferred compensation
under Section 409A and the Company intends to operate the Plan in compliance
with Section 409A and the Department of Treasury’s guidance or regulations
promulgated thereunder. If the Committee grants any Incentives or takes any
other action that would, either immediately or upon vesting or payment of the
Incentive, inadvertently result in the imposition of a penalty on a participant
under Section 409A of the Code, then the Company, in its discretion, may, to the
maximum extent permitted by law, unilaterally rescind ab initio, sever, amend or
otherwise modify the grant or action (or any provision of the Incentive) in such
manner necessary for the penalty to be inapplicable or reduced.
CERTIFICATION
The undersigned Secretary of CenturyTel, Inc. (the “Company”) hereby certifies
that the foregoing Amended and Restated CenturyLink 2005 Management Incentive
Compensation Plan was (i) recommended to the Company’s Board of Directors (the
“Board”) by its Compensation Committee at a meeting of the Compensation
Committee duly held on February 17, 2005, (ii) adopted by the Board at a meeting
duly held on February 22, 2005, (iii) approved by the requisite affirmative vote
of the Company’s shareholders at its 2005 Annual Meeting of Shareholders held on
May 12, 2005, and (iv) adopted by the Board in its current amended and restated
form on February 23, 2010.
Dated: February 23, 2010
/s/ Stacey W. Goff
Stacey W. Goff
Secretary
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EXHIBIT 10.3
AMENDED AND RESTATED REVOLVING NOTE
$9,000,000 Minneapolis, Minnesota April 15, 2016
FOR VALUE RECEIVED, the undersigned, INTRICON CORPORATION, a Pennsylvania
corporation, INTRICON, INC. (formerly known as Resistance Technology, Inc.), a
Minnesota corporation (successor-by-merger to Intricon Datrix Corporation
(formerly known as Jon Barron, Inc.) (d/b/a Datrix), a California corporation),
and INTRICON TIBBETTS CORPORATION (formerly known as TI Acquisition
Corporation), a Maine corporation (each, a “Borrower”; collectively, the
“Borrowers”), hereby JOINTLY AND SEVERALLY promise to pay to the order of THE
PRIVATEBANK AND TRUST COMPANY, an Illinois state banking corporation (the
“Bank”), the principal sum of NINE MILLION AND NO/100 DOLLARS ($9,000,000), or
if less, the then aggregate unpaid principal amount of the Revolving Loans as
may be borrowed by the Borrowers (or any of them) under the Loan Agreement (as
hereinafter defined). The actual amount due and owing from time to time
hereunder shall be evidenced by Bank’s records of receipts and disbursements
with respect to the Revolving Loans, which shall, absent manifest error, be
conclusive evidence of such amount.
Each Borrower further promises to pay interest on the aggregate unpaid principal
amount hereof at the rates provided in the Loan Agreement from the date hereof
until payment in full hereof. Accrued interest shall be payable on the dates
specified in the Loan Agreement.
All payments of principal and interest under this Amended and Restated Revolving
Note (the “Note”) shall be made in lawful money of the United States of America
in immediately available funds at the Bank’s office at 50 South 6th Street,
Suite 1415, Minneapolis, MN 55402, or at such other place as may be designated
by the Bank to the Borrowers in writing.
This Note is the Revolving Note referred to in, and evidences indebtedness
incurred under, a Loan and Security Agreement dated as of August 13, 2009 (as
previously amended, as further amended on or about the date hereof and as the
same may be hereafter further amended, modified or supplemented from time to
time, the “Loan Agreement”), among the Borrowers and the Bank, to which Loan
Agreement reference is made for a statement of the terms and provisions thereof,
including those under which the Borrowers are permitted and required to make
prepayments and repayments of principal of such indebtedness and under which
such indebtedness may be declared to be immediately due and payable. Capitalized
terms used here and not otherwise defined herein have the meanings ascribed to
them in the Loan Agreement.
All parties hereto, whether as makers, endorsers or otherwise, severally waive
presentment, demand, protest and notice of dishonor in connection with this
Note.
This Note is made under and governed by the internal laws of the State of
Minnesota.
This Note amends, restates and replaces, but does not evidence repayment of or
constitute a novation with respect to, that certain Revolving Note, dated August
13, 2009 made payable jointly and severally by the Borrowers to the order of the
Bank in the original principal amount of $8,000,000.00.
IN WITNESS WHEREOF, the undersigned have caused this Note to be executed as of
INTRICON CORPORATION,
a Pennsylvania corporation By /s/ Scott Longval Scott
Longval, Chief Financial Officer INTRICON, INC. (formerly known as
Resistance
Technology, Inc.), a Minnesota corporation By /s/ Scott Longval
Scott Longval, Chief Financial Officer INTRICON TIBBETTS
CORPORATION
(formerly known as TI Acquisition Corporation),
a Maine corporation By /s/ Scott Longval Scott Longval,
Chief Financial Officer
[Amended and Restated Revolving Note]
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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)June 30, 2015 ADDVANTAGE TECHNOLOGIES GROUP, INC. (Exact name of Registrant as specified in its Charter) Oklahoma (State or other Jurisdiction of Incorporation) 1-10799 73-1351610 (Commission File Number) (IRS Employer Identification No.) 1221 E. Houston St., Broken Arrow, Oklahoma (Address of Principal Executive Offices) (Zip Code) (918) 251-9121 (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 InstructionA.2. below): □ Written Communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425) □ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) □ Pre-commencement 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 3.01. Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing. (a)On July 1, 2015, ADDvantage Technologies Group, Inc. (the “Company”) received notification from Nasdaq that it was no longer in compliance with Nasdaq’s independent director and audit committee requirements as set forth in Listing Rule 5605.This rule requires that the Company’s Board of Directors be composed of a majority of independent directors.The Company’s Board of Directors has been composed of three independent directors and two non-independent directors but the resignation of independent director Paul Largess on June 30, 2015, as disclosed in Item 5.02 below, resulted in an equal number of independent and non-independent directors at the Company.In addition, this rule also requires the Company to have at least three independent directors on the audit committeeMr. Largess’ resignation leaves the audit committee with only twoindependent directors and causes the Company to no longer be in compliance with this portion of the rule. The Nasdaq notification has no immediate effect on the listing of the Company’s common stock.Consistent with Listing Rule 5605(b)(a)(A), Nasdaq provides the Company a cure period in order to regain compliance as follows: · until the earlier of the Company’s next annual shareholders’ meeting or June 30, 2016; or · if the next annual shareholders’ meeting is held before December 28, 2015, then the Company must evidence compliance no later than December 28, 2015. The Company plans to replace Mr. Largess by appointing another independent director within the cure period. Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. (b) On June 30, 2015, director, Paul Largess, notified ADDvantage Technologies Group, Inc. (the “Company”) of his decision to resign as a member of the Board of Directors. Mr. Largess’ decision to resign is not because of any disagreement with the Company. Item 9.01 Financial Statements and Exhibits. (d) Exhibits The following exhibit is furnished herewith: Exhibit 99.1 Nasdaq Notification Letter of Non-Compliance with Listing Rule datedJuly 1,2015. 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. ADDvantage Technologies Group, Inc. (Registrant) Date:July 6, 2015 /s/Scott Francis Scott Francis Vice-President & Chief Financial Officer Exhibit Index Exhibit Number Description Nasdaq Notification Letter of Non-Compliance with Listing Rule dated July 1, 2015.
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Exhibit 10.2
THE GOLDMAN SACHS AMENDED AND RESTATED
STOCK INCENTIVE PLAN
DISCOUNT STOCK PROGRAM AWARD
This Award Agreement sets forth the terms and conditions of the award of RSUs
under the Discount Stock Program (“DSP RSUs”) under The Goldman Sachs Amended
and Restated Stock Incentive Plan (the “Plan”).
1. The Plan. Your DSP Award is made pursuant to the Plan, the terms of which are
incorporated in this Award Agreement. Capitalized terms used in this Award
Agreement that are not defined in this Award Agreement have the meanings as used
or defined in the Plan. References in this Award Agreement to any specific Plan
provision shall not be construed as limiting the applicability of any other Plan
provision.
2. Award.
(a) Form of Award. The number of DSP RSUs subject to this Award is set forth in
the Award Statement delivered to you. The Award Statement shall designate your
DSP RSUs as either Base RSUs or Discount RSUs. An RSU is an unfunded and
unsecured promise to deliver (or cause to be delivered) to you, subject to the
terms and conditions of this Award Agreement, a share of Common Stock (a
“Share”) on the Delivery Date or as otherwise provided herein. Until such
delivery, you have only the rights of a general unsecured creditor, and no
rights as a shareholder of GS Inc.
(b) Certain Conditions Precedent. YOUR DSP AWARD IS EXPRESSLY CONDITIONED ON:
(I) YOUR BEING A PARTICIPANT IN THE GOLDMAN SACHS PARTNER COMPENSATION PLAN OR
THE GOLDMAN SACHS RESTRICTED PARTNER COMPENSATION PLAN ON THE DATE OF GRANT AND
YOUR EXECUTING ANY AGREEMENT REQUIRED IN CONNECTION WITH SUCH PARTICIPATION; AND
(II) YOUR EXECUTING THE RELATED SIGNATURE CARD AND RETURNING IT TO THE ADDRESS
DESIGNATED ON THE SIGNATURE CARD AND/OR BY THE METHOD DESIGNATED ON THE
SIGNATURE CARD BY THE DATE SPECIFIED. UNLESS OTHERWISE DETERMINED BY THE
COMMITTEE, YOUR FAILURE TO MEET THESE CONDITIONS WILL RESULT IN THE CANCELLATION
OF YOUR DSP AWARD. YOUR DSP AWARD IS SUBJECT TO ALL TERMS, CONDITIONS AND
PROVISIONS OF THE PLAN AND THIS AWARD AGREEMENT, INCLUDING, WITHOUT LIMITATION,
THE ARBITRATION AND CHOICE OF FORUM PROVISIONS SET FORTH IN PARAGRAPH 12. BY
EXECUTING THE RELATED SIGNATURE CARD YOU WILL HAVE CONFIRMED YOUR ACCEPTANCE OF
ALL OF THE TERMS AND CONDITIONS OF THIS AWARD AGREEMENT.
(c) Status under Shareholders’ Agreement. The Shares delivered with respect to
this Award will be subject to the Goldman Sachs Shareholders’ Agreement to which
you are a party, as amended from time to time (the “Shareholders’ Agreement”),
except such Shares will not be considered “Covered Shares” as defined in that
Agreement.
3. Vesting and Delivery.
(a) Vesting.
(i) Base RSUs. Except as provided in Paragraph 2(b), you shall be fully Vested
in all of your Outstanding Base RSUs on the Date of Grant, and, subject to
Paragraph 9, neither such Base RSUs, nor the Shares delivered thereunder, shall
be forfeitable for any reason.
(ii) Discount RSUs. Except as provided in this Paragraph 3 and in Paragraphs 4,
6, 7, 9 and 10, on each Vesting Date you shall become Vested in the number or
percentage of your Outstanding Discount RSUs specified next to such Vesting Date
on the Award Statement (which may be rounded to avoid fractional Shares). While
continued active Employment is not required in order to receive delivery of the
Shares underlying your Outstanding Discount RSUs that are or become Vested, all
other terms and conditions of this Award Agreement shall continue to apply, and
failure to meet such terms and conditions may result in the termination of some
or all of your Discount RSUs (as a result of which no Shares underlying such
Discount RSUs would be delivered).
(b) Delivery.
(i) The Delivery Date with respect to all of your DSP RSUs shall be the date
specified as such on your Award Statement, if that date is during a Window
Period or, if that date is not during a Window Period, the first Trading Day of
the first Window Period beginning after such date. For this purpose, a “Trading
Day” is a day on which Shares trade regular way on the New York Stock Exchange.
(ii) Except as provided in this Paragraph 3 and in Paragraphs 2, 4, 5, 6, 7, and
9, in accordance with Section 3.23 of the Plan, reasonably promptly (but in no
case more than thirty (30) Business Days) after the date specified as the
Delivery Date (or any other date delivery of Shares is called for hereunder),
Shares underlying the number or percentage of your then Outstanding DSP RSUs
with respect to which the Delivery Date (or other date) has occurred (which
number of Shares may be rounded to avoid fractional Shares) shall be delivered
to a brokerage or custody account approved by the Firm. Notwithstanding the
foregoing, if you are or become considered by GS Inc. to be one of its “covered
employees” within the meaning of Section 162(m) of the Code, then you shall be
subject to Section 3.21.3 of the Plan, as a result of which delivery of your
Shares may be delayed.
(iii) In accordance with Section 1.3.2(i) of the Plan, in the discretion of the
Committee, in lieu of all or any portion of the Shares otherwise deliverable in
respect of all or any portion of your DSP RSUs, the Firm may deliver cash, other
securities, other Awards or other property, and all references in this Award
Agreement to deliveries of Shares shall include such deliveries of cash, other
securities, other Awards or other property.
(c) Death. Notwithstanding any other provision of this Award Agreement, if you
die prior to the Delivery Date, the Shares underlying all of your then
Outstanding DSP RSUs shall be delivered to the representative of your estate as
soon as practicable after the date of death and after such documentation as may
be requested by the Committee is provided to the Committee.
4. Termination of Discount RSUs and Non-Delivery of Shares.
(a) Unless the Committee determines otherwise, and except as provided in
Paragraphs 3(c), 6 and 7, if your Employment terminates for any reason or you
otherwise are no longer actively employed with the Firm, your rights in respect
of your Discount RSUs (but not your Base RSUs) that were Outstanding but that
had not yet become Vested immediately prior to your termination of Employment
immediately shall terminate, such Discount RSUs shall cease to be Outstanding
and no Shares shall be delivered in respect thereof.
(b) Unless the Committee determines otherwise, and except as provided in
Paragraphs 6 and 7, your rights in respect of all of your Outstanding Discount
RSUs (whether or not Vested) (but not your Base RSUs), immediately shall
terminate, such Discount RSUs shall cease to be Outstanding and no Shares shall
be delivered in respect thereof if:
(i) you attempt to have any dispute under the Plan or this Award Agreement
resolved in any manner that is not provided for by Paragraph 12 or Section 3.17
of the Plan;
2
(ii) any event that constitutes Cause has occurred;
(iii) you, in any manner, directly or indirectly, (A) Solicit any Client to
transact business with a Competitive Enterprise or to reduce or refrain from
doing any business with the Firm, (B) interfere with or damage (or attempt to
interfere with or damage) any relationship between the Firm and any Client,
(C) Solicit any person who is an employee of the Firm to resign from the Firm or
to apply for or accept employment with any Competitive Enterprise or (D) on
behalf of yourself or any person or Competitive Enterprise hire, or participate
in the hiring of, any Selected Firm Personnel, or identify, or participate in
the identification of Selected Firm Personnel for potential hiring, whether as
an employee or consultant or otherwise;
(iv) you fail to certify to GS Inc., in accordance with procedures established
by the Committee, that you have complied, or the Committee determines that you
in fact have failed to comply, with all the terms and conditions of the Plan and
this Award Agreement. By accepting the delivery of Shares under this Award
Agreement, you shall be deemed to have represented and certified at such time
that you have complied with all the terms and conditions of the Plan and this
Award Agreement;
(v) the Committee determines that you failed to meet, in any respect, any
obligation you may have under any agreement between you and the Firm, or any
agreement entered into in connection with your Employment with the Firm,
including, without limitation, any offer letter, employment agreement, the
Shareholders’ Agreement or any other shareholders’ agreement to which other
similarly situated employees of the Firm are a party; or
(vi) as a result of any action brought by you, it is determined that any of the
terms or conditions for Delivery of this Award Agreement are invalid.
For purposes of the foregoing, the term “Selected Firm Personnel” means: (i) any
Firm employee or consultant (A) with whom you personally worked while employed
by the Firm, or (B) who at any time during the year immediately preceding your
termination of Employment with the Firm, worked in the same division in which
you worked; and (ii) any Managing Director of the Firm.
5. Repayment. The provisions of Section 2.6.3 of the Plan (which requires Award
recipients to repay to the Firm amounts delivered to them if the Committee
determines that all terms and conditions of this Award Agreement in respect of
such delivery were not satisfied) shall apply to your Discount RSUs but, subject
to Paragraph 2(b), not your Base RSUs.
6. Extended Absence and Downsizing.
(a) Notwithstanding any other provision of this Award Agreement, but subject to
Paragraph 6(b), in the event of the termination of your Employment by reason of
Extended Absence, the condition set forth in Paragraph 4(a) shall be waived with
respect to any Discount RSUs that were Outstanding but that had not yet become
Vested immediately prior to such termination of Employment (as a result of which
such Discount RSUs shall become Vested), but all other conditions of this Award
Agreement shall continue to apply.
(b) Without limiting the application of Paragraph 4(b), your rights in respect
of your Outstanding Discount RSUs that become Vested in accordance with
Paragraph 6(a) immediately shall terminate, such Outstanding Discount RSUs shall
cease to be Outstanding, and no Shares shall be delivered in respect thereof if,
prior to the original Vesting Date with respect to such Discount RSUs, you
(i) form, or acquire a 5% or greater equity ownership, voting or profit
participation interest in, any Competitive Enterprise, or (ii) associate in any
capacity (including, but not limited to, association as an officer, employee,
partner, director, consultant, agent or advisor) with any Competitive
Enterprise. No termination of Employment initiated by you, including any
termination claimed to be a “constructive termination” or the like or a
termination for good reason, will constitute an “involuntary” termination of
Employment or a termination of Employment by “mutual agreement.”
3
(c) Notwithstanding any other provision of this Award Agreement and subject to
your executing such general waiver and release of claims and an agreement to pay
any associated tax liability, both as may be prescribed by the Firm or its
designee, if your Employment is terminated solely by reason of a “downsizing,”
the condition set forth in Paragraph 4(a) shall be waived with respect to a
portion of your Discount RSUs that were Outstanding but that had not yet become
Vested prior to your termination of Employment by reason of “downsizing,” as a
result of which you shall become Vested in a portion of such Discount RSUs,
determined with respect to each Vesting Date by multiplying the number of
Discount RSUs that would become Vested on the remaining Vesting Date by a
fraction, the numerator of which is the number of months from the Date of Grant
to the date your Employment terminated, and the denominator of which is the
number of months from the Date of Grant to the applicable Vesting Date, but all
other terms and conditions of this Award Agreement shall continue to apply.
Whether or not your Employment is terminated solely by reason of a “downsizing”
shall be determined by the Firm in its sole discretion. No termination of
Employment initiated by you, including any termination claimed to be a
“constructive termination” or the like or a termination for good reason, will be
solely by reason of a “downsizing.”
7. Change in Control. Notwithstanding anything to the contrary in this Award
Agreement, in the event a Change in Control shall occur and within 18 months
thereafter the Firm terminates your Employment without Cause or you terminate
your Employment for Good Reason, all Shares underlying your then Outstanding DSP
RSUs, whether or not Vested, shall be delivered.
8. Dividend Equivalent Rights. Each DSP RSU shall include a Dividend Equivalent
Right. Accordingly, with respect to each of your Outstanding DSP RSUs, at or
after the time of distribution of any regular cash dividend paid by GS Inc. in
respect of a Share the record date for which occurs on or after the Date of
Grant, you shall be entitled to receive an amount (less applicable withholding)
equal to such regular dividend payment as would have been made in respect of the
Share underlying such Outstanding DSP RSU. Payment in respect of a Dividend
Equivalent Right shall be made only with respect to DSP RSUs that are
Outstanding on the payment date. Each Dividend Equivalent Right shall be subject
to the provisions of Section 2.8.2 of the Plan.
9. Certain Terms, Conditions and Agreements.
(a) The delivery of Shares in respect of your DSP RSUs is conditioned on your
satisfaction of any applicable withholding taxes in accordance with Section 3.2
of the Plan.
(b) Your rights in respect of your Discount RSUs are conditioned on your
becoming a party to any shareholders’ agreement to which other similarly
situated employees of the Firm are a party.
(c) Your rights in respect of your DSP RSUs are conditioned on the receipt to
the full satisfaction of the Committee of any required consents (as described in
Section 3.3 of the Plan) that the Committee may determine to be necessary or
advisable.
(d) You understand and agree, in accordance with Section 3.3 of the Plan, by
accepting this Award, you have expressly consented to all of the items listed in
Section 3.3.3(d) of the Plan, which are incorporated herein by reference.
(e) You understand and agree, in accordance with Section 3.22 of the Plan, by
accepting this Award you have agreed to be subject to the Firm’s policies in
effect from time to time concerning trading in Shares and hedging or pledging
Shares and equity-based compensation or other awards (including, without
limitation, the Firm’s “Policies With Respect to Transactions Involving GS
Shares, Equity Awards and GS Options by Persons Affiliated with GS Inc.”), and
confidential or proprietary information, and to effect sales of Shares delivered
to you in respect of your DSP RSUs in accordance with such rules and procedures
as may be adopted from time to time with respect to sales of such Shares (which
may include, without limitation, restrictions relating to the timing of sale
requests, the manner in which sales are executed, pricing method,
4
consolidation or aggregation of orders and volume limits determined by the
Firm). In addition, you understand and agree that you shall be responsible for
all brokerage costs and other fees or expenses associated with this Award,
including without limitation, such brokerage costs or other fees or expenses in
connection with the sale of Shares delivered to you hereunder in respect of your
DSP RSUs.
(f) GS Inc. may affix to Certificates representing Shares issued pursuant to
this Award Agreement any legend that the Committee determines to be necessary or
advisable (including to reflect any restrictions to which you may be subject
under a separate agreement with GS Inc.). GS Inc. may advise the transfer agent
to place a stop order against any legended Shares.
(g) Without limiting the application of Paragraph 4(b), if:
(i) your Employment with the Firm terminates solely because you resigned to
accept employment at a governmental agency, self-regulatory organization, or
other employer and as a result of such new employment the Firm determines that
your continued holding of your Outstanding Discount RSUs, or Base RSUs would
violate standards of ethical conduct applicable to you (“Conflicted
Employment”); or
(ii) following your termination of Employment other than described in
Paragraph 9(g)(i), you notify the Firm that you have accepted or intend to
accept Conflicted Employment at a time when you continue to hold Outstanding
Discount RSUs that are Vested , or any Base RSUs for which the delivery of
Shares has not yet occurred;
then, in the case of Paragraph 9(g)(i) above only, the condition set forth in
Paragraph 4(a) shall be waived with respect to any Discount RSUs you then hold
that had not yet become Vested (as a result of which such Discount RSUs shall
become Vested) and, in the cases of Paragraph 9(g)(i) and 9(g)(ii) above at the
sole discretion of the Firm, you shall receive either a lump sum cash payment or
the delivery of the Shares underlying all then Outstanding Vested DSP RSUs
(including those that become Vested in connection with Paragraph 9(g)(i) by
reason of the immediately foregoing), in each case as soon as practicable after
the Committee has received satisfactory documentation relating to your
Conflicted Employment. Notwithstanding anything else herein, Discount RSUs shall
become Vested and payment or delivery as a result of this Paragraph shall be
made only at such time and if and to the extent as would not result in the
imposition of any additional tax under Section 409A of the Code;
10. Right of Offset. The obligation to deliver Shares under this Award Agreement
is subject to Section 3.4 of the Plan, which provides for the Firm’s right to
offset against such obligation any outstanding amounts you owe to the Firm and
any amounts the Committee deems appropriate pursuant to any tax equalization
policy or agreement.
11. Amendment. The Committee reserves the right at any time to amend the terms
and conditions set forth in this Award Agreement, and the Board may amend the
Plan in any respect; provided that, notwithstanding the foregoing and
Sections 1.3.2(f), 1.3.2(g) and 3.1 of the Plan, no such amendment shall
materially adversely affect your rights and obligations under this Award
Agreement without your consent; and provided further that the Committee
expressly reserves its rights to amend the Award Agreement and the Plan as
described in Sections 1.3.2(h)(1), (2) and (4) of the Plan. Any amendment of
this Award Agreement shall be in writing signed by an authorized member of the
Committee or a person or persons designated by the Committee.
12. Arbitration; Choice of Forum. BY ACCEPTING THIS AWARD, YOU UNDERSTAND AND
AGREE THAT THE ARBITRATION AND CHOICE OF FORUM PROVISIONS
5
SET FORTH IN SECTION 3.17 OF THE PLAN, WHICH ARE EXPRESSLY INCORPORATED HEREIN
BY REFERENCE AND WHICH, AMONG OTHER THINGS, PROVIDE THAT ANY DISPUTE,
CONTROVERSY OR CLAIM BETWEEN THE FIRM AND YOU ARISING OUT OF OR RELATING TO OR
CONCERNING THE PLAN OR THIS AWARD AGREEMENT SHALL BE FINALLY SETTLED BY
ARBITRATION IN NEW YORK CITY, PURSUANT TO THE TERMS MORE FULLY SET FORTH IN
SECTION 3.17 OF THE PLAN, SHALL APPLY.
13. Non-transferability. Except as otherwise may be provided by the Committee,
the limitations on transferability set forth in Section 3.5 of the Plan shall
apply to this Award. Any purported transfer or assignment in violation of the
provisions of this Paragraph 13 or Section 3.5 of the Plan shall be void.
14. Governing Law. THIS DSP AWARD SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICT OF LAWS.
15. Delay in Payment. To the extent required in order to avoid the imposition of
any interest and additional tax under Section 409A(a)(1)(B) of the Code, any
payments or deliveries due as a result of your termination of Employment with
the Firm will be delayed for six months if you are deemed to be a “specified
employee” as defined in Section 409A(a)(2)(i)(B) of the Code.
16. Headings. The headings in this Award Agreement are for the purpose of
convenience only and are not intended to define or limit the construction of the
provisions hereof.
6
IN WITNESS WHEREOF, GS Inc. has caused this Award Agreement to be duly executed
and delivered as of the Date of Grant.
THE GOLDMAN SACHS GROUP, INC.
By: Name: [Name] Title: [Title]
7
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